Home / Cover Story / Long-term reforms stalled in 2003

Long-term reforms stalled in 2003

By Christopher Guadagnino, Ph.D.

If Pennsylvania’s physicians felt helpless and exasperated near the end of 2003, they had very good reason. Physicians spent the entire year expecting to gain relief from oppressively high – and still-increasing – medical malpractice insurance premiums, moving from a mood of expectancy and hope at the beginning of the year to one of anger and unified resolve mid-year, to bitter disappointment as the end of the year approached.

Physicians had endured an entire year of being denied relief from their spiraling malpractice premiums – either short-term premium abatement or long-sought tort reforms. Accentuating the sting was something every Pa. physician held in his or her hands at the end of the year: an MCARE bill telling them to pay in full by Dec. 31, despite a year-old promise by state leaders that they would see an abatement. As for long-term tort reform success, physicians were left empty-handed.

Reports emerged toward the end of the year – as they did the previous December – that some physician groups in high-risk specialties would be priced out of practice unless they saw relief. Many physicians had applied for out-of-state licenses in case they had to move. Others could not afford to pay the tail on their claims-made policy if they left the state, as their primary carrier requires.

In 12 months, expressions of powerlessness and resignation seemed to replace acts of protest and defiance at at least one surgical practice. Delta Medix, the Scranton surgical practice that had cut off surgery and ceased to schedule patients for a month in late 2002, had no such plans in late 2003, having paid dearly for the action. The Associated Press reported the practice’s chief executive saying, “When we came back in January, there were no patients 85 It took until February to gear back up … You can’t fight this battle every day.”

Late consolation came as MCARE abatement finally passed near the end of December. All tort reform proposals – including caps on noneconomic damages in malpractice cases – were tabled until 2004 as Senate leaders had refused to allow a vote on a caps bill – or any other tort reform – in 2003.

The sullen mood of many physicians near the end of 2003 contrasted starkly with the strength and optimism they projected in late April and early May of last year during the Code Blue Emergency rallies and office closures, which marked a watershed of physician unity and potency as a political force to be reckoned with. Now, eight months later, many physicians may wonder what happened to that clout, having seen little visible progress toward malpractice reform goals and nearly losing MCARE abatement relief which looked like it was in the bag early on.

A number of factors retarded progress: an unusually long standoff on the state budget that diverted legislative attention away from the malpractice issue and complicated efforts to secure a funding source for abatement; the medical community continued to lobby for passage of a stronger version of abatement than was proposed by the Rendell administration, and then only if caps accompanied it; some Republican legislative leaders said they would not pass abatement in the absence of long-term reform, while others were hostile to caps; and – as always – the medical community continues to be outspent by several magnitudes by the trial lawyer lobby.

And yet, important groundwork was laid over the past eight months for this year’s renewed push toward long-term malpractice liability relief.

MCARE Abatement Saga

Gov. Rendell’s proposal in early 2003 to abate MCARE premiums for physicians and to pay for it with surpluses of the state’s Blue Cross and Blue Shield plans ran into opposition by the Blues, and provoked doubts by legislators, Pa. business chamber groups and employer groups about the legality of such a state assessment, according to Office of Health Care Reform (OHCR) Director Rosemarie B. Greco. A bond funding source had also been explored by the administration early on, which would have required a revenue source to service the debt and pay interest, says Greco, who adds that the OHCR in March put a cigarette tax option on the table to fund the debt. Other abatement funding options were proposed, including a general tax and a surcharge on patients in physician offices, says Greco. The OCHR sized up all proposals and shelved the bond fund option in May.

Rendell officially outlined an abatement formula without a funding mechanism, as part of his long-awaited medical liability reform plan released in early June, with funding to be resolved through the state budget deliberations for fiscal year 2003-2004. The proposal included MCARE abatement at 100 percent for obstetricians, general surgeons, neurosurgeons and orthopedic surgeons and 50 percent for all other physicians for 2003, 2004 and 2005, and authorization of the Insurance Commissioner to extend or adjust the MCARE abatement formula for year 2006 and beyond. The proposal also called for an additional $25 million per year through Medicaid disproportionate share funding to trauma centers.

