Saturday, June 7, 2003 | 3:51 a.m.
WEEKEND EDITION: June 8, 2003
The Nevada Legislature approved health care bills this year aimed at insurance companies, managed care organizations and state regulators, but took a pass on the most controversial issue of all: medical malpractice liability.
As a result, health care and insurance experts say they do not expect skyrocketing malpractice premiums to decrease anytime soon. And that could lead to more doctors leaving the state.
A lobbyist for the Nevada Trial Lawyers Association, which opposes doctors' efforts to change existing malpractice law, said insurance rates won't go down until the economy improves, regardless of what lawmakers adopted.
None of the key players is happy with the way the Legislature handled the medical malpractice issue. Doctors wanted passage of Senate Bill 97, which they say would have lowered malpractice insurance rates by instituting more restrictive provisions than the law that went into effect Oct. 1.
Doctors want tighter caps on damages for pain and suffering, which are considered "noneconomic" damages because they are based on intangibles such as making a patient "whole." Other type of damages that injured plaintiffs can receive are economic, which cover medical bills and lost and future wages.
Because doctors gathered enough signatures last year in an initiative drive to force the Legislature to consider their proposal -- and because lawmakers killed SB97 -- the doctors' initiative will be placed on the November 2004 general election ballot. Doctors believe that means they will have to wait until after that election before they see rate relief.
"I'm very disappointed," Dr. Rudy Manthei, a Henderson ophthalmologist, said. "As Nevadans we're going to have to live through two more years of health care turmoil because of this. I expect more doctors to leave. I expect more doctors to pull off of hospital staffs and not provide emergency coverage. I expect more doctors to retreat to their offices and send their more difficult cases to California."
The trial lawyers association isn't happy either because it didn't get the Legislature to place a competing initiative on the 2004 ballot through an amendment to SB97. The lawyers' proposal would have retained much of the existing law, but also would have enabled seniors and low-income wage earners to collect higher damages for pain and suffering than other injured plaintiffs if they were ineligible to receive compensation for lost wages.
"The health care consumer didn't get treated as fairly as a significant portion of the Legislature wanted to see them treated," Reno attorney Bill Bradley, a trial lawyers association lobbyist, said.
Bradley said the $350,000 cap on pain and suffering with no exceptions sought by doctors "fails to compensate the most catastrophic victims of medical malpractice. That's why that concept was rejected in last year's special session of the Legislature."
There is the possibility that Nevadans won't get a chance to vote on the doctors' initiative if it is struck down by the Nevada Supreme Court for constitutional reasons.
It was rumored in Carson City during the regular legislative session that ended Tuesday that the trial lawyers would approach the high court as early as this summer, a possibility Bradley would not confirm.
"There are various options being discussed but no clear direction," he said.
But Keep Our Doctors in Nevada, the group headed by Manthei that is backing the ballot measure, is preparing to battle any opponent. Its lobbyist, Jim Denton, said the group plans to raise at least $1.5 million for a ballot campaign it expects to win by a comfortable margin based on its polls that indicate overwhelming public support for the doctors' position.
"We intend to show the voters of the state why it is important to change the law," Denton said. "It's because doctors continue to leave, and premiums continue to go up."
The doctors will ask voters to change the medical malpractice law that was approved after a four-day special legislative session last summer so that:
There would be a $350,000 cap on pain and suffering damages with no exceptions, vs. current law, which has a $350,000 cap with exceptions for gross malpractice and exceptional circumstances as deemed by the court.
The cap for pain and suffering would apply per case, instead of applying to each plaintiff from each defendant, as in current law.
Lawyers' contingency fees would be based on a sliding fee schedule that would decrease from 40 percent for small judgments to 15 percent for large awards, as opposed to current law, which has no sliding fee schedule.
Doctors and other malpractice defendants could take several years to pay off judgments, an option they don't have under current law if not approved by the plaintiff.
When calculating economic damages such as for lost wages and medical expenses, doctors and other defendants would pay their share based on their percentage of blame for the plaintiff's injury. Under current law, doctors can be compelled to pay a larger share of the economic damages than their percentage of blame.
In addition to plaintiffs' attorneys, doctors can expect opposition from people such as Las Vegas bartender Jason Phillips, father of a disabled 13-year-old girl who was the victim of medical malpractice nine years ago.
Phillips, appearing with his wheelchair-bound daughter, Brittany, testified against the doctors' proposal at an Assembly Judiciary Committee hearing earlier this year. He said delays in intensive treatment for Brittany's spinal meningitis caused her to suffer a series of strokes that led to permanent brain damage.
Exceeding the cap
Phillips declined to reveal the amount of his family's malpractice settlement, but said the pain and suffering portion exceeded the proposed $350,000 cap. He said it would be wrong for Nevada to eliminate the exceptions to that cap.
