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					Washington State Hospital Association
        71st Annual Meeting




          October 9-10, 2003
    Bell Harbor Conference Center
             Seattle, WA
Concurrent Session: “The Medical Liability Quandary: Is
                 There a Way Out?”


                   October 9, 2003



                    Matt Wall, J.D.
              Associate General Counsel
              Texas Hospital Association
                   P.O. Box 15587
                 Austin, Texas 78761
                    512/465-1538
                   mwall@tha.org
The answer is “Yes, there is a way out of
 the medical liability quandary” – with…

   the right coalition,

   research,

   the political will,

   grassroots efforts,

   … and luck.
Snapshot of the liability problem in Texas -
     coverage issues in early 2003

   From 2000-2003, the average Texas hospital
    premium more than doubled, to $870,000.

   From 2002-2003, 93 percent of the hospitals in
    Texas increased their first layer of coverage,
    usually through an increase in self-insured
    retention – and 37 percent of those hospitals said
    they increased their first layer of coverage by
    more than $4 million in that one-year period.

Source: Jan. 2003 THA Professional Liability Study
Snapshot of the liability problem in Texas -
     coverage issues in early 2003

   From 2002-2003, almost 75 percent of the
    hospitals in Texas experienced a decrease in their
    second layer of coverage of 40 percent or more.

   Despite the substantial decrease in the second
    levels of coverage, the premium for this lower
    amount of coverage was often higher.


Source: Jan. 2003 THA Professional Liability Study
Snapshot of the liability problem in Texas–
    other professional liability issues

   Hospitals’ loss history review - longer time span or
    more intense review than in the past: 55+ %

   Hospitals were unable to obtain the amount of
    commercial coverage they desired: 20+ %

   Hospitals increased their total number of
    commercial policies in an attempt to obtain a
    similar level of total coverage: 50 %


Source: Jan. 2003 THA Professional Liability Study
Snapshot of the liability problem in Texas–
    other professional liability issues


   Physicians on the medical staff asked if the
    hospital was willing to help subsidize the
    physician’s liability premiums: 65 %

   Hospitals changed commercial carriers: 50+ %




Source: Jan. 2003 THA Professional Liability Study
  Negative impact of these issues on
             health care

 Higher premiums
            +
  reduced access
to liability insurance
            =
Jeopardized access
    to health care
           Negative impact of these issues on
                      health care

More dollars for liability insurance
also means fewer resources to
expand or enhance services.
Numerous hospitals indicated
that they had restructured
or limited their plans for
expanding existing services or
adding new ones due to the
increase in liability premiums
that would result.

Source: Jan. 2003 THA Professional Liability Study
        Forming a medical liability reform
                   coalition

   Coalition building is
    critical to achieving
    success on liability
    reform. Reasons:
       Builds trust
       Helps reduce conflict
       Allows the coalition to
        speak with one voice
        Forming a medical liability reform
                   coalition

   The Texas Alliance for Patient Access (TAPA):

       formed in January 2002
           Name registered

           Executive director hired

           Dues established and assessed

           Website established
     Forming a medical liability reform
                coalition

   TAPA:
      was formed as a consortium of representatives of
       hospitals, physicians, liability insurance carriers,
       clinics, health insurers and long-term care
       providers
      to serve as a facilitator and promoter of the liability
       reform agenda in Texas.


   Ensuring access to care became the alliance’s
    key message.
       Forming a medical liability reform
                  coalition

   TAPA was modeled after an alliance in California:
    Californians Allied for Patient Protection (CAPP).

   CAPP “is a broad-based coalition of health care providers,
    business, labor and consumer organizations, and insurers
    created to preserve the Medical Injury Compensation
    Reform Act of 1975 (MICRA), California's landmark medical
    malpractice law.” (www.micra.org)
        Forming a medical liability reform
                   coalition

   Key TAPA committees established:

       Legal and Claims Committee
          Composed of health care lawyers, insurance
           representatives.

       Communications Committee
          Composed of association communications directors,
           and PR consultant.
        TAPA Legal and Claims Committee


   Top legal and insurance experts were included -
       Knowledge of relevant state statutory, case-law and
        regulatory issues was a prerequisite.


