Virginia Governor Vetoes Damage Cap Compromise, General Assembly Overrides Veto

May 16, 2011 by matray

By an overwhelming majority, the Republican-ruled Virginia House of Delegates rejected Republican Gov. Bob McDonnell’s veto of a bill that would boost the limit on court awards in medical malpractice lawsuits. The bill represented a compromise among Virginia’s doctors, insurers and attorneys with strong bipartisan support in the House and Senate. The support held in a 93-7 House override in the General Assembly’s single-day session to consider McDonnell’s vetoes and amendments. The result of two years’ worth of negotiations between the Virginia Trial Lawyers Association (VTLA) and the Medical Society of Virginia (MSV), the agreement maintains an aggregate medical malpractice cap for the next 20 years, while providing for a modest $50,000 annual increase to the current $2 million cap—representing an average annual increase of roughly 2 percent—beginning July 1, 2012, through June 30, 2032. The agreement satisfies several key requirements for MSV. It retains Virginia’s total cap; establishes an agreement for a long period of time; minimizes the risk of large premium increases; and delays the effective date of any increases. Overall, the agreement is expected to help strengthen the long-term predictability and stability of medical malpractice insurance, while having a nominal effect on insurance premiums. There will be no legislative efforts by VTLA to eliminate the total cap, amend the cap to apply only to non-economic damages or create a second cap within the total cap. In addition, the agreement preserves potential avenues for further tort reform beyond the medical malpractice cap. MSV’s Medical Liability Advisory Group will continue to explore opportunities for effective reform, such as the pilot programs included within the Patient Protection & Affordable Care Act. “Virginia currently has a climate that has effectively stabilized malpractice premiums, and attracted healthcare service providers to the Commonwealth,” McDonnell explained in his veto. “Virginia's $2 million cap is the highest all-encompassing cap in the nation, and was last raised in 2008. Raising the cap for medical malpractice judgments to $3 million over the next twenty years, without further reforms in the medical malpractice litigation system, will not meaningfully protect against healthcare cost increases. “Federal health reform law mandates, currently in litigation, will cost Virginia an estimated $2 billion over the next 10 years, and is creating great uncertainty in the healthcare system. Adding to system costs at this time without other offsets should not occur. While I commend the affected stakeholders for working diligently together, increasing the medical malpractice cap will ultimately lead towards higher healthcare costs for doctors, hospitals, businesses and, most importantly, patients.”

Posted in MPL company news, Tort reform | 1 Comment
National Conference of State Legislators Sends Letter to Congress in opposition of proposed ‘HEALTH Act of 2011’ Tort reforms

May 9, 2011 by matray

Last month, the National Conference of State Legislators (NCSL) wrote a letter to both the chairman and ranking member of the House Subcommittee on Health expressing “strong, bipartisan opposition to the passage of the latest federal medical malpractice legislation, HR 5, the ‘Help Efficient Accessible, Low-Cost, Timely Healthcare (HEALTH) Act of 2011,’ pending before the U.S. House of Representatives.” Modeled after the successful reforms contained in California’s Medical Injury Compensation Reform Act of 1975 (MICRA), the HEALTH Act contains a number of reforms considered critical for improving the fairness and efficiency of the medical liability system. These reforms include a $250,000 cap on non-economic damages; collateral source rule reform allowing evidence of outside payments to be made in court; a ban on subrogation by collateral sources; a fee schedule for attorney contingency fees; and periodic payments of future damages. “Medical malpractice, product liability and other areas of tort reform are areas of law that have been traditionally and successfully regulated by the states,” wrote William Horne, NCSL chairman, in the letter to the House Subcommittee on Health. “Since the country’s inception, states have addressed the myriad of substantive and regulatory issues regarding licensure, insurance, court procedures, victim compensation, civil liability, medical records and related matters. In the past two decades, all states have explored various aspects of medical malpractice and products liability and chosen various means for remedying identified problems. Over the past several years, states have continued to revise and refine their medical malpractice laws and procedures.... “NCSL studied this issue in 2005 when the last iteration of HR 5 was being considered by the U.S. House of Representatives. Our review included assessing whether circumstances had developed, or were so unique, that only federal action could provide an adequate and workable remedy. We again examined recent state actions, policy options and experiences. We discussed at length how various proposed or anticipated pieces of federal legislation fared against NCSL’s core federalism goals. Those questions included: (1) whether preemption is needed to remediate serious conflicts imposing severe burdens on national economic activity; (2) whether preemption is needed to achieve a national objective; and (3) whether the states are unable to correct the problem. The resounding bipartisan conclusion was that federal medical malpractice legislation is unnecessary.” Federal reform of the country’s medical liability tort system has been a Republican agenda item for years. The HEALTH Act was first introduced in 2005 and passed by the House. It was sponsored in the Senate by Sen. John Ensign, and co-sponsored by five other Republican senators. The legislation ultimately stalled in committee and never became law. The HEALTH Act of 2011 has been endorsed by the American Medical Association as well as the Physician Insurers Association of America, which represents medical professional liability insurance companies owned and/or operated by healthcare providers.

