Cover Story - January 2006
By Erin Prather
When family practitioner Evelyn Tobias-Merrill, MD, told a family she was closing her private practice, they stared at her in shock. They questioned her decision and asked what they could do to change her mind. It wasn't that the then-36-year-old Corpus Christi physician was ready to retire or had decided to move. Instead, it was the 300-percent increase in medical liability insurance premiums that caused her to close her practice's doors.
"It was May 2003. I had mentally run the numbers over and over, hoping I could make my practice financially work. I hired a broker from Houston to see if he could broker with the other insurance companies to get a better rate; it turned out the one with a 300-percent increase was the best. That type of increase in anyone's insurance premium, whether you're a physician or business owner, causes the reevaluation of whether or not you can keep going. I clearly remember how upsetting it was to tell my patients and staff that I would be leaving."
The same month Dr. Tobias-Merrill closed her practice, Texas physicians celebrated a victory when the Texas Legislature passed House Bill 4, a sweeping package of tort reforms that capped noneconomic damages in medical liability cases. Following HB 4's passage, health care and business groups got behind Proposition 12, a constitutional amendment authorizing the legislature to enact damage caps, thus protecting HB 4's caps from legal challenges.
Dr. Tobias-Merrill, who eventually joined the Corpus Christi Family Practice Residency Program, was one of many physicians who became involved in the Proposition 12 campaign and enlisted the help of her patients to make sure the amendment passed.
"The family that wanted me to continue practicing was a huge supporter of Prop 12 because they had been personally affected. High liability rates were not just their physician's problem, it was their problem. What if they found another family practitioner, then that practice had to close its doors? It's a very scary thought that when your family might need a physician, there might not be one there for you," she said.
Their efforts paid off. On Sept. 13, 2003, Texas voters approved Proposition 12, making Texas the 26th state to cap noneconomic awards in health care lawsuits. Since then, both the amendment's proponents and critics have carefully watched its effects on Texas health care. Last May, the American Medical Association took Texas off its list of states in medical liability crisis. Texas is the only state to have been removed from that list.
In 1999, 17 licensed companies were writing new professional liability policies in Texas. That number dwindled to just four during the height of the medical liability crisis. Since Proposition 12 passed, the Texas Department of Insurance reports, 12 new carriers have begun selling liability insurance in the state. For the first time in years, Texas physicians can shop competitively for their policies.
"It seems there is a new carrier coming into the state on a weekly or monthly basis," said Thomas Cotten, president and chief executive officer of the Texas Medical Liability Trust (TMLT). "It's caused us to really look at how we are pricing, particularly on group accounts where there is another carrier trying to get the business. Physicians have more choice with more carriers, and there is a softening of the rates as well."
Fort Worth cardiologist John Durand, MD, chair of the Texas Medical Association Committee on Professional Liability and a board member of the Texas Alliance for Patient Access (TAPA), concurs with Mr. Cotten. He says substantial reductions in his group's liability insurance premium began in 2003, when GE Commercial Insurance's Medical Protective (MedPro) and TMLT started bidding for their business.
"We ultimately moved from MedPro to TMLT with significantly lower rates than what we've ever had with a previous carrier," he said.
In 2005 alone, all five of Texas' largest physician insurers announced rate cuts. According to TAPA, the reductions will save Texas physicians roughly $60 million in premiums. Additionally, some insurers have eliminated planned premium increases as a result of tort reform, and there has been a steady decline in the number of physicians enrolled in the Joint Underwriting Association, the insurer of last resort.
Last September, TMLT, the largest physician liability insurer in Texas, said it would reduce its rates by another 5 percent this year. The insurer also announced it would pay an "unprecedented" $10 million in dividends to 2005 policyholders. Both changes went into effect Jan. 1 and come on the heels of the company's 12- and 5-percent reductions in 2004 and 2005, respectively.
"In the more than 20 years that I have been with TMLT, I have never seen rates decline for such an extended period of time," said Mr. Cotten. "Texas is the only state that has been able to really reduce premiums. Other states have some type of tort reform and have been able to not increase their rates, but Texas continues to be the model. It's the only state in which there have been real rate reductions across the board."
