MINUTES OF THE meeting
of the
ASSEMBLY Committee on Judiciary
Seventy-Second Session
May 13, 2003
The Committee on Judiciarywas called to order at 8:18 a.m., on Tuesday, May 13, 2003. Chairman Bernie Anderson presided in Room 3138 of the Legislative Building, Carson City, Nevada, and, via simultaneous videoconference, in Room 4401 of the Grant Sawyer State Office Building, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
Note: These minutes are compiled in the modified verbatim style. Bracketed material indicates language used to clarify and further describe testimony. Actions of the Committee are presented in the traditional legislative style.
COMMITTEE MEMBERS PRESENT:
Mr. Bernie Anderson, Chairman
Mrs. Sharron Angle
Ms. Barbara Buckley
Mr. John C. Carpenter
Mr. Jerry D. Claborn
Mr. Marcus Conklin
Mr. Jason Geddes
Mr. Don Gustavson
Mr. William Horne
Mr. Garn Mabey
Mr. Harry Mortenson
Ms. Genie Ohrenschall
Mr. Rod Sherer
COMMITTEE MEMBERS ABSENT:
Mr. John Oceguera, Vice Chairman (excused)
Mr. David Brown (excused)
STAFF MEMBERS PRESENT:
Allison Combs, Committee Policy Analyst
Risa B. Lang, Committee Counsel
Carrie Lee, Committee Secretary
OTHERS PRESENT:
Lawrence Matheis, Executive Director, Nevada State Medical Association
James Rosenberger, Attorney, representing health care providers and facilities
Bill Bradley, representing the Nevada Trial Lawyers Association
Jan Gilbert, Northern Nevada Coordinator, Progressive Leadership Alliance of Nevada (PLAN); and representing the Nevadans for Quality Health Care
Larry Spitler, Associate State Director, American Association of Retired Persons—Nevada (AARP)
Mark Nichols, Executive Director, Nevada Chapter, National Association of Social Workers
Dianne Meyer, Victim of medical malpractice
Jim Crockett, representing the Nevada Trial Lawyers Association
Renne Williams, Mother of victim of medical malpractice
Len Marazzo, Father of child lost due to medical malpractice
Allen Triese, Victim of medical malpractice
Jason Phillips, Father of victim of medical malpractice
Larry Struve, Legislative Associate, Religious Alliance in Nevada (RAIN)
Bobbie Gang, Nevada Women’s Lobby
Chairman Anderson:
[The Chair reminded the Committee members and those present in the audience of the Standing Rules and appropriate meeting etiquette. Roll called.]
Twelve members being present, eight needed for a quorum, a quorum is present.
[Exhibit C was distributed to the Committee members.]
Senate Bill 97: Makes various changes relating to certain actions against providers of health care. (BDR 1-248)
Lawrence Matheis, Executive Director, Nevada State Medical Association:
[Introduced himself and submitted Exhibits D and E.] I have prepared an outline (Exhibit D) summarizing comments that I am going to make with a couple of attachments.
Chairman Anderson:
We also have an outline (Exhibit C) that has been prepared for the Committee with medical malpractice background information on S.B. 97 compared to A.B. 1 of the Eighteenth Special Session, which I asked to be distributed to the Committee.
Lawrence Matheis:
On behalf of the Nevada State Medical Association, we really do need to say for the record, as the session is winding down, because this issue has now been on the front burner for over a year and a half, to thank all of you for the time you put in trying to understand these complex issues and trying to tease out of them what can be done, what needs to be done, to get us out of the current crisis, to minimize the damage done to the health care system by the crisis, and to forestall any future repeats of it. These are challenges that are being faced nationally, but I do recognize the amount of time and energy that it has required to address them.
The complexity is reflected in the number of bills that you and the Senate have processed or are in the act of processing that deal with the various components that have contributed to the problem. However one defines where the problem starts, there is clearly a synergy of problems within the insurance industry, the civil justice system, and the health care system that have fed the crisis and have made it wider and deeper than anything we have experienced in contemporary times. Looking at all aspects of the system is appropriate. In terms of A.B. 320 that you have processed and sent to the Senate, S.B. 122 that passed the Senate and you have for review, and S.B. 250—those three bills address insurance-related issues, issues of licensure, and how professional competency is evaluated, and then we still have the questions about the civil justice system. That’s where we come to S.B. 97.
I would like to talk briefly about how we got where we are and then walk through S.B. 97. This is not the Nevada State Medical Association’s bill. Following the 18th Special Session of the Legislature, an ad hoc group of physicians and other interested parties began meeting, the Keep Our Doctors in Nevada Coalition, with an idea of getting an initiative going to go further than was done in the 18th Special Session. The Nevada State Medical Association agreed to participate and support that effort. Senate Bill 97, in bill form, is the basic statutory proposals that are in the initiative that will be on the ballot in 2004. It looks at a number of civil justice issues modeled roughly on the reforms that have been adopted in the six states that are still without any evidence of this current liability crisis.
[Lawrence Matheis continued.] One of the handouts (Exhibit D) includes a map showing, as of March 2003, what the American Medical Association has found in terms of the extent of the liability crisis in the country. The bad news is that there are very few states that haven’t seen any problem; a significant number have moved from a problem developing to a crisis. That’s why it’s a national issue. The kind of approach that’s suggested in S.B. 97 is the sort of approach that is being looked at in virtually every one of the states that are in crisis or is having problems and is, of course, the model that the United States Congress is considering in legislation.
The crisis clearly resulted from unsustainable medical professional liability insurance premium increases charged to Nevada’s physicians. As much as possible, I am going to try to do a value-free look at what the actual events and measurable points have been in this crisis. There can and should be differing explanatory views, but we need to come to a common understanding of the stages of this crisis, if nothing else, so we can avoid or have an early warning if it begins to develop again. The premium increases resulted from carrier losses, both nationally and in Nevada. As reported by the Legislative Counsel Bureau in the materials prepared for the 18th Special Session, national malpractice loss ratios averaged 79.5 percent in 2000, which rose to 97.4 percent in 2001.
What’s a combined loss ratio? Basically, after you collect a premium, it’s how much money you have to pay out when there are claims. From the insurance industry’s point of view, the closer the loss ratio gets to 100 percent, the worse it is. At 100 percent, it means that every $1 brought in, goes out. Whatever percentage lower than that is desirable; anything over 100 percent means that they are losing money in that given period. That’s why loss ratio is an important issue.
But what happened in Nevada is symptomatic of all the states that are in the crisis zone. In Nevada, carriers went from 84.83 percent in 2000, to 133.6 percent in 2001. That meant that for every $1 [paid in 2000] they were paying $1.34 out in 2001. Around the country, you could predict which states were going into crisis because in either 2000 or 2001 the carrier loss ratios began approximating 100 percent or exceeding 100 percent.
[Lawrence Matheis continued.] What about the states that don’t have the crisis? California had a 65.7 percent loss ratio in 2000 and a 45.77 percent loss ratio in 2001. In 2001, when Nevada had 133.6 percent, California had 45.77 percent. Another non-crisis state is Colorado; in 2000, they had 46.7 percent loss ratio; in 2001, it was 43.19 percent. Again, the states that don’t have the crisis, the carriers did not go into this loss cycle; the states that had the crisis, like Nevada, did.
Relating the comments that have been made over the months, that nothing happened that justified the behavior of the insurers—they lost money. That justifies a lot of behavior by corporations; when they lose money, they change the way they behave. One of the things to be considered is whether it is worth doing business if you are going to project to continue to lose money. Maybe it’s an anomaly, maybe it’s just something that happened, but if they draw the conclusion that it’s going to continue to happen, then they are going to draw the conclusion that maybe they should be doing something else. That’s why many of the carriers in the liability system have made that judgment; that’s why we had an availability crisis in early 2002.
I have inserted into this outline (Exhibit D) the profit and loss of the carriers that were in the state in 1999 through 2000. Based on information in 2000, my expectations would be that 2001 numbers would show even more loss. You can see that pattern. Some of these companies are no longer in Nevada because they made the evaluation, for whatever reason, that the Nevada market and particularly the southern Nevada market wasn’t predictable enough, or to the degree that they thought they could predict it was going in the wrong direction; they didn’t want to be here.
These losses were associated with medical liability costs exceeding premiums and the consequences of the general economy. One of the charts that Mr. Bradley likes to use, it’s an effective one, was derived from Professor Butler, who is now with Consumer Union, shows that the insurance industry tends to track the business cycle, which I don’t think is a particularly innovative thought, but it’s true that there are national and international aspects that certainly affect availability of interest income, investment income, and overall productivity. For the most part, the problem with that general chart on the insurance industry, which is drawn mostly from the AMVest reports, is that the medical liability insurance cycles are not the same as a general insurance cycle.
Also it is not surprising, given one of the things we have all had to deal with in the last couple of years—the very long time horizon from when acts may have been done that develop into cases, that the medical liability crisis over time is not necessarily in phase with the economic cycles. It tends to be on its own cyclical arrangement, although it does look like it starts in the bad economic times, but by the time you see the measurement of it, it is usually several years after the cycles change.
[Lawrence Matheis continued.] The annual losses in Nevada, as far as we can tell, resulted from a series of 1996 to 2001 district court verdicts, overwhelmingly in Clark County, on cases of medical negligence. We have all seen those data that was reported in the background material for the 18th Special Session as well. It is astounding that 23 court cases in Clark County decided in favor of the plaintiffs could have such a disproportionate impact on the psychology as well as the economics of that marketplace, but apparently it did. Whether that caused the crisis, it happened sequentially right before the settlement amounts went up, the total awards went up, and I have that data as well (Exhibit D).
What you see is that four of those cases, where there were economic and noneconomic damages detailed, for that period from 1996 to 2001, accounted for almost $40 million dollars in total awards, and 67.8 percent of those were noneconomic damage awards. That contributes to one of the discussion items regarding how the civil justice system teases out these cases in the way they are dealt with. The escalation in these court awards increased the costs associated with the settlement claims. Again, that data is pretty clear. The last closed claims report from the Division of Insurance, Nevada Department of Business and Industry, shows a significant increase in claims where there were indemnity payments into 2000 and 2001. It virtually doubled from what was occurring in the preceding years.
The next chart details those same awards and settlements by size, those over $250,000 and those over $1 million, illustrating that the numbers in both categories made significant jumps upwards; the numbers track, show why the insurers responded, and justify their responses. Together, the award and settlement increases detailed in the closed claims data show what was considered the unpredictability of what would happen in future claim costs. That more than anything created the psychology, both in the insurance industry and secondarily with the physician community, of the unpredictability which meant a fundamentally unbalanced marketplace.
What does S.B. 97 propose?
Section 1 is somewhat controversial; it deals with the issue of contingency fees. The proposal is modeled…in almost every case; the question is where did the language come from? The language came from California’s MICRA (Medical Injury Compensation Reform Act) law. It limits attorney contingency fees to 40 percent of the first $50,000 recovered, 33.3 percent of the next $50,000 recovered, 25 percent of the next $500,000 recovered, and 15 percent of the amount of recovery that exceeds $600,000.
[Lawrence Matheis continued.] There was testimony at the hearing the insurance commissioner held in trying to determine if there was an availability crisis in March 2002, in the Legislative Subcommittee to Study Medical Malpractice that Ms. Buckley chaired, and during hearings on a number of the bills dealing with these issues by insurers that are in the California market and those other states where there are limits on contingency fees. That is, from their viewpoint, an important component of the laws. The reason they say it works has to do more with the impact of severity of the contingency fee system, with the modification and the scaling of it. It certainly does not deal with frequency; it doesn’t discourage filing of claims. It would discourage those sorts of claims that would tend towards the upper end where there is a possibility of large recovery. That is how I understand the basic rationale; it restabilizes expectations and doesn’t build in an inflationary component into the expectations.
