Relative Importance of California's MICRA vs Proposition 103

I think MICRA-type tort system reform is much more important than Proposition 103-type reform because of Stigler's Law. George Stigler won the Nobel Prize in Economics in part by proving that instead of protecting the public, some regulations protect firms, organizations and professional and occupational groups from competition. This is because state regulated insurance companies are often able to "capture" and control the state regulatory agencies and insurance commissioner to serve their own commercial interests.

As usual, with billions of dollars* in annual medical malpractice tort system settlements and awards at stake, those who benefit from financially successful medical negligence claims (consumer plaintiffs , trial attorneys and consumer advocacy groups) will invariably:

• view the same statistics very differently than healthcare providers and their allies,
• often create "mis or disinformation", and
• do anything else necessary to block any change in the status quo that might adversely impact their growing earning power.
  

*A total of $24.5 billion in 2002 according to Tillinghast-Towers Perrin. This amount representing 10.5 % of the $233 billion, or $809 for every person in the country, that the entire U.S. tort system cost consumers in that year. Since 1975, national costs for medical malpractice liability lawsuits have steadily grown at a faster pace than for all other torts. We are all living in an increasingly litigious society.

This is why determining the true comparative impact in California of MICRA (passed in 1975) and Proposition 103 (passed in 1988) is a critical part of creating any legislative solution in Rhode Island or in any other state.

MALPRACTICE REFORM OPPONENTS:
The perspective of the trial attorneys and consumer advocacy groups is accurately reflected in recent published quotes from David S. Casey, Jr., President of the Association of Trial Lawyers of America in his June 27, 2004 letter to the Providence Journal Editor entitled "Insurance Caps Hurt Victims of Malpractice":

"Caps on jury awards have not solved the problem in states that have adopted them and caps perversely hurt those most seriously injured by medical errors. California is not a triumph for cap-driven "reform." In fact, it was insurance reform that actually netted lower premiums for doctors in my home state, not "one-size-fits-all" limits on jury verdicts. Check out the facts please, and don’t believe the insurance industry’s propaganda."

Similarly, a February 16, 2004 Media Release from Public Citizen and Georgia Watch ("Protecting Georgia Families") claimed:

"California’s lower malpractice insurance premiums are due to insurance reforms, not damage caps. In the first 12 years of MICRA (1976-1988), that capped non-economic damages at $250,000, total medical-malpractice insurance premiums paid by health providers increased 190 percent (almost 16 percent annually). But under Proposition 103, a major insurance reform passed by voters, malpractice premiums paid declined 2 percent from 1988-2001."

The full report, Increasing Doctor Accountability & Patient Safety: Solving Georgia’s Medical Malpractice "Crisis", is available at:

http://www.citizen.org/congress/civjus/medmal/articles.cfm?ID=11077.

A summary of Proposition 103 is available at:

http://www.pifc.org/Media/pdffiles/refprop103.pdf

MALPRACTICE REFORM ADVOCATES:
A number of medical liability reform advocates claim that California’s stable medical liability market is due to passage of MICRA in 1975, not Proposition 103 in 1988.

These include the AMA, state Medical Societies, the Physician Insurers Association of America (PIAA), commercial malpractice insurers, and advocacy groups that support pro-physician sponsored legislative medical malpractice reform like the Health Coalition on Liability and Access (HCLA: http://www.hcla.org) and Californians Allied for Patient Protection (CAPP: http://calphys.org/html/bb220.asp).

The CAPP link above provides convincing data that refutes 4 "myths" about Proposition 103 and claims that:

"The argument that Proposition 103, the insurance reforms passed by voters in 1988 targeted primarily at auto insurers, is directly or indirectly responsible for keeping malpractice liability premiums in California lower than in other states is based on convenience and coincidence rather than evidence.