Implementation of Rendell’s abatement proposals ended up being stymied until the end of the year because the administration and legislative leadership had agreed to determine the abatement funding source as part of resolving all other budget matters, including education, property tax reform, economic development stimulus package and PACE Reform, says Greco. From June through November, there were over two dozen meetings between legislators, their staffs and the Rendell administration on abatement funding scenarios, while the legislative leadership had asked that Rendell not disclose potential funding sources under discussion, says Greco.

Toward the end of the year, Pa. was the only state in the country without an approved and implemented fiscal budget, says Greco, and physicians had seen their MCARE bills deferred three times while budget gridlock continued in Harrisburg.

Physicians were sent a reminder of that gridlock in mid-September, when they received both an invoice from their malpractice insurers for the full cost of MCARE coverage and a letter from the Insurance Department expressing optimism that abatement would be resolved by the Legislature and requesting that the four high-risk specialties withhold payment for their MCARE assessment and that all other physicians pay half, as per Rendell’s relief proposal. The letter also cautioned that assessment for the full amount would be required if no abatement legislation materialized.

Physicians were greeted after Thanksgiving with exactly that: an MCARE bill to pay in full. In a Nov. 25 letter to physicians co-signed by Greco and Insurance Commissioner M. Diane Koken, the MCARE Fund instructed physicians that the Legislature had not yet enacted abatement and that the law required their MCARE assessment to be paid in full on Dec. 31, and expressed regret that the assessment would place hardship on many physicians and potentially affect patients’ access to care. The letter also deferred physicians’ 2004 MCARE assessment to April 1, 2004 “in an effort to alleviate the strain of paying two years’ Mcare assessments at once.”

Abatement did come before year’s end. Pa. lawmakers finally hammered out a budget deal in late December, which earmarked a 25-cents-per-pack increase in the cigarette tax to fund MCARE abatement, using the abatement amounts of Rendell’s proposal and also giving 100 percent abatement to family practitioners who deliver babies, to emergency doctors in trauma centers, and to nurse midwives. Rendell’s proposal to extend abatement to three years, according to Greco, had been based on projected trends in the potential availability and affordability of malpractice insurance for the next three to five years. The abatement that ultimately passed is only slated for two years: 2003 and 2004.

Uphill Road to Long-Term Relief

Recommendations by the 30-member Rendell Medical Malpractice Insurance Crisis Task Force released in early April of 2003 had stunned a hopeful physician community by failing to recommend what physicians regard as a key tort reform: limiting noneconomic damages. The Task Force had even polled 25 malpractice insurers, asking why they had withdrawn from Pa. or had decreased their underwriting activities, as well as what changes would make Pa. a better place for them to do business. All of the insurers interviewed said that caps on noneconomic damages would be the primary change of most significance.

The Task Force has ceased to function since it released its recommendations, says Greco.

Physicians felt betrayed that Rendell did not permit the Task Force to vote to recommend caps, or any solution for which there was not a consensus. That feeling of betrayal galvanized county medical societies, medical specialty societies, hospital medical staffs and various physician groups across all specialties and regions in Pa. to launch a series of rallies with the goal of persuading the public that tort reforms were needed to keep their physicians in practice – including $250,000 caps on noneconomic awards and limits on attorneys’ contingency fees, forgiveness of the full 2003 MCARE Fund payment for all doctors, removal of MCARE’s multi-billion-dollar unfunded liability, and reduced levels or outright elimination of required liability coverage. Accompanying the rallies were widespread office closures (albeit with backup channels for coverage) intended provide patients with a glimpse of what will happen to their access to medical care if reform does not come soon.

The impact of the Code Blue Emergency events on legislators was hard to gauge. Some spoke supportively at the rallies. Some introduced tort reform legislation in 2003. Some resented the pressure tactics. Others were perplexed by further demands on the heels of a series of tort reforms passed in 2002.

Many legislators were waiting for Rendell, who openly criticized the goals and tactics of the protest and called physicians “obsessed” with caps, to issue his medical liability reform plan.

Not surprising to physicians, the plan Rendell released in June did not include caps on noneconomic damages, although it did include a request to cap attorneys’ contingency fees. Specifically, most of the plan’s tort reform proposals came in the form of requesting the Pa. Supreme Court to do the following:

· Establish guidelines to be used in considering Motions for Remittitur for non-economic jury awards (allowing a judge to reduce a damage award according to court rules).

· Implement the timelines previously prescribed by Act 135 for controlling the delays in malpractice cases.

· Require plaintiffs to file a copy of the medical malpractice complaint, and requiring defendants to file a copy of the answer with the licensing boards.

· Limit contingent and referral attorneys’ fees in cases involving bodily harm or death.

· Prohibit the sealing of court records of medical malpractice cases to preclude examination of records by physician licensing board staff.

· Implement the voluntary mediation previously prescribed in Act 135 of 1996.

· Monitor timeframes and amount of awards by jury verdicts and develop templates to collect data on medical malpractice case settlements and jury awards.

In late June, Pa. Supreme Court Chief Justice Ralph J. Cappy appointed Justice William H. Lamb to develop a plan to implement a voluntary medical malpractice mediation program, which Justice Lamb said had the full and unanimous approval of the Supreme Court. Cappy also selected Allegheny County Common Pleas Court Judge R. Stanton Wettick, who serves as chair of the Supreme Court’s Civil Procedural Rules Committee, to chair an ad hoc “think tank” comprised of two plaintiff’s attorneys and two defense attorneys charged with reviewing Rendell’s other requests and to issue recommendations to the Court. In addition, Cappy has appointed the Court’s Administrative Office to look into the timeframe monitoring proposal, while the Court has held discussions with the Office of Health Care Reform and Office of General Counsel to develop a means of collecting medical malpractice statistics.

Chief Justice Cappy did not define time limits for completion of these projects, and no announcement had been made about them as of late December. The Office of Health Care Reform (OHCR) said it expects a response by early January, according to its director, Rosemarie B. Greco.

Proposals to ease the standard of Remittitur also continue to await legislative action in both the House (HB 1719) and Senate (SB 862). Bills have also been introduced to impose limits on malpractice plaintiff attorney fees using a sliding scale, and to adopt a constitutional amendment permitting such limits (HB 702, HB 703, SB 806). The Pennsylvania Medical Society (PMS) believes that attorney fee caps have to be approved by a Supreme Court rule, but also believes that any public attention to the issue that legislative discussion and debate may produce is needed to get the court to take the proposal seriously, according to PMS Executive Vice President Roger Mecum.

Another of Rendell’s proposals has been put into effect: requiring managed care plans to explain their physician reimbursement rate methodology as part of their annual reports to the Department of Health.

A Rendell proposal to expand the Pa. Insurance Department’s authority to regulate primary malpractice insurer premiums was passed by the Pa. House in mid-September. HB 865 requires Insurance Dept. approval of premium increases, permits the Dept. upon request to hold informational hearings on rate increases over ten percent, permits the Dept. to review changes in an insurer’s underwriting principles and claims data, and prohibits insurers from raising premiums if a lawsuit is brought and subsequently terminated. A similar bill is still pending in the Senate.

Rendell’s plan also proposed better communication between MCARE and primary insurance companies to facilitate early settlements, as well as a number of patient safety proposals, most of which were, as of late December, still in the form of pending legislation and ongoing coordination with state agencies.

The medical community has continued to pursue the rest of its tort reform agenda in the Pa. legislature. Goals of the PMS, as outlined by Mecum, include:

· Secure full MCARE abatement for all physicians.

· Amend the Pa. Constitution to allow caps on noneconomic damages in malpractice cases.

· Eliminate or reduce the state-mandated $1 million malpractice insurance for physicians.