Section 1 deals specifically with NRS Chapter 7, whereas Section 3 deals with NRS Chapter 41A; a new definition of professional negligence is provided.
“Professional negligence” means a negligent act or omission to act by a provider of health care in the rendering of professional services which act or omission is the approximate cause of personal injury or wrongful death. The term does not include services that are outside the scope of services for which the provider of health care is licensed or services for which any restriction has been imposed by the applicable regulatory board or health care facility.
That comes straight out of the California statute. It would replace the current definition that’s in NRS 41A.009, “Medical malpractice defined,” which defines medical malpractice to mean “the failure of a physician, hospital or employee of a hospital, in rendering services, to use the reasonable care, skill or knowledge ordinarily used under similar circumstances.” The rationale for that, as I understand it, is to link the action that may be negligent to an actual injury. There can be actions that are negligent that do not result in any harm. This is intended to discourage filing of claims and making of cases where there really isn’t that nexus of both a substandard professional judgment or negligent act and some injury being done. There can be bad outcomes unrelated to a negligent act, so you begin to look more at the outcomes.
[Lawrence Matheis continued.] Indeed, that is one of the issues, I would hope over time, out of the public spotlight and out of the heat of advocacy pro and con, I believe the legal community really needs to look at the civil justice system—how the system itself tries to assure the accountability that is being sought is the accountability for an action that results in some injury.
There has been another detailed study of the New York hospital data from the New England Journal of Medicine (December 26, 1996) report; they tried to control for all factors. They went through medical records and court records to attempt to determine what would be a predictor of an award. The bottom line of the study, which used 1995 and 1996 data, was that the biggest predictor is not negligence. In fact, they couldn’t find it was a predictor at all; it was the disability of the plaintiff. It had more to do with the condition [of the plaintiff]. That is totally appropriate if that condition was the result of an error, a mistake, or a negligent act. The fact that they were unable to find any relationship between an act of negligence and the award… Much as the health care system is going to have to start seriously looking at system problems that result in patient injuries with the idea of identifying and fixing those problems, the folks in the civil justice system are also going to have to make sure that means and ends line up in a way that assures public confidence.
It is a fundamental problem I see that there is a loss of confidence in the medical profession, health care industry, legal profession, justice system, and insurance industry. Many of the institutions on which we have to rely have, in many cases, because they themselves have failed to take appropriate assertive actions, created questions of doubt about their willingness to do that. This particular part is meant to deal with trying to realign the definition of professional negligence so that there is a relationship between a negligent act and the injury where there is a desire to seek compensation.
Section 5 will limit noneconomic damages to $350,000 with no exceptions. This would repeal part of the provisions of A.B. 1 of the 18th Special Session. The reason for that is the two exceptions that exist, which could probably form the basis of a challenge down the line, have added to the inability of the insurers and those who advise based on potential liability that the $350,000 cap is actually a cap; it might not be breached in too many cases. Whatever predictability you get from…
The Legislature has taken a very significant and bold step, to revisit the issue that courts should recognize certain limitations when considering noneconomic damage awards. The concern is, in relation to the exception that allows for the court that was the trier of fact to find exceptional circumstances and abrogate the cap, that it would generally and likely be misused. As far as I know, there has not been a case yet developed under A.B. 1 of the 18th Special Session; none of us know until the courts make their decision. The idea of the $350,000 cap, which is not the MICRA cap, not the California cap which is $250,000, but without exceptions, would be viewed generally on the insurance side by legal advisers and the medical community as being successful in terms of making more predictable what the outside limits of a possible payout would be; that’s the assurance that you want.
[Lawrence Matheis continued.] Section 6 applies the several liability to all economic and noneconomic damages, extending the abrogation of the several doctrine that was done in A.B. 1 of the 18th Special Session. All of you who sat in the 18th Special Session, I don’t think you have gotten as much appreciation from physicians and their spouses as you earned. One of the things that you did was you adopted the standard that California has, which is to abrogate the joint and several rule to make several liability for noneconomic damages apply.
This proposal is largely aimed at the problem of obstetricians and others who are associated with facilities that would come under the sovereign immunity cap; they become the deep pockets. Economic damages, especially on medical care, take into account lifetime economic medical costs. Someone who has been adjudged as having a fairly small part, maybe they were the admitting physician, of whatever adverse outcome occurred, could end up as the only one with sufficient resources or insurance. Unfortunately, he could then to be required to compensate for the largest amount. A case like that happened—a southern Nevada physician was found by a jury to be 5 percent liable based on fairly limited involvement in a case, but was ordered to pay $5 million out of a $6 million judgment. This would try to deal with the fairness issue that is created.
It is my understanding that the National Conference of Commissioners on Uniform State Laws has adopted or approved a uniform Apportionment Tort Responsibility Act in October 2001, which apparently would establish several liability instead of joint liability as the general rule.
In Section 8, it changes the statute of limitation from two years to one year from the time the plaintiff discovers or should have discovered an injury. That brings it into alignment with the California MICRA law. It shortens the timeline for filing claims; one of the real problems is that at one level at the beginning it may encourage more cases be filed in a short time, but over time the experience in other states has been that by shortening the statute of limitation it makes more predictable what the likely number of cases might be.
[Lawrence Matheis continued.] Section 9, subsections 1 and 2, permits the defendant to introduce at trial any collateral source payment; currently they are required to be applied at a separate hearing following a court determination of an award. This would put the Nevada law in line with California and most of the other states that have changed the collateral source rule. This again is meant to change the psychology of the process of deliberation as to what is an appropriate award because so much of what drives the deliberations has to do with what the actual costs are, especially medical costs. If somebody has been injured as a result of medical negligence, presumably there is some medical cost that will need to be dealt with over time. It is important in the psychology of how to evaluate that total picture for the court to know that the medical costs may have been paid. Not that it affects whether or not there should be awards, but in the sympathy factor and the issues that drive the psychology of making not the decision of guilt or innocence but the decision as to what is an appropriate award in the situation. That’s the logic of introducing collateral source information at the time of the trial decision.
Section 9, subsection 3, requires the court to apply a periodic payment schedule for future awards over $50,000 at the request of either party; currently, it is only at the request of plaintiff. Again, this follows the California statute.
Section 11 is the severability clause. Underlying much of this are such questions as:
· How will the courts view this?
· What attitudes will the district courts or the Supreme Court of Nevada take when a case is presented, either with the laws that you have passed already, are in the process of passing, if you were to pass S.B. 97 or some form of it?
· What will the courts do if the ballot initiative passes next time [in 2004]?
· How will the courts look at these pieces [of legislation]?
· Will they look at them in terms of specific facts of a specific case?
· Are they fair or not fair?
· Do they conform to the Constitution of the State of Nevada or their understanding of the Constitution of the State of Nevada?
On any day, any given court can go in any given direction. The severability clause is important so that if one part is stricken without addressing other parts, the other parts aren’t stricken equally.
[Lawrence Matheis continued.] The questions now are “Why S.B. 97?” or “Why a ballot initiative?” or “Why are we still looking at the civil justice issues when the Legislature addressed some of them in the 18th Special Session?” The confidence expressed by the insurance carriers that the Nevada market is stabilized just isn’t there. I have an attachment (Exhibit D) from the newspaper and the Division of Insurance Web site, outlining the rate increases that have been requested and approved since September 2000. In September 2002, the Doctor’s Company was approved for a 26 percent rate increase, and in November [2002] for a 45.9 percent increase for psychiatrists. Also in November [2002], CNA (American Continental) was approved for a 4.2 percent increase for APNs (advanced practitioner of nursing). In January 2003, PHICO (Physician’s Insurance Company) of Wisconsin was approved for a 25 percent increase in Clark County and a 10 percent increase in the remainder of the state. Also in January 2003, Continental Casualty received a 93 percent rate increase and the Doctor’s Company received a 16.9 percent rate increase. The impact of those decisions, the clear uncertainty expressed by the insurers… I don’t think any of them have committed that they won’t be seeking more rate increases and several may or may not leave the market; certainly we have seen that happen.
The actions since the 18th Special Session haven’t shown any immediate relief and [are not promising]. There hasn’t been a qualified commitment that there is an expectation that what has been done is going to change their view of the negative market. With the exception of Mr. Robert Byrd representing MLAN (Medical Liability Association of Nevada), I don’t think that there has been a particular positive statement from any of the carriers about how they view the way things will evolve with A.B. 1 of the 18th Special Session. I hope that they are all just being unduly pessimistic, conservative, cautious, prudent, and wrong. But if their behavior continues to follow from the logic of those assumptions, then the continued problem for our physicians is the premium prices that they can’t meet and the continuing erosion of the system as a result.
Clearly physician confidence has not been restored; we see continued practice closures and restrictions. Every time we have asked physicians to report to us their intentions, a few more are added; it hasn’t stopped. I just heard of another one that is gone, but if things change, may come back. What’s real bad is that it is national; increasingly we have heard from groups that are trying to recruit specialty physicians to replace those who are leaving or supplement those who are so hard pressed. We are hearing that they are having an incredible hard time and very few are being recruited. Southern Nevada is especially a “no go” zone for physicians of the highest desired specialties coming in; if that doesn’t change, we are going to be testing the bottom of what our medical care infrastructure, especially in southern Nevada, can deal with and still provide.
[Lawrence Matheis continued.] Finally, the last chart in the handout (Exhibit D), compiled by Dr. Weldon (Don) Havins, M.D., J.D., Chief Executive Officer and Special Counsel, Clark County Medical Society, illustrates the Clark County court filings through April 2003. One would have expected that in the last months of 2002, because one of the actions of A.B. 1 of the 18th Special Session was the elimination of the Medical Legal Screening Panel, that there would be a transition period where a number of panel cases would be filed in the courts. You would have expected to see a jump up, and you do in the October, November, December 2002 period; there is a huge increase.
I am far more worried about this new plateau in January, February, March, and April 2003. You see 80 cases filed in district court in January 2003; there were 33 in 2002, 39 in 2001. In February 2003, 72 cases filed, 14 last year, and 20 the year before. In March [2003], 75 filed this year, 30 filed last year, and 35 filed the year before. In April [2003], 74 filed, 34 last year, and 37 the year before. It looks like a pattern is setting in at double previous rates; that could be problems for the courts, and it certainly could mean problems for future premium prices, which are driven by whatever happens with those cases. We don’t know what will happen, but that’s the point.
Why is S.B. 97 an answer to these occurrences?
To a great degree change in the psychology and changing the nature of these expectations could add as much predictability into what’s going to happen as possible. What is the greatest factor of unpredictability right now? It is whether the courts will find that the experiment you have undertaken as a body in A.B. 1 of the 18th Special Session, which is new kinds of caps, new kinds of protections on the Good Samaritan law, and new kinds of protections on the trauma-related cap. There is no experience in any other state with the approach that we took in A.B. 1 of the 18th Special Session to be able to predict how a court elsewhere has looked at similar issues. How are the Nevada courts going to look at it? It may be that they really do understand why you did what you did and will agree that the trade-offs were necessary in order to assure continued availability of those essential services. It may be that they just say, “Sorry, that does not conform to the constitutional protection in this case.”
The statutory provisions in S.B. 97 have been tested in a number of courts in a number of states and have been sustained. Most of them are in force in the six states that don’t have a crisis; all of them are in force in California and Colorado. Those courts have looked at these laws over a generation and have ruled on their constitutionality and their legality. While each court, state Supreme Court, and each constitution is different, courts tend to look at what others have decided when they look at similar statutory provisions in similar factual cases.
If you want to build the most predictability into statute, you would go with the provisions most tested and most frequently approved by courts. Our view is that we agree with those who put S.B. 97 together; these are provisions that have withstood that test. By that qualification it should be viewed as being more predictable as to what things will be like three, four, or five years from now. While it may not affect decisions regarding cases already in the pipeline, it should reflect on future judgments about how to reserve, what to anticipate as payouts, and how to adjudge premiums.
Assemblywoman Buckley:
Is the reason you are bringing forth S.B. 97 because premium increases are too high? Is that what you summarized, that increases being requested are still too high?
Lawrence Matheis:
Premiums have continued to increase and the insurers have indicated that they are going to continue to increase.
Assemblywoman Buckley:
In our previous testimony, we heard over and over again from the insurance companies, “Don’t pass tort reform if you expect premiums to go down because they won’t.” The American Association of Insurers said that. They said, “Perhaps it might lead to future predictability, but don’t pass tort reform if you want premiums to go down.” I guess my question to you is…you know they have said that, so why do you think that if we passed S.B. 97 you would get any more assurances from insurance companies?
Lawrence Matheis:
I did not say that I expect premiums to go down, but the expectation is, if it is viewed as predictable, if it is viewed as stable, the premiums will stabilize. You won’t have the wild fluctuations; the physicians are unable to accommodate these wild fluctuations.
Assemblywoman Buckley:
Why won’t that same stability come with A.B. 1 of the 18th Special Session?
Lawrence Matheis:
Primarily because in A.B. 1 of the 18th Special Session we are relying on some provisions that are so novel that they have not withstood judicial review. I hope they do and I hope they are successful, but these [in S.B. 97] we know have.
Assemblywoman Buckley:
I think that is disingenuous. Caps have been held unconstitutional in many jurisdictions and that is one of the reasons why in A.B. 1 of the 18th Special Session we tried as hard as we could to make it constitutional. There is a cap of the insurance policy limit; our cap at times can be lower than $350,000. If someone is brain-damaged and has $900,000 worth of hard damages, hospital costs, they only get $100,000 in pain and suffering. So in some ways our cap is lower than California’s. To say all that hard work we did to try to pass a constitutional bill should be jeopardized by passing something that I think is very risky constitutionally is very foolish, but that’s my opinion.
Lawrence Matheis:
I think you have put your finger on the problem that we have as well. I agree with you that many of the ideas in A.B. 1 of the 18th Special Session will pass, but the problem is that because some of them are presented in very new ways, you have a sense of the unpredictable. You have attorneys counseling about that and erring on the over-cautious side. The problem is that we are still facing more of this and it’s having a bleeding effect. I don’t disagree with your…I think that what you did was responsible with A.B. 1 of the 18th Special Session; I think that going for this [S.B. 97] is also responsible.
Assemblyman Horne:
I don’t understand in Section 9 the subrogation portion, particularly how this is going to accomplish your objectives. You are looking at collateral sources… My wife just had a baby a couple of weeks ago. If she had died during delivery, our life insurance policy would have paid and then the doctor’s insurance company would have looked to reduce my damages by that claim. I don’t understand how it helps or brings down the rates so that the doctor gets to ride on our coattails for prudent prevention in such unforeseen circumstances. It seems unfair to say the least.
Lawrence Matheis:
The notion is that it is going to be about economic damage. If in fact, that economic damage is made whole, then it shouldn’t be compensated twice. It is going to be coming out of the system somewhere. If it is compensated twice, then there are going to be cost impacts of that. That’s the logic of that.
Assemblyman Horne:
That would hold true if it was compensated twice by your insurance premium—if your insurance carrier were providing that award. But my wife and I are the ones making those premium payments. We have not made the premiums for the doctor; we have made the premiums for ourselves. It is not to relieve you of your liability, but that is what you’re asking. If somebody has taken the steps in order to protect himself or herself in the future, we [the victim] should be relieved of their liability because we have already done it for ourselves.
Lawrence Matheis:
I think that’s the counter-discussion that Mr. Rosenberger will discuss.
James Rosenberger, Attorney, representing health care providers and facilities:
I think the answer to the question is that S.B. 97 allows the jury to be aware of other payments made. The way that it works now is that you have a case that goes to trial, the doctor and hospital bills are submitted to the jury in their total amount, say $50,000. The jury can award that amount if they find liability. In reality however, the physician may only have been paid $10,000 or $15,000 as a result of provider contracts or reimbursements that are less than full dollar amount. The jury is not given that information as to what was actually paid for those medical services. That’s the reason, to give the jury a full understanding of what the true payments are, not just those that are billed. I don’t know how many of you are familiar with how health care is billed, but the billed amount is not often or is rarely paid in its full amount.
Assemblyman Horne:
But I don’t think this narrowly goes to just what has been paid in medical costs. The scenario that I posed had nothing to do with what medical bills had or had not been paid. Basically, to make it real simple, I get in a car accident, wreck my car, and I sue. I buy a brand-new car. The defendant can’t say, “He already has a new car, so I don’t have to pay for his other car.” That’s how I read it; that’s what this does.
James Rosenberger:
I believe the last part of Section 9, subsection 1, says that you can introduce what the cost of that was to you. If you paid premiums over a number of years, that cost can also be disclosed to the jury if you so choose. The jury can decide what to do with it at that point.
Assemblyman Horne:
You can introduce that information to a jury, but you can’t introduce evidence that a doctor has insurance. Is that true?
James Rosenberger:
That’s correct.
Assemblyman Horne:
Is that fair?
James Rosenberger:
I don’t think there is anybody in Nevada that doesn’t know that doctors have to have insurance. That’s a different rule.
Assemblywoman Buckley:
Could we ask our Legal Counsel or Committee Policy Analyst? The testimony during the 18th Special Session was that doctors do not have to have insurance. That is why we put that in the statute, in order to take advantage of the cap, they had to have $1 million worth of insurance. Could our staff respond to that? That contradicts the testimony that I received during the 18th Special Session.
Lawrence Matheis:
I can supplement that; physicians are not required to have insurance by law. They are required to have it by almost every hospital in order to have staff privileges; it is not a statutory requirement. There are a few states that have statutory requirements; Nevada is not one. You are correct, in A.B. 1 of the 18th Special Session, by creating policy limits of $1 million per occurrence and $3 million per policy year as a secondary cap, you established an incentive for physicians to have those limits.
Assemblywoman Angle:
How long has MICRA been in California? Have there been cases that tested the constitutionality of all of these provisions; what has been the outcome of those cases?
Lawrence Matheis:
Medical Injury Compensation Reform Act (MICRA) has been the law since 1975. It has been tested; it was tested into the early 1980s. When the last constitutional decision was made, that was when things stabilized. Depending on how you want to count it, from when it was passed or when it passed the last of several constitutional challenges, it has been 25 to 30 years. I will submit for the record a list of the constitutional challenges and the decisions of the California Supreme Court on the MICRA law.
Chairman Anderson:
And the percentages of insurance premium increases in California have not gone up, then?
Lawrence Matheis:
It’s my understanding that, as a general rule, it has been much less than the national increase rate and the lowest in the country.
Chairman Anderson:
I was under the impression that during the 18th Special Session that we saw that they were comparably as high as Nevada’s.
Lawrence Matheis:
I will submit the chart and the information that I have, which don’t show that.
Assemblywoman Angle:
Related to the collateral [sources] and the insurance being introduced into the court, is that permissive and the jury does not have to take that into account unless they want to? It is not something that must be deducted from the settlement, is that correct?
Lawrence Matheis:
I happen to have the March 3, 2003, report by the United States Department of Health and Human Services (Exhibit E), “Addressing the New Health Care Crisis: Reforming the Medical Litigation System to Improve the Quality of Health Care.” On page 26, a chart illustrates the premium growth in California versus U.S. premiums, 1976-2000. Nationally, premiums increased 505 percent since 1976, which is the year that MICRA went into effect. In California, the increase was only 167 percent since 1976 and virtually flat since the court decision in the mid-1980s. That is the lowest in the country.
Chairman Anderson:
Over 500 percent nationally, except for a few states—Colorado, California, New Mexico….
Lawrence Matheis:
…Wisconsin, Indiana, and Louisiana.
Assemblywoman Buckley:
California has a larger pool of doctors, which determines risk. They also passed Proposition 103, which reined in the insurance companies. I don’t know of any study that has considered all of those factors.
Lawrence Matheis:
I think you do have to consider all of those factors. The state of New York, which adopted many of the reforms…
Assemblywoman Angle:
Related to adverse outcomes, when someone is found guilty of negligence, are there ever criminal charges brought for that? Is the license revoked or do we just pay the settlement and they continue working?
Lawrence Matheis:
Both have happened. It depends on the circumstances in which the malpractice occurred. There have been cases where there were actual criminal assaults by physicians resulting in criminal decisions against them. Certainly any of these cases are reported to the Nevada Board of Medical Examiners or the State Board of Osteopathic Medicine, which then are required to look into it.
James Rosenberger:
I agree with Mr. Matheis’ comments. In regard to the Nevada Board of Medical Examiners, over the last several years they have taken a very active role and have become much more involved in actually filing administrative complaints and holding hearings in Reno in regard to physicians. In my practice I have seen an increase…I am there are at almost every meeting on behalf of one of my clients in regards to actions like this. This was not true five or six years ago; it is true today. Over the last two years, I have had five actual evidentiary hearings in medical negligence cases.
Assemblyman Geddes:
To follow up on Ms. Buckley’s questions related to the size of the [physician] pool and the other protections, I see those in California; I am looking at New Mexico, Colorado, and Wisconsin, which I would say are comparable to our state. What other protections do they have in place and how would those pools compare [to Nevada]?
Lawrence Matheis:
They all have hard caps and they vary in the other elements such as the collateral source rule. Only Indiana also has contingency fee limits. The one thing that is in common for all of them is the hard caps.
Assemblyman Geddes:
I think Ms. Buckley also mentioned some of the other provisions such as insurance reform. What about those types of provisions in the other states?
Lawrence Matheis:
That has only been in California. That was really aimed at automobile insurance issues. The numbers on the stabilized premiums in California precede that by a number of years. On the size of the pool, the problem is that California obviously has more doctors than Canada does, but so does New York, Illinois, Florida, or Texas. The size of the pool of physicians has not affected their ability to control the market. All of those states are in crisis. It’s a complex area; different parts of the equation are going to play out. That’s why it is best to look at where there has been a success over a long period of time with the most factors accounted for.
Bill Bradley, representing the Nevada Trial Lawyers Association:
[Introduced himself and submitted Exhibit F, Exhibit G, Exhibit H, and Exhibit I.] Before I get into a discussion of S.B. 97, there are a number of items I have to address in response to Mr. Matheis’ comments. Mr. Matheis indicates that the public confidence has been lost in our justice system, it has been lost in physicians, and it has been lost in our health care system. I think it is important to realize that, if you agree with us, there are really three areas that need attention in this complex matter:
1. Reduce medical errors and reduce instances of malpractice.
2. Take reasonable steps in civil justice reform to achieve a balance between the rights of victims, which we have not heard one word about from the Nevada State Medical Association.
3. Enact reasonable insurance reform.
Unfortunately, the Nevada State Medical Association has chosen to ignore two of those. In doctor discipline, they have supported a bill that will make the standards more difficult to discipline physicians. Regrettably, you have not seen that bill; it’s S.B. 250, which is hung up in the Senate Committee on Finance, but it will come here. I will expect you to ask them why they feel that, in order to restore public confidence, we need to make it tougher to hold bad doctors accountable.
In the area of insurance reform, Ms. Buckley has passed good insurance reform, Assembly Bill 320; the Nevada State Medical Association does not support that. A few brave physicians have supported it, and I made a comment [during the hearings on A.B. 320] that I find it fascinating that the Nevada State Medical Association does not support that as well. It gets frustrating, as you well know, because I have been in this Committee so long, to see the doctors stand up and take the insurance companies’ position. I will say again, this truly is not an argument between lawyers and physicians; this is a complex issue that is truly between the innocent victims of medical wrongdoing and the insurance companies whose job it is to hold onto their money to be profitable for the shareholders. That is where this debate should focus.
[Bill Bradley continued.] In crafting a bill, I hope it is the policy of this Committee and every committee in this Legislature to do a balancing act of the various interests that are at risk when legislation is submitted. I think it is important to ask these three questions:
1. What’s fair for patients?
2. What’s fair for doctors?
3. What’s fair for Nevada?
As I said earlier, there was not a single word said about rights of victims in the entire presentation on S.B. 97. It is our position that S.B. 97 is so unfair to victims that it cannot survive constitutional challenge, but more importantly, it should not survive the public scrutiny that this body gives it.
We also have to look at what’s fair for doctors. We agree that the great majority of doctors are hard-working, honest, and need a good place to practice medicine. We believe that under A.B. 1 of the 18th Special Session, we accomplish that goal.
Finally, what is fair for Nevada? This is the first time that I have ever heard:
· Nevada should just step in line and do away with our independent ways of thinking.
· We really don’t need you folks [the Legislature] and we don’t need us [the lawyers].
· Let’s just follow what the other states have done because that makes it easy.
I am sorry, I was born and raised in this state and I have always been proud of the independence that Nevadans have. I am proud of the fact that Nevada was willing to look beyond the draconian effects of other state laws that completely disregarded the rights of victims. The 18th Special Session attempted to do a good balancing between the rights of injured innocent victims, the rights of physicians, and the rights of Nevadans.
[Bill Bradley continued.] How did the problem begin? We have spent some time talking about this issue with you before but because Mr. Matheis brought it up, I think it is important to look back historically at what really happened. As we have indicated to you in the past, I am not going to do my insurance hard-cycle chart unless you are interested, I differ 100 percent with [comments made by] Mr. Matheis. Every crisis in medical malpractice fell squarely in an economic crisis in this country: 1974, the oil embargo; 1984, the worst hurricane season on record; and 2002, the horrible economy. Unfortunately, the year of 2003 is starting out very bad for the casualty companies, as I am sure all you have seen with the horrible devastation that is occurring in the Midwest. Rest assured, that is going to create additional problems in the casualty insurance market; there is nothing you or I can do about it. That’s the cyclical nature of insurance.
In 1984, St. Paul [Insurance] came into Nevada and saw it as an opportunity. They came in, bought a little carrier called NML, and went about the business of systematically capturing market share. What’s the best way for a giant corporation to systematically garner market share? Drive down premiums, artificially low. When St. Paul came in, they automatically reduced rates across the board by 15 percent. Unfortunately, nobody asked Mr. Matheis, they also did something else very smart: they entered into an agreement with the Nevada State Medical Association that guaranteed coverage to any physician who belonged to the Nevada State Medical Association irrespective of his claims history or his experience. Thus, the [member physicians] got the automatic 15 percent rate discounts, and who is going to blame any physician for not fleeing to that lower price? It just makes sense.
But then what St. Paul did was even more dangerous; they froze their prices. If you think about it for a moment, and this is an explanation for why verdicts continue to go up, our health care costs are going up every year in double digits. Whenever there is a catastrophically injured victim of medical malpractice or, for that matter, of any tort, the medical bills that person is incurring are going up 12 to 19 percent per year. As long as the cost of care for catastrophically injured people is increasing, unfortunately, the medical verdicts reflecting the need to care for their future injuries will increase.
So why would any reasonable insurer, this is not rocket science…if one half of your anticipated costs are going to increase next year, the economic damages of a victim, aren’t any one of us going to try to accommodate that by increasing our premiums to reflect that increase in cost? But that’s not what St. Paul did; instead, St. Paul froze rates and held rates down artificially in order to garner more market share.
What does that do to the competitors? The competitors have two choices:
1. Follow the market and not garner market share because the big gorilla is knocking down the prices, or
2. Reluctantly go along…and that’s what happened in Nevada.
[Bill Bradley continued.] Mr. Matheis’ chart doesn’t indicate the rate decreases that the Doctor’s Company gave in 2001. I would just like to take a look at Mr. Matheis’ exhibit (Exhibit D) because I think it is pretty interesting. On the back of the first page, it shows the profit/loss for 1999 and 2000. Of course, St. Paul had losses because, as part of that agreement, they insured every doctor. You have heard me talk about before and I will talk about again Dr. Dan Broja, a spinal surgeon, who repeatedly significantly injured people. St. Paul continued to write him as part of the Nevada State Medical Association agreement, and Dr. Broja continued to hurt people. So, you can see why St. Paul lost in 2000.
Looking at the Doctor’s Company, they had a profit in 1999 of $6 million and a profit in 2000 of $4 million; that’s $10 million in two years. If you look at the states where Mr. Matheis pointed out there were significant profits, such as Indiana and Colorado, those companies are making fortunes in those states. They are not reimbursing it to the physicians, and that’s part of the insurance reform that Ms. Buckley has sought. Unfortunately, we don’t see the medical association trying to refund some of those savings back to the medical professionals when this draconian tort law does pass.
So we had St. Paul undercutting the market, making promises to the Insurance Commissioner, making promises to the Nevada State Medical Association, and making promises on tail coverage. Then a new president came into St. Paul and said, “Boy, whoever was the former idea man sure got us in trouble. We are in horrible trouble and we are ending the business.” So they pulled out, but by the time they pulled out they had already insured 60 percent of the southern Nevada market. They left the state in a crisis—no doubt about it.
But you have not heard today, nor will you hear the rest of this session, is a single example of a verdict that was excessive or frivolous. I will continue to remind you not to listen to the anecdotes but to look at the actual facts of 21 verdicts in Clark County. Mr. Matheis and I do agree, how can 21 verdicts affect this market so badly, especially when the largest verdict was $5 million? That question does not ring true in anybody’s mind. Furthermore, none of those verdicts were paid in full; some are still on appeal. The whole idea of this large number, which really isn’t a large number when you divide it among 21 catastrophically injured people, is not intellectually sound.
We could talk about what caused this crisis forever and what the real or perceived facts are, but let’s talk specifically about S.B. 97. Generally, in the area of civil justice reform, the only five areas that anybody from the Nevada State Medical Association seems interested in addressing in this session, are:
I want to point out to you what you worked so hard to do in A.B. 1 of the 18th Special Session, it is such a good bill, how badly S.B. 97 trashes the good work that you did, and, more importantly, how it destroys innocent victims’ rights to hold wrongdoers accountable.
[Bill Bradley continued.] The first area that S.B. 97 changes is the definition of malpractice. No one has given a real good explanation in this entire Legislature why the definition of malpractice needs to change; it’s been the same definition in Nevada for 60 years, courts have interpreted it, we have a multitude of decisions interpreting what medical malpractice is, and it’s contained in NRS 41A.009. I don’t know and I haven’t heard any reason why we need to change that at this time, other than I think it is the hope of the defense bar and the insurance industry that they can make an argument that under this definition people who have legitimate injuries perhaps should not be allowed to recover against a physician. Obviously, there is a reason why they want to change this, but I haven’t heard the reason explained sufficiently and I have not understood why the current definition for 60 years is not a good definition.
Now we will get into a discussion on caps. Assembly Bill 1 of the 18th Special Session has a cap that we fought very hard to oppose in the 18th Special Session. Unfortunately, because of the circumstances surrounding the 18th Special Session, a $350,000 per plaintiff/per defendant cap was passed. I think it is important for this Committee to recognize that people did not just come together for three days in July 2002 for the 18th Special Session; the Governor ordered a medical liability task force comprised of lawyers, insurers, and physicians to work for almost a year leading up to the 18th Special Session. In that group, many of these compromises were worked out, including agreement by the Nevada State Medical Association. The $350,000 per plaintiff/per defendant cap is a way to make sure that someone who has a catastrophic injury, still unbalanced, has the right to recover a fair pain and suffering award. All we are talking about here, noneconomic damages, is the same as pain and suffering.
[Bill Bradley continued.] I don’t think I have to say this, but the initiative petition and S.B. 97 are, word for word, the same. When we are talking about one, we are talking about the other.
The other aspect about A.B. 1 of the 18th Special Session that is so important is the two exemptions:
1. Gross malpractice where the $350,000 cap would not apply
2. Exceptional circumstances by clear and convincing evidence
The gross negligence is an exemption without a lot of body because under Nevada’s definition of “gross negligence” an injured victim has to show that the physician intended to hurt them. We have a problem with the definition of gross negligence, but as gross negligence is defined in Nevada, that’s a state of mind and there is no way… First of all, I don’t believe that in 999 of 1000 cases, a physician ever intends to hurt somebody. That exemption doesn’t really mean a lot, but the second one is very important.
The exemption for exceptional circumstances by clear and convincing evidence means that during the course of a trial the judge and jury listen to the evidence surrounding the catastrophic injury suffered by the plaintiff. If that judge determines that evidence was presented by clear and convincing proof, the judge has the ability to maintain the jury’s verdict, to lower the jury’s verdict, or to lower it to the point of the cap. It’s based on a fundamental understanding of the damages [by those] in the courtroom, as many of you can appreciate.
You are going to hear from some victims today. Without hearing from the victims, without hearing how the injury affected the person, passing a hard cap of $350,000 is a tough decision for any policy body to make. I think that in order to ensure that victims are heard by our courts and our judges, an exemption like the one we created for exceptional circumstances is absolutely necessary.
[Bill Bradley continued.] In Senate Bill 97, irrespective of the harm, irrespective of the damages, irrespective of the negligence of the physician, irrespective of everything, there is a $350,000 cap. In the case of a wrongful death of a bread winner, a housewife, where the caps are so bad, a non-wage earner, a senior citizen, a stay-at-home mom, or a child, the cap is $350,000. I need to make sure that everybody in this room understands, that does not mean that the insurance company is going to pay $350,000. Why would they ever pay what is the most they will ever have to pay?
If there is a tragedy involved in the wrongful death of a stay-at-home mom, they are not going to pay $350,000, they’ll say that they will pay $200,000 or maybe $150,000, and that’s after three or four years of litigation and upwards of $100,000 in expenses.
What that cap does to senior citizens, stay-at-home moms, and those that lose young children is deny them access to the courts. That’s why that cap is there and that’s also why the limit on attorneys’ fees is there. That’s why we believe that S.B. 97 is unfair to victims and without exemptions, as contained in A.B. 1 of the 18th Special Session, poses significant constitutional problems for any court to overcome.
We have talked a lot about a hard cap; this is what Majority Leader Buckley was referring to. As part of A.B. 1 of the 18th Special Session, there is an absolute, without question, hard cap of noneconomic damages of $1 million; that was why Section 5, subsection 3, was inserted, which basically says, as Ms. Buckley already indicated, that if a victim of medical malpractice has a claim against a physician and that victim’s medical bills and wage loss total $900,000, the most that victim can recover is $100,000 for a total of the defendant’s policy limit.
In California, that is not the case. In California, if the victim has $900,000 in economic damages, medical bills and wage loss, they are still entitled to recover $350,000 in noneconomic damages. Not in Nevada. This is probably the hardest cap that exists in the United States other than the states that Mr. Matheis talked about, like Indiana or Colorado, where irrespective of your economic damages, your medical bills and wage loss, there is a total cap. Those states have reached so far across victims’ rights that they said, “We don’t really care what your economic damages are; we’re just saying that your economic damages are limited to a certain amount.” I hope that kind of backward thinking does not exist in a progressive state like Nevada.
[Bill Bradley continued.] Make no mistake about it, this hard cap is the reason the Senate Committee on Judiciary rejected S.B. 97 and reinserted in its amendment A.B. 1 of the 18th Special Session. That amendment passed out of the Senate Committee on Judiciary on a majority vote only to fail by one vote on Senate Floor. The hard work that was done in the Senate Committee on Judiciary was all for naught, but the Senate Committee on Judiciary was convinced beyond a shadow of a doubt, as are the insurers, that this hard cap makes a very predictable market place in Nevada.
What I am talking about is predictability. I am going to dispute what Mr. Matheis said, because testimony that we also heard on the Senate side was very good news—the Governor’s plan, MLAN, that currently insures 600 doctors, has now been fully reinsured by AIG (American International Group Inc.), the largest insurer in the world. Interestingly enough, the chairman and chief executive officer of AIG, according to testimony of the insurance commissioner on the Senate side, made comments that his company was not going to write liability in states that did not have reasonable tort reform. More importantly, [AIG] was not going to participate in the bond market of the states that don’t have reasonable liability reform.
Fortunately, seeing AIG come into Nevada and totally reinsure the Governor’s plan is very strong commitment on behalf of the insurers that the legislation that you passed in A.B. 1 of the 18th Special Session is good, balanced tort reform that gives the insurers the predictability that they need in order to view Nevada as a good market. That’s why we are seeing stability in this market, we’re seeing insurers express more interest to come to Nevada, and we are seeing new insurance companies formed to write insurance in Nevada.
I have already indicated that when you have a victim who has no wage loss and whose medical bills are paid by Medicaid, the only claim is for noneconomic damages for that horrendous loss, for the loss of a spouse of 50 years, for the loss of a child, or for the loss of a stay-at-home parent. Unfortunately, that hard cap of $350,000 without exemptions totally discriminates against those people, it makes it incredibly difficult to hire competent counsel, and they are washed out under the systems that have this kind of draconian cap.
An interesting difference between A.B. 1 of the 18th Special Session and S.B. 97 is the concept of joint and several liability, which can be a complicated concept. Basically, joint and several liability only applies when there are two or more people who bring about an injury to a person. Because roughly 80 percent of all malpractice cases arise in the context of a hospital setting, let’s talk about a nurse and a physician who, through a myriad of reasons, don’t communicate properly, a patient is inappropriately treated, and that patient, a young man in his 40s, suffers catastrophic injuries and irreversible brain damage. Under joint and several liability, a jury is required to determine how much of that responsibility falls on the physician and how much falls on the nurse. Of course, that is going to vary from case to case.
[Bill Bradley stepped away from the witness table to use the easel and spoke off microphone.]
[Bill Bradley continued.] Under A.B. 1 of the 18th Special Session, the award is limited to $350,000 unless the exemption applies. Under S.B. 97, if a jury determines that the hospital is 30 percent at fault, the doctor is 70 percent at fault, and forgetting the $350,000, under the doctrine of joint and several liability, the doctor and hospital are severally liable for the damages they caused; that’s what the proponents of S.B. 97 want to say, each person is responsible for his share. The physician who is 70 percent at fault of $2 million has the responsibility of $1.4 million, and the hospital’s responsibility is $600,000.
Under existing law, as long as the plaintiff or the injured victim was free from fault, the victim may recover this amount from either the physician or the hospital; that’s the doctrine of joint liability. The policy behind that was when a victim was free from fault, the social policy was that it was better to make sure that victim was adequately compensated particularly on the economic damages and that loss is spread throughout the system. That was the old social policy—to ensure that innocent victim was economically compensated to take care of its future.
Under S.B. 97 that all changes and, by the way, I want to make sure it clear, S.B. 97 is not MICRA. Don’t for a moment think that this joint and several [liability] law is the same in California; even in California it doesn’t go as far as S.B. 97. In California, it follows existing law under Nevada, which is that for noneconomic damages, each person is only responsible for his share. But the economic damages can be recovered from either the hospital or the doctor.
So what happens under S.B. 97? This is why I find it so incredible that doctors support this; the doctor is now liable for $1.4 million, but as we know, most doctors only carry $1 million coverage. Under the rule existing for A.B. 1 of the 18th Special Session, we would still be able to recover the $1 million from the doctor and get the remaining $400,000 from the hospital, once again to ensure that victim is economically compensated. But under S.B. 97, that will no longer be the case; we will have to pursue this doctor for the $1.4 million.
[Bill Bradley continued.] Here is what’s going to happen—that doctor will say that he only has $1 million coverage. In the old days, under A.B. 1 of the 18th Special Session, under a very creative and fair bill we had, we would have accepted the $1 million, given the doctor a release, and pursue the balance from the hospital, the larger company able to spread its costs throughout the United States. But you, the doctors, are the ones who asked for S.B. 97 and now you’re basically telling me to look my client in the eye, the spouse taking care of horribly injured 40-year-old man, and tell her, “Although the doctors asked for this bill, they don’t have the money to pay for your husband’s care, and they would really appreciate it if you would sacrifice the quality of your husband’s care for the next 30 years because they only have $1 million in coverage.”
In the 25 years I have been practicing law, I have never pursued a physician individually, I never believed in it, I never felt it was productive; these things demand closure. Under S.B. 97, the proponents and the proponents of the initiative have given us no choice but to pursue these physicians individually beyond their policy limits. That is a horrible public policy to establish in the state and, quite frankly, we can’t believe that the medical community has not woken up to this because it means that every physician that practices in a hospital setting is now vulnerable to significant excess verdicts. Hopefully, somebody can explain that to the physicians. Even though I have been in this argument for a long time, I still have a few friends who are physicians. My recommendation, should S.B. 97 or the initiative petition pass, to my friends that are physicians is that they get more coverage. This is going to happen; it’s just a matter of time.
Senate Bill 97, for this reason alone, should be rejected.
The next area of discussion between A.B. 1 of the 18th Special Session and S.B. 97 is insurance and collateral source. Nevada, rather than being a follower, was the leader in a fair collateral source evidence of insurance bill. Basically, evidence of insurance has never been admissible in a courtroom because insurance has a prejudicial effect on people; that’s the way the law looks at it. If the law knows you have insurance, the jury might be more inclined to make an award against you. I will go down swinging saying that if a jury knows you’ve got medical insurance and your bills were paid, why would they ever award you your medical bills? I just doesn’t make a lot of sense to me that when a jury knows about those things, the juries are very smart, they are going say, “Well, their medical bills have already been paid, why do it again?”
Assemblyman Horne was correct when he asked, “Why would we set up a law where the wrongdoer gets the benefit of the hard work of the innocently injured victim?” That’s what the proponents of S.B. 97 are trying to convince you to do. It is very interesting that they want to tell the jury that the victim of medical malpractice has insurance, but they won’t let you tell the jury that the doctor has insurance. That just doesn’t again make logical sense. If it were up to us, we wouldn’t even want to name the physician in the lawsuit. I wish the insurers were in the back of the room; it ought to be “Jane and Jim Smith versus The Doctor’s Company” because that’s really what it is. The insurers, if they were sitting here, would say that you can’t do that, that would be too inflammatory to the jury, so that’s why we are back on the old rule of having to name the doctor, but the insurance company really steps into those shoes.
[Bill Bradley continued.] Under the collateral source bill, what really happens is the jury continues not to be told about any insurance. Then at the conclusion of the case… And by the way, I have to deeply disagree with the attorney from Pico and Mitchell [James Rosenberger] about the bills that are introduced into evidence. I will have to check the files that Pico and Mitchell have appeared in, but I can guarantee that they have a motion filed that asked the judge to only allow the medical bills that have been billed. I think it is disingenuous to offer the medical bills that have been sent because they haven’t been paid. The only bills that have been paid are those the insurers paid. I can tell you in the medical malpractice cases that I have been in and the medical malpractice cases that Jerry Gillock, [NTLA], has been in, the bills that come into evidence are those that were paid, not the bills that were charged.
Here is what happens. Those bills that were paid come into evidence, let’s say they are $200,000. If the jury awards those medical bills because they find liability, the judge thanks the jury and sends them home. Within a week or two, the judge calls the lawyers back and says, “Tell me about the award of medical bills, did your client have health insurance?” If I say, “Yes,” then the judge asks, “Does that health insurance company have a right to be paid back?” In every health insurance, there is a right to be paid back and that’s the big fancy word called “subrogation.”
The judge will then ask, “Do you have information from the health insurer that they want to be paid back?” Remember, I had to contact the health insurer to find out how much they paid. I don’t know about you, but I can’t read those forms and the only way to really find out what was paid or wasn’t paid is to call them and ask them, “How much did you pay on this claim, what’s your total?” The minute you do that, there is an e-mail sent from that adjuster to their third-part subrogation department that says, “Mr. Bradley has called and asked about medical bills; he must have a claim. Make sure you send a letter to Mr. Bradley perfecting our right to be paid back.”
[Bill Bradley continued.] I will get a letter from the insurer saying, “We understand you represent Jim and Jane Smith, we’ve paid out insurance proceeds, we have a right to subrogation, and we are asserting that right.” I show that letter to the judge and the judge says, “OK, let me understand. The jury awarded the medical bills, but the insurance company wants it back. Under that circumstance, I am not going to reduce the verdict because there has been no double recovery. The jury awarded it, it needs to be paid back to the insurer, everybody comes out square.” That’s what our law does.
If the judge says, “Do you have a letter from the insurer that says they want to be paid back?” and I say, “No, they never have contacted us, they are not interested.” Then the judge says, “That does appear to be double recovery,” and the judge reduces the verdict by the amount of the medical bills. What that does is it keeps insurance out of the courtroom, it makes sure that insurers are paid back, and it avoids the double recovery that some people are critical of in our cases.
One of the most important things, it pays back the major medical insurer because, if you think about it for a moment, if that major medical insurer doesn’t get back all that money it paid out year after year, what are they going to do? They are going to have to raise their premiums to reflect the loss to subrogation.
One thing the proponents of S.B. 97 didn’t tell you is that under the initiative petition and under S.B. 97, they eliminate the right to be paid back. The major medical insurers will not have the right to be paid back anymore, they are going to experience losses, and our health insurance is going to go up. Under our scenario, we are at the forefront of collateral source legislation in Nevada. We have a way that avoids that problem, deals with the concept of double recovery, and keeps evidence of insurance out of the courtroom, which is everybody’s goal unless we open it wide up. Once again, I don’t care what California did, I don’t care what Colorado did—this is fair to Nevada and fair to patients.
One interesting sidelight is Medicaid, which gets its share of malpractice victims. Under Medicaid, people have to seek their primary care in hospitals where sometimes they don’t get the attention they need, and they are unfortunately the victims too. When a victim who has no medical insurance and has no assets is horribly injured, Medicaid picks up the bill. I just actually completed a case on behalf of a 36-year-old woman who received horrible treatment over a Memorial Day weekend that left her blind, brain-damaged, and in a vegetative state. To date, Medicaid has paid out over $350,000 on her claim. Under A.B. 1 of the 18th Special Session, Medicaid will be paid back.
[Bill Bradley continued.] However, if we went to S.B. 97, the jury would be told that Medicaid paid her bills. I think the logical conclusion of the jury under that scenario would be, “If Medicaid paid it, we don’t need to award it,” so they don’t award the medical bills. On the Senate side, we heard from the state Medicaid people that whether or not the jury awards medical bills to Medicaid patients, Medicaid has federal rights to recover against any award. Even though that victim would not receive their medical bills from a jury, they would still have to pay their medical bills to Medicaid. That victim with Medicaid, who did not have their medical bills awarded, would get a double whammy. They would first not recover their medical bills and then whatever money was left under their award would be subject to Medicaid’s recovery. It is horribly unfair to people who are on Medicaid or Medicare.
The next element is periodic payments. Once again, Nevada was at the forefront of periodic payments. Periodic payments are a way to make sure that a plaintiff has money in the future, but there is a very subtle distinction between the way Nevada under A.B. 1 of the 18th Special Session deals with periodic payments and the way the proponents of S.B. 97 would. Under current law, under A.B. 1 of the 18th Special Session, if the jury awards a $500,000 award, the victim is entitled to take that $500,000 and place it with a company that will pay future payments. They receive their money and they can buy something with it. But that’s not what happens under S.B. 97. Under S.B. 97, the person who caused the harm gets to decide whether that patient receives their money now or whether they have to receive it over time. I can’t think of another element in society where the wrongdoer gets to select how the victim is going to be paid, but that is what S.B. 97 does.
Once those payments are established, if it’s $500,000… Let’s say the judge thinks $50,000 a year is fair, so the victim never sees their $500,000, they see $50,000 a year. In year 2, they have spent year 1 and they get $4,000 a month for 12 months, that’s almost $50,000, but in the sixth month of the second year, they need a significant surgery. They don’t have any way to pay for that emergency care, so they have to postpone their emergency medical care, and save those little nickels that come in every month until they have enough to pay their bills. While they are saving their money every month waiting for their money to add up to the future medical surgery, the insurance company is holding on to the principal amount getting interest and flourishing with the victim’s money. That’s why we don’t feel that the periodic payment provision of S.B. 97 is fair at all.
Finally, there is the limit on attorney’s fees. There is not a person who has testified in this Legislature who [believes] that the limit on attorney’s fees will reduce premiums. That’s a punitive aspect of S.B. 97. I am sure it’s popular, people feel that our fees are too high, but what they don’t realize is how negotiable our fees are. To have the state establish fees is something that just doesn’t seem the power or the right of the state. We are constantly interviewing people who believe they have medical malpractice claims. Unfortunately, most people don’t realize that there is a huge difference between a poor outcome of surgery that could not be avoided and a poor outcome that was due to negligence. A lot of people have the misunderstanding that a poor outcome equals negligence. The sophistication of people that are coming into law offices and into doctors’ offices, the Internet has done a wonderful job of making people aware of their rights.
[Bill Bradley continued.] If a client comes into me and says, “Mr. Bradley, I think I have a good case and I think my case demands that your fee be reduced.” I have two choices, I can say, “You’re right, and I am willing to reduce it to meet your goals,” or “I am not, but there is someone down the street.” That seems to me the way that Nevadans have always contracted, and I again submit to you that the limits on attorneys’ fees are not going to do a thing to affect premiums, but ultimately are going to prohibit those same people—seniors, stay-at-home parents, people who have losses that are limited to the noneconomic cap of $350,000—will not be able to obtain a lawyer because by the time the costs are taken care of, these cases are by no means easy to win, I am not aware of a verdict that has occurred in the last eight months in Nevada in favor of a victim. We really feel that the toughest case in this state right now is to try to hold the doctor accountable. It just no longer makes sense if our fees are so low that economically we cannot pursue those claims.
What S.B. 97 really accomplishes is it eliminates legitimate malpractice cases. The senior citizens, the stay-at-home parents, parents who lose their children, and those who are confined to that $350,000 cap, are not going to be able to bring the wrongdoer into a courtroom. We have decided not to pay attention to jurors under S.B. 97. We don’t need jurors to listen to the victim’s side of the story because the proponents of this bill have already decided what their case is worth. Finally and most importantly, the most catastrophically injured people are those that pay the most and they are the ones most harshly affected by this horrible bill.
The goals of a good policy should be how do we get stability in the rates? Mr. Robert Byrd, who is an incredibly sophisticated insurance man, said in the 18th Special Session, “A.B. 1 of the 18th Special Session is meaningful tort reform.” Mr. James Wadhams: “A.B. 1 of the 18th Special Session has a positive impact.” Mr. Byrd at the Senate Committee on Judiciary, the only insurer who had the guts and the wherewithal to say how he really felt, said, “I believe the relief given us in A.B. 1 of the 18th Special Session, if it holds up…instead rates will start going in the other direction.” In other words, we have one of the leading insurance people in the state saying that A.B. 1 of the 18th Special Session, if it holds up, is going to lower rates, and of course that is what we are all after.
[Bill Bradley continued.] Fundamentally, let’s take a look at A.B. 1 of the 18th Special Session and S.B. 97, because everybody’s concern is what will hold constitutional challenge and what won’t. We have selectively picked up quotes from the people who spoke in the 18th Special Session about the constitutionality. If you think about it, we are trying to pass a bill that is constitutional but will still protect the safeguards of injured victims and gives doctors a stable environment. Which is more constitutional, a bill [S.B. 97] that has an incredibly inflexible cap of $350,000, has no exemptions, and makes doctors exposed beyond their policy limits; or a bill like A.B. 1 of the 18th Special Session that this Legislature worked so hard to craft in a constitutional manner? I submit to you that there is just not a question between which was designed to meet the constitutional safeguards—that would be A.B. 1 of the 18th Special Session.
Finally, we will go back to what’s fair for Nevada, what’s fair for doctors, and what’s fair for patients. We believe very strongly that A.B. 1 of the 18th Special Session, the hard work that was done last session, meets all three of those questions very squarely. We also believe there are small problems with A.B. 1 of the 18th Special Session, but they are insignificant compared to the horrendous problems created by S.B. 97. We would respectfully request that you reject this proposal [S.B. 97] as being unfair for Nevadans, unfair for doctors, and totally unfair for patients.
Assemblyman Geddes:
In looking at A.B. 1 of the 18th Special Session and S.B. 97, comparing them to California, Colorado, and New Mexico, the $350,000 cap, is it per plaintiff/per defendant in those states or is it per event?
Bill Bradley:
I can only answer for California, but I can get the information on the other states. California is per event.
Assemblyman Geddes:
Talking about the three legs that we need to deal with—medical errors, reasonable tort reform, and insurance reform—Ms. Buckley brought a bill addressing insurance reform, I haven’t seen much about the medical errors, but this is the bill dealing with tort reform. In your opinion, you say that this bill does not address tort reform and there are no bills out there that will address reasonable tort reform as you suggested. Do you think A.B. 1 of the 18th Special Session has covered what you would consider to be reasonable tort reform? I firmly believe that tort reform, not only in this area but also in several areas, is necessary.
Looking at the access, we have a lot of victims who can speak and have been wronged and deserve to be made right in their situations, but I am truly frightened by the number of pregnant mothers who can’t get a doctor these days and the value of prenatal care. Without a good obstetrician, I shudder to think what could have happened with my son who was two months premature.
I want you to tell us that A.B. 1 of the 18th Special Session will get us there and that no other reasonable tort reform is necessary.
Bill Bradley:
I do believe that A.B. 1 of the 18th Special Session gets us there in spades. Assembly Bill 1 of the 18th Special Session I think has some problems, but overall the caps that were instituted, the preservation of joint and several [liability], the fair treatment of collateral source, and the way periodic payments are established is a fair civil justice reform.
Regarding your comment about women who cannot access prenatal care, if I could have the video (Exhibit I), please.
There are two things I am going to ask you. When you talk about jury verdicts, I need you to point out to me jury verdicts in Nevada that you believe are excessive or frivolous; and I need you to point out the women who have not been able to obtain obstetrical care. As soon as this tape comes up, despite the misleading and wrong ads that have been presented by the Keep Our Doctors in Nevada Coalition, you are going to find out what an investigative reporter learned in Las Vegas about the access to obstetrical care. [Video run.]
That’s probably one of the biggest perception problems out there. Unfortunately, a lot of people are accepting anecdotes as true. Please ask for the specifics, don’t go to the anecdotes.
Assemblyman Geddes:
I will let you know that I am not basing any of this on anecdotes. I based it on myself and my wife, my friend and his wife, and another friend and his wife in Reno trying to call around and find an OB/GYN (obstetrician/gynecologist); it took us a month to find one who would take the insurance plans available to us. We had a whole list of OB/GYNs, there were 16 on our list, and only 2 were listed as taking new patients at the time; one was no longer taking patients since publication of the list. We had to talk to a friend who got us in with a cousin who was an OB/GYN. I am speaking from that and the list that I had as a state of Nevada employee of the OB/GYNs available to me in Washoe County. It was neither anecdotal nor based on commercials.
Bill Bradley:
Are you aware that the OBs are threatening another boycott down in the south because of the inability to recover a fair Medicaid charge on OB/GYN services? It is a multifaceted problem.
Assemblyman Geddes:
You firmly believe that A.B. 1 of the 18th Special Session handles all the reasonable tort reform that is one of the three parts that we need to address?
Bill Bradley:
I do, but more importantly, the president of the largest insurer in the world does.
Assemblyman Mabey:
There truly is a problem in southern Nevada. I agree with what happened in that article that seemed a little slanted. But there aren’t enough obstetricians in town, if things continue the way they are. I talked to a colleague this last Sunday. I said, “How is it going?” In January and February, he did over 50 deliveries. In March and April, he did nearly 30 each month. That’s too many, he can’t do that, and it’s practically impossible. We really do have a problem in southern Nevada.
I introduced some obstetricians the other day on the Assembly Floor; I told [the legislators] they were like the blue butterfly in Nevada that is endangered. I feel that way about certain specialties. We go to medical school for four years and [complete] four years of residency. If you get a lawsuit, we aren’t all perfect; you end up with premiums of $160,000 to $200,000 [a year]. You won’t be able to practice medicine. Why would anyone want to come to Las Vegas to be an obstetrician? They would need a psychiatrist! I just can’t understand it. There are other fields that are going to be affected just as much; there are some fields that are doing OK for now.
We never want to hurt anybody; you said that you did not know of a doctor that intends to hurt somebody. The way it is going, I can’t see that things are going to improve in southern Nevada.
Bill Bradley:
I agree with you. There is not a rational person in this state that wants to see good doctors not be able to practice here. But I would submit to each and every one of you that we have addressed [the problems]. This organization has stepped up and worked for a year with the medical community to fashion a remedy that gives predictability to the insurance industry. Certain victims’ rights are going to be sacrificed, and that’s something I never thought I would find myself saying in front of a panel of the Legislature, in order to accomplish this goal. We have stepped up; this Legislature stepped up in A.B. 1 of the 18th Special Session, without question.
Now where are the other two legs? Are we just going to sit here and say, “We did reform,” when we know the problem was not created by excess verdicts and it was not created by frivolous lawsuits because we had the Medical Legal Screening Panel. We know it was created by the absolute insatiability of a fire-breathing corporation that was so anxious to make money that it put our whole health care system at risk. When are we going to say, “Enough”? That’s my question because I think the victims, the organizations that represent the victims, and those that testified on A.B. 1 of the 18th Special Session did step up. I don’t see the other people willing to step up. All you have to do is look at the positions of the Nevada State Medical Association on doctor discipline and insurance reform to see where this problem is now.
Assemblyman Mabey:
I agree. Assemblywoman Buckley brought up Nevada’s small pool; that’s not our fault. There are only a few blue butterflies in that sand dune. We are protecting that; we are making sure that you cannot dune buggy on that sand dune to protect those few butterflies. Well, the OBs are going to be like those blue Nevada butterflies: there are only going to be a couple of them around if the problem continues. It is hard to discipline a doctor. Mr. Rosenberger has defended me in the Nevada Supreme Court because I was on a committee that tried to do that; that case has been going on for I don’t know how long. We really have a problem. I would love to get rid of these bad doctors; I just don’t know how to do it.
Bill Bradley:
I am going to tell you, in our sincere, honest opinion; A.B. 1 of the 18th Special Session provides a lot more protection to OBs than S.B. 97. The one thing that I did not say about S.B. 97 is, when is the medical community going to wake up to this and realize the bag of tricks that they have been sold? In the event of a catastrophic loss where there is a periodic payment, particularly for a physician that delivers babies who have a long life expectancy, the physician is going to be a judgment debtor for the entire period of that judgment. That could go on 25 to 35 years where your assets are tied up. Unfortunately, when people who don’t understand what they are doing passed the initiative petition, they decided that was the best for you. The physicians that I have conversations with, I point out that if they work in a hospital S.B. 97 is bad… By the way, S.B. 97 provides great protection for hospitals. For everybody that’s interested in protecting hospitals, S.B. 97 is your way to go; that’s why they are supporting the initiative petition so strongly. Between the several liability that creates exposure for doctors who work in hospitals and being on that judgment for a long time, S.B. 97 should be the enemy of the Nevada State Medical Association.
Assemblywoman Angle:
Since you said we shouldn’t deal with anecdotes, I want you to discuss with me the percentages that were discussed in the previous testimony related to California’s 160 percent increase in their insurance rates, whereas nationally it is 505 percent. They base this on the MICRA restrictions. Also, if you would elaborate on why that’s unfair to patients in California. Are they not getting what they need in California? It would seem to me there would be more challenges if the fairness issue was raised there, if patients were not being cared for. There must be malpractice lawsuits. What’s going on there that we are not hearing about?
Bill Bradley:
The cap of $250,000 was passed in 1974 in California. It is still $250,000 today, which is actually $81,000 because that cap has never been adjusted for inflation. Legislators who thought the cap was fair in 1974 picked a figure of $250,000, but they didn’t put any increase on it, so what they thought was fair in 1974 is now really only worth $81,000. If they were consistent in their beliefs, the cap in California would be $850,000 because that’s where $250,000 over inflation has grown to the year 2003.
First of all, there is an incredible coalition of nurses and patients’ rights and consumer advocates that have fought for years to try to change the laws in California, but have been unsuccessful in doing so. There is great outrage among the victims in California about the unfairness of MICRA, primarily dealing with the cap. When you talk about the loss of a loved one, the wage earner, and the insurers, again, I can’t emphasize enough that no one is taking into account the ferocity with which the insurers defend these cases. So the defense costs are the same, ballpark about $100,000, because it is not “me” against the physician, it’s me against a $1 billion insurance company. For every one expert that I can get, they can hire four. When the cap is $250,000, when there is so much at risk, $100,000 with the ultimate recovery being $250,000, lawyers can’t help people and people can’t hold physicians accountable in California.
The other thing about California, and the reason you hear about $50 million verdicts, $40 million verdicts, $30 million verdicts, which we have never heard of in Nevada, is because of the way they have set up MICRA to require periodic payments. Lawyers are required in the tragic event of a baby born with horrendous brain damage because it stayed in the womb too long, having millions of dollars of expenses each year. Each year the jury is asked to decide how much those expenses are for each year for each child; it adds up to $30 or $40 or $50 million. We don’t see that in Nevada, but that’s the way MICRA makes the lawyers practice.
More importantly, Chairman Anderson is correct, during the 18th Special Session, I don’t have the figures in front of me but I will get them to you, the major malpractice carriers in California all raised their rates by, as I recall, double digits…11, 12, 13 percent within days of when we went in for a special session. The combination of the huge risk pool in California and the ability to spread that risk out among tens of thousands of physicians makes one of these large verdicts able to be spread out among the risk pool. In Nevada, with a small risk pool, we really can’t afford those large verdicts and that’s the exact reason why Ms. Buckley and others have sought to introduce reasonable insurance reform to make sure that the insurers treat our small risk pool with respect and care.
Chairman Anderson:
Let me indicate to those of you who are waiting to speak on Senate Bill 100, the other bill that is on the agenda for today. I am going to repost S.B. 100 for tomorrow [May 14, 2003].
Senate Bill 100 (1st Reprint): Makes various changes to provisions governing common-interest communities. (BDR 10-29)
There is about 30 minutes left, I have yet to hear from several people who have indicated that they want to testify from Las Vegas.
[Chairman Anderson accepted continued testimony on S.B. 97.]
Assemblyman Horne:
One of the criticisms was predictability or the lack of predictability; I am addressing the exemptions that exist now; gross malpractice, which we have a definition for; and exceptional circumstances, is there a definition for that?
Bill Bradley:
There is not a definition for exceptional circumstances, but the legislative history is very complete when this issue was debated at the 18th Special Session. Clearly, legislative intent is very important when a judge is inquiring as to what are the exceptional circumstances. When A.B. 1 of the 18th Special Session was originally designed, crafted, and agreed upon between the Nevada State Medical Association, the lawyers’ groups, and the somewhat missing insurers, there was actually a host of exceptions: organic brain damage, the loss of a limb, blindness in both eyes, paraplegia or total paralysis, or the loss of a loved one. To the best of recollection those were the exceptional circumstances. When the Senate removed those, Senator Raggio and the rest of the Senators were very explicit when they said that this list is a list that should guide judges in this state. However, we don’t mean to confine it to this list; we need it to apply to those cases where the judge determines that an award limited to $350,000 would, by clear and convincing evidence, be unfair. We believe the legislative intent is very clear on what those exceptional circumstances mean—those catastrophic injuries.
Jan Gilbert, Northern Nevada Coordinator, Progressive Leadership Alliance of Nevada (PLAN); and representing the Nevadans for Quality Health Care:
[Introduced herself and submitted Exhibit J.] In February [2003], a group of us got together and felt that there was a lack of individuals, patients, and consumers that were at the table discussing this medical malpractice issue. We wanted to come forward and discuss it equally with you. We feel the consumers will be the most affected by these bills and wanted to have a voice. We were also very concerned with the ads that were on the television; they seemed very misleading. So the group pulled together and raised a little money, we did not have hospitals, the insurers, or the medical industry behind us, and we put some ads on the radio for two weeks in northern Nevada to try to talk about what really is happening in this arena. I have brought to you some amendments (Exhibit J); we are calling this amendment an actual plan to “Keep Quality Medical Care in Nevada.”
We would like to offer that S.B. 97 should be eliminated, actually replaced with A.B. 1 of the 18th Special Session, and made to go before the voters as an alternative for the voters to be able to discuss the different proposals themselves. Right now the voters are going to look at one initiative; we would like to see A.B. 1 of the 18th Special Session that you worked so hard on during the special session to also have a place on the ballot in 2004. We would like to call that alternative “Keep Quality Medical Care in Nevada,” and we think it is only fair that the voters actually get to make that decision. It would give us two choices that would protect injured patients.
[Jan Gilbert continued.] In putting A.B. 1 of the 18th Special Session on this bill [S.B. 97], we would like to make a couple of additions because we have seen that there are certain individuals who could be really hurt by any medical malpractice. You can see on the first page [of the amendment] the suggested addition is to increase the cap on noneconomic damages to $500,000 for seniors and children. I think Mr. Bradley addressed the issue of seniors and children being less able to recoup economic damages since they don’t have that earning power.
We also have listened over the few months of the Legislature about settlement conferences and how a doctor often will want to settle a case but now is very concerned about reprisal from his insurance company. We would like to suggest that we allow a doctor who wants to settle a case to be without the fear of reprisal under his contract with the insurance company. That would be an addition under the mandatory pretrial settlement conference part of A.B. 1 of the 18th Special Session.
The third piece of our recommendation is to roll back the insurance premiums. Requiring a reduction in premiums would be based upon the savings achieved through the enactments of these reforms. We have seen that if we will let A.B. 1 of the 18th Special Session work and hopefully the insurance proposal passed out of this Committee, we will be able to reduce those premiums and make the Insurance Commissioner be the one to determine what those premiums will be. We have to limit…we have to make sure that physicians are entitled to a reduction in those premiums. I would urge you to add that portion to this bill; particularly with the hard caps that are in A.B. 1 of the 18th Special Session as Mr. Bradley was discussing, there will be the ability to see premiums go down, which would be beneficial to all.
The fourth piece would be to reinstate the medical malpractice screening panel. I know that Assemblyman Mabey agrees with me. What we are proposing is something very simple—two doctors and two lawyers would be on the panel, they would only review the medical records, they would not have a mini-trial, there would be no pleadings by the attorney, no affidavits other than an expert, and the defendant would not be allowed the expert. You set up these panels in 1985; they were models for the nation. During the 18th Special Session they were abolished. Since that time a number of the cases have been filed in the court; it has risen dramatically. We feel that these panels will help weed out frivolous cases and reduce the number of jury verdicts that come through. The reason we limited the number of people on the panel is because it will work to expedite the screening process. It has been delayed due to difficulties in scheduling and holding meetings; it is difficult enough to get four professionals together but before you had six and it was very cumbersome. Also, limiting the role of the panel to review medical records and not making it a trial will facilitate this procedure. In addition, it will place more importance on the medical record, which is good policy, and it will encourage medical professionals to be sure to keep accurate, complete, and legible records to be built and maintained.
[Jan Gilbert continued.] Our fifth recommendation, which came up because we have seen that there are very few doctors in southern Nevada who have a majority of the cases that have been filed, is to require that a physician would have to report any action of malpractice within 45 days after the physician receives service of a summons or complaint of the action. The Nevada Board of Medical Examiners would then investigate a physician with three or more actions filed in court against that physician for malpractice. If the Board finds the physician is unfit, the Board would revoke the license. You have seen enough information over the course of this legislative session about this issue, but we really feel we need to strengthen the investigation of multiple cases of medical malpractice.
Finally, this would address Assemblyman Geddes’ questions about providers; there are many states across the country that are enacting “any willing provider” laws. What’s happening is that a lot of health organizations are limiting the doctors that they will allow to serve their clients. This bill would actually prohibit health insurers from excluding any provider who is willing, qualified, and able to meet the plan’s conditions for participation. It would obviously increase the number of OB/GYNs because there would be more of them available on different plans if they were willing, qualified, and able to meet that plan. Adequate access to health care is an increasingly important problem for all of us across our state, particularly in rural Nevada, so we think this “any willing provider” law would be a wonderful addition to S.B. 97.
Larry Spitler, Associate State Director, American Association of Retired Persons—Nevada (AARP):
[Introduced himself.] We testified before the 18th Special Session committee and also we have appeared at all the hearings on S.B. 97. We continue to be here today to request that you not consider S.B. 97 as a solution to the medical malpractice insurance crisis. We feel that consumers, in general, victims of medical malpractice specifically, and insurance companies must be at the table in order to see positive results. To our knowledge, no one has guaranteed lower rates as a result of the legislative actions already taken or pending. We have heard “perhaps” and “maybe,” but we have heard no firm assurances. In order to fully understand this issue, we urge you to formally reestablish the committee looking at the medical malpractice insurance crisis. Charge them to complete the work they began and encourage them to explore other systems that could potentially work toward the prevention of medical injuries or medical errors. Along with looking at these points, they should also be charged with establishing procedures to access the courts for all legitimate claims. Above all, they should establish regulations that assure the public and the medical community that medical malpractice insurance rates are fair and that they accurately reflect claims experience.
The amendments that we have spoken to were not official members of the Keep Quality Care in Nevada, but it certainly seems that the points that they presented in terms of amendment are not only logical but perhaps very beneficial to the public. We feel it would give the public a choice on the ballot in 2004, that it would improve a couple of provisions in A.B. 1 of the Eighteenth Special Session, and that it also returns to the table several things that the doctors had indicated that they wanted, specifically the reinstatement of the Medical Legal Screening Panels. I think also the amendment is extremely important when it looks at mandatory investigation of doctors who receive multiple lawsuits for malpractice. It is so disheartening to the public when they don’t know if doctors they go to may be sued by 50 people; perhaps they would make a different choice if they knew that information. We could heartedly support the amendments that have been submitted by Ms. Gilbert.
Mark Nichols, Executive Director, Nevada Chapter, National Association of Social Workers (NASW):
[Introduced himself and submitted Exhibit K.] I am here to speak in opposition to S.B. 97 and in support of the amendments offered by Jan Gilbert. The analysis of the medical malpractice insurance issue has been a challenge for NASW. Initially portrayed as doctors against the trial lawyers…
Chairman Anderson:
I see that you have submitted your testimony in writing; in the interest of time, might we just take your written testimony? There are a couple of people I want to make sure that I get them in front of the Committee if we possibly can.
Mark Nichols:
That is fine.
Dianne Meyer, Victim of medical malpractice:
I am a victim of medical malpractice. In a nutshell, I entered the hospital with pains in my side, was x-rayed, given tests that were later read, and the tests found…they sent me home saying that I was fine. They gave me some pain medicine and I was sent home with no one ever to respond to me telling me that I was on my way to dying. Two days later, after taking the pain medicine and staying in bed, I reentered the same hospital, my husband was sent back to work that day, told they were going to keep me, and I was going to be fine. That was the last time I saw my husband for a month and a half: I slid into a coma at that point.
During that period of time, my children and my husband had to face the decision to have, because my body was sepsis, both of my legs removed. My gift from God was that they did not give permission to take my hands. The two tiny kidney stones that they sent me home from the hospital with turned out to be one very large kidney stone that could not have been passed by a human body; I was laying there being poisoned little by little over the next few days. After I woke up, all I wanted to hear was why it all happened, but there wasn’t a person who could tell me or told me the truth. It was only through the encouragement of some very professional people at the hospital who encouraged my family to seek an attorney [that I learned the] the story was not coming out the truth.
My attorneys have ferreted out the information and believe me, if these changes take place… My economic value on this earth is very little. The highest point in my economic history would be my medical expenses, which were covered by my insurance company, way over $500,000 at this point. They will be, if we get to court and if I am successful, repaid. That’s something that I asked right off the bat; I wanted to make sure that the union that I belong to covers the smallest of people on the working force here in the state of Nevada and I did not want to take away from them. If you take the amount of money that I earned, which was just a pittance, believe me, and give it to me until my 65th year, which is typical, I am facing on my next birthday 60 and I am proud to say that I am walking. It doesn’t make me a very valuable person. I thank you for paying the doctors; however, my insurance company will allow me, or almost any insurance company will allow, a new set of legs every three years. I am on my third set of legs in two years and those are $30,000 apiece. So doling out money over a period of time, no one can say that we are out of the same cookie cutter.
Right now I am facing arthritis in both my knees. I am very lucky to be standing on my prosthetics; I consider my greatest act of courage is putting these legs on in the morning. I can come here and speak for other people to let you know that these very important issues to all of us. Yes, we hate being pitted against pregnant ladies, that hurts us. We hate hearing the words about frivolous malpractice, but there are a lot of us that have to face the rest of our lives with serious issues. They don’t go away, they are not little. Passing me in the hallway, you see a lady walking beside you, and it’s easy to miss me, especially if I am wearing pants, I walk with a limp. That’s about all you would see, that’s how I want to look, I want to look as normal as everybody else, but my life is far from normal.
Medical malpractice, I wished and prayed that I would be the last victim in the state of Nevada, but I see that it continues because accidents and mistakes happen. Three people down the road could have changed everything in my life; a simple antibiotic could have saved me from having sepsis. With that, I ask that you please seriously reconsider what you are reviewing today.
Chairman Anderson:
Ms. Meyer, as always, I consider you to be one of the great heroes in our society as I do my sister-in-law who had similar types of problems, as I explained to you at one time. I appreciate your effort to come forward and your courage in retelling your story for us.
Jim Crockett, representing the Nevada Trial Lawyers Association:
I just wanted to introduce Renne Williams, a spokesperson for her daughter, who is in a wheelchair behind the witness table. Renne is the caretaker for her 23-year-old daughter and her daughter’s four children also in attendance. I have asked them to come forward so that you can see whom Renne is speaking for.
Renne Williams, Mother of victim:
When doctors leave Nevada, some of the victims are left behind and are not able to speak for themselves. My daughter Danielle is a victim of medical malpractice. She is 23 years old and is completely unable to care for herself or her children as a result of her doctor’s malpractice. Her doctor has now left the state. Keep our doctors in Nevada, but keep them accountable for their malpractice.
Len Marazzo, Father of child lost due to malpractice:
[Introduced himself and submitted Exhibit L.] On the evening of November 9, 1999…
Chairman Anderson:
We have your written statement (Exhibit L), which will be included in the record. Is there something else that you would like to say?
Len Marazzo:
It is in the written statement. I would ask you to take a look at the commercials that are out there and look at all the facts. Please read through my statement to the end, as I feel it sums up what we are all experiencing as victims.
Chairman Anderson:
Is there anybody else here or in Clark County who is a victim of medical malpractice who has not been heard? I don’t want to hear from an attorney; I want to hear from a victim who wants to get on the record, this is an opportunity for them.
Allen Triese, Victim of medical malpractice:
When I went in for open-heart surgery, a couple of the doctors in the operating room gave me a drug with blindness as one of the warnings of side effects. They weren’t aware of it. As a result, here I am. I spent a lot of time trying to get an attorney to take my case; I called just about everybody in the book. Everybody told me that a case like mine was very unique and they thought I had a serious problem, a catastrophe, but they couldn’t afford to take the case. I finally secured an attorney that has taken care of me. If he was restricted in what he could charge me for contingency I would never have been able to have any representation whatsoever.
As far as doctors or attorneys deciding how to dole money out to me if I win my case, I was the breadwinner in the family, I have 15 to 20 years of my life cut out, I am unemployable according to society standards. My life savings are gone, my retirement is gone, I don’t need somebody to tell me how to save money and make it stretch. I really hate to say this with others in this room who are catastrophically injured same as I, I feel mine is worse because it is me. Somebody in a wheelchair, I am sure feels he or she is worse. Somebody that’s bedridden probably feels he or she is worse. If I get a $350,000 settlement, I pay my attorney’s fees; what do I do for the other 18 years of the gainful employment that I have lost?
I am proud to be a Nevadan. I don’t like being compared to a Californian; I never have since I came to Nevada 19 years ago. I want to live in Nevada because this is the last frontier. All I ask is that you reconsider and don’t take my rights away or those of all the other victims in this room.
Jason Phillips, Father of victim:
Sitting beside me is my daughter Brittany, who in my opinion is the perfect example of why the changes that some people want to make are completely wrong. At such a young age, due to a doctor refusing to even consider putting her into intensive care… The very first thing a nurse said to me when we walked into the hospital was, “This little girl needs to be in ICU (intensive care unit).” They called him [the doctor] immediately, but he said, “No, I’ll take care of it after office hours.” Her condition worsened, they called the next hour, they called him every hour on the hour for five hours; every single time his answer was the same, “No, I’ll take care of everything after office hours.” Eventually she suffered a series of strokes, which left her with permanent brain damage. All the man had to do was say the word “Yes,” but because of what in my opinion was an absolute inbred collusion between insurance companies and doctors, I am quite certain he was being allowed to save some money on his premiums by not instituting the ICU care. Once the strokes hit, it was taken out of his hands, thank goodness.
The question I have and have always had is, “How is it that limiting what injured people are allowed to recover or what an attorney is allowed to make trying to…?” I am just a simple bartender, there is no way that I could have recovered anything for my daughter; we need the attorneys. I seems like the changes they are trying to make in limiting attorneys’ fees is just a shot at attorneys that is not going to help in any way. I have absolutely no problem with every single penny that the attorney who handled my case earned. It is an expensive process, there is no reason to limit what they are allowed to make. There should be no reason to limit what the injured parties are allowed to recover.
Like Mr. Triese, I am not a born-and-bred Nevadan; I came here from California and there is a reason. California has turned into a place where the citizens don’t seem to matter that much, whatever they can do to make sure the special interests save money. While I appreciate all the hard work that was done in the 18th Special Session, the only people who made out on the whole thing is the insurance industry. Subrogation, they talk about losses…subrogation is a built‑in way for them to not experience any losses. I paid $480 a month for my insurance for six years and then when I actually needed them to come through, they did, but the first phone call we got after our settlement conference was from our insurance company saying that they wanted their money back. Why was I paying them to do their job? They did their job.
I heard the one gentleman ask, “How can we get rid of bad doctors?” That was another issue talked about not too long ago; that’s not what we are here about. But test them, if they fall short of the knowledge of their profession, remove them. If you can’t prove that you know how to do your job properly, you shouldn’t be allowed to do it. If I couldn’t make drinks, I wouldn’t be allowed to do my job. If some of the people like what is going on in other states, move there. This is Nevada and I would hope that the people who run our state would care a little more about those who live in Nevada.
Chairman Anderson:
Any others in Carson City who need to get on the record?
Larry Struve, Legislative Associate, Religious Alliance in Nevada (RAIN):
[Introduced himself.] Access to medical care and protecting families and children are top priorities for the RAIN organization. We have watched the bills on this medical malpractice issue with great interest. I would say that the RAIN board feels that unless a bill can clearly show that it’s going to improve access to medical care for the vulnerable portions of our population and not exacerbate what has brought us to this point, we are not able to support that legislation.
In examining this legislation [S.B. 97], we have come to the conclusion that should you process this bill, it is not going to assure that there is going to be an improvement of access to medical care. It will not be known until the bill is tested through the courts and that’s going to take a long time. In the interim, we are going to have a continuation of the problems that you have heard very graphically described to you.
We are intrigued with the possibility of the amendment that has been presented to you simply because it would at least give the voters a choice. We know the initiative petition is going to the ballot, so if you pass S.B. 97 you simply move the time table up and RAIN does not believe that you will improve the access to health care that we are concerned about. If you do process S.B. 97 with amendments, at least the voters would have a choice and maybe in that interim another better alternative could come forward that would achieve the objectives that all of us want. We don’t believe that S.B. 97 is going to do that, and therefore we cannot support the bill.
Bobbie Gang, Nevada Women’s Lobby:
[Introduced herself and submitted Exhibit M.] Maybe a light version of what we are trying to say might be appropriate. The cartoon is from the Las Vegas Review-Journal and the sticky note in the corner is our message to please put the patient back in the picture. We feel that the debate in the media as well as during the 18th Special Session and most of this session has been between the doctors and the lawyers. We hope that the Legislature will consider the needs of the patient, or the consumer. We strongly oppose S.B. 97 as written, and looking at the amendments as proposed, we think it would provide a very viable alternative ballot question. We urge you to support that.
Assemblyman Mabey:
Regarding the needs of the patient, most of us [doctors] spend all night with a patient, we are at the bedside, even at home we toss and turn, and we worry about the patient. It’s not like we are going see them, do the procedure, send the bill, and collect our fees; that’s not the way it works, at least for the doctors I know. Although I understand where you are coming from, 99 percent of the doctors take care of their patients.
Bobbie Gang:
We have no doubt, and I and all the members of the Nevada Women’s Lobby know that we have wonderful doctors in this state. What we are saying is that, when a medical error does occur, especially when it occurs to the elderly, to children, or low-income people, caps on noneconomic damages are deterrent to them in gaining redress for the error. We know that there are very few doctors who commit medical malpractice and we hope that various pieces of legislation this session will address those instances of medical errors. I said yesterday that we tried very hard not to take a position of the lawyers or the doctors; we are really looking at it from the perspective of the patient or the consumer who someday could be a victim.
Assemblywoman Buckley:
Good doctors care about their patients, and so do good lawyers. I think you saw the relationship between the lawyers and the victims who came here today; they are friends.
Chairman Anderson:
Anybody else who feels the need to get their name on the record or has information that the Committee needs to have in order to make its decision?
I am going to move S.B. 100, as I indicated, to tomorrow. We may be receiving some bills from the Senate yet. There are a couple of Senate bills in the Senate Committee on Finance. If they come out, we’ll get a shot at them, so we are not finished. We are going to have work sessions tomorrow, Thursday, and Friday; with a little bit of due diligence we might be able to finish with whatever we can.
With that, we are adjourned [at 11:20 a.m.].
RESPECTFULLY SUBMITTED:
Deborah Rengler
Transcribing Committee Secretary
APPROVED BY:
Assemblyman Bernie Anderson, Chairman
DATE: