Health Courts

Two recent amendments passed by Florida voters allow the State to make significant modifications in medical liability practices and reform that will pave the way for the future of malpractice policy within this country. Florida is at an important cross-roads in malpractice reform where we have the opportunity to be a leader in policy change and health care delivery, or simply another band-aid on the stump of an amputated limb.

First, I will review two Amendments which allow these changes and second I will introduce a policy proposal that can be adopted using the current laws, infrastructure, and resources available to our state.

In November, Florida voters passed two significant amendments that will affect the future of health care delivery and medical liability within the state. First, Amendment 3 is a self-executing item that limits compensation. More specifically, Amendment 3 states that an injured claimant is entitled to 70% of the first $250,000 of non-economic damages and entitled to 90% of any recovered damages over $250,000. This is virtually a non-economic damages cap of $250,000. Amendment 8 (SB 940) is even more significant. Originally, the Florida Bar Association proposed Amendment 8 as a vague “3 strikes your out” proposal. However, after the Amendment passed in November, a state court barred the passage of the legislation until the impact on the state could be further reviewed. The potential problem was that some medical specialties face a high frequency of litigation simply because they are in fields of high risk or frequent negative health outcomes. Thus, it was possible that a broad interpretation of the 3 strikes and your out law would mean that any physician with 3 malpractice settlements on their record could lose their Florida license. In addition, it was feared that there would be a trend to lose physicians, both practicing and training, from the State out of fear of the law and from the burden of rising malpractice insurance premiums. The Florida Medical Association lobbied the state congress to make modifications to this Amendment that would allow it to become a practical law that would not decrease the quality of health care in the state of Florida.

A panel was assembled in the winter and spring of 2005 that made recommendations to the state House of Representatives. Finally, the House followed many of these recommendations and a final Amendment was passed that modified the original legislation into a law that would not cause a significant burden on Florida citizens. The new law is not retroactive. Therefore, only new “strikes” that occur after November 3, 2004 will be counted against physicians. Furthermore, a professional board of physicians, health care administrators, and legal officials was created to review malpractice litigation in order to determine whether a particular suit or settlement should count as a “strike”. This board has the expertise to understand whether or not the malpractice was due to negligence and poor doctoring, or if it was a result of a greater systemic problem out of the physician’s control or not due to physician error directly.

These two Amendments should be welcomed by the both the legal and medical community, as well as by patients, and but not in the current way in which the Amendments are executed. If we do not continue pursuits of additional malpractice reform, Florida physicians may not see a decrease in malpractice premiums and patient’s may not be able to obtain just representation in the case of negligent injury. However, we are fortunate that the actions required by the Amendments and the language of the two laws allow us to make modifications in other aspects of our medical liability decisions that will lead to a reduction in insurance premiums in the long run, an ability for patients to pursue medical malpractice claims, and a reduction in frivolous lawsuits and out of proportional jury awards.

The major concern cited by opponents to the non-economic damages cap is that attorneys will be unable to take on malpractice cases due to the high cost by the law firm in gathering expert witnesses and investing the claim. Therefore, attorneys will be unable to take on the majority of liability claims due to the potential loss of their investment. Florida is not the first state to pass non-economic damage caps on malpractice jury awards. In 1975, California passed a cap of $250,000. However, the state continued to witness double-digit rate increases until the MIRCA was passed which significantly altered how insurance agencies could set premiums for physician liability coverage. In other words, the non-economic damages cap did nothing to halt rising malpractice insurance premiums – only insurance reform was able to do that. However, this paper is not necessarily suggesting insurance reform because it will not be necessary if we pursue the alternative discussed below. Other states have also experimented with non-economic damage caps including Missouri and Texas. The Missouri non-economic damages cap was set in 1986 at $350,000 and was adjusted for inflation in 2003 to $557,000. The cap resulted in a reduction in claims by 14% by 2003. However, one has to wonder if this drop in claims was due to even more low income individuals finding it impossible to obtain representation to pursue their claims. Correlating with this drop in claims and the cap, the state also observed a reduction in payouts by 21%. Interestingly, during this same period, malpractice insurance premiums increased by 121% in the state of Missouri. Data from California and Missouri suggests that non-economic damages caps do not translate to lower malpractice premium rates – a common stated reason for medical community support for such caps.

It is also important to note that only 2% of patients injured by negligent care ever file a malpractice claim and the current malpractice system only compensates 1 in 14 people. These low odds and the lack of precedent cause attorneys to adopt a strategy of swamping the courts with malpractice claims, 4 out of 5 of which are found to be invalid. A system of standards for awards and for care would greatly reduce frivolous suits and would allow attorneys, patients, and physicians to modify their practices and behavior accordingly.

