Malpractice Reform a Double-Edged Sword

Aug. 20, 2009— -- It was supposed to be a 15-minute colonoscopy at a local clinic, but it turned into the nightmare of Michael Washington's life.

There was nothing unusual about the procedure, and even his wife Josephine, a registered nurse, had no cause to worry. But after two months of severe cramps, discolored eyes, and emaciation, Washington, a-70 year-old retired Air Force veteran, went to see an internal medicine doctor who told him that he had contracted an active case of Hepatitis C.

"I thought he had cancer," Josephine Washington told ABC News after witnessing her husband's unusual symptoms.

Washington's case was one of nine genetically linked cases of hepatitis C that was traced back to the clinic as a result of unsafe injection practices where syringes were reused instead of being disposed of. Along with those are an additional 105 cases that were possibly related and nearly 40,000 patients that were exposed to the infectious disease that afflicts the liver.

The next step for the Washingtons proved equally distressing, as they and other victims came to realize the harsh reality that they might not be able to hold the clinic accountable. Nevada's malpractice laws place a $350,000 cap on pain and suffering damages, dramatically reducing the value of pursuing these lawsuits for plaintiffs and their attorneys.

Nevada is one of many states that has capped non-economic damages as a part of medical malpractice reform in an attempt to alleviate high malpractice premiums for health care providers and to reduce costs in the health care system.

"Nevada was kind of a poster child nationally for why we must have some kind of reform to get rates down," said Adam Scales, a professor of torts and insurance law at Washington and Lee University School of Law.

Indeed, as the national health care debate continues into the fall, malpractice reform is expected to come to the forefront. But the question remains as to whether malpractice reform really works -- and who benefits the most.

A recent study by Americans for Insurance Reform, a national coalition of public interest organizations that support effective insurance industry reforms, suggests that limiting the liability of negligent doctors and unsafe hospitals is unjustified and would have almost no impact on lowering overall health care expenditures in the United States.

Malpractice Reform May Hurt Some Injured Patients

Not everyone agrees.

Lawrence Smarr, president of the Physician Insurers Association of America and a major proponent of malpractice reform, cited significant concerns and bias with the study.

"The AIR is primarily funded and sponsored by the trial bar," Smarr said, referring to a group of lawyers that typically supports unlimited monetary awards for patients in medical malpractice lawsuits, and thus is opposed to efforts to limit such awards.

Smarr takes issue with two sources of data used in the study, noting unrepresentative sampling because large self-insured hospitals were left out of the reporting data.

Smarr praised Texas, one of a handful of states that have instituted damage caps, for their success in reducing premiums for doctors.

Why Malpractice Reform?

The state of Texas has come a long way since 1994 when the American Medical Association said the state was in a crisis because there were too few doctors for the population, according to Sherry Sylvester, a spokesperson for Texans for Lawsuit Reform.

"Poor communities frequently had no obstetricians, no neurosurgeons and no orthopedic surgeons because of the risks," Sylvester said. "Now, since the reforms there has been a 69 percent greater growth rate in newly licensed physicians in the past two years compared to the two years prior to the reforms."

Dr. Javier Cardenas, an obstetrician in McAllen, Texas, is one such physician who credits the passage of a non-economic damage cap to his decision to return to his hometown.

"Because of the cap, my average yearly malpractice premiums have decreased from $58,000 to $26,000, and this decrease has allowed me to open up my own private solo practice, something that is hard for most obstetricians because of large overhead costs."

In the past six years, Texas has added 215 obstetricians, according to the Texas Medical Board's Analysis of Physician Demographics for the Texas Alliance for Patient Access, a lawsuit reform organization.

Nevada's Problem

In the Washingtons' home state of Nevada, high premiums were also an issue. Former Nevada Gov. Kenny C. Guinn said this problem required attention.

"Some in the ob-gyn community were carrying a heavy burden and everyone was getting nervous with no limits on the lawsuits," Guinn said, adding that "Insurance premiums for ob-gyns were around $25,000 to $27,000 and then suddenly they were up to $75,000 to $80,000."

Malpractice Insurance Prices Some Docs Out of Practice

The problem became so acute in the medical community that in July of 2002, a major trauma center in Las Vegas temporarily closed its doors because physicians resigned from the facility in response to their high liability risk.

"Our malpractice suits, rather heavy at the time, were creating a situation perceived or seen by others to be a concern for the medical profession," Guinn said.

The governor's response was to call in a special legislative session, where he was able to pass a malpractice reform bill titled "Keep Our Doctors in Nevada Act."

"Injured patients who are hurt by negligent actions of health care providers who have violated known rules, or known standards of care, are prevented from holding those negligent health care providers, fully accountable," said Bill Bradley, former president of the Nevada Trial Lawyers Association in response to the bill.

Drops in malpractice claims in states with caps often come as a result of patients being unable to launch lawsuits because some attorneys are unwilling to take on cases with lower monetary rewards.

"A medical malpractice lawsuit can easily cost a plaintiff's attorney $100,000 to litigate," said Adam Scales, a professor of torts and insurance law. "With a damage cap, there's often not enough money around to make it worth bringing the case. Damages caps make such cases non-economical to pursue, even when the case is very strong."

Without attorneys willing to launch malpractice lawsuits, patients are unable to get recompense. "The decision is made on that person's case before they walk into the courtroom," said Bradley.

Patients like the Washingtons, who found lawyers willing to pursue the cases, faced additional barriers.

Some of the documents needed for the trial from the Centers for Disease Control have not been released due to privacy laws protecting medical service providers and health insurers. In addition, the clinic also filed for Chapter 7 bankruptcy in July, causing the Oct. 19 trial date for the malpractice lawsuit to put on hold until further notice.

"I felt that the law is protecting bad doctors... they are free to continue practicing and they can be underinsured and other people can still be exposed," said Josephine Washington.

The Battle on the Horizon

As the Washingtons and others in Nevada continue their efforts to combat the malpractice laws and to seek justice, a major malpractice reform battle could materialize after the congressional recess ends and this time the battles lines may not be as clear as they've been in the past.

The New York Times reported in June that in private talks with the American Medical Association, President Obama made the case that the reduction in malpractice lawsuits could help in lowering health care costs.

The AMA endorsed the health care reform effort in June, despite no public commitment from leading democrats or the president on whether their signature issue of curbing malpractice lawsuits would appear in the health care bill.

AMA President Dr. James Rohack in a statement to ABC News asserted that "medical liability reform will help doctors implement best-practices in patient care and reduce unnecessary health costs."

Sen. Judd Gregg, R-N.H., who has introduced malpractice reform legislation in the past in the Senate, made similar assertions about the importance of malpractice reform.

"You can't do health care reform unless you have medical malpractice reform included," said Gregg.

The senator also expressed doubt about Obama's openness to malpractice reform.

"It would be nice if the president was actually supportive," said Gregg.

As the debate continues, the question still remains as to whether malpractice reforms will make it into a Senate bill in the fall.

"There is no effort right now for compromise or bipartisan work on the health care bill," Gregg later added. All of Gregg's markups relating to malpractice reform in the Kennedy-Dodd bill have been rejected.

It seems clear that any bill will need to balance the interests of doctors who try to do their jobs without the threat of litigation and high malpractice premiums, with the rights of patients to seek complete justice for doctors' negligence.

For physician Cardenas, it was a matter of being able to practice back in McAllen, Texas. "This is my home; my ancestry goes back about eight generations."

But for Josephine Washington to see her husband go through so much pain while the clinic's doctors remain unaccountable, she said, "You have to hit them where it hurts them the most. That will change their minds and get them to practice better medicine."