Furthermore, as a way of rewarding those policyholders who play an active role in reducing their liability risk, TMLT has elected to increase the discount for physicians who complete practice reviews from 3 percent to 5 percent. There is no dollar amount for the discount, and the discount continues through the expiration of the current policy plus two full policy periods. Practice reviews, which are free to all TMLT policyholders, involve on-site evaluation by a TMLT risk management professional to help determine exposures. Physicians can request a practice review online at www.tmlt.org or by calling the risk management department at (800) 580-8658.
Welcome Back, Doctor
David Teuscher, MD, an orthopedic surgeon in Beaumont, chairs the Committee on Professional Liability for the American Academy of Orthopaedic Surgeons. Although he readily agrees the cuts have benefited physicians, he quickly points out their benefit to patients.
"This issue was never just about rates. It's about physicians being able to be there for their patients. The real message is that, yes, our rates are going down, but more important, there will continue to be physicians in my community who are going to help me take care of my patients and potentially take care of me or my family."
TAPA reported that since May 2003, more than 3,000 new doctors have established practice in Texas, many of them serving in high-risk specialties and in medically underserved regions of the state. Some counties, such as Cameron County along the Texas-Mexico border, have experienced unprecedented success in physician recruitment.
A Corpus Christi Caller-Times article reported that after four years of searching for a neurosurgeon, the Corpus Christi medical community was able to recruit Matthew Alexander, MD, from a Wisconsin residency program. Dr. Alexander told the newspaper he wouldn't have come to Texas had Proposition 12 not passed.
Dr. Tobias-Merrill witnessed firsthand that physicians are indeed moving to her city.
"Corpus has been very successful in increasing the number of physicians practicing here. Before tort reform, physicians were leaving the state, finding jobs elsewhere. Others were altering the services their practices provided due to the premiums. Since Prop 12, we have had a wonderful turnaround, going from losing to hiring, and some physicians have been able to reinstate those previously halted services."
The Texas Medical Board (formerly the Texas State Board of Medical Examiners) says that before Proposition 12, the ranks of Texas internists, emergency care physicians, orthopedic surgeons, and neurosurgeons were flat or on the decline. Their numbers have increased since tort reform.
Beaumont, TAPA says, lost 12 physicians before lawsuit reform. Since the reform, the community has gained 21 physicians, including five anesthesiologists and 15 emergency physicians. Dr. Teuscher's own experiences support the fact that physicians are moving to the city.
"Recruiting at our hospital is way up. For the first time in years we have full-time neurosurgery coverage. That has been a significant development for us. Before tort reform, a number of specialties were just not covered in Beaumont's emergency rooms," he said. "Now physicians have more reason to practice here."
In April 2003, a TMA survey revealed that more than half the physicians in Texas said they had stopped providing high-risk services to patients. Nearly a year after the passage of Proposition 12, the percentage of physicians with restrictions on high-risk cases dropped to just 13 percent.
David A. Cantu, MD, a Fredericksburg family physician, provides obstetric services for his patients. Before Proposition 12, he and his partner had to quit practicing obstetrics because of insurance costs.
"Our overhead was hitting 100 percent, and I experienced a three-month stretch of no pay," he said. "There was a decrease in insurance costs after we stopped practicing obstetrics, but that decision upset some of my patients. I am a Hispanic, fluent in Spanish, and I treat a lot of Spanish speakers. When I stopped practicing obstetrics, there were few Spanish-speaking providers who provided obstetric services in the area. A lot of my patients came to talk to me about that because they were frustrated."
After Proposition 12's passage, Dr. Cantu contacted TMLT to see how much it would cost him to again be insured for obstetrics. The difference was substantial enough that he and his partner elected to once again provide those services, much to the relief of his patients who had been forced to go elsewhere.
Tort reform advocates assert that Dr. Cantu's story and those like it prove that tort reform has benefited Texas health care. Additionally, Dr. Durand maintains that Proposition 12 has improved physician-patient relations.
"Fear of frivolous lawsuits caused tension between physicians and patients," he said. "Since passage, the attitude among physicians has changed; they have more spring in their step. Physicians now believe they have a future in Texas. Colleagues tell me they are thinking about practicing an additional five or 10 years, something they wouldn't have considered before Prop 12."
