Local Lawyers Mull Malpractice Melee

Insurance Increases
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Some local plaintiff lawyers cringed when President Bush gave a speech on Jan. 5 in Collinsville, Ill., touting medical malpractice reform.

They hope the U.S. Senate won’t pass legislation limiting jury awards during its current session, which began Jan. 4. Among other things, Bush wants a federal ceiling of $250,000 on non-economic awards in medical malpractice cases. Non-economic damages, also known as compensatory damages, are jury awards for pain and suffering.

The federal proposal for caps has already been approved by the House of Representatives twice, but it died quickly in the Senate. With four more Republicans in the Senate now, there’s a greater chance federally mandated caps will become law.

Timothy Brooks, a lawyer with the Taylor Law Firm in Fayetteville, said a federal cap at Bush’s proposed level “would have an extremely chilling effect on a plaintiff’s ability to bring a malpractice case.”

“The ultimate reward for possibility of a judgment has to justify the amount of money that you put into it,” Brooks said. “While they’re selling caps as a way to rein in health care cost overall … that’s not really what it’s about. It’s about deterring lawyers from taking cases.”

Malpractice defense lawyer Walter Cox, senior partner of the Cox Law Firm in Fayetteville, said he’s not sure if federal caps on non-economic damages are a good thing. Arkansas juries are conservative and don’t tend to award outrageous sums, he said.

On the other hand, Cox said, there are parts of the country where medical specialists won’t practice for fear of extravagant malpractice awards.

Of course, Brooks and other plaintiff lawyers worry about their business and if they will have to significantly reduce their work in “med mal,” industry parlance for medical malpractice.

But on the state level, there’s still plenty of debate over whether or not the 2003 Arkansas tort reform has applied a tourniquet to the gushing artery of insurance premiums.

State Reform

The 2003 Arkansas tort reform passed with the idea that it would limit skyrocketing insurance rates, particularly rates for the health care industry.

Act 649, also known as the Civil Justice Reform Act of 2003, modified defendant liability and tightened the burden of proof in malpractice cases, among other things. The law does not put a state cap on compensatory damages.

It did cap punitive damages at $250,000, but those damages are more applicable in suits where a jury seeks to punish an offender, and not so much in malpractice cases.

The Act has already faced legal challenges. In April, a coalition of the Arkansas Advocates for Nursing Home Residents, the Arkansas AFL-CIO, the Arkansas Trial Lawyers Association and individual plaintiffs asked the Arkansas Supreme Court to declare the law unconstitutional, but the Court threw out the case in June.

David Wroten, assistant executive vice president of the Arkansas Medical Society, a proponent of the Arkansas law and of federal caps, said it may be too early to tell for sure if the Act has slowed insurance rates. He thinks it will take at least another two years to get a good fix on the law’s repercussions.

The law is nearing its second anniversary. After March 25, every medical malpractice lawsuit filed in the state will fall under it. But for the last two years, most malpractice cases have fallen under the old law, Wroten said, so comparisons are a little premature.

According to a Nov. 1 report prepared by the Arkansas Insurance Department for the Legislative Council and the Arkansas General Assembly, there are only five companies writing new policies for physicians and surgeons in the state. All five had rate increases during 2003 or 2004, anywhere from 4 percent to 100 percent (see chart, p. 15).

But Wroten said the 100 percent increase by Preferred Professional Insurance Co. was probably due to the fact that they’re new to the Arkansas market and may have under priced to begin with. So with that exception thrown out, physician and surgeon insurance rates could have gone as high as 23.2 percent since 2003, according to the document.

The same report said, prior to the law, that companies offering malpractice insurance in the state had increases anywhere from 6.8 percent to 97.5 percent during the period from 1999 through 2002. Filings for increases with the AID were “virtually nonexistent” prior to 1999, the report said.

William Lacy, property and casualty division director of the AID and author of the report, said that of the five companies writing new policies in the state, only three are actively doing so, and that the other companies listed are merely renewing existing policies for doctors.

Malpractice Maladies

Another Fayetteville lawyer, Don Elliott of Odom & Elliott PA, believes a federal cap on non-economic damages would have a damning effect on those with the least amount of resources — children and the elderly.

Many firms simply would not be able to accept medical malpractice cases from the very young or old, Elliott said. Both groups have little or no ability to show long-term economic damages. Therefore, those groups would be awarded lower damages, and with capped pain and suffering damages, a case may simply not be feasible for a firm to accept. An average trial case can cost $25,000.

Elliott speculates the number of malpractice cases taken to trial after the two-year anniversary of reform will drop.

A check of the number of med mal cases on either side of the 2003 law shows they were down to 10 cases filed in 2004 from 17 cases filed in 2002, according to the Benton County Circuit Clerk’s office. Comparable numbers in Washington County weren’t available because the office has a different filing system.

Those two years alone in Benton County are not precise indicators, and lawyers say it will be a couple of years before they know how their business will be affected.

Cox said he’s seen an increase in his defense practice with people trying to get in under the two-year statute of limitations. He said an average cost of defense is difficult to peg, but that $50,000 is not uncommon.

Brooks said he has an average of five contacts a week regarding possible malpractice suits, and that number hasn’t slowed since tort reform. Of those, about 10 percent are cases that eventually make the grade to be a lawsuit, he said.

Brooks has between 25 and 30 med mal cases open, with about 12 of those in various stages of litigation, he said.

His firm usually invests a minimum of $25,000 to take a simple case all the way to jury trial. If a case is complicated and requires multiple experts, it could reach the $50,000 range quickly, he said. At that mark, and with caps in place, a malpractice suit would probably not be economically feasible, Brooks said.

Elliott’s experience is similar. He gets two to three calls a week, and ended up with about five med mal cases last year. He had a total of 10 open in early January.

“I’ve been pretty picky,” Elliott chuckled, “especially under the new Act.”

He said the average minimum his firm has in out-of-pocket expenses for malpractice is $30,000 to $50,000 for a case to go all the way to trial, and that’s assuming he can win in court.

“Experts are very, very expensive,” Brooks said. A case he had last year ran in to the six-figure range just in expenses, he said.

Brooks said it’s ironic that proponents for the 2003 tort reform talked of possible diminished access to health care if the law didn’t pass.

“It’s just a bunch of hogwash,” he said.

“Every single week, you see newspaper ads of new doctors moving to town. That argument alone didn’t justify the need for tort reform,” he said.

Elliott said the change in joint and several liability is one of the biggest hindrances to malpractice suits post Act 649.

“What that means is now as a plaintiff lawyer, I have to sue every doctor, every nurse, every hospital that was involved…” he said. “So instead of reducing litigation, from that standpoint, the new act has actually increased litigation and will cause more doctors to be sued than under the old act.”

Elliott said his assistant told him that she wished President Bush could sit in their office and listen to the calls they get.

“She said the calls are still as much as ever. She said, ‘I wish he could hear the people who call in and say [they’ve] missed three weeks of work because the doctor made a mistake.'”