The book follows research O’Connell and his colleagues completed for a 2006 report for the U.S. Department of Health and Human Services (HHS) titled “Medical Litigation Reform.” They analyzed cases that occurred between 1988 and 2002 and found that the early offer system reduced claim costs by an average of over $100,000 per claim and over $600,000 per claim for severe injuries. It should be noted that their early research reflects awards from both medical mal-practice and product liability cases in Texas and includes a time period when that state had no caps on noneconomic damages prior to the 2003 statute change.

Under an early offer plan, insurers would promptly pay injured patients for their out-of-pocket medical expenses and lost wages. The initial analysis of court settlements in Texas and Florida showed the system to have strong advantages, with savings coming from eliminating noneconomic damages and reducing legal fees, court costs, and lawyers’ fees. Since liability and the value of pain are difficult to determine, litigation is subject to long delays and thus results in higher legal costs.

For an early offer plan to work, a defendant must agree to pay a claimant’s medical expenses and lost wages plus 10 percent for attorneys’ fees, and the claimant must agree to forgo the pursuit of a tort claim. Some defendants fear that an early offer to settle will be seen as a signal of weakness and will encourage claimants and their lawyers to reject the early offer and try for an even larger set-tlement. Some claimants and their lawyers fear that to settle only for economic loss would be an admission of a weak case.

As early as 1985, former Representative Richard Gephardt (D-MO) introduced the Medical Offer and Recovery Act to “enhance patients’ rights while curbing the system’s excesses.” His bill provided for compensation called an “early offer” (also called “rapid recovery” or “make a first best offer”). If the offer was accepted, the option of going to court and seeking compensation for pain and suffering was foreclosed.

In September 2004, HHS Secretary Tommy Thompson conducted a pilot program of early offers for claims by patients who were treated by employees of federally funded community health centers and Indian Health Service programs. Par-ticipation on the part of the patient was voluntary. Claims were settled within 90 days after HHS was notified of the claim. An independent third party received requested amounts from patients and settlement amounts from HHS and negotiated between the parties.

In 2006, Senators Clinton (D-NY) and Obama (D-IL) sponsored S.1784 to facilitate early compensation and to estab-lish six national patient safety initiatives. Also in 2006, Senators Enzi (R-WY) and Baucus (D-MT) introduced S.1337, a bill that would have funded state demonstrations for alternatives to the current medical tort system—including disclosure, early compensation, and special health care courts. Neither bill was passed.

Where legislation to cap noneconomic damages fails to pass, fails to get introduced, or is barred by a state’s constitu-tion, proponents of medical liability reform will probably attempt alternative solutions such as health courts and early offers.

Federal Issues
S.2499, the Medicare, Medicaid, and SCHIP Extension Act of 2007, created new mandatory reporting requirements for insurers, including medical liability companies. The bill’s goal is to search out new ways for Medicare to be reimbursed by secondary payers. Regulations pursuant to the act are being circulated by the Centers for Medicare and Medicaid Ser-vices (CMS). The Physician Insurers Association of America (PIAA) is supporting us by working with CMS to reduce the burden of the new reporting requirements.

H.R.1343, an Energy and Commerce Committee bill to reauthorize Medicare and Medicaid, passed the House in June. Its companion bill, S.901 (Kennedy, D-MA), passed the Senate in July.

H.R.5840 (Kanjorski, D-PA) proposed the Insurance Information Act of 2008. This bill would create a new office within the U.S. Treasury Department to collect and analyze insurance information for Congress and the administration. Some state insurance regulators have expressed reservations about the bill because it would have less consumer protection oversight than state regulations now have. The issue will be taken up in 2009.

State Issues
It might appear that there were few medical liability bills to follow at the state level and that 2008 was a rather uneventful year.

The truth is that your Government Relations Department rigorously monitors hundreds of bills that are not specifically about caps but are liability-related and might, therefore, interfere with the practice of good medicine. Topics we follow in-clude the impact of the CMS “never events,” maintenance of patient records, new reporting requirements for doctors or for claims managers, mandatory screening for hospital infections, the corporate practice of medicine, “captain of the ship” issues, enhanced damages for wrongful death, higher liability exposure in university-sponsored hospitals, venue reform, curtailing arbitration, parental notification, long-term care facilities, elder abuse, state regulatory boards, patients’ rights, and licensing issues.

Outside the legislative arena, we vigilantly monitor and participate in amicus briefs in court challenges at the appellate and supreme court levels.

We will report a roundup of political, legislative, and legal issues in selective states and at the federal level in the first quarter of 2009. Our report in the next issue of The Doctor’s Advocate will discuss how the outcome of the elections may affect tort reform efforts.