Monday, July 9, 2012
Monday, July 2, 2012
I realize we have readers not terribly interested in early offers. I hope to take a break from them after this.
Max Kennerly, of the Beasley firm in Philadelphia, posted some comments on my previous early offers posts and, instead of answering them piecemeal, I want to address them comprehensively. The crux of Kennerly’s opposition to early offers is actually the same as my support for them: the desire that claimants receive compensation.
As I understand Kennerly’s comments, he has two principal objections. First, the penalty for turning down the offer will exacerbate the amount of claimants who do not recover because it will prevent lawyers from taking their cases. Second, the amount of and process to obtain the early offer would be insufficient for a variety of reasons.
The Penalty for Turning Down the Early Offer Will Lead Attorneys to Turn Down Cases.
Kennerly notes a 2006 New England Journal of Medicine article finding that approximately one in six claimants with valid claims did not recover. He believes the addition of the bond and fee-shifting will mean more claimants will not be able to obtain a lawyer (because of the risk involved).
There are two responses to this concern. First, New Hampshire’s law has safeguards in place that encourage claimants to have an attorney involved in the initial decision of whether to seek an early offer. Unrepresented claimants are assigned a neutral advisor whose job is to encourage the claimant to seek an attorney and explain the difference between early offers and traditional tort law. Thus, many claimants will likely have attorneys before the offer is requested, reducing (but not eliminating) the scenario Kennerly fears. In this vein, I’m actually more concerned that claimants who would benefit from early offers will fail to request them on the advice of counsel than I am that claimants will request an offer when it is ill-advised.
Second, and more significantly, the only way a claimant will have the burden of fee-shifting attached to the claim is if the claimant requested an offer and the offer has been made. In other words, the claimant has already been assured economic loss (on this issue, see Kennerly’s next objection), a modest amount for pain and suffering, and the payment of her attorney’s fees. If the concern is that one in six claimants with valid claims recovers nothing, surely this is an improvement. Especially when one considers the fact that the most egregiously injured claimants often recover only a portion of economic loss pursuant to tort law.
Saturday, June 30, 2012
Over at Litigation & Trial, Max Kennerly has found a problem with the early offer law, but it is not as serious as he first believed.
Kennerly argues that early offers do not cover future lost wages. He arrives at this conclusion by noting that the definition of "economic loss" includes wages, but does not include "earning capacity." His conclusion is that "wages" only means wages that would have been earned at the time the claim is filed. He then provides an example of someone who lost $50,000 in past lost wages and Kennerly is concerned that he will only receive the $50,000 in lost wages.
The statute makes it clear that future lost wages are included. Section 5:19-C:5 provides that future lost wages will be paid. That section divides payments by the health care provider into section I, covering economic losses previously incurred, and Section II, covering future economic losses. Subpart b to Section II covers lost wages, and states: "Payment of lost wages shall be made weekly." Moreover, the payments are adjusted annually to keep up with inflation.
What then does "earning capacity" mean? Kennerly is right that it should have been defined in the statute. However, I think he arrived at the answer in his updated post that responded to my comment. Moreover, in so doing, I think he sheds light on the nature of early offers. He says that "earning capacity" includes "estimates of increased wages due either to individual career advancement or advancement of wages as a whole in a particular sector." Early offers does include increased wages due to inflation. What it doesn't include, what it can't include, based on its very nature, is the individualized treatment that Kennerly wants.
This is the tradeoff. Tort law generally provides individualized justice. If you want to push your case far enough, a jury will decide whether the health care provider was liable and how much pain and suffering that the claimant, this particular claimant, suffered. As a result, it can be slow, averaging about 5 years per med mal case, and expensive, chewing up a lot of transaction costs. Early offers is based more on an insurance premise. The claimant gives up the possibility of having a jury take all of her particular circumstances into account for recovery that is certain and much swifter. Especially when one considers that the most seriously injured claimants often recover only a fraction of their economic loss and claimants lose a large portion (around 80%) of tried med mal cases, the tort route can be daunting for claimants who understand it.
