MINUTES OF THE
SENATE Committee on Judiciary
Seventy-second Session
March 4, 2003
The Senate Committee on Judiciary was called to order by Chairman Mark E. Amodei, at 8:09 a.m., on Tuesday, March 4, 2003, in Room 4100 of the Legislative Building, Carson City, Nevada. The meeting was videoconferenced to the Grant Sawyer State Office Building, Room, 4406, 555 East Washington Avenue, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator Mark Amodei, Chairman
Senator Maurice E. Washington, Vice Chairman
Senator Mike McGinness
Senator Dennis Nolan
Senator Dina Titus
Senator Valerie Wiener
Senator Terry Care
STAFF MEMBERS PRESENT:
Brenda J. Erdoes, Legislative Counsel
Nicolas Anthony, Committee Policy Analyst
Bradley Wilkinson, Committee Counsel
Barbara Moss, Committee Secretary
Lora Nay, Committee Secretary
Ann Bednarski, Committee Secretary
OTHERS PRESENT:
Scott M. Craigie, Lobbyist, Nevada State Medical Association
Shelby L. Wilbourn, M.D.
Bill Bradley, Lobbyist, Nevada Trial Lawyers Association, Citizens for Justice
Keith L. Lee, Lobbyist, State Board of Medical Examiners
Robert Byrd, Chairman, Medical Liability Association of Nevada
Mark J. Nichols, Lobbyist, National Association of Social Workers - Nevada
Larry L. Spitler, Associate State Director, Lobbyist, American Association of Retired Persons
Nicole Byrne
Stephen Byrne
W. Randall Mainor, Attorney
Melissa D’Andre
Renee Williams
Kevin Price
Lon Howard
Carlton Jacob
Rachel Jacob
Chairman Amodei:
The hearing is open on Senate Bill (S.B.) 97 and Initiative Petition (I.P.) 1.
SENATE BILL 97: Makes various changes relating to certain actions against providers of health care. (BDR 1-248)
INITIATIVE PETITION 1: Makes various changes relating to certain actions against providers of health care.
Chairman Amodei:
Brenda J. Erdoes, legislative counsel, will brief the committee on the subpoena procedures available to the committee in this matter. I also want to acknowledge the presence of many sage and experienced colleagues on the Senate Committee on Commerce and Labor.
Brenda J. Erdoes, Legislative Counsel:
The Assembly and Senate and the committees thereof have subpoena power in any matter pertinent to future legislative action. The subpoena can be issued to any person within the state. The Legal Division is happy to take care of any requests for subpoenas and needs to know who, what, when, where, the reason the testimony is sought and how it is pertinent to future legislation. The speaker of the Assembly, president of the Senate, or the chairman of a committee with a concurrence of a majority of the members, may ask for and sign the subpoena. Traditionally, our office has prepared the subpoenas and the legislative police have served them. The system works well, we have had experience with it, and it has been upheld in the local courts.
Chairman Amodei:
Do we have subpoena power out of state?
Ms. Erdoes:
We have no power to enforce subpoenas out of state. Certainly, they can be issued and become an invitation for the person to attend. In this case, the commissioner of insurance serves as the resident agent, by law, for insurers housed out of state, so there is a possibility we can secure her help in reaching some people. In my experience with the Legislature, the subpoenas have been followed. There was a case in the 1990s in which subpoenas were issued out of state and people voluntarily attended. There are other ways of getting people to Nevada other than subpoena.
Senator Care:
In the case of an insurance company doing business in the state, but the chief executive officer (CEO) of the particular entity is out of the state, would it be considered noncompliant should the CEO, personally, not appear even though the company is doing business in Nevada?
Ms. Erdoes:
The subpoena can be issued to a particular person, such as the CEO; however, it is based upon where the person is actually located. Should the person come to the state, the subpoena could be enforced. There is a fine line between the law and enforcement of the actual subpoena and what needs to happen in a business regulated in Nevada. Traditionally, when a company has been subpoenaed, they can either send the local representative or choose to send the requested CEO. In most cases, a regulated business will choose to send the person subpoenaed by the Legislature because they are regulated by the agency.
Scott M. Craigie, Lobbyist, Nevada State Medical Association:
I represent the Nevada State Medical Association, as well as the Keep Our Doctors in Nevada coalition. I would like to introduce two people in attendance: Dr. Rudy Manthei, who heads up the Keep Our Doctors in Nevada coalition, along with a number of other people including some Legislators who have worked diligently on the effort, and Dr. Robert Shreck, the president of the Nevada State Medical Association. Both groups are my clients and the basic core of support for this effort. A former Nevada physician, Dr. Shelby Wilbourn, will give his testimony.
Shelby L. Wilbourn, M.D.:
I am a board certified obstetrician-gynecologist (OB/GYN) and I practiced in Las Vegas for 12 years. I came to Nevada after completing my residency at Tulane University. For 7 years I was a clinical faculty member at the University of Nevada School of Medicine in the Department of Obstetrics and Gynecology. The last 5 years I was in solo practice in Nevada. I saw approximately 40 patients a day, performed 20 to 25 deliveries per month, with a total patient base of about 8000. I remained claim-free for 12 years with no disciplinary actions and no lawsuits. I served as a member of the Medical Dental Screening Panel and reviewed cases for the Nevada State Medical Association.
In April 2002, I received notice my insurance premiums would increase from $33,000 to $108,000 a year. In 2001, because of declining reimbursements in the field of medicine in Nevada, I did not pay myself four times during the year. Then, all of a sudden, I faced an approximate $70,000 increase in premiums, and did not know how I would pay. Immediately I began to fight to save my practice, remain in Nevada, and keep my patients. I had six staff members, four of whom had been with me for 12 years, and we were like a family. Most of my patients had been with me for 12 years. I had five patients my first day of practice in Nevada. I put red stars on the front of their charts and called them the “first fivers.” I always gave them a special hug because they were the “first fivers.” The day my practice closed, all five came to say goodbye.
I began fighting because I am not afraid to say when something is wrong. The next thing I knew there was much media attention to my case. Many individuals thought it atrocious a physician in practice 12 years, who had never been sued, would receive that much increase in premium. One news article led to another, then television, Cable News Network, and in June 2002, I was called to the White House to be one of the physicians to meet with President George W. Bush regarding the issue from a federal standpoint.
Despite all my efforts, nothing was done. My insurance renewal was due August 17, 2002, and I realized if I renewed at the new rates, my tail insurance would be even higher if I left the state. A 30-day decision could make a difference of $100,000 for my tail insurance. At that point, I decided it was time to leave Nevada and began talking to physician recruiters, sometimes up to 30 a day. Once my name, with M.D. behind it, was associated with leaving Nevada, my telephone rang off the hook. I received job offers from states I knew were also crisis states and I told the recruiters I did not want to consider those states. I ended up in Maine, a state in which I had vacationed in the past, and knew malpractice insurance was more affordable. My premiums in Nevada were going to be $108,000; my first-year premium in Maine is $9900, and the mature rate after 5 years will be $34,000. The state of Maine has a surcharge system in which the money paid by low-risk physicians is paid back to high-risk physicians, such as obstetricians, neurosurgeons, and orthopedic specialists, and they receive a $10,000 rebate on premiums. Therefore, after 5 years I will only be charged $24,000 out-of-pocket.
Even though I hated to do it, I knew it was a move I had to make. I was unable to sell my 12-year practice with 8000 patients because no new OB/GYNs wanted to buy it. No physicians wanted to absorb the practice due to their concern about obtaining money to pay their increasing premiums, much less borrowing money to buy a practice. Ultimately, I donated my practice to the University of Nevada School of Medicine. Twelve years of practice was given away.
I returned from my meeting with President Bush and closed my office July 31, 2002. A few days later a lawsuit was delivered to my office, the first in 16 years, including 4 years of residency. While I was still seeing patients and packing boxes, the telephone rang, my nurse answered it, and began to cry. I thought something had happened to one of her children. It was an automated telephone call asking whether your doctor had prescribed too many medications or performed unnecessary surgery, and if so, please call the law offices of “Blank and Blank.” I then received telephone calls from my bank. I had taken out a loan 5 years ago to start my practice and had never been late or missed a payment. The bank wanted to call my loan in. When I asked the reason, I was told the bank deemed physicians high risk since they might possibly leave town. Because I had a friend in high places, the call was reversed that afternoon.
I then attempted to find money to pay my tail coverage in order to leave the state, which, at that point, was quoted at $138,000. I ended up getting a loan through a bank in Maine because I could not find a Nevada bank to offer me a loan. I put my home up for sale in May 2002, and it has not sold. During the 18th Special Session, a lawyer friend handed me a journal with a quip that said:
As the hour grew late on Wednesday, and early on Thursday, tempers were high among trial lawyers who were losing their rhetorical battle with their physician opponents. As the quips were flying fast and furious, one trial lawyer, who shall remain nameless, was talking about a Las Vegas doctor who put his house up for sale because he was leaving the state. How much is that house worth, the journalist asked the lawyer jokingly? Ask me next year when I own it, the attorney shot back.
The house is still for sale.
Dr. Wilbourn:
I think the problem is lawsuit abuse. Two weeks ago, I testified in Washington, D.C., before the United States Senate Committee on the Judiciary and the United States Senate Committee on Health, Education, Labor, and Pensions (Exhibit C). Senators Bill Frist, Edward Kennedy, Hillary Clinton, and probably 20 other people were on the committee. Before going to Washington, D.C., I was warned I could face retaliatory lawsuits or have my name smeared for speaking out. I gave away a 12-year practice, moved my family 3000 miles across the United States, and borrowed $200,000. I have nothing else to lose and I am not afraid to speak.
