The AMA, Medical Liability
and HMO Lawsuits
Miguel A. Faria, Jr., MD
With the definite resurgence of the medical liability crisis, a recapitulation of the AMA's campaign for the implementation of tort reform in the last several years is in order to better understand where we have been and where we are headed in our struggle for meaningful and substantive medical liability ("malpractice") tort reform.
In fact, as this special issue of the Medical Sentinel demonstrates, we are facing another serious surge in the medical liability crisis. Premiums for physicians are skyrocketing and medical liability insurers are leaving many states and abandoning their former client physicians, leaving them without coverage.
Obstetricians have been particularly hard hit in this medical liability explosion, but the crisis affects every one of us, from physicians to patients. As reported in the News Capsules and Report From the States sections of this issue, obstetricians are closing their offices and leaving states such as Florida, New Jersey, New York, Nevada, and West Virginia. No, I don't know where they are going. For this and other reasons, there are less and less places to run to!
In Mississippi, four hundred doctors are expected to leave the state. There used to be fourteen insurance companies providing medical liability coverage; now only one company remains in the state. St. Paul Insurance Company, the second largest medical liability insurer in the country, is not only leaving such states as Mississippi and Georgia, but has decided to get out of the medical "malpractice" business altogether.
Obstetricians are not the only ones affected. Dr. José Igoa, a 47-year-old psychiatrist, closed his office door and protested this past spring along with his colleagues in Edinburg, Texas, because of soaring insurance premiums, which last year increased three to four times what it was five years ago. This year, he cannot find a renewal policy at all!
In the July 2002 issue of AAPS News, a sister publication of the Medical Sentinel, Dr. Jane Orient, Executive Director of AAPS, explains the underlying problems:
True insurance is a mechanism of voluntarily sharing risks, with premiums proportional to the probability of a loss or payout. Basically, it enables one to protect financial assets.
As it has evolved, malpractice coverage isn't insurance at all. It isn't voluntary, and physicians must carry limits that may be far in excess of assets that they own - or will ever be able to acquire while paying enormous "premiums..."
More fundamentally, the [medical liability] crisis is a symptom of a profound cultural transformation: the entitlement mentality, the erosion of contract rights, collective guilt and scapegoats supplanting individual responsibility, the expectation of government-defined and guaranteed "equity" and "social (distributional) justice," and the hubris that all outcomes are under human control.
Something Happened on the Way to the Forum
In the early spring of 1995, the House of Representatives passed a bipartisan medical liability bill (tort reform) by a significant margin (247 to 171), despite a strong opposition by the trial lawyers. This legislation was a sweeping tort reform bill that would have gone a long way towards reforming medical "malpractice" and alleviating the adversarial and litigious climate in which physicians have been practicing medicine for the last three decades. It included a $250,000 cap on non-economic damages, limits on "joint and several" liability, and even a provision for "loser pays" rule that would have penalized plaintiffs for filing frivolous lawsuits.
Robert E. McAfee, M.D., then president of the American Medical Association, called it "a giant leap forward"; not surprisingly, the AMA flexed its heretofore flabby abdominal musculature claiming victory for "its decade long advocacy on behalf" of physicians.(1) But, unfortunately, it was a premature muscle flexing exercise.
Something happened on the way to the forum in the high stakes of politics. Less than two months later, the U.S. Senate, led by then-Majority Leader Bob Dole (R-KS) and Sen. Fred Thompson (R-TN), passed a different version of the proposal, which focused solely on product liability reform and had no medical liability relief. The two disparate bills then went to a conference committee, where legislators were to iron out the significant differences. In the process, the entire medical liability reform proposal, despite the AMA's assurance that it would continue "to press the issue," was completely extirpated out of the conference committee legislation.
The issue then became moot when the Clinton White House threatened to respond to the possible compromise with a presidential veto. And so, medical liability reform never saw the light of day, although some product liability did pass.
American Medical News (AMNews) reported that "one particular last ditch effort to pass tort reform" could have been made had the AMA played hardball and consented to attach medical liability reform to the Kassebaum-Kennedy bill, which it was also supporting. Unfortunately, James S. Todd, M.D. (then AMA executive vice-president emeritus, now deceased) explained the AMA had pledged "not to play that card" and would not risk endangering what later became the Trojan horse of deleterious incremental health care reform in the form of the disastrous Kassebaum-Kennedy law.(2) You can say this maneuver was a clear case of throwing the baby out while saving the dirty bath water.
The Kassebaum-Kennedy law that was passed by the U.S. Senate (unanimously) in 1996 with the support of the AMA has been a terrible piece of legislation that has not improved but actually worsened the climate of the American health care system.
It has enforced draconian fraud and abuse provisions harmful to patients and physicians; implemented administrative simplification requirements that threaten medical privacy and patient record confidentiality (i.e., with proposed Unique Patient Identifiers, establishment of databases, and other privacy-eroding provisions); increased health insurance premiums because of proposed guaranteed coverage and renewability requirements; and caused an actual increase in the number of the uninsured for the same misguided reason, namely higher insurance premiums that have priced many individuals and their families out of the insurance market, etc.
