Groups Attack Watchdog Effort to Raise Medical Malpractice Bar in California

Under a measure being pursued for next year’s ballot by Consumer Watchdog California voters will have the opportunity to boost the cap on medical negligence lawsuits, but opponents of the measure on Friday said doing so will add billions-of-dollars in cost to the state’s healthcare system and make more difficult the process of bringing the state into compliance with the Affordable Care Act.

The effort to raise the $250,000 limit on pain and suffering to $1.1 million was filed as an initiative with the Secretary of State on Wednesday, and the backers of the initiative expect within the next two months to get the go ahead to start collecting the 750,000 signatures it will take to qualify it for the 2014 ballot.

The initiative’s main provision makes changes to the Medical Injury Compensation Reform Act, MICRA, to increase the cap on non-economic damages.

Detractors of the initiative say it will make it easier and more lucrative for lawyers to file lawsuits against healthcare providers, and burden the healthcare system with legal fees.

Californians Allied for Patient Protection, a coalition to protect MICRA, released a study in 2010 that showed that doubling the cap to $500,000 would result in $9.5 billion in added costs annually for the healthcare system.

The group is in the process of crunching the numbers to release a revised estimate for the systemic cost that would result from effectively quadrupling the cap, according to Lisa Maas, CAAP’s executive director.

“We’re still looking into that so we can give specific numbers,” Maas said. “It’s fair to say that $9.5 billion number is going to go up when we crunch the numbers some more.”

The initiative was authored by Bob Pack, who lost his 7-year-old daughter and 10-year-old son on a roadside nine years ago to a drugged driver in Danville who fell unconscious and swerved off the road. The incident also injured Pack’s wife, Carmen, who was pregnant and lost the couple’s unborn twins.

The initiative, called the “Troy and Alana Pack Patient Safety Act,” requires mandatory random drug and alcohol testing for physicians and mandatory physician drug and alcohol testing after reports of adverse events, and requires physicians to use the CURES prescription drug database.

The initiative also requires doctors to report substance abuse by physicians or medical negligence, and it includes protections for those physicians from lawsuits by other doctors when they do.

The focus of the initiative is to adjust for inflation the $250,000 cap set in 1975 on recovery for medical negligence victims to $1.1 million, according to Consumer Watchdog, which argues the quarter-million-dollar cap is worth on $58,000 today in 1975 dollars.

In the case of the Pack family, the driver, Jimena Barreto, described by backers of the initiative as a “doctor-shopping drug addict,” was convicted of second-degree murder and sentenced to 30 years to life.

However, the doctors who prescribed her the pills were not held accountable, and the Pack family was only entitled to the cap of $250,000 for each of their children’s lives, according to Consumer Watchdog.

Pack is an Internet entrepreneur who helped modernize CURES following the loss of his family. CURES (Controlled Substance Utilization Review and Evaluation System) enables registered users, such as healthcare prescribers, pharmacists and law enforcement, to access patient substance history information.

Consumer Watchdog argues the problem with CURES is doctors aren’t using this system, and that is contributing to a growing prescription drug problem.

Groups opposing the initiative are calling it “window dressing” and a “smoke screen” to hide an ulterior motive in what they describe as a trail-lawyer backed initiative to get more money for legal fees.

“It’s very clear that raising the cap and changing MICRA is what the trial lawyers are after,” said Dr. Paul Phinney, president of the California Medical Association. “They want to change MICRA, which will increase the number of meritless lawsuits and increase lawyer fees. Ironically it will do absolutely nothing to improve quality.”

Phinney declined to state opposition to the provision in the initiative that calls for physician drug testing, saying the group is still examining the language of the initiative before giving an opinion on that.

“We very likely will have more to say on that later,” he said, adding that the call for physician drug testing is “part of the smoke screen.”

Jerry Sullivan, chairman of Gerald J. Sullivan & Associates, the focus company for a privately held consortium of independent insurance firms that deal in many areas including professional liability, thinks it should be noted that there’s more to MICRA than just pain and suffering.

