Statement

of the

American Medical Association

to the

Committee on the Judiciary

U.S. House of Representatives

RE: Legislative Hearing on H.R. 5, to Improve Patient Access to Health Care Services and Provide Improved Medical Care by Reducing the Excessive Burden the Liability System Places on the Health Care Delivery System

Presented by: Donald J. Palmisano, MD, JD

March 4, 2003

On behalf of the physician members of the American Medical Association (AMA), I appreciate the opportunity to testify before you today regarding an issue that is seriously threatening the availability of and access to quality health care for patients. I would especially like to express our gratitude to you, Mr. Chair, and other Members of the Committee who are cosponsors of H.R. 5, for providing a much needed focus for action at the national level.

I am Donald Palmisano, MD, JD, President-elect of the AMA and a general and vascular surgeon from New Orleans, LA. The policy of the AMA is decided through its democratic policy-making process in the AMA House of Delegates, which meets twice a year. Our House is comprised of physician delegates representing every state, nearly 100 national medical specialty societies, federal service agencies (including the Surgeon General of the United States), and six sections representing hospital and clinic staffs, resident physicians, medical students, young physicians, medical schools, and international medical graduates. AMA policy dictates support for national medical liability reform. In particular, the AMA supports H.R. 5, the HEALTH Act.

Mr. Chair, you know that our health care system is facing a crisis when patients have to leave their state to receive urgent surgical care. You know that our health care system is facing a crisis when pregnant women cannot find an OB/GYN to monitor their pregnancy and deliver their baby. You know that our health care system is facing a crisis when community health centers have to reduce their services or close their doors because of liability insurance concerns. You know that our health care system is facing a crisis when dedicated professionals, who have trained for years, want to give up the work of a lifetime and retire. You know that our health care system is facing a crisis when physicians and other health care professionals believe they work in a culture of fear, rather than a culture of safety. You know that our health care system is facing a crisis when efforts to improve patient safety and quality are stifled because of lawsuit fears. An unrestrained medical liability system is driving our health care system into crisis.

As you have recognized, the time for action is past due. Physicians across the country are making decisions now, and more and more patients are wondering, “Will their doctor be there?” We must act now to fix our broken medical liability system. That is why we are here supporting H.R. 5, and that is why we join with numerous other members of a broad-based coalition known as the Health Coalition for Liability and Access to urge this Congress to promptly reform the medical liability system.

ACCESS TO CARE IS AT RISK

The crisis facing our nation’s medical liability system has not waned—in fact, it is getting worse. Escalating jury awards and the high cost of defending against lawsuits, even frivolous ones, have caused medical liability insurance premiums to reach unprecedented levels. As a result, a growing number of physicians can no longer find or afford liability insurance. Over the past two years, many physicians have been hit with medical liability premium increases of 25 to 400 percent. Some hospitals have seen premiums increase 140 percent in the same time period.

The most troubling aspect of this crisis is its impact on patients. As insurance becomes unaffordable or unavailable, physicians are being forced to close their practices or drop vital services—all of which seriously impede patient access to care. Emergency departments are losing staff and scaling back certain services such as trauma units. Many obstetrician-gynecologists and family physicians have stopped delivering babies, and some advanced and high-risk procedures (such as neurosurgery) are being postponed because physicians can no longer afford or even find the liability insurance they need to practice. According to the American Hospital Association’s 2002 TrendWatch 1, more than 26% of health care institutions have reacted to the liability crisis by cutting back on services, or even eliminating some units.

A 2002 survey conducted by Wirthlin Worldwide shows that 78 percent of Americans say they are concerned about access to care being affected because doctors are leaving their practices due to rising liability costs.

Virtually every day for the past year there has been at least one major media story on the plight of American patients and physicians as the liability crisis reaches across the country. Access to health care is now seriously threatened in states such as Florida, Georgia, Mississippi, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas, Washington, and West Virginia. On top of this, we expect at least five more states to be in a full blown crisis in the near future, with a crisis looming in at least 26 other states. A sample of media reports in the appendices to this testimony illustrates the problems faced by patients and physicians in some of these states—problems many other states will face if effective tort reforms are not enacted.

We must bring common sense back to our courtrooms so that patients have access to their emergency rooms, delivery rooms, operating rooms, and physicians’ offices.

THE LITIGATION SYSTEM IS CAUSING THE CRISIS

The primary cause of the growing liability crisis is the unrestrained escalation in jury awards that are a part of a legal system that in many states is simply out of control. While there have been several articles published since the mid-1990s indicating that increases in jury awards lead to higher liability premiums, in the last year a growing number of government and private sector reports show that increasing medical liability premiums are being driven primarily by increases in lawsuit awards and litigation expenses.

In his State of the Union Address last month, President Bush stressed that we all are threatened by a legal system that is out of control. The President stated that “Because of excessive litigation, everybody pays more for health care and many parts of America are losing fine doctors.” The President’s remarks are substantiated in several recent government and private sector reports—reports making clear that the medical liability litigation system in the United States has evolved into a "lawsuit lottery," where a few patients and their lawyers receive astronomical awards and the rest of society pays the price as access to health care professionals and services are reduced.

recent federal government reports

In a July 2002 report released by the U.S. Department of Health and Human Services (HHS), the federal government concluded that the excesses of the litigation system are threatening patients’ access to health care. This federal government report states that insurance premiums are largely determined by the litigation system, and that the litigation system is inherently costly, unpredictable, and slow to resolve claims. Just to defend a claim now costs on average over $24,000. Further, the fact that about 70 percent of claims end with no payment to the patient indicates the degree to which substantial economic resources are being squandered on fruitless legal wrangling—resources that could be used to reduce health costs so that more Americans could find health insurance.

Even when there is a large award in favor of an injured patient, a large percentage of the award never reaches the patient. Attorney contingent fees, added with court costs, expert witness costs, and other “overhead” costs, can consume 40-50 percent of the compensation meant to help the patient.

On September 25, 2002, HHS issued an update on the medical liability crisis. This update reported on the results of a survey conducted by Medical Liability Monitor (MLM), an independent reporting service that tracks medical professional liability trends and issues. According to MLM, the survey determined that the crisis identified in HHS’s July report had become worse. The federal government reported that:

The cost of the excesses of the litigation system are reflected in the rapid increases in the cost of malpractice insurance coverage. Premiums are spiking across all specialties in 2002. When viewed alongside previous double-digit increases in 2000 and 2001, the new information further demonstrates that the litigation system is threatening health care quality for all Americans as well as raising the costs of health care for all Americans. (emphasis added)

This federal government update further highlights that liability insurance rates are escalating faster in states that have not established reasonable limits on unquantifiable and arbitrary non-economic damages. The government’s report states that:

. . . 2001 premium increases in states without litigation reform ranged from 30%-75%. In 2002, the situation has deteriorated. States without reasonable limits on non-economic damages have experienced the largest increases by far, with increases of between 36%-113% in 2002. States with reasonable limits on non-economic damages have not experienced the same rate spiking. (emphasis added)

HHS also compared the range of physician liability insurance premiums for certain specialties in California, which has established reasonable limits on awards for non-economic damages, to the premiums in states that have not enacted similar limits. The results reveal how excessive awards for non-economic damages affect premiums. For example, in 2002, OB/GYNs in California paid up to $72,000 in medical liability premiums. In Florida, which does not limit non-economic damage awards, OB/GYNs paid up to $211,000 for liability coverage.

Further, a 2002 Congressional Budget Office study on H.R. 4600 (107^th Congress), which included a limitation on non-economic damages, asserts that:

CBO’s analysis indicated that certain tort limitations, primarily caps on awards and rules governing offsets from collateral-source benefits, effectively reduce average premiums for medical malpractice insurance. Consequently, CBO estimates that, in states that currently do not have controls on malpractice torts, H.R. 4600 would significantly lower premiums for medical malpractice insurance from what they would otherwise be under current law.

In Florida, as indicated in the example given above, medical liability premiums are among the highest in the nation. The situation in Florida has become so dire that Governor Bush created a special Task Force to examine the availability and affordability of liability insurance. This Task Force held ten hearings over a five month period and received extensive testimony and information from numerous, diverse sources.

Among the many findings in its report released on January 29, 2003, the Governor’s Task Force found that the level of liability claims paid was the main cause of the increases in medical liability insurance rates. The Task Force ultimately concluded that “the centerpiece and the recommendation that will have the greatest long-term impact on healthcare provider liability insurance rates, and thus eliminate the crisis of availability and affordability of healthcare in Florida, is a $250,000 cap on non-economic damages.”

recent private sector reports

Evidence that the litigation system is broken, and that the medical liability crisis is growing, is further established in a study released by Tillinghast-Towers Perrin on February 11, 2003. Tillinghast reported that “The cost of the U.S. tort system grew by 14.3% in 2001, the highest single-year percentage increase since 1986,” which is “equivalent to a 5% tax on wages.” This is the only study that tracks the cost of the U.S. tort system from 1950 to 2001 and compares the growth of tort costs with increases in various U.S. economic indicators. Some of the key findings of this study are stunning:

Ø The U.S. tort system is a highly inefficient method of compensating injured parties, returning less than 50 cents on the dollar to people it is designed to help and returning only 22 cents to compensate for actual economic loss.

Ø As of 2001, U.S. tort costs accounted for slightly more than 2% of GDP, signaling an increase after a 13-year decline in the ratio of tort costs to GDP.

Ø While the cost of the U.S. tort system has increased one hundred fold over the last fifty years, GDP has grown by a factor of only 34.

Ø Medical malpractice costs have risen an average of 11.6% a year since 1975 in contrast to an average annual increase of 9.4% for overall tort costs, outpacing increases in overall U.S. tort costs.

The study also adds that “These trends continued in 2002, with no sign of abatement in the near future.” In a press release accompanying this study, a Tillinghast principal stated that, “Absent sweeping tort reform measures, we expect most of these trends to continue in 2003 and beyond."

In a 2001 report by Jury Verdict Research, data show that in just a one year period (between 1999 and 2000) the median jury award increased 43 percent. Further, median jury awards for medical liability claims grew at 7 times the rate of inflation, while settlement payouts grew at nearly 3 times the rate of inflation. Even more telling, however, is that the proportion of jury awards topping $1 million increased from 34 percent in 1996 to 52 percent in 2000. More than half of all jury awards today top $1 million, and the average jury award has increased to about $3.5 million.

These are just a few examples of growing evidence that reveal that out-of-control jury awards are inexorably linked to the severe increases in medical liability insurance premiums. It is clear that corrective action through federal legislation is urgently needed.

blaming insurance industry investments is a red herring

Organizations opposing H.R. 5 have claimed that soaring medical liability insurance premiums are the result of declining investments in the insurance industry, and that liability reforms do not stabilize the insurance market. The reports discussed above, as well as several other authoritative and credible studies, reveal such claims to be misleading, based on flawed analysis, and contrary to the facts.

Last month, Brown Brothers Harriman & Co. (BBH) released a report ("Did Investments Affect Medical Malpractice Premiums?") that analyzed the impact of insurers’ asset allocation and investment income on the premiums they charge. BBH concluded that there is no correlation between the premiums charged by the medical liability insurance industry, on the one hand, and the industry's investment yield, the performance of the U.S. economy, or interest rates, on the other hand.

