Malpractice cap debate rages in D.C.
Kevin Dobbs
Argus Leader
published: 7/11/2003
Issue personal for Martin family
Two years after they lost their young son to what they call a needless death, Shawnna and Vernon Gardner find
themselves at the heart of a national debate over skyrocketing medical malpractice insurance costs.
Doctors, hospitals, insurers and a string of politicians blame frivolous
lawsuits and excessive jury awards for causing the higher rates. They say the solution is liability reform -
specifically, a nationwide $250,000 cap on pain-and-suffering payouts.
It has worked at the state level, they argue.
The Senate this week blocked the legislation, but Republicans vowed to push for it again in Congress or during the
next presidential election season.
Yet for all the attention it is getting these days in Washington, D.C., the Gardners - a ranching couple from Martin
who are in their 30s - see more than politics.
They see heartbreak and outrage as they recall the death of their 2-year-old son, Owen.
They also see the need for change within the insurance industry, and, above all else, more assurances that hospitals
are staffed with competent people.
For the Gardners - and others who share similar experiences - see an issue defined by preventable tragedy, an
issue "we live with ... every day," Shawnna Gardner said.
She said her son died senselessly when staff at a South Dakota hospital failed to treat his common flu-like
symptoms.
After medication failed to stop their son's vomiting and diarrhea, the Gardners say they were sent two hours away
from their home in Martin to a regional hospital. Their dehydrated son needed a pediatrician, but one
was not immediately available.
A nurse failed to administer intravenous fluids, Shawnna Gardner said. Owen stopped breathing. A tube was
incorrectly inserted into his stomach, cutting off his oxygen, and he died.
The Gardners settled for a confidential sum, mostly damages for their pain and suffering. It is, they say, money they
never would have sought had the medical staff done its job.
"It is so hard, but we really want people to know his story so no one else loses a child like this," Shawnna Gardner
said.
Debate in D.C.
President Bush and Republican leaders have argued all year that tort reform is critical to discouraging frivolous
lawsuits that, according to some estimates, have forced an 80 percent increase in the average jury
award against doctors during the past 10 years.
Malpractice insurance rates have shot up 100 percent or more in a single year for some surgeons and specialists asa direct
result, doctors and insurers insist. In some cities, doctors have conducted strikes, stopped
performing certain procedures, even retired early.
All of which not only scars the financial picture of a health care industry already grappling with high costs, but
also threatens patients' access to care and their ability to pay for it, doctor trade groups say.
For example, if doctors in a rural state such as West Virginia go on
strike - which they did - patients must travel to other cities and states for care, the trade groups say. And if
doctors who deliver babies fear a lawsuit at the first indication of a problem delivery and opt for
a Caesarean section, the mother-to-be is assured of more costs.
"Insurance is not magic. If judgments are to be unlimited, then the premiums need to increase accordingly to pay for
those judgments," said Barbara Smith, vice president of the South Dakota State Medical Association.
"As premiums rise, so must the cost of health care," she said. "With absolute certainty, this will compound the
severe access to care issues that we all face today."
The $250,000 cap championed by President Bush and passed by the U.S. House - with support from Rep. Bill
Janklow, R-S.D. -Êis modeled after one in California.
Punitive damages would be capped at the greater of $250,000 or twice the amount of economic damages, which
cover medical costs, lost time on the job and related expenses. States still could enact
higher caps.
Imposed in 1975, the cap in California has helped that state keep insurance costs in check through the years, Bush
and others have repeatedly said.
Twenty-four other states also have some kind of cap. South Dakota, with a $500,000 limit on noneconomic
damages, is among them. By and large, those are the states where malpractice insurance
rates are the most reasonable, proponents of tort reform say.
No state immune
But the American Medical Association said a national cap still is needed. Even though states such as South Dakota
that have caps in place have not yet endured a malpractice cost crisis, they could, the
association said.
That's because national companies cover doctors in rural states. There are no insurers based in South Dakota that
provide malpractice coverage. As national companies endure losses in some states, they are bound to
pass along the burden to all.
Even after charging doctors higher rates, some insurers have concluded that their losses on malpractice are too
great, and they have pulled out of the business.
The St. Paul Companies, for one, dropped malpractice coverage. That's a problem for states such as South
Dakota, where The St. Paul was one of only a handful of insurers doing business in the
state. Some doctors in Sioux Falls and Sioux City, Iowa, worry that they soon won't find a
company to cover them.