"To me the biggest problem is with the insurance companies," Phillips said. "They are using the doctors to do their dirty work. Limiting what people can recover doesn't help the people of Nevada.
"You have to live inside me for awhile to understand that you suffer everyday. It's so bad that I can't even watch certain movies where the child turns out perfect. It's painful to think about what could have been. It drives me nuts knowing what has been taken away from Brittany."
Opposition to the doctors' position was also voiced by the American Association of Retired Persons of Nevada, which has 260,000 members. Former Assemblyman Larry Spitler, associate director of the state AARP, conceded that the ballot initiative would pass if the vote were held now, but said that would be tragic for many Nevadans.
"When you cap noneconomic damages you ultimately penalize people who are on a fixed income -- retirees and women who are not in the work force," Spitler said. "Seniors with fixed incomes and people with low incomes are penalized on economic damages because they don't make that much money."
Spitler said that under current law, retirees who aren't eligible for compensation for lost or future wages and low-income wage earners who wouldn't get much compensation still have a good chance of getting more money for pain and suffering because they could get sympathy from juries.
"Juries have been fair in these things," Spitler said.
On the flip side is Dr. John Nowins of Las Vegas, the Clark County OB/GYN Society's president. The society is quick to note that the county has only 97 obstetricians, down 13 from March 2002 when malpractice premiums began to escalate. Separately, the Nevada State Medical Association found in a survey of members that as of Jan. 28, 75 Nevada physicians had closed their doors within the past year primarily because of the rate increases.
"There are so many negative things happening here in Nevada against doctors," Nowins said. "We just had Medicaid pay cuts, which didn't go over well. And we're dealing on a federal level with Medicare cuts. As those cuts go into effect, managed care cuts follow.
"With the pay cuts and with our overhead increasing all the time, especially because of malpractice premiums, this is not a favorable environment for doctors to practice. Not only will doctors continue to leave, we are learning that doctors don't want to come to this town."
Doctors argue that nationally more than three-quarters of all malpractice judgments by dollar amount go for pain and suffering damages. They believe that capping such damages will lead to lower insurance rates. But Bradley disagreed.
"Until the economy turns around, we do not expect rate decreases," he said.
That is based on the argument that insurance rates are determined to a large degree by the investment returns reaped by insurers. Bradley and other trial attorneys argued that the sluggish stock market combined with low returns on investments in the bond market have forced insurers to raise medical malpractice insurance rates.
Since the medical liability law went into effect last fall, the state Insurance Division has approved rate increases ranging from 4 percent to 93 percent depending on the medical specialty involved, according to Larry Matheis, executive director of the Nevada State Medical Association.
"I'm disappointed in the Legislature because all the insurers felt that passing SB97 would have given them the confidence to stabilize rates," Matheis said. "It is unlikely we will now see a reduction in rates.
"Right now, doctors can't see the light."
Jim Wadhams, an insurance industry lobbyist, estimated that liability premiums could drop by as much as 40 percent within six months if voters approved the doctors' initiative.
No effect
"I don't see that the legislation passed this year will have any effect on insurance rates at this time," Wadhams said.
He was referring to three other bills approved by the Legislature this year that could still affect Nevada doctors:
Senate Bill 122, signed by Gov. Kenny Guinn on May 22, places new restrictions on insurers who wish to charge doctors more money for medical liability premiums. This law represents an attempt by legislators to prevent unwarranted premium rate increases.
It prohibits insurers from seeking rate increases based on investment losses and diminished cash flow from dividends and other investments that have nothing to do with malpractice litigation. Insurers also will be prohibited from seeking increases to cover losses caused by any crime committed by an insurance company official.
But Wadhams said the new law merely affirms existing state policy, which he said currently prohibits insurers from raising rates based on investment losses. He said that policy has been in effect for at least 30 years.
"That provision will have no effect because insurers already can't go and ask for rate increases to cover market losses," Wadhams said.
Nevada Insurance Commissioner Alice Molasky-Arman agreed, saying it is a myth that insurance rates went up in Nevada because insurers took losses on investments. She and Janice Moskowitz, lead actuary for the insurance division, said there have been instances where insurers projected lower returns on future investments as part of their argument for rate increases. But for the most part, both said rate increases have come about because of the money insurers lost in malpractice litigation.
"They (insurers) can't seek an increase in rates to cover investment losses from the past," Moskowitz said.
SB122 also places new restrictions on charging certain obstetricians a higher premium depending on the number of babies delivered annually -- a practice that some doctors said forced them to restrict deliveries. Under SB122, higher rates may be charged based on the number of deliveries only if the rates are justified because of malpractice litigation losses and approved by the state insurance commissioner.
