Medical Liability Reform in the District of Columbia The Facts

• Press Release: District Medical Society Launches New Campaign  For Medical Liability Insurance Reform

Why is healthcare liability reform necessary in the District of Columbia?

Rising malpractice insurance premiums will soon force many physicians out of the practice of medicine entirely. Preliminary results of a 2004 survey of 190 DC obstetricians and gynecologists conducted by MSDC confirm that escalating medical liability insurance rates are forcing these physicians—one of the groups hardest hit by high rates—to make tough choices. Of those who answered the question on how the rates are impacting their decision to practice in the District, nearly nine out of 10 (88%) indicated they have moved, plan to move, or are considering moving their entire medical practice out of the District. Currently, OB/GYNs, neurosurgeons and emergency physicians are being hit the hardest by premium increases, but all physicians are seeing substantial increases in their premiums. As medical liability insurance premiums continue to rise, the public and policymakers face a choice: reasonably limit awards or face a crisis in patient access to health care. Without reform, the District will see further reductions in medical services, adding to an already severely stressed healthcare delivery system.

The escalating costs of liability insurance premiums have reached unaffordable levels for an increasing number of medical practices. Physicians who may have done nothing wrong are subjected to the trials, vagaries and personal assaults of the current system. The personal impact—actually experienced or anticipated as a distinct possibility—is driving physicians out of clinical practice. Physicians are coming to the conclusion that there is precious little justice in our system of "justice" as it relates to claims of medical negligence.

Why are caps on non-economic damages the answer to the crisis?

Reasonable healthcare liability reforms, which include caps on non-economic damages, have worked in California for over 27 years. Many studies show that caps on non-economic damages are widely viewed as the most effective reform measures to help control escalating healthcare liability costs.   The District of Columbia has the highest average medical liability jury award of any state in the nation ($584,338).

What proof is there that a $250K cap on non-economic damages is effective?

Physician's medical liability insurance premiums in California went from the highest in the nation in most specialties to the median or even lower as a result of capping non-economic damages at $250K. From 1976 to 2000, medical liability insurance premiums in the U.S. rose 505%. In California during the same time period, premiums rose 167%. Also, in California the average time to settlement is shorter than the national average, and the average cost of settlement is lower than the national average. This helps to keep medical liability premiums lower in California than in states without a cap on non-economic damages.

Is the Health Care Liability Reform Act of 2005 just about caps on non-economic damages?

No. Capping non-economics damages at $250K is just one part of the multi-faceted bill. The bill would also; help preserve the system of free clinics in the city by extending and expanding the Free Clinic Immunity Act to cover physicians, registered nurses, and nurse-midwives who provide free care; mandate the development of a system for reporting medical errors in hospitals; limit attorney contingency fees so that more money goes to the patient; establish additional regulation of medical liability insurance companies; and more.

But aren't insurance companies increasing premiums to offset losses they've incurred by playing the stock market?

The often-asserted claim by some that insurance companies are trying to make up for losses in the stock market is wrong. The increasing loss severity of claims impact premiums, not playing the stock market. That is because the typical insurance company investment portfolio has a very small exposure to equities. Most professional liability insurers maintain very conservative investment portfolios comprised almost entirely of high-grade bonds. The objective is preservation of capital (reserves and surplus) and the generation of investment income to fund—along with premium income—the payment of claims. Reduced investment income is not driving the rate increases being felt today—and accounts for a fraction of rate increases.

Will this law prevent me from suing if I'm a victim of medical negligence?

Not at all. But, frivolous cases with no evidence of actual medical errors would be less likely to be pursued if the potential rewards for "rolling the dice" were restricted.

Will this bill significantly reduce the amount of money I would receive if I successfully prove that I'm a victim of malpractice?

Economic damages, such as lost earnings, medical care, and rehabilitation costs, are NOT limited by this bill. This bill would simply replace the current health care liability "jackpot lottery" system—where a very small percentage of claimants receive tens of millions of dollars, or even hundreds of millions of dollars, while other claimants receive little—with a more equitable system for all involved. Limiting the amount received in non-economic (or punitive) damages is a small price to pay to bring premiums in line and preserve access to health care in the District.

Why should we limit the amount a jury can award? Isn't the jury system one of the effective benchmarks of the U.S. justice system?

We are trying to bring some reasonable expectations to what a jury can do. The insurance market prices itself based on risk and exposure. If you get the exposure and risk within reason (via a cap on non-economic damages) then you will get a reasonable insurance rate.

If healthcare liability reform limits unreasonable awards while ensuring that those with legitimate needs are fully and efficiently compensated and stabilizes medical liability premiums, why are some critics still so strongly opposed?

Because they have a vested interest in preserving a system that currently benefits lawyers, not patients. Mega-verdicts are on the rise as, more and more frequently, trial attorneys ask juries for Powerball-sized awards. In 1999-2000, according to the U.S. Department of Health and Human Services, more than half (52%) of all awards exceeded $1 million, compared to 34% from 1994-1996. Under typical contingency fee arrangements, lawyers walk away with 30-50% of any jury award to the plaintiff, plus an additional percentage of the award to cover expenses. In California, where limitations on attorneys' fees as part of healthcare liability reform have been in place since 1975, a plaintiff's attorney still receives more than $220,000 of a $1 million award—and plaintiffs receive 17% more than under traditional contingency arrangements.

Wouldn't we avoid this crisis if we just policed bad doctors?

We already do. In fact, the practice of medicine (physicians) is the most regulated profession. Hospitals monitor physicians through peer review committees and other established entities. The many state medical societies, including the Medical Society of the District of Columbia, have peer review committees. And, most importantly, the DC Department of Health's Board of Medicine regularly reviews complaints against physicians and takes disciplinary action—including the revocation of a medical license when warranted.