Dallas internist Neal Sklaver, MD, says that as an older physician, being able to have reasonable insurance costs makes it more feasible for him to practice medicine longer.
"As physicians get older, we may want to practice on a more limited basis. Having lower premium costs will make it more attractive for us to stay in medicine longer, which is important as the baby boom generation is growing older."
Despite the successes of tort reform, critics continue to argue it was unnecessary and has not done what proponents said it would. Last March, four professors from The University of Texas and University of Illinois law schools released a study that claimed skyrocketing professional liability premiums in Texas were not caused by higher payouts on claims or by rising jury verdicts. (See "A Difference of Opinion," May 2005 Texas Medicine , pages 39-42.)
It also maintained that after being adjusted for general inflation and population, claim rates, payments, and total costs, jury verdicts were all stable; overall, there was no evidence of lawsuit abuse or a tort crisis.
TAPA immediately criticized the study's authors for offering no plausible explanation for why 13 insurance companies went out of business, left the state, or withdrew from selling liability insurance between 1999 and 2003. TAPA also expressed concern that the study did not include any legal expenses for claims in which no payment was made to the plaintiff, which in Texas accounts for 86 percent of all claims.
In July, a tort reform law article was published in the Texas Tech Law Review (see "Lower Premiums, More Doctors Result of 2003 Tort Reforms," September 2005 Texas Medicine , pages 45-46). Titled " House Bill 4 and Proposition 12: An Analysis With Legislative History ," the article was written by six Texas attorneys and captured what the legislature did and did not intend in the wording of the reform legislation.
Discussion items in the article ranged from statute of limitations and expert reports to emergency care and charitable immunity, as well as the new noneconomic damage cap, widely regarded as the lynchpin of the reform package. The 357-page article also analyzed changes in general tort law with respect to such issues as class-action reform, settlement offers, forum shopping, and proportionate responsibility.
Dr. Teuscher has no patience with tort reform opponents and says Proposition 12 accomplished its key objectives. He cautions that the battle for tort reform is not over and that proponents must continue to show their support.
"I expect the other side to make legal challenges in the future, maybe even during upcoming legislature sessions. The price of reform is eternal vigilance. We are going to have to maintain reforms in order for them to be effective. I travel around the country to talk with other orthopedic surgeons. Everyone always says they want their state to be like Texas. We are a model for the rest of the country."
Added Dr. Durand, "Texas is enjoying the fruits of good public policy changes. Imagine where we would be if this crisis had not been diffused. We would have seen more physicians leaving, more restrictive practices … a continued decay in the Texas medical infrastructure. None of those things are happening now. Despite all the problems that health care has, this is one really bright spot in the scene. This isn't about making life easier for the physicians and hospitals. This is about creating an environment in which patients have improved care."
Erin Prather can be reached at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by email at Erin Prather.
Number of Specialty Physicians, 1999-2005 [ PDF ]
Carriers Writing Insurance in Texas [ PDF ]
Learning From the Mistakes of Others
By Volker Gressler, MD
They say we learn valuable lessons from our mistakes. How about mistakes of others? If that is the case, there may be an opportunity for other physicians to learn from the hard lessons I was taught in the aftermath of another's mistakes.
Every physician has nightmares about losing a patient. Unfortunately, that nightmare became a reality for me nearly three years ago, after a nurse at my oncology clinic disregarded procedural safeguards and physician orders and administered a double dose of Taxol to a patient, which led to his death. It was a crushing loss to me, both professionally and personally, as I had formed a close bond with him during our battle against his terminal prostate cancer.
Looking back, I thought I had done everything right. I left a large oncology practice to establish my own small, comfortable clinic. I hired qualified staff, including certified oncology and chemotherapy nurses. I maintained a lower-than-average nurse-to-patient ratio to ensure nurses were not overwhelmed and patients enjoyed personalized care. I established written policies and procedures to protect the safety of my patients. I kept a strong focus on researching the latest cancer treatment techniques. I established an untarnished record.
In spite of the checks and balances I had in place - requiring two signatures to ensure that two minds were checking all chemotherapy orders and conducting weekly staff meetings to review cases - a human being made a human mistake. Unfortunately, her mistake cost the life of another human being and brought great sorrow to his family.