As I have said before, early offers is not for everyone. Kennerly proffers a college student client who had no lost wages, but the potential to earn $3 to $5 million. Absent more information, I would say this client should not request an early offer if one were possible. But there are claimants for whom it makes sense. I was a plaintiffs' lawyer, and I can recall any number of clients for whom it would have made sense. I hope plaintiffs' attorneys in New Hampshire will give it fair consideration as an alternative for those types of clients.
Thursday, June 28, 2012
On Wednesday, the legislature in New Hampshire voted to override Governor Lynch’s veto of the early offers bill. Despite some imperfections in the bill, it was a good decision. Because all of the criticism is coming from the claimants’ perspective, I specifically state that the early offers law is good for claimants. I defended an earlier version of the bill from the claimants’ perspective here.
In a post on Wednesday, The Pop Tort pronounced early offers “horrendous.” Unlike the editors of many torts-related blogs, I don’t know the people who write for The Pop Tort. I don’t always agree with their positions, but I admire their dedication to victims of tortious conduct. This is a major reason why I want to respond to their early offers post. I would like those typically supportive of claimants to seriously consider endorsing early offers.
Because the bill has changed since I last defended it, I will start by briefly explaining the version that is now the law of New Hampshire. 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. Moreover, the offer includes payment of the claimant’s attorney. 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 and pursues a tort claim, she must be awarded at least 125 percent of the early offer or have to pay the defendant’s attorney’s fees. To ensure these fees can be paid, a bond must be posted.
I begin by examining the specific points of opposition in the post.
Wednesday, June 27, 2012
It is not yet being confirmed by the media, but it appears that the legislature has overridden Governor Lynch's veto, making New Hampshire the first state to adopt an early offers law.
Updated: The veto override is confimed by the New Hampshire Union Leader.
Friday, June 22, 2012
A new study conducted by a group of researchers including Charles Silver (Texas) concludes that Texas's 2003 tort reforms did not lower health care costs. The Austin American-Statesman has the details.
Wednesday, June 20, 2012
Monday, June 4, 2012
Mark Behrens, a partner at Shook Hardy, authored an opinion letter in Sunday's Philadelphia Inquirer about tort reform in Pennsylvania. While advocating for tort reform, the letter also provides a good overview of recent changes enacted in Pennsylvania, such as the Fair Share Act, and the home venue rule.
Friday, June 1, 2012
Senate and House negotiators agreed on a bill that retained the House's "loser pays" provision if a claimant turns down an early offer after requesting it:
A claimant who rejects an early offer and who does not prevail in an action for medical injury against the medical provider by being awarded at least 125 percent of the early offer amount, shall be responsible for paying the medical care provider's reasonable attorney's fees and costs incurred in the proceedings under this chapter.
Both houses are expected to pass it next week and then it will go to the governor. The Union Leader has details.
Tuesday, May 29, 2012
St. Louis businessman John Brunner and former State Treasurer Sarah Steelman, both candidates for the U.S. Senate Republican nomination, sparred over tort reform in a debate last week. The News-Leader has more.
Wednesday, May 23, 2012
A couple of weeks ago (while I was busily grading papers and exams), Susan Ladika published a piece at Carinsurance.com that was picked up by Fox Business News entitled Reforming Reform: Fixing no-fault insurance.
In the article, the author discusses current efforts to reform no-fault insurance, given its greater-than-expected costs. No-fault has been successful in some ways. The article often relies on a 2010 RAND study by James M. Anderson, Paul Heaton, and Stephen J. Carroll, The U.S. Experience with No-Fault Automobile Insurance. That study, at pages 96-97, found that "no-fault systems provide reimbursement for a larger proportion of economic losses, greater satisfaction with the speed of payment, and faster resolution of third-party claims." However, no-fault was advertised as being cheaper than liability insurance. Instead, in most states, it has been just as expensive, if not more so. As a result, no-fault, which once seemed on the cusp of becoming the law of nearly every state, has lost traction. What went wrong and how can it be fixed?
