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Dubious Deal

January 31, 1988

A study group of doctors called the Medical Liability Project has proposed some alternativesto the present chaos and confusion surrounding malpractice, offering innovative ideas that could help to stimulate national reform.

The study may have no immediate applicability in California because of the Medical Injury Com-pensation Reform Act of 1975 (MICRA) that has limited some of the high costs associated with malpractice litigation. But the deal that was struck in September between California's doctors, trial lawyers and insurers raises some profound questions about whether the public interest is being adequately protected. That in turn may encourage a broader reform in California as well as in other states.

The national Medical Liability Project is sponsored by the American Medical Assn., 31 national medical-specialty societies and the Council of Medical Specialty Societies. So it may not be surprising that they propose an administrative alternative to the courtroom and jury for the adjudication of malpractice actions. States would establish independent boards and examiners to handle malpractice investigations and damage assessments. The boards would include some physicians, though the majority would be public members.

Sponsors of the reform proposal argue that many more victims of malpractice would receive compensation and that procedures would be quick and relatively cheap, at no expense to persons bringing claims. It would eliminate the multimillion-dollar judgments that juries have given in some celebrated cases. Non-economic damages, including punitive damages and damages for pain and suffering, would be capped at levels related to average earn-ings within each state.

A particular strength of the proposal is its provi-sion for stricter medical-quality review and firmer discipline of doctors straying from appropriate standards. There is no reason to delay some of those improvements, regardless of the fate of mal-practice reform.

The California Medical Assn., is supporting tests of the proposal in some other states, but regards the plan as "inappropriate" in California because of MICRA. One can at least say that MICRA has kept malpractice-insurance fees in California lower than in crisis states. Gynecologists in California, for example, pay half as much as do those in New York and Florida. The limits on pain-and-suffering awards and lawyers' fees in MICRA have helped in the effort to redress the fact that much, perhaps most, of malpractice insurance money goes to lawyers, court costs and overhead rather than to the victims of malpractice.

But California's doctors and those who write insurance, in the deal that they struck last September with the trial lawyers in Sacramento, fattened lawyers' share of contingency fees at the expense of malpractice victims.

There were four elements of that deal, contrived behind the scenes in the Legislature as the adjournment confusion prevailed. The package appears to be an ugly example of the willingness of special interests to trade the public interest for their own profit. In this case (1) doctors gained a new defense against malpractice actions through tougher requirements for proving a base for punitive damages, (2) trial lawyers won access to millions of dollars in added fees by changes in the sliding scale of contingency fees, (3) manufacturers won immunity from product-liability suits in cases involving common products, including cigarettes, and (4) insurance companies won new flexibility in requirements that they provide attorneys for insured persons in certain disputed claims.

Time will tell whether the integrity of MICRA was affected by these concessions to the trial lawyers. The doctors saw it as a small price to pay for a five-year agreement to bar all other assaults on the malpractice law. But their willingness to help protect cigarette makers from liability actions was troubling.

In the long run MICRA may prove to be a more effective model for other states than the administrative board proposed by the Medical Liability Project. No one will easily forgo the protections of a courtroom and trial by jury, however skewed some damage awards may have been. But the binding-arbitration agreements used by Kaiser Permanente, the largest health-care provider in California, have shown that there are effective and fair alternatives to the crowded courtrooms.

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