Healthcare Business News

Raising the cap

Calif. measure revives med-mal debate

By Andis Robeznieks
Posted: August 17, 2013 - 12:01 am ET

A new political battle over California's landmark $250,000 cap on pain and suffering damages in medical malpractice lawsuits is revving up, and the issue may go to the state's voters next year.

The fight will once again raise long-standing questions of how best to protect patients against medical negligence and fairly resolve malpractice cases without imposing high costs on providers and the healthcare system in general.

If supporters gather the more than 504,000 required signatures, the Troy and Alana Pack Patient Safety Act of 2014 will go on the ballot in November 2014. If approved by voters, the $250,000 cap on noneconomic damages—passed 38 years ago—would be adjusted for inflation, increasing the limit to about $1.1 million.

Also, physicians would be subject to random drug and alcohol testing, they would have to guard against patients who doctor shop for narcotic prescriptions by checking a database before writing such prescriptions, and they would face mandatory drug testing after an unexpected patient death or serious injury.

The proposed California ballot initiative measure is named after the young son and daughter of Bob and Carmen Pack, who were killed by a driver impaired by prescription drugs. Though the driver went to prison, Bob Pack argued that the physicians who wrote her multiple prescriptions were not held accountable.

The ballot measure paperwork was filed July 25. The state has 45 days to process the request, then supporters will have five months to gather signatures.

In an interview, Bob Pack said a voter referendum is the only way to change the current system to promote patient safety and protect victims' rights because the physicians' lobby has so much sway over lawmakers.

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Showing economic losses

Supporters of California's Medical Injury Compensation Act of 1975, led by physicians and liability insurers, argue that while the state limits noneconomic damages, injured patients still can be awarded unlimited economic damages such as care costs and lost wages. But cap opponents, led by plaintiff lawyers and patient advocacy groups, note that it's difficult for children, senior citizens or homemakers to show economic losses, and that attorneys often refuse to take their cases because without the potential for recovering pain and suffering damages, the costs exceed the payoff.

The healthcare reform law created a program to let states test alternative ways of resolving medical malpractice cases, such as judge-directed negotiations, and full-disclosure/quick-settlement-offer programs. But none of these have gained broad traction in California or other states, where the debate continues to focus on caps and other limits on lawsuits.

Since California led the way, 25 other states have passed noneconomic damage caps. This includes Kansas, which followed California's lead and capped pain and suffering damages at $250,000.

Texas caps damages at $250,000 per physician and $250,000 per institution with a $500,000 limit on all institutions combined. Several states have established a total cap for all types of damages. While California's cap has remained unchanged for 38 years, Maryland's cap is adjusted for inflation.

“If $250,000 was fair in 1975, the equivalent amount adjusted for inflation should be fair today,” said J.G. Preston, press secretary for the Consumer Attorneys of California trial lawyer association.

But opponents of the ballot measure argue that even if the damage cap were increased only to $500,000, it would produce a $9.5 billion increase in healthcare costs in California.

“It's a law that has worked very well for a long time,” said Dr. Paul Phinney, president of the California Medical Association. “It balances the need to compensate injured patients with the need to make the system work.”

Caps do not translate into savings

Troy and Alana Pack Patient  Safety Act
Researchers, however, have found no evidence that states with caps have lower total healthcare costs. A 2008 study by researchers at the University of Alabama at Birmingham and published in the journal Health Services Research concluded that caps on noneconomic damages and other limits on medical malpractice suits “have not translated into insurance savings” for consumers.

The current medical liability system in 2008 cost the U.S. about $55.6 billion a year, or 2.4% of total healthcare spending, according to a study published in Health Affairs in 2010. That included $45.6 billion in “defensive medicine” costs.

Michelle Mello, Harvard University professor of law and public health who co-authored that report, said there is strong evidence that caps have a “modest but statistically significant” impact on liability premiums, reducing them by 6% to 13% over time. A Medicare Payment Advisory Commission review she led found there also is evidence that caps lower defensive medicine-related utilization rates and modestly increase the supply of physicians in a state. On the other hand, a Health Affairs study she co-authored this month found that physicians in states with caps order certain services associated with defensive medicine at higher rates than those in states without caps. “Physicians always feel under the gun, even with that protection,” she said.

Phinney said there has been an ongoing effort in California by the medical profession to comprehensively address patient safety without resorting to the legal system. “When errors do occur, they should be disclosed, and mistakes need to be acknowledged openly and quickly,” he said. “But from the trial lawyers' perspective, it's been a nonstop debate about caps since 1975.”

Follow Andis Robeznieks on Twitter: @MHARobeznieks

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