Posted in MPL company news, Studies and reports, Tort reform | 1 Comment
Laser Spine Surgery Marketing through Google Sees Malpractice Complaints

May 5, 2011 by matray

side note: This is an interesting article on a new phenomena -- physicians and surgeons marketing their services online. How hard -- and in what manner -- should physicians market their services? Why are we moving away from the traditional model of medicine where physicians refer their patients to specialists? And how much should the marketing of healthcare services be regulated? By David Armstrong - May 4, 2011 Bonnie Balch searched online for a back surgeon and found a pitch she called irresistible: Laser Spine Institute LLC promised to ease her pain and have her out the door in a few hours. Instead, her October 2008 surgery at the Tampa, Florida- based center left Balch incontinent, with a dangerous spinal fluid leak, she said. Still in pain, she was off work for almost a year and needed a second surgery elsewhere to get relief. “They should have told me they couldn’t help me,” said Balch, 63, a Longmont, Colorado, flight attendant. “They are in it to make money.” Her insurer paid Laser Spine $90,176 for the operation, a follow-up procedure and some subsequent care. Balch sued Laser Spine, alleging malpractice, in December 2009, one of 15 cases filed against the company in the past 18 months. The lawsuits reflect growing complaints about a new area of medicine: high-volume, doctor-owned spinal surgery centers that market directly to patients on Google Inc.’s search site and others. For Laser Spine, the business model generated a 34.3 percent net profit margin from 2006 through 2009 -- eclipsing even the Internet giant’s 24.8 percent for that period. Laser Spine and its competitors, part of a boom in outpatient clinics operated by entrepreneurial physicians, sell a high-tech version of procedures that have been around for years -- despite a lack of independent research to show that their variations lead to better outcomes. The company commands higher prices than laser-less rivals, driving up the cost of health care. Its number of malpractice claims per 1,000 surgeries is several times the rate for all U.S. outpatient surgery centers, based on insurance industry data. ‘Already Available’ “It strikes me as somewhat of a scam,” says Jeffrey Arle, a neurosurgeon at the Lahey Clinic near Boston who has treated former Laser Spine patients. He’s one of nine surgeons from across the U.S. who told Bloomberg News that the company’s laser surgery was either unnecessary or inappropriate for many patients who get it. “My conclusion is they are offering patients a version of what is already available in the regular medical care system.” Laser Spine’s in-house surveys show positive outcomes for more than 87 percent of patients, though the institute has had trouble recruiting academics to examine those results, said Jimmy St. Louis, the company’s chief operations officer. Its staff screens those who respond to its ads rigorously, he said, and only 10 percent of them end up getting an operation. The company’s standards for safety and quality of care help determine its pricing, said Dotty Bollinger, its chief medical operations officer. Works Every Day “We know it works,” Bollinger said of the surgery. “We see it every day.” Laser Spine declined to discuss Balch’s claims, which it has denied in court filings. Laser Spine often charges $30,000 for each procedure, according to interviews with several patients and copies of billing records. That’s twice as much as Aetna Inc., the third- largest U.S. health insurer, will pay for laser-less surgery. It’s more than twice the average reimbursement for spine procedures at Regent Surgical Health, a Westchester, Illinois- based company that operates 15 outpatient centers, according to Matt Lau, Regent’s corporate controller. Laser Spine’s surgeons, some of whom are investors in the 6-year-old company, perform as many as 5,000 operations a year, using small tubes called endoscopes that are equipped with video cameras. They insert the lasers separately, through catheters. Out of Bankruptcy Founder James St. Louis, 56, was just a year out of personal bankruptcy when he began seeking investors for the company in 2003, court records show. Now he owns