   They debated and formulated the specific
    elements of the proposed legislation
       monthly meetings
       in Austin.
      TAPA Legal and Claims Committee

   Their recommendations
    were presented to the
    entire TAPA board for
    approval in the fall of 2002.

   This committee also vetted
    specific legislative
    proposals and
    counterproposals during
    the 2003 legislative
    session.
         TAPA Legal and Claims Committee

   Key decision for the
    committee:

        whether to pursue just
         medical liability reform
         legislation, or also a
         constitutional
         amendment to limit
         noneconomic
         damages.
     TAPA Legal and Claims Committee

   Specifically, the committee considered whether to
    pursue a joint resolution that would authorize a
    constitutional election by the voters.

   As envisioned by the committee, this election
    would address one question: whether the
    legislature could set limits on noneconomic
    damages in medical liability cases.
        TAPA Legal and Claims Committee



   The committee decided to pursue the drafting of a
    joint resolution. The rationale:

       A constitutional amendment, if passed by the
        voters, would provide immediacy and certainty
        regarding a noneconomic damages cap.
        TAPA Legal and Claims Committee

   This meant that the
    liability reform
    initiative would be a
    two-pronged fight:

       Legislature

       Voters
      TAPA Legal and Claims Committee


   The resulting legislation was HJR 3.

   HJR 3 ultimately passed on May 20, 2003 by a
    vote of 102/43 in the House, and 22/9 in the
    Senate. And it includes authorization for the
    legislature to set caps in other liability cases, too.

   HJR 3 was designated as Proposition 12 for the
    constitutional election.
      TAPA Legal and Claims Committee


    RESULTS OF 9/13/03 CONSTITUTIONAL
    ELECTION ON PROPOSITION 12:

   Total Votes Cast:    1,416,615

   In Favor:             750,810    51.12%

   Against:              717,805    48.88%

   Margin of Victory:     33,005
     TAPA Legal and Claims Committee


   House Bill 3 was originally filed as the medical
    liability reform legislation in February.

   Subsequently, the House leadership expanded
    HB 3 to address a number of nonmedical liability
    reforms (such as class actions, products liability
    and venue). It was renumbered as HB 4.
      TAPA Legal and Claims Committee

    HB 4:

   entailed 60+ hours of public hearings, several
    days of legislative debate, and the filing of 300+
    amendments.

   finally passed on June 2, 2003 - the last day of
    the regular session. The vote was 110/34 in the
    House, and 28/3 in the Senate.
        TAPA Communications Committee


   This committee developed a media plan to
    manage the liability reform issue:

       Consistency and consensus were key factors in
        message development.

       Provided one-day media training for TAPA
        spokespersons and representatives from hospitals,
        medicine, insurance and nursing.
        TAPA Communications Committee


   Media plan, (cont’d.):
       Developed collateral
        materials for coalition’s use
       Coordinated grassroots
        involvement
           Letter-writing
            campaigns during the
            legislative session
           Local media
            coordination/coverage/
            story development
      TAPA Communications Committee

   Media plan (cont’d.):
   Developed a mechanism
    for media management
          Initiated rapid
           responses to
           inquiries/other
           stories
          Arranged news
           conferences
                 Other research


  The Texas Hospital
Association established its
 own tort reform technical
 advisory group to review
    legal concerns and
  recommend legislative
          options.
                    Other research

   The THA TAG:

       was composed of in-house counsel and risk managers
        from THA-member hospitals/systems.

       met three times over a one-year period.


       reviewed law review articles, studies, other states’ laws.
                   Other research

   The THA TAG (cont’d.):

       provided testimony and expertise during the interim
        committee hearings of the legislature in 2002.

       developed recommendations – which in turn helped
        establish the parameters for THA in its negotiations on
        the TAPA board.
              Other research


  Point: You should
  consider establishing
          a TAG
  to tackle the tough
 legal/technical issues,
and to help focus your
          effort.
                    Other research

   California’s MICRA was a template for the Texas
    law. MICRA has four fundamental components:

       $250,000 cap on noneconomic damages (California Civil
        Code § 3333.2)

       Periodic payments (California Code of Civil Procedure §

        667.7)
                   Other research

   MICRA key components (cont’d.):

       Contingency fee limits (California Business and
        Professions Code § 6146)