· Implement a sliding scale of contingency fees for malpractice plaintiffs attorneys.

· Explore pilot projects for alternative systems for handling malpractice lawsuits.

In June, on the heels of the Code Blue rallies, the House passed HB 1326, permitting a constitutional amendment to allow caps on noneconomic damages. Preoccupation with the state’s budget and opposition by key Senate leadership to bring the issue to a vote kept that legislation stymied for the remainder of 2003, says Senate Majority Whip Jeffrey Piccola (R-Dauphin). The PMS had also stuck to its insistence that any MCARE abatement be accompanied by a caps amendment. Among those publicly opposing caps on damages were Senate Majority Leader David “Chip” Brightbill (R-Lebanon), Senate President Pro Tempore Robert Jubelirer (R-Blair) and Senate Judiciary Committee Chair Stewart J. Greenleaf (R-Montgomery).

Senate leaders have pledged to debate the caps bill, and other long-term tort reform measures, in 2004.

Pa.’s hospital and business communities have stuck with the PMS’s pursuit of a vote on the Senate caps bill, says Mecum. The current version of a Senate caps bill applies to all forms of tort, including product liability cases, whereas another version introduced by Sen. Connie Williams (D-Montgomery/Delaware) had restricted caps to medical malpractice. Williams – a rarity as a Democrat who supports caps – says she was initially uncomfortable with a broad tort caps bill but has since become supportive of the concept and believes that there may be additional constitutional hurdles to singling out malpractice for caps.

Although Williams concedes that the Senate Democratic Caucus is not supportive of a caps amendment bill, she says there is some Democratic support for it and is optimistic that it will have enough votes to pass because of anticipated non-votes by some Republicans and because lobbyists have kept up organized pressure for tort reform over the past eight months, including grassroots lobbying by physicians.

Also in June, the House passed HB 158, called a patient safety measure by its sponsor Nicholas A. Micozzie (R-Delaware), which would profile physicians’ malpractice lawsuit histories on the Internet. Under the bill, physicians would be forced to submit information on any claim resulting in a jury verdict or settlement of $50,000 or more within the last ten years to the state’s medical licensing boards, which, along with a comparison to the malpractice experiences of other physicians in the same specialty, would be published on the Department of State’s Web site.

The bill also contained several provisions favorable to physicians that came in the form of health and malpractice insurance reforms pushed by the Pennsylvania Orthopedic Society (POS), according to lobbyist Jonathan Bigley. One amendment grants a 15 percent discount in premiums from the Joint Underwriting Authority to physicians who cannot find a private malpractice insurance carrier and haven’t had any malpractice claims filed against them in the past five years. Another requires malpractice insurers to notify insureds of nonrenewal 90 days in advance, up from 60 days previously, and requires them to notify insureds of premium increases 60 days in advance, up from 30 days. A third requires health plans to disclose their fee schedules and the methodology of how those schedules are determined. A fourth amendment prohibits a variety of downcoding by health plans by requiring that they adhere to Medicare reimbursement policies on multiple surgical procedures.

Bid for Consensus Fails

In late 2003, staffers of Senate leaders Brightbill and Jubelirer had tried to bridge the gaps between key stakeholders on issues of malpractice reform by forming a work group. The positions of various interest groups on different proposals highlight the difficulty – or perhaps the futility – of achieving compromises on those issues this year.

Between September and November of 2003, about eight meetings of the group were attended by representatives of the physician community, the Rendell Administration, the Hospital & Healthsystem Association of Pennsylvania (HAP), the Pennsylvania Trial Lawyers Association (PaTLA), the Insurance Federation of Pennsylvania and the Pennsylvania Chamber of Business and Industry, according to Drew Crompton, a top staffer to Jubelirer.

The group was convened in an attempt to look for middle ground proposals that did not alienate any of the interest groups represented, says Crompton. That proved impossible to do on the issue of noneconomic damage caps, he notes, while the issue of MCARE abatement – which all parties supported – was taken out of the discussion, to be treated in a separate forum.

