Nice write up online for the Willamette Week here about how liability insurance rates for Oregon physicians fell. The study from the State of Oregon Department of Consumer and Business Services dispels a major political myth.

While it’s hard to remember, Oregon voters rejected a cap on damages in medical malpractice cases several years ago. The initiative, Measure 35, was sold as necessary due to a crisis. Check out the linked power ponit to see how badly proponents of Measure 35 overstated their position.

Oregon voters saw through the rhetoric and chose the wise course. Today’s study simply confirms the wisdom of that choice.

It should be interesting to see whether this objective information stifles the recurring urge by some to put limits on damages. The absence of any crisis makes it pretty difficult to argue for caps on damages.

David Sugerman

Texans are proud of doing things in a big way.  Unfortunately, big, loud and proud sometimes misses the mark on the wisdom front. It happened again.

In 2003, Texans went big and amended their state constitution to cap damages that can be recovered in medical malpractice claims. The proponents argued long and loud about the parade of horribles, often with little or no supporting documentation. We’ve heard it all before here in Oregon, too: doctors leaving the state, plus defensive medicine are responsible for the high cost of consumers’ health insurance. The Texas tort reformers sold the big and loud constitutional amendment as a means of lowering consumers’ medical costs.

Guess what? It didn’t work. This report explains that consumer health insurance costs have continued to climb in Texas.  Texas consumers gave away their rights and didn’t even get the benefit they were promised.

Much of the rhetoric about medical liability lawsuits is simply noise. The better information is that serious medical errors cause substantial injuries, that frivolous lawsuits are rare enough to be urban myth, and that medical errors can happen in clusters.

Damage caps are filled with vices. They substitute a lobbyist driven one-size-fits-all form of justice for a jury’s determination based upon a review of the facts and evidence on a case-by-case basis. Damage caps often discriminate against the retired, the elderly and the poor.

Those who live in Texas are proud of their state.  I’m not meaning to throw stones. I imagine Texas voters truly believed they were getting something of value when they gave away their rights by amending the Texas Constitution.  The rest of us are better served to take it as a lesson and not go down the same road.

David Sugerman

What starts out as a blah-blah Wall Street Journal editorial supporting Illinois’ damages caps on medical error cases, turns ugly.

Look at what’s underneath, as the editors at the Journal are fairly frank about their goals:

“We’d prefer a ‘loser pays’ rule as in the British system. But without such a deterrent to frivolous suits, limiting damage awards is the only way to stop jackpot judgments that drive doctors away and hurt the quality of medical care.”

It’s a nasty bit of rhetoric for several reasons. First, there’s the urban myth of doctors driven away. There are no names, and there is no data. It’s just the bald “fact” that this happens. But the more unfortunate and intellectually dishonest piece is the “jackpot justice” rhetoric. The Journal editors know that they’re being disingenuous as a number of high-profile studies confirm that the system works fairly well, with one important flaw. Here’s a widely-publicized study from the New England Journal of Medicine on the topic of medical errors and litigation. Here’s another slightly-dated summary from AARP.

Here’s the bottom line from the New England Journal article: “Claims that lack evidence of error are not uncommon, but most are denied compensation. The vast majority of expenditures go toward litigation over errors and payment of them. The overhead costs of malpractice litigation are exorbitant.”

That overhead cost thing at the end is also important. What the Wall Street Journal wants to do is make litigation more expensive by importing from England the loser pays rule. What that means is that lawyers on both sides get paid by the loser.

Under the current system, most patients’ cases are handled on a contingent fee basis. That means that the lawyers get paid if and only if we make a recovery for the injured patient. That system does several things. First, it keeps open the courthouse to meritorious claims, regardless of the wealth of the patient. The patient that wins pays his or her lawyer based on a percentage of the recovery.

Under the contingent fee system, lawyers who represent patients simply can’t afford to take losing cases because when they lose, they don’t get paid.  As well, middle-income patients are able to locate and hire top-flight legal talent because they don’t have to pay by the hour for the lawyer’s work.

But the second thing is that I imagine that loser pays will drive up the costs to both sides. While I don’t have any data, the costs are apt to increase because both sides have an incentive to do more work and stick the loser with the bill.

