California Proposition 46, the Medical Malpractice Lawsuits Cap and Drug Testing of Doctors Initiative, is on the November 4th ballot, and could impact malpractice liability awards if passed. The initiative was introduced earlier this year by Consumer Watchdog, a group based in Santa Monica.
The main points of the initiative include:
- Increasing the state's cap on the non-economic damages that can be assessed in medical negligence lawsuits from $250,000 to $1.1 million.
- Requiring all health care practitioners to consult a state prescription drug history database before prescribing certain controlled substances. This could help prevent patients from "doctor shopping" for multiple prescriptions of controlled substances.
- Requiring drug and alcohol testing of doctors. Those with positive tests would be reported to the California Medical Board. This would be the first law in the U.S. to require random drug testing of physicians.
- Requiring the Board to suspend doctors with a positive test pending an investigation, and taking disciplinary action against doctors found impaired while on duty.
- Requiring health care practitioners to report any physician suspected of medical negligence or being impaired by drugs or alcohol.
The Medical Injury Compensation Reform Act (MICRA) was instituted in 1975 by then Governor Jerry Brown in response to requests from the medical community to manage rising medical malpractice judgments. There are no limits on economic impacts such as lost wages or medical bills.
"The cap on non-economic damages was instituted in 1975 and has not been changed for 39 years with no provision for increase due to inflation," explains Barry Zalma of Zalma Insurance Consultants. "Proposition 46 raises the maximum to $1.1 million. Because of the limitation very few attorneys will handle medical malpractice cases and the contingency fees are very limited compared to what they can earn on other tort cases."
Because of the bill's multiple provisions, however, voting for or against the measure becomes far more complex. Passage would probably be easier if the measure only increased the amount of recovery to allow for inflation.
According to a briefing on the bill from A.M. Best, if the proposition is enacted it will have a far-reaching effect on residents, the medical community, trial lawyers, and insurers providing medical professional liability (MPL) in the state. The report states, "This is particularly true as it pertains to premiums charged to physicians, loss frequency, loss severity, and potential changes in average indemnity losses and loss adjustment expenses."
Proponents of the bill call it the Troy and Alana Pack Patient Safety Act of 2014, named after two children who were killed over a decade ago by a woman who was drunk and had taken over a dozen painkillers before she got behind the wheel of her car. She had visited multiple doctors in the same hospital to get prescriptions for Vicodin and Flexeril, a muscle relaxant.
Bob Pack, Troy and Alana's father, has spent the last 10 years using his expertise to create an update to the state's Controlled Substance Utilization Review and Evaluation System (CURES) which allows doctors to see what has already been prescribed for their patients. In cases of abuse, the Justice Department is alerted.
Supporters of Proposition 46 say that medical negligence is too prevalent and the bill will protect patients by allowing higher damage awards. Those opposing the measure say it will increase malpractice premiums, substantially increase costs for patients and the government, and will threaten patient privacy since all prescriptions will be included in the state's database.
State tort reform laws like MICRA have helped to mitigate and manage risk, especially in the absence of federal laws. To assess the impact the legislation would have if enacted, A.M. Best surveyed the MPL companies it rates in California, which cover almost 95% of the market. Approximately 65% of the MPL market and 70% of the rated firms responded in some manner.
While the survey results were incomplete, the respondents agreed that passing Proposition 46 would result in increased MPL rates, an increase in physician retirements, further consolidation of hospital practice groups, and an additional strain on the already existing physician shortage.
A substantial number of insurer respondents (92.6%) anticipate an overall base increase of more than 10% if the legislation passes. Insurance premiums for high-risk practices such as surgeons, obstetrics, gynecology and other specialties could be substantial.
The survey results also showed that 53.5% of the respondents believe that new claims will increase between zero and 10 percent if the measure passes, and that open claims would increase anywhere from 10 to 30 percent. Best says that since the majority of cases never make it to trial, it is logical to assume that the number of open cases would increase.
Passage of the bill could also impact reinsurance rates according to respondents, who anticipate increases from five to 10 percent.
In its summary, A.M. Best anticipates that passage of Proposition 46 will have far-reaching consequences for a number of disciplines including underwriting, claims, actuarial, legal, reinsurance, capital management and strategic planning.
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