Personal injury attorneys say a patient’s right to sue is being taken away. This is not about a patient’s right to sue, it is about a patient’s right to affordable, accessible, and available health care. What happens when people seeking an obstetrician, neurosurgeon, or orthopedic surgeon, cannot find one and must go out of state? Do people have a protected right to available care? That care is not available to them because physicians have closed their practices, left the state, or limited their practices because they cannot afford the insurance premiums.
Seventy-three percent of cases filed against physicians are dismissed. The insurance industry, before the United States Senate 2 weeks ago, testified the average cost for an insurance company to defend a lawsuit is $91,073. Many times they settle for $50,000 or $60,000 because it is cheaper than defending the case, even though it may be without merit. They sue for $1 million, settle for $60,000, take their 30 percent, and never have to go into a courtroom.
Physicians have documented solicitation calls to assisted-living facilities in Nevada, particularly Las Vegas, where the same kinds of questions are asked: “Do you feel you are being overmedicated? Do you feel you had unnecessary surgery?” The volume of lawsuits is increasing and, if there is a cap, they try to make it up in volume because a percentage of the award goes to the attorneys. The Medical Injury Compensation Reform Act [MICRA] tort reform had those percentages on a sliding scale. Ironically, it was one of the first things thrown out when A.B. No. 1 of the 18th Special Session was debated.
United States Senator Jeff Sessions of Alabama said it well when asking one of the patients before the committee what her present attorney was receiving for contingency. When she told him, he laughed, and said, “We have a transaction fee problem.” If we go to the automatic teller machine and take money out, we are not charged 30 or 40 percent of what we take out as a transaction fee. We must decrease the fee, which will ultimately decrease some of the volume. Other industries in Nevada, such as building and construction, are also facing this problem. However, sadly enough, physicians are one of the few industries that cannot pass on rising costs to the consumer. I can raise my prices, but will still receive the same amount for a vaginal delivery from a managed care company as I received yesterday, or the day before. My malpractice premiums increase, my rent increases, my employees want raises, the cost of my supplies go up, and yet my reimbursements go down. It does not take a lot to figure eventually I will be driven out of business.
I equated this to one of my patients in Las Vegas. You own a restaurant for 12 years, it is booked every night, and there is a 3-month wait to get in. Then one day you are informed by your insurance company your premium will increase 400 percent in the event someone slips and falls in your establishment, and you must decrease the number of people you serve. You would be put out of business.
The most important point of this issue is access to health care. Some states are waiting for federal movement. President Bush is pushing for it because he has a Republican-controlled House and Senate, and a Senate majority leader who is a physician. However, after my visit to Washington, D.C., 2 weeks ago, I do not think it will be done anytime soon. Many people in Washington, D.C., are strong on states’ rights, say it is a state issue, and let every state take care of its own problem. It is important Nevada take care of its own problem because we cannot wait for federal intervention.
I read the Las Vegas Review Journal on-line from Maine to keep up with my friends and patients. Recent articles have indicated there is no crisis and the problem was created by physicians. I deliver 25 babies a month and see 40 patients a day, but got bored one day and decided to create a crisis because I needed some drama in my life. After 5 months practice in Maine, I still receive two to three telephone calls a day from former patients who indicate they either cannot find a doctor, or found a doctor and ask whether the doctor is good and whether they should go to him or her. They ask whether I will return to Nevada. The problem is, when physicians leave, they will not return. They have gone to a hospital-based sponsorship, a new practice with financial commitments, signed a 4- or 5-year contract, and will not go back on the contract. In addition, they developed new relationships and patients and are not willing to walk away from them.
Dr. Wilbourn:
Ask the physicians who have left. I keep seeing numbers indicating no physicians have left; however, I have physician friends in Oklahoma and California who no longer practice medicine. I hear no physicians have cancelled their licenses. I live in Maine, but I still have a Nevada license. Becoming licensed in a state is a tedious process which includes review and cost. A physician never gives up his or her license. Most doctors still have their license from the state in which they did their residency. If doctors move, they just add another license to their resume. At the present time, attaining a license in California takes 6 months. Therefore, I would never give up my Nevada license.
Ask insurance companies whether or not there is a problem. I am not talking about medical malpractice insurance companies; rather I am talking about health insurance companies. An article from Ob.Gyn. News stated:
More physicians quit practice in response to high premiums. Evidence is mounting across the country that physicians are leaving their jobs because of rising malpractice insurance premiums. Blue Cross and Blue Shield drew this conclusion when it surveyed 42 of its companies and found that 56 of plans in states with a malpractice crisis report their physicians are refusing some high-risk procedures, are leaving practice, or retiring early.
More than twice as many plans in crisis states report physicians reducing emergency department calls or refusing to see patients, compared with states without a malpractice crisis. Nearly one-third of plans in crisis states say physicians are moving their practices out of state. The insurer’s basic definition of a crisis state on the American Medical Association survey conducted in 2002 identified 12 states with a medical malpractice crisis, and 30 others with a growing malpractice problem. The 12 states surveyed were Florida, Georgia, Mississippi, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas, Washington, and West Virginia. Blue Cross and Blue Shield Association surveyed its plans in Nevada and found its physicians were leaving.
Numbers from the American College of Obstetrics and Gynecology were put into the Congressional Record giving exact data of what percentage OB/GYNs chose to either retire early, cease practicing obstetrics, leave the state, or stop doing high‑risk procedures.
A prominent Democratic senator in Washington, D.C., said to the panel:
I have no questions. I just want to say, we in Congress can do what we do best. For the next 5 years we can debate Republicans versus Democrats and personal injury attorneys versus doctors, but every night we let this problem go unsolved is another night a woman goes to bed without an obstetrician, another car wreck victim does not have a trauma surgeon, and someone who needs a neurosurgeon does not have one.
The most compelling testimony I heard in Washington, D.C., was from a patient from Vicksburg, Mississippi, with two teenage sons. She and her husband were starting a business in Gulfport, Mississippi. Her husband had been working all week and driving back one night he fell asleep at the wheel, had a single-vehicle accident, suffered a head injury, and was taken to the Gulfport Hospital. The only neurosurgeon qualified to relieve the pressure on his brain had left the hospital because he could not afford his insurance premiums. The woman’s husband lay in the emergency room for 6 hours while the hospital staff tried to find a neurosurgeon in Mississippi to treat him. He is now irreversibly brain dead and she is mother, father, caretaker, and provider for her family.
Being here today will do nothing for me, but hopefully it will help some of my former patients who are still seeking another doctor. Some of my physician friends, with children in school, are interviewing and making decisions affecting their entire families. Las Vegas is an island in the desert and, in regard to health care, we are counting on the Legislature to not let it become a deserted island.
Senator Care:
We had a Special Legislative Session last year and spent $200,000 of the taxpayers’ money, and here we are again. This time around I intend to be very direct. Who was your insurance company in Nevada?
Dr. Wilbourn:
My insurance company was American Psychological Association Insurance Trust, and I received the rate increase letter from Dennis Coffin.
Senator Care:
I would like to see a copy of that letter.
Dr. Wilbourn:
I may have it with me, but if not, it will be in my files at home.
Senator Care:
I think I know Mr. Coffin. You mentioned a law firm, White and White, that left the disclaimer.
Dr. Wilbourn:
Yes, “Blank and Blank.”
Senator Care:
Was it Blake and Blake?
Dr. Wilbourn:
I said, “Blank and Blank.”
Senator Care:
Do you know the name?
Dr. Wilbourn:
Yes.
Senator Care:
What is the name?
Dr. Wilbourn:
Mainor Harris.
Senator Care:
Did anybody ever return the call, or was it just a solicitation?
Dr. Wilbourn:
It was a solicitation.
Senator Care:
Did you ever discuss with any other physicians whether they had received the same call?
Dr. Wilbourn:
No.
Senator Care:
What was the name of the bank that accelerated your loan?
Dr. Wilbourn:
BankWest of Nevada.
Senator Care:
Who at BankWest of Nevada told you they wanted to accelerate your loan?
Dr. Wilbourn:
Diane Fearon.
Senator Care:
Have you any correspondence from the bank on that subject?
Dr. Wilbourn:
The loan was resolved when I took a loan in Maine and paid them off.
Senator Care:
Did you ever discuss with any other physicians whether they had been told loans with BankWest of Nevada were somehow in jeopardy or at high risk?
Dr. Wilbourn:
No, I did not. Most physicians do not want to discuss their financial affairs with other physicians.
Senator Care:
What is the name of the trial lawyer who said he would own your house next year?
Dr. Wilbourn:
Mr. Crockett.
Senator Care:
Was it a newspaper article?
Dr. Wilbourn:
I do not know the name of the journal, but it comes out weekly or monthly, and it is kind of off the record for attorneys.
Senator Care:
We are going to put it on the record. Please make a copy of the article for me.
Chairman Amodei:
Who is your insurance carrier in Maine?
Dr. Wilbourn:
There is only one carrier which is a physician-owned mutual company called Medical Mutual of Maine.
Chairman Amodei:
Was it created in the state of Maine to service physicians in the state?
Dr. Wilbourn:
That is correct. There has been no rise in premiums for approximately 9 years.
