SB 319-CLAIMS AGAINST HEALTH CARE PROVIDERS  CHAIR CON BUNDE called the Senate Labor and Commerce Standing Committee meeting to order at 1:32 p.m. Present were Senators Gary Stevens, Bettye Davis, Ralph Seekins, Hollis French and Chair Con Bunde. The first order of business to come before the committee was SB 319. MR. DON ROBERTS, Kodiak resident, said that SB 319 should not have seen the light of day. He proclaimed that the Alaska state constitution says all government originates with the people and is founded upon their will, only, and is instituted solely for the good of the people as a whole. "I assure you that neither the Providence Health Systems nor the State Medical Association speak for me or the people as a whole." He was concerned that SB 319 deprived people of due process. MS. MEG SIMONIAN, Anchorage attorney, said she wanted to discuss section 4 of SB 319 that amends AS 09.55.556. Subsection (c) overrules two Supreme Court cases that set out reasonable patient standards, which say basically that a doctor has to explain everything to a patient that will allow them to make an informed decision regarding treatment and procedures. This bill would restrict that information to what the medical experts who testified in the cases decided a reasonable patient should know. The American Medical Association's code of ethics, section 808 adopts the reasonable person standard, not the standard that is included in this bill. You would be removing Alaska from a majority of states that have set standards that the American Medical Association says are appropriate in these cases and putting it back many years.... MR. MIKE HOGAN, Executive Director, Alaska Physicians and Surgeons, supported SB 319. Three out of four doctors actually admit that this liability crisis has changed the way they practice medicine. HHS estimates it adds between 5 to 9 percent to the overall healthcare costs in this country. The question, do non-economic damage caps really help with patient access to physicians, is addressed in the legislation. An HHS study found that states with non-economic damage caps had a 12 percent increase in the number of physicians per capita versus states without the caps. Premiums in states with caps are found to be 17 percent lower than in states without caps. California adopted non-economic damage caps and from 1975 to 2001 its premium rates increased by 182 percent. Nationally, in that same time period, rates went up 569 percent. The few remaining insurance companies have been told that during that same time period rates for physicians have gone up 1,593 percent. Testimony has indicated that Alaska's supply of physicians is already at risk and any increase in premium costs could be devastating to medical care in Alaska. MS. CINDY LENTINE, Anchorage resident, said she used to be a beautiful vibrant woman, but now she has no hair, no breasts, her face is round from steroids and her body is tattooed from radiation treatments. She will probably not live long enough to see her grandchildren. It is all because of negligence on the part of my physician. Let me tell you why this bill is so dangerous. By catering to the insurance companies and the doctors, you're going to only encourage a substandard level of professional [indisc.] Alaska. Convincing evidence from other states shows that lowering non- economic caps did not lower the insurance premiums for doctors. Legitimate malpractice cases would not be brought forward because winning will leave the patient clients worse off than losing. It renders medical malpractice cases almost impossible to economically pursue. This is a scary piece of legislation, because it allows insurance companies to dictate jury awards. Yes, something has to be done about medical malpractice insurance high rates for doctors, but something also has to be in place for the victims. This bill is not a vehicle to address these issues.... MS. BRENDA ARNEY, Wasilla resident, related how in the summer of 2003 her husband, Bob, was diagnosed with a tumor on his lung. He had surgery in Anchorage and his chances for recovery were quite good. Pathologist reports showed there was no threat of cancer and his doctor told him he could start exercising the next day on a stationery bicycle. One night staff turned down his monitors and left for a coffee break and during that time Bob, while on heavy pain medication, disconnected his tubes and catheter and walked out of the hospital making it to a trailer two blocks away before he needed help. Three days later he died. His death was caused by negligence of the hospital and healthcare providers. The hospital said they were sorry and that they would make changes in some policies and they said they would erase some of the hospital bills, but they did not bring Bob back. I would like a jury to know these facts and judge my loss, not the Legislature, not the hospital and his doctors and not an insurance company. Because Bob was retired, his economic damage loss in a medical malpractice lawsuit would be quite small. My pain and suffering since my loss of Bob really cannot be valued by anyone but myself. Bob's agony before his death was horrendous. I trust the judgment of a jury of my and Bob's peers more than the Legislature, the insurance