Washington State Hospital Association 71st Annual Meeting

1. Washington State Hospital Association 71st Annual Meeting October 9-10, 2003Bell Harbor Conference CenterSeattle, WA

2. Concurrent Session: “The Medical Liability Quandary: Is There a Way Out?” October 9, 2003 Matt Wall, J.D. Associate General Counsel Texas Hospital Association P.O. Box 15587 Austin, Texas 78761 512/465-1538 mwall@tha.org

3. The answer is “Yes, there is a way out of the medical liability quandary” – with… • the right coalition, • research, • the political will, • grassroots efforts, • … and luck.

4. Snapshot of the liability problem in Texas - coverage issues in early 2003 • From 2000-2003, the average Texas hospital premium more than doubled, to $870,000. • From 2002-2003, 93 percent of the hospitals in Texas increased their first layer of coverage, usually through an increase in self-insured retention – and 37 percent of those hospitals said they increased their first layer of coverage by more than $4 million in that one-year period. Source: Jan. 2003 THA Professional Liability Study

5. Snapshot of the liability problem in Texas - coverage issues in early 2003 • From 2002-2003, almost 75 percent of the hospitals in Texas experienced a decrease in their second layer of coverage of 40 percent or more. • Despite the substantial decrease in the second levels of coverage, the premium for this lower amount of coverage was often higher. Source: Jan. 2003 THA Professional Liability Study

6. Snapshot of the liability problem in Texas– other professional liability issues • Hospitals’ loss history review - longer time span or more intense review than in the past: 55+ % • Hospitals were unable to obtain the amount of commercial coverage they desired: 20+ % • Hospitals increased their total number of commercial policies in an attempt to obtain a similar level of total coverage: 50 % Source: Jan. 2003 THA Professional Liability Study

7. Snapshot of the liability problem in Texas– other professional liability issues • Physicians on the medical staff asked if the hospital was willing to help subsidize the physician’s liability premiums: 65 % • Hospitals changed commercial carriers: 50+ % Source: Jan. 2003 THA Professional Liability Study

8. Negative impact of these issues on health care Higher premiums + reduced access to liability insurance = Jeopardized access to health care

9. Negative impact of these issues on health care More dollars for liability insurance also means fewer resources to expand or enhance services. Numerous hospitals indicated that they had restructured or limited their plans for expanding existing services or adding new ones due to the increase in liability premiums that would result. Source: Jan. 2003 THA Professional Liability Study

10. Forming a medical liability reform coalition • Coalition building is critical to achieving success on liability reform. Reasons: • Builds trust • Helps reduce conflict • Allows the coalition to speak with one voice

11. Forming a medical liability reform coalition • The Texas Alliance for Patient Access (TAPA): • formed in January 2002 • Name registered • Executive director hired • Dues established and assessed • Website established

12. Forming a medical liability reform coalition • TAPA: • was formed as a consortium of representatives of hospitals, physicians, liability insurance carriers, clinics, health insurers and long-term care providers • to serve as a facilitator and promoter of the liability reform agenda in Texas. • Ensuring access to care became the alliance’s key message.

13. Forming a medical liability reform coalition • TAPA was modeled after an alliance in California: Californians Allied for Patient Protection (CAPP). • CAPP “is a broad-based coalition of health care providers, business, labor and consumer organizations, and insurers created to preserve the Medical Injury Compensation Reform Act of 1975 (MICRA), California's landmark medical malpractice law.” (www.micra.org)

14. Forming a medical liability reform coalition • Key TAPA committees established: • Legal and Claims Committee • Composed of health care lawyers, insurance representatives. • Communications Committee • Composed of association communications directors, and PR consultant.

15. TAPA Legal and Claims Committee • Top legal and insurance experts were included - • Knowledge of relevant state statutory, case-law and regulatory issues was a prerequisite. • They debated and formulated the specific elements of the proposed legislation • monthly meetings • in Austin.

16. TAPA Legal and Claims Committee • Their recommendations were presented to the entire TAPA board for approval in the fall of 2002. • This committee also vetted specific legislative proposals and counterproposals during the 2003 legislative session.

17. TAPA Legal and Claims Committee • Key decision for the committee: • whether to pursue just medical liability reform legislation, or also a constitutional amendment to limit noneconomic damages.

18. TAPA Legal and Claims Committee • Specifically, the committee considered whether to pursue a joint resolution that would authorize a constitutional election by the voters. • As envisioned by the committee, this election would address one question: whether the legislature could set limits on noneconomic damages in medical liability cases.

19. TAPA Legal and Claims Committee • The committee decided to pursue the drafting of a joint resolution. The rationale: • A constitutional amendment, if passed by the voters, would provide immediacy and certainty regarding a noneconomic damages cap.

20. TAPA Legal and Claims Committee • This meant that the liability reform initiative would be a two-pronged fight: • Legislature • Voters

21. TAPA Legal and Claims Committee • The resulting legislation was HJR 3. • HJR 3 ultimately passed on May 20, 2003 by a vote of 102/43 in the House, and 22/9 in the Senate. And it includes authorization for the legislature to set caps in other liability cases, too. • HJR 3 was designated as Proposition 12 for the constitutional election.