multimillion- dollar homes in Pinellas County, Florida and Aspen, Colorado. He declined an interview request. The institute, which rewards employees with trips to the Bahamas when they hit sales and customer-satisfaction targets, has established surgical centers in Scottsdale, Arizona; Philadelphia; and Oklahoma City as well as Tampa. It now bills itself on the web as “the largest spine center in the world” and it had sales last year of $109 million, says Jimmy St. Louis, the COO and the founder’s son. From 2006 through 2009, Laser Spine earned net income of $98.9 million on revenue of $288 million, a 34.3 percent profit margin, according to testimony that chief executive officer Bill Horne provided last year in a lawsuit. In that case, Joe Samuel Bailey, an Arkansas businessman and the chairman of a rival spine center, alleges that St. Louis stole his business plan. St. Louis and Laser Spine have denied that allegation in court. Distributions to Investors The company has distributed at least $77 million to a small group of shareholders, according to an opening statement made by Bailey’s lawyer in the same court case. Another document in the case indicates that James St. Louis was slated to receive a 25 percent interest. That would entitle him to $19.25 million from the distributions. Bollinger said the 25 percent figure is not accurate. She would not disclose individual stakes. Other investors include the private equity unit of Dallas investment firm EFO Holdings LP, managed by William Esping, and two founders of OSI Restaurant Partners LLC, whose properties include Outback Steakhouse. In 2009, Goldman Sachs Group Inc. valued Laser Spine at as much as $428 million, as part of the company’s consideration of an initial public offering, Horne testified in Bailey’s lawsuit. Bollinger said in an e-mail that this estimate and others provided by bankers were “rough guesses” and not reliable. Aetna won’t cover operations at Laser Spine and some of its competitors, citing a lack of research to confirm their safety and effectiveness. Cigna Corp., the seventh largest U.S. insurer, won’t pay for the laser portion of the surgery. Other insurers provide less than full coverage. Second Mortgages Some patients, desperate for pain relief and a short recovery period, say they’ve tapped retirement accounts or taken out second mortgages to pay Laser Spine. They’re not always satisfied with the results. Fifteen former Laser Spine patients -- whose cases came up in court records, in the institute’s materials and in online back-pain forums -- said in interviews that their operations provided only fleeting relief, or no relief at all, from their back pain. The 15 malpractice claims since October 2009 came during a period in which the company performed about 7,500 procedures, based on its 2010 estimates. Nationally, outpatient surgery centers received about six malpractice claims for every 20,000 surgeries, according to data from Zurich North America, a commercial property and casualty insurer. Bleeding Internally Balch and others say that after their operations at Laser Spine they were told to get dressed and leave -- though Balch had suffered a spinal fluid leak and another patient was bleeding internally from two lacerated arteries, according to records in two malpractice suits. A third went to a hospital in need of emergency surgery just hours later, according to a state inspection report. Laser Spine executives say they meet state regulatory requirements. The company is a target for malpractice suits because it’s fully insured, said Bollinger, the medical operations officer. With regard to the claims in those suits, the institute gave Bloomberg News a statement that said: “We do not believe it is appropriate to dispute the facts at issue with a patient in the public forum.” Since July 2009, the institute has paid at least $2.8 million to seven patients to settle cases, according to the Florida Office of Insurance Regulation. Some of the cases were settled at the behest of Laser Spine’s insurer, Lexington Insurance Co., even though institute officials believed the care they provided was appropriate, Bollinger said. continue reading

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Why Medical Malpractice Reform Will Increase the Deficit, Not Reduce It

