Medical Care Availability Task Force

A two-year study of New Jersey's Medical Malpractice crisis

Background

Recently, a noted risk management professional asked why I have not offered any new written perspectives on the medical malpractice landscape.  Then, someone handed me the MCATF report. Well, I just finished reading it (the MCATF - Medical Care Availability Task Force) and, like magic, I felt compelled to offer my perspective.

MCATF arose out of Bill A-50 or "The Patients First Act." The Bill was charged with the formation of a task force entrusted to study specific issues and report to Governor Corzine. The report can be accessed by visiting the DOBI (Department of Banking and Insurance) website and clicking on "Hot Topics".

The report is 30 pages long, and understanding it is necessary to an informed reading of this commentary.

As a general overview, most of the report is repetitive and rehashes issues we know and understand all too well. About 10 pages are new and substantive.  As an additional comment, the original Bill A-50 contained no meaningful reform, and was simply a rehash of existing judicial rules revisited and made to look like action was taken.

As I have served on Governor Rendell's Crisis Task Force and also attended several of the MCATF meetings, I feel qualified to make the following observations on the Task Forces findings.

First the lack of data is discouraging, as the Task Force had subpoena power and could have used it. The issues affect the health care and the healthcare delivery system of 8 million citizens of New Jersey and the financial well-being of the 20,000 physicians who provide care to them; subpoenaed data would have helped to make the report more meaningful and trenchant.  For example: If carriers' rates are unexplainably high, make the carriers substantiate them, as California did with its Proposition 103.

Let's go through the report.

I will leave out issues of little consequence, such as pre-suit intervention.  The members were told to "favor" 3 individuals; these 3 were either recipients of a medical malpractice award or settlement or the spouse of a recipient.  What was especially disturbing was the position of key committee representatives,  (seemingly pro-physician) who for some reason choose to take a passive, non-participatory posture.

The Report:

Members of the Task Force included physicians, the Administrative Office of the Courts, a dentist, DOBI members, the Attorney General's Office, the New Jersey Hospital Association, managed care representatives, a medical malpractice insurer, and several "health care consumers."  The healthcare consumers, for some unknown reason, were entrusted with much of the administrative power, including chairing the three committees.

The group was charged to issue a report on several distinct areas of concern:

• A:  The advantages and disadvantages of establishing limitations on medical malpractice judgments;

• B:  Extending limitations on liability that apply to nonprofit hospitals to non-physician employees of those hospitals;

• C: The impact of third party reimbursement policies by insurers and HMOs on access to health care;

• D: The advantages and disadvantages of adopting additional changes to the statute of limitations;

• E: The advantages and disadvantages of establishing additional procedures for mediation;

• F: Screening for frivolous medical malpractice lawsuits

• G: The advantages and disadvantages of establishing a pre-suit procedure.

Findings and Recommendations

On charge A: the committee defined terms such as "plaintiff" and "negligence" and made the startling observation that medicine is not an exact science. According to the report there was discussion of the pro and con of limits and whether limits or "caps" would reduce or stabilize rates. There was concern limits would encourage settlements or prevent patients from receiving fair and just compensation. The committee introduced a report from a group called "Americans for Insurance Reform" or "AIR."  AIR's independent study concluded the malpractice "crisis" is over, and so I guess we can all rest easier now.  Sounds like the President of Iran saying, "I officially declare this subject to be over."

The "AIR" spokesperson is coincidently the Executive Director of the Center for Justice and Democracy.   Doctors: are you starting to sense this process was hijacked? Do you understand why you will never see meaningful reform through the legislative process?  The analogy is the gas consumer when gas prices reached $3.50 we screamed for a bloody riot when the price came down to $2.75 we were told all is well, although we had been paying $1.75 not too long ago.  Obstetricians are paying well in excess of $100,000 with only one claim.  Incur a second and you're off to real estate school.  I am so tired of seeing rates for "perfect" doctors used as examples, and, of course, the rate of suits filed  against OBGYNs is  higher then other specialties.  The paid losses are also substantially higher for OBGYNs. I note that the Star Ledger reported that 30% of all losses paid are in Obstetrics. Are they committing that much malpractice?

In reality, most OBGYNs pay more than $100,000 for their insurance.  Not surprisingly, obstetricians are leaving the practice; many observers estimate that as many as 350 obstetricians have moved to gynecology only. The committee does make a very cogent comment of the ratemaking process (they find it excessive and unjustified) but completely misunderstand and fail to analyze the cyclical nature of professional liability insurance.