Interestingly, the Senate staffers floated the idea of attaching the level of pain-and-suffering awards to some kind of point system which would dictate the amount awarded, says Mecum, who attended the meetings. The PMS regarded a point system as overly rigid and vulnerable to constitutional challenge, he notes. When PMS suggested more flexible language for the point system idea, PaTLA called the suggestion worse than caps, Mecum adds.

The group failed to achieve consensus on other proposals, according to attendee Jim Redmond, HAP’s senior vice president of legislative services – including limiting attorney contingency fees; eliminating or reducing mandatory malpractice insurance requirements; establishing special malpractice courts, an early offer system or pre-trial screening panels; and establishing a limited tort option for patients with a patient surcharge for the higher tort option.

While the PMS supports lowering physicians’ malpractice insurance requirements, HAP does not, out of concern that hospitals could become the “deep pocket” pursued by malpractice plaintiffs should staff doctors be allowed to carry less insurance coverage, says Redmond.

The Insurance Federation favored special courts, as did HAP, while PMS withheld a formal position until the proposal had more details, and PaTLA opposed it, noting that the regional districts of special courts would dilute the jury pool from any one county and be unjust to Philadelphia victims, who would never have an all-Philadelphia jury.

PaTLA proposed increasing mandatory insurance requirements and repealing Pa.’s recent joint and several liability law, which limits malpractice exposure to a party’s proportion of assigned blame. The law is currently under challenge before the Commonwealth Court as violating the single subject rule (it was amended to what critics say is an unrelated bill), and PaTLA feels there is a good chance that it will be declared unconstitutional, says Mark Phenicie, PaTLA’s legislative counsel.

PaTLA also proposed allowing both plaintiff and defense attorneys to recommend damage award levels – both economic and noneconomic – to juries, according to Phenicie. “The PMS did not seem to have a major problem with that, except that we proposed it,” although the Insurance Federation expressed concern that the practice would extend to other realms of tort, such as automobile, Phenicie adds. The Insurance Federation supported the PMS’s position on caps.

While the staffers hoped the meetings would produce a document of proposals, only an informal package of ideas emerged, which has not been publicly released or put into draft language for any bill. Because of the intense focus on caps and abatement at the end of 2003, the group’s organizers felt the package was not time-urgent and was better addressed in 2004, and there is a “strong possibility” that the group will meet again, says Crompton.

Legislative Slog Ahead

Despite achieving very little movement on tort reform in 2003, the Politically Active Physician’s Association (PAPA) says it has grown stronger, with a current membership of 5,000, up from 1,500 in May, and a greater presence in northeastern Pa. and other regions of the state, says Anthony V. Coletta, M.D., PAPA’s statewide coordinator. The organization has built up its website to include district maps offering direct links between physicians and the offices of their local legislative representatives. During the last several months of 2003, the group has focused mainly on abatement and caps.

Coletta notes that PAPA has looked at various long-term malpractice reform proposals, including those contained in the Pew Project reports and elements of existing bills, and he says the group is holding active discussions with the Office of Health Care Reform and plans to release a detailed proposal in January.

“We haven’t faded away,” Coletta declares, reaffirming the vision of a “physician pyramid” whereby physician offices become conduits to educate patients and encourage them to contact legislators on the need for tort reform. He says that it takes a lot of resources to identify and bring on board physicians in the districts of key legislators – like Brightbill and Jubelirer – to such a focused degree that it will get legislation moving, and believes the concept is still a viable one.

In a late-December email to members, PAPA wrote, “There are only a few in the Senate who refuse to recognize the crisis for what it is. They continue to listen to those who benefit from the lack of a cap on insurance settlements. We will notify you as to who those Senators are, since possibly half are up for reelection this primary. They need to be taught that public health comes first. We will help you do that.”

