MALPRACTICE CAPS. The West Virginia Supreme Court last month decided 3-2 to review a ruling it made just one month earlier upholding the constitutionality of the state's $1 million cap on noneconomic damages in malpractice cases.
A new justice sworn in near the end of December apparently tipped the court's balance in the opposite direction. Rules of the court allow a rehearing within 30 days of its decision at the request of either party. Due to the new makeup of the court, the request was approved.
The rehearing is scheduled for May 9, according to the West Virginia State Medical Association. "We now have the Supreme Court taking a third look" at the damages cap, says Evan Jenkins, the association's executive director.
The court ruled unanimously in 1991 that the 1986 law restricting punitive damages for medical malpractice was constitutional after a lower court reduced a $2.5 million award to comply with the cap. The plaintiff in the 1991 case challenged the law anew last year after the entire makeup of the court had changed, but the justices ruled 3-2 in December to affirm their earlier decision.
Jenkins says that the court rarely grants reviews unless one party gives a compelling reason to do so. "There has been no new evidence or any new factors presented by the petitioner," he says.
"What the court may be trying to do is to get the Legislature to raise the (maximum) amount," Jenkins says.
M&A SLOWDOWN. Mergers and acquisitions in the healthcare services sector hit a seven-year low during the fourth quarter of 2000, a new study shows.
Healthcare research firm Irving Levin Associates of New Canaan, Conn., reported just 88 transactions among healthcare services firms during the last three months of the year, down 42% from the 153 mergers and acquisitions in the fourth quarter of 1999. It's also 32% below the third-quarter total of 129, though activity normally cools late in the year.
For the first time, the firm tracked mergers in healthcare technology. It noted 143 fourth-quarter transactions in this sector, which includes companies in e-health, medical devices, biotechnology and pharmaceuticals.
The healthcare mergers and acquisitions noted were worth approximately $26 billion, the company says. Technology firms were responsible for nearly 85% of that total.
"During a year of bankruptcies, a volatile stock market and new reimbursement methodologies for Medicare, the healthcare services M&A market took a beating," says Stephen Monroe, a partner and managing editor for Irving Levin.
HMO RESULTS. Smaller HMOs had a harder time than larger HMOs balancing their books during the first half of 2000, according to a study.
At HMOs with fewer than 100,000 enrollees, medical expenses increased 4.4% per enrollee in the first half of 2000. That surpasses the 3.9% per enrollee revenue increase, according to Palm Beach Gardens, Fla.-based Weiss Ratings, an independent healthcare financial ratings company. The report was released Jan. 23.
Large HMOs, those plans with more than 500,000 enrollees, saw a 7.2% increase in medical costs per enrollee but also saw more revenue per enrollee, 7.8%.
The 373 small HMOs in the study had an aggregate loss of $127 million for the first half of 2000, with 52% posting a loss for the period. The 35 largest HMOs reported a combined net profit of $528 million. The HMO industry recorded aggregate net income of $370 million in the first six months of 2000, up from $91 million in the first half of 1999.
"With medical costs rising at such a fast pace, quite a few HMOs, particularly the smaller companies, will continue to lose money," says Martin Weiss, chairman of Weiss Ratings.
CHIROPRACTIC SUIT. An ongoing American Chiropractic Association lawsuit against HHS over the denial of chiropractic services in Medicare HMOs can go before the federal bench, a district court has determined.
The ACA filed a suit in 1998 alleging that HHS unlawfully allowed physical therapists, medical doctors and doctors of osteopathy to perform spinal manipulation to correct a sublaxation, a procedure the chiropractors argue only they have been educated and licensed to provide. The suit also accuses HHS of failing to allocate appropriate Medicare funds for the treatment.
The U.S. District Court for the District of Columbia ruled on Jan. 22 against an HHS contention that chiropractors must exhaust the agency's administrative process before seeking judicial relief.
"We've met with HCFA. We got nowhere and had to get the advice of counsel," says ACA board chairman J. Michael Flynn, a Houma, La., chiropractor. "Other managed care insurance companies are waiting in the wings" to act on this decision, he says.
A HCFA spokesperson says that the agency doesn't believe the allegations in the complaint have merit and that it intends to file an answer to the complaint soon.