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Can tort reform help save health care?

November 4, 2009
By STEWART WARREN swarren@scn1.com

While Illinois is one of a handful of states with a cap on malpractice awards, many think a limit on settlements for medical wrongdoing is a key element in the overhaul of the nation’s health care system.

In Joliet, Dr. Theodore Kanallakes, an allergist at the Allergy and Asthma Clinic, 229 N. Hammes Ave., says tort reform in Illinois from 2005 has helped doctors control costs. It made insurance costs more affordable for doctors by including a limit on how much a jury can award in non-economic damages. That’s made doctors’ insurance more affordable, Kanallakes said.
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Dr. Theodore Kanellakes talks to patient Andrew Paver, of New Lenox, after Paver had a skin test at Allergy and Asthma Clinic S.C. in Joliet.
(Liz Wilkinson Allen/Staff Photographer)

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Dr. Thomas Hurley, a neurosurgeon who practices at Silver Cross Hospital in Joliet, said malpractice lawsuits scare off doctors. Before Illinois’ tort reform, “people were dying because they couldn’t get access to the immediate care of a neurosurgeon,” he said.
(Liz Wilkinson Allen/Staff Photographer)

As the health care debate rages in Washington, we asked for your thoughts about this controversial issue. The response was overwhelming. Hundreds of you wrote, e-mailed or went online to share your feelings. This series addresses the issues you’re most passionate about.

ABOUT THIS SERIES

• Sunday: When illness strikes

Even those with insurance aren’t protected from financial and emotional disaster.

• Monday: Don’t take my money

Many taxpayers don’t trust the government to fix the problem; nor do they want to bear the burden of those uninsured.

• Tuesday: Speaking of uninsured

Those who can’t afford health insurance want more options than disability or welfare.

• Wednesday: Fire the lawyers

Some are convinced tort reform could go far in fixing our health care woes.

• Thursday: Your suggestions

So how do you really feel? We look at more of your concerns.

“Prior to 2005, premiums were escalating and doctors could not do the work,” he said. “(Health) insurance companies fix the fees that doctors can charge, and expenses continued to rise with employee salaries and malpractice premiums. An obstetrician was probably paying $150,000 for malpractice insurance, and neurosurgeons were paying $200,000. You’d have to do a lot of cases to keep up with that.”

Dr. Tom Hurley, a neurosurgeon from Naperville who practices at Joliet’s Silver Cross Hospital, worries that the Illinois Supreme Court might overturn tort reform. In 2007, a Cook County judge ruled that the limits on damages were unconstitutional. The Supreme Court has been considering the issue for nearly a year but has yet to announce a decision.

“I don’t think anyone wants to go back to 2004,” Hurley said. “People were dying because they couldn’t get access to the immediate care of a neurosurgeon.”

Hurley has been sued and lost.

“I still profess that I don’t know what I did wrong that day, and thankfully I had an insurance policy that covered the limits of the judgment,” he said. “(But) there are some cases where there is a chance that it might not go well, and I don’t touch them anymore.”

Liability reform

Tort reform has plenty support among others in the medical profession.

According to Howard Peters, excess liability is responsible for $100 billion in health care costs every year because physicians and other health-care workers feel they must go to great lengths to guard against unfair lawsuits.

“We strongly believe that if you want to reform health care, and you want to squeeze costs out of the health-care system, you’re going to have to do comprehensive liability reform,” said Peters, senior vice president for government relations for the Illinois Hospital Association, based in Naperville.

Recent research backs the idea that substantial savings are to be found in cutting waste. A Thomson Reuters study released Oct. 27 reported that the U.S. health-care system squanders more than $700 billion yearly, roughly one-third of the total outlay. Of that amount, roughly 37 percent is spent on unnecessary procedures, many of those falling under the umbrella of defensive medicine, the authors found.

Cut costs instead

Others disagree.

