Legislature(2005 - 2006)BUTROVICH 205
03/08/2005 08:30 AM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing – Select Committee on Legislative Ethics | |
| SB67 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | SB 67 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 67-CLAIMS AGAINST HEALTH CARE PROVIDERS
9:17:48 AM
MR. BRIAN HOVE, staff to Senator Seekins, presented SB 67, which
amends AS 09.55 by adding a new section. The section places a
$250,000 limit on non-economic damage awards for healthcare
providers who render services. SB 67 intends to alleviate a
growing crisis in Alaska's healthcare industry. Medical
malpractice insurance companies find Alaska uneconomic and have
left the market. This has created higher rates across the board.
Every Alaskan needing medical care pays added costs. There is
also a critical shortage of physicians in Alaska. Over half of
Alaska's physicians exceed the age of 50. It is difficult to
recruit doctors when other states have capped non-economic
damages at or near $250,000.
Bottom line, Alaska is viewed as an undesirable place for
medical insurance carriers to do business. As a result, fewer
physicians open clinics here. Other states have effectively
placed an upper limit on non-economic damage awards, thereby
providing a stable, predictable, insurable climate. SB 67 does
not alter awards for quantifiable damages, such as lost wages
and medical expenses, and does not affect awards for gross
negligence or reckless behavior.
9:21:19 AM
SENATOR FRENCH stated that current law differentiates between
pain and suffering losses for some injuries that are inflicted
through negligence and there is a differentiation for severe
physical impairment. He asked Mr. Hove if SB 67 differentiates
in the same manner.
MR. HOVE believed SB 67 did not differentiate.
SENATOR FRENCH asked Mr. Hove why the decision was made to not
address the differentiation.
MR. HOVE stated the intent of SB 67 was to make the insurance
market more attractive.
9:22:49 AM
SENATOR FRENCH asked Mr. Hove the number of states that have a
$250,000 cap.
MR. HOVE answered 10.
SENATOR FRENCH pointed to page 3, lines 11-14, which lists
instances that qualify for compensation for non-economic losses.
He asked if those would still be recoverable under SB 67 but be
limited to $250,000.
9:24:27 AM
MR. HOVE agreed.
SENATOR FRENCH stated under SB 67 one can sue for loss of
enjoyment of life (page 3, line 13) but one cannot sue for
hedonic damages. He asked Mr. Hove to explain the difference.
MR. HOVE deferred the question.
9:25:36 AM
SENATOR GUESS asked Mr. Hove how the sponsor decided on
$250,000.
MR. HOVE replied the current limit is $400,000. The intent is to
provide relief and encourage competition in the marketplace.
SENATOR GUESS asked Mr. Hove which states have lower
doctor/patient ratios than Alaska.
MR. HOVE did not know.
9:30:18 AM
CHAIR SEEKINS provided a list of states that have a cap of
$250,000 to committee members. They include California, Kansas,
Montana, Ohio, Texas, and West Virginia. SB 67 is not suggesting
to short fund proper medical care.
9:32:44 AM
DR. ROLAND GOWER, surgeon, a member of the board of directors of
Alaska Physicians and Surgeons and chief of staff at Alaska
Regional Hospital, testified in support of SB 67. He expressed
concern with the lack of medical access and stated it affects
all Alaskans. Lack of malpractice insurance will cause a crisis.
Alaska has two insurance companies that offer liability
insurance. They are both physician run boards out of California
and they are not-for-profit companies. During a fee crisis in
the late 1980s, premiums rose to $100,000.
DR. GOWER commented his premium is currently up 12 percent over
last year and has doubled since 2001. One company has limited
the type and extent of the policies it is writing for some
practitioners. In the past, costs were passed on to the patient
but today the preferred provider contracts limit the ability to
raise physicians' rates. In Florida, neurosurgeons, cardiac
surgeons and OBGYN surgeons are paying over $200,000 a year for
liability insurance. The trend in Alaska is toward higher
premiums.