Chairman Amodei:
To what do you attribute the lack of increase?
Dr. Wilbourn:
First, Maine has a totally different litigious environment and people do not think the answer to everything is to sue. Maine, Vermont, and New Hampshire do not allow billboards in any form for any businesses because they do not want to obstruct the view. Therefore, you do not sit at a stop sign and see 14 billboards that say “Call us and we will sue for you.” Much of the area is rural and people appreciate having a physician. It is a different cultural world than Nevada.
Chairman Amodei:
Who was the carrier in regard to the expensive tail coverage?
Dr. Wilbourn:
It was through GE Medical Protective.
In regard to Senator Care’s question regarding the name of the law firm, I would like to check my records in order to verify it is Mainor Harris.
Senator McGinness:
How many patients did you have on your first day of practice in Maine?
Dr. Wilbourn:
One.
Senator McGinness:
Is there a star on her chart?
Dr. Wilbourn:
Yes. Actually, she is the first cousin of the recruiter who brought me to Maine.
Bill Bradley, Lobbyist, Nevada Trial Lawyers Association, Citizens for Justice:
I am the chairman of the medical malpractice subcommittee of the Nevada Trial Lawyers Association. I will specifically discuss S.B. 97 and compare it to A.B. No. 1 of the 18th Special Session. Accompanying me is Matt Sharp, president of the Nevada Trial Lawyers Association, who will discuss some insurance reform ideas in this committee, as well as the Senate Committee on Commerce and Labor. I distributed the PowerPoint presentation (Exhibit D. Original is on file in the Research Library.) and a quite lengthy packet of reference materials on a paper being submitted to the committee (Exhibit E. Original is on file in the Research Library.).
Before I proceed further, I want to say there is one thing on which I agree with Dr. Wilbourn. If this committee, or any other committee in the Legislature, has a desire to banish billboards in southern and northern Nevada, we will stipulate to that bill in a heartbeat.
Our theme is what is fair to Nevadans, what is fair for doctors, and what is fair for patients. As Senator Care alluded, the 18th Special Session addressed the crisis in medical malpractice insurance. This committee, as well as the remainder of the Senate and the Assembly, worked very hard with the Governor’s office to craft a bill that continued the balance between the rights of physicians against the rights of patients. I do not believe this is a fight between doctors and lawyers. Doctors have a legitimate problem and patients in the state are entitled to go to our justice system for redress, but we disagree strongly on the cause of the crisis.
As many of you are aware, the background leading up to A.B. No. 1 of the 18th Special Session was not pretty. Today we will discuss how S.B. 97 fails to help Nevadans and how insurance reform will help them. Prior to 1994, one of the insurance companies in Nevada was the Nevada Medical Liability Insurance Company (NMLIC) whose former president, Robert Byrd, is now Governor Guinn’s appointee to head up Medical Liability Association of Nevada (MLAN), the Governor’s insurance plan. In 1994, The St. Paul Companies purchased NMLIC to enter what was then a lucrative market of malpractice insurance in Nevada. As part of the agreement, they entered into an agreement with the Nevada State Medical Association to provide coverage to all members, irrespective of underwriting guidelines, in order to garner market share. In addition, they promised the physicians they would get free tail coverage. That is very important in underwriting because the agreement from the Nevada State Medical Association indicated they would take everybody.
As we go through this presentation you will learn, unfortunately, physicians with horrendous backgrounds, experiences, and significant malpractice cases against them were accepted into The St. Paul Companies’ program. One in particular was Dr. D’Ambrosia, a spinal surgeon in Las Vegas. At the time of the 18th Special Legislative Session there were approximately 40 lawsuits against him. Because he was a spinal surgeon, people injured through his negligence were horribly injured. Yet through the agreement with the Nevada State Medical Association, he was provided coverage through The St. Paul Companies, and to this day orthopedic surgeons throughout the State of Nevada are paying for the errors of Dr. D’Ambrosia. Dr. D’Ambrosia subsequently left the State of Nevada and relinquished his license before the Board of Medical Examiners could take action against him. He relocated to California, reopened his practice, and within a few months one of his patients died. This is an example of the agreement that led to poor underwriting and the fact many doctors were insured who should not have been insured. As a result, many competent, caring physicians in the state are paying for the errors contained in that agreement.
The St. Paul Companies entered the state and told the insurance commissioner they were here to stay. What happened? The committee needs to understand the cyclical nature of the insurance industry. The chart on page 4 in the PowerPoint presentation (Exhibit D) entitled, “Cyclical Nature of Insurance,” dramatically points it out. The peaks in the chart accommodate good economic times in the country when interest rates were up and the economy was moving strongly. What happened during that period of time is very important. This is what we call the celebration years of insurance companies because all they want is the premium dollar. If they get the premium dollar, they put it into the market and receive good returns on their investments. In their aggressiveness to sell insurance, they do not pay much attention to underwriting. The chart shows crises in 1975 and 1985, but the most recent economic times, 1995, 1996, and 1997, when the economy was doing so well with Internet companies, was when The St. Paul Companies entered the state wanting premium dollars and took insurance money from everybody.
The economy turns down after each good economic time and is the hangover accompanying the good times. When the peaks are up, it is called soft-market insurance, and is the time when insurance is affordable and available. When the peaks are down, it is called hard-market insurance. When the economy turns down, insurers do not get the same investment return and lose money in their portfolio investments. What do they do? Unlike the rest of us who cut back, let employees go, and tighten purse strings, insurance companies raise premiums. Every bad market in history paralleled a time there was an insurance crisis in this state, as well as nationwide.
Mr. Bradley:
The St. Paul Companies entered Nevada in 1994 and said, “We are here to stay.” They aggressively pursued insurance dollars, did not do adequate underwriting, took in physicians such as Dr. D’Ambrosia, and got stuck with horrible consequences. About that time, a new chief executive officer came into The St. Paul Companies and asked, “What are we doing here? I want out.” The St. Paul Companies withdrew from the medical malpractice market leaving 60 percent of the physicians in Nevada, so aggressively pursued in the early 1990s, holding the ball without the promised tail coverage.
What did A.B. No. 1 of the 18th Special Session, the bill you worked so hard on last summer, accomplish? It is inaccurate to say it was not significant tort reform. Robert Byrd, from MLAN, testified to the Senate joint committee it was meaningful tort reform. James Wadhams, representing the insurance industry, indicated the bill has had a positive impact. It enhanced the loser pays. In 1995, the Nevada Trial Lawyers Association sponsored a bill saying any lawyer who files or defends a frivolous case is personally liable for the associated costs. Prior to 2002, it was discretionary and A.B. No. 1 of the 18th Special Session was amended to make it mandatory.
The complaint must include an affidavit from a specialist in the same area in order to cut down on frivolous filings. Prior to 2002, there was a medical screening panel that also required affidavits. However, the screening panel was repealed at the insistence and demand of the insurance industry and the physicians’ group working the summer of 2002.
A positive aspect of working in the Nevada State Legislature as a lobbyist is the well-balanced approach taken to difficult problems. In A.B. No. 1 of the 18th Special Session, a fair balance was accomplished between the rights of patients and the needs of physicians. However, due to the short time frame and the proclamation the Governor instituted to call a special session, insurance reform could not be discussed. Assembly Bill No. 1 of the 18th Special Session did not accomplish insurance reform, but we are hopeful many other bills will do so this session. We have done nothing to reduce instances of malpractice. The single most effective tool that will assist physicians in obtaining affordable insurance is to institute reforms reducing malpractice, and it should be pursued aggressively in this Legislature. Finally, I think everyone, including physicians, believes patient safety is our No. 1 priority.
I will explain the comparisons between S.B. 97 and A.B. No. 1 of the 18th Special Session; however, I must first take issue with the preamble, which states:
Skyrocketing medical malpractice insurance costs have resulted in a potential breakdown in the delivery of health care in this state, severe hardships concerning the availability of health care for the medically indigent, a denial of access to health care for the economically marginal, and the depletion of physicians such as to substantially worsen the quality of health care available to the residents of this state. …
We respectfully disagree with that preamble. In a memorandum dated February 12, 2003, the Legislative Counsel Bureau informed you of an exodus of physicians from the state. Certainly, physicians leaving because of high malpractice insurance rates is a problem; however, we need to identify which physicians left because of high malpractice insurance rates, and which left for other reasons, such as, to spend more time with their children or live a different lifestyle. The number of physicians coming into the state is still strong and 335 new licenses were issued in 2002. Is this a mass exodus of doctors? We do not believe so.
The second part of the preamble discusses denial of access. Less than 2 weeks ago, Charles Duarte, Administrator, Division of Health Care Financing and Policy, Department of Human Resources, indicated the number of obstetricians remains more than adequate to serve the population in Clark County. Health Plan of Nevada, Incorporated, has 56 obstetricians taking new patients and Nevada Health Solutions has 68 obstetricians taking new patients. Medicaid does surveys of its patients, and 92 out of 100 women indicated they have easy access to physicians. We do not believe this indicates a denial of availability to access.
I will now compare A.B. No. 1 of the 18th Special Session, the well-balanced bill, and S.B. 97, a horribly out-of-balance bill. I want to assure the committee I will not just be drawing a distinction between S.B. 97 and I.P. 1, because they are exactly the same. There are four words that are different: two are in the preamble, one expands the definition of nurses, and the final difference is the effective date. Other than that, the two measures are identical.