In addition, on February 4, 2003, BBH released an addendum to this study that analyzed National Association of Insurance Commissioners (NAIC) data to determine whether investment gains by medical liability insurance companies declined in the recent bear market. BBH asked the question: "Did medical malpractice companies raise premiums because they had come to expect a certain percentage gain that was not achieved due to market conditions?" BBH determined that the decline in equities (which are a small percentage of insurance company investments) was more than offset by the capital gains by bonds (which make up a substantial part of insurance company investments) due to a decline in interest rates. BBH concluded that "investments did not precipitate the current crisis."

BBH's findings are corroborated by other recent reports. On September 25, 2002, HHS released an update on the medical liability crisis addressing claims that the crisis is caused by the management practices of the insurance industry. HHS concluded that such claims are not supported by facts, stating "Comparisons of states with and without meaningful medical liability reforms provide clear evidence that the broken medical litigation system is responsible."

In addition, a summary of medical liability insurer annual statement data in A.M. Best's Aggregates & Averages, Property-Casualty, 2002 edition shows that the investment yields of medical malpractice insurers have been stable and positive since 1997. A.M. Best reports that medical liability insurers have approximately 80% of their investments in the bond market. Also, recent NAIC data show that physicians' medical liability insurance premiums between 1976-2000 have risen 167% in California (which established effective liability reforms in 1975) compared to 505% in the rest of the United States.

The report on which H.R. 5 opponents base most of their speculations, produced under the direction of J. Robert Hunter for the Americans for Insurance Reform (AIR), is flawed in a number of ways. The AIR/Hunter study purports that there is no current explosion in medical liability insurance payouts, and that the explosion in medical liability insurance premiums is due to the insurance underwriting cycle. While medical liability insurance premiums, medical liability award payouts, and tort law factors differ across states, the premium and payout data presented in AIR's report are at the national level. One cannot use national data to draw valid conclusions about how state-specific changes in premiums may be related to state-specific changes in payouts. Conclusions about what has or has not caused recent premium escalation without accounting for the state-level factors listed above are unsupportable.

In addition to claiming that the current medical liability crisis is an insurance issue, there have been attempts to argue that medical liability insurance premium rates in California have remained stable because of Proposition 103, not because of the successful medical liability reforms (known as MICRA—discussed later) that have been in place in California since 1975. Such claims are misguided. Proposition 103, also known as the Insurance Rate Reduction and Reform Act, applies to all lines of insurance, not just medical liability insurance. It was passed as an initiative by the voters in 1988 (thirteen years after MICRA), yet did not take effect until 1989. This is when the state’s high court struck down its rate rollback provisions while maintaining the remainder of the law.

Proposition 103 implemented a basic standard that “no rate shall be approved or remain in effect which is excessive, inadequate, unfairly discriminatory or otherwise in violation of this chapter.” However, Proposition 103 provides that “every insurer which desires to change any rate shall file a complete rate application with the commissioner.” Proposition 103 also requires that the Department of Insurance grant a hearing for a challenge to any increase above 15 percent for commercial lines of insurance.

According to Californians Allied for Patient Protection, “Insurers have regularly applied for and obtained significant rate increases in all lines of insurance, except medical liability where MICRA has kept the rates from rising astronomically. Between September and the end of October, 2002, for instance, the Insurance Department approved more than 75 applications for double-digit increases in insurance rates.” None of these approved increases included medical liability insurance. This illustrates that Proposition 103 is not responsible for keeping medical liability premiums down. Rather, as we discuss later, it is MICRA that has been the force behind California’s success.

Such misdirected claims as discussed above are a disservice to patients who are losing access to health care services, and an affront to the physicians and other health care professionals who dedicate their lives to healing and caring for the sick and working to find ways to improve the quality of care. America's medical liability crisis is too serious and the consequences of inaction too grave for the public and Congress to use anything but the facts to make decisions about reform. In short, these claims are counterproductive to the debate on resolving the medical liability crisis.

FEDERAL SOLUTION

The medical liability crisis is a growing national problem that requires a national solution. If the crisis was just a matter of physicians obtaining or affording medical liability insurance in one state, we might agree that a national approach would not necessarily be required. However, the problem goes far beyond physicians and other health care professionals and institutions. The medical liability crisis has become a serious problem for patients and their ability to access health care services that would otherwise be available to them, including services provided to Medicare and Medicaid patients.

Also, the premise that it is within the ability of every state to enact legislation to effectively resolve their respective medical liability crisis has been shattered by the fact that many state liability reform laws have been nullified by activist state courts or stripped of their most effective provisions under state constitutions that limit reforms. Taking into consideration that studies show the litigation system to be an ineffective, and often unfair, mechanism for resolving medical liability claims, we believe that the time is ripe for a uniform, federal approach to resolving the liability crisis.

Moreover, there is a direct and compelling federal interest in reforming our outmoded medical liability system. According to estimates by HHS, altogether medical liability adds $60 billion to $108 billion to the cost of health care each year. This means higher health insurance premiums and higher medical costs for all Americans, and especially for the federal government given that one-third of the total health care spending in our country is paid by the Medicare and Medicaid Programs. Further, HHS estimates that excessive medical liability adds $47 billion annually to what the federal government pays for Medicare, Medicaid, the State Children's Health Insurance Program, Veterans' Administration health care, health care for federal employees, and other government programs.

THE LIABILITY CRISIS AND PATIENT SAFETY

The AMA’s policy is to be part of the solution to improving patient safety and quality. The AMA believes that one preventable error is one error too many. In fact, the AMA helped launch the National Patient Safety Foundation (NPSF) in 1996 to address patient safety issues, well before publication of the IOM report. The NPSF’s approach is to create a culture of cooperative learning and mutual improvement, as opposed to a culture of shame and blame.

Quality of care improves when there is greater access to physicians and health care services. A culture of safety requires a legal environment that encourages professionals and organizations to work together to identify problems in providing care, evaluate the causes, and use that information to improve care for all patients. An over-litigious system is anathema to building a strong and effective national patient safety program.

Under our current liability system, the reality of being sued is daunting to just about everyone in the medical community. A 2002 Harris Interactive study (The Fear of Litigation Study—The Impact on Medicine) illustrates just how detrimental the litigious nature of our society is to physicians and other health care professionals. This study reveals the extent to which the fear of litigation affects the practice of medicine and the delivery of health care—“From the increased ordering of tests, medications, referrals, and procedures to increased paperwork and reluctance to offer off-duty medical assistance, the impact of the fear of litigation is far-reaching and profound.”

The study shows, among other things, that more than three-fourths (76%) of physicians believe that concern about medical liability litigation has negatively affected their ability to provide quality care in recent years, and nearly all physicians and hospital administrators feel that unnecessary or excessive care is provided because of litigation fears. It also shows that an overwhelming majority of physicians (83%) and hospital administrators (72%) do not trust the current system of justice to achieve a reasonable result to a lawsuit.

The Harris study found that a majority (59%) of physicians believe (“a lot”) that the fear of liability discourages open discussion and thinking about ways to reduce health care errors. The AMA has long believed that health professionals and organizations should be encouraged to report and evaluate health care errors and to share their experiences with others in order to prevent similar occurrences. However, this “culture of fear” caused by our over-litigious society suppresses such information.

The AMA strongly supports the principle underlying the 1999 Institute of Medicine (IOM) report entitled, To Err is Human: Building a Safer Health System, that the health care system needs to transform the existing culture of blame and punishment, which suppresses information about errors, into a “culture of safety” that focuses on openness and information-sharing to improve health care and prevent adverse outcomes. The AMA also supports the IOM’s focus on the need for a system-wide approach to eliminating adverse outcomes and improving safety and quality, instead of focusing on individual components of the health system in an isolated or punitive way.

Toward this end, the AMA supports H.R. 663, the “Patient Safety and Quality Improvement Act,” which was favorably reported by the House Energy & Commerce Committee on February 12, 2003. H.R. 663 would provide a framework to create a “culture of safety” by establishing a confidential, non-punitive, and evidence-based system for reporting health care errors. There is a very broad and strong consensus of agreement on this legislative approach within the health care community. By implementing this approach, errors can be identified and analyzed to improve patient safety by preventing future errors.

In addition to patient safety and quality improvement, the fear of litigation stifles the advancement of new medical treatments and medications, encourages physicians to practice defensive medicine, overwhelms the health care system with paperwork—leaving less time for patient care, and discourages qualified candidates from pursuing a career in medicine or from moving to a state with a bad liability climate.

THE PRACTICAL SOLUTION

The AMA recognizes that injuries due to negligence do occur in a small percentage of health care interactions, and that they can be as devastating or worse to patients and their families than injury due to natural illness or unpreventable accident. When injuries occur and are caused by a breach in the standard of care, the AMA believes that patients are entitled to prompt and fair compensation.

This compensation should include, first and foremost, full payment of all out of pocket “economic” losses. The AMA also believes that patients should receive reasonable compensation for intangible “non-economic” losses such as pain and suffering and, where appropriate, the right to pursue punitive damages.

Unfortunately, our medical liability litigation system is neither fair nor cost effective in making a patient whole. Transformed by high-stakes financial incentives, it has become an increasingly irrational “lottery” driven by open-ended non-economic damage awards. As mentioned above, studies show that our tort system, in general, is an extremely inefficient mechanism for compensating claimants—returning less than 45 cents on the dollar to claimants and only 20 cents of tort cost dollars to compensate for actual economic losses.

To ensure that all patients who have been injured through negligence are fairly compensated, the AMA believes that Congress must pass fair and reasonable reforms to our medical liability litigation system that have proven effective. Toward this end, we strongly urge Congress to pass the “Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) Act,” a bipartisan bill that would bring balance to our medical liability litigation system.

The major provisions of the HEALTH Act would benefit patients by:

Ø Awarding injured patients unlimited economic damages (e.g., past and future medical expenses, loss of past and future earnings, cost of domestic services, etc.);

Ø Awarding injured patients non-economic damages up to $250,000 (e.g., pain and suffering, mental anguish, physical impairment, etc.), with states being given the flexibility to establish or maintain their own laws on damage awards, whether higher or lower than those provided for in this bill;

Ø Awarding injured patients punitive damages up to $250,000 or up to two times economic damages, whichever is greater;

Ø Establishing a “fair share” rule that allocates damage awards fairly and in proportion to a party’s degree of fault; and

Ø Establishing a sliding-scale for attorneys’ contingent fees, therefore maximizing the recovery for patients.

These reforms are not part of some untested theory—they work. The major provisions of the HEALTH Act are based on the successful California law known as MICRA (Medical Injury Compensation Reform Act of 1975). MICRA reforms have been proven to stabilize the medical liability insurance market in California—increasing patient access to care and saving more than $1 billion per year in liability premiums—and have reduced the time it takes to settle a claim by 33 percent. MICRA is also saving California from the current medical liability insurance crisis brewing in many states that do not have similar reforms. In fact, according to MLM, as discussed above, the gap between medical liability insurance rates in California and those in the largest states that do not limit non-economic awards is substantial and growing.

MICRA-type reforms are effective, especially at controlling non-economic damages. Several economic studies substantiate this point. One study looked at several types of reforms and concluded that capping non-economic damages reduced premiums for general surgeons by 13% in the year following enactment, and by 34% over the long term. Similar results were shown for premiums paid by general practitioners and OB/GYNs. It was also shown that caps on non-economic damages decrease claims severity (i.e., amount of the claim) (Zuckerman et al. 1990).

