Symposium on Medicolegal Problems in Ophthalmology f
COMPARISON OF STATE LEGISLATION REGARDING PROFESSIONAL LIABILITY BYRON H. DEMOREST, MD SACRAMENTO, CALIFORNIA
The so-called malpractice crisis of the mid-1970s alerted physicians to the need for legislative involvement in order to achieve needed malpractice tort reform. There has been a positive effort to modify the medical liability situation in each of our 50 states. A review of this legislative activity from 1975 through 1977 is presented. It is anticipated that a new malpractice crisis may develop during the early 1980s. Actuarial data now being collected plus the effects of such innovations as arbitration, pretrial screening panels, collateral source rules, and periodic funding of malpractic claims may provide an equitable approach to any future malpractice tort reform.
IN 1975 American physicians were involved in what was termed a "malpractice crisis." Several key factors contributed to this emergency. Since 1969 there has been an alarming increase in the number of malpractice suits filed. (Fig 1) Taken from the report of the California Citizens Commission on Tort Reform, this figure shows the increase in tort filings in California from 1967 through 1976. 1 Another element creating the crisis was the escalation of jury awards given in recent years. In California the average size of jury awards over $10,000 has increased remarkably (Fig 2). Most medical liability awards fall into this higher category.
Submitted for publication October 24, 1978. Reprint requests to 5301 F Street, Sacramento, CA 95819 (Dr Demorest).
Faced with this unstable actuarial situation, insurance companies rapidly increased the premiums for malpractice coverage or totally withdrew from the medical liability area, leaving many physicians without malpractice insurance. Increased threats of litigation and inflated insurance premiums energized physician groups, who then called on their elected representatives for legislative relief. In each state, bills were introduced, legislative advocates were engaged, public relation campaigns were developed, and, in some areas, physician slowdowns were put into effect-all to dramatize the need for relief from an untenable malpractice liability situation. The effect of this activity was not wasted. Within a short time, there was a positive legislative response in each of the 50 states. Laws have now been passed which modify the medical liability situation, somewhat reducing the risks of practice for physicians. These legislative efforts generally fall into two categories: (1) personal injury and liability law modifications, and (2) insurance provisions or modifications of insurance codes. The stated reason for this affirmative action by legislators was to lower malpractice defense costs and to grant physicians freedom from court appearances following
BYRON H. DEMOREST
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Fig I.-Increase in all tort filings during the teneyar period 1967-1977. (Courtesy California Citizens Commission on Tort Reform. Sept 1977.)
frivolous malpractice suits. Legisla- lems related to malpractice in ophtors agreed. that the purpose of thalmology. I shall now review medical education traditionally has recent legislative efforts which in been to prepare physicians to prac- part alleviate some of these probtice medicine, not to spend long lems. The material for this presenhours in court defending their med- tation has been drawn from state ical practice efforts. Although the health legislation reports compiled political world is foreign to most by the Legislative Department, physicians, the need to be heard Public Affairs Division, of the and involved in political decisions American Medical Association. 2 •3 was clearly demonstrated. to all The various states which have physicians during the malpractice adopted changes in tort law related crisis. to medical liability will be listed, and an effort will be made to relate Other participants in this sym- complicated legal terms to the pracposium have discussed specific prob- tice of ophthalmology. There is not
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Fig 2.-Marked increase in the growth of jury awards over $10,000 from 1970 to 1976. (Courtesy California Citizens Commission on Tort Reform, Sept 1977.)
time to discuss all of these. However, the specific legislative changes include the following, the most significant of which will be discussed in detail: The ad damnum clause elimination, statute of limitations, limitations on reCQvery, collateral source provisions, ad-
vance payments, not guilt admission, itemized verdicts, periodic payments, remittitur and additur provisions, punitive damage provisions, locality rules, burden of proof-res ipsa loquitur, informed consent, statute of frauds, notice of intent to sue, attorney fee regula-
BYRON H. DEMOREST
tion, awarding costs-expenses and fees, and countersuits. AD DAMNUM CLAUSE
This clause refers to that part of the plaintiffs initial pleading which states the amount of monetary damages and other relief requested by the plaintiff in a court action. In medical malpractice actions, this amount can be an inflated figure which often does not reflect the actual amount of damages sustained. "Pain and suffering damages" frequently form a part of this claim. Most recent legislation on this subject eliminates the ad damnum clause altogether. Provisions also have been made so that the defendant is now told of the precise amount sought by the plaintiff through thE! normal course of pretrial discovery. Thus, if an ophthalmologist were sued by a patient for $1,000,000 to cover the loss of an eye,this amount would not be available for pretrial publicity. Only as the case proceeded would the amount the plaintiff wished to recover become known. To date, 28 state legislatures have modified the ad damnum clause. They are Alabama, Alaska, Arizona, California, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Missouri, Nebraska, New Hampshire, New Mexico, New York, North Carolina, Ohio, Rhode Island, Tennessee, Texas, Utah, Washington, and Wisconsin.