companies and doctors valuing his life at $250,000. Bob was my best friend, my soul mate and he was priceless to me.... MS. DENISE MORRIS, President and CEO, Alaska Native Justice Center, said she is concerned that SB 319 would apply in federal tort claims act cases as well as state medical malpractice cases. It will apply in cases involving federal healthcare providers. The IHS facility medical providers do not have medical malpractice insurance per se and are covered under the federal tort claims act. This means that a private attorney representing a plaintiff is rendering a defense against U.S. attorneys. If this passes, healthcare providers in the United States will essentially be immune from cases where malpractice seriously harmed the retired or elderly Alaskans living in a rural or subsistence lifestyle, mothers who do not work outside the home and children who do not have any earned income. If someone from one of these groups is seriously injured by malpractice, their damages will primarily be non-economic. If non- economic damages are capped at $250,000, no one will be able to afford to bring these cases and, therefore, they will not be heard and no remedy will be available to these individuals that are injured. Many citizens do not realize how difficult and expensive it is currently to bring a malpractice claim against a healthcare provider for negligence or recklessness that causes harm. Many citizens do not realize that we in Alaska already have non-economic damages, which were capped by the Legislature in 1997. In order for an Alaskan to bring a malpractice claim against a healthcare professional, he or she must find a medical expert working the same field as the healthcare provider to prove that the standard of care was breached. Sometimes cases require several experts. It is practically impossible to find healthcare providers in Alaska who are willing to do medical malpractice cases. Therefore, experts are almost always hired from outside the State of Alaska and are extremely expensive. As you can imagine, it costs tens of thousands of dollars in costs, alone, to investigate and pursue a case of malpractice. It can take in excess of $200,000 to actually go to the final [indisc.]. Secondly, these cases rarely settle before there is a tremendous amount of time, effort, work and expense that is incurred. I am really concerned that if SB 319 is passed, it will have a tremendously adverse effect on Alaska Natives who live a rural subsistence lifestyle, for fishermen in the Bristol Bay region... in the type of industry where a lot of accidents do occur. MR. WILLIAM COOK said he is an attorney in Eagle River who has had several professional malpractice cases, but has not had a great deal of medical negligence experience. He related how young people in his congregation volunteer their time teaching children and they are totally innocent of what is going on. It would also adversely affect retirees, young stay-at-home mothers, home-schoolers and Natives. MR. LES SYREN, Vice Chair, District 31, Republican Party, said he has a lot of healthcare providers in his family. He is also a plaintiff's attorney, but as a Republican, he has several problems with this bill. First, it seems like we're institutionalizing prejudgment of a case.... The other thing that offends me as a Republican is this idea of personal responsibility.... If we're giving special treatment to this one group of people, not for any reason other than they won't be able to get insurance supposedly or their assets might be at risk, something like that, that's not right. That just offends my sense of personal responsibility.... He related several cases involving malpractice - one in which a sponge was left in a woman's stomach and another in which a woman had a fibroid removed from her uterus that unbeknownst to her or her doctor had a viable fetus in it. "Let's not put the burden on the innocent victims." MR. PAUL DILLON, Dillon & Findley, had three areas of concern regarding the effects of this bill on individuals across the state. I'm not going to discuss that. It's obvious that this has profound effects on Alaskans in a very real sense.... I'm going to cover whether or not the removal of Continental and Northwest create a market crisis for doctors, which has been alleged here. I'm going to talk and address briefly a question of premium crisis in the context of is there a premium crisis and, thirdly... I'm going to address whether or not there's any fixes out there that this committee or this Legislature should consider as alternatives to the saddling of Alaskans with the effect of a cap on damages. CHAIR BUNDE asked him to limit his testimony to five minutes. MR. DILLON replied: Whatever you want, sir.... I have handed out... a list of all of the various malpractice that has occurred in this state from 1990 forward as defined by the Alaska Medical Board. This is a reporting that is required for purposes of settlement or judgment.... In a nutshell it defines medical malpractice to a large degree in this state. We, therefore, know who the victims of medical malpractice are and who the practitioners are in the context of what is going on in the real life situation of hospital medical care. The one party that