Expert Roundtable: Law And Tort Reform

Written by City & State on . Posted in Banking/Insurance, Health Care.

Chair, New York State Senate Insurance Committee

Q: How widespread is no-fault insurance fraud in New York? What should be done to address it?
No-fault fraud is rampant in New York, particularly in the New York City area. No-fault fraud amounted to nearly $400 million last year, a cost shared by every single driver. This is a primary reason that New Yorkers pay the fourth highest auto insurance premiums in the country. The Senate has already passed legislation to crack down on runners and those who stage accidents, along with a measure to allow insurers to retroactively cancel policies taken out by those who commit fraud. I have also introduced a series of legislations that would reform the no-fault system in a more comprehensive manner. Specifically, these include giving insurance companies more than 30 days to detect fraud when reviewing claims, requiring mandatory arbitration of no-fault disputes, making burden of proof requirements in no-fault disputes more equitable and developing no-fault treatment guidelines similar to workers’ compensation. These common-sense reforms will bring savings to consumers, protect insurance industry jobs and put lawbreakers behind bars.

Q: Why hasn’t no-fault reform been passed already? What are its chances in 2013?
The Senate has already shown its commitment to no-fault reform, but in order to enact serious reforms, we need a partner in the Assembly. Gov. Cuomo has an excellent track record when it comes to bringing stakeholders together and getting things done in Albany. I think that if the governor makes no-fault reform one of his top priorities, it stands a very good chance of happening in 2013.

Q: Is there anything else the state should be doing in terms of tort reform? What legislation is on the table?
Section 240/241 of the labor law continues to be a problem and is a primary reason that the cost of doing business is so high in New York State. Sections 240/241 of the labor law hold contractors and building owners to an absolute standard of liability when a worker is injured on the job. As a result of this open-ended liability, we have seen skyrocketing general liability rates and reductions in available coverage. I am a co-sponsor of legislation that would apply a comparative negligence standard of liability for claims under sections 240/241 as opposed to the current absolute standard. This would ensure that those workers whose negligence directly contributed to their injuries are held liable for their actions. As a result, we should see a reduction in general liability rates for contractors and subcontractors.

Chair, New York State Senate Health Committee

Q: Is there a need for tort reform in the medical field?
In general I’ve taken the side of the practicing professionals in regard to tort reform. The overarching question and policy to be followed right now is the sufficiency of money into the system, both in terms of hospitals and in terms of medical professionals, both doctors and nurses who have been getting sued. There’s a real question—and this has nothing to do at the moment with Obamacare; that’s an extra layer that comes later. This has to do with changes in reimbursement, changes in practice, and reaction to and payment for storm-related damages. There’s just an enormous amount of questions related to sufficiency of cash. Once you start examining that, you realize that many hospitals, many doctors, are probably economizing as much as possible, but that’s taking money out of the system because they don’t have it. And in fact when it comes to malpractice, there were reports that at least two hospitals are not self-insuring; they haven’t bought policies. They are going bareback when it comes to medical malpractice. And I’m told there are probably more than the two that were reported in the paper. The bigger question is, Is there adequate financial resources for the health care system? I’d just leave it at that.

Q: Are there any areas where something needs to be done?
There is one specific policy area that needs to be addressed in malpractice, and that is the excess medical malpractice program of the state, as to whether or not there is enough money in the budget for it, whether or not the rules as to who can join are clear, and what’s been happening to the program, now that hospitals are absorbing, either by buying practices or simply hiring doctors directly, more and more doctors to be on the hospital staff. Excess medical malpractice basically provides a layer of insurance to doctors in this state, to the tune of $1.3 million, and then they have to pay around that.

Q: Some proponents of tort reform say it’s not just a matter of cost but that doctors are afraid of litigation and it’s affecting how they treat patients.
I don’t know that there is so much a risk in cautiousness as there is the fact that there’s probably testing and X-rays to the maximum, and the question is whether all of those are desirable. There was the initiative with neurologically impaired infants, and the setting up of the fund that was part and parcel of the 2011 budget, and there will be the need to see how well that works or does not work. Part of the debate that occurred when those proposals were being discussed in 2011—there was a study that was brought to the forefront, a study concerning safety protocols in regard to obstetrics at Columbia Presbyterian, and whether or not there had been an improvement in the errors that had occurred. There was a substantial push by the trial lawyers that this should be expanded. The counterpoint to that was not that it was wrong but questions as to whether that system could be scaled up very easily. Focusing on quality steps, quality measures, I think, would be a very productive thing to do.

Chair, New York State Assembly Health Committee

Q: Does New York need tort reform in the medical field?
New York’s liability laws are a key part of our justice system and reflect traditional American values. The least powerful New Yorker can go to court and get justice regardless of the power or position of the person or entity that may have injured you. Our system has evolved over a thousand years, and there are marginal improvements that could be made on both the plaintiff and defendant sides. There may be changes in the insurance industry and rate setting that could help hold down premiums.

Q: Some have called for specialized health courts as a way to improve the health-care system.
I chair the Assembly Health Committee. While medical malpractice issues affect health care, they mainly involve the expertise of the Assembly’s Judiciary, Insurance and Codes committees. Some think that medical care is so complicated that ordinary judges cannot properly handle medical malpractice cases. But we expect our judges to master all sorts of arcane topics, and they do that pretty well. A specialized court might speed up cases, which would be good. However, I think people who advocate for special malpractice courts hope that specialized judges would be more sympathetic to health-care providers and less prone to being impressed by plaintiff claims. I don’t know whether that would happen; maybe the opposite would happen. Either way I don’t think it’s a good idea.

Q: Another proposal is to cap noneconomic damages in medical malpractice cases. Is that a good idea?
I strongly oppose capping “noneconomic” damages. It’s an arbitrary and unjustified policy. Until someone can figure out a way to cap the pain and suffering that injured victims suffer, it would be wrong to limit how much victims can be compensated for what they suffer. I don’t see any likelihood of such a proposal going anywhere in Albany.

Q: What would you advocate for in the medical malpractice area?
We need to reduce bad outcomes. Reducing hospital-acquired infections, improving communication and integration among the disparate providers who treat a patient, putting more resources into primary and preventive care and care coordination, and other measures—all will help improve outcomes and control costs, including malpractice costs. Programs that encourage health-care professionals to communicate more with their patients, including acknowledging errors and bad outcomes, can reduce the number of injured patients who sue their health-care providers. In 2011 we set up a hospital-funded program to finance the payments malpractice claims against hospitals for neurologically impaired newborns. It did not change the tort system, yet it is a more affordable way for hospitals to pay these costs. We ought to look into whether this model can be expanded.

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