State Government

Doctors Rally in Raleigh for Malpractice Reform

By Steve Tuttle

April 8 was a bad day to be sick in North Carolina because thou-sands of doctors who normally would be seeing patients that day instead were in Raleigh rallying for medical malpractice reform. An estimated 3,000 doctors and other healthcare professionals swarmed around the Legislative Building, buttonholing members of the House and Senate and waving signs that said, to cite one, “Who You Gonna Call When the Doctors Are Gone?”

At issue is the skyrocketing rates for medical malpractice insurance paid by doctors, hospitals and nursing homes. The medical community says that trial lawyers are to blame because they persuade juries to award huge sums to patients for the pain and suffering they received as a result of medical malpractice. Malpractice insurance rates now are so high that hospitals have scaled back some services, most doctors overprescribe tests and some specialists no longer offer high-risk procedures.

As detailed in a January cover story in the North Carolina magazine, hospitals here have experienced increases of 400 to 500 percent in three years in their professional liability insurance premiums. Doctors in key specialties, including those with no past claims history, had insurance premium increases of more than 50 percent last year. Many rural hospitals are losing money and some may be forced to close and some insurers have stopped writing coverage in North Carolina.

“Patients in Alleghany, New Hanover and other counties are already facing access issues because increasing professional liability insurance premiums are forcing their doctors to make hard decisions,” said Dr. Joseph Jenkins, chair of the N.C. Medical Society’s Professional Liability Task Force. “Without reasonable reforms, will they be able to continue to perform high-risk procedures, or even stay in practice!”

The U.S. Department of Health and Human Services has concluded that a leading cause of the national insurance crisis is the recent dramatic increase in jury awards and settlements. The federal agency cited North Carolina and Nevada as states with the most “mega” malpractice awards in recent years.

Responding to the crisis, a bipartisan majority of House members introduced legislation to tackle the professional liability insurance crisis. Lead sponsors of H. 809 Ensure Health Care Access include Reps. David Miner (R-Wake), Edd Nye (D-Bladen), Joe Kiser (R-Lincoln) and Jim Crawford (D-Granville). In all, the legislation has 72 co-sponsors.

NCCBI is a strong supporter of the bill and sent a letter to all 170 legislators urging them to vote for it.

The legislation establishes a $250,000 cap on non-economic damages, allows periodic payments of future damages, places reasonable limits on trial lawyers’ contingency fees and bars the use of nursing-home inspection records in medical malpractice lawsuits. The bill is more far-reaching than similar legislation introduced in the Senate in March.

A coalition of the N.C. Medical Society, N.C. Hospital Association and the N.C. Health Care Facilities Association points out that other states have adopted similar laws and have seen far less dramatic increases in insurance rates.

Professional liability insurance premiums have rises 167 percent in California since it adopted limits on pain and suffering awards in 1976. In that same time they have risen by 505 percent in the rest of the country. Twenty-six states impose some limit on non-economic damage awards or cap total damages in medical malpractice suits.

Limits on Bond Issues: North Carolina has no plan for managing its debt or for prioritizing its long-range capital needs, State Treasurer Richard Moore said in noting that the state’s debt has risen 75 percent over the past five years and debt service has almost doubled.

In a study he issued, Moore said the state’s debt load now stands at $3.29 billion and annual debt service payments at $302.3 million. While those figures remain relatively low compared to other states, their rapid rise means the state should put in place systems for better managing debt, Moore recommended.

Moore said that the state’s current debt load doesn’t include $3.3 billion in bonds approved by voters but not yet sold. Most of that — $2.5 billion — is the remaining portion of the higher education bonds. The figure also doesn’t include road bonds that are paid from dedicated taxes.

Assuming the remaining education bonds are sold as scheduled by 2006, the state’s annual debt payments will rise to $540 million, Moore said.

If the General Fund budget stood at $16 billion by then (compared to $14.3 billion today), debt payments would account for just over 3 percent of state spending, he added.

Sen. David Hoyle (D-Gaston) responded by introducing S. 464 An Act to Create the Debt Affordability Advisory Committee and the Capital Projects Priority Committee, which calls for a target debt-service-to-tax-revenue ratio of 4 percent, with an absolute ceiling of 4.75 percent.

Under this formula and predictions of revenue growth, the state could only take on another $350 million in total debt before reaching the target number. NCCBI voiced its support for the legislation in a note to the state Treasurer.

By passing the legislation, ”we can plan for North Carolina’s future with a long-term perspective,” Moore said, adding: “Implementing a best practices model for state capital planning is not only prudent as we continue the trend of increasing our debt load, but will also send a positive signal to our credit rating agencies that we are always looking for better ways to manage our state.”

Even with all the bonds sold by the state in the past five years, North Carolina’s debt ratios remain below median levels both for all 50 states and for a peer group of eight Triple AAA rated states, Moore said. Expected future debt issuances over the next four years total $3.3 billion, with $2.55 billion or 77 percent issued for higher education purposes. 

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