9:38:43 AM
DR. GOWER remarked half of the medical doctors in Alaska are
over 50 and towards the end of their careers. Many would retire
tomorrow if insurance availability ceased. Recruiting new
doctors is difficult because of this issue. California brought
stability by putting a cap on non-economic damages.
9:41:37 AM
DR. GOWER remarked he does not see society looking at other
solutions such as mandatory arbitration, a review board to look
at suits, limiting attorney fees, and/or mal-occurrence
insurance where patients buy insurance. SB 67 will provide
predictability and stability to the insurance companies that
practice in Alaska.
9:43:49 AM
CHAIR SEEKINS asked Dr. Gower to comment on whether Alaska needs
better doctors.
DR. GOWER declared he is impressed with the current level of
medical care that Alaskans have access to.
9:45:17 AM
SENATOR HUGGINS asked Dr. Gower if there is a policing mechanism
within the industry to police questionable practitioners.
DR. GOWER explained the multi-tiered process of achieving
credentials.
9:49:20 AM
SENATOR HUGGINS asked whether the Alaska State Medical Board did
the oversight.
DR. GOWER explained a physician needs a state license to
practice but hospital privileges are not automatic.
SENATOR HUGGINS asked Dr. Gower whether the rise in rates is
based on the effectiveness of the doctor or on a pool.
DR. GOWER answered it is based on pooled risks. Specialists are
in a higher risk category than non-specialists.
9:51:47 AM
SENATOR HUGGINS asked if the trend is toward out of court
settlements.
DR. GOWER affirmed that settling malpractice claims out-of-court
is the best way to save on additional attorney fees.
9:54:13 AM
SENATOR GUESS asked Dr. Gower if the legislature should look at
the process of removing a physician from practice.
DR. GOWER stated he has never served on the state medical
licensing board but has served on the credential committee of
both hospitals in Anchorage. There is a fine line in attempting
to remove a physician who is practicing bad medicine. It is
almost always implied that competition is the main factor for
removing a physician. The bylaws are set up so that multiple
hearings and multiple reviews must occur before taking a
physician's hospital privileges away. He stated the process
works.
9:58:18 AM
SENATOR GUESS asked Dr. Gower to comment on why the public
doesn't want to consider any other solutions.
DR. GOWER said he did not mean to imply the public wouldn't want
to look to other solutions. He stated the issues are complex and
the majority of the public does not comprehend the various ways
the problem can be solved. Solutions are out there but they are
not in the hands of the physicians or the public. Solutions are
in the hands of partisan legislation and various interest
groups. He said 40 percent of insurance premiums end up going to
the attorneys.
10:01:39 AM
SENATOR GUESS clarified Dr. Gower meant 40 percent of premiums,
not payouts.
DR. GOWER agreed.
SENATOR GUESS asked Dr. Gower to comment on the percentage of
his premiums to the overall increase of his other costs.
DR. GOWER commented in 1988, his premium costs were close to 18
percent of his total revenue. Reimbursement of medicine
nationwide is down significantly.
SENATOR GUESS asked if he was seeing his other costs increase at
the same rate.
DR. GOWER answered yes.
10:03:41 AM
CHAIR SEEKINS commented that Florida has a $500,000 cap that can
be increased to $1 million under certain circumstances. He said
some members of the Judiciary Committee are looking to address
the huge amount of litigation costs of medical malpractice
claims. He asked Dr. Gower if he or any of his colleagues
considered an arbitration step and speedier resolution where
more money goes to the person injured.
DR. GOWER answered it has been talked about but no one thinks it
will ever happen. He stated it makes sense to have a review
process before a lawsuit is filed. It only takes $75. Once the
lawsuit is filed it costs money and time. One can file a lawsuit
without consulting a medical expert to see if the case is valid.
He said malpractice cases are a lot like divorce cases where the
attorneys make more money the longer the issue stays unresolved.
10:08:41 AM
CHAIR SEEKINS pointed out the committee received a document
yesterday from the Alaska Action Trust.