Other explanations
But opponents of the legislation, including many consumer groups and trial lawyers, question whether there is
anything of substance linking the caps to insurance rates.
They point out that shortly after California placed a cap on malpractice damages, it also enacted new rules that
gave the state more oversight over the insurance industry, including a say on how much companies could
raise premiums. That broader reform, many observers have noted, should get credit for curtailing prices in California.
Others say the prevalence of malpractice jury awards doesn't approach
the level that tort reform advocates say it does.
An analysis of new federal National Practitioner Data Bank records by Public Citizen, a Washington, D.C.-based
watchdog group, found the number and amount of payments to malpractice victims declined both
nationally and in South Dakota last year.
The group also reported that the number of awards greater than $1 million fell 11. 5 percent. No awards reached
seven figures in South Dakota last year.
"It's clear from these numbers that the insurance premium increases over the past year are not tied to lawsuits," said
Joan Claybrook, president of Public Citizen. "The only thing that correlates with the premium
increases is the decline in malpractice insurers' investment income."
Critics of the Public Citizen report said it's merely a snapshot of one year, while the problem is one that has
developed over several years.
But the Association of Trial Lawyers of America agrees with the report's substance and points to insurers' setbacks
on Wall Street. During the boom years of the 1990s, insurance companies invested heavily in the
stock market. With favorable returns, they were able to keep premium costs low and still make fat profits.
When a national recession took hold this decade, however, the stock market stumbled, and insurers lost money.
They in turn raised premium rates, at least in part to offset their losses, the argument goes.
On hold, for now
Senate Democrats and some skeptical Republicans this week bought that latter argument and voted to bottle upthe
legislation.
In a 49-48 vote - 11 short of the 60 needed to override Democratic opposition - those against caps argued that in
terms of health care change, the bill would simply hurt the victims grievously impaired by
medical errors.
There was not compelling evidence that it would lower insurance costs, said Sen. John Edwards, D-N.C., a trial
lawyer by training. "We shouldn't pad insurance company profits and hurt people who already have
suffered immensely," he told the Associated Press.
South Dakota's Democratic senators, Tom Daschle and Tim Johnson, voted against the national cap. In a recent
interview, Daschle said malpractice reform is better left at the state level.
Vernon and Shawnna Gardner, the Martin couple who lost their son, applauded the result. They had traveled to
Washington this week to speak out against the bill in advance of the vote.
Vernon Gardner said the bill purported to boost access to care but really only promised assurances for the
insurance industry.
"You can put a skirt and lipstick on a pig, but it's still a pig," he said. "At least we stomped it out this time."
Such legislation is hardly dead, though. Republican leaders vowed to
make it a key issue as a new election season gears up. They said that as the malpractice-cost problem worsens, those who
voted against the cap will struggle to explain themselves when campaigning.
"It could be a very potent political issue, particularly in those states where they have a crisis," Sen. George Allen of
Virginia, chairman of the Republican Senatorial Campaign Committee, told The Los Angeles Times.
Opponents such as the Gardners do not dismiss the problem but hope that when legislation resurfaces, it attacks
the issue on multiple fronts.
Potential alternatives
Already, one alternative proposed would lift anti-trust exemptions that give insurance companies great leeway in
setting prices. It also would give tax credits for doctors and hospitals pressured by soaring premiums
and penalize lawyers who file frivolous suits.
And, most important in the Gardners' eyes, it would use a voluntary nationwide program to report medical errors,
making it easier for patients to avoid problem doctors.
Public Citizen recently reported that 5 percent of doctors were involved in 54 percent of payouts to injured
patients. In South Dakota, just 3.6 percent of doctors were responsible for 40 percent
of all payouts between 1990 and 2002.
If lawmakers can find a way to weed out those failing physicians, it could dramatically cut costs and, more than
anything else, save lives.
"I don't doubt for a second that most physicians are paying way too much for insurance. But that's an insurance
problem," Vernon Gardner said. "If you can single out the worst physicians, people can avoid them, and
all the good ones should get better rates."
"That's what's going to improve health care," he added. "That's what we want to happen. We want people to know
so their kids don't get killed."
Reach reporter Kevin Dobbs at kdobbs@argusleader.com
or 977-3924.