The patient's daughter sued. She sued me, the nurse, the clinic, and another physician. Ironically, she sued just weeks before Texas voters approved Proposition 12. While Texas physicians were achieving the dream of reining in frivolous lawsuits, my own litigation nightmare was just beginning.
In the face of this major crisis, I turned to my liability insurance company for help, certain it would do everything possible to defend me. I was wrong.
Unbeknownst to me at the time, my insurance company decided to gamble with my defense. First, the defense team negotiated settlements to remove the other physician and me from the lawsuit before it headed to trial. It seemed like a good idea, as it meant I would not personally be on trial. However, I never would have agreed to the settlement had I known that my insurer was going to pay the maximum amount on my policy, which implies that I did something wrong, and how the settlement fit into the larger strategy they had in mind.
In an ill-conceived move, the insurance company assigned one attorney to represent both my clinic and the nurse who made the actual mistake. Though I am no lawyer, that seemed like a conflict of interest. How does an attorney determine which defense strategy he will pursue more vigorously, when the two may be diametrically opposed?
As the trial ensued, it became apparent which defense strategy the attorney had chosen, and I drew the short straw. Unfortunately, I was unaware of the antics taking place in the courtroom. Although I had blocked out a week to attend the trial, my attorney had advised me to stay away from the courtroom, saying, "You are not the one on trial, so you should not be there."
The defense attorney, which my premium was paying for, had other clever plans. He allowed the nurse to assert that she was not to blame for the medication error because she worked in a terrible environment and implied that the terrible work environment was due to mismanagement and poor leadership by me. After all, I was no longer a party in the lawsuit, so the insurance company had nothing to lose if everyone pointed the finger at me.
And point the finger they did. The headline-grabbing plaintiff's attorney had a field day with my reputation, suggesting I was a cold, greedy, uncaring physician cutting corners at every opportunity to make millions of dollars. In fact, he still advertises, my absence from the courtroom was proof of my greed and indifference.
What did my defense attorney do as these falsehoods were echoing through the courtroom? He helped the plaintiff's attorney by failing to provide my clinic with any defense or any expert witnesses that would have shown that my clinic policies met or exceeded the standards in the industry, even those employed by the plaintiff's own expert.
But the defense attorney did not do that. Instead, the defense attorney chose the strategy to exonerate the nurse and possibly lower the verdict for my practice by pinning blame on me personally, since I was no longer a party in the lawsuit. It was a gamble, but what did the insurance company have to lose?
Unfortunately, there was a lot to lose, starting with my reputation. In the end, my insurance company's gamble failed, as the jury found both the nurse and my practice liable for negligence and awarded a mind-boggling amount in punitive damages. But the insurance company came out all right. By negotiating a high-low settlement strategy, the insurance company only had to pay out a fraction of the $600-million-plus verdict.
The whopping verdict, however, caught the attention of the media - with some help from the plaintiff's attorney, who was seeking to make a name for himself. The headlines were horrible. News reports based on the false allegations invented in the courtroom painted me as a patient's worst nightmare. My attorney advised me not to talk to the media, which only made matters worse. Worst of all, those headlines continue to come up today anytime a patient, potential patient, referring physician, or health care network runs an online search about me.
So there you have it: hard lessons learned by a physician whose insurance company gambled with his reputation and lost. The lessons I learned? Do not assume that just because you do everything right, you are immune from litigation. Do not assume that just because you pay the premium, your liability insurance company will act in your best interest. After all, their interest is in making their shareholders happy.
Be vigilant about your own defense. Understand their plans and strategy, and if your gut tells you it's not right, push back. If there is a trial involving you or your practice, be there in person. Don't think you can make negative news go away by not talking to reporters. Plan for the worst-case scenario and determine ahead of time how you will respond to media questions. And if your patients want to rally behind you publicly, welcome them. My patients have been my most ardent supporters during this period and have even posted messages of support at www.defendhope.com. If you ever find yourself in the kind of nightmare scenario I have been living, do what your patients do when they are in doubt: trust your instincts and get a second opinion.
Dr. Gressler is an oncologist in Richardson.
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