Valerie Barich, a Joliet lawyer practicing with Rathbun, Cservenyak & Kozol, argues that health-care reform is not the same as tort reform.

“There is no doubt we need health-care reform, but the way to do that is by implementing cost-saving measures,” Barich said.

The Government Accountability Office has done studies concluding that the costs of medical malpractice actually are less than 2 percent of the overall health-care spending, she said.

“Yet that is the main target of health-care reform. That doesn’t make sense,” Barich said.

Tort reform only addresses a small part of the problem, said Frank Cservenyak, a partner in the same firm. Tort reform capped the amount of non-economic damages, money that’s paid for pain and suffering, he said. But plaintiffs who file medical malpractice lawsuits don’t always win their cases. They’re actually successful less than 20 percent of the time, Cservenyak argued.

“Better practices by the doctors, and better reviews by the hospitals and the entities performing the medical procedures — that could reduce premiums,” he said.

The Medical Rights and Reform Bill — sponsored by U.S. Rep. Mark Kirk, R-Northbrook, and co-sponsored by Rep. Judy Biggert, R-Hinsdale, and 18 other House Republicans — includes a suggestion to “encourage states to adopt ‘alternative to litigation’ reforms such as early disclosure and compensation, administrative determination of compensation, and specialized health-care courts.”

The proposal also calls on doctors to consider practice guidelines supported by clinical evidence as a way of reducing defensive medical practices, and includes “stabilized compensation” for those who are injured in the course of receiving treatment.

Multimillion-dollar awards

Some people assert that eyebrow-raising awards are justifiable in some cases, however. They say cutting back substantially on victim awards would do little to bring down the cost of health care.

Kathleen Zellner represents patients in medical malpractice actions. The Oakbrook-based lawyer said reducing these awards would do nothing to bring down costs.

Citing a Harvard University study that found 200,000 Americans die unnecessarily each year because of medical errors and infections contracted in hospital settings, Zellner won’t absolve the medical community of big-ticket responsibility for bad outcomes.

She argued successfully for a $13.3 million settlement for the estate of a woman who committed suicide after she was sent home from the hospital although still severely depressed. Even after the award was halved to account for the deceased’s role in the tragedy, the case holds the U.S. record as the largest malpractice award involving a suicide, Zellner said.

She also refers to a comment from University of Pennsylvania professor Tom Baker, who was quoted in the New York Times saying that at $30.4 billion for 2007, malpractice awards account for less than 2 percent of the $2 trillion spent on health care annually. Other estimates place it at less than one-third that much.

“I don’t think there’s disagreement that it represents a fraction of all health-care costs,” she said.

Zellner, who defended hospitals before taking up medical injury work, said 5 percent of all physicians are involved in 95 percent of all suits. Doctors do a poor job of monitoring each other, and putting a monetary limit on their exposure won’t fix that, she said. More importantly, tort reform cuts into health care’s system of checks and balances, she said.

“The biggest problem is it erodes the function of the judiciary, because then you’re taking the decision out of the hands of the jury and you’re putting it in the legislature,” she said.

‘Runaway’ settlements

Business owners also see substantial value in what the U.S. Chamber of Commerce calls civil justice reform. The perspective is reflected on the local level as well.

“We support relief for health care for business owners, and civil justice reform must and needs to be part of that reform,” said John Schmitt, president and CEO of the Naperville Area Chamber of Commerce, adding that limitations have to be consistent among different states to keep the playing field level.

Setting award limits would help control costs, “which are runaway, as we all know,” Schmitt said.

Although Schmitt and others say when malpractice premiums come down, the savings are passed along to patients, Zellner disputes the assertion. Premium rates are driven by insurance companies’ earnings in the bond markets, she said. When the underwriters make profits, premiums go down.

“They’ve tried to tie it to medical malpractice, as if medical malpractice was the cause of health care costs,” she said.

Susan Frick Carlman of Sun-Times Media contributed to this report.

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