ISSUE SPOTLIGHT: Tort Reform

Why New York Won’t Pass Medical Malpractice Reforms

Most everybody in New York state government agrees the state’s costly tort system needs to change—but nobody seems to think it will.

The reason is simple: No one agrees on what makes tort costs in New York so high, or what can be done to lower them definitively.

“New York State suffers from an extreme lack of data on medical malpractice,” J. Robert Hunter, a former federal insurance commissioner, told a group of New York lawmakers and health-care providers who assembled recently to talk about how medical malpractice reform could save the state money.

While court caseloads have been declining in the few states with available data, New York tort cases have remained steady for the past decade, according to the National Center for State Courts. While the total number of case filings has fallen in the last decade from 37,499 in 1999 to 27,916 in 2009, the overall caseload has remained relatively unchanged.

And while medical malpractice insurance costs vary widely for different regions in New York State, hospitals say their skyrocketing legal costs are crippling the system—creating doctor shortages in areas of practice like obstetrics and gynecology, where the risks associated with practicing are high.

Last year, for instance, the Legislature considered capping noneconomic damages in medical malpractice cases at $250,000 as part of a series of Medicaid reforms, but the cap was removed from the bill in budget negotiations after it became clear it wouldn’t pass.

The state’s health-care organizations, which supported the cap, still claim it is the only way to reduce the $1.6 billion annual tab for medical malpractice insurance in New York.

“Some of the highest-quality hospitals have the highest medical malpractice costs,” said Susan Waltman, an attorney for the Greater New York Hospital Association. “That means there is not a correlation, necessarily, between what your premiums and med-mal coverage costs are and the quality of the care that you deliver.”

The debate over medical malpractice as a contributing factor to the nation’s health costs was partly settled in 2008, when the Congressional Budget Office found that medical malpractice costs account for less than 1/2 of 1 percent of total U.S. health-care spending. But the issue has remained a hot button for some Republicans and conservative think tanks.

Less clear is how much the fear of being sued leads doctors to practice defensive medicine, ordering unnecessary and expensive tests for patients to insulate themselves from liability.

The only tort reform with certain cost savings, the CBO found, are caps on noneconomic damages. But caps may have an uncertain effect on patient health in general. Several studies the CBO cited drew different conclusions, linking lower malpractice costs to increases in mortality. They studied health outcomes and found positive correlations with reforms to joint and several liability, but negative correlations with caps on damages.

Meanwhile, New York’s trial attorneys argue that caps on noneconomic damages are both an affront to the appellate system, which already has the ability to cap awards that are considered unreasonable, and to victims of negligence.

“If you ask the patient which is preferable, simply cutting out their ability to sue, or having the system work more efficiently and in a way that cuts out negligence, I would think most Americans would think the latter was the better practice,” said Sen. John DeFrancisco, a Republican who also works as a trial attorney.

DeFrancisco said that the health-care trade groups like GNYHA are content to “blame everything on lawyers,” noting that the insurance industry also should share blame because they artificially inflate premiums by keeping excessive amounts of money in reserve for potential payouts that are never realized.

New York has several pilot programs aimed at lowering tort costs in medical malpractice, such as specialized health courts where judges with medical knowledge work toward potential settlements with both plaintiffs and defendants. That program, spearheaded by Bronx Supreme Court Judge Douglas McKeon and funded through the Affordable Care Act, has drawn praise.

But the health-care community is skeptical the courts can lower tort payouts, in part because of an ideological divide within the judicial community.

“Judge McKeon is exceptional in his desire to help settle cases,” Waltman said. “There are judges who feel it’s not their responsibility, that they’re on the bench to try cases.”

Proponents of tort reform say broad support for changes to the system among the general public haven’t translated into  change in Albany.

“I think a lot of that has to do with the trial attorneys’ influence on our legislators,” said Tom Stebbins, executive director of the Lawsuit Reform Alliance of New York.

And while the state’s trial lawyers’ association is a major sponsor of the Assembly Democrats, giving more than half a million dollars during the last election cycle, legislators of both parties and both houses also make their livings as trial attorneys, making it hard to pass tort reform in Albany.

Lawyers said the issue was not just one of income but also of ideology. In states that do have caps on noneconomic damages, such as Texas, the cap has not translated to savings. And even tort-reform proponents had difficulty discussing the quantification of pain-and-suffering awards.

“Pain and suffering can be subjective,” said Sen. Neil Breslin, the deputy minority leader, “but if you told me that a person was going to receive a million dollars for pain and suffering, and if you asked that person, ‘Would you rather have your leg back?’, I think that person would say, ‘I want my leg back.’ It’s an area where I think we should be very careful in restricting people’s right to sue.”

Tort-reform proponents argue caps are good for society as a whole. “If there were guidelines that decreased premiums significantly, we might be able to provide more care at safety-net institutions,” Waltman said. “In a world where we’re all trying to figure out how can we provide care to whole communities, especially downstate and communities where there are many safety-net providers, that ends up being part of the trade-off.”

With the perspectives seemingly hardened on both sides, no stakeholders sound particularly upbeat about the potential for substantive change next year in Albany. Asked about the potential impact of the governor’s medical malpractice reform workgroup, DeFrancisco demurred.

“We’ll have another round this year, I’m sure,” he said.

-lnahmias@nycapitolnews.com