There is plenty of evidence, however, that California’s Medical Injury Compensation Reform Act of 1975 has been the driving force that has kept premiums one-half to one-third below those in states without caps on non-economic damages and similar reforms. Here are some commonly held misconceptions about Prop. 103 and the facts to refute them from Californians Allied for Patient Protection. http://www.micra.org.

The HCLA claims that " Proposition 103 has had no impact on California medical liability premiums." and includes the following data on MICRA:

"How successful has MICRA been? At the height of California’s medical liability crisis, insurance premiums for anesthesiologists reached $22,702 per year. Current rates are $10,337 per year---50% below the rates charged in 1975. (Norcal Mutual Insurance Company, January 31, 2003).

Since MICRA was enacted 27 years ago, medical liability premiums in California have risen just 167 percent compared to 505 percent for the rest of the nation (a 33 percent advantage). (Physician Insurers Association of America).

The stridency of the malpractice reform opponents about caps may be partly due to a recent analysis published in the journal Health Affairs (January 21, 2004) indicating that tort system reform involving award caps has worked nationally in the 24 (48 %) of U.S. states that have implemented them:

"Jury award caps exist in 24 states and are the only malpractice reform that has reduced physicians’ premiums, reducing them 17 percent."

http://www.healthaffairs.org/press/janfeb0403.htm .

The AMA Health Policy Group produces a "Health Care Financial Trends Report." The most recent edition (June 2004) reveals our nation's massive investments in health care -- nearly $1.6 trillion in 2002, increasing to an estimated $2 trillion in 2004-- and is filled with a number of educational charts and statistics.

AMA members can visit the following link for a free copy:

http://enews.ama-assn.org/UM/T.asp?A40.442.1654.20.271796

The current AMA President, John C. Nelson, MD, MPH noted in the July 22, 2004 edition of the AMA eVoice a section of this report entitled: "Professional Liability Insurance Update: Growth in Medical Liability Premiums in California vs. the Rest of the U.S."

"As you know, California's $250,000 cap on non-economic damages, mandated by the passage of the Medical Injury Compensation Reform Act (MICRA) in 1975, has served as a model for what we at the AMA hope to accomplish nationwide because medical liability premiums are stable and competitive in California and exactly the opposite in many other states.

In the report, we learn that premiums have grown exponentially faster outside of California since MICRA was enacted. In fact, while California premiums have risen 245 percent, the rest of the country has experienced a 750 percent increase! (also a 33 percent advantage). That's further proof that MICRA-style reforms work -- and work well.

Speaking of which, congratulations to Wyoming's House and Senate for passing a constitutional amendment to allow the legislature to enact caps on non-economic damages in medical liability cases. This crisis state's constitution currently prohibits limiting damages in any case involving injury or death. Wyoming patients will vote on approving the amendment this November."

According to the AMA, MICRA protects patients and health care providers by:

• Providing full compensation for all economic damages, including medical bills, lost wages, future earnings, custodial care and rehabilitation.
• Placing a fair and reasonable limit of $250,000 on non-economic damages.
• Establishing a statute of limitations on claims.
• Ensuring that the bulk of any award goes to the plaintiffs, not attorneys.
  

BARRIERS TO MEANINGFUL REFORM:
If the numbers provided by the reform/award cap advocates are correct, I must conclude that Public Citizen and other opponents of award cap-based tort reform are either distorting the statistics or lying. In any case, what still must be overcome is the substantial money and political power behind the liberal mass media, the trial lawyers (including John Edwards, 2004 Democrat candidate for Vice President ) and certain Democratic members of Congress and the Rhode Island General assembly.

The liberal mass media attitude on tort reform is well characterized by NY Times Op-Ed columnist Bob Herbert in his June 25, 2004 NY Times essay entitled: "Cooking Up a Crisis."

http://www.nytimes.com/2004/06/25/opinion/25HERB.html

"The disinformation campaign of the tort reform zealots and their sustained attacks on the rights of patients who have been harmed by doctors, have been disgraceful. The proper prescription for this apparently chronic disorder is a strong dose of the truth."