Physicians have also gained more political experience last year during the November elections. In late summer and early fall, the PMS had expended considerable effort organizing physician support to elect Judge Joan Orie Melvin, a Republican whom the PMS perceived to be sympathetic to the medical provider community on malpractice issues, to the Pa. Supreme Court. The election marked the first time the PMS had solidified a grassroots program for physicians to work the polls, says Mecum, and the campaign carried traditionally Democratic areas of the state and offered fresh motivation for physicians to get involved in the political process. The Orie Melvin campaign was also supported by other medical societies and the business community, but was done in, Mecum says, by the concurrent Philadelphia Mayoral race, which helped secure a wave of votes for Orie Melvin’s Democratic opponent, Judge Max Baer.

Mecum declares, “We are still in Code Blue,” noting that lobbying by physicians and their patients are still central to the reform campaign, particularly as access to obstetrical and specialist care continues to erode and emergency rooms remain overcrowded. He notes that many hospital medical staffs are now channeling their dues to PMS’s lobbying organization, PAMPAC.

PaTLA is also lobbying in full force, with messages that there are more physicians in Pa. than in previous years, not less, says Williams. It was PaTLA’s opposition to caps that has prevented a Senate vote on a caps amendment or any long-term tort reform, says Piccola, co-sponsor of the Senate version of the bill (SB 50).

The success that physicians have had in getting a number of tort reforms passed in 2002, Phenicie argues, is a key impediment to physicians securing further reform. Says Phenicie, “A number of legislators were and are tired of physicians constantly in their face saying they have not done enough for them – after Act 13, venue, joint and several, certificate of merit and frivolous suits.”

Although it did not oppose MCARE abatement for physicians, PaTLA plans to continue to oppose caps vigorously – which it says only serves to limit the rights of seriously injured people – and continues to press for measures to enhance patient safety, says Phenicie. He maintains that, although Act 13 mandates that hospitals give written notice to patients of serious medical errors, such a notice has been issued only five times in the past year and a half. PaTLA is pushing for harsher noncompliance penalties and greater enforcement of the provision and Phenicie expects legislation to that effect to emerge this year.

PaTLA also supports a measure to collapse the Joint Underwriting Association’s 16 physician current rating class categories into no more than three classes (SB 990), spreading malpractice insurance premiums such that high-risk specialists would pay less and lower-risk physicians would pay more. Phenicie says that a recent actuarial analysis of the proposal would increase premiums for family physicians by about 20 percent, but would decrease premiums for physicians in high-risk specialties by as much as 50 percent.

The PMS opposes the measure, arguing that shifting more cost to lower-risk practitioners such as family doctors does not fix the problem of skyrocketing rates, would be punitive, would likely hit rural doctors the hardest and could thereby result in reduced patient access to health care, according to PMS president Jitendra Desai, M.D. The Pennsylvania Academy of Family Physicians opposes the measure for similar reasons.

The Pennsylvania Orthopedic Society, on the other hand, supports the measure. HAP has not objected to proposed changes in the number of risk categories in the past, but says a reduction from 16 to three goes beyond a reasonable level that can be justified in the current malpractice insurance system.

The POS also supports a bill to adjust malpractice limits to a physician’s experience rating (SB 286), provided that lawsuits deemed to be frivolous do not factor negatively against a physician, and that a peer review component be added to the index, according to Bigley. The PMS said it supports the measure. HAP does not object to it, but believes its impact would be minimal because most insurers already surcharge physicians with claims experience.

Measures to establish alternatives to the current medical malpractice system have been introduced, but have not attracted much attention thus far, including bills to establish special malpractice courts (HB 23 and SB 204), one to implement a pre-trial screening panel (HB 22) and a measure (SR 160) to study the feasibility of alternatives such as medical malpractice courts, no-fault administrative systems and peer review systems. The bills draw from findings of Pew Project studies that argue for the advantages of alternative systems.

Bills to lower the amount of mandated malpractice insurance coverage have been introduced in both the House (HB 21) and Senate (SB 266), which the PMS supports in concept, with the caveat that language be added to prevent other entities, such as hospitals, from requiring higher limits, and that physicians realize that their personal assets may be at risk if they elect to carry lower coverage levels and are sued for malpractice, says Mecum.

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