occurrence of the alleged malpractice or from the date of discovery of damage. Thirty-seven states now have established a specific statute of limitations for medical malpractice cases. These are Alabama, Arizona, California, Colorado, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, and Wyoming. All other states have a statute of limitations applicable to medical malpractice actions, but in most of these states the statute is a general one applicable to all liability cases.
Maximum Statute of Limitations
Twenty states have sought to eliminate the "tail" of claims against malpractice insurance carriers by placing an absolute maximum time period within which medical malpractice suits may be filed. Such legislation commonly provides for bringing an action within a certain number of years after the occurrenee· of an alleged malpractice. States providing some form of definitive maximum time limitaSTATUTE OF LIMITATIONS tions are Alabama, Colorado, Delaware, Florida, Hawaii, illinois, Iowa, The statue of limitations is a law Louisiana, Missouri, Nebraska, New cutting off medical malpractice ac- Mexico, New York, North Carolina, tions after the expiration of a speci- North Dakota, Ohio, Oregon, South fied time period. Such a statute can Dakota, Tennessee, Utah, and begin to run either from the date of Washington.
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Minors Most states provide that if an injury is incurred by a minor, there is an extension of time on the minor's cause of action until he or she reaches the age of majority. Several states have amended their statutes, typically by providing that the general statute applies to a minor prior to reaching the age of majority. States that have amended their statutes of limitations for minors are Arizona, California, Colorado, Delaware, Indiana, Kansas, Louisiana, Maryland, Massachusetts, New Hampshire, New Mexico, Missouri, New York, North Carolina, Ohio, Rhode Island, Texas, Utah, and Wyoming. LIMITATIONS ON RECOVERY
Thirteen states have enacted legislation which establishes a maximum ceiling on the amount of damages that may be recovered in medical malpractice cases. All are different. For example, statutes in California, Ohio, and South Dakota place a maximum ceiling only on the amount of noneconomic damages which may be recovered by a plaintiff in a medical malpractice case. This type of provision limits only the amount of damages that may be a warded for "pain and suffering" but does not limit the amount that a plaintiff may recover for such things as lost wages and out-of-pocket expenses. A New Mexico statute, however, provides an overall limitation on the amount recoverable by a plaintiff, but an exemption is provided if it can be demonstrated that costs and future medical care may exceed the limited amount ..
A Wisconsin statute provides for a ceiling of $500,000 in the event the reserve in the patient compensation fund falls below $2,500,000 in any year. Other states have similar specially tailored variations of this statute. The states which have enacted some form of limitation on the amount of damages are California, Idaho, Illinois, Indiana, Louisiana, Nebraska, New Hampshire, New Mexico, Ohio, South Dakota, Texas, Virginia, and Wisconsin. COLLATERAL SOURCE PROVISIONS
The collateral source rule is one which prohibits the introduction into evidence at a trial of any indication that a patient has been compensated or reimbursed for his injury from any source other than from the defendant. Nineteen states now have enacted legislation in an attempt to limit such duplication of payments. These modifications take two different approaches. One is to permit the introduction into evidence of compensation or other payments received from collateral sources. Eight states have adopted such legislation. They are Arizona, California, Delaware, Kansas, New york, Rhode Island, South Dakota, and Washington. The second approach is that there will be an offset against any award given by the jury in the amount of any collateral source payment received by the plaintiff. Eleven states have modified their collateral source rules in this manner. They are Alaska" Florida, Idaho, Illinois, Iowa, Nebraska, New Hampshire, North Dakota; Ohio, Pennsylvania, and Tennessee.
