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Lawyers closely watch proposed med-mal reform legislation

Author / Coordinator: Michelle Lore
Minnesota Lawyer
March 2005

Medical-malpractice lawyers across the state are keeping an eye on proposed state legislation that would limit damage awards for injured plaintiffs.

A House panel earlier this month approved of several bills that would implement caps on noneconomic and punitive damage awards in medical-malpractice lawsuits. Plaintiffs’ attorney fees would also be capped under the legislation.

Some attorneys are concerned that if the legislation passes fewer injured persons will assert meritorious claims because of the difficulty they will have finding lawyers willing or able to pursue their cases.

According to Minneapolis attorney Robert J. King, capping recoveries means that lawyers will not be able to recoup their costs investment, which can easily top the six-figure mark in many cases. “Attorneys wouldn’t be able to afford to take these cases under these rules,” he said. “That would be the most dramatic consequence of this kind of legislation.”

But Minneapolis defense attorney Richard J. Thomas doesn’t believe that the legislation, if adopted, would drive med-mal attorneys out of the practice. “Lawyers will just change their focus,” he said. “They will argue the cost of future care rather than noneconomic damages.”

The proposals

Separate bills sponsored by Rep. Matt Dean, R-Dellwood, Rep. Brad Finstad, R-New Ulm, and Rep. Duke Powell, R-Burnsville, were heard by the House Health Policy and Finance Committee earlier this month.

The bills would limit noneconomic damages like pain and suffering against health providers, nursing homes and ambulance services to no more than $250,000 per claim. The bills also would cap punitive damages at $250,000 and award them to a state health insurance fund. The amount of fees attorneys may recover in med-mal cases would also be limited, calculated on a sliding scale based on the plaintiff’s recovery.

All nine Republicans on the committee voted for the measure and all six DFLers voted no. The measure advanced to the Civil Law and Elections Committee. At press time, no companion bill had been introduced in the DFL-controlled Senate.

Minneapolis plaintiffs’ attorney Peter W. Riley, president of the Minnesota Trial Lawyers Association, believes that two primary considerations are driving the legislation on both a national and state level. First, he views it as an attempt to “defund” the Democratic Party, for which trial lawyers have historically been a significant source of funding.

Riley contends that the second reason for the proposed legislation is the perception that there are an abundance of “runaway juries” making huge damage awards, which he says just isn’t the case. “The worst idea in the world is to make law based on untrue or unsupported facts,” Riley observed.

King added that the claimed incentive for capping med-mal awards is to reduce malpractice premiums for doctors, something he does not believe will occur.

“The literature and studies show there is not necessarily a connection between insurance premiums and tort reform legislation of this nature,” he said.

Riley agreed, pointing to California — which has caps similar to those proposed in Minnesota — as an example. He noted that insurance rates in that state did not go down until an insurance rate review was done years after the caps were implemented. “California’s rates are still higher than Minnesota’s,” he added.

A needless measure

Plaintiffs’ attorneys assert that there is no medical-malpractice crisis in Minnesota that would justify the reforms proposed by the House members. They contend that Minnesota has among the lowest malpractice insurance rates in the country and that the number of med-mal cases filed in the state has been declining for several years.

Moorhead plaintiffs’ attorney Keith Miller explained that it is very expensive to bring a medical-malpractice claim, a fact that for the most part eliminates cases that are not meritorious. “With the cost of pursuing med-mal cases, I certainly wouldn’t pursue one that doesn’t have merit,” he said.

The defense attorneys who talked with Minnesota Lawyer agreed that there is not a med-mal crisis in Minnesota, at least not now.

“We don’t have a lot of frivolous litigation in the med-mal area in Minnesota,” said St. Cloud attorney Steven R. Schwegman, president of the Minnesota Defense Lawyers Association. He explained that cases without merit are generally eliminated early on in the litigation process.

Thomas agreed that while the numbers do not support the conclusion that Minnesota has a med-mal crisis, insurers cannot simply “put their heads in the sand” on this issue.

Medical-malpractice insurers base their rates on previous experience and what has happened elsewhere, Thomas observed. “They need to prepare. It’s unfortunate but they have to try, in part, to predict the future. … The trends are disheartening and uncomfortable.”

Affidavit requirement

Both plaintiff and defense attorneys told Minnesota Lawyer that one reason Minnesota does not have the med-mal litigation problems some other states have is because it requires plaintiffs early on in the litigation to provide an affidavit from an expert who supports their claim.

“The kind of tort reform that was adopted in the ‘80s — the expert affidavit requirement — has proved very effective in Minnesota at keeping out of court cases that don’t belong there,” said King.

Miller agreed. “The requirement of an expert affidavit early on in the litigation takes care of a whole bunch of potentially frivolous lawsuits,” he said. “It’s an admissible opinion from a credible expert.”

Thomas pointed out that another, less-talked about provision in the proposed legislation would eliminate the opportunity to correct or cure an expert affidavit that is alleged to be deficient. “That’s a worthwhile change,” he said.