Another study published in the Journal of Health Politics, Policy and Law concluded that caps on non-economic damages reduced insurer payouts by 31%. Caps on total damages reduced payouts by 38% (Sloan, et al. 1989). Another study concluded that states adopting direct reforms experienced reductions in hospital expenditures of 5% to 9% within three to five years. If these figures are extrapolated to all medical spending, a $50 billion reduction in national health spending could be achieved through such reforms (Kessler and McClellan, Quarterly Journal of Economics, 1997).

Further, as discussed above, a 2002 Congressional Budget Office study on H.R. 4600 (107^th Congress) asserts caps on non-economic damages have been extremely effective in reducing the severity of claims and medical liability premiums. Conversely, a 1996 American Academy of Actuaries study shows that medical liability costs rose sharply in Ohio after the Ohio Supreme Court overturned a liability reform law in the 1990s that set limits on non-economic damages. (Ohio recently enacted a new liability reform law.)

Furthermore, a Gallup poll released on February 5, 2003, show that 72% of those polled favor a limit on the amount patients can be awarded for pain and suffering. This Gallup poll is consistent with a 2002 survey conducted by Wirthlin Worldwide showing that three-quarters of Americans understand the detrimental effect that excess litigation has on our health care system. The Wirthlin survey shows that the vast majority of Americans agree we need common sense medical liability reform. In addition to the 78 percent discussed above who said that they are concerned about access to care, the survey found that:

Ø 71 percent of Americans agree that a main reason health care costs are rising is because of medical liability lawsuits.

Ø 73 percent support reasonable limits on awards for "pain and suffering" in medical liability lawsuits.

Ø More than 76 percent favor a law limiting the percentage of contingent fees paid by the patient.

CONCLUSION

Physicians and patients across the country realize more and more every day that the current medical liability situation is unacceptable. Unless the hemorrhaging costs of the current medical liability system are addressed at a national level, patients will continue to face an erosion in access to care because their physicians can no longer find or afford liability insurance. The reasonable reforms of the HEALTH Act have brought stability in those states that have enacted similar reforms.

By enacting meaningful medical liability reforms, Congress has the opportunity to increase access to medical services, eliminate much of the need for medical treatment motivated primarily as a precaution against lawsuits, improve the patient-physician relationship, help prevent avoidable patient injury, and curb the single most wasteful use of precious health care dollars—the costs, both financial and emotional, of health care liability litigation. The modest proposals in the HEALTH Act answer these issues head on and would strengthen our health care system.

The AMA appreciates the opportunity to testify on the adverse effect that our current medical liability litigation system imposes on patient access to health care and urges Congress to pass H.R. 5, the HEALTH Act.

Appendix A

APPENDIX B

Medical Liability Crisis Affects Access to Care

Crisis States

THE MEDICAL LIABILITY CRISIS—A NATIONWIDE PROBLEM

Florida

· Women are facing waiting lists of four months before being able to get an appointment for a mammogram because at least six mammography centers in South Florida alone have stopped offering the procedure as a result of increasing medical liability insurance premiums. “This trend is troubling. There are a growing number of older people and less and less people to provide mammograms,” said Jolean McPherson, a Florida spokeswoman for the American Cancer Society. South Florida Sun Sentinel, Nov. 4, 2002.

· Aventura Hospital in South Florida closed its maternity ward and cited $1,000 in insurance premiums for each delivery as the prime factor. Aventura is one of six maternity wards to close in recent months. Now, patients will be forced to drive to other counties and other facilities. “There may be waits getting into a labor-room floor,” said OB/GYN Aaron Elkin, MD. Miami Herald, Oct. 19, 2002.

· "Without a doubt, access to health coverage is being affected. Some of our emergency rooms are losing their effectiveness," said Dr. Greg Zorman, neurosurgery chief at Memorial Regional Hospital in Hollywood. His unit gets several patients a week from smaller ERs that have lost neurosurgery coverage. South Florida Sun Sentinel, February 5, 2003.

· Port Charlotte cardiologist Leonardo Victores, MD, left for Kansas in the face of medical liability premiums that were going to increase 100 percent. “He’s moving to Kansas because that state has caps on malpractice awards,” said colleague Mark Asperilla, MD. Sun Herald, Jan. 1, 2003.

· Despite having no malpractice claims or disciplinary actions on his record, Lakeland OB/GYN John Kaelber, MD, was forced to close his practice and leave the state in the wake of insurance premiums that doubled. Lakeland Ledger, Nov. 21, 2002.

· More than 50 Bradenton patients had to postpone elective surgeries and more than 100 office visits were canceled because two physicians were unable to obtain liability insurance. The insurer may leave the state altogether. Bradenton Herald, Jan. 24, 2003.

· After recently receiving notice of a premium spike coming in July 2002, Vladimir Grnja, MD, decided that he would "go bare" and drop all medical liability insurance coverage. Rates for the Hollywood, FL radiologist were to rise to $112,000 from $35,000 a year (a 220% increase), mainly because of litigation over mammograms. "No doctor wants to go bare," said Dennis Agliano, MD, chairman of the Florida Medical Association’s special task force on the Florida medical liability crisis. But with significant premium hikes in Florida for specialties like OB/GYN, neurosurgery, thoracic surgery, radiology and even primary care, "some doctors have no choice," he says. Some neurosurgeons in South Florida, are paying a $200,000 premium for coverage of $250,000 per occurrence, making insurance practically meaningless. The Florida Medical Association reports that more than 1,000 doctors in Florida have no medical liability insurance. Doctors in West Virginia and Ohio are also reportedly going bare. Modern Physician, April 1, 2002.

· Ob/Gyns in the “Sunshine State” face the highest premiums in the nation, some as high as $208,000. Many surgeons also are facing premiums in excess of $200,000.

· Fourteen of the 16 neurosurgeons in Broward County cannot afford insurance and are going “bare.” Neurosurgeons in Pinellas County are considering doing the same rather than face increases of 55 percent or greater to more than $100,000.

· The Miami Herald reports one radiologist saw his premiums increase from $32,000 to $112,000 in one year due to “mushrooming lawsuits involving mammograms.” Another radiologist told the St. Petersburg Times he would no longer read mammograms because of the high risk of being sued.

· Cardiologists and internists also are seeing insurance rates double or triple this year.

· An insurance executive told the South Florida Sun-Sentinel that insurance companies are paying out $1.30 for every $1.00 they collect in premiums, a fact that cries out for medical liability reform.

· And, what’s worse $100,000 only buys about $1 million in coverage, a small amount compared to soaring jury verdicts. Tallahassee Democrat, June 30, 2002.

· PHICO, the third largest professional liability insurer in Florida was forced into liquidation earlier this year. Zurich American Insurance Co., and Clarendon National also are leaving the Florida market. Remaining insurers are on record as saying they will draw sharper lines between which physician specialty they will and will not insure.

· Florida’s community hospitals are considering the drastic step of no longer requiring physicians to carry professional liability insurance to ensure the hospitals can remain open.

· “The squeeze is hitting South Florida extremely hard, and it’s gradually spreading out to the rest of the state,” Dennis Agliano, MD, FMA secretary and chair of its tort reform task force. (The South Florida Business Journal)

· Several Florida Supreme Court rulings have weakened tort reforms in Florida.

· “Litigation was and always will be the problem in Florida until there are caps,” said Bob White, COO of First Professionals Insurance Co., Florida’s largest carrier.

· Medical Specialists of the Palm Beaches, a 50-physician group, saw its premiums rise from $800,000 to $2.5 million this year.

· American Physicians Assurance announced on July 17, 2002 that it is leaving the state

· Farmer’s Insurance has announced its intent to leave the state. Among other insurers, MAG is still writing policies, while Medical Protective and ProNational are being very selective. FPIC, the largest medical liability carrier in the state, endorsed by FMA, is only writing very selectively. Both Clarendon and St. Paul have pulled out entirely.

· According to the FMA's General Counsel, Florida’s existing caps simply do not work and are never used. The caps only apply in cases where the physician agrees to arbitration and in order for the case to go to arbitration the physician must admit liability. In addition, the original intent of this Florida provision was to have the cap apply to each incident, but it has been interpreted to apply to per claimant, which obviously also decreases its effectiveness. The lack of a straight cap is the primary reason for the current crisis in Florida. Unlike such States as Kansas, Florida, has not seen an increase in frequency of claims, but there has been an increase for severity in jury awards.

· In a presentation before FMA, the medical liability insurance carrier, EPIC, presented facts that demonstrate the medical liability crisis in Florida. During 1975, there were 380 health care lawsuits in Florida, resulting in $10.8 million in jury awards and costing $1.5 million to defend. In 2000 there were 880 lawsuits alleging malpractice, resulting in awards of $219 million and costing $36 million to defend.

· Dr. Oliver Bayouth says his medical-malpractice premiums are skyrocketing. The Orlando obstetrician is paying about $100,000 for insurance this year, up at least 25 percent from two years ago. Frustrated, Bayouth says he is thinking about moving his practice out of Florida. Orlando Sentinel, January 20, 2002.

· In South Florida, where insurers say litigation is the heaviest, ob/gyns pay as much as $202,949 a year--the highest rates in the country, according to Medical Liability Monitor, a Chicago-based newsletter. Orlando Sentinel, January 20, 2002.

· Dr. Alan Appley, an Orlando neurosurgeon, moved his practice to Lafayette, Louisiana, last year in part to escape Florida's soaring malpractice rates. Orlando Sentinel, January 20, 2002.

· Dr. Joseph Boyer, an Orlando cardiologist, says his rates rose 64.6 percent, to $99,000, in 2002. Orlando Sentinel, January 20, 2002.

· Central Florida Cardiothoracic Surgery in Orlando says it will pay about $140,000 to insure two surgeons in 2002, compared with about $54,000 last year. Orlando Sentinel, January 20, 2002.

· Dr. Alexander Jungreis, an Orlando neurosurgeon, said his liability insurance premiums tripled this year. Orlando Sentinel, January 20, 2002.

· Dr. Jorge Perez, an Orlando internist, said his insurer canceled his policy last year even though he never had a claim filed against him. His new company is charging him $18,000 per year, compared with the $11,000 he previously paid, on top of a $25,000 fee to cover possible lawsuits from prior incidents. Orlando Sentinel, January 20, 2002.

· Nationwide, one out of every 12 doctors gets sued each year, while in Florida it's one out of every six, said Bob White, chief operating officer of Jacksonville-based First Professionals Insurance Co., the state's largest provider of medical liability insurance with about 33 percent of the market. Orlando Sentinel, January 20, 2002.

THE MEDICAL LIABILITY CRISIS—A NATIONWIDE PROBLEM

Georgia

· According to a Georgia Board for Physician Workforce study released in January 2003, 2,800 physicians in Georgia are expected to stop providing high-risk procedures to limit medical liability.

· The study also indicated that 1,750 physicians reported that have stopped or plan to stop providing ER coverage and 630 physicians plan to quit practicing or leave the state. In addition, 1 in 5 family physicians and 1 in 3 OB-GYNs reported plans to stop providing high-risk procedures, including delivering babies.

· But numbers alone do not tell the whole story; there is a very human side to this crisis. For instance, although she is only in her first year of medical school at Medical College of Georgia, the liability crisis has already caused Thandeka Myeni, 26, to reconsider her preference for obstetrics, one of the specialties hardest hit by medical liability increases. “I definitely think it could be discouraging,” she said. The Augusta Chronicle, Nov. 13, 2002.

