New Yorkers for Lawsuit Reform

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					             New Yorkers for Lawsuit Reform

On behalf of New Yorkers for Lawsuit Reform (a broad-based coalition of
businesses, professionals, medical providers, municipalities, not-for-profits,
insurers and concerned citizens dedicated to lawsuit reform in New York) I would
like to thank Senator Breslin, Senator Duane and Senator Schneiderman for
conducting this hearing, and affording interested parties an opportunity to
address the medical malpractice crisis facing New York State. The laws, rules,
regulations and practices in New York respecting medical malpractice have an
enormous impact on the manner in which medicine is practiced and have
resulted in one of the most difficult practice environments in the country.

President Obama, in a speech on June 15th 2009 to the American Medical
Association, cited the critical role that medical malpractice rules play in inflating
h o t f u h a h ev r ss
     s        t i      e   h rs e t od s o e a J n
                                d s            s
tec s o o r e l d ley ytm.T ePe i n’w rs p k nl t u e
are certainly accurate. However, the healthcare reform legislation moving
through Washington simply fails to implement a national medical malpractice
solution. (Former Governor Howard Dean identified the reason why the national
bills fail to include meaningful malpractice reform provisions when he noted that
the authors did not want to anger personal injury trial lawyers.) The call for state
specific demonstration grants is simply inadequate. Solutions to the medical
malpractice conundrum have been implemented in a number of states over the
past thirty years, and we now know that a $250,000 cap on non-economic
damages works to keep the cost of the system in check. In addition, Health
Court, as proposed by the American Medical Association and others, would
serve as an effective tool to assure that determinations of liability are based on
science and not the ability of skilled trial lawyers to evoke sympathetic verdicts
from jurors wanting in medical expertise.

             New Yorkers for Lawsuit Reform

A recent October 2010 study, by the respected independent research
organization Pacific Research Institute, concluded that 8 percent of total health
care expenditures in the nation are the result of defensive medicine. (PRI Health
Policy Prescriptions Vol.7 No. 10 October) On a national basis, this amounts to
more than 191 billion dollars of annual wasted health care expenditures, with
 e ok h r fh o e u lg r h n 4 io oas
      s         s
N wY r’s aeo tel s q an moeta 1 blnd lr.As p rt
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study by Pricewaterhouse Coopers puts the numbers even higher - 239 billion
nationally - which equals more than 15 billion dollars in New York. (It is
undisputed that a substantial percentage of these dollars are expended by the
State, local governments and school districts as a result of the Medicaid program
 n h mp y r’h r f o en na e l e e l x e d ue .
       o                      o      t       t   )
a dtee l ess aeo g v rme tl mp y eh a he p n i rs A
2008 study by the Massachusetts Medical Association details that 25% of all
medical procedures ordered by a wide array of physicians are driven by
defensive medicine. Moreover, as recently concluded by the Congressional
Budget Office the weight of the evidence supports the conclusion that defensive
medicine does not improve health outcomes.

In fact, a compelling argument can be made that, with respect to certain
practices, such as the over-utilization of broad spectrum antibiotics, the practice
of defensive medicine is a killer. A recent paper appeared in the American
Journal of Therapeutics 16, e1– (2009) entitled: Relationship Between
Population Density of Attorneys and Prevalence of Methicillin-Resistant
Staphylococcus Aureus: Is Medical-Legal Pressure on Physicians a Driving
Force Behind the Development of Antibiotic Resistance. This article found that:
i 7 o nr sn uo e n ot mei n n h 1 v l b t e i
 n       i              h   c             u e a
“ 1 c u te i E rp a dN r A r aa di te4 e a a l s tsn
the United States, there is an association between antibiotic prescriptions written
per capita and MRSA. Our international evaluation further showed that the
percentage of MRSA among clinical S. aureus was closely associated with the
 o u t n e sy f t n y b t o wt h e sy f h s i . MR A
    ao      t    o            h      t      cn”
p p l i d n i o atre s u n t i ted n i o p yia s ( S

             New Yorkers for Lawsuit Reform
infections in the United States kill more people than AIDS and cause appreciably
more deaths than motor vehicle crashes involving alcohol.) Equally alarming is
the explosive growth in the use of diagnostic imaging, once one considers the
                                                            ai ’ ai t
                                                              os e .
concomitant increase in radiation exposure undergone by then t n p t ns
Additionally, the direct costs for malpractice claims (insured and uninsured) are
 smae o e ew e 6 io n 0 io n u l wt e ok h r
e t tdt b b te n1 blna d3 blna n ay i N wY r’s ae
                   i       i
                           l      l h       s
between1 billion and 1.89 billion.

 e ok tt’ s
N wY r Sae medical malpractice system is viewed as among the most
dysfunctional in the nation. The American Medical Association lists New York as
 cis t e” e e t 0 8 t y fh ota iy yt i h i s e
   s a               u
a“r is t. Arc n 2 0 s d o tetrlbi ss msntef y tts
                              i l
                                t   e      t
                                           f a
(prepared by the Pacific Research Institute - PRI) provides a state-by-state
 se s n ( I e ”o trc s ,ot
         h n            s
a s sme tte“ d x) fot o t tr-litigation risks, and tort rules and
reforms on the books and ranks the states accordingly. The Index measures
which states have the highest and lowest tort liability costs and tort-litigation risks
(outputs). And it examines which states have rules and reforms on the books
(inputs) that, if implemented and enforced, reduce lawsuit abuse and tort costs,
resulting in a more balanced and predictable civil justice system. Unfortunately,
tes d rv a N wY r’s r wu s ot mi s i arn o 4 th on the
   u      s
h t y e e l e ok or flh r o n wt a k f 8
                 s   o      c   g   h
index (1 best, 50 worst). Moreover, the study provides a more detailed picture for
each state along various lines of liability insurance (private passenger auto,
commercial general liability, etc.) and finds that New York ranks dead last with
respect to medical liability losses and projected health care expenditures.
This conclusion is echoed by a second New York specific report released by PRI
              0 ni d A mp e i t – y e ok ot yt
                  tl     r   ae            s      e
in November 20 9e te “nE i Ds s r Wh N wY r’T rS s m
s rk n n o o iI. d i n l, n rc u lh d u l t nh n
                 ”    t l
                       o       ie    i    sa
iBo e a dH wt Fx t A d i ay a atl p bs e j t s mo t i
the NY Post by Carl Campanile (11/18/09) addressed the need medical liability
reform, as did a Daily News Op-Ed published the same day.

             New Yorkers for Lawsuit Reform
 o s rr i y e ok
       sg,       s d a c mmu i h s fr n y as b e
N t upin l N wY r’me i lo    t
                            n y a ,o ma y e r, e n
 p e lg o e ok a
     i         s w k r free f
                           i o vr
a p an t N wY r’l ma es o rlfrm e e-escalating malpractice
premiums. As a result we understand policymakers may be poised to offer
physicians relief in the form of new tax-based subsidies that would be in addition
to the 137 million dollars currently provided to physicians via HCRA. New York is
the only state in the nation which has resorted to subsidies of this magnitude for
the physician community, rather than enacting systemic legal reform to address
unsustainable direct and indirect malpractice costs. New Yorkers for Lawsuit
Reform has very serious concerns respecting any approach to medical
malpractice reform which fails to address the direct cost of malpractice claims
(the number and size of awards) and the ubiquitous practice of defensive
medicine which our state and nation simply can not afford.

New taxes on insurers and their policyholders, potentially as large as, or larger
than, the HCRA assessments allocable to the purchase of physician excess
liability insurance, is not an acceptable alternative to reforms. Sadly, as a result
of this type of legislation, physicians will be less accountable for their actions as
the cost of their errors are visited upon taxpayers. New proposals under
consideration would increase the amount of taxpayer dollars paid on behalf of
physicians to secure excess malpractice insurance coverage, and create a new
grant program for physicians practicing in high risk specialties and areas of the
state suffering from physician shortages. Additionally, new taxes on liability
insurers are proposed to fund deficits in medical liability pools which have been
created by the years of artificial rate suppression.

After passing the largest state tax increase in history in 2009, amounting to more
than 8 billion dollars, we are expressing our very serious concern with any
 rp s l h h o l d u de s f l n o d lr i e a s sme t
         c    d              l
                             i      l
po o a w i w u a dh n rd o mio s f oasnn w“se s ns ”
 n e ok itizens and businesses. What does a new tax mean to the
o N wY r’c
average taxpayer and business? Higher automobile and homeowner insurance
rates, as well as higher property taxes as municipalities are forced to pay more

             New Yorkers for Lawsuit Reform
for liability insurance. Employers will continue to leave the state due to these
increased costs and take their jobs with them. New York continues to lose more
and more of its affluent residents.

In addition to the proposal to put in place more subsidies to reduce the out-of-
pocket cost to the physician community, some have proposed the continuation of
artificial rate freezes on malpractice premiums, and granting medical malpractice
n rr te i tr tp tni” se s ns s ses n h i a n e h es
 s       g e         a                       r a
i ues h r h t a “oe t la s sme t a a s t o te b l c s e t.
Both of these approaches amount to nothing more than short-term political fixes
based on accounting sophistry and must not be countenanced.

Unbelievably, instead of working to fix the system via substantive legal reform (a
move that would lead to a lower tax burden, better health care, increased
economic development and increase insurance availability), some state leaders
are also looking to repeal some of the modest liability reforms currently in place.
We are deeply concerned about legislation, which would perversely permit a
plaintiff to recover more than the level of damages fixed by a jury, is being given
serious consideration. We are also troubled by the fact that repeal of the sliding
scale fee schedule applicable in medical malpractice cases is a top priority of the
personal injury trial lawyers who have spent millions of dollars to influence
lawmakers in Albany. Rather than repeal this law, which gives victims a greater
percentage of the amount of a recovery or settlement, the law should be
expanded to apply to all personal injury and wrongful death cases.

