TortsProf Blog

In Support of New Hampshire's Early Offers Bill

          New Hampshire has proposed an early offers regime for medical malpractice cases.  It passed the Senate and will be up for a vote in the House shortly.  Pursuant to the bill, a patient who believes she is the victim of malpractice may send a notice of injury to the heath care provider requesting an early offer.  The provider has 90 days to decide to extend an early offer and can ask the patient to undergo a physical exam.  If extended, the offer must cover all economic loss—medical bills and lost wages.  There are modest amounts of pain and suffering damages included based on classification of the injury as determined using the National Practitioner Data Bank severity scale.  The patient then has 60 days to accept or reject the early offer.  If she accepts the offer, the case is over.  However, if she rejects the offer, she must prove gross negligence to a clear-and-convincing standard in order to recover.

            The bill is based on a proposal authored by Jeffrey O’Connell, with the change of allowing the claimant, not the health care provider, to initiate the early offer process.  I endorse the change and support the bill, though a similar system could be implemented without legislation.  Criticism of the bill has come from the perspective of claimants.  I’ll try to address specific points shortly, but I want to start with the general proposition that my support for the bill is largely based on its advantages for claimants.  There are other potential benefits—savings, etc.—but they are not the chief reason I support early offers. 

            Early offers allows, but does not force, a claimant to bypass the tort system.  Tort law has virtues, but among them are not certainty and swiftness.  Because of an understandable focus on individual justice, the tort system can be very uncertain and slow, with significant transaction costs.  There are many claimants who would prefer to have their claims resolved along insurance principles—with more certain payment for economic loss, taking care of the their urgent needs.  I have sat at the hospital bed of a catastrophically injured loved one.  After his health, my main concern was that he not be bankrupted by the enormous costs of life-saving care. 

            Some claimants have the resources to wait out a five-year malpractice struggle.  Some claimants may enjoy the adversarial proceedings of depositions, interrogatories, and cross examinations.  But all do not, and early offers gives them a possible way around them, while providing for basic economic loss much more swiftly.  What follows are some objections to early offers I’ve seen in various columns and posts.  I try to respond to each. 

            1.         Early offers will incentive “low-ball” offers. 

This is the objection I see the most, and it is ambiguous.  I’m not sure if the writers mean the health care provider will try to offer less than allowed pursuant to the early offer bill or the offer will be lower than is available pursuant to tort law.  If the former, the response is that any offer less than full economic loss, plus the modest pain and suffering award, does not qualify as an early offer.  If the latter, the response is that it is true the offer is less than would be theoretically available pursuant to tort law, but it is swifter and more certain.  That is the trade-off. 

            2.         Only economic loss is available.

The latter version of the first objection blends into this objection.  Some writers add that early offers would be unfair to claimants who did not have a lot of medical bills or lost wages; regarding lost wages, this would be particularly true of children, those who are retired, and those who do not work outside the home.  The response to this point is that early offers may not be beneficial for everyone.  If the claimant does not have a lot of economic loss, there may not be a pressing need for a financial recovery.  Under such conditions, the claimant may decide the better course is to pursue a tort claim.  Although, it may be significant to claimants who do not work outside the home that “replacement services” are available as economic loss.

            3.    Claimants will be suckered into signing up for the early offer.

The concern here is that claimants will be duped into accepting an early offer and waiving their tort rights by health care providers.  One writer asked why a warning was not required.  The response is that a waiver and warning are required.  Every claimant, before initiating the early offers process, must sign a waiver that informs the claimant that legal rights, including the right to a jury trial, may be affected; that there is a right to consult an attorney (who will be paid by the health care provider in the event of an accepted early offer); that the claimant is free to pursue a tort claim if no early offer is made, along with other pieces of information.  The following language is also included:

I UNDERSTAND THAT WHEN I SUBMIT A NOTICE OF INJURY AND SUBSEQUENTLY RECEIVE AN EARLY OFFER, I WILL HAVE RELINQUISHED MY RIGHT TO SUE FOR ORDINARY NEGLIGENCE, BREACH OF CONTRACT OR WARRANTY OR ANY OTHER CLAIM CONNECTED TO THE INJURY DESCRIBED IN THE NOTICE OF CLAIM.  Moreover, if a claimant who submits a notice is not represented by counsel, the health care provider must provide a neutral mediator, at the health care provider’s expense, to offer assistance to the claimant.