· Evans Memorial, a rural hospital in Claxton, decided to “go bare”—have no coverage at all—instead of paying what it considered an exorbitant medical liability premium. Only one insurer offered a malpractice policy for the hospital and its nursing home, and the annual premium for $1 million in coverage would have been $581,000, up from $216,000 last year. “We just thought it was outrageous,” said Eston Price, Evans Memorial administrator. The Atlanta Journal-Constitution, Oct. 7, 2002.

· The largest hospital in the state’s health system has bought a new policy—with a deductible of $15 million—covering 953-bed Grady Memorial, a nursing home and clinics. On each paid claim below that mark, Grady is responsible for every dollar. The $15 million deductible starts again with each claim. “Grady faces open-ended liability,” said Timothy Jefferson, Grady Health System executive vice president and chief counsel. The Atlanta Journal-Constitution, Oct. 7, 2002.

· Knowing that malpractice premiums were rising for everyone in the industry, Ty Cobb Health System CEO, Chuck Adams earmarked enough money for a 100 percent increase. The bill arrived by fax this summer, just 24 hours before a check was due. Not only was the insurance company increasing his deductible tenfold, but the premium jumped from $553,000 to $3.15 million – a 469 percent increase. “We were numb,” said Adams, who eventually got an extension and another cheaper policy at $1.65 million. “There goes our expansions, like a renovation of the Hart County Emergency Room.” The Atlanta Journal-Constitution, Aug. 11, 2002.

· “Dr. Edmund Wright, a Fitzgerald family practitioner who performed Caesarian sections, has given up that part of his practice. His premiums quadrupled to $80,000 in 2002 and would have been $110,000 if he had continued the surgical delivery procedure. Wright said, “I don’t know if I really want to do this anymore.” The Atlanta Journal-Constitution, Aug. 11, 2002.

· Insurance costs are rising so high and so quickly because of medical malpractice lawsuits that many doctors are quitting medical practice, said Michael Greene, who has a family practice in Macon. The problem is increasing so fast that Georgia will soon face a critical shortage of physician, Greene said. “It hasn’t hit with a tidal wave yet, but the waves are beginning to lap at the shore,” Greene continued. The Macon Telegraph, Aug. 3, 2002.

· David Cook, executive director of the Medical Association of Georgia, said the malpractice crisis is driving more doctors into early retirement. “One-third of doctors 55 and older say they plan to reduce their hours or get out altogether,” he said. “These are physicians at the peak of their diagnostic powers.” The Times (Gainesville), July 17, 2002).

· 40 percent of the State’s hospitals have seen have seen medical liability premium go up 50 percent or more in 2002. A rural hospital in Bainbridge actually faced increases from $140,000 to $970,000.

· St. Paul was the second largest carrier in Georgia before its pull-out. The remaining insurers are raising rates for some specialties by 70 percent or greater. Some ER physicians, Ob-gyns and radiologists have not yet found new coverage.

· On average, Georgia physicians are facing premium increases of 30 percent or greater for 2002.

· Georgia physicians paid more than $92,000,000 to cover jury awards for 2000. That amount was the 11^th highest in the nation despite Georgia ranking only 38^th in total number of physicians in the United States.

· The median jury award increased from $225,000 in early 1990s to $480,000 by late 1990s.

· The number of paid claims totaling $1 million or more increased from one in 1990 to 13 in 2000. There was one claim of $2 million or more in 1991, and more than 5 so far in 2002; according to MAG Mutual, which insures 70% of Georgia physicians. Atlanta Journal & Constitution Aug. 11, 2002

THE MEDICAL LIABILITY CRISIS—A NATIONWIDE PROBLEM

Mississippi

· Although Mississippi enacted some medical liability reforms late last year, it is still too early to see if this will stem the exodus of physicians from the State. The reason: the Mississippi cap on non-economic damages has broad exceptions and the trial bar is looking for ways to get around its limits. In short, Mississippi remains in crisis.

· The Mississippi State Medical Association still estimates that the state could lose as many as 10 percent of its 4,000-4,500 physicians.

· Obstetricians in Mississippi still worry about what is going to happen to their patients who face longer trips to the hospital while already in labor. Women who used to walk or make a short drive for both prenatal visits and delivery now face a 45-minute drive by car to the only physician in their area who can still treat OB patients.

· Pregnant women who are considered high-risk, such as someone with diabetes, cannot be treated at the Kosciusko Medical Clinic because it is too risky for physicians, where seven physicians formerly practiced obstetrics and gynecology. Only three were predicted to remain in January 2003. The Clarion-Ledger, Aug. 26, 2002.

· Only two neurosurgeons remain in practice in the Gulf Coast-area of Mississippi, and general surgeons are in short supply because of the state’s medical liability crisis. “Everybody is reduced to the same low level of trauma care that we had 20 years ago,” said Steve Delahousey, vice president of operations at American Medical Response ambulance service. Jan. 29, 2003 Biloxi Sun Herald

· Neurologist Terry Smith, MD said he had applied with 14 companies, and Medical Assurance was his last hope to find coverage before his current policy expired on Aug. 4, 2002. His premium went from $55,000 a year to potentially $150,000 with a $132,000 tail to his old insurer. “I’m looking at writing a check for $300,000,” said Smith, who does brain surgery at three hospitals in Jackson and Harrison counties. Associated Press, July 11, 2002.

· Four rural hospitals in Ocean Springs faced closure, as their insurer, Medical Assurance Company of Alabama, was not renewing their coverage because the insurer was leaving Mississippi.

· Greenwood Hospital – the only trauma center in a 55-mile radius – was unable to keep its Level-II trauma center rating because area neurosurgeons have left, citing the high cost of liability insurance. Greenwood also has lost 2 of its 4 Ob-Gyns.

· At least 15 insurers, including St. Paul, have left Mississippi in the previous five years.

· Nursing homes in Mississippi have faced insurance increases as high as 900 percent in the previous two years according to industry representatives.

· Tupelo has lost 3 of its 5 neurosurgeons in the previous two years because of the State’s legal climate. A physician-delegate to the Mississippi Economic Council predicts nearly 100 physicians will leave Tupelo in the near future.

· In Cleveland, Mississippi, three of the town’s six Ob-Gyns have stopped delivering babies. Yazoo City’s 14,550 residents have no ob-Gyns. According to the Mississippi State Medical Association, insurance rates for Ob-Gyns have increased from 20 – 400 percent in the previous year.

· Since 1995, Mississippi has been home to 21 verdicts of $9 million or greater. Before 1995, there were none. In the first quarter of this year, $31 million was awarded in such cases. The total for the entirety of last year was $32 million. Daily Mississippean (Oxford, MS), July 30, 2002

· A Natchez doctor’s group is seeking to build a $6 million medical office building across state lines in Louisiana rather than face continuing lawsuits and skyrocketing insurance premiums in Mississippi.

· Mississippi has been voted the nation’s worst liability climate by the U.S. Chamber of Commerce, which has warned businesses away from doing business in the state. Rural areas are particularly hard hit by the state’s liability crisis. Twenty-five of Mississippi’s 80 counties have fewer physicians today than they did in 1990. 21 of those counties have 10 or fewer physicians.

· “The legislative process has slammed the proverbial door in the face of the entire business and medical communities,” Mississippi’s director of the National Federation of Independent Business told the Associated Press.

· Mississippi needs doctors like Kirk Kooyer, MD. He is the only pediatrician in Sharkey and Issaquena Counties, where the majority of patients live below the poverty level. Kooyer moved to the Mississippi Delta to serve those who cannot otherwise get medical treatment. Because of increasing litigation risks and high insurance premiums, Kooyer has decided to leave the Delta. His absence will put a strain on the community hospital because there is no pediatrician to take his place.

· In 2001, Bolivar County in western Mississippi had six physicians providing obstetrical care; today it has three. Obstetrics insurance for a doctor in Bolivar County jumped from $28,000 to $105,000, with a $25,000 deductible. The Wall Street Journal, May 1, 2002

· In neighboring Sunflower County, all four physicians who delivered babies have quit private practice. The Wall Street Journal, May 1, 2002

· In the northern half of the state last year there were nine practicing neurosurgeons; now there are just three on emergency call. The Wall Street Journal, May 1, 2002

· In 1998, 227 Mississippians filed malpractice suits. Based on the suits filed during the first quarter of 2002, the Medical Association Company of Mississippi predicts over 550 medical liability suits will be filed this year.

· Across the State, there is a veritable litigation explosion, in Jefferson County, for example, there are only about 9,740 residents - but the number of lawsuits filed in 1999 numbered 10,000. A year later, in 2000, the number of plaintiffs on the docket increased to 27,000, or nearly three times the number of residents. The Washington Times, May 11, 2002.

THE MEDICAL LIABILITY CRISIS—A NATIONWIDE PROBLEM

Nevada

· In August, Nevada Governor Guinn called a special legislative session to address medical liability issues. In just four days, Nevada legislators enacted a meaningful liability reform bill.

· Unfortunately, while Nevada passed needed reforms, the crisis there has not yet been averted due to continued lack of availability and affordability of medical liability insurance. Insurers in Nevada have not yet reduced their premiums and physicians are still leaving the state, particularly in Southern Nevada.

· Why? Because the trial bar has threatened to institute legal challenges to this new law that could thwart and delay its implementation. Without the full force and effect of reforms right now, the scenario that has crippled access to medical care in Nevada will continue.

· 60 percent of Las Vegas-area Ob-gyns have said they would stop delivering babies in 2002 because of the out-of-control legal system and skyrocketing liability premiums.

· Las Vegas’ only trauma center, which treated more than 11,000 patients in 2001, closed for 10 days in July 2002 because it did not have enough surgeons to staff the center.

· When a trauma center closes, “some patients are going to die that wouldn’t die . . . the quicker you’re at the trauma center, the better chance you have of survival,” a Las Vegas surgeon told NPR. The next closest trauma center is at least 5 hours away.

· “There is an unavailability of [medical liability] insurance,” said Nevada State Insurance Commissioner Alice Molasky-Arman, at a March 4, 2002 hearing where insurance officials testified they would no longer insure any new obstetricians, surgeons and other high-risk specialists.

· A Las Vegas Ob-gyn was forced to close her practice and leave 30 pregnant patients behind because her liability insurance increased from $37,000 to $150,000 in one year. She now practices in Los Angeles and pays only $17,000. Some Nevada women have had to call as many as 50 Ob-gyns just to find one who is accepting new patients.

· Nevada ranks 5th among states with the highest physician liability premiums (at $94,820 per year), but only 47^th out of 50 states in the number of physicians for its population, according to the American College of Obstetricians and Gynecologists. An ACOG survey concludes that 6 out of 10 Nevada Ob-gyns will no longer practice obstetrics.

· “Approximately 100 Las Vegas physicians have already left Nevada to practice elsewhere, announced they will be closing their practices, or retire early because they cannot afford doubling, tripling, or quadrupling rates,” according to the Nevada State Medical Association.

· In Las Vegas, it is expected that more than 10% of the physicians will stop practicing or relocate, further adding to the crisis in the state. Los Angeles Times, March 4, 2002.

· Recently, five trauma surgeons and 26 specialty surgeons made the difficult decision to resign or request leave from the University of Las Vegas Medical Center’s trauma center. Some plan to leave June 30 and others July 31. This was expected to reduce by half the number of urologists, spinal surgeons, neurosurgeons, orthopedic surgeons, and cardiothoracic surgeons who could be on call to aid patients with life-threatening injuries. Las Vegas Review-Journal, June 6, 2002.

