Liability Reform Simmers in State, Federal Capitols

Comprehensive medical liability reform that includes caps on noneconomic damages -- a searing issue two years ago -- has cooled this year, as state and federal lawmakers and constituent chapters begin the current legislative session. To date, 26 medical liability-related bills, out of more than 3,600 health-related bills, have been introduced in state legislatures.

The AAFP continues to advocate comprehensive medical liability reform, however. In early January, an Academy-inspired coalition of 10 health care organizations called on Congress to implement medical liability reform legislation as one of 11 principles for restructuring America's health care system. Similarly, constituent chapters are calling for incremental changes that will ease the medical liability burden for their members.

The relative inactivity on liability reform by state and federal governments may reflect successful constitutional challenges to caps on noneconomic damages, a softening insurance market or a legislative pause as lawmakers take time to assess the impact of previously passed legislation, say observers.

In several states, previous legislation that capped noneconomic damages has been found unconstitutional. "In those states that have no chance for implementing a cap on noneconomic damages, they are looking at alternative methods, such as health courts, dispute resolution or patient compensation funds, as viable options" to restrain growth in malpractice insurance premiums, said Diana Ewert, AAFP senior manager for state government relations.

Lagging interest in comprehensive reform also may reflect a moderation in liability premiums. A 2006 Medical Liability Monitor survey found that rates, although "still at record-level highs," had leveled off in most areas. The survey showed that 69.5 percent of changes reported by respondents were categorized as "no rate change" or "rate decrease." That percentage is "up significantly" from 34.5 percent in 2005, wrote Kevin Bingham, rate survey editor, in the October 2006 issue. Moreover, companies that increased rates had smaller premium hikes than in previous years. "In some states, we are seeing the first signs of rate decreases and competition from new entrants," he wrote.

Some of the premium moderation stems from liability reform passed one or two years ago, the publication notes, pointing to Texas as an example. There, "the medical liability reforms enacted in 2003 by the Texas legislature and the passage of Proposition 12 (a constitutional amendment that authorized the legislature to determine noneconomic damages) have had a favorable impact on both the cost of medical liability coverage and the availability of health care," wrote Bingham.

It's a lesson not lost on state lawmakers, Ewert observed, "Some states are waiting to see how the issue shakes out in response to laws that have been enacted in the last two or three years," she said.

Despite the Jan. 10 introduction of national medical liability reform legislation by Sen. John Ensign, R-Nev., the ascent of Democratic majorities in Congress does not bode well for federally legislated medical liability reform, according to Ewert.

"In the next couple of years, comprehensive federal tort reform is not likely to happen because the leadership in Congress now has other legislative priorities," she said.

Like Ensign's Medical Care Access Protection Act of 2006, which was blocked by Senate Democrats last year, his most recent medical liability reform effort is based on reform laws enacted in Texas in 2003. The bill would cap noneconomic damages at a total of $750,000 and limit attorney's fees, and it includes an expert witness provision.