MedMal Ruling Waters Down Fee Caps

It has been two years since Florida voters approved a number of dueling constitutional amendments supported by physicians and the trial bar. The amendments had their genesis in the infighting between physicians and attorneys during the 2003 legislative session. After three legislative special sessions, the legislature failed to pass a $250,000 cap supported by Bush and in a compromise measure enacted a $500,000 cap that only applied in certain cases.

Trial lawyers fiercely fought the provision saying it was an infringement on the rights of patients to sue hospitals and insurers and collect monetary damages. The Florida Medical Association (FMA) was likewise disenchanted with the $500,000 cap, which the association said would do little to reduce MedMal rates in the state. Spurned by the legislature, the trial bar and physicians decided to take their case directly to voters in the form of constitutional amendments.

The trial bar backed several amendments that they said increased protection by making physicians more accountable and allowing patients to access more records. One amendment promised to strip doctors of their right to practice if they are found liable in three MedMal cases. Commonly referred to as the "three strikes" amendment, voters approved the constitutional change by a 71 percent to 29 percent margin. Specifically, the amendment states that, "No person who has been found to have committed three or more incidents of medical malpractice shall be licensed or continued to be licensed by the State of Florida." Additionally, the amendment defined "found to be committed" when "malpractice has been found in a final judgment in a court of law, final administrative agency decision, or decision of binding arbitration."

A second trial bar backed an amendment, approved by voters by an 81 percent to 19 percent margin, which would have opened doctors' and hospitals' records to patients. The "consumer-friendly" amendment was touted as a means to allow patients more control over their medical care.

Narrowing the Application

Although voters approved the amendments, it was up to the legislature to sort out how they should apply. Due to latitude and political pressure from all sides, lawmakers moved to narrow the application of the amendments. First, lawmakers stated that only the state Board of Medicine could determine whether a doctor was liable in a MedMal suit and revoke his or her license. In the issue of patients' access to medical records, lawmakers enacted a provision that made the records available only to patients with the same condition they are seeking — in other words, only cancer patients can seek records of how a hospital or doctor treated another cancer patient. Also, patients will only have access to records generated after Nov. 2, 2004 and the records will be prohibited from being used in civil lawsuits and administrative actions against doctors and hospitals.

Fee Caps

While the trial bar amendments did not go unnoticed, it was the FMA's amendment on attorneys' fees that commanded the most attention. Approved by 60 percent of the voters, the amendment limited attorneys' fees so that plaintiffs suing under contingency agreements could receive at least 70 percent of the first $250,000 in damages and 90 percent of any remaining awards. The amendment was intended to stop lawyers from taking up to 40 percent of damage awards. But lawyers have argued that they often spend millions on major cases and must put up all their expenses without any guarantee of ever receiving compensation.

From the beginning, the trial bar maintained that the amendment was moot based on the premise that it would be illegal for the state to intervene in cases where patients voluntarily agreed to higher fees. That argument was followed by the observation that the amendment would be all but impossible to enforce. To a point, even the FMA agreed the arguments had some validity. As a result, unlike the trial bar amendments, the legislature did not pursue an enacting bill clarifying how the amendment should be applied and under what conditions.

Absent legislative action, the trial bar turned to the state Supreme Court, which sets the rules that govern attorneys. The court found that lawmakers indeed could ask plaintiffs to waive the fees spelled out under the amendment. From the trial bar's point of view, the court's opinion validates their position that the amendment was invalid and unnecessary as exhibited by the state of the MedMal market.

The trial attorneys have long argued that the MedMal insurance profits are more tied to Wall Street than a Floridian doctor's claim history. They noted premiums went up in the early part of this decade after the insurer's stock market portfolios slipped The Academy of Florida Trial Attorneys also notes in the past two years, claims are down, competition is up in the insurance industry and, most importantly, for Floridians, more doctors are coming to Florida.

One major reason why many lawyers say there are fewer MedMal claims is not due to the amendment, but because many more doctors have opted to no longer carry MedMal insurance. Florida is one of the few states where doctors have the option of not carrying insurance, but must be able to settle a $250,000 judgment. Attorneys are less apt to sue a doctor without coverage, because they will have difficulty collecting a big settlement.

FMA Takes Action

The FMA, which spent millions of dollars to get the amendment approved, has responded quickly to the court ruling, and with more than just angry words. Instead, the association, which represents 17,000 doctors, directed physicians across the state to have patients fill out their own waiver. The waiver requires the patient to agree to not sue the doctor for more than $250,000 in non-economic damages if anything does go wrong. It doesn't limit economic damages (follow-up care or lost wages).

"This waiver will empower patients," said Dr. Patrick Hutton, an orthopedic surgeon in Orange Park and FMA president. "Patients have a right to receive the quality and timely health care they deserve."

FMA Executive Sandra Morthum said the Supreme Court's opinion goes against the spirit of the amendment and will restrict patients' monetary damages, which will be siphoned off by lawyers. "Florida's trial lawyers are ignoring the will of the people. They have created yet another avenue to put more money back into their own pockets, by requiring clients to sign this form before they will take a malpractice case," she said. "If an individual signs this lawyer's waiver, they give up their right to receive what they deserve – a larger portion of a medical liability award. The bottom line: only the lawyer benefits."

The Academy of Florida Trial Attorneys, of course, has a different take on things "With its release of a patient waiver form, the Florida Medical Association once again made it clear that they are more interested in preventing medical malpractice cases and increasing insurance industry profits that preventing medical malpractice from occurring altogether," said Jacqui Sisto, academy spokeswoman.

While the effect of the court's ruling remains to be seen, there are signs that MedMal rates have stopped climbing and even in some areas, are being reduced.

In September, Florida's largest malpractice carrier, First Professionals Insurance Co. (FPIC), filed for a rate decrease effective Dec. 1, 2006, in which most Florida physicians will see an eight percent decrease in premiums. However, some 900 physicians in some specialties will see larger decreases ranging from 14.2 percent to 19.5 percent FPIC credits the constitutional amendment limiting attorney fees as one reason for its improved financial performance. "Fewer claims are being presented against physicians since the passage of the amendment," said FPIC President Bob White, Jr., at the recent FMA annual meeting. "The amendment is the reason we are in a position to reduce rates and provide some relief from the medical liability crisis."

Mortham said she was not sure whether physicians would deny treatment to patients who didn't sign the waiver, saying that the choice of whether to treat a patient lies with the individual physician. However, patients should not be too surprised to find themselves caught in the middle of a health economics battle. After all, this is the same state where dozens of physicians have started charging patients annual membership fees just for the privilege of being allowed to see them. Some patients may view the new doctor waiver form the way a bride views a prenuptial agreement before a wedding and wonder if this is just a precursor to trouble ahead.