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The Buck Stops Here
The Controversy Over Malpractice Caps In Connecticut
By Lili Beit |
The Connecticut health care system is in crisis, according to Ronald Burt, a Hartford anesthesiologist. Burt has devoted much of his time and energy as President of the Medical and Dental Staff at St. Francis Hospital to spreading the word about what he considers a ticking time bomb in medical care: the rising cost of malpractice insurance for doctors and hospitals. If Connecticut does not pass legislation to keep costs down, Burt warns, the state's health care system will implode within the coming year.
"The reason premiums have increased so much is because of size of jury awards," Burt said in a phone interview in March. The problem, he said, is that over the past three years, juries have been dishing out such huge awards to injured patients, that insurance companies have had to raise their rates astronomically, making malpractice insurance almost unaffordable for doctors and hospitals. This forces hospitals to close, encourages doctors to move out of state, and prompts health care providers to suspend their most risky services, which are often the most critical for patients. Those remaining must raise their fees to stay in business.
Ultimately, according to Burt "a crisis of access" will ensue when more and more patients cannot afford medical care. "What a lot of physicians are being forced to do is say: ÔI can't take care of someone with Medicare or Medicaid because those payments don't pay me enough to cover malpractice insurance.' So in order to keep their practices afloat, primary care specialists are saying, ÔWe can't see patients that don't have good managed care insurance.'"
A member of the Connecticut State Medical Society, Burt has testified on three occasions before the Connecticut legislature, urging state politicians to pass a bill to cap non-economic awards to injured patients. It is the "non-economic" awards Ð those given to compensate for pain and suffering, not to pay for medical care or lost income Ð that are extravagant, according to Burt. In 2002, 17 % of pain-and-suffering awards in Connecticut exceeded $1 million, according to the Connecticut Department of Public Health.
Burt lays no blame on insurance companies for soaring premiums. "They have to operate by the same business principles as any other business," he said, "and if payouts from claims are exceeding premiums they bring in, then either premiums need to increase or claims need to be capped." Because the malpractice insurance business has become so unprofitable since 2000, many insurers have folded or fled the state. One of the few remaining, GE Medical Protective, plans to raise rates 80.9 % this year. Even Connecticut Medical Insurance Company, a physician-run company whose sole mission is to insure Connecticut doctors, has faced dramatic increases in payouts in recent years and has had to raise rates.
Hospitals and doctors around the state are feeling the pressure of rising insurance premiums. Specialists who perform the riskiest procedures, such as obstetricians and neurosurgeons, are hit with highest rates. In 2003, 15% of OB-GYNs left the state, according to testimony by Dr. Maryanne McDowell before the Connecticut General Assembly in February. Some obstetricians have even stopped delivering babies to reduce their insurance costs.
For hospitals, escalating malpractice insurance rates is one of a number of factors throwing them into financial turmoil this year. At Yale-New Haven, malpractice insurance costs jumped 55% from 2001 to 2002, according to the New Haven Register.
With their livelihoods on the line, Connecticut doctors, hospitals and insurers, led by the Connecticut State Medical Society and the Connecticut Hospital Association, are lobbying for a $250,000 cap on pain-and-suffering awards. California enacted a $250,000 pain-and-suffering cap in 1975, along with other reforms of the malpractice system, and is touted as a success story by lobbyists. Over half of all states have enacted similar legislation, with caps ranging from $250,000 to $700,000.
The plea of Connecticut health care providers and insurance companies has been embraced by some state Republicans. Embattled governor John Rowland vowed to submit "a bill to cap jury awards and bring some common sense to a system that is putting Connecticut patients at risk" in his State of the State address in February.
But Rowland's efforts to enact a cap have been thwarted thus far by state Democrats, who argue that a cap on awards would be a quick fix that would ignore underlying problems, and would be unfair to many patients. The Insurance and Real Estate Committee of the General Assembly rejected cap legislation in March, sending hopeful lobbyists back to the drawing board.
The malpractice cap controversy in Connecticut reflects the tug-of-war going on in the rest of the country. The American Medical Association (AMA) designates 19 states, including Connecticut, as "Crisis States" because of escalating jury awards, and advocates the national adoption of malpractice reforms similar to California's. The average jury award is $3.9 million according to the AMA Ð far too high for the medical system to support.