Under current law, a defendant may not bring a motion to dismiss a med-mal case based on a deficient expert affidavit until after the plaintiff is given 45 days to save the case by correcting the affidavit.

Thomas explained that this puts defense attorneys in a very difficult situation by forcing them to decide whether to bring the motion early on after the deficient affidavit is filed or whether to wait and raise the issue at the time of trial. “That is not the way the law should work,” he said. “No defense lawyer should be in a position like that.”

Fewer cases

One of the arguments against the proposed legislation is that capping noneconomic damages does nothing to prevent the filing of frivolous lawsuits and only serves to harm those who are catastrophically injured.

“The most seriously injured people will be the ones who will be penalized under this legislation,” Riley observed.

St. Paul defense attorney Terence O’Loughlin, who handles numerous obstetric med-mal cases, acknowledged that the damage cap may not be appropriate in all cases.

“I have a problem seeing a $250,000 cap on noneconomic damages in malpractice cases where they have catastrophic injuries,” he said.

O’Loughlin explained that in some of his cases babies end up with cerebral palsy, and while they have lengthy life expectancies, they are totally dependent. “Even as a defense attorney I have a problem seeing caps on that,” he said.

Schwegman acknowledged that in specific cases some seriously injured people will be limited in their noneconomic recovery. He stressed, however, that they will still be entitled to recover all of their actual economic loss. “Things like medical loss and wage loss, those things are not affected,” he said.

Plaintiffs’ attorneys also contend that the proposed legislation will negatively affect low- and middle-income individuals who cannot afford to pay the costs involved in bringing a med-mal case.

“[The proposed legislation] punishes the least economically well-off in our society,” said Minneapolis plaintiffs’ attorney John F. Eisberg.

Eisberg explained that med-mal cases are “extremely time consuming and expensive” cases to pursue, with out-of-pocket costs alone topping more than $100,000 in some cases. Few lawyers will be able to afford to represent clients unless the client is wealthy and can afford to cover his or her own costs, he said.

Placing caps on noneconomic damages effectively wipes out the claims of low-income children, retirees and individuals, Eisberg said. “For low-wage earners, you are basically telling people, ‘Your injuries aren’t worth much.’”

Some attorneys contend that fewer claims will be filed because fewer attorneys will accept the risk of taking on med-mal cases. Lawyers simply will not be willing or able to cover the cost of bringing these cases, they said.

If an attorney is investing $30,000, $40,000, $50,000 or $100,000 or more in costs on a case and he or she knows that the award will be limited, why take the case? Miller observed.

According to Eisberg, if the legislation were to pass, the amount of litigation will drop enormously — without any corresponding drop in insurance rates. “I think we’ll see a drop in the number of cases because lawyers won’t be handling the cases,” he said.

Caps unfair

Plaintiffs’ attorneys are upset by the proposed cap on attorney fees — and defense attorneys understand.

To limit attorney fees based on a client’s recovery is “simply unfair,” said Eisberg. “It is another disincentive for qualified attorneys to handle these cases.”

Eisberg pointed out that there are no caps like this in other kinds of litigation and there has been no showing of why there needs to be a cap here. “If lawyers can’t seek a decent return on their investment and time, lawyers won’t take these cases,” he said.

King is also against the attorney fee caps, explaining that the current system has been working well for a long time.

“If we’re going to provide people … justice, we need a system that keeps the courthouse doors open. The contingency fee system has done that,” said King, adding that the fee-capping proposal effectively eliminates the availability of that system in many cases.

Even some defense lawyers acknowledge that the attorney fee caps seem unfair.

Thomas told Minnesota Lawyer that the caps may be politically motivated and “short-sighted,” adding that this ought to be an area where people can contract the way they want.

Thomas explained further that like plaintiffs’ attorneys, defense attorneys strongly believe that complex issues are best resolved with a jury of neutral people. It is important to get complaints resolved in a just and fair manner, he said. “By capping attorney fees we are going against that fundamental principle and I am against it.”

Schwegman added that limiting attorney fees is always a difficult issue. “I’m not sure why the Legislature should be involved in that process,” he said.

Not this year

Despite passage in the House Health Policy and Finance Committee, plaintiffs’ lawyers are hopeful that the legislation will not become law in Minnesota any time soon.

“I hope better judgment will prevail,” said Riley. “If reasonable minds prevail, this legislation will not.”

Eisberg believes the chances of the legislation passing are extremely slim. “Opposition to tort reform in Minnesota has strong bi-partisan support,” he said. “Republican legislators and Democratic legislators realize the unfairness of penalizing children, retires and under- and unemployed individuals.”

Eisberg added that many legislators have seen their own family members injured by the medical profession. When they are personally confronted with a med-mal situation, “they get a different perspective,” he said.

King agreed the legislation probably would not go anywhere this session, explaining that he was told “by those who profess to know, that it’s not likely to pass.”

Thomas confirmed the point. “I don’t think anything is going to happen [on this proposal] this year,” he said.

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