Legislation setting federal limits on medical liability claims, modeled after California’s nearly 30-year-old MICRA law, was introduced in the House late last month.

Rep. Lamar Adams, R-Texas, chair of the House Judiciary Committee, introduced H.R. 5, “The HEALTH Act,” on Jan. 24. Co-sponsors include Rep. Phil Gingrey, R-Ga., and Rep. David Scott, R-Ga.

According to a statement from Rep. Adams’ office, the legislation is modeled after California’s 30-year-old medical liability law, known as the Medical Injury Compensation Reform Act of 1975.

The federal bill:

• Imposes a $250,000 cap on subjective noneconomic damages

• Includes a collateral source rule allowing evidence of outside payments to be made in court

• Imposes a ban on subrogation by collateral sources

• Includes a fee schedule for attorney contingency fees

• Imposes periodic payments of future damages

The legislation is tied to the House Republicans’ campaign to propose alternatives to the current health care reform system.

The introduction followed a 273-175 vote a week earlier on H.R. 9, a resolution charging House committee chairmen with the responsibility to pass legislation that would “replace ObamaCare with meaningful reform to lower costs, expand access to affordable coverage and protect the doctor-patient relationship.”

Lawrence Smarr, president of the Physician Insurers Association of America in Rockville, Md., a national trade association representing health care provider-owned and provider-operated medical professional liability insurance companies, issued a statement lauding the measure and urging its quick passage.

“The reformation of our medical liability system is critical for both patients and health care providers,” Mr. Smarr said.

He added, “Not only will these reforms restore fairness and equity to our medical liability system for patients and health care providers alike, they will also result in notable savings for Americans.”

But Gibson Vance, president of the American Association of Justice, which represents trial lawyers, rejected the bill as draconian.

“This bill will impose severe, one-size-fits-all caps on damages that injured patients can seek—not just when injured by medical negligence but also by defective drugs, medical devices, or abuse suffered in nursing homes,” he said.

Mr. Vance said the bill even extends this cap to health care providers that intentionally harm or kill patients, as well as insurance companies that refuse to pay just claims for medical bills.

“The bill is beyond extreme,” he said. “Its authors should focus on real measures that will improve patient safety, not provide welfare to drug and insurance companies that stand to gain the most from this proposal,” Mr. Vance said.

Mr. Smarr and others testified at a medical liability reform oversight hearing held by the House Judiciary Committee—“Medical Liability Reform—Cutting Costs, Spurring Investment, Creating Jobs”—before the bill was introduced.

There is “no question” that medical lawsuit abuse is “undermining both our health care system and the doctor-patient relationship,” said Mr. Smarr in submitted testimony.

He argued that “the medical liability system is broken” and that “neither doctors nor patients benefit from a system of rampant litigation. Only lawyers do, and thus they support a system that is fundamentally flawed and inefficient.”

Dr. Stuart Weinstein, a spokesperson for the Health Coalition on Liability and Access in Iowa City, Iowa, said at the hearing that “medical liability has devolved from a system designed to protect patients’ rights and improve the quality of health care to a system designed to reward personal injury lawyers.”

He said medical liability was an issue that was left unresolved following last year’s major health care overhaul.

He testified that defensive medicine is “the antithesis of health care reform. It increases health care costs and has the potential to lessen the quality of care that we strive to provide our patients every day.”

He also cited Congressional Budget Office estimates that medical liability reform would result in cost savings to the federal budget of $54 billion over the next 10 years.

But Joanne Doroshow, executive director for the Center for Justice & Democracy, in New York, said that besides increasing the deficit, proposals designed to cut the cost of medical liability would also likely “unfairly increase the obstacles that sick and injured patients face in the already difficult process of seeking compensation and prevailing in court.”

She charged that there is “still an epidemic of medical malpractice in this country,” and said proposed revisions in current law “will also reduce the financial incentive of institutions, such as hospitals and HMOs, to operate safely, which will lead to more costly errors.”

She, too, cited the CBO, saying the nonpartisan agency had looked at several studies, including one study finding tort restrictions would lead to a 0.2 percent increase in the nation’s overall death rate.” If true, that would be an additional 4,853 Americans killed every year by medical malpractice,” Ms. Doroshow testified.

In his submitted testimony, Mr. Smarr said the current system for assessing medical liability “is seriously flawed.”

“Injured patients may wait more than four years on average for their claim to be resolved after an alleged injury,” he said.

“And then, when they are compensated, substantial sums of their money go to pay attorney fees and other litigation expenses, thus depriving them of the funds that had been intended for their recovery,” he said.

“Unfortunately, no data exists, but it is widely believed that 40 percent or more of awards and settlements is paid to the plaintiff attorney, who also passes along the costs of prosecuting the claim.”

At the same time, “doctors may be needlessly dragged through lengthy litigation, their reputations tarnished even when it is proven that they did nothing amiss (which is the case more than 80 percent of the time for claims resolved at verdict),” Mr. Smarr testified.

“And personal injury lawyers?” he asked. “While doctors, patients and MPL insurers are seeking to fix the system, the personal injury bar, which stands to profit from it, steadfastly advocates for the status quo.”

In a statement, Matt Brady, a spokesperson for the National Association of Mutual Insurance Companies, in Washington, D.C., said that it is important that Congress consider tort reform for medical liability as an integral part of the health care debate.

“As we heard from the witnesses in the hearing, the fear of being sued has lead to the practice of more defensive medicine by the medical community, which in turn leads to higher costs for all Americans,” Mr. Brady said.

“Any effort to reform our health care system should include a plan to address the costs of defensive medicine, and eliminating the fear of frivolous lawsuits through reforming the tort system should play a major role in achieving that outcome,” Mr. Brady added. 

For reaction to the president’s statement for p&c insurance groups, see article titled “Industry Reacts To SOTU Comments On Med Mal Reform, Regulation” on our website at www.propertycasualty360.com.