The U.S. House of Representatives offered a glimmer of hope for frustrated doctors last year by passing the HEALTH (Help Efficient, Accessible, Low-cost, Timely Healthcare) Act. The Act included a cap on jury awards and other AMA-backed reforms, but was squelched in the Senate. In February, the Senate also narrowly defeated the Health Mothers and Healthy Babies Access to Care Act, a bill that would have capped awards for OB-GYNs. That vote was divided almost exactly along partisan lines, with both Connecticut Democrats, Chris Dodd and Joe Lieberman, voting Nay.
Connecticut Democrats' most vociferous constituents on this issue are trial lawyers and patients' rights groups, who argue that a cap on awards would be immoral and ineffective. "[A cap] would have a disparate impact on women, minorities, and people who generally do not have as large economic recoveries, for whom the only chance of justice is a non-economic recovery," said Michael Koskoff, Senior Partner at the Bridgeport-based law firm of Koskoff, Koskoff and Bieder.
Koskoff, who is on the Malpractice Committee of the Connecticut Trial Lawyers' Association, said in a phone interview that non-economic damages are the only means of delivering justice to those who sustain few economic losses, such as the unemployed. "Let me give you an example," he said, "An elderly person in a nursing home is burned by the nursing home and will suffer excruciating pain for 10 years. The most that person could recover would be $250,000 for ten years, out of which lawyer would have to be paid, and the expert witnesses would have to be paid."
A cap on awards would also be ineffective, Koskoff argued, because there are no data to substantiate the claim that a $250,000 limit would substantially reduce malpractice premiums. Moreover, according to Koskoff, data show that 5% of doctors are responsible for 90 % of the payouts for malpractice claims, suggesting that institutional quality control in medical care is a better solution.
Koskoff blames the poor business practices of insurance companies for the rate hikes in the past few years: "Insurance companies have to be patrolled more carefully. They failed to put away money for a rainy day." During the boom years of the nineties, he said, insurers should have been saving for the economic downturn instead of lavishing profits on shareholders.
Connecticut Medical Insurance Company representatives typically scoff at this particular criticism, noting that regulators would crack down on rate hikes that were not based on actual statistics on claim payouts.
While Koskoff was adamant that caps on awards should not be part of any solution to the malpractice imbroglio, some state Democrats interviewed did not rule out the possibility that caps could be instituted along with other reforms. Representative Andrew Fleischmann, D-West Hartford, said that while he was instinctively against caps, he would be willing to consider a proposal promulgated in March by Governor Rowland: instituting a cap of $750,000, and giving the courts discretion to exceed that amount.
But many lawmakers insist that other potential reforms of the malpractice system are more important. Representative Mary Fritz (D-Wallingford), who co-chaired the Malpractice Action Group in the state legislature, said that "when we looked at states that had done caps, in the long run, if they had not done prior rate approval, and other reforms, rates have escalated equally. What was significant in California was not just caps. They gave their Insurance Department great power, so the Insurance Commission could turn down rates." Fritz's group in March made recommendations for reforms in Connecticut, including implementing procedures to reduce medical error, requiring the Insurance Department to approve all rate hikes before they went into effect, and developing guidelines in the Department of Public Health to screen complaints before they went to court. The Insurance and Real Estate Commission of the General Assembly approved a bill containing these measures in March.
In this conflict that pits doctors against lawyers and has found its way into party politics, there is one point of agreement: the Connecticut malpractice system is broken. Connecticut politicians have begun to realize that there is even some agreement about what reforms are needed to fix it. Yet capping pain-and-suffering awards remains an overwhelmingly divisive issue.
Even though reforms such as patient safety programs and prior rate approval are necessary, it seems increasingly clear that Connecticut will also need to pass legislation capping pain-and-suffering payments if jury awards keep rising. A few multi-million-dollar payouts will send insurance rates and physician and hospital fees soaring statewide. Connecticut should emulate states that have successfully employed both sets of regulations Ð those capping awards and those enforcing systemic reforms.
While a cap may mean that a handful of malpractice victims will receive reduced awards for pain-and-suffering, the issue of whether human pain can be measured in dollars remains a contentious one. It is true that the poor and the old receive smaller economic awards than the young and the employed; this, however, is a flaw in the economic awards system, and should not be compensated for with unregulated pain-and-suffering payouts. In the end, if malpractice insurance rates continue to skyrocket, all who seek medical care in Connecticut will face escalating fees and diminishing services. More important than awarding a few people millions of dollars is preserving access to affordable health care for all Connecticut residents.
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