is not present is the insurance companies, themselves. I have also provided you with th certain pages and excerpts from the 65 annual report... I'd like to go over those with you briefly.... He showed the committee that Norcal has 33.43 percent of the market and Medical Insurance Exchange of California (MIEC) has 34.92 percent and the relative size of the companies. Between the two of them, they control 70 percent of the market. Northwest decided to pull out of the Alaska market after asking for a 100 percent increase in their premiums, which was declined by the Division of Insurance. He didn't know how many doctors were affected by this, but he knows they then tried to get insurance through MIEC or Norcal. If they didn't get insurance through them, they had the option of going to a surplus line, which is typically used by individuals who are unable to get insurance through the normal market. A third way doctors can seek insurance is the direct approach. They can call an insurance company directly whether the company is in the state or not, but this doesn't happen often. As of 2002, 70 percent of the market was controlled by the providers that are still here. He didn't know what percentage of physicians and surgeons were affected by the removal of Northwest and Norcal. He submitted to the committee that there is not a crisis for doctors to get malpractice insurance. In 1978, the State of Alaska created an insurance company of its own. Through the next 10 years it was tremendously successful and kept premiums down for physicians and, because of its well- run and effective liability section, it held claims and payouts down. "So, we already have in the context of experience, a successful way to resolve our problems." MR. DILLON said that a number of his family members are doctors. The last time doctors faced a premium problem where they felt they were paying too much, they came to the Legislature, who adopted a process that protected them, but also protected the rest of Alaska. [END OF TAPE] TAPE 04-22, SIDE B  2:20 p.m. MR. DILLON said the purpose of insurance is to cover ourselves in the event of a mistake. There has never been an attempt to shift the burden of a mistake from doctors to victims. That's what this cap is doing, especially in light of the fact that you already have a cap. Why are we doing this? We have a cap that exists in the context of what we are dealing with every day in the courts as it stands right now. CHAIR BUNDE asked him to summarize. MR. DILLON responded that would be hard, but rather than summarize he went to the question of the review process for premium rates. The Division of Insurance reviews the premiums that are charged to physicians and judges them on three standards - that the rate is not excessive, that it is not inadequate (too low) and that it doesn't unfairly discriminate. This means that the premium rates for all companies are going to be between a range. The more effective and efficient companies are going to be on the lower end and be able to lower premiums somewhat. The less efficient are going to have to charge higher premiums, but generally, all companies are within a marketable range. So, you have watchdogs in place. Just as Northwest came in and sought a massive increase in their premium base, which was denied, I submit to you that present- day premiums, while high, and for all I know sitting here - and I don't know - let me be very clear about that - whether that constitutes such a percentage of the doctors' cost as to make it an overwhelming burden such that it's going to drive them from the state. I submit, I don't think so, personally.... That cost factor is certainly less than 5 percent on a national average, but I don't think that premium cost is going to drive doctors from the state, especially when we're not HMOs. These guys can make as much money as they're willing to go for in the context of what they do. SENATOR HOLLIS FRENCH said a report about physicians practicing in Alaska showed a trend over the past 17 years with respect to our population. The number has gone up pretty steadily over that time. He thought the appropriate year to look at would be 1997 when tort reform went into effect. Up until that time the number was increasing, but after that time the number increased, as well. Another plaintiff's attorney pointed out to him that this bill would put victims of car crashes in far better standing in the eyes of the law than victims of negligence on a doctor's table. The point made was: Why would you handle those two people differently? Why would you allow a person in a car crash to press all their claims in court and cap the rights of person damaged on an operating table. I think it is hard to draw a principle distinction between those two. SENATOR SEEKINS said he was sure the Labor and Commerce Committee had looked as far into the matter as it could within the purposes of the committee. He moved to pass SB 319 from committee with individual recommendations and attached fiscal note. SENATORS HOLLIS FRENCH AND BETTYE DAVIS objected. CHAIR BUNDE asked for a roll call vote. Senators Gary Stevens, Ralph Seekins and Chair Con Bunde voted yea; Senators Bettye Davis and Hollis French voted nay; and SB 319 moved out of committee.