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An example of the need for a change in the collateral source rule can be seen when an apparently poor bereft widow with minimal disability elicits great sympathy without revealing that she inherited $2,000,000 following her late husband's death from a medical maloccurrence.
tucky, Louisiana, Maryland, Nebraska, New Mexico, Nevada, North Dakota, Pennsylvania, Texas, Washington, West Virginia, Wisconsin, and Wyoming. PERIODIC PAYMENTS
In most states, judgment can only be rendered as a lump sum ADVANCE PAYMENTS NOT award. This type of payment may ADMISSION OF LIABIITY be ill suited in medical malpractice cases because awards in such cases Patients in medical maloccur- often include payment for such rence situations may encounter things as anticipated future medifinancial difficulties as a result of cal care and lost earnings. This illness, incapacity, loss of a spouse, entails speculation about future or extra unanticipated medical pay- damages and also may create a ments. In situations in which some windfall for the plaintiff's heirs liability seems to be apparent, the in case of the premature death of physician's insurance company may the plaintiff. A patient with a advance to the patient certain shortened life expectancy from a amounts to alleviate economic hard- malignant melanoma might sue a ship. physician who allegedly overlooked the tumor. Such a patient should If a strabismus patient has suf- be given periodic payments to cover fered a cardiac arrest and a longer medical expenses and lost earnings. hospitalization was required with These expenses vary from family attendant unexpected expenses for to family and should be set accordthe family, who needed to commute ing to need. This requirement is long distances or stay at a motel best met by periodic payments. near the hospital, the medical liability insurance company is now Thirteen states now have adopted able to advance money to cover a periodic payment system, in such extra expenses without indi- which payments are made over the cating an admission of guilt by the actual lifetime of the plaintiff or for physician. the actual period of disability. These states are Alabama, Alaska, To encourage the continuance of California, Delaware, Florida, Kanthese advance payment practices, sas, Maryland, New Hampshire, 19 states have enacted legislation New Mexico, North Dakota, Utah, to provide that any such payments Washington, and Wisconsin. advanced by the defendant or his insurance carrier to the plaintiff in a medical malpractice action prior LOCALITY RULES to final judgment or settlement do not constitute an admission of liHow reasonable or applicable is ability for injuries or damages testimony provided by out-of-country suffered by the patient. These states or out-of-state witnesses? Such testiare Alabama, Alaska, Connecticut, mony may overlook local traditions Delaware, Hawaii, Indiana, Ken- of medical practice and the local
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standard of care. In a case of pseudophakia with medicolegal complications, an expert testifying from an area where intraocular lenses are not used could provide unfair and biased testimony against against a surgeon who has implanted many artificial lenses. Locality rules prescribe the standard of care for physicians in a designated geographic area. Such rules also may be applied to determine the qualifications of expert witnesses. Sixteen states have now adopted modifications in medical liability law on the subject of standard of care which sought to define the locality on which the applicable standard is to be based. These states are Alabama, Alaska, Arizona, Arkansas, Delaware, Florida, Idaho, Louisiana, Nebraska, Nevada, North Carolina, Oregon, Tennessee, Vermont, Virgina, and Washington.
tion to each patient regarding the nature and purpose of proposed medical or surgical treatment as well as the risks associated with such treatment. A patient with a cataract should be given the opportunity to understand the options open to him before he agrees to cataract surgery. The surgeon often indicates the procedure of choice according to the situation as he evaluates it, but the patient must be given enough information to concur with the surgeon's evaluation or allow the choice of another approach to therapy.