According to AMA Immediate Past President Dr. Donald J. Palmisano, while Bob Herbert, writer of the columns, focuses on tidbits that Dr. Palmisano thinks dilute the overwhelming body of evidence that a medical liability crisis exists, the rest of the nation is actively seeking a solution.

Mr. Herbert cited an August 2003 General Accounting Office (GAO) report that found mixed evidence on access to care caused by the medical liability crisis. However, as Dr. Palmisano points out, he didn't mention a key finding of the report that states, "growth in malpractice premiums and claims payments has been slower in states that enacted tort reform laws that include certain caps on non-economic damage." Also not mentioned in the column was the June 2003 GAO report that verifies what the AMA has said about the crisis: medical liability premiums have "increased dramatically" in some states and specialties - and that increasing awards "appear to be the primary driver."

"One key statistic can't be denied: Americans want medical liability reform," Dr. Palmisano wrote. "An overwhelming 78 percent say they are concerned about the impact that rising liability costs have on access to care, and 72 percent support a law that caps non-economic damages."

http://www.ama-assn.org/ama/pub/article/print/9255-8684.html .

Rhode Island trial lawyer Max Wistow, Esq. accurately summarized the perspective of all his colleagues, Public Citizen, Ocean State Action and other consumer advocacy groups in this recent Providence Journal quote:

"Doctors have chosen to protect each other in ways that are scandalous. In Rhode Island, 4.8% of doctors were responsible for 52.7 % of all the dollars paid in settlements and jury awards. No one ever goes after those doctors."

This perspective, based on over 14 years of National Practitioner Databank (NPDB) statistics, is exactly why any genuine and meaningful reform effort must address all three interrelated areas: the state-based medical discipline system, the civil justice (tort) system for medical liability and the medical liability insurance system. The importance of a combined approach is very well illustrated by the impact all three types of reform have had since they were legislated in Texas just one year ago.

THE 2003 TEXAS LEGISLATIVE SOLUTIONS:
Texas doctors and Rep. Joe Nixon (R-Houston) have already emulated California's MICRA in September, 2003, combining passage of H.B 4 and "Proposition 12" to amend the state constitution and immediately validate the legislature's work in passing H.B. 4 and Governor Perry signing it into law with passage of SB104 and SB14 (see below).

The $250,000 cap on jury awards for pain and suffering was the first part of a three-step process that included reforming the state's medical discipline system, tort system reform and insurance reform which forces the three medical liability insurance carriers to file and justify their rate changes with the Department of Insurance.

http://www.consumerwatchdog.org/healthcare/nw/nw003647.php3 .

A THREE-LEGGED APPROACH TO MED-MAL REFORM IN TEXAS:
(Texas Legislature 78th Regular session--2003)
I. Medical Discipline System Reform: SB104
II. Tort System Reform: HB4 and Proposition 12
III. Insurance System Reform: SB14

The content of the combination of medical liability market reform bills that were passed by wide margins in the 78th Texas Legislature (2003/2004) are available online at the following URL:

http://www.capitol.state.tx.us/tlo/legislation/bill_status.htm .

You can search on all three bills (SB104, HB4 and SB14) by highlighting "78th Regular Session-2003", and then inserting the number of each bill in the "Bill Number" field and submitting a search for the "History" or "Text" of each bill.

A summary of the successful 2003 Texas "Proposition 12" voter constitutional amendment is at:

http://www.scotthochberg.com/amends/amend12.html .

It is still too early to predict the full impact of these Texas reforms passed only last fall. However, since January 2004, the Texas Medical Liability Trust, a physician-owned insurer, has decreased its premium rates by 12% (e-Internal Medicine News 8/1/04 issue: "Physicians Push for Caps in Liability Reform Efforts, by Mary Ellen Schneider).