· Obstetricians and gynecologists remain particularly hard hit, who, like trauma centers, face premium increases of as much as 500 percent. Las Vegas Review-Journal, March 6, 2002.

· Earlier this summer President Bush spoke with Jill Barnes, a Nevada resident who is more than two months pregnant. Mrs. Barnes and her husband were recently told by their home physician that he would not be accepting any new obstetrics patients. Unable to find a Las Vegas-area obstetrician to treat her, Mrs. Barnes has been forced to go out of state to find one. "When she goes into labor, she'll have to drive across the desert for two hours" to Arizona, her husband told the Las Vegas Review-Journal. The Washington Times, July 31, 2002.

· Point in fact, Dr. Shelby Wilbourn, a Las Vegas-area obstetrician-gynecologist has cut staff, stopped taking new patients and decided to leave the state (he's going to Maine) after his insurance premium jumped from $33,000 to $80,000 this year. The Washington Times, July 31, 2002.

THE MEDICAL LIABILITY CRISIS—A NATIONWIDE PROBLEM

New Jersey

· A multi-physician practice in Teaneck, NJ, was forced to layoff employees and reduce the number of deliveries it performed because of medical liability insurance premium increases of more than 120 percent. “All of my colleagues are experiencing the same pressures,” said George Ajjan, MD. Bergen Record, May 22, 2002.

· One out of every four hospitals—nearly 27 percent—has been forced to increase payments to find physicians to cover Emergency Departments. Physicians are increasingly reluctant to take on such assignments because of the greater liability exposure. Hospitals report that more and more physician specialties are being hit by the crisis. While a previous New Jersey Hospital Association survey in March 2002 found that OB/GYNs and surgeons were primarily affected, the new survey finds a deepening impact for neurologists/neurosurgeons, radiologists, orthopedists, general practitioners and emergency physicians. New Jersey Hospital Association, Jan. 28, 2003 news release.

· “We have as much to lose as they have,” said Joan Hamilton, a patient who attended a recent rally in New Jersey in support of her physician. Bergen Record, Oct. 6, 2002.

· Physicians, nursing homes and hospitals are all in jeopardy. Liability premiums for hospitals increased more than 150% over the past 3 years. A N.J. American Hospital Association survey found that nearly 2/3 of hospitals had one or more instances where physicians were forced out of medicine because of high premiums.

· 64.8 percent of all New Jersey hospitals said they have had physicians stop practicing medicine or plan to stop because of the state’s liability crisis.

· New Jersey’s largest insurer, the MIIX company, declared May 9, 2002, it is getting out of the medical liability business. Previously, MIIX insured 7,000 physicians – nearly 40% of the state. MIIX previously left the medical liability insurance markets in Ohio, Pennsylvania and Texas, citing those states’ out-of-control legal climates as an unacceptable business risk.

· After years of only a few large jury awards, New Jersey had 26 greater than $1 million in 2001, and is averaging one a week in 2002, MIIX President Patricia Costante told the Philadelphia Inquirer June 4. New Jersey has no limits on non-economic damages in medical liability cases.

· New Jersey physicians are also facing difficulty finding new insurance because PHICO, which insured 9%, and St. Paul, with 6% of the market, have pulled out.

· After making the difficult decision to no longer deliver babies, one New Jersey obstetrician will see his liability insurance rates plummet from $82,000 to $8,000. “I’m devastated,” one of patients told the Atlantic City Press.

· New Jersey physicians are predicting as many as 25% of the state’s Ob-gyns will be unable to afford liability insurance if nothing is done to stabilize the market. According to the Medical Society of New Jersey, premiums for Ob-gyns have risen 50% to 200% over the past year.

· The New Jersey Supreme Court ruled May 29, 2002, that ER doctors are not immune from lawsuits under the state’s good Samaritan law and may be sued for malpractice.

· Some general surgeons are seeing rate increases from $30,000 to $110,000. Zurich, one of the remaining liability insurance carriers has informed physicians it will raise rates 120 percent.

THE MEDICAL LIABILITY CRISIS—A NATIONWIDE PROBLEM

New York

· New York physicians still pay, in most instances, the highest medical liability premiums in the country. Ob-gyns’ average premium is $144,973, according to the American College of Obstetricians and Gynecologists.

· New York continues, by far, to lead the country in total medical liability payouts, with $633 million total in 2000. That is 80% more than the state with the second highest total, Pennsylvania (at $352 million), and 300% more than California (at $200 million). Average medical liability verdicts have skyrocketed recently, going from an average of $1.7 million in 1994 to $6 million in 1999.

· “The number of doctors leaving Erie County last year doubled from the previous year, a trend that continues in 2002,” wrote Donald Copley, MD, an officer of the Erie County Medical Society in Business First of Buffalo. “I’ve watched sadly as valued colleagues have left Erie County and even the profession. A competent young specialist recently quit doing high risk diagnostic procedures to become a business consultant. Several local obstetricians have stopped delivering babies to reduce their insurance expenses. A half dozen nationally-known doctors have quietly left Western New York. The number of doctors leaving Erie County last year doubled from the previous year, a trend that continues in 2002.” Buffalo Business First, April 15, 2002.

· The Medical Society of New York says the trend of physicians leaving New York State or retiring early is happening across the state.

· “The rising cost of malpractice coverage is becoming one of the most important factors driving inflation for physicians’ services,” said a managing director of the Carlyle Group, the investment group for The New York Times.

THE MEDICAL LIABILITY CRISIS—A NATIONWIDE PROBLEM

Ohio

· The Ohio Supreme Court has overturned three tort reform measures in the past 15 years. Following the state Supreme Court’s 1995 overturning of the state’s tort reforms, premium increases and jury verdicts began rising. Family physicians in rural areas are increasingly no longer performing obstetrical services. Recently, Ohio again enacted medical liability reforms, but it is too soon to tell if the courts there will let these reforms take root.

· Meanwhile, according to a recent Ohio State Medical Association survey, 79% of Ohio physicians reported an increase in their medical lawsuit insurance costs over the last two years, with an average increase of 41%. And 51% of Ohio physicians are contemplating early retirement, while 15% are considering or have relocated their practices, as a result of rising costs.

· Physician groups in Cincinnati are seeing increases between 20 and 100%. “I expect this to get worse,” Ken Folz, CEO of Patient First, told the Cincinnati Business Courier.

· According to Daniel J. McLaughlin, a vascular surgeon in Cleveland, some specialists in the region have seen their malpractice premiums increase 600 percent this year, and typical premiums for surgeons with just three or four years of experience have doubled or tripled, to from $50,000 a year to as much as $100,000 or more. Health Leaders Magazine, Sept. 2002.

· In July, Westlake oncologist Dr. Romeo Diaz was faced with an insurance premium of $80,000 – double what he paid last year. He would have gone out of business had it not been for his patients, who raised the needed $40,000 to help Diaz stay insured. ''At first I thought he was playing,'' said Kathy Fritsch, a patient of Diaz for 10 years. ''But when he looked up at me, he was crying. He said his insurance rose from $40,000 last year to $80,000 this year. It used to be $20,000.'' Morning Journal, July 31, 2002.

· Dr. William Hurd, chairman of the department of obstetrics and gynecology at the Wright State University School of Medicine, said the liability insurance issue already is driving young doctors out of the Dayton area. "In the last two years, not a single one of our (OB/GYN) residents has set up a practice in Dayton, or even Ohio," Hurd said. Dayton Daily News, Aug. 28, 2002.

· The average jury verdict in Ohio was $11.7 million in 2001. In 2000, it was $8.6 million.

· Physicians in Cleveland are being forced to lay-off staff and discontinue high-risk procedures, reported the Cleveland Plain Dealer February 18, 2002.

· After not replacing a retiring office manager and moving to a smaller office, a 55-year old Cleveland-area surgeon who was only sued once quit practicing medicine rather than accept an 80% liability premium insurance increase. Another surgeon, who has never been sued, no longer performs high-risk procedures and saw his insurance rates jump from $40,000 to $90,000 in one year.

· “If I were advising medical students now, I would tell them to take a real hard look at going into some of these high-risk specialties,” John Bastulli, MD, told the Plain Dealer.

· Ohio ranked among the top five states for premium increases according to the Medical Liability Monitor.

· “My premium jumped this year from $14,000 to $35,000. I can’t afford to continue obstetrics at that price. I’ll have to give up delivering babies as of Jan. 1, 2003. I practice in a primarily rural area, and there isn’t any other obstetrical care here, so expectant women will have to drive long distances to receive prenatal care. Some 75% of my patients don’t have the financial resources to do so. Yet, studies have shown that proper prenatal care fosters healthier newborns and healthier newborns cost society less money. I find it difficult to accept that my liability insurance premiums will force me to give up a side of my practice that has meant a lot to me and to my patients, but I’ll have no recourse.” – A Mt. Gilead family practitioner.

· “We’ve done the math: If we’re going to take care of this debt (our annual insurance payment will increase from $100,000 to more than $500,000), our service is going to go out the window. To recoup the loss, we’d have to add 400 patient visits a month. You can’t turn ob-gyn into a factory.” – A Columbus obstetrician-gynecologist.

· “I just sat down with paper and pencil, and it became not financially rewarding to stay.” – An Athens obstetrician-gynecologist, in reference to why he retired from his practice early.

· “I practice in southern Ohio in a town of 7,000. We have a small community hospital with a family birth center. There are three of us who do obstetrics – two family practitioners and one OB/GYN. In order to break even, our unit needs 150 deliveries a year. That is 50 deliveries each. If we go over 30 deliveries now, our premiums are in the $40-60,000 range, which is impossible financially. We are struggling with limiting our ob to 30 each, but that will cause the OB unit to go under and close. We all love ob, and are well trained in providing high-risk OB care, but we’re going to be forced to stop. If this occurs, there will be no OB care between Athens and Lancaster, Ohio. Tort reform needs to occur yesterday!” – A Logan family practitioner

· “I’m just postponing the inevitable. If the situation doesn’t change, I could be insolvent in five years and have to close my practice. I’m only 49. Who will care for my patients? Discontinuing obstetrics is not an option. We need help!” – A Dayton obstetrician

· “In the past two years, my medical liability premiums have increased more than 50%. I have no claims, graduated first in my medical school class, and was chief resident at OSU. I had been treating some of my chronic pain patients with acupuncture (medical research documents decreased pain and decreased inflammation with acupuncture). Due to the skyrocketing medical liability premiums, I will have to stop offering this treatment for these patients to try to decrease my costs of insurance.” – A Columbus physical medicine and rehabilitation physician.

· “My premiums increased significantly, but my reimbursement level is down because of the Medicare cuts. In order to stay in practice, I had to float a loan from my pension fund. I am actively looking to leave this state. I know of one colleague who gave up his private practice and went to work at the local VA hospital, so they would cover his liability premium. – A Warren cardiologist.

· “This five physician practice recently had to give up obstetrics due to our rates. We have been committed to delivering full-range family practice…true womb to tomb medicine. We had to send our patients to local OBs. We and our patients are devastated by this turn of events.” – A Medina family practitioner

· “After a mad scramble to obtain insurance, it came down to 5:45 p.m. on the day before my insurance expired to obtain insurance. I was literally 15 minutes from having to close a practice that cares for over 4,000 people in this town.” – A Coldwater family practitioner

· “We have an obstetrician-gynecologist retiring because his insurance company pulled out of Ohio. To buy a tail and the new policy would cost this man $140,000, which he couldn’t afford to do.” – A Rossford obstetrician-gynecologist.