The first change is in section 1, paragraph 4, of S.B. 97, and is a new definition of professional negligence. I cannot understand why anyone would want to change the definition. The current definition has been interpreted by Nevada courts for 50 years and provided strong case law during that time. The change will give lawyers a new chance to define medical malpractice and promote litigation. I think it is unfortunate to throw away 50 years of case history and I do not understand the need to do so.
Mr. Bradley:
There are exceptions to the noneconomic cap in A.B. No. 1 of the 18th Special Session. Why were exceptions created? First, and most importantly, is a statement from Senator Raggio who conducted incredible joint sessions and was very concerned about a blanket cap without exceptions. The senator felt strongly the exceptions were necessary in order to uphold constitutionality. In an article dated February 21, 2003 (Exhibit E), Mr. Craigie indicated he was in favor of exceptions; however, in S.B. 97 there are absolutely no exceptions. One of the insurance bibles, the Business Insurance, issued an editorial indicating the same necessity to include an exception for egregious acts. Finally, in recent times, based on the North Carolina case of Jessica Santian, hospitalized at Duke University with permanent brain damage, U.S. Senator Orrin Hatch, Chairman of the U.S. Senate Committee on the Judiciary, also concurred any bill should include exceptions.
Now for the comparison: In A.B. No. 1 of the 18th Special Session, there is a $350,000 per plaintiff, per defendant cap. That is a very important distinction. It means if there is a wrongful death caused by negligence and there is a family, including a spouse and three children, under A.B. No. 1 of the 18th Special Session, each family member would have an independent claim for noneconomic damages. Under I.P. 1, it is $350,000 per event with no exceptions.
The exceptions in A.B. No. 1 of the 18th Special Session include gross negligence. When discussing the case in North Carolina, and other horrific cases, many Legislators comment it is gross negligence. The definition of gross negligence in Nevada is not the egregiousness of the facts, it is the state of mind of the actor at the time the negligent act took place. Our definition of gross negligence is defined as conscious indifference and disregard to safety and welfare. I have never been involved in a medical malpractice case in which I believed a doctor intended to hurt somebody. I do not believe that happens in Nevada. However, the gross negligence exception cannot be proven under the current definition because a state of mind cannot be proven.
The second exception is for exceptional circumstances. This was intended to follow when a judge sits in a courtroom with a jury and listens to the compelling testimony, and the jury returns a verdict that exceeds the cap on noneconomic damages. Remember, the jury is never told about the cap and works very hard to decide the plaintiff’s damages. If the jury decides a damage award above the cap, the judge releases them. Under most circumstances, after the jury has gone home, the judge says, “Now we will take all the jury’s hard work and throw it out the window because the cap is $350,000.” An exception, supported by Governor Guinn and the group of doctors lobbying for the bill in the 18th Special Session, and strongly endorsed by many groups, creates an exception when the judge, based on his or her interpretation, feels clear and convincing evidence exists and the cap should not apply in that case. Those are the two exceptions.
Mr. Bradley:
The cap under S.B. 97 is destructive to the rights of certain people, the most important of whom are senior citizens. You need to realize the cap on noneconomic damages is $350,000. Senior citizens, stay-at-home parents, children, and others with no wage-earning capacity only have one claim, which is a claim for noneconomic damages. Under S.B. 97, their claim is limited to $350,000. It also includes people killed or horribly maimed in nursing homes. I do not understand why senior citizens would not realize the harmful effects of S.B. 97 because, with a $350,000 cap, almost all claims involving seniors, stay‑at-home parents, and children will be rejected. Keep in mind, the Legislature did not cap the fees of the insurance companies’ defense attorneys or the amount of money an insurance company can spend defending one of these claims. When lawyers such as Mr. Sharp or myself take a medical case, we take on The St. Paul Companies, a billion-dollar company, and The Doctors Company, another billion-dollar company, whose resources are without limit. Caps tie our hands. Nevadans have always enjoyed a good fight; however, a fight is not fair when our hands are tied. You have given the insurance company the upper hand and such advantage that those individuals will not see justice in our courts under S.B. 97.
Now, I want to talk about what is fair to doctors. Joint and several liability is what you have heard is the “deep pocket.” In the context of medical malpractice, physicians believe they are the deep pocket, but they are mistaken. Over 80 percent of cases involving medical malpractice arise in a hospital situation when there is miscommunication between personnel and physicians. When miscommunication results in catastrophic injury, damages are significant. We know medical inflation has risen approximately 19 percent per year for the past 10 years. Why are verdicts going up? One, life expectancy is longer, and two, the cost of care, because of medical inflation, is driving the numbers up. Under S.B. 97, doctors just want to be responsible for their percentage of fault. In the case of a catastrophically injured child or spouse, the future cost of care may amount to $5 million or $6 million due to daily care, medicine, and needs required by the catastrophically injured patient at home or in a facility. Those are future economic damages.
Mr. Bradley:
In a case where both hospital and physician are involved, let us assume the jury decides the physician is 50 percent at fault and the hospital is 50 percent at fault. With a $5 million future economic award, the physician is liable for 50 percent of the damages, 50 percent of $5 million is $2.5 million, and the hospital is liable for $2.5 million. Virtually every physician in the state carries $1 million insurance coverage. Physicians requesting to be only severally liable are saying they are prepared to take on the cost of $2.5 million for the catastrophically injured child, and their insurance will not cover it. I have friends who are still physicians despite the battles and some of them are in attendance today. If S.B. 97 passes with the joint and several change, I will have to inform my physician friends they must carry more coverage. There is no doubt about it. They have asked to be more responsible. Please realize, under the old system, we are still able to accept the physicians’ $1 million policy, give them a release, and cover the remainder from the hospital. Under this scenario, when we must pursue each and every person who has at least 1 percent of responsibility, we can no longer release that position.
If you are the patient, or the parent of a catastrophically injured child, and the physician has responsibility for $2.5 million, but only wants to pay $1 million, what do you do? Under existing law, you can see whether you can get the remainder of recovery from the hospital. Under S.B. 97, you must attempt to obtain the entire amount from the physician, otherwise the quality of care will suffer. This is not a novel idea. We discussed it at length during the summer of 2002 with Governor Kenny Guinn, Dr. David Kahan, Dr. Kent McBeath, and Dr. Robert Shreck. When the argument was presented to them, they acknowledged it was not what they wanted, which is the reason it was not included in the Governor’s package. We now have another group of doctors asking for something different. This was not just put aside, but was the subject of significant debate in our meetings with physicians and the Governor. Due to the associated problems, it was rejected.
Mr. Bradley:
In regard to periodic payments, under S.B. 97, it is requested to take the jury’s verdict, not pay attention to it, and then figure out what the plaintiff needs on a monthly basis. The problems with that are as follows. One, the physician or hospital that caused the catastrophic injury will now play a role in how the victim of medical malpractice will be compensated. That does not fit right with fairness in Nevada. Two, page 5, section 9, subsection 5, lines 39 and 40 of S.B. 97 says, “Such payments must only be subject to modification in the event of the death of the judgment creditor.” In other words, if the person awarded the compensation dies, only under that circumstance may the payment schedule be changed. However, in every case there are medical emergencies. If a catastrophically injured child is awarded monthly periodic payments, but in the middle of one of those months the child has a significant medical experience requiring hospitalization, surgeries, postoperative care, and rehabilitative care, and it is not contemplated in the monthly payments, the child and his or her family have nowhere to turn. The payments cannot be modified. What is the answer? Do we tell the parents to postpone their child’s surgery until enough payments build up and there is enough money to pay the doctors? It is an insidious way to tie the hands of injured plaintiffs and totally unfair to patients in Nevada.
Finally, under this scenario, who holds the money and who gathers the interest and benefit of that money? Not the patient who waited 3 years to get to court and hocked everything to keep the lights on. The patient does not get the money, the insurance company holds the money while the patient waits anxiously for the monthly payment. That is also not fair to patients. The idea of periodic payments was heavily debated with physicians and Governor Guinn last summer. At the conclusion of the debates, it was Governor Guinn’s decision, based on common sense, to reject the concept, which is the reason it was not included in A.B. No. 1 of the 18th Special Session.
Collateral source is the attempt by a defendant to introduce evidence of the fact the plaintiff is insured, either through medical, disability, or any type of insurance that may help pay the bills. Senate Bill 97 is insidious because the jury, though not told the physician has insurance, is told the plaintiff has insurance. That is the first problem. More importantly, under A.B. No. 1 of the 18th Special Session and existing law passed in 1995, Nevada has a good system in dealing with insurance benefits to a plaintiff. The law says that following a verdict, the jury is not told about any insurance, but after the verdict is returned, the jury goes home and the judge holds a hearing. In regard to medical bills introduced into evidence, the judge asks whether there is a lien from the insurance company.
Mr. Bradley:
In every insurance plan, including the State of Nevada’s insurance plan, there is a clause called subrogation, which is the right to reimbursement. It basically says, if we pay on behalf of a person injured by a third party, and the third party files a lawsuit and recovers the medical bills, the insurance company is entitled to be paid back. That is a simple way of saying “subrogation.” Under existing Nevada rules, the judge asks whether you have been notified by the insurance company it wants to be paid back, which is called a lien letter. If we say, yes, the judge asks for a copy of the lien letter. When it becomes apparent the insurance company will be paid back, the judge says, “I understand the plaintiff will have to pay back the insurance company so I am not going to reduce this verdict.” Because the money is going back to the insurance company, the plaintiff avoids double recovery.