Twenty states have codified the doctrine of informed consent in an attempt to insure a uniform definition and application of that doctrine. Generally such statutes require that consent to medical treatment be in writing. An imposition is made on the physician to disclose facts that a reasonable physician would have disclosed in the Additionally, nine other states same or similar circumstances, and have enacted legislation on the the statutes require the physician qualifications and use of expert to disclose the ris.ks of such treatwitnesses. Such modifications in- ment. The states that have enacted clude the absolute requirement that legislation on informed consent are expert testimony must be provided Alaska, Colorado, Delaware, Florida, in a trial in order for the plaintiff Hawaii, Idaho, Iowa, Kentucky, to prevail on a claim based against Louisiana, Nebraska, Nevada, New negligence, plus the establishment York, North Carolina, Ohio, Pennof an absolute standard of qualifi- sylvania, Rhode Island, Tennessee, cations for expert witnesses, often Utah, Vermont, and Washington. based on locality rules existing in that state. Those states that have AGREEMENT ASSURING adopted "standard of care" proviRESULTS sions relating to expert witnesses are Delaware, Florida, Idaho, LouiAn ophthalmologist may indicate siana, Michigan, Nevada, Ohio, to a patient that new glasses should Oklahoma, and Tennessee. greatly improve his vision. The patient then finds that aberrations caused by the lenses make the INFORMED CONSENT glasses impossible to wear. MisThe doctrine of "informed con- understanding may occur in that sent" imposes a duty on the physi- oral assurances by the physician cian to disclose pertinent informa- may be misinterpreted by the pa-
BYRON H. DEMOREST
tient as a guarantee of results. State legislatures are beginning to realize that guarantees now must be in writing. Fourteen states have adopted legislation stating that alleged guarantees of results must be in writing and signed by the provider in order to be enforceable in a court of law. The states having enacted such legislation are Alaska, Arizona, Delaware, Florida, Indiana, Kentucky, Louisiana, Nebraska, North Carolina, Ohio, Pennsylvania, Texas, Utah, and Vermont. NOTICE OF INTENT TO SUE
Legislation enacted in six states requires that a plaintiff, prior to filing a malpractice action, must notify the physician in writing of the date of the alleged malpractice and of the patient's intention to sue. The theory behind this is that it encourages the physician and the physician's insurance company to investigate the claim and perhaps reach a settlement prior to the initiation of expensive, time-consuming litigation. Those states with such a statute are California, Maine, New Hampshire, Texas, Utah, and Virginia. ATTORNEY FEE REGULATION
Usually arrangement for payment of the plaintiff's attorney fees in medical malpractive cases is on a contingency fee bases. Under this arrangement, the attorney receives as his fee an agreed-upon percentage of 30% to 50% of any final award. Legislation enacted within the past several years in 19 states regulates plaintiff attorney fees in two
different ways. One is a provision of a sliding scale for maximum fees. States adopting this legislation include California, Delaware, Hawaii, Idaho, Indiana, Michigan, New Jersey, New York, Ohio, Oregon, Pennsylvania, and Wisconsin. The other attorney fee modification method provides that the court review an attorney's proposed fee and approve what it considers to be a "reasonable fee." A recent case involving an eye blinded after surgery resulted in a settlement of $350,000 for the patient and $200,000 for the patient's attorney. The case was settled out of court before trial, and the duties of the attorney were modest. Such fees would be adjusted under this legislation. States authorizing the court to approve reasonable fees include Arizona, Iowa, Kansas, Maryland, Nebraska, Tennessee, and Washington. INSURANCE CODE MODI FICATIONS
In addition to the above liability law modifications, a number of states have also adopted changes in their insurance codes to allow latitude in the means by which insurance for malpractice may be provided to physicians. Such changes include the following. Joint Underwriting Associations
Thirty-three states have provisions for the creation of joint underwriting associations (JUAs). While definitions of this form of coverage vary from state to state, most often a JU A is defined as a pooling arrangement composed of commercial liability insurers doing business within that state. Such associations are usually formed when
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medical liability insurance becomes unavailable in the private sector. These are short-term solutions to the problem, but may be an alternative mechanism for insurance when needed. States with arrangements for JUA's are Alabama, Alaska, Arizona, California, Colorado, Delaware, Florida, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, and Virginia. Health Care Mutual Insurance Companies Such organizations are usually formed by state medical societies. They are "captive companies" and are private physician-owned and operated insurance companies that are authorized to write medical malpractice insurance for the benefit of their members. The insurance laws of many states already permitted the establishment of such mutual companies prior to the socalled malpractice crisis. Other states which have recently enacted specific legislation to allow the establishment of physician-owned companies are Alaska, Arizona, Colorado, Florida, Hawaii, Iowa, Maryland, Mississippi, Missouri, Montana, New York, North Dakota, South Dakota, Tennessee, Texas, and Washington. Professional Liability Reinsurance Exchanges Three states-Arkansas, New Jersey, and North Carolina-have enacted legislation for the establishment of reinsurance exchanges.