· “I was told two months ago that I will have no insurance after the 11^th of September. I have had no claims filed against me.” – An Akron general surgeon

· “My carrier has refused to cover me for bariatric procedures. I have had to turn patients away who need this service.” – A Massilon general surgeon

THE MEDICAL LIABILITY CRISIS—A NATIONWIDE PROBLEM

Oregon

· Rural families in John Day, Hermiston, and Roseburg counties, Oregon have either lost obstetric care or have seen services drastically reduced. The Business Journal of Portland, Jan. 10, 2003.

· Only by dropping obstetrics were two Hermiston physicians able to afford their liability insurance premiums. “It’s something you don’t like to tell patients,” said Doug Flaiz, MD. The Oregonian, Oct. 29, 2002.

· “No one with $100,000 in debt from medical school wants to start a practice in a place where they could find themselves completely broke and having to pick up and go somewhere else to start all over again,” said Rosemari Davis, CEO of Willamette Valley Medical Center, who has seen three of her center’s family practitioners stop delivering babies. The News Register, Jan. 28, 2003.

· In 1999, the Oregon Supreme Court overturned the State’s law capping non-economic damages. Since then, multi-million dollar claims have become commonplace, according to the Oregon Medical Association.

· Since the 1999 decision, Oregon physicians are experiencing rapidly rising premiums and insurers becoming more reluctant to offer policies to physicians, such as Ob-gyns and surgeons, who perform high-risk procedures.

· Recent jury verdicts include: $8 million, $8.5 million, $10 million and $17 million.

· Rural patients in Oregon are being particularly hard hit. A small town clinic, Roseburg Women’s Healthcare, which delivered 80% of the babies for the area, closed its doors in May 2002 because its liability insurance was canceled after one large lawsuit. “We consider this a medical crisis for the community,” Mercy Medical CEO Vic Fresolone told the Associated Press.

· The Roseburg clinic physicians paid $17,000 per physician per year in 2001 for medical liability insurance and are now receiving quotes for $80,000 -100,000 per physician.

· Oregon’s only academic health center – the Oregon Health & Science Center – reports fewer medical students are applying for its Ob-gyn residency positions. Ob-gyn residents elsewhere reportedly are increasingly concerned about setting up practice in Oregon due to the state’s broken liability system.

· A major liability insurer, Northwest Physicians Mutual Insurance Company, announced in 2002 it would not write new policies to obstetricians. Remaining insurers are raising rates by 60% or more.

· “We lost $12.5 million last year (2001),” Jim Dorigan, CEO of Northwest Physicians Mutual, told the Portland Business Journal June 21^st. Dorigan also said the company no longer is renewing policies for any physician who delivers babies.

· A level-III trauma center in Rogue Valley is dropping its trauma designation to obtain professional liability insurance. Rates would have been unaffordable if neurosurgery continued to be performed.

THE MEDICAL LIABILITY CRISIS—A NATIONWIDE PROBLEM

Pennsylvania

· According to the Pennsylvania Medical Society Alliance, 919 doctors have decided to leave the Keystone State or have scaled back their practices as premiums spiraled upward over the past three years. The Baltimore Sun, Feb. 5, 2003.

· Dr. Anthony Clay never thought he would have to leave Philadelphia. He has spent his whole life there—growing up and attending college, medical school, and residency to become a cardiologist. He treats families he has known since boyhood. He likes knowing where his patients live, work, and shop. All nine of his siblings still live there. But, Dr. Clay is leaving his practice in Philadelphia this Spring because of surging malpractice insurance rates. He is starting over in Delaware, where his insurance costs will drop from roughly $70,000 a year to $8,000. "It's been terrible," said Dr. Clay, 40. "In this field, you've been with the patient, and also the family, in some of their most life-defining moments - in the throes of a heart attack with no blood pressure. Wrongly or rightly, the patient credits you with being there when they weren't doing so well. You realize you've created a bond. I take that very seriously." Baltimore Sun, February 5, 2003.

· Brian Holmes, MD, is one of an estimated 18 percent of Pennsylvania neurosurgeons to have left the state, retired, or limited his or her practices because of the medical liability crisis. “It saddened me to move, but I had no choice. It was either move or go out of business.” Philadelphia Business Journal, Sept. 25, 2002.

· After 25 years of practice, OB/GYN Michael Horn, MD, stopped delivering babies in 2002 because of the fear of getting sued. “It’s just the potential, the not knowing if someone will seek an outlandish reward. I don’t want to expose myself or my family.” Burlington County Times, Oct. 2, 2002.

· Medical students are less likely to seek residencies in Philadelphia, and residents are less likely to stay and practice in the area because of “prohibitively high” medical liability insurance rates, according to Jefferson Medical College professor Stephen L. Schwartz, MD. Associated Press, Oct. 4, 2002.

· OB/GYN Lawrence Glad, MD, used to deliver about 500 babies a year—40 percent of all the babies born in Fayette County annually. After his premiums skyrocketed from $57,000 to $135,000, however, he closed his practice in the fall of 2002. Pittsburgh Business Times, Nov. 18, 2002.

· Mercy Hospital chief of surgery Charles Bannon, MD, has watched numerous physicians leave Scranton and Lackawanna County—creating a shortage of surgeons, fewer medical school applications and residencies. “It will take generations to get back the quality of medicine in Philadelphia.” Scranton Times, Nov. 20, 2002.

· Physicians across the “Keystone State” have left, retired, and stopped performing high-risk procedures. Those who have stayed face skyrocketing premiums, extremely nasty legal climate. Methodist Hospital in South Philadelphia closed its maternity ward and prenatal program last year because of unaffordable medical liability insurance rates. Mercy Hospital of (South) Philadelphia announced June 19, 2002 it would closed its ob ward August 23rd.

· Pennsylvania has the second highest payouts in the country for medical liability lawsuits. Pennsylvania’s total in 2000 was $352,309,905 - nearly 10 percent of the national total despite having less than five percent of the national population.

· Orthopedic surgeons in Pennsylvania face insurance premiums of nearly $100,000. In California, which has strong tort reforms, orthopedic surgeons pay an average of $36,310 for yearly liability insurance coverage.

· A recent poll, conducted by Susquehanna Polling Research, shows that 31 percent of doctors participating in the study had their existing liability insurance cancelled or non-renewed for 2002.

· 72% of Pennsylvania doctors have deferred the purchase of new equipment or hiring of new staff because of out-of-control liability costs.

· 270 employees at the Jefferson Health System in Philadelphia have recently lost their jobs to skyrocketing liability insurance costs. The Einstein Network laid-off 127 workers and eliminated 52 vacant positions in April 2002, citing rising liability costs as the prime factor.

· Philadelphia County, which has one of the worst liability climates in the nation, has seen its surgical specialist population decrease 13.4% from 1995 to 1999. The average jury award in Philadelphia County is $970,000 while the rest of state’s average is $420,000.

· A shortage of radiologists willing to read mammograms has increased the wait time for screening mammograms at most major hospitals to two to three months, according to the Pennsylvania patient advocacy group Concerned Citizens for Care.

· The Level-II trauma center at Brandywine Hospital in Coatesville closed June 10th, because of rising malpractice insurance rates. Area trauma patients are now being transported more than 30 miles away to hospitals in Philadelphia and Lancaster. The Washington Times, July 17, 2002.

· “As I look around and see my friends retiring early or leaving Pennsylvania, I wonder who will be next,” Meadville physician Tom Arno, MD, wrote in USA Today.

· 414 medical liability lawsuits were filed in Philadelphia County in February 2002 – five times the average number filed during the month over the previous decade, reported the Philadelphia Inquirer.

· One-quarter of respondents to an informal poll conducted by the American College of Obstetricians and Gynecologists say they have stopped or are planning to stop practicing obstetrics.

· Statistics compiled for the Pennsylvania Medical Association by Caso Consulting indicate it costs $96,199 to cover an orthopedic surgeon in Pennsylvania, compared with $37,783 in Delaware, and $36,291 in New Jersey. Best’s Insurance News, January 7, 2002.

· Howard A. Richter, a neurosurgeon and president of the Pennsylvania Medical Society, said a 2001 survey by the medical society showed that 72% of doctors have either deferred the purchase of new medical equipment or have not hired needed staff because of "sudden and sharp increases" in insurance rates. Best’s Insurance News, January 21, 2002.

· “To lower their risk and insurance premiums, doctors who normally would take on high-risk medical procedures are opting not to do so. For example, we've seen obstetrician/gynecologists give up delivering babies. Virtually every medical liability insurance carrier increased their rates in recent years. From the beginning of 1997 through September 2001, major liability insurance carriers writing in Pennsylvania increased their overall rates between 80.7 percent and 147.8 percent.” York Daily Record, January 20, 2002.

· Driving premiums through the roof are excessive sums awarded in malpractice suits. Medical liability payments for physicians in 2000 totaled $3,908,113,303. York Daily Record, January 20, 2002.

THE MEDICAL LIABILITY CRISIS—A NATIONWIDE PROBLEM

Texas

· In the “Lone Star State” medical liability insurance premiums for physicians have skyrocketed as much as 300 percent in some regions and for some specialties, acccording to the Texas Medical Association. As a result, there is only one neurosurgeon serving 600,000 people in the McAllen area.

· In the past two years, four South Texas patients with head injuries died before they could be flown out of the area for medical attention. As reported in a July 10, 2002, article in The Courier, a community family practice clinic in Conroe (just north of Houston) was recently forced to turn away half of its normal patient load because its liability insurance provider would not provide coverage while “highly lawsuit-risky obstetrics training was conducted.”

· Even though the Texas legislature has passed medical liability reforms, the Texas Supreme Court has regularly overturned them.

· Medical liability premiums were expected to increase by at least 20 percent and perhaps as much as 75 percent in 2002, according to the Texas Department of Insurance. San Antonio Express-News, April 8, 2002.

· In 1999, 17 companies offered malpractice coverage to doctors in Texas. Today, the field has dwindled to only four, and Texas is considered the least profitable state for liability carriers. The Dallas Morning News, September 1, 2002.

· Moreover, premiums this year have climbed at triple-digit rates for many of Texas' 36,000 physicians. That's on top of double-digit increases in prior years. Now it's not uncommon for doctors in high-risk specialties such as trauma surgery, emergency medicine, and orthopedic surgeries and obstetrics to pay more than $ 100,000 annually for coverage. This means that some 6,100 Texas physicians are scrambling to find liability insurance.

· The Doctor’s Company, a national insurer, told the Dallas Morning News the company is selective about which types of physicians it will cover. “Texas is a very dangerous venue, and we don’t really encourage . . . [growth] from there – not without tort reform,” said senior vice president Jack Myer.

· In South Texas, one jury awarded $43 million to a woman who claimed a diabetes drug damaged her liver, while another gave $15 million to three women who received faulty hip implants. The Wall Street Journal, May 1, 2002.

· 6 of every 7 medical liability claims in Texas are closed with no fault found on the doctor’s part. Nonetheless, tens of millions of dollars are spent fighting these cases.

· Family physician Marissa Iniga, MD, has been sued 12 times in the past 13 years. All of the lawsuits were dropped but her insurance premiums still went up 200 percent. Her situation is mirrored by many physicians throughout Texas.

· Several physicians in Corpus Christi have been sued by patients they have never seen, but it required thousands of dollars to have the cases dismissed.

