AMA: States are in crisis of liability and of costs

A report from the Chicago-based American Medical Association (AMA) says at least a dozen states are in a medical liability insurance crisis that has forced physicians to limit services, close practices, or move to other states.

Annual costs for medical liability insurance could reach as much as $200,000 or more for some physicians, especially surgeons and obstetricians. The AMA says 30 more states have the same problems to lesser degrees. The physicians’ group surveyed physicians in all 50 states and determined that the states in crisis are Florida, Georgia, Mississippi, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas, Washington, and West Virginia. The only states that have escaped the malpractice crisis are those that have enacted laws protecting providers, usually during similar crises in the 1970s and 1980s. California, Colorado, Indiana, Louisiana, New Mexico, and Wisconsin, for instance, have laws that establish caps for pain and suffering and limit the amount lawyers can charge for contingency fees.

In response to the nationwide crisis, the AMA and other physicians’ groups recently called on Congress to take action. Testifying before the House Judiciary Subcommittee on Commercial and Administrative Law recently, AMA secretary-treasurer Donald Palmisano, MD, says the situation has become so critical in some states that physicians are forced to limit services, retire early, or move to another state where liability premiums are more stable.

"Many OB/GYNs and family physicians have stopped delivering babies, and some advanced and high-risk procedures, such as neurosurgery, are being postponed because surgeons cannot find or afford insurance," Palmisano says. "The AMA always has held that patients who have been injured through negligence should be compensated fairly. Unfortunately, the current liability system has failed patients. The United States has created a liability lottery, where select patients receive astronomical awards, and many others suffer access to care problems because of it."

Lawrence Smarr, president of the Physician Insurers Association of America, told the subcommittee that rising damage awards in malpractice cases and lowered returns from investments available to malpractice insurers have combined to create "the perfect storm" of a malpractice crisis.

"During the period 1991-2001, the percentage of million-dollar-plus claims increased from 2.06% to 7.9%," he reported.

Help may come in the form of H.R. 4600, the HEALTH Act, a bipartisan bill introduced recently that would make a series of changes in malpractice laws, most notably imposing a $250,000 cap on noneconomic damage awards. Subcommittee Chairman Bob Barr (R-GA) said the bill is necessary because "a national liability insurance crisis is ravaging the nation’s health care system."

Barr said California’s landmark 1975 Medical Injury Compensation Reform Act is a model for national reform. That law includes a $250,000 noneconomic damage cap. Barr noted that California has not been affected as seriously as other states by the current malpractice crisis.

The vast majority of Americans also support liability reform, according to a recent survey by the Health Care Liability Alliance (HCLA). An overwhelming 78% of Americans say they are concerned about the impact rising liability costs have on access to care, and 73% support a law that caps pain and suffering awards.

"The spiraling costs generated by our nation’s dysfunctional liability system are borne by everyone," Palmisano says. "We need a system that ensures fair compensation and puts an end to the liability lottery. The HEALTH Act will go a long way toward bringing common sense back to our liability system."

Furthermore, they agree that litigation is one of the primary factors behind rising medical costs and reduced access to care. By overwhelming margins, the HCLA poll shows, Americans favor legislative reforms such as limiting trial lawyers fees and guaranteeing patients full payment for medical expenses and lost wages while placing reasonable controls on awards for noneconomic damages, such as pain and suffering.

The poll resulted in these other findings:

  • Lawsuits hinder access to medical care: Nearly four out of five Americans (78%) express concern that skyrocketing medical liability costs could limit their access to care, as doctors in many parts of the country, particularly those providing specialized care, scale back services or abandon their practices.
  • Too many lawsuits: Nearly half of Americans (48%) believe the number of malpractice lawsuits against health care providers is "higher than is justified" compared to just 17% who said the number of claims is "lower than is justified."

To bring more attention to the problem, the AMA has considered a march on Washington, DC. The group has decided against a march this year, but it is forming a task force to organize a "major national event" calling for tort reform, Palmisano says.

Delegates at the annual AMA House of Dele-gates meeting debated an action plan to fight rising malpractice premium costs, which they say are driving physicians out of practice. The delegates called the problem a "highest priority" and voted to launch a broad-based coalition — including trade and professional associations, medical groups, farmers, and patient advocacy groups — to "promulgate a public information campaign on the issues of civil liability reform."

The delegates decided against a march on Washington for this year but the "major national event" task force might reconsider that option for a later date, says AMA trustee D. Ted Lewers, MD, of Easton, MD. He says the delegates also directed the AMA board of trustees to take a series of steps that would thwart what they called "circuit-riding expert witnesses." Some AMA delegates contend that traveling expert witnesses will say whatever suits a plaintiff’s cases. So the delegates directed the AMA to "go on record condemning any physician who would harm a colleague with false testimony" and to explore the possibility of all specialty societies establishing registries of testimony. The AMA also will encourage specialty societies to sanction or expel members who give false testimony.

The American College of Obstetrics and Gynecology already maintains such a registry and expels members when it discovers evidence of false testimony.