There is a solution to these problems that would be in complete alignment with Amendment 3 and Amendment 8. The Progressive Policy Institute, among others, proposes a system of health courts for liability claims and written standards of liability settlement that would function similar to the workers compensation claims process operated by the Board of Labor.

The most striking and revolutionary changes that would follow the health court system would be a shift from designating blame to a particular physician into assigning a process of blame to a team, group, or institution. Furthermore, and maybe most controversial, the system would end jury awards for malpractice and would rely on written standards to dispense benefits.

The basic tenants of the Progressive Policy Institute proposed Health Court system include (1) replacing civil courts with health courts to hear liability claims (similar to specialized tax courts), (2)creating a written standard of accelerated compensation events (ACEs) of common medical mistakes and errors (e.g. bleeding after colon surgery requiring an additional surgery) that would detail a benefit schedule that could be included with lost wages and direct economic damages, (3) ability for patients to directly file liability claims with the health care provider or hospital, (4) a local board that would review injury claims and determine if they meet ACE designation or if they require further judafication, (5) a system of state and federal health care boards with mixed funding at each level, (6) the establishment of additional ACEs and benefit standards determined by written case law (7) experts will be paid and obtained by the court and board, not by the attorneys from either side, (8)the ability to monitor truly negligent hospitals and institutions over time and (9) use of evidence based medicine to establish a standards board for practicing physicians.

The benefits of this system are that physicians will have a clear idea of what constitutes malpractice and liable behavior because their will be a written set of standards developed from court rulings. This will decrease overall health care expenses by decreasing the practice of “defensive medicine” which is common among physicians (an over abundance of tests are ordered to cover liability). Furthermore, all patients will have access and ability to pursue injury claims in a similar manner in which they already pursue worker’s compensation claims. In addition, the hiring of experts by the court will reduce attorney fees significantly making it easier for low-income individuals to obtain representation. Also, juries should not be in the business of deciding law, they should be focused on deciding fact. However, the unclear precedents in current malpractice suits make it so that the jury focuses their efforts on deciding law since there are no clear standards of care. It is quite possible that two people suffering identical injuries will receive very different awards simply based on the jury they receive. A physician faces the same fate at the mercy of an assembled jury. Health Courts remove juries from these decisions and allow clear expectations and standards to develop over time.

The Progressive Policy Institute has also outlined a number of potential objections to this system. The objections will likely come from attorneys for two reasons – (1) citizens have the right to a jury trial and (2) malpractice attorneys could suffer decreased compensation and less demand for services. However, the workers compensation model is ideal for demonstrating that it is possible to settle liability claims without a jury. Furthermore, if only 2% of malpractice injury claims are pursued at present, and only 1 in 14 of those receive an award, attorneys may be able to find compensation simply by the increased frequency of malpractice cases they will be able to take on.

One other potential problem is that large jury awards have been significant for increasing reform in other industries. For example, tobacco lawsuits resulted in billions of dollars in jury awards that threatened tobacco companies and resulted in significant modifications within their industry and an increase in positive health outcomes among the community. However, the large jury awards are not useful in altering physician behavior or hospital practices. Since there are no clear standards in place, it is not possible that a systematic practice of negligent and liable behavior is occurring. In other words, there is no behavior to deter by these awards. As a matter of fact, the large awards are linked to increased health care costs due to the practice of defensive medicine and high insurance rates.

Most importantly, Florida is an ideal state for launching a Health Court system. The November 2004 elections demonstrates that our citizens are ready to discuss and reform medical liability. Furthermore, the will of the voters, as outlined in Amendment 3 and Amendment 8, can be followed with a state Health Court system. First of all, funding for the state Health court could come from minor insurance reform – but not in the manner that might be expected. By enacting a short-term 1% increase in malpractice premiums, a much larger decrease could be expected in the following years. The 1% increase can be used to set up a state Health court, as well as local boards that create ACEs and review claims. Once the system is launched, necessary attorney fees will drastically decrease as neutral experts are hired by the state, not the legal team. In this scenario, injured claimants would certainly recover 30%, or more, of their first $250,000 in non-economic damages. Furthermore, a state board would be created with the ability to monitor negligence and malpractice among individual physicians and hospitals. Thus, the language of Amendment 3 and Amendment 8 would dually be followed. It is possible that even with the significant reduction in attorney’s fees and the elimination of unfair jury awards, malpractice premiums may not decrease. At that point, the state should explore insurance reform, similar to the MIRCA in California to ensure that we maintain a population of specialist physicians in the state. In the immediate future, a state Health Court would allow us to address numerous problems now posed to us by the liability crisis. Furthermore, we would create the necessary infrastructure that goes beyond putting a band-aid on a gushing wound, allowing us to plan for adequate delivery of health care services now and in the future.