TEXAS Medical Liability Reform Fact Sheet: (from Governor Perry's Web site)
"In the one year since we passed major medical liability reforms, patients are experiencing better access to healthcare, communities are recruiting new physicians, insurance costs are down significantly for many hospitals and some doctors, and lawsuits filed against healthcare providers have declined dramatically." - Governor Rick Perry

http://www.governor.state.tx.us/divisions/press/tortreform/factsheet.htm

Medical Liability Reforms are improving patient access to the healthcare delivery system all across Texas. Statewide and local data show a stunning reverse in recent trends with hospitals and communities experiencing much greater success in recruiting physicians, lower insurance costs for hospitals leading to an expansion of indigent and charity care in some instances, a tremendous decrease in lawsuits against healthcare providers, and lower rates for some doctors compared to skyrocketing increases in previous years.

HERE ARE THE FACTS FROM TEXAS:

• Lower Insurance Costs: Texas Hospitals are reporting a 17 percent decrease in professional liability premiums for 2004-2005 (Texas Hospital Association Survey with responses from 172 acute-care hospitals, 8/23/04.) In 2003 premiums rose more than 50 percent.
  Ten new carriers are seeking entry into the Texas market (Texas Department of Insurance report 8/5/04), and the largest carrier, the Texas Medical Liability Trust, has reduced physician rates 12 percent. In the years prior to medical liability reform, 13 carriers left the state and 6,000 physicians had to scramble for coverage.
  The largest hospital writer in Texas, Healthcare Indemnity, Inc. has reduced rates by 20 percent (TDI report 8/5/04.)
• Lawsuits Down Dramatically: Medical liability lawsuits in several counties considered high-risk for physicians have decreased dramatically since the new law took effect on 9/01/03:
  Harris County: 105 lawsuits were filed from 9/01/03 to 7/31/04, compared to 746 lawsuits filed in the three months prior.
  Bexar County: 81 lawsuits were filed from 9/01/03 to 4/30/04, compared to 304 lawsuits filed in the three months prior.
  Nueces County: 32 lawsuits were filed from 9/01/03 to 4/30/03, compared to 108 lawsuits filed in the three months prior.
  Cameron County: 17 lawsuits were filed from 9/01/03 to 4/30/04, compared to 28 lawsuits filed the three months prior.
  Hidalgo County: 17 lawsuits were filed from 9/01/03 to 4/30/04, compared to 96 lawsuits filed the three months prior.
  Lawsuits filed against hospitals declined 70 percent in the first ten months since House Bill 4 took effect (9/1/03-6/30/04.) In the month prior to the new law some hospitals reported a 300 percent increase in lawsuits filed.

• Patient Access to Care is Improving:
  Since medical liability reforms took effect, the number of physicians maintaining or enhancing services has increased dramatically, with nine percent providing new services in addition to maintaining existing ones, and 73 percent making no changes to services they offer (Texas Medical Association Survey, 8/23/04.) Since 9/1/03, 13 percent of doctors have reduced their services, compared to 51 percent who reduced services in the previous two years.
• The number of physicians who have found it easier to recruit new physicians to their practice, hospital or community is now higher than the number of physicians who have indicated it is more difficult (TMA survey, 8/23/04.) Of those who indicated it is easier, 97 percent indicated the professional liability climate was either very important or somewhat important in their ability to recruit.
• Reports from several communities show patients have access to additional physicians and specialists:
  Corpus Christi: Driscoll Children's Hospital has experienced a one-year savings of $204,000 on its liability premiums, plus an additional $250,000 that would have otherwise been allocated to its self-insurance trust fund. The hospital has hired close to a dozen pediatric specialists since September2003 (including two cardiologists, three neonatologists, a hematologist, a plastic surgeon, an anesthesiologist, and a general surgeon.
  Corpus Christi: Christus Hospitals, which are saving nearly $21 million statewide in liability costs, are saving millions of dollars at Christus Spohn in Corpus Christi. The hospital has experienced a net gain of 22 physicians. After losing four neurosurgeons in the three years prior, Corpus Christi recently recruited a new neurosurgeon.
  Rio Grande Valley: Driscoll Children's Hospital has built new pediatric specialty clinics in McAllen and Brownsville in partnership with Valley Baptist Medical Center. Rio Grande Regional estimates $750,000 in liability savings and has recruited two neonatologists.
  San Antonio: Christus Santa Rosa has saved $935,000 in liability costs and expanded specialized care services.
  Beaumont: Christus St. Elizabeth has yielded $1.372 million in savings. Beaumont has also recruited four new anesthesiologists. It was just two years ago that Christus St. Mary's in Port Arthur canceled a dozen surgeries over an eight hour period because their anesthesiologists lost their insurance.
  Austin: Austin has gained 16 new obstetricians in a year after losing the same amount over the preceding 2 ½ years.
  Dallas: Baylor Hospital reports that seven reinsurance companies are bidding for their insurance renewal, compared to just one company a year ago. They estimate liability savings in "the seven figures," and doctors insured by the Baylor Health Care System "Health Texas" group can expect a premium decrease of more than ten percent (Dallas Morning News, "Hospitals find healthy savings," 8/23/04).
  Fredericksburg: Two obstetricians placed an ad in the paper thanking voters for passing Proposition 12 and announced they would resume their obstetrics practice.
  