Such exchanges are basically organizations comprised of all insurance carriers writing a certain class of insurance within that state. The exchange is established to provide reinsurance for policies written by member companies. State Funds Five states have provided for a residual authority state fund administered by the state and empowered to write insurance or obtain reinsurance for the fund. The costs of such funds are provided by premiums from the members. The states with such legislation are Indiana, Louisiana, Michigan, Nebraska, and Oklahoma. REGULATORY PROVISIONS Mandatory Insurance Coverage Thirteen states now require all physicians to submit proof of insurance or proof of financial responsibility. These states are Alaska, Colorado, Florida, Idaho, Indiana, Kansas, Nebraska, New Mexico, North Carolina, North Dakota, Oregon, Pennsylvania, and Wisconsin. In two states this requirement has recently been withdrawn. It was repealed in Hawaii and declared unconstitutional in Kentucky. Incident and Mandatory Claim Reporting In 35 states, malpractice claims, settlements, or judgments must be reported by the carriers either to the insurance commissioner or to an appropriate licensing board within the state. These states are Alabama, Alaska, Arizona, California, Colorado, Delaware, Hawaii,
. BYRON H. DEMOREST
Idaho, Illinois, Indiana, Iowa, Louisiana, Kansas, Kentucky, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, New York, North Dakota, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Utah, Virginia, Wisconsin, and Wyoming. It is the intent of this legislation that data accumulated from such reporting mechanisms will provide guidance for future tort reform legislation in the medical liability insurance area. Limitations on Policy Cancellations
In the past, sudden cancellations of medical liability insurance have resulted from an adverse judgment or settlement against a physician. Several states now have enacted legislation to reduce this problem. These states are Arkansas, California, Colorado, Connecticut, Kansas, Louisiana, Maryland, Nebraska, Pennsylvania, Texas, and Virginia. THE FUTURE OF TORT REFORM
Recently James E. Ludlam, legal counsel for the California Hospital Association and one of the nation's foremost authorities on health liability litigation, stated that in his opinion the medical malpractice situation is currently in a lull or on a platform. 4 He feels that the problem which we faced several years ago will surface again and a new crisis will develop during the early 1980s.
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ally overcome the temporary legal restrictions of recently enacted tort reform legislation. If this new predicted malpractice crisis occurs in the 1980s, premiums for malpractice insurance will again rise and renewed efforts will be made by physicians to effect malpractice law reform.
There are events that may have· ·~ positive effect on the future that should be considered. First, the American Bar Association has appointed a Committee on Total Tort Reform. The fact that our nation's attorneys now formally recognize the problem is a positive sign. Next, there are a number of statewide committees investigating tort reform. Earlier I quoted from the California Citizens Commission on Tort Reform. It is apparent that problems in the field of government liability, product liability, and automobile liability are becoming increasingly critical. Solutions directed toward these problems will impact positively on the resolution of any future malpractice crisis. During the last crisis, physicians, hospitals, and attorneys tended to blame the insurance industry for the malpractice problem. Now that provider-controlled companies are in existence, that "scapegoat" will no longer exist and the true problem will have to be faced. Placing emphasis on the need for tort reform should help reduce medical malpractice actions.
Ludlam feels that the number of suits brought by patients against As the federal government bephysicians will increase in another comes more involved in the proviyear or so. He also feels that mal- sion of health care, it will make a practice trial attorneys will gradu- positive effort to protect providers
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and reduce costs. In the past, physicians have taken a strong position against any federal solutions, but in the future federal involvement seems more likely. One advantage of government involvement is that a federal solution will be uniform and could have a quicker impact than the present approach on a state-by-state basis. And last, new information concepts and actuarial data now being made available, and not evident during the last malpractice crisis, may be very helpful in the 1980s. The result of what is occurring in many states with arbitration, screening panels, collateral source rules, and periodic funding may provide valuable information to effect an equitable approach to the next malpractice crisis.
It is important to keep the problem of malpractice in medicine under continuous surveillance; if we do not, difficulties will surface periodically and the practice of medicine will be continually harassed. REFERENCES 1. Palmer BH, et al: Righting the Liability Balance. Summary of the Report of the Citizens Commission on Tort Reform. Los Angeles, Sept 1977.
2. Kritchbaum JA: State Health Legislative Report. A Special Update and Review on Medical Malpractice Legislation and Related Court Decisions. Chicago, AMA, vol V, no I, 1977. 3. Kritchbaum JA: State Health Legislative Report. Chicago, AMA, (suppl to vol V, no 1) 1977.
4. Ludlam JE : Storm warning: Tort reform needed now. Sacramento Med Sept 17, 1978, P 6 .