On the other hand, if the judge asks whether the insurance company will be paid back, and there is no lien letter from the insurance company, the judge will say, “Since you do not have to pay anybody back, I am going to reduce the verdict by that amount because otherwise it will constitute double recovery.” We do not have to introduce evidence to the jury about insurance one way or another, the trial is still clean, and justice is served by the judge doing his or her job in reducing a premium.
That is not the law under both I.P. 1 and S.B. 97. They mimicked California where the right of subrogation is eliminated. What does that mean? It means entities, such as Medicaid, Insurance Company of Nevada, and private insurers, for the time being, under Nevada, will recover millions of dollars a year and their rights are cut off. In regard to Medicaid, many indigents receive primary care in emergency rooms. When they are victims of malpractice, Medicaid pays their bills. When they recover compensation for the malpractice, Medicaid is paid back. We hope a representative from Medicaid will tell you how much is recovered in subrogation claims on behalf of Medicaid. It is substantial. Insurance Company of Nevada is reimbursed and private insurers are reimbursed millions of dollars every year. By cutting it off, how will Nevada and private insurers be reimbursed? They will have to raise rates in order to make up the insurance money. That is the reason the collateral source rule is unfair to Nevada.
Mr. Bradley:
Finally, I will discuss the limit on attorney fees. Dr. Wilbourn made it sound as though we make a telephone call and the insurance companies roll over and pay verdicts. I tell you, without question, filing a medical negligence case is one of the most difficult things done by a lawyer. Physicians perceive they are being called bad doctors; however, it is not the doctor, it is a horrible mistake in which a person was catastrophically injured. Limiting attorney fees does one thing: it prevents people from obtaining access to good lawyers. The idea it puts more money in the victim’s pocket is a nice story to tell the Legislature, but it is not true. It will accomplish the same thing it did in California, where senior citizens, stay-at-home parents, children, and others without a wage, cannot retain a lawyer. Nevada has been at the forefront of the debate on this issue, which is the reason Governor Guinn and the committee rejected it. The State does not establish contracts; contracts are the rights between two individuals. To establish a state contract that will harm thousands of Nevadans is not right for the patients of the state.
I would like to speak about filings and claims in Las Vegas. Testimony has indicated since the termination of the screening panel, filings are out of control in Las Vegas. I want everyone to remember, insurers and physicians demanded the repeal of the screening panel. Quite frankly, to have both the tort reform contained in A.B. No. 1 of the 18th Special Session or S.B. 97 and the screening panel, is an incredible burden on an injured person and it cannot exist under a constitutional analysis, which is the reason it was eliminated.
The screening panel expired October 2002 and filings increased in Clark County in November, December, and January 2003, reflecting the fact people came out of the panel. If you recall, we were given the right to opt out of the panel or remain in. Because the screening panel took 1½ to 2 years to resolve a case in southern Nevada, many attorneys and their clients decided to come out of the panel. The increase in filings is nothing more than a reflection of leaving the panel and filing the case in district court.
I question the numbers presented to you because they are based on the number of defendants named in lawsuits, not the number of filings per plaintiff. In other words, when physicians want to talk about noneconomic caps on damages, they want to talk per event, but when they talk about filings in Clark County, they want to talk per physician. You cannot have it both ways.
What do I.P. 1 and S.B. 97 truly accomplish? They will eliminate legitimate medical malpractice cases on behalf of seniors and other non-wage earners. They take the rights of juries and set them aside because corporate executives decided a cap is what people are entitled to without ever hearing a word about their case. Finally, it denies recovery to those most seriously injured. Those people who experienced horrific injuries and are told, “Sorry, but I have already decided your case has the cap,” will be the ones who will be most severely damaged by both measures.
Senator Care:
My approach is this: If somebody wants the Legislature to change, amend, repeal, or create the law, they must demonstrate the reason, importance, and necessity to do so before I will be persuaded. A bill was passed last session and the law went into effect October 1, 2002, 5 months ago. What about the legislation is not working? Before I attended the 18th Special Session I was told a deal had been reached. You will not find anything in the Nevada Revised Statutes (NRS) about deals; however, the legislative function will not operate unless deals are made.
I want to know whether or not the insurance industry told you or the doctors it was likely insurance rates would either stabilize or decrease if we enacted what at that time was the deal. I would like you to name the names.
Mr. Bradley:
The only names involved in the 18th Special Session were Robert Byrd and James L. Wadhams. Because of time constraints, unfortunately, the insurance industry did not participate in the 18th Special Session. It was a terrible shortcoming because many people feel strongly the issue is an insurance problem. Insurers have been sitting back and allowing it to look like a fight between lawyers and doctors, which is not true, but insurance companies have been conspicuously absent. I applaud this committee, as well as the Senate Committee on Commerce and Labor, for looking into the insurance side of the matter and bringing insurance representatives to the table to answer important questions about Nevada. I cannot give you any names because insurance company representatives were not there, and have not been here.
Senator Titus:
I served on the interim committee chaired by Assemblywoman Barbara Buckley. The next scheduled meeting would have brought the insurance companies to the table; however, before they could appear, the 18th Special Session was called. Consequently, the interim committee did not get to hear from them. Then, during the 18th Special Session, I attempted to bring up the issue of insurance companies and was ruled out of order by the majority leader of the Senate because it was not specified in the Governor’s directive. I think the directive was broad enough to address it, but it was disallowed. Senator Townsend and I have insurance bills this session and both are scheduled to be heard Thursday morning this week; therefore, we will be looking at the issue from that angle as well. In addition, there are other things on the table in regard to insurance reform that will be heard by this committee. I regret those issues were not an earlier part of this debate.
Senator Nolan:
Mr. Bradley, you said removal of the medical review panel was at the insistence of the insurance industry, but then you said the insurance industry was not present and did not participate. Therefore, who requested removal of the medical review panel and was it over the objection of the Nevada Trial Lawyers Association, or was it agreed fundamental problems be addressed and the medical review panel removed as well?
Mr. Bradley:
To answer your first question, prior to the 18th Special Session, the Division of Insurance commissioner, Alice Molasky-Arman, held a full-day hearing, March 4, 2002, on insurance companies in Nevada and the Nevada Medical Legal Screening Panel. Prior to that hearing, the insurance department sent a letter to every malpractice insurer requesting comments on the function of the screening panel. To my recollection, every insurer that responded insisted the screening panel was not working and should be eliminated. In addition, the group of physicians working on the 18th Special Session, Dr. David Kahan, Dr. Kent McBeath, Dr. Michael D. Daubs, and Dr. Robert W. Shreck, also suggested and recommended the panel be abolished.
Knowing A.B. No. 1 of the 18th Special Session included tort reform with a $350,000 cap, and a $50,000 cap in emergency rooms, the Nevada Trial Lawyers Association could not agree whether the panel should continue with those types of hurdles already facing an injured patient. Therefore, we concurred the panel be repealed should the bill pass with inclusion of significant tort reform. We did it for constitutional reasons.
Senator Nolan:
Earlier in this meeting we were told there is an industry-accepted average amount for a medical malpractice claim. What does the Nevada Trial Lawyers Association consider an average malpractice claim?
Mr. Bradley:
I was surprised to hear the average malpractice claim is $91,000. I think it is higher in Nevada. You must realize, 70 to 80 percent of tried malpractice cases result in a favorable verdict for the physician. Consequently, the desire to try these cases in Nevada is significant.
Dr. Wilbourn indicated, when insurance companies are faced with a demand for $90,000 on a medical malpractice case, they make a business decision to settle for $60,000. I take issue with that. In every policy sold in the State of Nevada there is a consent provision to which the physician must agree. If you look at any of your policies, whether professional or automobile, there is no consent. My malpractice policy does not have a consent provision. Therefore, a physician must consent before there is any sort of meaningful settlement discussion. My point is, with the tremendous amount of these cases coming out in favor of health care providers, many are defended up to the courthouse steps and the costs are exorbitant. I suggest the fees are much higher than $91,000 in Nevada, at least the cases in which I have been involved.
Senator Nolan:
Do you dispute the fact insurance companies settle at an amount less than what it would cost to defend the case regardless of its merit? I believe it is common business practice within the insurance industry across the board. Can an attorney make a profit by handling cases not on their merit, but by settling for an amount considerably higher than what it would cost to defend them?
Mr. Bradley:
Medical malpractice attorneys do not make a decision to file a claim lightly. A medical malpractice claim requires tremendous research, consultation with other physicians, and preparation to take on a $1 billion insurance company. It is not unusual for attorneys to spend $100,000, $150,000, or $200,000 to take on an insurance company. I will not file a frivolous lawsuit knowing the chances of winning are remote, particularly in today’s environment. I will not put my firm’s assets at risk in the hope I can buffalo a physician and insurance company into caving in; in this situation there is no deference. The physician must consent, which is a very difficult thing to do. Physicians are trained to do the right thing and I believe, in most instances, they feel they did the right thing. However, there are tragic consequences when they make a mistake. In a clear case of medical malpractice in a hospital, it is rare for the hospital risk manager to work something out and admit the hospital was responsible. The only way people receive relief after many attempts for justice is to consult a lawyer. I wish no one had to come to me and cases could be resolved. I work hard to resolve cases. However, without willing participation of the insurance industry, it does not happen.
