Revenue shortfall may hurt Oklahoma’s plans for tort reform
Government might not be able to create fund to handle costs of jury awards by deadline
BY MICHAEL McNUTT
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Published: October 22, 2009
A continued revenue shortfall could affect whether the state can afford to create a fund to pay damages in physician negligence cases, a key component of the comprehensive lawsuit reform bill passed earlier this year.
"It can have a huge effect and it could make it where it’s not feasible to do it,” said
Rep. Dan Sullivan, author of the lawsuit reform measure and co-chairman of a task force assigned to come up with ways to set up the indemnity fund.
"Until we know what the cost (of setting up the fund) is, it’s hard to say what impact it’s going to have,” he said Wednesday.
House Bill 1603 deals with how lawsuits are treated in court cases ranging from personal injury to medical malpractice. Among other things it sets a noneconomic cap of $400,000 for all negligence cases, but the cap may be lifted if a judge or jury determines there’s a permanent physical injury, some kind of catastrophic injury or gross negligence or recklessness.
In cases involving physicians, the cap will be lifted by the same criteria but has to be found "by a clear and convincing evidence,” which is a higher standard.
Plans call for the state to set up an indemnity fund that would pay jury awards above the $400,000. An annual cap would be $20 million.
Members of the task force met for the first time Wednesday and discussed the state possibly buying a $20 million insurance policy to provide money for the indemnity fund. The policy’s premiums would be paid with state general revenue funds.
But state revenues have come in about 26 percent below estimates so far this fiscal year.
If economic conditions don’t improve next year, it will be difficult to find money to pay the new expense of the insurance payment for the indemnity fund, Sullivan said. To keep the insurance premiums down, the state could put some of its own money into the fund.
Options include not setting up the fund and coming up with another method to deal with noneconomic damages, Sullivan said.
If the state’s revenues pick up in two years, when the indemnity fund is to be in place, lawmakers won’t need to look at another option, he said.
"Hopefully, we’re looking at a better situation by then,” he said.
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Start out your analysis by realizing that a basic truth has been violated by tort reform. There is a reason why the law is not supposed to afford special treatment to anyone - even the elite. It is because when a person does not pay for ALL the harm they cause, part or all of the burden of caring for their victim goes on someone else's back. (Medicare, Medicaid, private health insurance, and yes even the doctors and hospitals who didn't cause the problem in the first place).
Oklahoma's venture into tort reform, while also a failure as the instant article shows, was more intelligent than most. It at least was an attempt to keep the unjust portion of the malpractice harm off the persons named in the parentheses above and to redistribute it more generally to the insurers and the public.
What we see however , as Amy almost finished pointing out, is that medical malpractice insurers coffers are swelling by billions to the point where we see them giving a modest (sometimes insignificant) overflow or kick-back to the doctors in the form of reducing med mal insurance premiums (that were often previously falsely inflated). This creates the false impression for Amy and the public in general that tort reform must be working.
Ask your doctor if, after tort reform, he or she quit (or even reduced) prescribing the tests and procedures that are now popularly (by proponents of tort reform) called defensive medicine. The answer that is uniformly being given in all 48 states is NO! WHY? Because any abuses in the tort system (and there are some that could use some work) were never the reason doctors prescribed those tests and procedures. They prescribed them because if they made a mistake they could still be sued JUSTLY. This remained true after tort reform. It doesn't matter to a doctor whether the suit is just or unjust, they still needed to be as careful as ever. AND, of course, why not since Medicare, Medicaid, and private health insurance (when the doctors said under oath that the procedures were "medically necessary" paid for them - often to the prescribing doctor.
Lawyers and the legal system make great scapegoats. They always have. The insurers making the big money from reducing risk (by limiting lawsuit recoveries) well know that. It's not been hard to convince the public (by focusing in the media on a few abuses) that lawsuits are causing far more problems for doctors than they do. You scare enough people about health care and they will do anything. It might be wise to remember something Ben Franklin once said as we consider whether we really want to limit the power of the jury to do FULL justice. "Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety".
to have them stick and build up in our toilets?
As far as the economy improving enough in the next 2 years so Oklahoma can pump cash into an indemnity fund... I wouldn't count on it. Considering our lags compared to the rest of the country in pretty much every metric (our economy started tanking ~1 year after the national crash) it will take at least one year to gain anything back & that will only come about when the national economy recovers.
If the Republicans insist that this law will benefit ordinary Oklahomans, I say this is exactly what the rainy-day fund is for. Pull the $20 million from there & get on with enacting this 'vitally, important' legislation.
If it ain't all that important, then repeal it & use better sense next session!
I concede the malpractice premiums, however, those costs never get passed on to the consumers.
Plus, malpractice makes up about 30 billion annually our of the 2.3 trillion dollar system. The CBO says Tort reform would save 0.5%. Is that really worth sacrificing your right to a trial by jury which is a given right as spelled out in the constitution (as described in the plan above)?
http://www.factcheck.org/2009/10/malpractice-savings-reconsidered/
12% more physicians per capita in states with malpractice damage caps – US Dept. HHS
A Pacific Research Institute Study found a 16% reduction in insurance premiums for consumers when tort reforms were passed.
Mississippi passed legal reform in 2004. Since then, malpractice insurance premiums have decreased by 30% to 45% (before passage, they were increasing by 25% per year).
Texas passed legal reform in 2003. Since then: 16,000 new physicians have come to the state, liability insurance rates for medical professionals have dropped at least 11%, and cumulative medical liability cost savings are $322.94 million. – Texas Medical Association
Ohio passed legal reform in 2005. Insurance rates dropped 11% in 2007 and 5% in 2008 (previous increases of 20-30% yearly).
Hope this helps to shed some light on the benefits of well-crafted legal reform.