Underneath, the Wall Street Journal wants us to believe that juries can’t be trusted, and our founders were wrong to set up a jury system. The Wall Street Journal apparently believes that legislatures that pass one-size-fits all rules are better suited than juries to determine case outcomes. [Snark alert:] I’m sure this has nothing to do with the fact that lobbyists roam through the various hearing rooms and halls of various legislatures but are barred from jury rooms.

In the end the editors of the Wall Street Journal sipmly ignore the reality of injured patients. I have to assume that they simply close their eyes because no one should be so jaundiced in the face of profound injury.

David Sugerman

Good explanation in–of all places–Forbes on how caps on damages discriminate against retired and lower-earning individuals. Oregon legislators and voters are often asked to consider capping damages, and for that reason, this is a good read.

As the author explains, caps on damages typically limit non-economic damages.  Non-economic damages have been wrongfully labeled as “compensation for pain and suffering.” In fact, those damages address all forms of harms and losses bound up in the joys and pleasures inherent in life that can’t be measured by a simple paycheck or bill. So if you lose the loving relationship of your mother, that is a non-economic harm and loss. Same deal if you lose your ability to lift your child, taste food, see a sunset, or walk on the beach. Those profoud human joys are at the core of non-economic damages.

Caps often do not limit what are called economic damages, which address an injured person’s out-of-pocket losses. Miss a month of work because you got hit by a drunk driver and that loss of pay is an economic damage. So are the medical bills that you incurred.

So here’s the problem. Those who fare well in the legal system are only those who have large economic losses. If you lost 10 years of earnings from a doctor’s mistake or if you will need lifetime medical care, you will be able to recover full compensation. But if you were retired or under- or unemployed, you won’t. The capped claim system doles out justice based on wealth.  In that respect, it is fundamentally wrong.

David Sugerman

Today, the Oregon Supreme Court ruled that caps on non-economic damages in wrongful death claims do not violate the Oregon constitution. In Hughes v. PeaceHealth, the Court declined to find the caps unconstitutional. Here is the link for the opinion: http://www.publications.ojd.state.or.us/S053447.htm.

Justice Walters’ dissenting opinion features one of the most eloquent descriptions of the jury system that I have ever read. It bears quoting here, as her prose is as brilliant as her analysis:

“The 12 in whom our constitution places its trust are the 12 who hear each word spoken from the stand, and the silences between. They are the 12 whose eyes watch others’ eyes and take their measure. By their absence, legislators cannot fill that role. Legislators may decide the categories of harm the state should address and the categories of persons who may bring claims in courts of law. But only jurors can shake right out from wrong for individual human beings and do them justice. ”

For those keeping score at home, the outcome is a bit hard to fathom. As to general injury cases, the Oregon legislature cannot place caps on the damages recoverable by injured consumers because those caps run afoul of the Oregon constitution. Ironically, if the injured consumer dies from the injuries, the recovery may be capped.

Go figure.

David F. Sugerman

I have to say that Steve Duin’s column in today’s Oregonian (24 January 2008) is a breath of fresh air. Here is the link: www.oregonlive.com/news/oregonian/steve_duin/index.ssf?/base/news/1201137918314500.xml&coll=7&thispage=1

The back story is that the Oregon Supreme Court ruled recently that Oregon Health Sciences cannot cap a child’s damages at $200,000 when OHSU’s negligent treatment causes profound brain damage.

Rather than take responsibility, OHSU started up the scare machine. We were treated to a parade of horribles. OHSU will be forced to limit or cut care, it will be closing clinics, and it will be laying off many people all because of–they claimed–Jordaan Clarke.

Steve Duin’s column debunks the myth. I mean, for crying out loud, can you say, “Aerial tram”? And don’t even get me started on the OHSU waterfront developments. Or how about the recent loss of the biotech research group to Florida? The reality is that OHSU hides from public scrutiny by claiming to be private and hides from market reality by claiming to be public.

The best part of Steve Duin’s article is this quote from Sen. Walker (Eugene): “They’ve finally found a way for people to overlook years of financial mismanagement,” state Sen. Vicki Walker, D-Eugene said, “and it’s Jordaan Michael Clarke. It’s a great PR move, but it’s ridiculous. And it’s a snow job.”

Couldn’t agree with her more.

David F. Sugerman