First, the thresholds were set poorly. No-fault was designed to compensate the injured for small and moderate injuries and leave tort for serious injuries. This would be more efficient and would leave the full (and expensive) tort system for those claims that were sufficient to merit it. The key is to separate small and moderate claims from serious ones. This was done by thresholds. However, monetary thresholds were set too low and verbal thresholds were too vague. The Ladika article points to three jurisdictions, Georgia, Connecticut, and Colorado, that moved back to liability insurance from no-fault. In all three jurisdictions, costs were reduced when the state reverted to liability insurance. However, each jurisdiction had a monetary threshold (as part of a combination threshold) that was miserably low: Georgia's was $500, Connecticut's was $400, and Colorado's was $500 (though raised to $2,500 before it was repealed in 2003). Almost any auto accident will create $500 in costs, which means that the tort system will operate in addition to the no-fault system for such claims. As such, costs are bound to increase.
In addition to being set too low, monetary thresholds, even if part of a combination threshold, created incentives for padding medical bills, inequitably treated those living in low cost areas, and provided an easy way for no-fault opponents to undermine the law. Instead, jurisdictions should use a verbal threshold that is sufficiently limited and clear to reduce litigation.
Second, protections against fraud were not included. This may be understandable. No one thought that no-fault would have fraud problems; tort, with its payment for pain and suffering, was supposed to be the favored target for fraud. However, that was overly optimistic. No-fault has attracted considerable fraudulent claims in many jurisdictions, and it must be dealt with to keep costs under control. This may be jurisdiction-specific, but New York has proposed legislation that would: (1) modify the requirement that insurers pay claims within 30 days if there is a suspicion of fraud; (2) allow the insurance department to review and decertify unscrupulous medical providers from billing and collecting no-fault benefits; and (3) increase penalties and enforcement for insurance fraud.
Third, no-fault insurers did not implement the same restrictions that health insurers routinely use. The RAND study found that a major problem with no-fault was spiraling health care costs. However, it was not clear whether total costs increased or there was a reallocation of costs from health insurance to auto insurance. No-fault insurers need to implement restrictions, such as fee schedules and medical protocols, that are already used by health insurers. For example, New Jersey recently implemented precertification medical guidelines or "Care Paths." Care Paths set forth the particular paths of treatment that are acceptable for specified injuries; when the treatment plan deviates from the Care Paths, the treatment will be reimbursed only where demonstrated to be reasonable and necessary.
Another improvement would be to make no-fault into a choice plan. Allow motorists to choose between tort and no-fault. Evidence from Kentucky, New Jersey, and Pennsylvania suggests that a large number of motorists will choose no-fault if given the option.
Tuesday, May 22, 2012
The Pittsburgh Post Gazette reports that the number of medical malpractice cases have dropped 47% in the ten years since two reform measures took effect. In particular, Pennsylvania requires that "cases be brought in the venue only where the cause of action arose and that a certificate of merit be obtained from a medical professional to certify the lawsuit before complaints are filed." The Gazette reports:
Despite the 10-year downward trend, there was a small uptick in the number of medical malpractice filings in Pennsylvania between 2010 and 2011. There were 1,528 filings in 2011 and 1,491 filings in 2010; 2010, meanwhile, had the lowest number of filings since the rule changes
Thursday, May 17, 2012
Last week, the House version was amended. Under the Senate bill, if the claimant requested an early offer and then declined it, the claimant would have to prove gross negligence to a clear and convincing standard. In the House version, if the claimant requested an offer and then declined it, the claimant would have to pay the health care provider's attorney's fees if the claimant lost or recovered approximately the same amount of money that was in the early offer. Both bills passed with veto-proof majorities. The Concord Monitor has the story here (scroll down past the first section on sealed bids).
Tuesday, April 24, 2012
From the Blog of the Legal Times:
House Republican leaders continued to push a medical malpractice reform bill this week that caps non-economic damages at $250,000 and limits lawyer contingency fees, arguing that it would save taxpayers $41 billion and prevent defense spending cuts.
BLT has more.
Thanks to Lisa Smith-Butler for the alert.
Wednesday, April 18, 2012
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.
Monday, April 9, 2012
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.
Friday, April 6, 2012
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.
Thursday, March 29, 2012
Wednesday, March 28, 2012
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.
Monday, March 26, 2012
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.