Yet, other industries did lobby and obtained legal protection from the litigation juggernaut. Writing in The Wall Street Journal, John Stossel reported: "The single-engine airplane business came back from the dead after the General Aviation Revitalization Act made it harder to sue. Vaccine makers were helped by the Vaccine Injury Compensation Program. Silicon Valley will be helped by the Private Securities Litigation Reform Act, passed in December  by Congress over President Clinton's veto."
He then questions why is it fair to pass piecemeal reforms for powerful industries. "And anyway, the lawyers just move on to the next hot area of litigation."(3) And yes, he was prescient. Lawyers have moved on to expand litigation as far as the eye can see: to tobacco, the gun industry, sexual harassment and domestic violence,(4,5) and now back to one of the most lucrative industries of all, another facet of the health care industry: managed care and HMOs.(6)
In the Oct. 21, 1996 issue of AMNews, the headlines blared, "Doctors win big in Washington --- AMA persistence delivers powerful results." But those items listed in the article attributable to the AMA scorecard are dubious claims of victory at best.(7) The major defeat of medical liability reform, of course, was not listed. The battle-ax issue the AMA swore it would not abandon and would continue to press died a quiet but painful death.
You would think that with the resurgence of medical litigation in the past few years the AMA would be experienced and sensitive to the issue of medical liability and lawsuits. You would think that despite all the shortcomings and failures of managed care and HMOs, the AMA and organized medicine would remain sensitive to the problem of medical litigation and the pain and suffering lawyers and lawsuits have inflicted on medical practitioners for decades.(8) You would think that despite the tragic setback of 1995 and the Pyrrhic victory of 1996, the AMA with full coffers to spend(9) would have faced the trial lawyers then and said, "No more lawsuits!" --- but it has not happened.
The AMA, claiming to represent "organized medicine," has instead said "Yes!" to more lawsuits, thus potentially opening a new venue for trial lawyer litigation.
During 2000-2001, the AMA considered HMO lawsuits more important than tort reform, despite the fact that about 90 percent of physicians support tort ("malpractice") reform, and conversely, 75 percent of them believe that trial lawyers would have the most to gain from HMO lawsuits.
Let's face it. It has been an agonizing decision for many of us to determine where we stand on this issue of HMO lawsuits.
I have vehemently denounced managed care as corporate socialized medicine and have pleaded for physicians to return to the ethics of Hippocrates and reassert their role as true advocates for their patients. And yet, even this sensitive and passionate issue must be faced objectively. Carried by passions and the heat of the debate, do we really want medical care to be subjected to more lawsuits? Is it beneficial to subject sick and vulnerable patients to more litigation-on-demand, when in reality, what they really need when their lives and health are at stake is prompt medical care?
It sounds good to make the law easier for patients to sue their HMOs and, perhaps, even their employers for delayed or mismanaged care but, after all, who is really going to benefit from opening another Pandora's box of litigation? The trial lawyers, of course, not the patients, who most likely will die or whose health will worsen as they wait and wait stressfully and in adversarial fashion for the slow wheels of civil litigation to turn in their favor.
Civil lawsuits take time, months and years pass as the legal process rolls --- i.e., with discovery, trial, appeals, more appeals, etc. Immediate (within 48 hours) external mediation (with an impartial, outside party) is cheaper, faster, and more effective than lawsuits.
Yet, the AMA, as in other areas, has moved to the left and now, on the issue of HMO lawsuits, has jumped in bed with the trial lawyers! Not only has the AMA, in the last three to four years in an incredible volte-face, militated for unlimited lawsuits against the HMOs, the same HMOs their leaders helped create and encouraged physicians to join, but, according to National Review, even helped defeat three GOP senators, Sens. Slade Gordon (Washington), Spencer Abraham (Michigan; now Secretary of Energy), and John Ashcroft (Missouri; now Attorney General); all of whom opposed the AMA on unlimited HMO lawsuit liability.(10)
On this issue, as far back as 1998, the AMA, according to the same National Review article, has alienated the Who's Who in the Republican Party from Georgia Rep. Charlie Norwood and Oklahoma Sen. Don Nickles to affable House Speaker Dennis Hastert, who complained that "these guys [AMA leaders] are --- as far as I am concerned --- toadies of the Democrats."(10)
The AMA leaders have lost sight of their mission and, unless pushed by the membership in the trenches, have trouble recognizing the face of the real enemy.
Yes, the AMA needs to feel well-deserved heat from physicians to change its leftward political course and place the profession back on the right ethical track. If it does not, it will continue to be less and less relevant, while becoming more and more of a joke on Capitol Hill.