10:09:01 AM
MR. PAUL DILLON, attorney, Dillon & Findley, testified in
opposition to SB 67. He primarily represents insurance companies
and also physicians. SB 67 attempts to create a market conducive
th
to insurers. He referenced the 66 annual report from the
Division of Insurance (DOI), and compared it with past reports.
The DOI produced a report on the annual effects of medical
malpractice legislation. He said his testimony would be balanced
on various journals and press releases.
10:11:53 AM
MR. DILLON said SB 67 is based on the premise of a crisis in
Alaska. The circumstances of the crisis are not born from bad
medical care. Alaska has a tiny insurance market. NORCAL Mutual
Insurance Company and Medical Indemnity Corporation of Alaska
(MICA) control 80 percent of the insurance market. Everyone else
is small time. Within the insurance market, a series of tort
reform efforts began in the '70s. The last one in 1997
culminated in a $400,000 cap. Under AS 09.55.530, a panel of
physicians was set up to review malpractice claims. The panel is
designed to review medical malpractice claims prior to a court
process. The purpose of the panel is to review and analyze cases
quickly and to avoid unnecessary lawsuits. The panel is
routinely waived by the defense. The insurance defense bar does
not use the panel. He does not know why.
10:15:57 AM
SENATOR HUGGINS asked Mr. Dillon to describe the function of the
panel and the authority level.
MR. DILLON recalled its function is to review the issue of
medical negligence and causation of damages and to render a
report based on the two issues. It is designed to be a tool to
weed out the frivolous cases and to provide a level of
protection to the medical field by preventing unnecessary cases
going to court.
SENATOR HUGGINS thought if the panel ruled the lawsuit is
unnecessary, it would stop the process.
MR. DILLON replied it was ultimately the plaintiff's call.
10:17:30 AM
SENATOR HUGGINS remarked the panel seemed to have no authority.
MR. DILLON offered the panel carries great weight due to the
evidentiary value. A medical malpractice case is one of the most
expensive cases a plaintiff's lawyer has. They are expensive and
time consuming. In his office the malpractice lawyers screen
hundreds of cases each year and take less than 10 percent of
them on. Cases are screened based on doctor's reviews. The case
has to have the support of the medical profession behind it.
10:19:14 AM
MR. DILLON declared the availability of insurance and the costs
of premiums are presently acceptable. Data from the DOI shows
medical premiums have declined over the last 13 years. He
alleged the DOI is not aware of any crisis in the insurance
industry.
CHAIR SEEKINS asked Mr. Dillon if he is familiar with the nature
of the insurance companies he referred to.
MR. DILLON alluded Dr. Gower described them correctly.
CHAIR SEEKINS clarified they were described as mutual companies.
He commented if they had increased losses they would pass that
on to their members.
MR. DILLON agreed.
CHAIR SEEKINS asserted a crisis might be indicated in increased
premiums.
MR. DILLON agreed but said there haven't been any.
CHAIR SEEKINS commented Dr. Gower testified his premiums have
increased 12 percent.
MR. DILLON stated anyone could play with numbers to get the
results they want.
10:23:33 AM
CHAIR SEEKINS said everyone has a different definition of the
word "crisis."
MR. DILLON disagreed and maintained there is no crisis in the
insurance industry. Medical schools are predicting huge national
shortfalls of physicians by 2020.
CHAIR SEEKINS agreed, but stated that physicians who are high in
demand can choose to practice in states where the liability is
less.
MR. DILLON said Alaska's insurance issues are no different than
any place in the Lower 48.
10:25:51 AM
CHAIR SEEKINS referred to the Alaska Action Trust information
and said deterring malpractice is the best way to bring down
costs and protect families.
MR. DILLON agreed deterring malpractice lawsuits is in the best
interest of everyone.
CHAIR SEEKINS indicated there was more room for improvement in
terms of rising costs of insurance.
10:27:15 AM
MR. DILLON disagreed. He stated the rise in insurance premiums
is an internal situation with the doctors.
10:28:58 AM
CHAIR SEEKINS said everyone benefits if meritorious cases are
settled in the proper manner.
10:30:22 AM
CHAIR SEEKINS announced SB 67 would carry over to the next
committee meeting.
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