There are eight major provisions addressed in MICRA, including periodic payments, collateral sources, attorney fees and arbitration.

“There are quite a few aspects to MICRA, only one of which is the cap on pain and suffering,” Sullivan said. “It should also be stated that there is no cap on medical expenses that have been incurred, future medical expenses, lost wages and future lost wages. It is a piece of legislation that has a number of different aspects to it to control costs.”

Like the groups opposed to raising the MICRA cap, Sullivan believes the backers of the initiative are obfuscating their own intentions as well as clouding the existing benefits of MICRA.

“I’m not sure what inflation has to do with pain and suffering,” Sullivan said. “I have great respect for an injured party. They need to get proper support. But pain and suffering is the only thing that’s limited to the $250,000 cap. The trail bar is very effective and very smart at what they do: Focus on the $250,000, focus on the $250,000. The trial bar has, ever since this bill got passed in 1975, been trying to weaken it.”

The impact on insurers and healthcare is clearly a negative in the opinion of those opposed to the bill, but agents who deal in medical malpractice could actually see increased revenue in the form of bigger commissions.

“Those agents who write a lot of medical malpractice business will probably be impacted favorably,” Sullivan said. “And the reason for that is: as you remove cost controls that exist under MICRA, the cost of claims will increase, and as the cost of claims increase, the premiums will increase.”

However, one aspect of the initiative may actually reduce claims costs, according to Consumer Watchdog spokesman Jamie Court.

Court argues that requiring physician drug testing can reduce malpractice costs by weeding out drug-addicted doctors, who he believes may be contributing to higher malpractice costs due to mistakes they might be making when practicing while drugged.

“We will have fewer claims because dangerous doctors will be out of business instead of creating all the claims,” Court said.

Court and Consumer Watchdog have also attacked the estimated financial impact of the initiative, calling the estimates “lies.”

For Hal Dasinger, vice president of government relations for medical malpractice carrier The Doctors Co., the bottom line is that if it is successful, the initiative will increase the costs of claims the insurer pays out in California, and therefore it will increase the costs to insure physicians.

“The bare bones proposal is to increase what it would cost to resolve a medical liability action,” Dasinger said. “If you are paying more to revolve these actions, it costs more to insure.”

He added, “If the MICRA limit is increased, we expect results to worsen.”

Beyond the problem of increasing costs, opponents of the initiative are also attacking its timing, considering California and other states are in the midst of attempting to implement sweeping reforms called for by the federal Affordable Care Act, according to the Civil Justice Association of California.

“This really couldn’t come at a worse time, given that the state’s trying to implement the Affordable Care Act,” Todd Roberson, a spokesman for the group said. “It will threaten the ability of providers to continue to operate in the state.”

Many doctors could be forced to exit the state in the face of rising liability insurance premiums, Maas with CAAP said.

“An obstetrician in L.A. or Orange counties pays around $71,000 a year in medical liability,” Maas said, citing figures from the Medical Liability Monitor’s annual rate survey. “Now you take New York, where there is no medical liability reform, an obstetrician has to pay $176,000. There are 19 counties (in New York) with no obstetrician, 22 are without internal medicine specialists and 15 do not have surgical specialty doctors.”

Consumer Watchdog – they are also the group behind qualifying for the 2014 ballot the Health Insurance Rate Public Justification and Accountability Act, which would require health insurance companies to publicly justify and get approval for rate increases before they take effect – insists the opposition is exaggerating the cost impact the initiative would have if it passes.

“Malpractice costs are a half of one percent of all healthcare costs,” Court said, citing figures from the Congressional Budget Office.

Court also noted that rate hikes must first be approved by the California Department of Insurance, a process in which Consumer Watchdog routinely intervenes to halt rising rates.

“Our group has stopped $62 million in rate hikes in malpractice insurance,” Court said. “Malpractice rates aren’t going up in California because we regulate them.”