The topic of the cyclical nature of professional liability can easily fill a 900-page book.  Suffice it to say that the last "crisis" was the third in the last 35 years.  Generally, carriers have been profitable for most of that time, although a few have not fared so well.  The reasons are many: poor underwriting, advancing into unknown legal  climates, taking on non-core business, failure to properly reserve, failure to appreciate not-so-subtle changes in insurance business patterns, and investment losses combined with irresponsible pricing.

I propose that the latest crisis was the result of all of these factors, combined with the rise of "bad faith" claims.  Again, I could write for days on bad faith - but it is not the focus of this opinion piece. Perhaps in my next article.

Not surprisingly, MCATF "finds that there is insufficient evidence to warrant a change in the system."  They exemplify that in the following language:  "There is no need to rush into quick legislative fixes, such as legal limits on patients rights."

When have our state legislators rushed in to fix anything meaningful?  And furthermore, as this is the seventh year of the crisis for obstetricians, there has been plenty of time to have "fixed" the issue in a timely, well thought-out manner.

Issue B is a no brainier for the committee: Any change would limit "patients' rights," something this committee saw as anathema.  As to issue C - third party reimbursement - the committee really got it right but had meaningful "change interruptus."  The committee pointed out what every doctor knows all too well:  their income is down significantly while costs are rising significantly and they cannot pass the costs along to patients. One of the suggestions was to take on more patients - a certain prescription for more professional liability claims. The classes most affected are Radiology, Obstetrics, Neurosurgery and Family practice (to a lesser degree). The fact that the data had to come from physician groups and not the HMO's is disconcerting. Had the data come from the HMO's we would see the extent of this calamity.

The report made us aware women are at risk as waiting time for mammography can be up to 4 months or more.  This is blamed on the availability of affordable insurance and the fear of a professional liability claim. Most radiology centers employ 2 radiologists on a single reading (mammography). One large group reported doing mammography at a loss (cost $105.57 vs. reimbursement $92.40) as a community or social contribution. It simply illustrates something is undeniably amiss in the field of medicine.  Medicine, like our bridge infrastructure, will require wholesale  rebuilding.  Yet it is a mystery why the people who might effectuate meaningful change stand idly by.  (Well, not really.  We all know why I just have to say that.)

To its credit, the report does make a strong case for obstetrics. It points out the hardship this specialty has suffered - most notably insurance costs and lack of reimbursement.  They offer the continuation of the subsidy fund as a solution: the oft-overused analogy of a J&J Band-Aid on a gaping wound is appropriate. The subsidy fund was, by the way, a plaintiff's attorney's suggestion in order maintain the status quo.

The report pointed out the loss of physician populations in these specialties and the lack of incoming new physicians, but it offered no meaningful solutions... unless you might call a legislative analysis meaningful!  As an interesting and contrary perspective, please read the New York "Times" article on-line  - "More Doctors in Texas After Malpractice Caps," October 5, 2007, in which it states that Texas, because of malpractice caps, has a backlog of license applications to the tune of 2500 doctors, over 60% of them ob/gyns.

Charge D: Statue of Limitations the committee felt the changes addressed in A-50 (more specifically, lowing the age of majority to 13) were sufficient to lower risk for physicians. New case law  - not known prior to the committee's first meetings - has, however, increased the Statue of Limitations in specific situations.

An expert who renders an opinion, the court said in "Guichardo" (Guichardo v. Rubinfeld,177 N.J. 45 2003), can identify new defendants. In "Guichardo" the expert identified a new tort-feasor some 3 years after the intial filing. This resulted in a new tolling of the Statue of Limitations. The committee saw no need to make any further changes to the statue of limitations. 

Charge E: mediation of medical malpractice cases.  This has been tried before with no success.  If the pilot program is any indication, success is not on any horizon, with only one settlement in 3 counties! The committee astutely points out that New Jersey's adversarial climate does not allow meaningful mediation between the parties.

Here is where the comedy comes in.   The committee recommends full disclosure of the claim.  In other words, the doctor sits down with the attorney, the patient and family, explains what happened and offers up-front compensation.  The committee fails to explain how the carriers might feel about this and the legal ramifications for the physician.  Your imaginary carrier phone call goes like this: "Hello insurance carrier, I just sat down with my patient and their attorney. I spilled my guts out, admitted to wrong-doing and offered $750,000. So what do I do next?"  Does the carrier cut a draft for the money and next day the Publisher's Clearing House van pulls into your drive way?  Probably not.  More likely, your carrier voids the policy of insurance and the physician is left with no coverage, and the patient with no compensation.

