Medical Malpractice Newsletter – Spring 2017
Pending Legislation Would Drastically and Negatively Impact Physicians Facing Medical Malpractice (“Health Care Liability”) Claims in Tennessee
Legislation originally proposed in 2015 and reintroduced in 2016 is back again this year and seeks to transfer medical malpractice (“Health Care Liability”) claims out of the court system and into an administrative patient compensation system. The legislation, sponsored by Senator Jack Johnson and Representative Glen Casada, is entitled the Insurance Costs Reduction Act, and curiously has no description or summary listed on the General Assembly’s website. Its goal, however, is to create a system with Department of Health oversight that would investigate and adjudicate medical malpractice claims, including the determination of compensation for injured patients. The legislation is being pushed by a Georgia-based advocacy group called Patients for Fair Compensation (“PFC”), which has also been unsuccessfully working to establish such patient compensation systems in Alabama, Florida, Georgia, Ohio and Maine. Instead of filing a lawsuit, patients would simply apply for compensation for their alleged injuries by calling a 1-800 number, and claims would be paid from a pool of annual fees collected from every Tennessee physician. The bill contains a “compensation rating model” which sets forth the base mandatory contribution amount for each practitioner, which is determined based upon his or her specialty. For example, higher fees would be required from providers specializing in cardiac surgery ($20,100), Ob/Gyn & maternal-fetal medicine ($23,700), neurological surgery ($22,300), and critical care surgery ($23,700). The contribution assessed would be due by July 1 each year, beginning on July 1, 2018, and failure to pay within 60 days would subject the practitioner to suspension or revocation of his or her license as well as other fines set forth in the Act. In addition to its lobbying efforts, PFC has targeted many Tennessee physicians with promotional materials which contain misleading information. For example, contrary to PFC’s assertions, physicians would still have to purchase separate malpractice insurance coverage under the proposed system in order to cover their employees and practices, as the Act only applies to physicians and not hospitals, clinics, or mid-level providers. They would also need coverage to provide defense counsel in the proceedings (unless the physician did not want representation or wanted to pay for an attorney out of his or her own pocket). Moreover, approximately 48% of the 10,000+ Tennessee physicians insured by State Volunteer Mutual Insurance Company live in border counties, many of whom also practice across state lines and would need separate insurance coverage for patients treated outside of Tennessee. The argument that medical malpractice insurance premiums have continued to “spiral out of control” is simply not supported by historical data, which actually reflects that premiums in Tennessee have steadily decreased by approximately 37.5% during the past ten years. The proposed legislation itself and PFC “talking points” also indicate that payments made under the system would not be reportable to the National Practitioner Data Bank (“NPDB”). The Director of the NPDB has stated in writing, however, that until such a system is established and in operation (which, again, has not happened in any other state), it cannot issue an opinion on the reportability of payments. Historically, the NPDB has required reporting under virtually any circumstances in which a payment is made for a claim of medical injury. Under the system, an administrative law judge would make the initial decision regarding whether an application constitutes a “medical injury” and, subsequently, a written determination of the award in accordance with a compensation schedule. That judge would be appointed by an eleven member board overseeing the entire compensation system, which would consist of at least three physicians, two patient advocates, one business executive, one hospital administrator, one accountant, and one lawyer. Opponents of the legislation have suggested that by reducing the threshold for awards from provable medical negligence to “avoidable medical injury,” the system would be flooded with claims and obviously result in more payments. Even the PFC acknowledges that its system would increase the number claims paid by 67% (a statistic that is likely an underestimation). Furthermore, the fact that a patient could initiate the claim process by simply calling a 1-800 number would dramatically increase the administrative time that physicians and their employees would have to spend responding to record requests, attending interviews, and participating in the hearing process (which the provider could, of course, choose to skip at his or her own peril). Another concern is that the system would take away the right to trial by jury, and that it is therefore unconstitutional under the Tennessee Constitution. One opponent, Representative Mike Stewart, has indicated that if the bill begins to advance, he will ask for an official opinion from Attorney General Herb Slatery’s office regarding its constitutionality. Representative Stewart has been quoted as saying, “The founders of this state, the makers of our constitution, had a very strong belief that the citizens should ultimately make these important decisions. So the right to a jury trial is extremely strong.” Perhaps incidentally, Tennessee (unlike many other states) requires that a jury verdict be unanimous before a patient may obtain a recovery in a medical malpractice lawsuit. Interestingly, the Plaintiff and Defense bar, SVMIC, and the Tennessee Medical Association are united in opposition to the proposed changes. For example, in a November 29, 2016 Nashville Post article, general counsel for the TMA, Yarnell Beatty, was quoted as follows:“Tennesseans do not want or need an unproven health care liability system. Our present system is working well and is fair and transparent. Tennessee has significantly reduced frivolous lawsuits while maintaining accountability for providers who are negligent. Throwing out our current system in favor of an untried and unproven experiment will be costly and cause undue stress on our medical system, both for patients and providers. And there is no guarantee of cost savings or any other benefits.”
In fact, the PFC, which has not even been able to get the legislation advanced through its home state’s legislature, is the only organization to support the Act, either publicly or privately. For the reasons discussed above and others which are too numerous to include in this newsletter, our firm has joined the Tennessee Bar Association, the Tennessee Association for Justice, SVMIC, and the TMA in their opposition to the Act. The most current information available from the General Assembly’s website indicates that the legislation has been referred to the Senate Judiciary Committee, and the House version of the bill has been assigned to the Civil Justice Subcommittee. Stay tuned for further developments.