The AMA spends millions of dollars each year lobbying in Washington, D.C. with very little to show for it, specifically in the desperately needed area of tort reform. For years, the AMA worked hard to get a seat at the Clinton table. We heard repeatedly buzzwords such as "compromise," "cooperation," "public-private partnership," etc. Now, the medical politicians of the AMA have lost their seat at the table. Last year as you will recall, President George W. Bush refused to deliver the traditional first health care address to the AMA. Instead, the president spoke to the cardiologists.
With the AMA's drift to the left, organized medicine will be fortunate if they are even allowed to enter any room to pick up the scraps!
Headlines Blaring --- Again!
Once again, the headline of the section of professional issues of the July 8/15, 2002, issue of American Medical News declares: "AMA readies for battle on tort reform." The subtitle went on to state that "the ambitious plan passed at the Annual Meeting could cost more than $15 million to carry out, with $12 million set for a national ad campaign to educate the public."
So, the AMA leadership has finally heard the message of the rank and file, private practitioners and now has seriously considered tackling the festering problem of the medical liability crisis. Indeed, the leadership of organized medicine has assigned it the "highest legislative priority." The voices have been heard, the medical politicians have done the talk, but will they follow through and do the walk? Only time will tell. Frankly, looking at their track record, I have my doubts.
"I'm tired of small victories," a New Jersey delegate Angel S. Argo, M.D., an otolaryngologist, told fellow delegates at the June 2002 meeting of the AMA in Chicago. "What I care about is survival. If we want to be effective, we need to be an 800-pound gorilla," reported AMNews.
In a two-hour session, "A View from the Trenches," the gathered physicians admitted that their colleagues were "retiring early, moving to another state, or giving up high-risk procedures because of liability woes."
AMA Immediate Past President, Dr. Richard F. Corlin, who wasted valuable time and effort during his tenure distracted with the issue of gun control, now wants to seize the day: "I'm from California. I know MICRA [California's effective tort reform law]. MICRA is a friend of mine. MICRA works."
Indeed, as a gastroenterologist in the Golden State, Corlin pays $7700 annually for his "malpractice" insurance, while his Miami, Florida, colleagues, who have been pleading for years for tort reform relief, have to fork out $40,000 for the same coverage!
States in trouble needing immediate tort relief in addition to Florida include: Georgia, Mississippi, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas, Washington, and West Virginia.
The AMNews article concludes: "But the effort to forge change will be expensive. The AMA estimates it could cost more that $15 million to create task forces and research impacts and solutions. About $12 million of that estimated cost is dedicated to a national advertising campaign."
Why should the AMA worry about cost? From its $200 million annual budget, of which 75 percent is derived from its government-granted monopoly on CPT publishing, the AMA has more than ample funds in its war chest to confront this ignominy head on!
Once again, the AMA has done the talk but will it do the walk? Let us hope it will. Even if the charge of hypocrisy is hurled at organized medicine --- i.e., because it's promoting more lawsuits for HMOs in the so-called Patients' Bill of Rights with the sky being the limit in verdict awards, while at the same time it wants relief for physicians with a $250,000 cap on non-economic damages --- the AMA needs to show it's still relevant and that it would follow through with what is right for both physicians and patients.
1. AMA delivers in liability reform. AMNews, April
2. McCormick B. Tort reform dropped from product liability bill: future damp. AMNews, March 25, 1996.
3. Stossel J. Protect us from legal vultures. Wall Street Journal, Jan. 2, 1996.
4. Moore S. The trial lawyers: a clear and present danger. Human Events, Dec. 17, 1999.
5. Schlafly P. Feminist-inspired law violates the Constitution. Human Events, Dec. 17, 1999, p. 15.
6. Hoff J. Patients' rights: a double standard. National Center for Policy Analysis, Brief Analysis, No. 307, Dec. 3, 1999.
7. Doctors win big in Washington --- AMA persistence delivers powerful results. AMNews, Oct. 21, 1996, p. 1.
8. Faria M.A., Jr. The litigation juggernaut. Part I: The dimensions of the devastation and Part II: Strategies and tactics for victory. J Med Assoc Ga 1993;82(8):393-398 and J Med Assoc Ga 1993;82(9):447-451. Although this two-part article touches on all aspects of the lawsuit crisis, it emphasizes medical liability and tort reform.
9. Faria M.A., Jr. The AMA, ethics, and gun control (Part I). NewsMax.com, May 3, 2001.
10. Catanzaro M. What's up docs? - The democratization of the AMA. National Review, May 14, 2001, pp. 28-30.
Dr. Faria is editor-in-chief of the Medical Sentinel, author of Vandals at the Gates of Medicine (1995), Medical Warrior: Fighting Corporate Socialized Medicine (1997), and Cuba in Revolution --- Escape From a Lost Paradise (2002).
The interested reader should also peruse my articles "Public Policy by Lawsuit," Medical Sentinel 2000;5(3):88-91 and "The AMA, Medical Liability and HMO Lawsuits," published by NewsMax.com, May 21, 2001. This essay is a condensed, updated version of these articles.
Originally published in the Medical Sentinel 2002;7(2):44-47. Copyright
©2002 Association of American Physicians and Surgeons.