· Currently obstetrician/gynecologists in Cameron, El Paso and Hidalgo Counties are paying one carrier a premium of $102,584 annually compared to their counterparts in Dallas County who pay $59,221. Another carrier charges thoracic surgeons in Cameron, El Paso and Hidalgo Counties $79,218 annually compared to $57,395 for those practicing in Dallas County.

· 70% of Texas physicians who practice near the U.S.-Mexico border have had medical liability claims filed against them, and 60% have been sued, according to the Texas Medical Association. 55% of physicians there are inclined to leave the border and practice elsewhere or retire during the next 12 months; 71% to 76% of border doctors say they cannot recruit new doctors to the border due to lawsuit crisis, and 1 out of 3 border physicians have had insurance carriers decide to stop writing coverage.

· The high cost of malpractice insurance for local doctors is driving them away from Laredo. The three main issues for this exodus are the high price of malpractice insurance for border area physicians, tort reform and the fact that Medicaid and Medicare do not reimburse border area physicians proportionate to what they do farther north, director of Community education/Physician Relations Mindy Casso said. Laredo [Texas] Morning Times.

· The second-highest premiums for obstetricians/gynecologists are paid in Houston, Dallas and Galveston, Texas, where the bills amounts to some $160,746 a year. Orlando Sentinel, January 20, 2002.

· “Dr. William F. Tucker, an orthopedic surgeon, figured he'd try to curb the cost of his malpractice insurance premium by abandoning spinal surgeries and reducing his emergency room calls. Both decisions cut down on his income but provided him with a greater sense of security as malpractice lawsuits against doctors become more common in Texas and the nation. Then came the shocking news that his premium would rise by 63 percent to $38,000.” The Dallas Morning News, January 20, 2002.

· The problem is particularly acute in Texas, where 51.7 percent of all physicians in 2000 had claims filed against them, according to the Texas Medical Examiners Board. Although no concrete numbers are available as a comparison, several industry experts say the frequency is twice the national average. The Dallas Morning News, January 20, 2002.

· In Texas, about 85 percent of cases are closed without payment to plaintiff, yet they still cost money to resolve, said Texas Medical Liability Trust president W. Thomas Cotton. The Dallas Morning News, January 20, 2002.

· Insurance carriers in Texas paid more than $381 million in claims in 2000, according to the Texas Department of Insurance--costs passed on to policyholders. That's an 87 percent increase since 1995. Nationally, the median malpractice award more than doubled from 1994 to 1999, to $800,000. The Dallas Morning News, January 20, 2002.

· Texans filed 4,501 claims in 2000, up 51 percent from 1990, according to the Texas Medical Examiners Board. More troublesome is the rise in expenses involved in resolving a case. Each claim cost an average of $68,681 to litigate in 2000, compared with $46,079 in 1995. The figure does not include the amount of settlement or award. The Dallas Morning News, January 20, 2002.

· Meanwhile, physicians in the Rio Grande Valley are in crisis, said Texas Medical Liability Trust president W. Thomas Cotton. An OB-GYN in North Texas pays $47,500 annually for $500,000 in coverage, while his Rio Grande Valley counterparts pay $82,300. Neurosurgeons pay even higher premiums. The Dallas Morning News, January 20, 2002.

· Seven in 10 Rio Grande Valley doctors have had medical liability claims filed against them. A February 2001 survey by the Texas Medical Association found that 1 in 3 Valley doctors say their insurance providers have stopped writing liability insurance. The Dallas Morning News, January 20, 2002.

· In Rio Grande Valley, half of the physicians admitted to being inclined to leave the area or to retire, according to a survey conducted in February 2001 by the Texas Medical Association. Many doctors in the Valley said they profile patients and refuse to treat some, because they fear the patients are prone to sue. They said they deny care for people who pay with cash, because the patients are most likely poor and may look at a lawsuit like a lottery opportunity. Some physicians are even hesitant to respond to a "code blue," which indicates a medical crisis, in a hospital. Dr. Carlos Cardinez, a gastroenterologist in McAllen, said he doesn't want to respond anymore because of the legal uncertainty. The Dallas Morning News, January 20, 2002.

· Increases in medical practice costs have outstripped revenue increases over the last 10 years, according to the Medical Group Management Association's 2000 cost survey. Operating costs for multispecialty groups went up an average of 35 percent over the past 10 years, while revenue increased 21 percent over that same period. The Dallas Morning News, January 20, 2002.

THE MEDICAL LIABILITY CRISIS—A NATIONWIDE PROBLEM

Washington

· “There is a growing crisis in medical malpractice in Washington state and nationally,” state insurance commissioner Mike Kriedler said in an April 2002 news release.

· "Patients in many communities are finding that their physicians have either started limiting their services or have closed their doors completely due to rising malpractice premiums," said Dr. Maureen Callaghan, president of the Washington State Medical Association. PR Newswire, Feb. 3, 2003.

· “I went through my mourning and my grieving, and now I have to find a place for my [380] patients,” said a South Send internist who has not been sued but can no longer afford liability insurance coverage.

· The cost of medical malpractice insurance has soared so high that Mount Vernon obstetrician Robert Pringle, MD, has stopped delivering babies, according to the Puget Sound Business Journal.

· So have his two colleagues at the North Cascade Women's Clinic, and so have others. "Of the nine obstetricians in our community, six have stopped delivering babies or left the area," Pringle said.

· When he began his practice 20 years ago, Pringle paid a premium of $1,000 for medical malpractice insurance, which covers physicians against claims of injury resulting from negligent medical care. "Now it's in the neighborhood of $60,000," he said. "From an economic standpoint, you would have to be a lunatic to continue private practice of obstetrics." Puget Sound Business Journal.

· The severe premium hikes besetting many doctors "could not come at a worse time," said Dr. Sam Cullison, president of the Washington State Medical Association. Cullison said the high cost of malpractice insurance has combined with low reimbursement rates from Medicaid, Medicare and private insurers to clamp many doctors in a financial squeeze. As a result more physicians are retiring early, or leaving the State, he said. Also, it's increasingly difficult to recruit doctors from other states.” Puget Sound Business Journal.

· "Everyone is in the same situation in terms of increasing premiums, increasing overhead and decreasing reimbursement," said Olympia neurologist Maureen Callaghan, MD. "The final end point," she added, "is that people are not to be able to get in to see a doctor." Puget Sound Business Journal.

· During the past five years, medical liability premiums paid by orthopedic surgeons increased 30 percent, to nearly $40,000, and premiums paid by family physicians who neither deliver babies nor do surgery rose 29 percent, to almost $10,000. Washington State Medical Association.

· In Washington, from 1999 to 2000, the median jury award rose 43 percent. Last year, seven medical malpractice verdicts or settlements exceeded $1 million. They totaled $44.7 million, and ranged from $1.2 million to $16.2 million.

· Washington’s Supreme Court overturned the state’s tort reform law in 1989. As a result skyrocketing medical liability insurance premiums are forcing physicians to limit patient loads and services. Some physicians are choosing to move out of State and retire early as well.

· In the past five years, the average medical liability premium for a family physician has increased a staggering 74 percent, according to the Washington State Medical Association. For obstetricians, the increase has been more alarming – 79 percent since 1997.

· The departure of liability insurers St. Paul and Washington Casualty Company from Washington have left thousands of physicians scrambling to find coverage.

· The Steck Medical Group, which serves 60,000 patients in mostly rural Washington, was forced to close its doors for a few days this year because it could not find liability insurance coverage. It re-opened only after the state insurance commissioner intervened, but the new policy was at a 160% increase.

· Clinics in Lewis County and Waterville also have been forced to close temporarily according to The Olympian.

· Recent large jury awards in Washington State include $13 million and $16 million verdicts.

THE MEDICAL LIABILITY CRISIS – A NATIONWIDE PROBLEM

West Virginia

· The “Mountaineer State” was one of the first states to experience wide-spread medical liability insurance problems.

· According to the West Virginia State Medical Association, some 100 doctors have already retired early or moved out of the state within the previous two years.

· That has helped drive 1 out of every 20 doctors out of West Virginia or into early retirement in the past two years. CNN, Jan. 2, 2003.

· General surgeon Gregory Saracco, MD, only 49 years old, was forced to borrow money twice in 2002 to pay $73,000 for his liability insurance. His premiums for 2003 are expected to rise to $100,000. He is considering leaving West Virginia and while he has taken time away from his practice this year to decide what his options are, he said “my job is to help people—I couldn’t drive past an accident on the road and not stop. I don’t know any doctor that could.” Associated Press, Jan. 2, 2003.

· Although orthopedic surgeon George Zakaib, MD, was raised and went to school in Charleston, WV, he and his family left because of the state’s medical liability crisis. Dr. Zakaib’s premiums had increased to $80,000 plus $94,000 in “tail” coverage. Charleston Daily Mail, July 27, 2002.

· Fourth-year medical school student Jennifer Knight isn’t sure she’ll stay in West Virginia. The Charleston Area Medical Center says fewer medical students are applying to its residency programs, and fewer students are applying to Marshall University’s medical school. “I think the problem is, we have too many frivolous lawsuits,” said Ms. Knight. Sunday Gazette-Mail, Nov. 24, 2002.

· The state legislature has been trying for more than a year to come up with a solution that will prevent more physicians from curtailing services or leaving the state. A state medical association poll found that 40% of the State’s doctors are considering similar action to stop practicing or leave the State.

· “It’s a ‘code blue’ emergency” threatening the state’s trauma centers and other health care services in the state, WVSMA President Ahmed D. Faheen, MD, told The New York Times.

· Wheeling, West Virginia, has no remaining neurosurgeons, forcing closure of its only trauma center. Trauma patients must be flown by helicopter for care elsewhere.

· Across the State, the pattern is the same, trauma centers are closing or headed in that direction, and there is incredible difficulty in recruiting high-risk specialty residents.

· Earlier this year, in the State Capital, the Charleston Area Medical Center (CAMC) was able to keep its level-I trauma center open only after agreeing to help surgeons pay their liability premiums. The one part-time and three full-time surgeons are paying $800,000 in liability premiums this year, according to a report in the April 25, 2002 Charleston Gazette.

· Now, after the loss of several orthopedic surgeons, CAMC can no longer offer 24- hour coverage seven days a week. That means patients with serious multiple injuries, usually car wreck victims, must be transported to other cities. Precious time that could mean the difference between life and death will be lost. The Charleston Daily Mail, August 29, 2002.

· The Medical Liability Monitor reported that West Virginia surgeons paid premiums of $36,094 to $56,371 a year in 2001 -- the seventh highest in the nation. This year these premiums have continued climbing dramatically. The Charleston Daily Mail, August 29, 2002.

· As the The New York Times has reported, the Bluefield Regional Center – a rural hospital – has lost 12 physicians in the previous two years but only has been able to find two physicians to replace them.

· A survey of state Ob-gyn residents by the American College of Obstetricians and Gynecologists found more than half plan to leave when they finish training.

· Without action, the future is not bright. The Charleston hospital faces an 11% - 41% drop in residency applications this year. “We are concerned that students will not think the residency opportunities in West Virginia favorable in light of the recent problems with malpractice insurance,” Dean James Griffith, MD, told the Charleston Gazette.

APPENDIX C

Medical Liability Crisis Affects Access to Care

Selected States Showing Problem Signs

THE MEDICAL LIABILITY CRISIS—A NATIONWIDE PROBLEM

Alabama

· The severe liability crisis in the neighboring States of Mississippi, Georgia and Florida has not left Alabama untouched.