            4.         Health care providers can already make offers to settle.

This is true, but they often do so slowly, as is obvious from the average length of malpractice cases.  The reason is that both sides have incentives to posture throughout the process of resolving the dispute.  By offering health care providers the incentive of the higher standard and lower transaction costs, more offers will be made and much more quickly.

            5.         Early offers would shift the costs of caring for the injured from the wrongdoers to state and local government.

Costs of care are economic losses, which are, by definition, covered by early offers.  The danger of shifting costs to the government is much more concrete if the claimant loses a tort case.

            There are two objections that concern me a little more, but I think these risks are acceptable given the potential benefits: 

            6.    Discovery is one-sided.

My friend Alberto Bernabe points out that the health care provider is able to obtain discovery before the claimant.  It is necessary that a health care provider perform discovery prior to making an early offer.  If the claimant wants the potential benefits of the early offer, she will have to make the choice to submit to discovery.  However, the outcome and any other writings, evidence, or statements made or offered by a party or party’s representative during negotiations of an early offer are not admissible in court.  A health care provider could also potentially be required to release all medical records to the claimant at the time of the early offer negotiations.

            7.         Disputes are resolved by the Department of Insurance.

The most common type of dispute would likely be whether an item counts as economic loss.  Although there may be hard cases, calculation of economic loss is one of the simpler issues in a tort case.  The main objection seems to be that the Department of Insurance in New Hampshire is financed by insurers.  I have not heard any direct claims that the Department is biased, and I have no reason to think it is, but a neutral arbiter is crucial to the process.

            Many of the objections seem to implicitly contrast early offers with an idealized tort system.  There is much to admire in tort law, but it is far from perfect.  The alternative to early offers is not recovery in every case in which it is deserved, with the exactly proper amount of pain and suffering damages, within a reasonable amount of time, and at an efficient cost.  Instead, recent studies show that one in six cases involving legitimate medical error received no payment and, for those that did, 54 cents out of every dollar went to pay the costs of operating the system.  The average malpractice case lasts approximately five years; New Hampshire’s system is a little quicker (about four years).  However, that is a long time to wait when medical bills and lost wages accrue.  Moreover, approximately 80% of malpractice trials nationally are won by health care providers; the New Hampshire figure is approximately 65%.  Although claimants with minor injuries often receive several times their economic loss, claimants with major injuries may not even recover the full amount of economic loss.  Why not provide claimants an alternative?  If a claimant, for whatever reason, prefers the tort system, it is still available.   

--CJR

More on NH Early Offer Bill

Back in March, Chris reported on the New Hampshire "early offer" bill that is pending in the state Senate.   As the Senate takes up consideration of the bill, it continues to receive media coverage.   SeaCoast Online has a detailed report in today's paper.

- SBS

VA Tech Asks Court to Cap Damages Via VTCA in Shooting Case

The families of two victims of the April 2007 shooting at Virginia Tech won an $8M award last month.  However, that award will be reduced to $100,000 per family pursuant to the Virginia Tort Claims Act.  Many states have tort claims acts which took the place of full sovereign immunity; they allow tort claims, but with capped damages and sometimes at a higher standard, such as gross negligence.  Reuters has the story.

--CJR

TX: Med Mal Cap Upheld

On Tuesday, a federal judge ruled that Texas's cap on non-economic damages in medical malpractice cases is not an unconstitutional taking of private property.  News Radio 1200 has the details.

--CJR

MO: Constitutional Challenge to Med Mal Cap

Yesterday the Missouri Supreme Court heard arguments on whether that state's 2005 cap on non-economic damages in medical malpractice cases violates the state constitution.  In 2011, a jury decided that physicians failed to act when an unborn child showed signs of distress in the womb.  The child was born with cerebral palsy and will not progress beyond the mental capacity of a three-year-old.  The jury awarded $4,821,000 in total damages.  Of that amount, $1.45M was non-economic and was reduced to $350,000 pursuant to the cap.  The Springfield News-Leader has the details.