22. TAPA Legal and Claims Committee RESULTS OF 9/13/03 CONSTITUTIONAL ELECTION ON PROPOSITION 12: • Total Votes Cast:          1,416,615 • In Favor:                       750,810         51.12% • Against:                         717,805        48.88% • Margin of Victory:        33,005

23. TAPA Legal and Claims Committee • House Bill 3 was originally filed as the medical liability reform legislation in February. • Subsequently, the House leadership expanded HB 3 to address a number of nonmedical liability reforms (such as class actions, products liability and venue). It was renumbered as HB 4.

24. TAPA Legal and Claims Committee HB 4: • entailed 60+ hours of public hearings, several days of legislative debate, and the filing of 300+ amendments. • finally passed on June 2, 2003 - the last day of the regular session. The vote was 110/34 in the House, and 28/3 in the Senate.

25. TAPA Communications Committee • This committee developed a media plan to manage the liability reform issue: • Consistency and consensus were key factors in message development. • Provided one-day media training for TAPA spokespersons and representatives from hospitals, medicine, insurance and nursing.

26. TAPA Communications Committee • Media plan, (cont’d.): • Developed collateral materials for coalition’s use • Coordinated grassroots involvement • Letter-writing campaigns during the legislative session • Local media coordination/coverage/story development

27. TAPA Communications Committee • Media plan (cont’d.): • Developed a mechanism for media management • Initiated rapid responses to inquiries/other stories • Arranged news conferences

28. Other research The Texas Hospital Association established its own tort reform technical advisory group to review legal concerns and recommend legislative options.

29. Other research • The THA TAG: • was composed of in-house counsel and risk managers from THA-member hospitals/systems. • met three times over a one-year period. • reviewed law review articles, studies, other states’ laws.

30. Other research • The THA TAG (cont’d.): • provided testimony and expertise during the interim committee hearings of the legislature in 2002. • developed recommendations – which in turn helped establish the parameters for THA in its negotiations on the TAPA board.

31. Other research Point: You should consider establishing a TAG to tackle the tough legal/technical issues, and to help focus your effort.

32. Other research • California’s MICRA was a template for the Texas law. MICRA has four fundamental components: • $250,000 cap on noneconomic damages (California Civil Code § 3333.2) • Periodic payments(California Code of Civil Procedure § 667.7)

33. Other research • MICRA key components (cont’d.): • Contingency fee limits (California Business and Professions Code § 6146) • Evidence of collateral source payments to offset awards (California Civil Code § 3333.1)

34. Other research TAPA concluded that a cap on noneconomic damages was the key ingredient to effective liability reform legislation.

35. Other research • Helpful resources supporting the utility of caps on noneconomic damages: • The Impact of Legal Reforms on Medical Malpractice Costs(September 1993), Office of Technology Assessment, archived online at: http://www.wws.princeton.edu/~ota/ns20/alpha_f.html

36. Other research • Helpful resources (cont’d.): • California’s MICRA Reforms: How Would a Higher Cap on Non-Economic Damages Affect the Cost of and Access to Health Care? Prepared by LECG, Inc. and available at: www.micra.org (under “Publications”)  

37. Other research • Helpful resources (cont’d.): • Confronting the New Health Care Crisis: Improving Health Care Quality and Lowering Costs by Fixing Our Medical Liability System, U.S. Dep’t. of Health and Human Services (July 24, 2002), available at: http://aspe.hhs.gov/daltcp/reports/litrefm.htm

38. Other research • Helpful resources (cont’d.): • Medical Malpractice Tort Reform: Lessons from the States, American Academy of Actuaries (Fall 1996), available at: http://www.actuary.org/(under “Publications,” click on “Issue Briefs,” then look under “Archives”)

39. Other research • There are a number of other useful and important potential tools to help predict a state’s need for medical malpractice reform.

40. Other research Use state insurance department statistics and data calls on medical and professional liability insurance to help establish your case.

41. Other research • Other useful tools (cont’d.): • Hire an expert to conduct an association-sponsored actuarial study on claims frequency and severity

42. Other research • Other useful tools (cont’d.): • Hire an expert, or use in-house expertise, to conduct an association-sponsored study on liability premiums

43. Political will TAPA hired a consultant to conduct a Texas poll to assess public knowledge and perceptions of health care liability. Eight focus groups were conducted over three months in key cities in Texas.

44. Political will • The results of the poll were: • 62% believed the state’s health care system is broken, based on cost and potential loss of access to care.

45. Political will • Polling results (cont’d.): • The public believed that the rising cost of malpractice insurance and high jury awards are contributing factors to increased costs. Many believed that greedy lawyers and frivolous lawsuits are running up the costs of the health care system. • The public also blamed insurance companies and managed care plans.

46. Political will • Polling results (cont’d.): • 81% would support limits on attorney contingency fees. • 71% would support $250,000 cap on non-economic damages. • 78% would support $1 million cap on non-economic damages.

47. Political will • Polling results (cont’d.): • 76% would support additional protection for emergency room physicians. • 77% would support efforts to make expert witnesses licensed.

48. Political will • Point: Research and polling data are key factors: • in helping the legislature establish a legal and historical record of the reasons for reform, • in helping individual legislators, if necessary, justify their vote to their party, and • in helping legislators with their constituents back home.

49. “Yes on 12” Promotional

50. “Yes on 12” Promotional