Page 27 of the PowerPoint presentation (Exhibit D) contains a verdict chart created by Assemblywoman Buckley’s interim committee that demonstrates the unwillingness of the insurance company to settle when the screening panel determined meritorious findings. It is not a situation in which people admit they made a mistake and want to make it right. That does not happen. Unfortunately, the only way people can receive remedy is to hire a law firm willing to take on the insurance industry.
Keith L. Lee, Lobbyist, State Board of Medical Examiners:
A packet of statistical information has been distributed to the committee (Exhibit F. Original is on file in the Research Library.). Page 1 is entitled “Licensure/Population Statistics-Medical Doctors” and contains information compiled from 1980 through 2002, showing the number of active medical licenses issued in the State of Nevada, and the number of new licenses issued each year. It also shows state population and develops a ratio between the number of physicians per 100,000 population, with the exception of the population for 2002. During 2001 and 2002, 335 new physicians were licensed in the state, which was only a net increase of 42 physicians. It reflects a number of physicians who either retired or closed their practices and surrendered their licenses. It is important to note a physician need not reside in the State of Nevada to possess an active license. The numbers show, of 3500 physicians, between 1200 to 1300 are actively licensed in the State of Nevada, but do not have a physical residence or address in the state. They may on occasion see patients in the state, but they do not have a medical office.
I will now discuss pages 2 through 18 (Exhibit F). The Nevada State Board of Medical Examiners (NSBME) does not certify or otherwise indicate areas of specialty for physicians, it just licenses them. However, when physicians are licensed, or relicensed, they provide their specialty area information. Pages 2 through 16 are licensee listings as of February 28, 2003. Pages 2 through 12 list 194 physicians whose primary specialty is obstetrics and gynecology. Pages 14 and 15 list 30 physicians whose specialty is gynecology only, and page 16 lists 2 doctors whose specialty is obstetrics. There is no requirement under the Nevada Medical Practice Act, or regulations adopted pursuant to the act, requiring physicians to notify the NSBME they are no longer practicing in the OB/GYN specialty area.
Pages 17 and 18 (Exhibit F) list 84 physicians who reported a specialty. The physicians’ names were derived from three separate lists. One list was received from the Governor’s Office in October 2002 and reflects the results of a poll of the members of the Nevada State Medical Society. The second is a list of OB/GYNs in the Las Vegas area, provided by Dr. Steven K. Montoya, an OB/GYN physician and member of the NSBME. The third is an unsolicited list from Dr. Robert A. Gatlin, a licensed OB/GYN physician in Las Vegas, with his determination of the physicians’ status at the time the list was provided. The three lists indicate physicians’ specialties, whether they continued to practice in those specialties, or in the case of OB/GYNs, whether they dropped obstetrics and continued practicing gynecology, and whether they had closed their practice, retired, or considered closing their practice.
The investigative staff of the NSBME called the approximately 200 physicians on the list to determine whether their licenses were active, their addresses had changed, or they quit practicing medicine. Physicians are required by law to inform the board, within 14 days of closing their practice, the location of their patients’ records, and they must maintain those records for a period of 5 years after closing their practice. Therefore, it is a legitimate inquiry for the board to determine the location of the physician and his or her patients’ records after closing the medical practice.
The column titled “Investigative Results,” on pages 17 and 18 (Exhibit F), is information received by the board after contacting physicians or their staff. In the event a physician could not be reached, the board came to a conclusion with respect to what they had done. The information reflected is, for the most part, correct.
Senator Care:
In perusing the packet (Exhibit F), it seems to me the figure on which we should focus is the right-hand column on page 1, entitled “Ratio of Active In-State M.D.s Per 100,000 Population.” In 1980 the figure was 144, it jumped in 2001, and is 165 at the present time. There must be a national figure as well, but I am not sure how we would compare the numbers. Is there a way to compile the number of OB/GYNs per 100,000 and compare it with the rest of the country? Is there a standard figure the profession might deem acceptable?
Mr. Lee:
I will ask the NSBME for answers to your questions.
Senator Titus:
What can we do help the NSBME get a better handle on what goes on with the medical community in the state?
Mr. Lee:
That is a difficult question. Physicians are mandated to notify the NSBME of a change of address prior to changing location, and often they do not do so. At the present time, the Nevada Medical Practice Act provides the NSBME may prosecute a physician for willful violation of any provision of the act.
Senator Titus:
Does the NSBME ever prosecute?
Mr. Lee:
The NSBME has never prosecuted a physician for failure to notify a change of address because it is difficult to determine whether or not the failure is willful. It is usually an oversight and inadvertent because they do not think about notifying the NSBME, even though they are reminded continually by various newsletters. Removing the word “willful” from the Nevada Medical Practice Act might allow the NSBME an opportunity to prosecute physicians for failure to notify a change of address.
Senator Titus:
What if physicians were fined rather than prosecuted?
Mr. Lee:
The NSBME has insufficient staff and resources to carry out such an endeavor, however, a better education program for physicians would be helpful.
Senator Washington:
I found the information (Exhibit F) rather vague. Would you clarify whether OB/GYNs stopped practicing due to a change of location or the cost of medical malpractice insurance?
Mr. Lee:
The first physician, listed on page 17 (Exhibit F), was reported to have stopped practicing obstetrics, and yet is still practicing gynecological medicine without delivering babies. We do not know whether the physician took that action as a direct result of medical malpractice premiums. It is beyond the scope of responsibility of the NSBME to inquire.
Senator Washington:
Is it possible for the NSBME to extend its responsibility and ask for the reasons physicians leave their practice?
Mr. Lee:
I will inquire whether it would be an invasion of physicians’ privacy to ask that question. I am certain the board would honor your request should it be possible to do so.
Senator Washington:
I understand the privacy issue; however, I think it is important when setting policies for the State that we understand the issues.
Mr. Lee:
The NSBME did not make inquiries of every licensed physician, only the physicians from the three lists mentioned earlier.
Robert Byrd, Chairman, Medical Liability Association of Nevada (MLAN):
I am here today to provide a recap of our efforts, primarily in southern Nevada. I will give you a short background of where we are and how we started with the medical malpractice crisis. Early in 2002, via the benefit of regulation, MLAN was formed to provide insurance availability, as opposed to affordability. By that I mean we were mandated to be self-supporting and feel strongly it is necessary. If we are not self-supporting and, in fact, our losses exceed our income, we have the mandate to assess doctors for what we have determined to be a fair amount to help make up the deficit. The fair amount has been laid out at 20 percent of an annual premium and we can do that each year. If the 20 percent does not alleviate the deficit that exists, we go to the casualty insurance market and assess each of them up to 5 percent of their net written premium the prior year in Nevada. This gives us a high capitalization rate or source of funds if we need it.
At this point in time we are insuring approximately 500 physicians, mostly in southern Nevada, which is probably something above 20 percent of the doctors in that part of the state. Since we opened our doors and first wrote doctors on May 1, 2002, we have quoted 1518 doctors and are insuring 500. That tells you 1000 doctors chose not to insure with us and other markets picked them up. Actual declinations in that period of time were only 22 doctors out of 1500. Therefore, a very limited number of doctors did not qualify for insurance. Our premium income at this point in time is at $10 million per year. We have obtained reinsurance for losses above the $250,000 level. We are insuring by regulation limits of $1 million per event and $3 million aggregate. Above $250,000 to $1 million we have reinsurance; however, we participate in that reinsurance via a very complicated formula where the real risk transfer is when we suffered more losses, at the high end of the experience.
That is a capsule of where we are. The operating plan and underwriting plan are enforced. We have retained a professional firm for claims management. We have actuaries from Milliman and Roberts. We are operating as an insurance company at this point and hope to be part of the competitive market.
Senator Washington:
Who is your reinsurer?
Mr. Byrd:
Our lead reinsurance is Transatlantic Reinsurance Company, a member of the American International Group, Incorporated, which is assuming 50 percent of all the reinsurance.
Senator Washington:
Are those basically high end?
Mr. Byrd:
They get into it as our experience deteriorates. When we have losses exceeding somewhere in the neighborhood of 47 percent of earned premium, their risk transfer happens. Although they are with us, as we go along we reimburse them for losses up to that amount.
Senator Washington:
Do you do your own underwriting?
Mr. Byrd:
Yes, we do. We hired a firm, part of Marsh Incorporated, to provide that function and we, with them, have developed an underwriting plan.
Senator Washington:
Do you manage your own claims?
Mr. Byrd:
We also hired a claims firm to handle claims; however, the board of directors has the final say on any claims.
Senator Washington:
Could we get a list of your board of directors?
Mr. Byrd:
Sure.
Senator Care:
What were your reasons for declining coverage for 22 doctors?
Mr. Byrd:
The primary reason was claims experience. We have a rating plan with assigned points based on claims experience. If the points assigned to those various claims exceed the No. 6, they are automatically declined. In most of those cases that was the reason they were declined.
Senator Care:
Is this a way of saying they had been sued?
Mr. Byrd:
Yes.
Senator Care:
Do you know what number of those 22 had been insured by The St. Paul Companies?
Mr. Byrd:
No, I do not.
Senator Care:
Is there a way we can obtain that information? Although I do not need the names, I would like to know the nexus between the 22 doctors and any prior coverage by The St. Paul Companies.
Mr. Byrd:
We have that information.
Senator Care:
Could it be broken down by the specialties of the 22 doctors? Do you know whether it is largely OB/GYN physicians, or is it across the board?
Mr. Byrd:
It is across the board.