       Evidence of collateral source payments to offset awards
        (California Civil Code § 3333.1)
               Other research


TAPA concluded that a
            cap
   on noneconomic
         damages
was the key ingredient
  to effective liability
    reform legislation.
                   Other research

   Helpful resources supporting the utility of caps on
    noneconomic damages:

       The Impact of Legal Reforms on Medical Malpractice
        Costs (September 1993), Office of Technology
        Assessment, archived online at:

    http://www.wws.princeton.edu/~ota/ns20/alpha_f.html
                   Other research

   Helpful resources (cont’d.):

       California’s MICRA Reforms: How Would a Higher Cap
        on Non-Economic Damages Affect the Cost of and
        Access to Health Care? Prepared by LECG, Inc. and
        available at:

         www.micra.org (under “Publications”)
                    Other research

   Helpful resources (cont’d.):

       Confronting the New Health Care Crisis: Improving
        Health Care Quality and Lowering Costs by Fixing Our
        Medical Liability System, U.S. Dep’t. of Health and
        Human Services (July 24, 2002), available at:


        http://aspe.hhs.gov/daltcp/reports/litrefm.htm
                    Other research

   Helpful resources (cont’d.):

       Medical Malpractice Tort Reform: Lessons from the
        States, American Academy of Actuaries (Fall 1996),
        available at:

        http://www.actuary.org/ (under “Publications,” click on
        “Issue Briefs,” then look under “Archives”)
                 Other research

   There are a number of
    other useful and
    important potential
    tools to help predict a
    state’s need for
    medical malpractice
    reform.
             Other research

Use state insurance
department statistics
and data calls on
medical and
professional
liability insurance to
help establish your
case.
                  Other research

   Other useful tools
    (cont’d.):

       Hire an expert to
        conduct an
        association-
        sponsored
        actuarial study on
        claims frequency
        and severity
                  Other research

   Other useful tools
    (cont’d.):

       Hire an expert, or
        use in-house
        expertise, to
        conduct an
        association-
        sponsored study
        on liability
        premiums
                     Political will

TAPA hired a consultant to
conduct a Texas poll to
assess public knowledge and
perceptions of health care
liability. Eight focus groups
were conducted over three
months in key cities in Texas.
                    Political will

   The results of the
    poll were:

       62% believed the
        state’s health care
        system is broken,
        based on cost and
        potential loss of
        access to care.
                      Political will

   Polling results (cont’d.):

       The public believed that the rising cost of malpractice
        insurance and high jury awards are contributing factors
        to increased costs. Many believed that greedy lawyers
        and frivolous lawsuits are running up the costs of the
        health care system.

       The public also blamed insurance companies and
        managed care plans.
                      Political will

   Polling results (cont’d.):

       81% would support limits on attorney contingency fees.

       71% would support $250,000 cap on non-economic
        damages.

       78% would support $1 million cap on non-economic
        damages.
                      Political will

   Polling results (cont’d.):

       76% would support additional protection for emergency
        room physicians.

       77% would support efforts to make expert witnesses
        licensed.
                         Political will

   Point: Research and polling data are key factors:

       in helping the legislature establish a legal and historical
        record of the reasons for reform,

       in helping individual legislators, if necessary, justify their
        vote to their party, and

       in helping legislators with their constituents back home.
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                 Political will

   It’s also
    important to
    identify and
    utilize legislative
    “champions.”
                    Political will

   These are legislators
    who have the
    knowledge, intellect
    and determination, as
    well as the respect of
    their peers, to
    shepherd the
    legislation through the
    process.

   A thick skin helps, too.
              Grassroots activities

   Educate your
    members on the
    issues so they can
    “tell their story” to the
    media, to local
    groups, and to their
    legislators.
              Grassroots activities

   Remember that
    liability reform issues,
    while complex, need
    to be distilled to their
    simplest terms, and
    they need to have
    human appeal.
    Simplify, simplify.
    Leave the
    complexities to the
    lawyers.
              Grassroots activities

   Utilize your
    written/electronic
    communications networks
    to alert your members
    when quick action is
    needed, e.g.,
    communicating with
    legislators in the days and
    hours leading up to a vote.
              Grassroots activities

   Identify and work
    the swing votes

       Use coalition members
       Use outside lobbyists
Good luck!

				
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