Mo. Reform Headed to Gov.; Ohio Insurers Say Market is Stabilizing
Missouri Republicans have passed a tort reform bill out of the House that they hope will force Democratic Gov. Bob Holden into making a tough election-year call, while Ohio medical liability insurers say the Buckeye State’s market, though stabilizing, could use more reforms of its own.
Show me the reform!
In Missouri, a revised bill imposing new restrictions on injury lawsuits cleared its first hurdle recently, winning House approval on a mostly party-line vote.
House and Senate negotiators forged the compromise last week as they hashed out differences in the two chambers’ positions on such issues as maximum damages for pain and suffering in medical malpractice cases. Proponents—generally the Legislature’s majority Republicans—say the bill would aid doctors by stemming rapid increases in the price of medical malpractice insurance.
Most Democrats have opposed the legislation, saying it embodies some of the toughest lawsuit restrictions in the nation and could unravel hundreds of years of Anglo-American legal tradition.
In the announced House vote of 89-59, just two Republicans joined 57 Democrats in voting against the bill. Eighty Republicans and nine Democrats voted for it.
The bill now goes to the Senate.
Democratic Gov. Bob Holden last year vetoed a similar but broader bill. He said Monday there were “problems in the current bill,” but he stopped short of a direct veto threat.
The measure would restrict tort lawsuits, which include such civil wrongs as personal injury, wrongful death, libel and slander. Under the compromise bill, a plaintiff could file suit only in the the judicial circuit where the injury occurred. Current law also allows lawsuits to be filed where any of the parties resides.
Supporters say the change would inhibit venue shopping—the practice of trying to find a reason to file suit in a county where juries are perceived as generous to plaintiffs, such as the St. Louis and Kansas City areas.
The legislation also caps noneconomic damages in medical malpractice at a permanent $400,000. Missouri had adopted a $350,000 cap in 1986 but allowed it to rise with inflation, to its current $565,000. The bill also creates a new lower cap on noneconomic damages for malpractice in emergency rooms of $200,000. House Minority Leader Rick Johnson accused Republicans of using doctors in a ploy to help big businesses.
“The entire purpose … is to use the doctors to help corporations and insurance companies maximize their profits at the expense of injured people,” Johnson (D-High Ridge) said.
Rep. Richard Byrd (R-Kirkwood), who sponsored the bill, said the Republican majority also plans to advance a companion bill giving the state Department of Insurance more regulatory power with the goal of lowering doctors’ malpractice premiums. That bill has passed the House and Senate in different forms and awaits negotiations.
Market not dead in Ohio
Meanwhile, the market for medical malpractice insurance in Ohio is becoming less volatile, but insurers are still struggling to stay solvent, the heads of five companies recently told a commission studying the problem.
The five companies write more than 70 percent of the malpractice policies for Ohio doctors. They told the Ohio Medical Malpractice Commission that insurers are less wary of the state since it passed limits on what patients can receive for pain and suffering.
“The Ohio market is becoming a much more stable environment. I don’t think we’re going to see the upheavals we saw in the 1990s,” said R. Kevin Clinton, president of the American Physicians Assurance Corp.
From 1995 through 2003, Clinton’s company had $139 million in insurance losses in Ohio, he said. However, he added that the caps on jury awards will make forecasting profits and losses in the state easier. The five executives, though, said they were waiting for the Ohio Supreme Court to rule on the constitutionality of the caps, which took effect last year. No case has reached the high court, which in 1999 struck down a broader law capping malpractice claims.
All five companies reported losses from 1997 through 2002. Higher jury awards have led to the removal of some doctors from so-called quality coverage and forced them to seek coverage with higher premiums, the executives said.
“In the last four years, the average size of a medical malpractice claim has gone up by 63 percent. That’s live dollars. That’s not funny money,” said Paul Butrus, executive vice president of Medical Assurance, an Alabama-based insurer.
Republican state Sen. Scott Nein of Middletown, one of four lawmakers who joined the commission in questioning the executives, tried to blame the companies’ losses on investments that went sour with the stock markets.
“That’s why we’re seeing these high premiums. You have invested poorly,” said Nein, a former insurance broker.
Clinton said his company’s losses were because of skyrocketing legal costs, not investments that amounted to a low percentage of its spending.
“I think the myth going around is we lost money on the stock market,” Clinton said. “We didn’t invest in the stock market.”
Nein asked the executives for their opinion of a bill now in his Senate Insurance Commerce & Labor Committee that would place a one-year freeze on most medical malpractice insurance premiums. None said they would pull out of the state but all said they had reservations.
“We would not invest capital in Ohio if we were not able to set our own rates,” said Timothy Kenesey, president of Medical Protective Co.
The commission’s chairwoman, Ohio Department of Insurance Director Ann Womer Benjamin, said the problem of doctors leaving practice or leaving Ohio is alarming and a solution must be found.
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