- FOUGHT 'REFORM': Coulter predicted parts of Act 649 would be held unconstitutional.
In 2003, the lawyers fought fiercely with the doctors and their insurance companies over legislation that would keep the lawyers from suing the doctors and their insurance companies, or at least from suing them so often and for so much.
The doctors' side prevailed at the time, the state legislature strongly approving their bill. Five years later, all is not calm. The lawyers keep hacking away at the legislation in court, with considerable success, even though some of them say that the bill never had as much impact as its backers intended. The doctors say the bill had a great and beneficial impact until the Arkansas Supreme Court began mucking it up. The two sides agree only that much still remains to be resolved. From the record so far, it appears the doctors own the legislative branch of government, the lawyers have the judiciary, and the executive branch is lying low.
Act 649 of 2003 was the so-called “tort reform” bill. It aided corporate defendants as well as doctors, but the bill's proponents liked to keep the doctors out front, in the interest of public relations. (Equally aware of the medical profession's generally favorable reputation, plaintiffs' lawyers in malpractice cases like to say they're not really suing doctors, they're suing insurance companies. Defense lawyers in malpractice cases, while paid by insurance companies, like to say that they're really defending doctors.)
Act 649 imposed a number of new requirements on plaintiffs in medical malpractice cases, making it more difficult for the plaintiffs to win their lawsuits and limiting the amount they could win. Doctors at the time said they were on the verge of being driven from practice by the crushing cost of medical malpractice insurance, and they believed that large awards in malpractice cases were driving up the premiums.
Lawyers said that malpractice judgments weren't the cause of the high malpractice insurance rates, and warned that the new restrictions might drive the lawyers away from medical malpractice litigation, to the detriment of injured patients, who had no other way to be compensated.
For better or for worse, Act 649 has in fact reduced the number of medical malpractice suits filed in Arkansas. Records of the Administrative Office of the Courts show 383 malpractice cases filed in 2001, another 383 in 2002, 385 in 2003. In 2004, the first year the effect of Act 649 was felt, the number dropped to 305. It dropped again in 2005, to 282, and yet again in 2006, to 255. It rose slightly in 2007, to 285, but remained far below the pre-Act 649 levels.
The effect of Act 649 on insurance premiums is less clear. The state insurance commissioner is required by law to file an annual report with the legislature on malpractice insurance rates. Those reports have generally said that it's still too early to evaluate the effect on rates of Act 649. This year's report, filed in September, is a shade more specific, though still not as helpful as it could be nor, perhaps, as helpful as the legislature intended for it to be. The report says there were nine medical malpractice rate filings in Arkansas in the most recent 12-month reporting period. Three of those were by new companies entering the state or for new products offered by companies already here, and thus couldn't be compared to previous rates, the report says. Of the other six filings, “One filing provided for an overall decrease in rates of 39.5 percent. Five contained overall increased rates, none above 14.4 percent.”
For another perspective, the University of Arkansas for Medical Sciences pays the malpractice premiums for the physicians on its faculty. “Our premiums have gone down about 5 percent,” UAMS spokesperson Leslie Taylor said. “We attribute that to good risk management, not tort reform.”
The insurance commissioner's report says that Arkansas still has “a limited number” of companies writing new medical malpractice policies – nine, as of the time of the report. But the nine included one new company, and two more new companies will appear in next year's report, Commissioner Julie Benafield Bowman said. She said new companies were coming in because they found a friendlier and more stable climate since passage of Act 649.
“Loss adjustment expenses and the cost of defense are still significantly higher in the medical malpractice line than in other lines of insurance,” the commissioner's report said. “A significant portion of medical malpractice premiums is derived from the cost to investigate and defend claims (even when a claimant abandons a claim, loses in court or prevails). Due to the nature of the claim, expert witnesses are needed (which are other medical professionals) and highly specialized litigation counsel is often required. Sometimes the cost of defending a claim can equal or exceed the amount paid in judgments or settlements.”
Bowman also issued a warning: “Repeal of all or a portion of Act 649 of 2003 in a future legislative session will make Arkansas less attractive to those remaining companies providing medical malpractice coverage to Arkansas's medical community.” Perhaps an unnecessary warning; there's no apparent effort to bring “tort reform” back before the legislature. One lawyer said he understood that legislators had said firmly they didn't want to rehandle this hot potato.
