Urban Friesz, BMS’ Vice President of Claims discusses his research on the recent med mal reform bill that passed in the US House of Representatives last week:
The US House of Representative passed legislation on March 22, 2012, that the Congressional Budget Office projects will reduce direct and discretionary spending by $46.6 billion over the 2013-2022 period (H.R. 5, Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) Act of 2011).
The bill, labeled H.R. 5, contains significant implications for medical malpractice insurance carriers and, in a prior form, could have meant big changes in how insurance is regulated in the United States. The McCarran Ferguson repeal amendment, which is part of the broader bill, has since been narrowed to exempt property and casualty and life products. The McCarran-Ferguson ACT of 1945 (15 U.S.C.A. § 1011 et seq.) recognized authority among the states to regulate the business of insurance unless federal law specifies otherwise. Broad repeal of this act would have likely meant larger regulatory oversight by the federal government under the Commerce Clause of the US Constitution.
The Bill Summary & Status published on the Library of Congress website lists the following elements of the bill:
• Sets conditions for lawsuits arising from health care liability claims regarding health care goods or services or any medical product affecting interstate commerce.
• Sets a statute of limitations of three years after the date of manifestation of injury or one year after the claimant discovers the injury, with certain exceptions.
• Limits noneconomic damages to $250,000. Makes each party liable only for the amount of damages directly proportional to such party’s percentage of responsibility.
• Allows the court to restrict the payment of attorney contingency fees. Limits the fees to a decreasing percentage based on the increasing value of the amount awarded.
• Allows the introduction of collateral source benefits and the amount paid to secure such benefits as evidence. Prohibits a provider of such benefits from recovering any amount from an award in a health care lawsuit involving injury or wrongful death.
• Authorizes the award of punitive damages only where: (1) it is proven by clear and convincing evidence that a person acted with malicious intent to injure the claimant or deliberately failed to avoid unnecessary injury the claimant was substantially certain to suffer; and (2) compensatory damages are awarded. Limits punitive damages to the greater of two times the amount of economic damages or $250,000.
• Denies punitive damages in the case of products approved, cleared, or licensed by the Food and Drug Administration (FDA), or otherwise considered in compliance with FDA standards.
• Provides for periodic payments of future damages.
As with any political issue, there are arguments for and against tort reform. In theory, constricting the universe of exposure reduces uncertainty and allows medical liability insurers to more accurately price insurance for practicing physicians and medical providers. Many argue that this reduction in risk also discourages practitioners from ordering unnecessary tests and procedures that serve to protect them from liability in the event of a lawsuit for medical malpractice (defensive medicine). Opponents of the bill argue that establishing caps on liability awards denies victims of medical negligence fair compensation for their injuries. They also refute that these reforms significantly reduce the cost of providing medicine.
As of March 28, 2012, govtrack.us predicts HR 5 has a 13% chance of passing congress. The related bill in the Senate S 1099 is showing an 8% chance of passing.
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