Legislators eye limits on awards to injured patients

Advocates say they want to lower doctors' insurance premiums

Posted: Monday, March 15, 2004

When Kathy Dale's 56-year-old husband, Gene, came out of shoulder surgery on May 18, 2000, she says, he was not the same man she'd taken in that morning.

Dale said her husband didn't fully awaken for three days, and when he did, he was talking nonsense.

Recounting the case during recent legislative testimony, Dale contended that the drugs her husband had been given during the outpatient surgery caused his blood pressure to drop. His vital signs were not monitored for 45 minutes, and he suffered brain damage, she told legislators.

The Dales sued and reached an out-of-court settlement, which she said she is required to keep confidential.

Now she is arguing against proposed legislation that would lower the amount of non-economic or "pain and suffering" damages that patients in medical malpractice cases can receive.

"It's going to rob those of us who have true losses of being able to get any remedy," Dale said.

But advocates for the bill say the state must do something to control malpractice insurance costs. They say Alaska doctors' premiums are among the highest in the nation, and two of four insurance companies offering the coverage pulled out last year.

"If our malpractice insurance climate worsens, getting young doctors to come here will be nearly impossible," said Dr. George Rhyneer, an Anchorage cardiologist. "You can be sure some Alaskans will go without medical care, even emergency care."

Rep. Tom Anderson, R-Anchorage, and Sen. Ralph Seekins, R-Fairbanks, are sponsoring identical bills aimed at addressing the doctors' worries. A key provision of the bills is a cap of $250,000 on non-economic damages.

The current limit on such damages is set at either $400,000 or $8,000 multiplied by the patient's years of life expectancy, whichever is greater. For severe physical impairment or disfigurement, the cap is higher - $1 million or $25,000 multiplied by life expectancy.

People would still be able to collect economic damages, such as lost wages and future medical expenses.

Committees hearing the bills have been barraged by competing statistics and testimony from doctors, lawyers, patients and insurance executives.

Norcal Mutual Insurance Co., one of two remaining malpractice companies in Alaska, says Alaska doctors paid on average $30,627 a year for medical liability coverage in 2000 - the eighth-highest average cost in the country.

By contrast, in California, which has the cap on damages being proposed in Alaska, the average cost was $14,564 in 2000, said Philip Hinderberger of Norcal.

Dr. Alex Malter, president of the Alaska State Medical Association, said a January story in the American Medical News estimated Alaska had the seventh-fewest number of doctors per capita in the United States.

Over half the state's practicing doctors are older than 51, and may be retiring in a few years, setting up a potential recruitment crisis, Malter said. And, he said, the legal environment and affordability of medical insurance plays a major part in medical students' decisions on where to work.

"The word on the street in the Lower 48 is Alaska's now becoming a very unfavorable environment to practice," said Dr. John Duddy of Anchorage.

But the Alaska Academy of Trial Lawyers said there's not a huge problem with out-of-control malpractice awards in Alaska. The average of all claims paid since 1990, not counting a handful of confidential settlements, is $210,622, according to the trial lawyers. Those numbers include economic damages, as well as pain-and-suffering awards.

And, the group says, malpractice rates charged by the two insurance companies still in Alaska were actually lower in 2003 for three specialties they looked at than they were at times during the early 1990s.

The lawyers maintain the insurance industry is simply going through a normal market cycle. In the late 1990s, intense competition in the industry drove rates down too far. The resulting losses meant that carriers that had engaged in "risky if not reckless underwriting" began to pull out, the group said, and rates are rising again.

Sarah McNair-Grove of the state Division of Insurance said there's probably some truth to both sides' explanations of the recent upswing in premiums - it's probably due partly to a normal market cycle and partly to higher claims being paid out.

The trial lawyers group says the proposed bill would especially hurt patients who are low-income, retired or living a subsistence lifestyle. That's because they won't be able to recover much, if anything, for lost wages.

Dale said she was told her husband would not qualify for damages for lost wages because he had recently started a new business, which had not yet turned a profit. He also did not qualify for compensation for future medical expenses because there was nothing more that could be done medically. That left her only non-economic damages.

Dale said she settled based on what she could get to take care of her husband if he died before she did.

Lawyers say malpractice cases are time-consuming and expensive, and with the cap on pain-and-suffering damages set at $250,000, many patients will have a hard time finding lawyers to take their cases.

"Those people would be without any recourse whatsoever," Anchorage attorney Ray Brown said.

The trial lawyers also say there is no guarantee insurance companies will lower their rates if the bill passes.

Doctors agree there's no assurance rates will drop, but they say they hope to stave off increases and keep the insurance available.

The lawyers group also says Alaska's doctor shortage is not new, and is improving. The number of physicians practicing here rose from 815 in 1985 to 2,099 in 2003.

Attorney Carmen Clark says the Legislature should not take away patients' rights to have their cases decided by a jury.

"I think everyone should say, 'How much would I sell my eye for? How much money would it take for me to be willing to wear a colostomy bag for the rest of my life? How much would it be worth for me to never be able to enjoy sex again?"

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