The 2008 insurance commissioner's malpractice report is the last that will be filed by Bowman, who will leave office in January. She's a Republican appointee of former Gov. Mike Huckabee, who supported “tort reform,” as do Republicans generally. President Bush is a big backer of a federal “tort reform” bill. That bill hasn't been approved and likely won't be.
There's a good deal of interest in the next insurance commissioner's attitude toward malpractice litigation. The next commissioner is expected to be Jay Bradford, a former state senator and former insurance executive. He's a Democrat, like Gov. Mike Beebe, but he's not a lawyer.
Beebe's own attitude toward the malpractice debate is unclear. He was attorney general when Act 649 was approved, and took no position on it. His top aide now, Morrill Harriman, was a top lobbyist for “tort reform” then.
David Wroten, executive vice president of the Arkansas Medical Society, said there'd been a major change in the medical malpractice market in Arkansas, although, he said “We don't know all the reasons why.” Only a couple of companies were writing medical malpractice insurance before Act 649, he said, and now there are nine. Rates have declined “in some cases,” depending on factors such as the insured physician's specialty, but not across the board. The biggest physician malpractice carrier in Arkansas, by far, is State Volunteer Mutual Insurance Corp., with about 70 percent of the market. “Their premium increases have dropped to nothing, or 3 percent,” Wroten said. “Their claims have been cut nearly in half.” He said the reduction in claims was due in large part to Act 649's requirement that an “affidavit of merit” be filed within 30 days of the filing of a malpractice lawsuit. The affidavit, saying there's reasonable cause for the lawsuit, had to be signed by a physician practicing in the same specialty as the defendant. It was supposed to be a defense against frivolous lawsuits. Lawyers said there were already many such defenses.
The affidavit requirement was invalidated by the Arkansas Supreme Court last year, the Court saying that the legislative requirement intruded on the Court's own constitutional authority to set the rules for filing lawsuits. Other provisions of Act 649 also are being challenged before the Supreme Court.
“When Act 649 was passed, people said it would take three or four years to see the results,” Wroten said. “Now it'll take three or four years to see the result of the court decision on the affidavit.”
Nate Coulter of Little Rock was a leader of the legislative fight against “tort reform.” He said that when Act 649 was passed, he and other plaintiffs' lawyers predicted that parts of it would be held unconstitutional.
Coulter said that Act 649 has had a “marginal but significant” effect on medical malpractice lawyers. “Lawyers on the plaintiffs' side are being very careful about taking cases that don't have substantial damages,” he said. “Even good cases, if there's not a chance of substantial recovery, lawyers are staying away,” rather than investing $50,000 to $75,000 of their own money.
Philip McMath of Little Rock had similar comments. He noted that Act 649 requires that malpractice suits be filed in the physician's home county. Before, a suit could be filed in the patient's home county. “The venue change was the big help to the defense,” McMath said. Winning a suit against a doctor on his own turf is difficult, he said. “If I can't get another venue, I probably am reluctant to file.” But then, winning any medical malpractice case is and always has been difficult, he said, and Act 649 was largely redundant. “They [the defense] win 90 percent of the cases anyway. Occasionally, they'll settle one.”
Additional difficulties haven't slowed Bobby McDaniel of Jonesboro, among the state's foremost medical malpractice lawyers. His website says that he “Won the largest medical malpractice verdict in Arkansas history.” It was for $8.5 million, he said in an interview, specifying that it was the largest med mal case involving doctors and hospitals. There've been bigger judgments involving nursing homes, but for scorekeeping purposes, trial lawyers put nursing homes in a different category. “I'm filing a lot of medical malpractice cases,” McDaniel said. “Too many. There's too much malpractice.” McDaniel's practice is such that he now has a doctor-turned-lawyer, David Sarver, in his law firm, working solely on medical malpractice cases. “He's been a great help.” Last year, McDaniel won a case in which an Arkansas jury for the first time awarded punitive damages against an offending physician. That case was filed before the passage of Act 649. The physician still has not been disciplined by the state Medical Board, McDaniel said.
“Most doctors are very good and conscientious,” McDaniel said. “But sometimes well trained, well intentioned people make mistakes. When they do, they should acknowledge it, and get the matter resolved. But usually these things have to be filed and fought for years before they're resolved.”
And often the public is ill served even when resolution finally comes, if it's in the form of a settlement, McDaniel said, because most settlements include a confidentiality requirement. “These confidentiality agreements protect the doctors. A person can't go on-line and find out that a doctor settled a malpractice suit. I don't think the confidentiality agreements should be allowed. They're used in legal malpractice cases too. I don't think they should be allowed there either.”