VOTE NO ON FRIVOLOUS LAWSUITS:

According to a recent survey of 800 registered voters in 17 "swing" states, America's patients are more likely to vote for a candidate who supports medical malpractice reform—regardless of their political affiliation.

More than two-thirds of the voters polled said the current medical liability rules should be changed to reduce frivolous lawsuits. Democrats, however, are more likely than Republicans to say they have heard enough about the issue of reforming the medical liability system. On other health care issues, a majority of the respondents were more likely to vote for a candidate who supported competition between different private health plans to give seniors the best benefits at the most affordable cost. The survey was commissioned by America's Health Insurance Plans and conducted by Public Opinion Strategies.

MY PERSONAL CONCLUSIONS TO DATE:
In face of the attitude of at least some registered voters on frivolous medical liability lawsuits, the inflexible stance of the local and national opponents of malpractice reform can be converted from a significant barrier into a big opportunity for disruptive beneficial change in the status quo. By simultaneously focusing the public debate on increasing patient safety, along with Texas-style tort and insurance reforms, I believe that it could prove feasible to build a public consensus for legislating all three measures in Rhode Island in 2005.

SUMMARY RHODE ISLAND ACTION PLAN: (from the Med-mal liability reform Weblog:

http://www.med-malliabilityreform.blogspot.com

First, reform the medical discipline market: Increase patient safety immediately and for the long term by creating and implementing fair but firm economic sanctions for the small group of most egregious repeat offenders whose performance records combine excess number of payouts* with serious disciplinary actions.

Second, reform the lottery-like aspects of the tort** (civil-justice) system: Reform the medical liability market by enacting measures equivalent to California's Medical Injury Compensation Reform Act (MICRA) of 1975 (only six of the 24 states with a non-economic damage cap currently have set it at a $250,000).

Third, reform the insurance industry: Reform medical malpractice and all other major insurance lines by enacting measures equivalent to California's Proposition 103 of 1988 (i.e. convert Rhode Island from an "open competition system" to a "prior approval" state).

If the Public Citizen/Georgia Watch statistics on the impact of MICRA vs Proposition 103 in California prove incorrect, it would suggest to me that if # I and #II can be accomplished in Rhode Island, #III may prove to be either optional or even unnecessary.

*The Percentage of Physicians with Number of Malpractice Reports in the National Practitioners Data Bank (NPDB) between September, 1990 and December, 2002: One Report = 63.4% Two Reports = 20.2% 3-5 Reports = 13.4% 6-10 Reports = 2.5% >10 Reports = 0.5%

** a tort (from Old French, injury) is a "a wrongful act done willfully and negligently that injures another for which a civil suit can be brought."