The flaw with this "sorry works" concept and with the malpractice industry generally is that it is based on the rampant occurrence of claims.

First, let's take published numbers from the largest carrier in New Jersey.  They report in their Annual Report that 95% of all adjudicated claims are closed without payment.  This of course leaves us with settlements; here we see approximately 25% of all cases closed in any given year monies are paid.  In addition, of the claims paid the majority of the large loss claims (greater then $500,000) are paid out of fear of a verdict in excess of the policy. In addition there are the Harvard Study and The New York Hospitals study that confirm as little 3% of all errors advance to a lawsuit (97% of the errors never see the light of a courtroom). Both Reports strongly opine injury is the determining factor.

Yes, we come back to the Rova Farms decision and bad faith.  I encourage all physicians to understand Rova and bad faith.  Someday you will be faced with a decision to settle or take your case to a jury verdict and the fright may cause you to make the incorrect choice.  Simply ask one of your attorneys "friends" to print out the statutory citation or contact me for an explanation.

Rova is the sole reason law firms earn a living off your patients' miseries.  Rova forces carriers to pay otherwise defensible claims, most of which emanate from obstetrics: shoulder dystocia, brain damage, ectopic pregnancies, wrongful birth and cancer.  Hence the reason an ob/gyn's rates are 2, 3 or 4 times higher then other specialties.  This is why attorneys quarry for these types of cases on billboards all along the Jersey Turnpike.

Charge F: more pathos then comedy. These statutes, I opine, were formulated to protect plaintiff's attorneys.  When was the last time - if ever - a plaintiff's attorney was successfully sued for bringing a frivolous case? Try zero.  The Certificate of Merit does not prevent a doctor from being sued; it allows the advancement of a significant injury claim. The language used to permit this obfuscation is "what a reasonable expert believes."  Ah-hah: what he believes based on what? What is available at the time he renders his certification?  All that is available are records, and the rendition of the case scenario as told by the patient and plaintiff's attorney. There are no interrogatories, no depositions, and no defense experts.  If I tell you my doctor "screwed" up you can write I reasonably believe the doctor "screwed" up.  All this does is protect the attorney and allows him to say, "I relied on the expert."  This gets them to the lottery  called the jury. Along with this, the plaintiff's attorney is required to sue everyone or be barred down the road; again more protection.  "I had to sue or risk legal malpractice."

I ask all of you attorneys, doctors, politicians:  if the Certificate of Merit demonstrates to a reasonable degree malpractice occurred why then, with 1,300 cases filed per year, are so many dismissed? Why do only 25-28% of the cases close with monetary settlements? Why do physicians win nearly 80% of the time in the courtroom when a Certificate of Merit was required in each case? The answer is that there is not the degree of malpractice occurring which the media, and the plaintiffs' attorneys portray. As a result, our politicians fail to enact laws protecting our State's healthcare buying public and our physicians.  I am not denying medical errors occur. I am stating that they simply do not become lawsuits.

Final Charge G does not rate a comment.  Pre-suit intervention evaluation and the Committee's time would have been better spent on issues such as bad faith and Rova Farms or new and emerging solutions such as Binding Arbitration.

In summary: MCATF delivered a 30-page rehash of what we all know, 7 years have gone by and our physicians and their patients are no better off, and certainly in a worse financial, emotional and professional quagmire.  What is disturbing is the effect this will have on the healthcare buying public: there is a true "dumbing" down of medicine taking place in New Jersey.  As the New York "Times" so clearly indicates, many of the physicians who are flocking to Texas are coming from New Jersey and its intrinsically unfriendly medico-legal climate.

The health care delivery system is in trouble. We all agree there will be another "crisis" when the next "hard market" hits.  I cannot wait for the hue and cry when physicians start paying $200,000 for a policy.  Here is the choice, then: continue to maintain the status quo knowing full well another "crisis" will occur or make meaningful changes to reimbursement issues, to professional liability procurement, to the judicial system and to a truthful representation for the public's awareness of the importance of these issues.

The opposition uses "patient's right" as their battle cry, when in reality only 30 plaintiffs' firms and a small handful of injured patients benefit  - while at risk is the entire healthcare buying public of 8 million souls.   Our values are ridiculously incongruent with reality. 

My comments are based on 30 years in the industry as the former VP of Claims for New Jersey's largest professional liability carrier for healthcare providers.

I can be reached by email at vpprince88@aol.com or by phone 973-652-4522 should you wish to discuss any aspect of my comments.

Peter Leone