Diagnostics & Imaging Week Washington Editor

WASHINGTON – Tort reform may be a pressing imperative for many in the private sector, but a hearing in the House of Representatives last week suggests that while many interesting ideas are making the rounds, Congress may not be able to push through a bill this legislative cycle if the divided expert opinion is any indicator.

In his opening remarks during the session, the chair of the House Committee on Energy and Commerce's health subcommittee, Rep. Nathan Deal (R-Georgia), commented that "it is increasingly difficult to ignore the fact that our medical liability system is broken," and argued that "needed reform is continually being opposed by those who stand to profit handsomely from the status quo."

Deal complained that the cost of malpractice insurance was driving practitioners into other fields and depriving some rural areas of needed medical services. "When people are dying because a trauma center was closed [due to malpractice insurance costs], there's a problem." However, he added that "the problem has no single source" and that "no magic bullet exists" that will eliminate high malpractice insurance premiums.

Diana DeGette (D-Colorado) told Deal that she was "disturbed that while you say you want to work on a bipartisan basis … you put the blame on Senate Democrats for inaction," a reference to, among other things, the Senate's rejection of H.R. 5. However, she also admitted that the current chair of the subcommittee was "more flexible" than his predecessor.

H.R. 5, a bill known as the Help Efficient, Accessible, Low Cost, Timely Healthcare Act of 2005, was approved by the House last July 28 largely along party lines, but stalled in the Senate. H.R. 5 would eliminate punitive damages unless the plaintiff could prove that the defendant acted with "malicious intent to injure," according to the Library of Congress web site, and would indemnify "a manufacturer, distributor or supplier of a medical product that has been approved" by the FDA unless the plaintiff can prove one of the following: non-compliance with labeling or packaging regulations; misrepresentation or withholding of information from the agency of information related to the claim; or that the defendant made an illegal payment to an FDA official to secure approval of the product."

However, DeGette alluded to the possibility that malpractice was not a rot upon all of healthcare. "Our [malpractice] system is not perfect," she commented, but noted the need for a system that addresses "the small number of doctors who are responsible for the majority of medical malpractice."

A number of other members of the subcommittee chimed in and Deal remarked that they were "the most encouraging opening statements I've heard in a long time."

Michelle Mello, PhD, associate professor of health policy and law at the Harvard School of Public Health (Boston) recited some of the better-known numbers on medical liability, including the allegation that "less than 5% of patients who are seriously injured by medical negligence file malpractice claims." She commented that nonetheless, "the system hemorrhages money" as a consequence of the current state of tort law.

Mello made the case that "the most promising reform approaches are those that create alternative processes for dispute resolution," including health courts and "early-offer" programs, an approach also recommended by panelist Jeffrey O'Connell, law professor at the University of Virginia (Charlottesville), who said that legislators such as those on the committee must deal with "a world of competing sorrows." He also recommended that "you and your staff should be very rigorous in questioning everyone who comes before you" with proposals to deal with tort reform.

O'Connell said the current system "protects everyone but those who need it most," the patients whose losses exceed "any applicable private or public insurance coverage." He argued for "early-offer reform," a system that would allow a defendant to offer a patient, within 180 days after a claim is filed, "periodic payment of a claimant's net economic losses as they accrue." These would include lost income and expenditures on medical care and rehabilitation that are not already covered by insurance, as well as attorney's fees.

The plaintiff would not be required to accept such an offer but would be prevented from seeking further economic damages if they accepted. If the plaintiff refused, the standard of proof of misconduct would be raised, requiring demonstration of gross negligence beyond a reasonable doubt.

However, the seven-member panel was not unanimous in its support of serious reform. Joanne Doroshow, the executive director of the Center for Justice & Democracy (New York), argued that "most victims with whom we work resolved their cases through informal, pre-trial settlements," but objected to any requirement that "cases be heard in informal settings, such as health courts, without the option of having juries or unbiased judges making decisions."

Doroshow said an article published in the New England Journal of Medicine by Mello and a co-author suggested that "the current system works: legitimate claims are being paid [and] non-legitimate claims are generally not paid." She added that health courts would constitute "an entirely new administrative bureaucracy to accomplish the same thing" as the current system.

Cheryl Niro, a member of the House of Delegates of the American Bar Association (Chicago), said that a trial by jury is guaranteed by the Seventh Amendment and voiced the concern that "neither the health court proposal nor the early offer proposal are truly voluntary."

Niro said that she was "an early proponent of alternative dispute resolution" and that comparisons between health courts and worker's compensation law are invalid because the latter is based on a no-fault approach to resolution. She also decried the schedule for damages that is part of many such proposals as unworkable because nations in which such structures are in place, such as Sweden and Denmark, "have health and welfare benefits that are paid for . . . before consideration of the injury claim can take place."

During the question-and-answer session, DeGette said that "our inclination is to be the uber-state legislature," but admitted that she was uncertain as to whether a federal system was appropriate.

Mello commented that insurance rates have risen in recent years in part due to the fact that the investment income was earned by insurance companies when interest rates were relatively higher, a point seconded by at least one other panelist. She also recommended that Congress "start small" with reforms and gather evidence so as to ensure the feasibility of any programs undertaken.

Doroshow made the case that "there is a disconnect between caps and rates" and that states that have imposed caps are not the only ones in which rates have fallen. Mello rebutted that "the argument has never been that" caps lead to lower rates, but she nonetheless stated that her data show that "there is a modest but significant association" between caps and rates.

O'Connell told Diagnostics & Imaging Week that while there is a possibility that an early-offer system could encourage patients to retain attorneys in hope of obtaining an early offer when they would otherwise not seek damages, insurers could cease the practice if they concluded that the system was being abused. However, he also said that early-offer closures "could save as much as $600,000 for a serious claims case" by cutting out administrative overhead and a substantial portion of lawyer's fees.