Shaheen supports provision for Senate legislation

A small provision in the sweeping health care reform bill that passed the House of Representatives earlier this month could prevent states from passing tort reform. The bill provides incentives for states to adopt medical liability reforms, but would block those incentives for any states that limit liability judgments or cap attorneys’ fees.

Section 2531 of H.R. 3962, the Affordable Health Care for America Act, empowers the Secretary of Health and Human Services to pay states that enact laws to hold down the cost of medical malpractice.

“To the extent and in the amounts made available in advance in appropriations Acts, the Secretary shall make an incentive payment, in an amount determined by the Secretary, to each State that has an alternative medical liability law in compliance with this section.”

This provision makes the incentive payments available only to states that enact new medical liability laws after the effective date of the health care bill, but also contains a provision blocking incentive payments to any state which includes tort reform as part of its medical liability law:

“The contents of an alternative liability law are in accordance with this paragraph if—
(A) the litigation alternatives contained in the law consist of certificate of merit, early offer, or both; and
(B) the law does not limit attorneys’ fees or impose caps on damages.”

The bill would not preempt existing state laws limiting attorneys’ fees or capping damages, and would not prevent states from adopting tort reform statutes if they were approved separately from the medical liability laws favored by Congress. But Walter Olson, senior fellow at the Manhattan Institute and editor of Overlawyered.com, argues the proposed law ignores the two most successful approaches to limiting the cost of litigation in health care.

“This clause is clearly intended to bribe states to reject proposals for damage and fee caps,” Olson tells the Josiah Bartlett Center. “While there are legitimate arguments on both sides of that debate, it is clear that state laws that do include such caps, like California’s MICRA, have been among the most effective in keeping rates below crisis levels.”

A state certificate of merit law would require a plaintiff’s attorney to find at least one other licensed professional to certify a “reasonable probability” that malpractice occurred. Early offer statutes give defendants the option to offer to pay a plaintiff’s medical expenses and lost wages while the lawsuit proceeds, rather than face steep penalties after it is resolved. Plaintiffs who refuse an offer to pay these expenses would not be able to recover them later at trial, or would be forced to meet a higher burden of proof in court. But Olson says neither of these provisions adequately discourage nuisance lawsuits.

“So the federal government will be intervening in favor of measures whose record of effectiveness is mixed (certificate of merit) or unproven (early offer),” Olson explains, “and against the reforms doctors overwhelmingly support because of its practical effectiveness.”

U.S. Senator Jeanne Shaheen

New Hampshire’s two Representatives, Democrats Carol Shea-Porter and Paul Hodes, voted for H.R. 3962 when it narrowly passed the House 220-215 on November 7. Both Hodes and Shea-Porter’s offices declined comment on whether they had seen o r approved of the medical liability provisions prior to the vote.

The House bill is now pending in the U.S. Senate. Later today, Majority Leader Harry Reid will file his version of the bill, which the Congressional Budget Office estimates will cost $849 billion over ten years.

Press Secretary Nell McGarity says that New Hampshire Democratic Senator Jeanne Shaheen supports the medical liability provisions in the House version.

“Senator Shaheen supports that section of the bill,” McGarity wrote the Josiah Bartlett Center.

U.S. Senator Judd Gregg

Republican Senator Judd Gregg’s office says that they will review the medical liability provision if it is added to the Senate health care package. The current version of 2,074 page bill Reid will formally introduce today does not contain the medical liability language included in the House passed version.

Ted Frank is the founder and President of the Center for Class Action Fairness. He says the medical liability provision is one of many designed to create lawsuits and benefit trail lawyers, including allowing states to hire lawyers on a contingency fee to sue insurance companies.

“If nothing else, the result would be to raise costs to private insurers, squeezing them out of the market so that there’s only the single-payer public option,” Frank argues.

The New Hampshire did not consider any legislation reforming its medical liability laws in 2009, though Representative David Nixon (D-Manchester) has introduced draft legislation for next year which would amend the amount and duration of medical payments coverage under motor vehicle liability policies. Nixon was also the prime sponsor of HB 201, which would have allowed ten jurors to decide liability and damages in civil lawsuits. Neither of these bills would likely trigger the proposed federal incentives.