May 4, 2011 by matray

side note: Here's an interesting article that I almost missed. It's written by Joanne Doroshow of the Center for Justice & Democracy, and she uses Congressional Budget Office (CBO) numbers to argue that tort reform -- specifically the HEALTH Act being considered in Congress -- would actually increase the deficit as well as add new burdens to state government. When people talk about medical malpractice "reform," they are usually not talking about reducing the epidemic of medical errors in hospitals or instituting proven measures to actually reduce injuries, deaths, claims and lawsuits. No, they're usually talking about making it more difficult for patients injured by medical negligence, including catastrophically-injured children, to be compensated. Despite the enormous hardships on innocent patients caused by these measures, or the fact that they shift compensation burdens onto others, there is an argument circulating that these measures are worth enacting because they will reduce the deficit. Well, no they won't. In fact, they will likely increase it. In October 2009, the Congressional Budget Office (CBO) presented an analysis (in the form of a 7-page letter to Senator Hatch) on "the effects of proposals to limit costs related to medical malpractice ('tort reform')," finding that "tort reform could affect costs for health care." CBO said that even if the country enacted the entire menu of extreme tort restrictions listed, including a Draconian $250,000 cap on non-economic damages, it could go no further than to find an extremely small percentage of health care savings, "about 0.5 percent or $11 billion a year at the current level -- far lower than advocates have estimated." On March 10, 2011, CBO provided a new analysis of H.R. 5, a bill before Congress that is considering these measures. CBO now says that enacting H.R. 5 would reduce total health care spending even less -- 0.4 percent. Yet to find even this small amount, CBO ignored factors that would not only lower this figure but also likely increase the deficit. For example, CBO acknowledges but does not consider in its cost calculations the fact that these kinds of extreme "tort reforms" would weaken the deterrent potential of the tort system, with accompanying increases in cost and physician utilization inherent in caring for newly maimed patients. CBO notes, "The system has twin objectives: deterring negligent behavior on the part of providers and compensating claimants for their losses ..." In fact, CBO wrote, "imposing limits on [the right to sue for damages] might be expected to have a negative impact on health outcomes." Yet it brushed aside the fiscal impact of this not because it is untrue, but because there are too few studies on the topic. However, of the three studies that address the issue of mortality, CBO notes that one study finds such tort restrictions would lead to a .2 percent increase in the nation's overall death rate. If true, that would be more than 4,000 additional Americans killed every year by medical malpractice, let alone the hundreds of thousands of additional patients injured. How could this possibly be an acceptable trade-off? Ten years ago, the Institute of Medicine put the costs of medical errors at between "$17 billion and $29 billion." Nowhere does CBO consider those costs, let alone the additional costs of caring for these newly-maimed patients as a result of new liability limits There will be new burdens on Medicaid and Medicare, as well, none of which were considered by CBO. If someone is brain damaged, mutilated or rendered paraplegic as a result of the medical negligence but cannot obtain compensation from the culpable party through the tort system, he or she may be forced to turn elsewhere for compensation, like Medicaid and Medicare. None of these increased costs are considered. What's more, whenever there is a successful medical malpractice lawsuit, Medicare and Medicaid can both claim either liens or subrogation interests in whatever the patient recovers, reimbursing the government for some of the patients' health care expenditures. Without the lawsuit, Medicare and Medicaid will lose funds that the government would otherwise be able to recoup. Again, none of these lost funds are factored in by the CBO. After CBO issued its original October 9, 2009 letter, members of the CBO staff agreed to meet with me and a panel of experts to discuss these issues. Among the things I learned at this meeting were: * It may be true that liability restrictions will create new burdens on state and federal deficits since the costs of injuries are not eliminated by enacting "tort reform," but merely shifted onto someone else -- including the government. However, no good study had yet been done on this phenomenon and according to CBO, if a study doesn't exist about a problem, it need not consider it even though savings could be significantly less than what they say. * Also, CBO arrived at these numbers by plugging selective studies into CBO's internal econometric models that no one ever sees. For example, I specifically asked how CBO could find a 0.2 percent savings due to lower medical malpractice insurance rates for doctors, when years of historical experience show this to be untrue. When Senator Jay Rockefeller (D-WV) asked CBO for a "complete empirical analysis of the cost savings associated with medical malpractice reforms," CBO's response was another seven-page letter. No empirical analysis, no econometric models, no data. continue reading

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