Policymakers must adopt meaningful medical liability reform in New York in order
to help arrest the ever-escalating rise in medical malpractice direct and indirect
costs and the enormous cost flowing from the practice of defensive medicine.
The cost of health care is the single most pressing issue for both large and small
businesses in New York, having risen more than 100% over the past 8 years. In
the midst of the worse economic crisis since the Great Depression, New York
cannot afford to allow the state personal injury trial lawyers to stand in the way of
a robust economic recovery for our state.

             New Yorkers for Lawsuit Reform
The multi-billion dollar cost engendered by the practice of defensive medicine, as
noted above, in and of itself warrants immediate adoption of broad sweeping
medical malpractice reforms. However, it is not just these costs which are of
grave concern. According to the independent group, Jury Verdict Research,
judges and juries find 82 percent of medical malpractice lawsuits without merit
and deliver no judgment for the plaintiff. The costs of defending claims against
physicians nonetheless average $92,000 for the case to go to trial. Further, the
recent Harvard Medical Practice Study, which analyzed 30,000 patient records at
53 hospitals across New York State and 67,000 court records, found that the
liability system is grossly unfair to victims as well as to the medical community.
Patients actually injured by physician negligence rarely sue. Only 2% of victims
filed a claim. On the other hand, few people who sue their doctors and win were
actually victims of negligence. Harvard investigators concluded from the medical
records that 80% of the winning litigants had not been negligently harmed.

In light of the foregoing, New Yorkers for Lawsuit Reform proposes the following
fair and comprehensive reforms. If enacted these systemic reforms would save
 e ok i e s b s e s s g v rme tl n s n o-for-profits billions
      s tz      n                 t
N wY r’ci n , u i se , o en na u i a dn t
annually, while preserving fair and just compensation for those injured by acts of
medical negligence.

      New Yorkers for Lawsuit Reform

 Create specialized health courts to handle medical malpractice trials.
   The cases could be adjudicated by judges, who are physicians
   themselves or have medical expertise and extensive experience
   overseeing medical trials. Legislation should be adopted requiring
   medical malpractice cases to be heard concurrently by a judge who is
   a physician (or judges with medical expertise and extensive experience
                                       ve mb ru . h o rs
                                               r        ’
   overseeing medical trials) and a twel me e j y T ec ut
   findings would be binding upon the jury unless a unanimous jury finds,
   by clear and convincing evidence, to the contrary. In such a setting
   physicians would largely be shielded from liability, provided they
   demonstrated that they used clinically sound practices in the care and
   treatment of patients.

 Provide by statute for a limit of $250,000 on damages attributable to
   non-economic damages (pain and suffering). Both the states of
   California and Texas have limits of $250,000 and more than thirty
   states in total have monetary caps. (In 1976 a Special Advisory Panel
   on Medical Malpractice empanelled at the request of then Governor
   Carey recommended adoption of a cap of $100,000 for pain and
   suffering.) (A $250,000 would reduce the cost for excess medical
   malpractice insurance by almost half directly saving the State more
   than 60 million HCRA dollars.)

 Expand joint and several liability reform to apply to both economic and
   non-economic damages and eliminate all statutory exceptions to New
    ok o t n e ea lbi rl
      s i          i lt e
   Y r’jn a ds v rla iy u .

                 New Yorkers for Lawsuit Reform


In short, while other states are enacting meaningful reforms, including capping
damages, to help make health insurance affordable for workers and their
families, as well as to small and large businesses, New York State is looking to
continue to tax its citizens and businesses to pay for a bloated, inefficient liability
system. Enactment of major medical liability reform in New York would be
welcomed news to virtually all New Yorkers including the more than two million
New Yorkers lacking health insurance today. While the health reform bill in
Washington may contain insurance mandates it does little to address the issue of

Finally, rather than address the underlying problem of a medical liability system,
which is simply too costly, the Legislature is also considering additional rate
freezes and authorizing medical malpractice insurers the right to engage in cash
flow underwriting. Cash flow underwriting is an insurance funding mechanism
which time and again has failed, resulting in huge deficits to be past on to the
future. It is another non-solution to our medical malpractice crisis which should
be rejected.

Instead of bailing out the lawyers and the doctors with one or more band-aid
solutions, our State leaders should start worrying about the average New Yorkers
and our businesses who will continue to suffer and leave our State.

Respectfully submitted,

Mark C. Kriss, Esq.
Executive Director New Yorkers for Lawsuit Reform
Capitol Station
PO Box 7277
Albany, New York 12224-0277