Senator Wiener:
You mentioned you could assess 20 percent a year to remain self-sustaining. Is that correct?
Mr. Byrd:
That is correct.
Senator Wiener:
You also mentioned you hoped your insurance plan would be competitive and operate in a competitive environment. Currently, with 20 percent of the doctors in southern Nevada on your plan, could you provide us a comparison regarding the nature of the competition and how your premiums compare to what else is in the marketplace? Is the 20 percent in addition to premium increases?
We saw substantial increase in rates of increase. In the 18th Special Session we felt it would be ideal to say we could reduce premiums, but my thought was whether we could hold on to reducing the rate of increase in premiums. Are you competitive with what else is in the marketplace and can you foresee whether or not you will need to impose the 20 percent assessment to remain afloat?
Mr. Byrd:
Answering the last part first, we hope to never have to assess the doctors the 20 percent. Our rate base is designed to eliminate that possibility. Experience would have to be a lot higher than expected before the assessment would ever take place.
Insofar as our competitive posture in the marketplace, when we first started writing doctors in May 2002, I believe our rates were very similar to other major carriers still offering coverage. There are only two or three still actively offering coverage and our rates are right on a par with them. It is my understanding, subsequent to that time, many of those carriers have increased their rates. Indeed, we have asked for an increase on one or two classes, but they were increases asked for by our reinsurers because they thought we were too low. I do not know whether those requests will be granted.
We have no intention at this point of increasing rates. There is nothing on the table to increase rates and are hoping we do not have to increase rates. I believe the relief given us under A.B. No. 1 of the 18th Special Session will prevent a rate increase, if it holds up; if not, rates will start going in the other direction. It will take time to determine.
Senator Wiener:
Although you have 20 percent of southern Nevada and are building a decent market share, do you see an opportunity to grow? What rate of growth can you handle and still maintain self-sufficiency? When I say growth, I mean the number of doctors you could put on the plan.
Mr. Byrd:
I believe our ability to grow is pretty broad. With the backing of the assessment plans we do not have capitalization, or surplus to capital deficiency, to worry about, as do other insurance carriers. Therefore, we can virtually handle all the doctors who want to come to us. We hope to grow. If, in fact, we do not find it necessary to increase rates and our competitors do, I expect we will receive more applications.
Mark J. Nichols, Lobbyist, National Association of Social Workers – Nevada:
I will read my written prepared testimony (Exhibit G).
Larry L. Spitler, Associate State Director, Lobbyist, American Association of Retired Persons:
The American Association of Retired Persons (AARP) is a nonprofit, nonpartisan, membership organization for people 50 years of age and over, with approximately 258,000 members in Nevada. It should be noted we take neither the side of the insurance companies, the lawyers, or the physicians, and as an independent voice hope to bring some balance and focus to resolving the real causes of this problem.
We are here today to request you do not consider S.B. 97 a solution to the medical malpractice insurance crisis. We testified before the Assembly Committee on Judiciary during the 18th Special Session and said the bill under consideration probably would not solve the problem. After many hours of hard work on all sides, we concluded not enough information had been made available to make a solid decision as to the reasons this issue had brought on a medical crisis, especially in southern Nevada. We continue to be concerned if we do not get to the bottom of the reasons why the crisis occurred, and adequately resolve the issue, seniors and others will continue to ultimately pay higher costs as this war of slogans goes further.
As an organization, AARP continues to stress this is an insurance issue and if that industry is not at the table at every forum, there will never be a solution to this crisis. We feel consumers in general, victims of medical malpractice specifically, and insurance companies, must be at the table in order to seek positive results. To our knowledge, no one has guaranteed lower rates as a result of legislative actions already taken, or by any other pending legislation. We have heard “perhaps,” we have heard “maybe,” but we have heard no firm assurances. The issue thus far has discouraged and alarmed seniors who are already experiencing difficulties as they wade through health maintenance organizations (HMO), preferred provider organizations (PPO), private pay, and a myriad of other paper-oriented procedures. Now, with medical malpractice insurance rates looming over their heads, this is just one more thing for them to worry about.
We urge this committee not to look at this crisis as a single-solution problem. It is complex and needs hard work to understand the mysteries of how insurance companies write lines of insurance and how they secure profits on those lines. We also need better ways to review medical performance and weed out practitioners who are consistently charged with medical malpractice. We believe the legislative committee established to look into medical malpractice insurance rates was on the right track in learning the roots of the problem and were in the process of collecting enough data to eventually offer both short- and long-term solutions for legislative consideration. Unfortunately, that committee was dissolved upon conclusion of the 18th Special Session as everyone thought the legislation enacted would, over time, bring medical malpractice insurance rates down and within reason. It did not bring rates down then, nor are there any assurances S.B. 97 would do that now.
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. Encourage them to explore more systems that can 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 any legitimate claim. Above all, they should establish regulations to assure the public and the medical community that medical malpractice insurance rates are fair and accurately reflect claims experience.
To enact additional legislation similar to legislation enacted in the 18th Special Session does not ensure lower rates or keep physicians in Nevada. We want our doctors to see patients and not worry about the ability to pay every escalating medical malpractice insurance premium. At the same time, we feel the public deserves a full explanation of how the crisis came about and how to make sure it does not occur again at a later date.
Mr. Craigie:
I submitted a document entitled “Clark County OBGYNs Licensed by Nevada Board of Medical Examiners 2001-2002” (Exhibit H). There were 24 people licensed to perform OB/GYN work during that period. On the second to the last column, “License Number,” 6 were limited licenses, mostly for residencies; 4 of the 24 were in 2002, all others were in 2001. The numbers of physicians moving into Nevada are far shy of those leaving. Given that 5000 people move into Clark County every month, the declining numbers of physicians to an increasing ratio for patients to each OB/GYN physician is dramatic.
Nicole Byrne:
I cohost a morning show in Las Vegas on “Sunny 106.5.” I am here today on behalf of women in Clark County, not just pregnant women, but women of all ages and income levels. This is the most serious health issue affecting Nevada women in history. Early detection of breast, uterine, cervical, and ovarian cancer is a very real concern. Access to care is being threatened in these areas.
I gave birth to my beautiful daughter, Sydney Grace, January 17, 2003. I learned of my pregnancy last May when the medical crisis was in full swing. It was an emotional time. We were very excited when the home pregnancy test came back positive, but I could not find a doctor to tell me whether or not I was pregnant because every doctor I called turned me away.
I am in the public eye, educated, and making a comfortable living. With all my resources, I could not find a doctor. I can only imagine what less fortunate women experience. It is appalling that millions of dollars have been spent educating women, especially low-income women, of the importance of prenatal care with programs such as Baby Your Baby from the Utah Department of Health. Then the medical crisis occurred and we were told, “If it is time for your baby to be born, go to an emergency room. That is all we can offer you right now.” As a result, drop-in deliveries at Clark County’s only county hospital increased 33 percent.
Research regarding prenatal care is rock solid. Women must access care in the first trimester of pregnancy. That care includes prenatal vitamins, monthly examinations, laboratory screenings, and ultrasounds. What does this mean to women who no longer have this care? It means miscarriages, birth defects, cerebral palsy, blindness, and death to the baby or mother during delivery. Historically, it was not long ago when one in two women died during childbirth. Something as simple as taking folic acid can reduce birth defects up to 70 percent. What happens to women who do not receive prenatal care?
I had a miscarriage earlier last year. I was 38 years old and considered a high‑risk pregnancy; therefore, it was very important for me to have a doctor. I began talking about my struggle on the radio and the phones lit up. Women called in tears because they could not find a doctor, or the doctor they had for many years was leaving. Because it was such an important issue in our community, the station began featuring a doctor each day on the radio for several weeks. It was unprecedented because we are a music station, not a talk station.
Since that time, I heard half the doctors featured on the radio left Nevada. They were not only OB/GYN physicians, but orthopedic surgeons, anesthesiologists, and a woman cardiac surgeon, one of the few women cardiac surgeons in the country. She also left the state. While she was on the radio she received a call from a tearful woman who thanked the doctor for saving her husband’s life. At that point the doctor began to weep.
I think it needs to be made clear that losing Nevada’s OB/GYN physicians is not just losing doctors who deliver babies. How will you feel if your wife, your mother, or your sister finds a lump in her breast and cannot find an OB/GYN physician to check it. We do not understand the severity of a problem until it happens to us. My experience of being turned away from ten or more doctors is a horrible feeling. It takes your self-worth to a new low. You feel as though you are not good enough to have a doctor. You ask, “Do they not realize how special my baby is and how important she is to me? I do not want to lose her.”
Last July I joined other members of the community to organize an effort to stress the magnitude of the problem to our leaders. We collected over 100,000 signatures and requested they be taken to the 18th Special Session in August. The Legislators came back with a version of tort reform that did not provide any short-term solutions. After the 18th Special Session, many women asked the reason the legislation passed was so different from what had been requested. There were 100,000 signatures that were clear about what the signatories wanted. The signatures were on postcards and spelled out something similar to the California tort reform. One listener said, “Is it a government of the people, by the people, for the people? We elected our leaders to be our voice, and our voices were not heard. Why?”
Five days after I gave birth to Sydney Grace I became very ill. My 15-year-old daughter drove me to the hospital on a Saturday evening. When I arrived at the emergency room, my blood pressure was extremely high and my heart rate was approximately 35. I lay in the emergency room for a long time and was scared to death. I asked my daughter to tell the nurses I was going to pass out, and they said to stay on the gurney so I would not hit the floor. At that point, my husband and doctor were called. My doctor left a dinner party, came to the hospital with his wife, and ordered a battery of tests. He thought I might have a blood clot in my lung, because it sometimes happens when a woman has had a caesarian section.