--CJR

House Passes Tort Reform Bill

The U.S. House of Representatives has passed nationwide tort reform measures as part of a bill repealing the Medicare Independent Payment Advisory Board, created as part of the Affordable Care Act in 2010.  Per an ABA summary,  the bill, H.R. 5, the "Protecting Access to Healthcare Act," would 

• Cap noneconomic damages at $250,000 in medical suits,
• Allow courts to reduce contingent fees and to redirect damages to plaintiffs,
• Create a “fair share” rule in which each party would be liable only for its share of any damages, pre-empting state laws that call for joint and several liability, and
• Abolish the collateral-source rule.

The Senate is unlikely to consider the bill, and President Obama has threatened to veto it, if passed.  The Hill's Floor Action Blog has more.

- SBS

MN Passes Cap on State/Local Liability

MN Governor Mark Dayton has signed legislation restoring caps in wrongful death cases against state or local governments to pre-2008 levels.  The new law caps liability at $1 million because of  “a single occurrence, if the claim involves nonprofit corporations engaged in or administering outdoor recreational activities funded or operating under a government-issued permit.”  StarTribune Politics has more. 

- SBS

NH: "Early Offers" Med Mal Proposal in State Senate

The New Hampshire Senate is touting an early offer approach to medical malpractice.  The proposal was designed with the input of Jeffrey O'Connell (Virginia) who conceived of the concept of early offers and has championed it for years.  The NH proposal allows the patient, not the health care provider, to initiate the early offer process.  One proponent of the bill explained:

victims of malpractice would send a notice of injury to the medical provider. The provider then has 90 days to decide to extend an early offer and can ask the patient to undergo a physical exam. The patient then has 60 days to accept or reject the early offer, and can ask for a hearing with state insurance officials if any disputes need to be resolved.

The Union Leader has the details.

--CJR

Loser Pays in NH and TN

Loser pay bills are moving through the legislatures in New Hampshire and Tennessee.

 

- SBS

 

Tort Reform Bills Advance in AZ, MN

In Arizona, the Economic Development and Jobs Creation Committee approved a bill that would exempt manufacturers from claims for punitive damages if they followed all federal, state, or agency standard for creating a product.  The bill moves to the full Senate.  The Arizona Republic has the story.

In Minnesota, the House last week passed several tort reform measures.  The measures, which passed largely on party-line votes, include:

• Reducing Minnesota's statute of limitations, the time limit for filing suit, from six years after the incident to four years.

• Allowing an early appeal to question the class-action status of large suits, in an attempt to weed out frivolous actions.

• Limits on attorney fees in certain cases, such as wrongful termination or sexual harassment, where state law requires the fees be paid as part of the lawsuit.

• Reducing the interest rate on judgments that remain unpaid while a case proceeds. The current 10 percent rate would be reduced to a market-based rate no lower than 4 percent.

The Minneapolis Star Tribune has the story.

--CJR

Reforming No-Fault Auto Laws

Neil Alldredge (National Association of Mutual Insurance Companies) has an interesting article on reforming no-fault automobile laws, including specific recommendations for individual states.  Here's a sample:

Early on, many states experienced cost savings, and no-fault seemed full of promise. Over time, however, some states’ laws produced unintended negative consequences. While the system intended to clear the court dockets of minor lawsuits, court dockets have become more cluttered because of weak litigation thresholds.

--CJR

NY: Defining "Serious Injury" for Purposes of the No-Fault Threshold

Eric Turkewitz has a great post on New York's highest court wading into the issue of what constitutes a "serious injury" for purposes of the state's no-fault threshold.  The failure to set proper thresholds is one of the biggest reasons that no-fault has not performed as well as it was expected to.  Monetary thresholds were set too low and verbal thresholds were too vague.  Eric rightfully challenges the language of New York's verbal threshold (and it's one of the best-drafted statutes).

Tighter threshold language is relevant to an issue I've been working on lately.  The Malaysian automobile tort system is terribly inefficient.  Among other things, Malaysia has separate hearings for liability and damages, often months or even years apart.  A group of Malaysian researchers led by Norila Abu Hasan is preparing a no-fault choice automobile proposal.  Last December, they visited the United States and consulted several scholars, including Andy Popper and Jeffrey O'Connell.  I told them drafting a proper threshold was crucial to the success of the system.  I'll be presenting a paper on thresholds in Malaysia in December. 

Eric provided the language in the New York statute in his post, complete with his italicized portions indicating vagueness problems:

1. A personal injury that results in death;
2. Dismemberment;
3. A significant disfigurement;
4. A fracture;
5. The loss of a fetus;
6. Permanent loss of use of a body organ, member, function or system;
7. Permanent consequential limitation of use of a body organ or member;
8. Significant limitation of use of a body function or system; or
9. A medically determined injury or impairment of a non- permanent nature which prevents the injured person from performing substantially all of the material acts which constitute such person’s usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following the occurrence of the injury or impairment”.

Eric also recommended that the legislature revisit the language.  As someone who will be recommending threshold language in the near future, how should it be changed?  I'd love to hear from Eric or anyone else who has ideas on the subject.

--CJR

Mississippi Supreme Court Asks for More Briefing in Tort Reform Case

The AP reports that the Mississippi Supreme Court has called for additional briefing in a certified question regarding the constitutionality of Mississippi's $1 million cap on non-economic damages.

Specifically, in the case before the court, the parties agreed that $2.2 million of the $4 million jury award was for non-economic damages. The Mississippi Supreme Court has asked the parties to explain how they reached that amount.

More from the AP story.

- SBS

WI Tort Reform Proposals

Gov. Walker called the Wisconsin State Legislature into session last week to focus on jobs.  Among other issues, four tort reform proposals will be introduced:

(1)  A bill requiring courts to consider certain factors in determining reasonable attorneys' fees;

(2)  A bill providing immunity for certain drug and device manufacturers based on preemption;

(3)  A bill preempting courts in WI from adopting R3's "flagrant trespasser" doctrine; and

(4)  A bill changing the interest rates on judgments in certain actions.

The State Bar of Wisconsin has the details.

--CJR

Tennessee Tort Reform Law Goes Into Effect

The Tennessee Civil Justice Reform Act, signed by the governor back in June, took effect on October 1st. The new law contains venue provisions, caps non-economic damages, and caps punitive damages. The same bill also contained the "Class Action Improvement Act of 2011," which would prohibit class actions under Tennessee's consumer fraud statute. A copy of the bill is available here: http://www.capitol.tn.gov/Bills/107/Bill/SB1522.pdf

- SBS

Indiana Stage Collapse Leads to Lawsuit, Challenges

Most people know that a stage collapsed during the Indiana State Fair, killing several people.  Not surprisingly, survivors of the victims have filed suit.  One suit challenges both Indiana's $5 million total cap on damages in claims seeking damages from the state and seeks to make damages available for surviving same-sex partners.  (Indiana does not recognize same-sex marriage.)

--BC

Intermediate Appellate Court Upholds Damages Cap in California

I missed it earlier this month, but an intermediate appellate court in California upheld a $250,000 cap on noneconomic damages in medical malpractice claims. 

--BC

Tort-Focused PAC in Texas

A few weeks ago, the New York Times published an interesting piece (from the Texas Tribune) about Texans for Lawsuit Reform, a very powerful PAC in that state.  Worth a read.

--BC

Class Actions in Mexico

WSJ Law Blog recently posted on Mexico's adoption of class actions.  The new Mexican law includes a loser-pays provision.  The details are here. 

Thanks to Mark Behrens for the tip.

--CJR

Amusement Safety

Two quick things about amusement parks:

• First, Wiggin & Dana attorney Erik Beard has started a blog about amusement park law generally, and today he's posted about why, in his view, the founding fathers would be glad that there are widely varying amusement ride regulatory schemes.
• Second, this weekend's episode of This American Life will be all about amusement parks.  I may or may not be in it -- I spent a day at Six Flags New England with a producer and did a few interviews with her, but it's still not entirely clear whether her segment will be in.  (It's a tight episode.)  But you should listen anyway.

--BC