Another new wrinkle is a reaction to the abrupt pullout by St. Paul Cos. in 2001 after it cornered 60 percent of Nevada's medical liability market. That, according to critics, was a major factor in the skyrocketing insurance rates doctors were forced to pay beginning last year. SB122 attempts to prevent such pullouts by requiring insurers to give doctors 120 days' notice before canceling policies, a period that may be extended 60 days by the state if doctors cannot find an alternate insurer.
Finally, the new law requires the insurance commissioner to determine annually whether there are any medical specialties "which are essential as a matter of public policy" that must be protected "from certain adverse actions" related to malpractice insurance. The initial list of "essential" specialties includes emergency medicine, neurosurgery, obstetrics and gynecology, orthopedic surgery, pediatrics and trauma surgery.
Assembly Bill 320, which awaits Guinn's signature, delves into other areas of medical insurance, including health maintenance organizations. Doctors have maintained that while their malpractice insurance costs have risen, the amount of money they receive for participating in HMOs has been relatively flat, leaving them with less money to run a successful practice.
AB320 would prohibit HMOs from charging doctors fees for being listed as health care providers for an insurance plan. The bill would require HMOs to inform doctors in writing how much they will be paid by the HMOs for different medical services. This would have to be done at the time the physician signs the HMO contract.
Doctors argued that HMOs have dragged their feet when it comes to reimbursing them for medical care.
The bill also would increase penalties against HMO administrators from fines to possible suspension or revocation of state registration certificates for two or more instances of violating laws dealing with deadlines for the approval or denial of insurance claims made by doctors.
Nowins said AB320 was "a long time coming."
"For managed care to post their reimbursements and be held accountable for their reimbursements is important," he said. "Some managed care companies don't reimburse us at the rates they said they would."
But Marie Soldo, senior vice president of government affairs for Sierra Health Services Inc., the state's largest HMO, said AB320 merely cleans up legislation approved in 2001 related to approval of claims.
"This doesn't change things much," Soldo said. "As a result of last session there has been marked improvement in timely payments from health plans."
AB320 also allows insured patients to continue to receive care from a physician for ongoing medical conditions even if the doctor's contract with the insurer is terminated during the course of treatment.
This provision kicks in only if the treatment is medically necessary and if the doctor and patient agree that "the continuity of care is desirable." But the doctor would be prohibited from collecting money from the patient for any other health care service that would not have been covered under the insurance policy.
After he and other members of the county OB/GYN society were fired in September by Sierra Health Services following a meeting with Guinn to discuss health care concerns, Nowins said two of his former patients were forced to have their babies delivered in emergency rooms. Both women were about seven months pregnant when Nowins was dropped by Sierra, he said.
"When we got fired a lot of our patients had to scramble to find other doctors," Nowins said. "We've always wanted a bill like this."
Senate Bill 250, also awaiting the governor's signature, would throw more light onto actions taken by the state Board of Medical Examiners when it comes to disciplining doctors for violating Nevada regulations. This bill arose from criticism that the board was not proactive enough in pursuing and weeding out bad doctors.
SB250 would require the board to publicly discuss and approve settlement agreements with doctors who allegedly violated state laws. An exception involves settlements that require the doctor to enter an alcohol or drug abuse treatment program.
Confidential
A complaint filed against a doctor and other documents related to the investigation of that complaint would be kept confidential. But the bill would make the complaint and documents public records once the board initiates disciplinary action against the doctor. Any discipline taken against a doctor and the conclusions reached in making that decision also would be public records.
"We supported SB250," Matheis said. "It's more about making the board's processes more timely and a little more responsive."
To allay criticism that board meetings have been inaccessible to the public because they are normally in Northern Nevada, SB250 stipulates that all such meetings "must be held at a location at which members of the general public may testify via telephone or video conference between Las Vegas and Carson City or Reno."
All doctors who apply for state licensing would be required to provide the board with any complaints against them for alleged malpractice, even if no lawsuits were filed. Licensing applicants also would have to reveal complaints and disciplinary actions taken against them in other states, and any problems they allegedly caused for hospitals or clinics.
Licensed Nevada doctors also would be required to tell the board about any malpractice claims made against them within 45 days of receiving notification. Doctors also have 45 days to notify the board about malpractice claims headed to arbitration or mediation, and the same deadline to report malpractice settlements or judgments. Doctors who violate these provisions would be subject to a fine of up to $5,000 per violation.
The board also would be required to investigate whether further disciplinary action should be taken against a doctor involved in a malpractice judgment or settlement. Manthei, president of the state Board of Osteopathic Medicine that is also covered by SB250, helped write the legislation.
"This is going to make the public more comfortable," Manthei said. "It will confirm that we don't have a problem with bad doctors."
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