With a business-friendly president in the Oval Office, Republicans in Congress are hoping 2017 will be the year for major tort reforms. Currently, at least four bills are advancing in the House, all aimed at protecting doctors and corporations from frivolous lawsuits and unnecessary costs. Despite evidence to the contrary, proponents of the bills say trivial lawsuits are driving malpractice insurance premiums ever higher and driving doctors out of business.
One measure, the Protecting Access to Care Act, would cap noneconomic damages in malpractice lawsuits at $250,000. Currently, there is no federal limit on monetary awards for noneconomic damages, which includes pain and suffering.
The bill, H.R. 1215, also establishes limits on how long plaintiffs can wait to file a malpractice suit. For adults, the deadline is three years after the injury or one year after its discovery. For minors, the statue of limitations is three years after the injury or, if the child is under six years old, three years after the injury, one year after discovery or the child’s eighth birthday, whichever occurs later. And it would bar plaintiffs from including providers in class action and product liability lawsuits involving FDA-approved drugs or medical devices.
The bill would affect malpractice lawsuits where coverage for care was provided through a federal program, subsidy or tax benefit. That includes patients insured under the Affordable Care Act, veterans, service members and civil servants covered by federal health plans, and Medicare and Medicaid beneficiaries.
‘Right balance of reforms’
Both the American Hospital Association (AHA) and American Medical Association (AMA) have voiced support for the Protecting Access to Care Act. “This bill provides the right balance of reforms by promoting speedier resolutions to disputes, maintaining access to courts, maximizing patient recovery of damage awards with unlimited compensation for economic for economic damages, while limiting non-economic damages to a quarter million damages,” AMA Executive Vice President and CEO Dr. James Madara wrote in a Feb. 28 letter.
According to the AHA, defensive medicine costs the healthcare system between $50-$100 billion a year and largely aims to mitigate the risk of liability rather than improve patient care.
“These costs do not primarily benefit the patient, but rather mitigate the risk of liability,” Thomas Nickels, executive vice president of the AHA, wrote earlier this year.
Michael Krauss, a professor of law at George Mason University, agrees. “It affects the amount of defensive medicine that doctors perform, knowing they will be paid for by insurance companies and not patients themselves,” he tells Healthcare Dive.
In some fields, like obstetrics, the threat of malpractice has led to service shortages in parts of the country. “Virtually 100% of physicians in the U.S. are sued sometime in their career, mostly because every time a baby is born with an anomaly a suit tends to follow,” Krauss says. “There are obstetricians that won’t take Medicaid patients because the amount they get from Medicaid is less than the amount they’d have to pay out in liability premiums.”
The Center for Justice & Democracy has criticized the bill, saying it will “greatly weaken the accountability of unsafe hospitals, incompetent doctors, nursing homes and pharmaceutical companies that injure or kill patients.” The group notes, for example, that the federally mandated statute of limitations is more restrictive than a majority of state laws.
According to an analysis last year in BMJ, more than 250,000 people die each year as a result of medical errors. Another report, by CRICO Strategies, concluded that miscommunications involving EHRs cost the U.S. $1.7 billion in malpractice claims and nearly 2,000 lives between 2009 and 2013. Still, while malpractice lawsuits and defensive medicine comprise about 3% of the nation’s $3.2 trillion healthcare bill, stricter tort laws won’t guarantee more affordable care, The Washington Post notes.
Reining in class actions
Three other tort reform bills would impact corporations and create new hurdles for class action lawsuits.
The Lawsuit Abuse Reduction Act, H.R. 720, would discourage the filing of frivolous claims by requiring mandatory sanctions on those who do and eliminating the ability of plaintiffs and their attorneys to avoid sanctions by withdrawing the frivolous claims following a motion for sanctions. A companion measure, S. 237, has been introduced in the Senate. In a letter to leaders of the House Judiciary Committee, the American Bar Association said the proposed changes would spur new litigation over sanction motions, resulting in higher court costs and delays.
The Fairness in Class Action Litigation Act, H.R. 985, would make it harder for plaintiffs’ lawyers to file class action lawsuits by requiring that every person in the class suffered the “same type and scope of alleged injury.”
Finally, the Innocent Party Protection Act, H.R. 725, would allow defendants in suits filed in state courts involving more than $75,000 and complete diversity (i.e., the plaintiff and defendant are from different states) to remove the case to the federal level, which tends to be less sympathetic to plaintiffs.
“This bill is aimed at addressing the problem of ‘fraudulent joinder,’ where a plaintiff allegedly adds a non-diverse defendant solely to get the case back to state court,” says William Horton, an expert in tort law and partner at Jones Walker in Birmingham, Alabama. “How big a problem this is anybody’s guess; the trial lawyers say it’s not and that this is just another effort by the Republicans to protect corporate defendants.”
While the Innocent Party Protection Act could affect lawsuits against hospitals that are corporations or merge with other corporations, it’s more likely to benefit manufacturers of drugs and medical equipment in the healthcare field.
Krauss believes all three measures propose meaningful changes in tort reform. “There’s tremendous abuse where lawyers sue corporations for very dubious reasons to get a settlement from the corporation, which would prefer to pay the settlement than to pay more than the settlement amount to defend itself even when it’s got a great defense,” he says. “It becomes something like a protection racket where corporations just find it part of the cost of doing business and the cost is passed on to their consumers and their shareholders.”