My head was pounding and I thought, perhaps, there was a blood clot in my lungs that had moved to my head. I kept asking for pain medication. The nurses were busy, and after my second or third request, they explained they were so busy and apologized for forgetting. My doctor finally gave me pain medication. There were no beds in the intensive care unit so I remained in the emergency room for 24 hours. They brought in a gurney for my husband so he could stay with me that night.
These are the kinds of things doctors do for us when we have a personal relationship with them. I wonder what would have happened that night if my doctor had not rushed there and immediately ordered a battery of tests. In the end, I was diagnosed with congestive heart failure due to fluid in my heart, and was released several days later.
I have been contacted to tell my story to Ladies’ Home Journal and Time Magazine, which, in my opinion, is an embarrassment to Nevada. As a new mother, I would be devastated if a doctor made a mistake and my daughter was scarred for life. However, I can live with the proposed legislation, in which, to my understanding, the doctor would still pay severely. On behalf of the women and children in Nevada, I ask for your help to keep our doctors here. The only way to do it is to help offset the enormous increase in their malpractice rates. Doctors in Nevada pay at least $50,000 more than those in any other western state. We need to pass solid tort reform, much like California, so the doctors who are still here will remain, and new doctors will come to Nevada. We cannot afford to lose even one more doctor. Please do not turn your back on the women and children of Nevada.
Stephen Byrne:
I will always remember lying on the gurney next to my wife in the emergency room watching the heart monitor for 24 hours. Her heart rate was down to 30 or 35 and I asked the doctors and nurses what was going on. They explained it was not unusual for a new mother, particularly in the case of a caesarian section, to have blood clots, pneumonia, or heart failure. In my wife’s case, congestion built up in her lungs because she was unable to take deep breaths or cough due to the incision in her abdomen, and then it built up in her heart. Heart failure is very serious, but in her case the possibility of clots was much more serious. Therefore, when the doctor got to the hospital, he made sure they did a brain scan because she had a terrible headache. They thought it might be a blood clot in the brain. She also had trouble breathing and they thought it might be blood clots in the lung. Once they cleared those two things, all they needed to do was reduce the swelling in her heart, which was a simpler thing with which to deal. It turned out the reason for her headache was because her blood pressure was 165/90 and her heart rate was between 30 and 45 and fluctuated all night long. I thought my daughter would never know her mother. It was a serious situation, but obviously worked out for the best.
Other than my connection to my wife and her contact with the community through her audience, I am just a guy who gets up in the morning, reads the paper, watches the news, and goes to work. Unlike the other testifiers, I do not know all the facts and figures. In earlier testimony, somebody mentioned the pendulum swinging. We have been talking about tort reform in various areas for what seems like 20 years. We must need more tort reform if we are still talking about it. We always try to strike a balance in these situations. It is a serious problem.
Everyone says this is a fight between doctors, lawyers, and insurance companies, and their respective interests. The saying about “killing all the lawyers” was a quote from a Shakespeare play. The characters were planning anarchy and actually were complimenting lawyers when they first said they would kill all the lawyers. There are many trade-offs in public policy. I remember the first oil crisis when the speed limit was lowered to 65 miles per hour. An ancillary benefit was saved lives due to fewer wrecks on the highways. The fact is, each life saved cost a certain amount of money. For years, people in government have put pencil to paper and figured the trade-off. A lower speed limit uses less gas, which is good public policy, but it also costs more money to move things across the country because everything that goes by truck costs more. You can actually calculate the cost per life. I do not know the answers to these issues and questions.
When we were in the hospital delivering our baby, we encountered a woman who lost her baby because, for whatever reason, she chose to have a midwife. Her baby was stillborn. Apparently the umbilical cord was too long and it wrapped around the baby, or somehow was choked off, and the baby died. The nurses said it was preventable. If the woman had received good prenatal care, the baby would not have died.
Nevada’s loss of doctors will probably result in loss of lives, or a diminished situation in which breast cancer will not be detected early enough, causing a radical mastectomy rather than a lumpectomy. What will cause us to lose attorneys and at what cost? I think people will still receive adequate representation. I have not heard of a mass exodus of lawyers because of recent legislation.
I have a new appreciation for what women go through and the complexity of childbirth. Eventually the problem will affect men as well because every time you hear about breast and ovarian cancer, you can substitute prostate or colon cancer.
Senator Nolan:
Mrs. Byrne, in your research on this issue, when you were told you would have to go to the emergency room to have your baby, was it inferred there would be an OB/GYN physician on call?
Mrs. Byrne:
I heard through the media and newspapers if a woman was unable to find a doctor, she should just go to the emergency room to deliver her baby; therefore, I assumed an OB/GYN physician would be on call.
Senator Nolan:
Perhaps we can find an individual with the hospitals to tell us whether or not OB/GYN physicians were on call to handle births, or whether an emergency room doctor handled those situations.
Mrs. Byrne:
I felt it was insufficient care to have the baby delivered with no prenatal care involved.
Senator Washington:
Did S.B. 97 and I.P. 1 help or hinder your particular situation?
Mrs. Byrne:
I would not have had difficulty finding a doctor. I am not sure how it would have affected my emergency room visit.
Senator Washington:
Given enough time, would the decisions made in the 18th Special Session have helped you find an OB/GYN physician, stabilized the rates, and/or increased competition for the insurance companies coming into the state?
Mr. Craigie:
Tomorrow’s witness will address those issues.
W. Randall Mainor, Attorney:
I received a telephone call this morning informing me false testimony bearing my name had been presented to this committee and I was asked to attend the hearing to clarify or refute that testimony. I was born and raised in Nevada. My father served as city councilman in Henderson and ran for mayor. My roots sink deep into the Nevada desert. As a citizen of the state, I am concerned about the medical malpractice crisis. I have distinguished myself as an attorney in the state by litigating these matters. I have handled many medical malpractice cases, some of which were horrendous. Recently, I met with a teenage boy who lost his leg through medical negligence. I could go on and on, but will not at this time. I am sure others can present information regarding some of the horrendous things I have seen as a lawyer.
I have many close friends and colleagues who are doctors and I respect most of the physicians in the state. There are those who have put a wedge between lawyers and doctors as though the issue is a doctor-lawyer battle. I do not believe that is the case. After looking closely at the issue, I believe it is an insurance problem. I hope the committee will follow offered advice and look into the practices of insurance companies as they affect doctors and medical malpractice rates.
Although I speak from hearsay, I was informed that a Dr. Wilbourn testified before the committee this morning saying he had received a medical malpractice solicitation telephone message which he attributed to myself, or my firm, Mainor Harris. That is an absolute falsehood. We do not do that. We would never do that. I served on the medical screening panel for the many years it was in existence. Many times I sat in judgment on doctors and most of the time I voted no reasonable probability of medical malpractice and the doctor did nothing wrong.
However, there are a number of cases in which the conduct and actions of a doctor are egregious. One size cannot fit all cases. It is wrong to think there will never be exceptional circumstantial cases. I could parade before the committee a number of people who have been blinded, lost limbs, lost their lives through failure to diagnose cancer, and been brain-damaged.
Chairman Amodei:
You have been given the opportunity to refute Dr. Wilbourn’s testimony and it will be made part of the record of this hearing. You will be allowed to testify further at subsequent hearings, however, there are other testifiers who are scheduled at this time.
Melissa D’Andre:
I will read my written prepared testimony (Exhibit I).
Renee Williams:
When doctors leave Nevada, some of the victims they leave behind are unable to speak for themselves. My daughter, Danielle, is a victim of medical malpractice. She is 23 years old and completely unable to care for herself or her children as a result of her doctor’s malpractice. Her doctor, Shelby Wilbourn, M.D., has left the state. Keep our doctors in Nevada, but keep them accountable for their malpractice.
Kevin Price:
I will read my written prepared testimony (Exhibit J).
Lou Howard:
Kevin said what I had to say. I cannot handle it. I took my wife to the hospital for a simple bladder infection and she was gone 5 days later. Senate Bill 97 does not give us any leverage. If we lose our ability to hire an attorney to proceed with these matters, it is all wasted. I go to bed every night alone. I lost my best friend. I am sure her doctor sleeps every night. I do not. I may get sleep two, or maybe three, nights a week. The rest of the time I just pace, work on the house, and have no direction in life. I thought this could never happen to me. Well, it did, and I hope nobody ever has to go through what I am going through now. It was 23 months ago.
Concessions were made at the 18th Special Session, and now you are back again. I would be very cautious in making changes this early in the game. If they had their ducks in a row they would ask for those concessions now. Why are they back again? I am not a public speaker, I am just a working guy. I do not want people to be hurt as I have been hurt.
Carlton Jacob:
I will read my written prepared testimony (Exhibit K).
Rachel Jacob:
I will read my written prepared testimony (Exhibit L).
Chairman Amodei:
The hearing is closed on S.B. 97 and Initiative Petition 1.
There being no further business to come before the committee, the hearing is adjourned at 11:03 a.m.
RESPECTFULLY SUBMITTED:
Barbara Moss,
Committee Secretary
APPROVED BY:
Senator Mark E. Amodei, Chairman
DATE: