Opinions vary on California tort reform law

Friday, June 7, 2002 | 5:26 a.m.

WEEKEND EDITION: June 9, 2002

A problem with finding long-term solutions to Nevada's medical malpractice insurance dilemma is that doctors and lawyers sharply disagree on what has caused liability premiums to skyrocket.

Doctors say the best solution would be for Nevada to adopt a California tort reform law, the Medical Injury Compensation Reform Act. Lawyers, however, say California's law doesn't work and instead are calling for reform of Nevada's insurance industry.

Caught in the middle are Gov. Kenny Guinn and Nevada legislators, who will be called upon to find solutions.

Here are two views of the California law and the insurance liability dilemma as reported by the Las Vegas Sun's Steve Kanigher.

Nevada lawyers say they don't buy the argument that a California tort reform law has had much impact on medical malpractice insurance premiums in that state.

Instead, they say the problem that needs fixing is Nevada's insurance industry.

"A lot of major insurance carriers decided to jump into the medical malpractice business in the 1990s, but to be honest they weren't very good at insuring medical malpractice," Las Vegas attorney Tim Williams, Nevada Trial Lawyers Association president, said.

"What we need are locally owned insurance companies that tend to be much better at underwriting business. They do not insure every doctor, and they do not force cases to trial that shouldn't go to trial."

Although doctors point out that California's Medical Injury Compensation Reform Act has withstood all legal and legislative challenges to date, its opponents say it has not affected malpractice premiums.

A study completed last week by former Texas Insurance Commissioner Robert Hunter contradicted pro-MICRA research because he found that California's premiums grew by 3.5 percent from 1991 to 2000, compared to 1.9 percent nationally.

As of 2000, California's premiums were only 8.2 percent below the national average, Hunter found.

Robert Cartwright Jr., president of Consumer Attorneys of California, which represents that state's trial attorneys, said MICRA is "absolutely not fair for patients."

"The effect in California has been that most medical malpractice victims go completely without compensation," Cartwright said. "Because of the cap (on noneconomic damages) there are few lawyers that want to handle these cases. The way the cap operates, it's almost impossible to get a fair recovery for victims. It's also unprofitable for an attorney to handle a medical malpractice case given the amount of time and investment you have to make. On average it takes conservatively about $100,000 to prosecute a case.

"Insurance companies promised after MICRA that premiums would go down, but they did not go down. If you tied a premium decrease to passage of MICRA, the insurance companies would have backed off."

Cartwright said he agrees with Nevada attorneys who say the real problems are the insurers -- who, he said, raise premiums when their stock investments take a nosedive.

"We experienced an alleged medical malpractice crisis in the 1970s, but what we found out is that the insurance market is cyclical," he said. "When they lose on Wall Street, they blame lawyers and lawsuits for their losses. In Nevada the insurance companies are trying in one year to make up all the money they lost last year."

Reno attorney Bill Bradley, Nevada Trial Lawyers Association past president and one of its lobbyists, said the problem with MICRA is that "all it has done is increase profitability for the insurance companies."

"It has severely hampered a victim's right to be compensated, and it doesn't address the real cause, which is medical malpractice," Bradley said.

The association plans to approach Nevada lawmakers with recommendations on how to solve the medical malpractice problem. Bradley said one idea would require an existing or new state agency to keep track of all medical errors reported by hospitals and health care professionals.

"We have to identify where malpractice is occurring," Bradley said.

Lawyers also point fingers at "greedy" insurance companies, saying they were forced to raise premiums when their Wall Street investments went sour.

Bradley and Williams are pushing for new laws that would make insurers more accountable to physicians and the public. Bradley said that the majority of Clark County jury verdicts that have favored plaintiffs since 1996 involved cases that could have been settled by insurers for much less money before they went to trial.

Bradley said one way to punish insurers would be to prevent them from raising premiums based on jury verdicts when it is proven they could have settled for much less beforehand.

"Insurance companies have to be made accountable for the senseless decisions in evaluating victims' claims," he said. "They shouldn't be allowed to charge physicians for their own stupid decisions."

The lawyers also say they may recommend funding and staffing increases for the Nevada Insurance Division, which is charged with regulating medical liability premiums. An area they say deserves closer scrutiny is how St. Paul Cos. was able to corner 60 percent of the medical malpractice insurance market in Nevada before pulling out last year. That helped remaining insurers to dramatically increase rates.

Assembly Majority Leader Barbara Buckley, D-Las Vegas, chairwoman of a special legislative committee that will issue recommendations Dec. 2 on the medical malpractice issue, has said she favors the creation of a nonprofit physician-owned and operated insurance company in Nevada.

In an interview published Thursday in a newsletter circulated by the Nevada Medical Liability Physicians Task Force -- a coalition of physician organizations -- Buckley said: "Whether you love or hate insurance companies, there is no doubt that whenever a company's stock needs boosting because of stock market losses or companywide poor management, huge premium increases follow.

"Nevada physicians need a viable, stable, affordable plan that will free them from the whims of outside insurance companies and allow them to control their own practice and financial stability. Having a nonprofit Nevada physician-owned company is the best way to guard against a company not interested in the needs of the state."

About the only area where doctors and lawyers agree change is needed has to do with the Medical Dental Legal Screening Panel, designed to reduce frivolous lawsuits. Both sides agree that the panel, which screens potential malpractice litigation to determine whether claims have merit, takes too long to process cases -- 18 months in most cases.

Both sides would like to shorten that time frame to no more than six months.

"It should only take about three months," Larry Matheis, Nevada State Medical Association executive director, said. "If it takes longer, that raises concerns of fairness by the plaintiff and it also doesn't help the doctors for the cases to go on."

There is also agreement that it takes too long for cases to reach trial -- in many cases, three to five years. Bradley said he would like to see that reduced to one year.

However, Matheis and physicians also complain that 65 percent of the cases that the screening panel has determined had no merit still wound up being filed as lawsuits.

"There is something that is not working right," Matheis said.

Bradley said he believes health care professionals who know of a malprac- tice-related error should be compelled to reveal that information before the screening panel. He said, however, that's often not the case. Instead, such information comes out at trial because the health care professional who confesses doesn't want to get implicated in the litigation, he said.

"If you're going to blame somebody at trial, you should have to be required to blame them during the screening process," Bradley said.

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