· Atmore Community Hospital has had to close its maternity ward because of soaring medical liability premiums, forcing pregnant mothers to travel 15 miles to the nearest hospital with an obstetrics department.

Arizona

· Arizona has not been immune to the medical liability crisis. Serious access problems are already developing.

· The Copper Queen Community Hospital, was forced to stop delivering babies in January after a group of family physicians said they could no longer afford medical liability insurance.

· Pregnant mothers in this part of Arizona must now travel over 35 miles to the nearest hospital – the only hospital left in that County that is still delivering babies.

Connecticut

· The crisis may be spreading to Connecticut as evidenced by the recent decisions of 28 OB/GYNs to stop delivering babies.

· Some OB/GYNs in Connecticut are now paying between $120,000-$160,000 per year in insurance premiums, according to state medical society executive Tim Norbeck.

· Connecticut already is on a “watch” list issued by the American College of Obstetricians and Gynecologists. Hartford Courant, Jan. 3, 2003.

· The average payment made by one of Connecticut’s major insurers to resolve a claim rose from $271,000 in 1995 to $536,000 in 2001.

· OB/GYN Jose Pacheco, MD’s, insurer stopped offering medical liability insurance, and he had to seek another carrier. However, because of the high cost of new insurance—estimated around $60,000—combined with “tail” coverage of $80,000, Dr. Pacheco retired after a 27-year career. Hartford Courant, Nov. 17, 2002.

Kentucky

· Health care access problems will worsen in the “Blue Grass State,” as medical liability premiums continue moving rapidly upward.

· Based on a survey by the Kentucky Medical Association, physicians in Kentucky have faced a recent average increase in medical liability premiums of 78 percent.

· Kentucky emergency department physicians have reported an average increase of 204 percent, with orthopedists facing a 122 percent increase; general surgeons facing an 87-percent average increase, and ob-gyns seeing an average increase of 64 percent.

· Deep in Appalachia, the only provider of obstetrical services in Barbourville soon may have to close its practice due to the liability crisis. Previously, this physician group had liability insurance coverage through St. Paul Company, the nations second largest malpractice insurer that pulled out of the market last year.

· This same 9-physician practice also has an office in Corbin, where two resident physicians from the University of Kentucky College of Medicine train in conjunction with Baptist Regional Medical Center. If the physicians are forced to close the practice, the residents will have to be placed out of State for the remainder of their training. leaving a tremendous access problem for the Kentucky women they treat.

Massachusetts

· In the Bay State, eight of 55 OB/GYNs in Springfield, Massachusetts, a state which has broad exceptions to the state limits on non-economic damages, will no longer be offering Obstetrics care to their patients because of sharply escalating liability insurance costs. “I got into obstetrics because it’s a very happy specialty. But there comes a point where you can’t make ends meet,” said James Wong, MD, one of two OB/GYNs at a western Massachusetts clinic giving up delivering babies. Boston Globe, Jan. 8, 2003.

· “The real issue is runaway juries,” according to Barry Manual, MD, who serves as insurer ProMutual’s chairman, and said the number of $1 million-plus claims paid out doubled between 1990 and 2001. Boston Globe, Jan. 8, 2003.

Missouri

· The State of Missouri is starting the slide into a full-blown medical liability crisis.

· Missouri Ob-gyns are routinely seeing premium increases of 200 - 300 percent and even upwards of 1,000 percent in some cases, forcing some physicians to close part or all of their practice.

· A recent survey completed by the Missouri State Medical Association found that 31.4 percent of the responding physicians were considering leaving their practice, and 28.6 percent said they would consider limiting their practice because of rising liability insurance premiums.

· This same survey showed an average premium increase for medical liability insurance of 61.2 percent for 2002, on top of a 22.4 percent average increase last year.

· Neurosurgeons in Kansas City are facing an increase in premiums of $12,000 to $42,000 this year, with further increases expected next year.

· The 2002 premiums for Ob-gyns have increased by as much as $50,000 from 2001. Again, further increases are expected next year.

· According to a separate survey by the Metropolitan Medical Society of Greater Kansas City, 40% of practices are looking for new coverage because their insurer has stopped writing medical liability coverage.

· Predictably, an access crisis to needed health care is developing. The St. Joseph Health Center in Kansas City recently lost another trauma doctor. It is now down to three. The situation is even worse because a local nearby trauma center has been virtually shut down, meaning St.Joseph’s must treat double the number of patients, and it is having trouble finding other surgeons willing to cover trauma.

· According to the St. Louis Business Journal, access issues are spreading. Dr. John Anstey, an obstetrician/gynecologist, recently faced a difficult choice. He knew he had to cut expenses after learning his medical malpractice insurance premium, which cost about $26,000 this year, would jump to $50,000 next year. Consequently, he closed his office in St. Ann effective July 30^th. Previously, Anstey and his partner, Dr. Fred Monterubio, Jr., deliver about 400 babies a year through their practice, St. Ann OB/GYN. As a stopgap measure, Drs. Anstey and Monterubio were forced to move their practice to a hospital-based setting where they await news of their 2003 premium by October.

· The current medical liability insurance market in Missouri is extremely tight, with at least three insurers having pulled out of the market over the past year.

· Intermed Insurance Company, based in Springfield, is the largest provider of medical liability insurance coverage in Missouri. The Missouri Department of Insurance said the company had a 34 percent market share in 2001. The company imposed an 18 percent hike, effective July 1, and also put a moratorium on writing new business in Missouri.

· Andy Bennett, president and chief executive of Intermed, said rates went up because the severity, or average amount paid per settlement or verdict, has continued to go up fairly dramatically in Missouri. St. Louis Business Journal.

North Carolina

· The “Tar Heel” state is on the verge of lapsing into a full-scale medical liability crisis that could seriously endanger access to needed health care.

· Hospitals in the Charlotte area are currently facing liability insurance premium increases of up to 400% this year.

· Dr. Harold Pollard, a physician with Lyndhurst Gynecological Associates, said “North Carolina is on its way to being one of those crisis states.” Dr. Pollard has said that liability costs are creating a shortage of necessary health care services. “What that results in is a lack of good obstetricians. We have counties in this State that have no obstetricians.”

· Recently, Dr. John Schmitt, an Ob-gyn whose insurance premiums tripled from $17,000 to $46,000, causing him to give up his practice to join the medical school faculty at the University of Virginia. Former patient Laurie Peel said, “he was a great doctor. When you are a woman, you try to find a gynecologist who will take you through lots of things in life. I suffered a miscarriage. You develop a relationship with your doctor. To lose someone like that is very hard.” Charlotte Observer, Jul. 25, 2002.

· According to the North Carolina State Administrative Office of the Courts, the number of medical malpractice lawsuits filed has increased 18 percent in the past five years.

· A greater number of medical malpractice lawsuits are ending in multi-million jury awards or settlements across North Carolina. In 2001, 21 lawsuits in North Carolina resulted in multi-million awards or settlements. According to N.C. Lawyers Weekly, the top five recoveries ranged from $4.5 million to $15 million.

· Facing a 660% increase in medical liability premiums from $53,000 to $350,000 a year, a practicing physician who runs a chain of six North Carolina urgent care clinics fears that soon he will have to stop practicing medicine and close his clinics’ doors. He needs liability coverage for both himself and nine other physicians employed by the clinics. For this year, the insurer agreed to renew at a 79 percent increase, allowing the clinics to stay open for now. Increases like this will make staying in business and treating patients very difficult if not unsustainable.

Oklahoma

· Oklahoma physicians are beginning to face problems in obtaining affordable medical liability coverage. The Oklahoman, July 17, 2002

· According to The Tulsa World, that makes Oklahoma one of 30 states with a problem in this area.

· The World cites the example of a Tulsa pediatrician whose malpractice insurance doubled this year. The Oklahoman, July 17, 2002

· Oklahoma pediatricians have far less to worry about than the State’s obstetricians and surgeons, whose rates in Oklahoma in 2003are expected to rise by 25 percent to 30 percent, says the Oklahoma State Medical Association.

South Carolina

· The medical liability crisis is rapidly spreading to the Palmetto State.

· A 10-physician OB/GYN group in Columbia had to take out a $400,000 loan this year to continue to provide OB services and pay malpractice premiums.

· In rural Oconee County, just four physicians deliver babies now, down from 11 physicians one year ago.

· A family practice group in Seneca was forced to drop OB coverage for four of their six physicians because of skyrocketing premiums. There are currently a total of four physicians in Seneca treating pregnant women.

· A solo practitioner practicing geriatrics in Charleston has had to quit treating patients in nursing homes because of high premiums.

Tennessee

· Professional liability premiums for physicians in Tennessee have been steadily rising in recent years.

· According to State Volunteer Mutual Insurance Company, which covers most practitioners in Tennessee, premiums have increased by 45% over the past three years, in order to keep up with rapidly escalating losses in medical liability lawsuits.

· Only approximately 4% of this 45% increase was related to lower investment yield, with the remainder being due to increasing medical malpractice losses. (State Volunteer Mutual Insurance Company is a policyholder owned mutual company with no outside investors).

· In recent years both juries and judges in Tennessee have made multi-million dollar awards for non-economic damages, over and above a patient’s actual economic losses.

· In one recent case, a jury awarded only $25,000 in economic damages but awarded non-economic damages of $1.6 million.

· Another case resulted in a jury award of $100,000 economic loss and $1.9 non-economic damages.

· A judge in another cases awarded $1,062,080 in economic loss and gave $4.5 million in non-economic damages. Yet another court awarded $687,691 in economic loss and gave $3 million in non-economic damages. One other jury awarded $7,811 in economic loss and a staggering $2.65 billion in non-economic damages.

· Award in PI and wrongful death cases are dramatically increasing. Tennessee's Administrative Office of the Courts reported that in FY 2001, even though fewer cases were disposed of in Tennessee than in the previous fiscal year, damages awarded statewide were more than $94 million, representing an increase of more than $51 million over the previous year. These totals were the largest since the courts began reporting these statistics.

· According to the same report, the average award for FY01 was $209,284 up $95,064 from the previous year.

Vermont

· The current medical liability insurance crisis continue to show that events in one State can have a devastating effect and cause severe problems elsewhere.

· The failure of medical liability insurer, PHICO, which was shut down by the Pennsylvania Insurance Department on February 1 of this year, left more than a quarter of Vermont’s physicians scrambling for medical liability insurance.

· Whenever medical liability insurance becomes too expensive or difficult to obtain, access to needed health care is threatened and typically results.

Virginia

· Physicians in Virginia are starting to see the warning signs of a full-blown medical liability crisis that has engulfed their neighbors to the north in West Virginia, Pennsylvania and other States. The telltale sign is a sharp upswing in liability premiums. Over the past two years physician premiums have increased on average over 30 percent.

· For some specialists, medical liability premiums in Virginia have increased upwards of 60 percent for this same recent two-year period.

· A case in point is Manuel Belandres, MD, a general surgeon who was is in the twilight of his career but still practicing until recently when he was unable to obtain tail coverage. He subsequently closed his practice rather than expose himself to open-ended future liability.

· In Virginia’s western border, many physicians are no longer treating West Virginia
patients who cross the State-line due to aggressive personal injury attorneys
attempting to bring suit against Virginia physician in West Virginia courts. This has further aggravated the access problem for pregnant West Virginia Medicaid patients, in particular, and their access to needed care.