MINUTES OF THE
SENATE Committee on Judiciary
Seventy-second Session
March 25, 2003
The Senate Committee on Judiciary was called to order by Chairman Mark E. Amodei, at 8:00 a.m., on Tuesday, March 25, 2003, in Room 2149 of the Legislative Building, Carson City, Nevada. The meeting was videoconferenced to the Grant Sawyer State Office Building, Room 4412, 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 E. Amodei, Chairman
Senator Maurice E. Washington, Vice Chairman
Senator Mike McGinness
Senator Dennis Nolan
Senator Dina Titus
Senator Valerie Wiener
COMMITTEE MEMBERS ABSENT:
Senator Terry Care (Excused)
STAFF MEMBERS PRESENT:
Nicolas Anthony, Committee Policy Analyst
Bradley Wilkinson, Committee Counsel
Jo Greenslate, Committee Secretary
OTHERS PRESENT:
Ed Gobel, Lobbyist, Council of Nevada Veterans Organizations and Gobel Lowden Veterans Center and Museum
Sharon Gobel
Robert E. Kessler, D.O., P.C., Nevada Osteopathic Medical Association
Bill Bradley, Lobbyist, Nevada Trial Lawyers Association
Matthew L. Sharp, Lobbyist, Nevada Trial Lawyers Association
Jan Gilbert, Lobbyist, Nevadans for Quality Health Care
Kerry L. Earley, Attorney, Keep Our Doctors In Nevada
Chairman Amodei:
We will open the hearing with Senate Bill (S.B.) 257.
SENATE BILL 257: Revises various provisions pertaining to malpractice. (BDR 3‑104)
Ed Gobel, Lobbyist, Council of Nevada Veterans Organizations and Gobel Lowden Veterans Center and Museum:
I am president of the Council of Nevada Veterans Organizations, chief executive officer of the Gobel Lowden Veterans Center and Museum, State commander of Veterans of the Vietnam War, Incorporated, past commander of The American Legion Post 149, and a member of the State commanders’ meeting on medical issues for the Veterans Administration Southern Nevada Health Care System, and several medical committees. With me is my daughter-in-law, Sharon Gobel. I have distributed a document entitled, “S.B. 257, Preserving Freedom with Honest Medical Malpractice Reform” (Exhibit C). We are here for a specific reason. This is a citizen’s effort; it is not a doctors’ effort, nor is it the doctors’ bill, although doctors were consulted. This is not the trial attorneys’ bill, although they were consulted. This is not the insurance companies’ bill, but they were consulted. This is about the citizens of the great State of Nevada. Those of us who were defenders of freedom believe an attack has been made on all of us when a person agrees to pay an arbitrary amount for an act he did not commit, and that amount is passed on to the citizens of Nevada. When you start agreeing to a cap of $250,000, or $350,000, or $400,000, no matter what the amount, it is setting the stage for paying for pain and suffering. We do not believe payment of pain and suffering awards for an act the doctor did not intentionally commit is guaranteed by the constitution. The only thing that should ever be paid for an unintentional mistake is economic damages.
What this has led to, in many cases, is escalating medical costs because doctors practice defensive medicine. Doctors order every test under the sun, even unnecessary ones, to cover themselves. Who pays the cost of this? It is not the doctors. It is, to some extent, the insurance companies, but it falls upon us, the patients and the people who need medical care, and it drives good doctors out of business. We have to reverse the defensive medicine trend. We need to have doctors do the best they can, for as long as they can, to save people’s lives and to try to help them without ordering excessive, expensive tests. We have to start separating the difference between the process and the result. If the result is not what somebody wanted, he does not necessarily have the right to sue for pain and suffering if it was an unintentional mistake and not the result of a doctor following an inappropriate process. Following an inappropriate process should be covered under gross malpractice, which is gross negligence or intent.
An example of intent is several doctors who have billed for three separate hysterectomies on the same woman. Gross negligence is defined in law. We have many people from different sides talking about caps and mistakes where doctors should not assume responsibility, except in making a person whole economically. There are three major components to S.B. 257, although one is not clearly stated. We talk about punitive damages as a result of gross negligence or intent, which is the definition of gross malpractice. Senate Bill 257 would require a type of probable cause hearing to prove damages were intentionally inflicted or were due to gross negligence before the case could go before a jury. Another component is if a doctor commits 3 mistakes in a 2-year period, he or she is taking the word “practice” too literally and is guilty of gross negligence. That would be prima facie evidence of gross negligence and would trigger the gross malpractice charge. In actual damages, there would be no requirement for intent to be proven. If a doctor made a mistake, the injured party would be made whole through economic damages.
We also propose a database of all settlements and filings against all doctors that would be available through the Internet or public means. We would address the purpose of punitive damages, which is provided for in the constitution. It is made to punish people, and there should be no cap. It weeds out incompetent physicians by establishing honest rules to prove gross negligence as in the 3 occurrences of actionable incidents by the same provider within a 24-month period. It would no longer require intent to be proven for actual damages.
We are here as citizens today, not representing anyone but ourselves. The Council of Nevada Veterans Organizations, Seniors United, and many other groups, have endorsed this plan. Senate Bill 257 is based on the fact nobody is considering the patient. Everybody is here spending millions of dollars on this campaign, but nobody is taking into account patients should be involved. We want a better quality of medicine, which we cannot have unless we start separating the process from the result.
You have a lot of our information in the handout (Exhibit C). Senate Bill 257 allows Nevada not to require as many doctors or providers, because they would not have to spend their time with attorneys resolving settlements. It would reduce the amount of coverage hospitals have to provide and increase the quality of care with a reduction in malpractice insurance premiums. We would be able to attract high-quality physicians to Nevada, and weed out the two or three physicians a year who do commit acts of gross malpractice. There would be less need for higher property taxes due to budgets of county hospitals. Passage of S.B. 257 would lower the need for more doctors and provide more quality people on staff, reducing the burden on taxpayers. There would be fewer court cases and a corresponding reduction in the need for expanded court facilities. Passage of S.B. 257 would reduce county budgets by reducing the cost of indigent health care. It would help insurance companies in terms of predictability and cost, because penalties would be spelled out in tables and not have to be negotiated.
Chairman Amodei:
Regarding the 3 incidents in a 2-year period, did you do any research before selecting a 2-year time frame?
Mr. Gobel:
Yes. We did a tremendous amount of research and tried to get the best data available. Most of it came from the insurance commission; a lot of it was distributed at the insurance commission meeting last April. They talked about going through the settlements entered, as well as the judgments in court. We went through the reasons for each case, and half the doctors had prior incidents. We can count the incidents against the doctors with settlements against them, and on the list of settlements, many of the same names appear over and over again.
Chairman Amodei:
I was wondering, because the bill says judgments. If you settle the case prior to going to judgment, there would not be one entered. A 2-year period means you would have to have 3 cases going at once in which you lose at trial 3 cases simultaneously within 24 months. In the data we have heard, even the doctors who are alleged to be “bad doctors” do not usually get hit three times in a row.
Mr. Gobel:
It should be settlements and/or judgments. I apologize. Actually, there are several doctors who have 3 cases in which there were settlements and/or judgments, 3 in a 2-year period. Another provision provides for a judgment on the first incident if you can prove gross negligence or intent.
Sharon Gobel:
I am 8 months’ pregnant, and since obstetricians/gynecologists are the most targeted physicians in the medical field, I am in complete support of S.B. 257.
Robert E. Kessler, D.O., P.C., Nevada Osteopathic Medical Association:
Last year I was one of 11 people in the country chosen to study in a health policy fellowship, and we were taught to analyze policy issues as nonpartisan, academic subjects. We were taught to be dispassionate and to think more about society than our stakeholder group. Given the events of this past year, as you can imagine, we spent quite a bit of time discussing safety and medical liability issues. My testimony here today derives from that study, and I hope you will take my statement in a nonpartisan spirit. I wanted to discuss S.B. 257 and S.B. 97, but I will talk about S.B. 257 first.
Chairman Amodei:
Dr. Kessler, we are going to go to S.B. 97 a little later. If your schedule permits, we would appreciate your thoughts on S.B. 257 now, and will get back to you when we discuss S.B. 97 for the last time. Would that be all right?
Dr. Kessler:
It would, sir. The legislative intent of changing the exceptions to limits on noneconomic damages seems well-meaning. It is one of those things that on first glance seems to make sense. There has been a lot of discussion about “getting rid of bad physicians.” In my opinion, it will have terrible, unintended consequences. First, it will discourage people from settling cases whatsoever, and early settlement is what has worked to stem the tide of this professional liability insurance crisis in other states. Moreover, it will extend the punitive nature of the litigation system, and because of that, it will interfere with patient safety efforts. If every physician who had ever lost a case or settled a case left medicine tomorrow, there would not be one error less the day after. Most importantly, if S.B. 257 is passed as is, it will decrease the number of physicians who will take on high-risk cases. There are many specialties where bad results are common.
I was in the audience talking to my director when we heard the previous presentation. The director looked at me and said, let us talk about a spine surgeon who does 300 surgeries a year. That means if he or she has 1 percent bad results, that is “prima facie evidence of gross malpractice.” I suggest to you, if that is our attitude toward what will happen, there will be no high-risk specialists in this State. They would be absolutely insane to stay. I would like to quote from James Webster, the father of medical jurisprudence, who was giving advice to a medical school graduating class in 1850:
A remedy to avoid persecution and protect yourselves from assaults upon your professional reputation, as well as your peace and comfort, to say nothing of your property should you be so fortunate as to accumulate any, is to refuse all fracture cases among the poor.
Some things never change. If physicians are reluctant to take on high-risk cases, as has always been true, it will hurt access to care for the most vulnerable among us.
Chairman Amodei:
We will close the hearing on S.B. 257 and open the hearing on S.B. 272.
SENATE BILL 272: Provides for posting of bond or other appropriate security by plaintiff in action for medical malpractice or dental malpractice under certain circumstances. (BDR 3-1056)
Chairman Amodei:
Is there anybody here to testify on S.B. 272? We will close the hearing on S.B. 272, subject to recall at a time when Senator Schneider is able to be here. We will open the hearing on S.B. 97.
SENATE BILL 97: Makes various changes relating to certain actions against providers of health care. (BDR 1-248)
Bill Bradley, Lobbyist, Nevada Trial Lawyers Association:
Pursuant to your request, we are prepared to go through the four concepts we have talked about in S.B. 97, because there appears to still be some misunderstanding on the effect of caps, joint and several liability, periodic payments, and finally, collateral source. I am hopeful we can help the committee understand these concepts and realize what a good job A.B. No. 1 of the 18th Special Session really did. We will start with a PowerPoint presentation (Exhibit D. Original is on file in the Research Library.). Listening last night, primarily to The Doctors Company representatives, what they are looking for, as we understand it, is predictability and stability, what they define as a hard cap. Before we go into A.B. No. 1 of the 18th Special Session to prove conclusively there is already an embedded hard cap, we thought it was important for this committee to realize the premium ratings of The Doctors Company in the last 3 years. We believe these are instructive in how they perceived our law long before we had a crisis.
In 2000, The Doctors Company sought a 2 percent decrease in their rates. This was under the screening panel legislation without any tort reform whatsoever. In 2001, they sought an overall 3.8 percent rate increase with a 2 percent decrease outside Clark County, and a 12 percent rate increase in Clark County. When you consider the course of ratings over the last 5 years of The Doctors Company and the influx of St. Paul Companies Incorporated and the desire to capture the market, these increases were not out of line. In August 2001, now less than 2 years ago, a minor increase of 1.2 percent and the horrendous economic effects of September 11, 2001, precipitated significant rate increases. As The Doctors Company represented last night, our investment income started to drop precipitously. We were no longer able to subsidize premiums as well as we could, and we saw a rate increase, all under the context of the laws before tort reform was passed.
Chairman Amodei:
Mr. Bradley, we heard yesterday this is a mutual company not grounded a lot in investments in the stock market, and it is an entity that does not play the stock market much. You tagged that to September 11, 2001.
Mr. Bradley:
The thing is, we talk about the differences in investing in the stock market and investing in the debt or bond market. Both of those were horribly affected. As the gentleman from The Doctors Company said yesterday, their investment income was significantly impacted. As you are well aware, one of St. Paul’s investments was $500 million in Enron, which they lost. They have vast amounts of money, and their 8 percent investment in the stock market took a beating. A significant portion is invested in the debt market, which also took a beating. As a result, we contend, we began to see significant rate increases. This was all during the time they were competing with St. Paul, an aggressive predator stealing business. It was telling yesterday when a gentleman from The Doctors Company indicated they felt comfortable when they had 1400 doctors; they now have only 500. You can see the dramatic effect St. Paul Companies Incorporated had on The Doctors Company pool.
Senator Washington:
Just to follow up on Chairman Amodei’s question, is it correct the market devaluation primarily subsidized those premiums for the doctors?
Mr. Bradley:
I am not sure I would agree with the word “primarily,” but certainly subsidized premiums, as investment income always does.
Matthew L. Sharp, Lobbyist, Nevada Trial Lawyers Association:
Senator Washington, to back up with regard to a mutual company and the understanding with respect to how their investments would be the same as St. Paul Companies Incorporated, the concept of a mutual company is simply, instead of the shareholders being shareholders, the shareholders are policyholders, the doctors. It does not, in my experience, necessarily affect how they invest. A mutual company, and I believe The Doctors Company said this yesterday, typically structures its pricing with the expectation that for every dollar they take in premium, they will spend in claims. They do not have an underwriting profit to begin with. They rely upon the investment features to cover that issue. The investment vehicle is the same way. The benefit of the mutual is, in effect, through pricing. Conceptually, you will see the same type of history. In good economic times there will be an increase in surplus, which is the amount of the company’s capital. You will see a decrease in pricing, and that will be significantly affected by downturns in the economy. I believe this is why you are seeing the 26 percent increase in June 2002, because losses were essentially stable during those 3 years.
Mr. Bradley:
Let us go to the meat of the matter, the hard cap that will give The Doctors Company and others predictability, and the merits of A.B. No. 1 of the 18th Special Session. First of all, as you will recall, A.B. No. 1 of the 18th Special Session imposes its limitations on noneconomic damages and other tort reform passed during the 18th Special Legislative Session to those health care providers that purchase and maintain a $1 million policy limit. That is the qualifier to allow them the benefit of the tort reform passed in A.B. No. 1 of the 18th Special Session. Here is what is really important and, quite frankly, I was somewhat disappointed The Doctors Company had not even read this bill. Anybody who reads this bill realizes section 5, subsection 3 of A.B. No. 1 of the 18th Special Session was put there for a reason. The reason was to put an absolute hard cap on noneconomic damages that will never exceed the policy limits of the health care provider. It is a plain, simple, and concise hard cap. In the case of a health care provider, a physician, it is $1 million. If you recall, The Doctors Company representative did indicate some states have $500,000, some have $1 million, but we just need predictability.
Once we have predictability, we are satisfied. It is unfortunate a legislative body like the State of Nevada came up with a better way to build something, but I commend the Legislature on A.B. No. 1 of the 18th Special Session because they came up with a much better approach to a hard cap on noneconomic damages that is not as cruel and unfair to plaintiffs. Before we go any further, The Doctors Company definition in noneconomic damages, as they testified to yesterday, is $250,000 in 1974 dollars. Today that equates to $83,000. I want to make sure everybody on this committee understands that is their definition of fair.
Chairman Amodei:
Mr. Bradley, I am looking at the language again. Do you think that hard cap applies even if there is gross negligence or exceptional circumstances?
Mr. Bradley:
No. Those two instances take the cap off noneconomic damages if the judge determines by clear and convincing evidence a particular case heard in his or her courtroom justified a higher award.
Chairman Amodei:
Is it fair, then, to say the unpredictability in Nevada’s law revolves only around circumstances of gross negligence or exceptional circumstances?
Mr. Bradley:
Yes, and I will suggest, Senator Amodei, throwing out gross negligence. If we define gross negligence as something so bad it shocks our conscience, it would be a meaningful exception. However, if we define gross negligence as it is currently defined under law, as a state of mind, meaning intent, it is nonexistent and really has no place in A.B. No. 1 of the 18th Special Session under the current definition.
Senator Washington:
I have a question about the language in A.B. No. 1 of the 18th Special Session also. In section 5, subsection 3, it says, “The professional liability insurance policy limit covering the defendant after subtracting the economic damages awarded to that … “
Mr. Bradley:
Let me give you an example, Senator Washington, if you would like. Is your question how that works?
Senator Washington:
Yes, how does that work?
Mr. Bradley:
A 25-year-old carpenter is malpracticed and no longer able to use his hand. He is making $40,000 a year. For roughly 35 years he loses that income. Forget about inflation for a moment. If you multiply 35 times 25, you come out somewhere around $800,000. Let us say the figure comes out to $850,000 in economic damages. Remember, we have not added in his medical bills. So let us add his medical bills and say the total economic package is $900,000. The doctor has a $1 million policy limit. Under section 5, subsection 3 of A.B. No. 1 of the 18th Special Session, the most the health care provider can be held responsible for is the remaining $100,000 under his $1 million policy limit. This is a much more severe cap than California, because if that person’s economic damages are $1 million, there are no economic damages; it is over. This is a very severe, inflexible, hard cap, unless there are exceptional circumstances. We are going to go into the legislative history about those exceptional circumstances so we can show you exactly what the intent was so the judges understand it. This cap does a lot more than California. In California, if he has $1 million in economics, he can still get $250,000 in noneconomics, but not in Nevada.
Senator Washington:
Let me see if I understand this correctly. If it is a $1 million policy, based on your scenario, the difference between the contracted bills and the award for his supplementary income, for the loss of a limb or whatever, is the difference the doctor must pay?
Mr. Bradley:
Not quite. We have compensatory damages here. We have economic and we have noneconomic. In every case in the 21 years I have been practicing and the 30 years Mr. Gillock has been practicing, we have never seen a punitive damage case against a doctor. Economic damages are generally broken down into medical bills and wage loss. To answer your question, if we have the contracted medical bills of $100,000, and we have a wage loss of $800,000, that is a total of $900,000. There is a $1 million policy limit. You want to make sure you keep the two columns divided to make a distinction between economic damages and noneconomic damages. We were glad to hear how sincere The Doctors Company is about making sure people are paid in full on their economic damages, because under S.B. 97 they are not.
Under A.B. No. 1 of the 18th Special Session, we worked with the group of doctors who represented themselves as representing the entire industry for 6 months under the auspices of the Governor’s task force, and we explained many of the concepts then abandoned by them when we did this bill. Unfortunately, there have been no discussions with the Keep Our Doctors in Nevada people. They have gone back to concepts that hurt doctors, hurt plaintiffs, and hurt the State of Nevada because they truly do not understand the ramifications of their own language. Nobody in this room yesterday explained to you section 5, subsection 3, of A.B. No. 1 of the 18th Special Session, which is as severe a noneconomic cap as there is in the United States.
Senator Nolan:
Mr. Bradley, what part of the award is susceptible to attorneys’ fees, to contingencies?
Mr. Bradley:
If this insurance company is the kind, warm, and generous The Doctors Company, who came to this person before they ever hired a lawyer and said, “We know you got hurt, and we are going to offer you $1 million,” they owe zero on the insurance case. They resolved it with the plaintiff. However, when they make you fight for 3 years, treat you like a dog for that 3-year period, and make you spend $100,000 to get to this number, the attorney who took the risk and fought the war for 2 years is entitled to a fee on retirement. Unless the patient comes in and says, “Mr. Bradley I have a good case here, and I expect you to reduce your fee, and if you do not, I’m going down the street to Mr. Gillock.” If they get the case settled early, I believe it is the ethical obligation of the attorney to reduce his fee. We reduce our fees all the time in order to make better economic sense to clients.
Senator Nolan:
This is $1 million per provider, and in a lawsuit it is not uncommon to have an emergency room situation, the hospital, the physicians themselves and the physicians medical group, that hires the doctor to be in there. Is this $1 million cap on each of those individuals named in the suit, including hospitals?
Mr. Bradley:
It is what their liability clause states; it goes up to the limit of their liability clause. No matter who the defendants are, the economic damages remain the same. We do not get economic damages against the doctor and economic damages against the hospital and economic damages against the other people.
Senator Nolan:
Does it not create a potentially larger pool of compensatory damages that can be paid out?
Mr. Bradley:
Not this part, and that is exactly why we have noneconomic per plaintiff, per defendant, so we can at least accommodate a plaintiff who is catastrophically injured, if it was occasioned by the results of the medical defendants. Remember, we want the plaintiff to be whole. The $100,000 or $150,000 that had to be spent to fight for 3 years comes right out of the plaintiff’s economic award. When you get the verdict, the defendant does not run over to you and pay. They appeal for a few more years. While you are sitting with a $1 million verdict, the defense asks if you will take $400,000 or $500,000. They keep grinding away. If they come forward initially and say, “We made a mistake and we want to get it taken care of,” that is the way to put lawyers out of business.
Senator Wiener:
Mr. Bradley, you made a statement earlier in your testimony about the gross negligence exception. You said, in your practice, you could not find that state of mind. In my opinion, it appears as though exceptional circumstances might pass constitutional muster. If this committee was to process, hypothetically, with those two exceptions, and you are saying the gross negligence is not a doable exception, is this something that should come out of this S.B. 97? Should we look to get rid of gross negligence in consideration of what we did under A.B. No. 1 of the 18th Special Session?
Mr. Bradley:
Yes, if we do not care to change the definition of gross negligence. The definition of gross negligence came out of a caucus meeting. In a Republican caucus meeting toward the end of the 18th Special Session, I was discussing a case in California in which a vibrant, retired gentleman, who hunted and fished, had a bad kidney. He had one bad kidney and one good kidney, and when the radiologist and the surgeon who were preparing to remove the bad kidney accidentally flipped the X-ray, they took out the healthy kidney and left him with the damaged kidney. His life was destroyed and he now lives on dialysis. Senator O’Connell said to me, “That certainly is gross negligence in my mind.” If you remember, last summer we did not have Ms. Earley; we had John Cotton. Mr. Cotton was in the caucus when I tried to explain to Senator O’Connell that incident was still not gross negligence, it was a mistake. They did not intend to destroy that gentleman’s life. Mr. Cotton said, “Mr. Bradley is correct, I have never seen a case of gross malpractice.” If we are going to leave the definition as a state of mind, we should take it out. If we decided to change the definition of gross negligence, then perhaps it would be acceptable. I would like to endorse Mr. Gobel’s definition, but I believe it goes a little too far; three strikes automatically means you are grossly negligent. I do not agree with that approach either. For conciseness, I say take it out.
I would now like to discuss why we included these exceptions. The exception for exceptional circumstances is based upon clear and convincing evidence as determined by a judge. Yesterday Ms. Earley brought up the fact a judge in Clark County is struggling with this term. When we talk about the legislative history, we will be able to give judges more guidance. We are going to suggest training sessions for district judges and settlement judges. Judges are settlement conference judges, but they need to understand what has transpired in the Legislature, what the Legislature expects of them as settlement judges, and the legislative intent behind the exceptional circumstances. I believe the training of judges should be a part of S.B. 97.
Senator Wiener:
I am going to pause at something here, based on the exceptional circumstances provision. You had mentioned during the 18th Special Legislative Session, and probably during the many hearings we have had this session, the jury is not told about the law. They deliberate based on what they hear during the trial: they are not given dollars and cents to deliberate. Let us say they come back with a $3 million verdict. The judge says, “No, the law does not allow that.” Then he might say, “but I know it is more than the cap.” How would this work?
Mr. Bradley:
We are going to distribute an editorial written by a juror in California, who read in the newspaper that the judge reduced the verdict. The jury is certainly told about dollars and cents on medical bills and wage loss, but they come up with a figure for pain and suffering, noneconomics. It exceeds the cap. The jury is discharged, and the judge, probably in a subsequent hearing, is going to say, “Now I want motions and arguments on whether this is one of those cases the Legislature intended to exempt. Tell me about the legislative history.” The judge will then decide whether it was a clear and convincing case, which is a higher standard than preponderance of the evidence, and it is one of the cases the Legislature intended not to restrict to the cap. If the judge decides it is a case with exceptional circumstances, he can amend the verdict.
Senator Wiener:
As a follow up, regarding the subsequent hearing procedure being at the discretion of the judge, would it strictly be at the judge’s discretion or would it come at the request of an attorney?
Mr. Bradley:
I want to refer to A.B. No. 1 of the 18th Special Session so I am clear on this. Section 5, subsection 2, paragraph (b) says, “A case in which, following return of a verdict by the jury or a finding of damages in a bench trial, the court determines … .” I believe it is any of the above; the court can do it on its own or either party can say the verdict was too high or too low.
Senator Nolan:
I understand your interest in the intent, and I agree with it, of trying to formalize training for judges on a regular basis as new judges come in so they can understand the intent. However, without a specific training designation, legislative or otherwise, the judges may not receive guidance to understand the legislative intent. Even if they do, is it not true if a judge decides that beyond the five or six examples the Legislature cited in earlier testimony, exceptional circumstances could be anything he deems?
Mr. Bradley:
That leeway was included in the language, but if there is a concern, we can go back to the seven exceptions we listed. First of all, the exceptions were put in to minimize the risk of a constitutional challenge. The second comment by Senator Raggio (Exhibit D) was he wanted to ensure we give judges the power, not only to use the seven exceptions we had in the original bill, but others as well, because I do not think we can anticipate each and every case. Senator Raggio, in the legislative intent, said very specifically he wanted to make sure the legislative history is clear, again building in a safety valve for the constitutional challenge. Finally, the way the bill started off was with the seven exceptions. I will say once again, throw out No. 7, gross malpractice.
Senator Nolan:
I appreciate your response. As I look at our seven exceptions, there is a lot of open-endedness to the death of a parent, spouse, or a child; that is any death. I guess in trying to give the insurance industry predictability, if we have open‑endedness where a judge can rule outside the listed exceptions, and if we have the death of a “parent, spouse, or child,” we really do not have predictability. Even if we do, if the predictability is still out of bounds on the expense and cost side of what insurance companies can expect, we still will not have people in Nevada writing insurance for physicians.
Mr. Bradley:
First of all, the best predictability is the $1 million cap. At the initial stages of the case, if the insurance company offers the policy limit, the case is over. I dispute the issue of predictability in these cases. Cases of death provide the only opportunity a senior citizen has to come in and explain how crucial his or her spouse was, because there is no economics, and it is under that exception. I believe it is a tragic mistake to define a senior citizen’s rights without ever hearing a word uttered from his or her mouth. This exception allows that to occur. I want to make one thing clear before we move on. Do not think for a moment that in a wrongful death case of a senior or a child, the insurer is ever going to come in and say, “We are prepared to offer you $350,000.” In a lot of scenarios, they are going to say, “That is the worst we could ever lose. Why would we originally offer the worst we could ever lose?" Please do not think this cap means they are going to roll in and pay the cap early on. That is not the system. They may offer $250,000; they are not going to ante up the $350,000.
While we are on this topic, I disagree 1000 percent with Ms. Earley when she says they do not fight about the life care plans. They fight about how long the person is going to live. They fight about whether they are going to need one surgery or two. They fight about whether the little girl who does not get much enjoyment in life can get on a horse and ride for half an hour.
Senator Titus:
Senator Nolan brought up the point about driving insurance companies out of the State, and if we have these provisions, it does not give them predictability or stability, so they will not write insurance here. Under A.B. No. 1 of the 18th Special Session, which has been in place for a little while, it seems to me there are not doctors having trouble getting insurance. The State-run insurance company is picking up doctors; the company formed by doctors here picked up doctors. I do not believe any doctors are having trouble with access. In fact we heard yesterday from the insurance company even the bad doctors, I believe they called them hard-to-place doctors, can get coverage in Nevada cheaper than the hard-to-place policy offered in California. It seems to me this must be working all right, because people are here and writing insurance.
Mr. Bradley:
I would like to respond, Senator Titus. I thought that was a little bit of a misstatement. They made it sound like the Governor’s plan is picking up all the hard-to-place doctors, and that is not true. As a matter of fact, if you remember in last Friday’s Reno Gazette-Journal, with Deseret Women’s Care, the obstetricians were angry because the Governor’s plan would not write them.
Senator Titus:
As I understood, they were charging an extra fee based on the number of cases, but The Doctors Company seemed to suggest that even paying an extra fee, because they had judgments pending against them, was cheaper than their hard‑to-place doctor policy in California.
Mr. Bradley:
I was a little surprised by that testimony. I will not speak for Mr. Byrd, because he can speak just fine for himself, but I think Mr. Byrd would come here and tell you, “Those hard-to-place doctors are not the kind we need in this plan right now.” They will give doctors a surcharge, but they are not going to like it. That is exactly what happened to those physicians involved in the article.
I believe the physicians group led by Mr. Craigie also supports exceptions to the cap, based on a quotation in an article. We are also reminded of the past when Senator Orrin Hatch, chairman of the Committee on the Judiciary in the United States Senate, has said any federal bill that passes must contain an exception. We frankly believe, once again, A.B. No. 1 of the 18th Special Session was at the forefront of creative legislation to adequately address the rights of injured plaintiffs, and was well balanced against the need for our health care system to have access and predictability.
Finally, before we leave this topic, there was a comparison yesterday that the Nevada Supreme Court has upheld caps, and we want to ensure the committee understands that cap is the $50,000 cap against State governments. It is a totally separate kind of cap, which I am happy to describe in more detail, if you would like. The important thing about the Supreme Court’s repeated opinions upholding that cap is it is per plaintiff. I believe it would be inconsistent for the committee to say in medical malpractice the cap will be per incident, but on the other $50,000 cap, it is per plaintiff.
Senator Washington:
I sat in the hearing with Assemblyman Anderson where we dealt with the cap on State governments and whether or not we were going to raise it. You explained the stacking procedure to us. I believe Senator Care was trying to emphasize if we stacked those complaints, I do not know if the cap loses its effect or if we limit the cap just to that isolated situation, the Medical Injury Compensation Reform Act (MICRA) becomes more effective and the constitutionality is intact.
Mr. Bradley:
I would have to disagree. In the context of sovereign immunity caps, the first thing totally different about sovereign immunity is it means, “The king is immune.” When the State of Nevada decided to depart from that Old English doctrine, they said we are only going to waive it to the extent of $50,000. In that context, there is a stacking of claims per plaintiff. For example, Senator Washington, if you are driving along with your wife and a Nevada Department of Transportation truck runs a stop sign and you are injured, your wife is injured, and you observe that, you are entitled to not only your claim for personal injury damages, but also the negligent infliction of emotional distress, a separate claim. This illustrates how hard the Supreme Court has worked to expand that low cap. Assembly Bill No. 1 of the 18th Special Session works otherwise by stating each defendant has an exposure for noneconomic damages of $350,000. That seems fair. The physicians are paying for such exposure, they are being billed for it, and it is being written into their underwriting guidelines. They have paid for it. In California, even though the physicians have paid for it, they do not get it because it is per incident. Irrespective of how many people came together and how devastating the injury, the plaintiff gets $250,000 that a legislator thought was fair in 1974.
Joint and several liability is where we believe S.B. 97 actually does harm to physicians. This liability only arises when there is more than one wrongdoer; two or more health care providers combine to cause an injury. A doctrine of joint and several liability helps identify how much each one of those providers is going to pay. Under A.B. No. 1 of the 18th Special Session, the two providers, we will pretend there are two, are jointly liable, meaning we can recover from one or 50/50 from each or 30/70, whatever we determine, on the economic damages. This goes right back to The Doctors Company’s sincere belief plaintiffs should be fully compensated for their economic damages. That is why the Governor’s task force made sure economic damages are subject to joint liability, to make sure the plaintiff always is awarded, and able to recover his or her economic losses. Under A.B. No. 1 of the 18th Special Session, the noneconomic damages, the pain and suffering component, are subject to several liability, meaning each defendant only pays the portion of noneconomic damages a jury determines his or her percentage of fault brought about the accident. This constitutes the whole concept of joint and several liability under A.B. No. 1 of the 18th Special Session. It reaches the goal of ensuring the plaintiff is economically compensated and able to recover but limits exposure to give The Doctors Company and others the predictability the noneconomic award is only decided based on the percentage of fault.
Unfortunately, S.B. 97 changes the exposure. Senate Bill 97 departs from the goal of making sure the fault-free plaintiff is compensated for his or her economic damages and subjects the economic damages to the same percentage of fault argument.
Chairman Amodei:
Under A.B. No. 1 of the 18th Special Session, if you are jointly and severally liable for economic damages, and you are carrying policy limits of $1 million and $3 million, even under joint and several liability, are you still limited to $1 million and $3 million for economic damages?
Mr. Bradley:
Yes, it is $1 million per occurrence. If you have multiple claims in one year, the most available to all those claimants is $1 million.
Chairman Amodei:
This $1 million that is in section 5, subsection 3 of A.B. No. 1 of the 18th Special Session applies in this instance, even in the joint and several context. Your maximum, even if you are one of the lower percentage-at-fault actors, will still be the cap in this context?
Mr. Bradley:
You have the cap for noneconomic damages. For economic damages, you are still, under A.B. No. 1 of the 18th Special Session, responsible for all economic damages. That is why there is joint liability on the economic damages. Let us pretend for a moment there is $1.5 million in economic damages, and one doctor has a $1 million policy and he is 95 percent at fault and the other is 5 percent at fault. If The Doctors Company does not offer the $1 million and get a release, the prime doctor at fault can be found liable for the full $1.5 million in economics. Thus our point in asking why they would take that risk when they can get out and end litigation at $1 million. This arises in the context of a hospital. Under the old practice, if there was a doctor and a hospital combined to bring about a catastrophic error, you could recover the physician’s medical malpractice policy and then recover the remainder against the hospital. The concern under S.B. 97 is when you make the physician severally liable for all the economics, you are putting a terrible burden on the plaintiff. You are telling him if his economic damages are over $1 million, and it happened in a hospital setting, he can no longer get the balance from the hospital. He has to pursue the doctor. I do not believe the physicians pushing for I.P. 1 or S.B. 97 realize the effect those bills are going to have on them. They are going to be pursued for the entire economic judgment, whereas under existing law, they are not.
Chairman Amodei:
Under A.B. No. 1 of the 18th Special Session you have MICRA in parentheses. Does this provision of A.B. No. 1 of the 18th Special Session mirror MICRA?
Mr. Bradley:
Yes, sir.
Chairman Amodei:
Senate Bill 97 is not the MICRA provision regarding joint and several liability?
Mr. Bradley:
No, sir.
Senator Washington:
In A.B. No. 1 of the 18th Special Session, we provide an exemption for noneconomic damages on several liability to the hospitals. Dr. Jamison was under a medical group, where we did not provide those same exemptions to medical groups or their employees. Could we, or should we, apply the same exemption to a medical group made up of physicians?
Mr. Bradley:
No, because you would see under a malpractice insurance policy, the group is usually listed as an additional named insured. They do not have additional insurance; it is $1 million for the group, $1 million for any member of the group. The $1 million applies to the individual doctors. It does not provide an extra $1 million to the group.
Senator Washington:
The group would still be exposed?
Mr. Bradley:
No, the group is a named insured. All it has is $1 million. The only way you will find a group independently negligent is if they negligently hired a bad doctor, or once the bad doctor’s reputation became known, they did not take steps to terminate their relationship. Under the normal action, where the doctor makes a legitimate error and it is deemed to be malpractice, there is no difference between him and his group. This is just a synopsis of joint and several, because although joint and several liability is one of the things people struggle with the most, it is actually just a way of sorting out who pays what when there is more than one defendant. The important thing to note under A.B. No. 1 of the 18th Special Session is we fulfill the goal of making sure the plaintiff gets compensated for his or her total economic losses.
That is not the case under S.B. 97. To give you the example of the catastrophically injured child under S.B. 97, and there is an extra $1 million in health care costs for that child the physician did not have, you can chase the physician, but nobody really does that. I know of only one case, but the money gets moved offshore, bankruptcies are declared, a whole series of steps occur, and meanwhile you are paying a lawyer to chase that person. Physicians should be careful about what they request. If they really want S.B. 97, I believe it is incumbent upon me and every other lawyer to indicate to our clients, “This is what they wanted, and they wanted us to pursue you individually.” I know that is not what they want.
Senator McGinness:
Give me an example of how the injured plaintiff is partially at fault.
Mr. Bradley:
He or she did not follow postoperative instructions.
Senator McGinness:
Do you mean rehabilitation or something of that sort?
Mr. Bradley:
Right; he went dancing three nights after he had some sort of surgery and the wound breaks open and he gets an infection. We also believe when you make each defendant severally liable, that law forces us to virtually name everybody who might have had even 1 percent of fault. In order to get that plaintiff economically whole, if I leave 1 percent or 2 percent of the defendants out, my client no longer gets economically whole. In our opinion, this will increase the number of lawsuits and the cost of litigation because we are forced to name everybody. You heard yesterday that frequency of litigation is double in California compared to the rest of the nation, and it does not make a difference to The Doctors Company. I predict some of us will be sitting here in 2 to 4 years when The Doctors Company is back complaining about the increased frequency of litigation in Nevada. We believe by passing S.B. 97 you are going to dramatically increase the frequency of litigation because we have to name all those people. In MICRA there is no requirement for an affidavit. That is why their frequency is so high. If we had our druthers, we would ask you to get rid of the affidavit, because they do not need it in California and that is such a great model. We would suggest A.B. No. 1 of the 18th Special Session is a much better model than MICRA; it does a lot more.
I will now go into periodic payments. Periodic payments, or structured settlements, are a way for a plaintiff to decide if they are not sophisticated in investing a lump sum of money, somebody else will do it for them. Every time we have a settlement conference in a medical malpractice case, we take our client, the defense lawyer brings a representative from the insurance company, and we each bring a person who works with structured settlements. The judge helps us get resolution. Let us say we agree on a number, the case should settle for $1 million. Each party’s structured settlement specialist says here is what I can do with that figure. I can provide monthly income to you for the rest of your life, or if such income is not important to you because you have health insurance and your bills will be handled, let us say you have three kids. They are all young, and you would like settlement money to go into a college fund for them. All the money goes into those structured settlement accounts, the insurance company holds onto the money, and when the time comes, a check is mailed out. We do that all the time, but under A.B. No. 1 of the 18th Special Session, it has been at the election of the injured party. We believe it should remain that way.
Yesterday The Doctors Company said they could demand the plaintiff accept periodic payments. Where that is so insidious is when The Doctors Company demands the plaintiff take periodic payments and the judge orders it, the plaintiff has lost control of the money, and all they have is a stream of payments with no access to a lump sum for emergency care. Meanwhile, The Doctors Company holds the plaintiff’s money and accrues interest. This practice is why we feel so strongly about the provisions we made in A.B. No. 1 of the 18th Special Session, where it is up to the plaintiff to decide if he or she wants to elect a structured settlement. We do not believe it is appropriate for the person who caused the wrongdoing to now demand the beaten and tattered plaintiff accept strung out payments.
I have an example in a case involving a brain damaged child, where after an award, The Doctors Company sought structured settlements, put the case on appeal for another 3 years, and then slowly dangled a carrot out in front of the child’s parents in an effort to get them to take a lot less, which they finally did. The fundamental principle under structured settlements is if you, as a public policy body, want the injured person to decide they can put the award into a stream of payments, or whether you are going to allow the wrongdoer and his insurance company, who caused the problem, to make the decision and impose it upon the plaintiff, and then earn money off their ill fortune.
Senator Washington:
Could you give me an example of future economic damages which may not include pain and suffering?
Mr. Bradley:
Yes, and maybe I can put it into the context of buying bread. Let us say you need bread every year to live, just like these injured people need payment of medical bills. In year 1 the bread costs $1, in year 2 the bread costs $1.20, and in year 3 the bread costs $1.50, and it goes up through 40 years. There are two ways in which the plaintiff can be compensated to receive all those payments over that many years. An accountant could say, “If I put $1000 up, I could buy you bread for the rest of your life.” Or, you can say, “That means I have to invest that money, and I am not really good at investing. I like the idea of having that increased price every year for the bread sent to me.” Things get tough when it comes to economic damages and periodic payments can be harmful to a plaintiff.
If I am representing your family, Senator Washington, and you have been catastrophically injured, your treating doctor says, “In year two I believe Senator Washington is going to need a tendon release in both arms, because when you are catastrophically injured, paralyzed, all your tendons contract.” The cost of the tendon release is $40,000. The defense is not going to let that go unchallenged. The defense will hire a defense medical doctor, and he will say, “Senator Washington was in great shape when he got hurt. He is not going to need that surgery for 10 years. We do not think a payment needs to be made until the tenth year.” The jury does not know whether to believe the treating doctor who says he will need surgery in the second year or the defense doctor, who is always a handsome, well-spoken person, who says Senator Washington will not need surgery until the tenth year.
The jury has a dilemma. If the jury decides he will need surgery in the second year, theoretically, the life care plan will provide $40,000 in year two. When the jury compresses all those numbers, they listen to an accountant. An accountant says, “The $40,000 surgery next year, considering our low inflationary rate at the present time, will probably cost $38,000, so we will give him $38,000 now and next year he will have $40,000 to pay that medical bill.” The problem is if the jury decided they liked the defense witness and decided Senator Washington does not need the surgery until the tenth year, and they were wrong, if you do what S.B. 97 wants you to do, and The Doctors Company wants you to do, you do not have any money in year two to pay for the surgery; you are stuck.
The nice thing about placing the plaintiff in charge of this decision is the plaintiff can create some flexibility. The plaintiff can say, “Maybe I will take a little of the cash up front and set it aside for an emergency fund.” The important thing is it was the injured party who was hurt; it is his or her judgment, and he or she ought to be in charge of his or her future. This scenario was in the context of a settlement where both the plaintiff and insurance company reached a figure, and the attorney gave his client the option of receiving a periodic payment. At trial is where The Doctors Company might want to tell the judge to structure these payments. Under current law, it does not work that way. The decision to purchase future payments is using the verdict as the funding source for the future amount of payments. This is critically important.
The other interesting thing about periodic payments, Senator Washington, is if you are going to have 25 years of future payments, the physician who caused you harm is going to be responsible to you for 25 years. I know, at least in today’s practice under A.B. No. 1 of the 18th Special Session, when the plaintiff elects to settle for a lump sum, the doctor is discharged. However, under S.B. 97, if the insurance company demands future payments, the judgment debtor is on the hook for a long time. I do not believe physicians realize this provision, because I do not believe they want the continuing responsibility, which S.B. 97 and I.P. 1 both entail.
Senator Washington:
That judgment actually comes from the judge? After the injury has been settled, the judge will determine whether it is paid in one lump sum or spread out over 25 years?
Mr. Bradley:
That is correct. Currently, the judge can do that, but it is at the request of the injured party, and that is where we believe it should stay.
Finally, collateral source is the decision to disclose the plaintiff’s insurance benefits. That is a way to prejudice the jury by making sure the jury understands they do not need to award the cost of medical bills because the plaintiff has medical insurance. First and foremost, we believe it is unfair that the insurance company is allowed to talk about the plaintiff’s insurance, but the plaintiff is not allowed to talk about the doctor’s insurance. More importantly, under A.B. No. 1 of the 18th Special Session, that issue still never comes up in front of the jury. The jury is not told about insurance because insurance tends to bias people. If the jury knows the doctor has insurance, they might say it is all right to find a judgment against him, because the insurance company is going to pay, just as the jury’s knowledge of the plaintiff’s medical insurance coverage may negatively influence their decision to award medical bills.
A long time ago, the people who made up the laws decided insurance has no business in a courtroom, and we agree. However, just because the jury is not told about insurance does not mean it does not come up. After the case is resolved, the judge comes back and says, “This jury awarded to Senator Washington $150,000 for past medical bills.” The judge would ask the attorney if the client had medical insurance to pay those bills, and if so, if the insurance company paid them. He would ask if the insurance company required reimbursement. The attorney would reply yes, and offer a copy of the letter from the insurance company stating they demand to enforce their subrogation rights. Under that case, the judge would say, “Since the insurance company needs to be reimbursed, Senator Washington is not going to get a double recovery,” and the judge would leave the verdict alone.
On the other hand, if the plaintiff does not have to pay the insurance company back, the judge will ask if the plaintiff has insurance and if the plaintiff has to pay the insurer back. In that case, the judge thinks if he allows Senator Washington to hold onto the $150,000, he will get a double recovery. The judge will decide the Legislature did not intend for the plaintiff to get a double recovery, and will reduce the award by that amount. It preserves the right of insurance companies to return and ask for payback, which keeps health insurance costs down. It also keeps the issue of insurance out of the courtroom and treats everybody fairly. It is a good and innovative way to deal with the issue of insurance. Unfortunately, S.B. 97 eliminates this provision.
Senator Wiener:
Mr. Bradley, I am looking at the third bullet on page 13, Medicaid and Medicare recovery (Exhibit D). Would that mean Medicaid and Medicare payments would be taken out of the injured plaintiff’s money?
Mr. Bradley:
Yes.
Senator Wiener:
The recovery for the plaintiff is what we are aiming for. The subrogation says Medicaid and Medicare get it first?
Mr. Bradley:
Yes. This came to our attention and was prompted by a good question from Chairman Amodei to the Medicaid people. Under S.B. 97, the jury would be told Medicaid paid the bills. We believe when a jury is told Medicaid is going to pay the bills, the jury is going to be reluctant to reimburse the plaintiff for his medical bills. Let us say they award the plaintiff some noneconomic damages. Now, all of a sudden, Medicaid, under federal law, does need to be reimbursed. The jury did not award damages to the plaintiff and he has to reimburse Medicaid, so he gets a double whammy. This is unfair and fails to make sure the plaintiff is fully covered for his economic losses.
Senator Wiener:
As with the insurance company that sends the letter requesting reimbursement, is there a notice requirement with Medicaid or Medicare? You say it is a federal statute, but does it require notice?
Mr. Bradley:
Yes. Under Medicaid and Medicare, the plaintiff’s lawyer is required to give notice to the provider. If the plaintiff’s lawyer does not give notice and the money is distributed to the plaintiff, those entities can come back and retrieve their money from the lawyer.
Senator Wiener:
With damages or interest, is that added as well?
Mr. Bradley:
Attorneys’ fees and costs? Senator Wiener, I am proud to be able to say I have never run into that problem. I make sure they know. The same applies to Workman’s Compensation Insurance; the plaintiff is under statutory obligation to notify the carrier.
Senator Washington:
I believe you have answered my question, but I want to make sure on the collateral resource provision, the ability to file liens under S.B. 97 is eliminated.
Mr. Bradley:
It is eliminated under S.B. 97, Senator Washington. All the money the health insurers no longer receive will be reflected in increased premiums.
Senator Washington:
In your estimation, the right to subrogate and file liens needs to be protected under A.B. No. 1 of the 18th Special Session, and that is a benefit to the insurance company.
Mr. Bradley:
It initially benefits the insurance company and all of us who have an insurance policy. My rates are not going to increase because your case did not allow reimbursement.
In conclusion, how do you make the process more efficient and faster? That is one of the things we are seeking to do. Under A.B. No. 1 of the 18th Special Session there is a mandatory settlement conference. A change we suggest would be to give the judge authority to hold parties in contempt for negotiating in bad faith. We also, under A.B. No. 1 of the 18th Special Session, shorten the time to get a malpractice action to trial. It used to be 5 years; under A.B. No. 1 of the 18th Special Session, it is 3 years until 2004, and 2 years thereafter. The Legislature has mandated under A.B. No. 1 of the 18th Special Session, these cases be moved rapidly through the system. How do you discourage frivolous lawsuits? Retain A.B. No. 1 of the 18th Special Session. We have an expert affidavit; once again in Nevada we have lawyer pays. Neither of these requirements exists under California’s model of MICRA. Nevada has a better system contained in A.B. No. 1 of the 18th Special Session.
How do you provide for stability and predictability? We have already indicated, a hard cap as contained in A.B. No. 1 of the 18th Special Session. How do you reduce rates and increase access? Go back to what a credible insurance man, who was appointed by the Governor to run an important plan in this State, told you, “A.B. No. 1 of the 18th Special Session, if it withstands constitutional challenges, will lower rates.”
Senator Washington:
Regarding stability and predictability to attract insurance companies to Nevada, as we deliberate and wrestle with A.B. No. 1 of the 18th Special Session and S.B. 97, I am wondering whether, as Legislators, we can still provide predictability based on the fact, as Mr. Byrd said, the pool available within Nevada is a small pool compared to California. In trying to provide the hard cap and tort reform, should we merge or splice the two bills? Or should we leave A.B. No. 1 of the 18th Special Session the way it is and rely on the fact we have a tort reform statute to provide the predictability and stability emphasized by Mr. Meyer?
Mr. Bradley:
That is the all-important question, Senator Washington, and Nevada will always have a problem due to the small number of doctors. When you have the Medical Liability Association of Nevada (MLAN) being formed and already picking up 600 physicians; when you have Nevada Mutual Insurance Company picking up another 600 physicians; when you have The Doctors Company trying to rebuild market share after St. Paul Companies knocked it out; when you have American Psychological Association Insurance Trust, another group with which Janice Moskowitz did such a good job in eliminating the cap on obstetrics when she went to work and proved there was no difference between 125 baby deliveries and 200 baby deliveries; when you have Physicians Mutual Insurance Company, who came in and said, “We like Nevada”; when you have American International Group (AIG), who decided to reinsure the doctors plan, that tells you there is competition in this State.
What is going to improve competition when this economy turns around? It is going to turn around, just like in the 1990s, when we get an upward swing and the economy gets going again, and interest rates start coming up. We have passed meaningful tort reform in A.B. No. 1 of the 18th Special Session. It could not come any clearer than from Mr. Byrd. It was built and designed to withstand a constitutional challenge. It was build with a lot of thought and deliberation. It is going to provide predictability and a level of confidence in Nevada to give us the degree of competition to keep rates stable.
The second part of the puzzle is important insurance reform. Senator Townsend has some good bills. One of the worst offenders is The Doctors Company in terms of not listening to its doctor, not listening to the screening panel, marching forward with cases, and then getting hit with a large verdict. If you ask Mr. Byrd if he ever got hit with a large verdict, I believe he will tell you either “No” or “One,” and he ran a company for 20 years. These companies have to appreciate the small market share Nevada represents. They have to aggressively underwrite and do excellent claims practices as a requirement under Senator Townsend’s bill and under Senator Titus’s bill. Under that scenario, we will have a good, stable market. Finally, the Board of Medical Examiners has to do its job.
Senator Washington:
We have this letter from AIG, presented to us and put into the record yesterday, basically saying MICRA, the law that has withstood the test of time and has been reviewed and found favorable by them, is what they are asking us to mirror. That is S.B. 97. You are indicating they are back in the market reinsuring some of the insurance companies. Now I am confused. Which is it?
Mr. Bradley:
The testimony did not come from me. Do you recall the statement that the AIG chairman had given a speech in which he said he would not come into any state that had not passed meaningful tort reform, to insure or participate in their bond issuances? Long before we got to S.B. 97, they looked at A.B. No. 1 of the 18th Special Session, I believe, and said with the hard cap, this is a doable bill. American International Group may believe MICRA would generate more profits for them. That becomes the question. Is the most important thing generating profits or generating a fair balance between those people who are injured through the negligent acts of physicians and the need to provide an accessible health care system? Assembly Bill No. 1 of the 18th Special Session does the latter. American International Group looked at it, other insurers have looked at it, Mr. Byrd, who is probably the most credible insurance person you will ever have at the table, said it would lower rates.
Senator Wiener:
For clarification, I seem to recall AIG reinsured MLAN.
Mr. Bradley:
That is correct.
Senator Wiener:
You just said the doctors, so I wanted to make sure I had it right. Also, as a follow up on your statement regarding the gross negligence standard, if we got rid of that one, in your expert opinion, would the legislation be more appealing to insurance companies or would the fact the standard is meaningless, whether it stays in or goes out, not make a difference?
Mr. Bradley:
Senator Wiener, they do not care about gross negligence, because it is intentional conduct and special liability policies do not cover negligent conduct.
Jan Gilbert, Lobbyist, Nevadans for Quality Health Care:
I am here representing a coalition called Nevadans for Quality Health Care. We, as consumers, believe what you have done with A.B. No. 1 of the 18th Special Session is the right way to go. I would like to urge you to let it work. It just went into effect August 1, 2002, and we have not even given it a year’s chance to show it can bring rates down. I believe, from some of the things you have been hearing, we should wait and see if A.B. No. 1 of the 18th Special Session will work. I have also heard a lot on television about our doctors leaving Nevada. Yet, a few weeks ago, the Medicaid Director Charles Duarte said he did an informal survey of 100 pregnant women covered by Medicaid. Ninety-seven of them said they found it easy or very easy to find a doctor in Nevada. Last week we heard of an investigative reporter who conducted her own survey in Las Vegas to find an obstetrician, and also found it easy. I believe we have to let this work. It looks to me as if we are being bombarded with ideas I am not sure are actually true. I am very concerned we are going to rush into something that will limit patient rights.
Perhaps we could have an interim committee study insurance issues. I sat through a couple of Senate Committee on Commerce and Labor hearings on insurance. It is an incredibly complicated issue, and the committee is uncertain of what will actually make a difference. What I am asking today is that you defeat S.B. 97. I also believe our juries are working. We were given a handout in the Senate Committee on Commerce and Labor about the judgments made in the last couple of years. Reading them over, I was surprised by how few there were and of those, how few were excessive in their awards. I believe it would be a mistake to move forward on S.B. 97.
Senator Washington:
A brief editorial Ms. Gilbert, I appreciate your comments and observations that we are concerned about the general public and the consumer. I see consumers at several ends of this issue. Consumers include not only the patient as a consumer of the provider, but also the provider as a consumer of the insurance company. The insurance company is a consumer of the patient. When we have emotional testimony from Dr. Jamison, who says she loves the State of Nevada, but her insurance rates have quadrupled and are threatening to close down her business; her concerns become a viable interest of great importance. If there is one Dr. Jamison, that means there are several like her. If we are going to continue to provide accessible and affordable health care of high quality, not only should we consider the patient as a consumer, but also all the other consumers involved. Whether we leave A.B. No. 1 of the 18th Special Session alone or merge some of its provisions into S.B. 97, or pass S.B. 97 as is, I would anticipate we would pass out a comprehensive bill that considers all consumers, in whatever capacity they are participating in this medical arena.
Ms. Gilbert:
I agree with you, Senator. We are all consumers in this dialog, and I trust all of your judgments to correct any part of A.B. No. 1 of the 18th Special Session you believe needs correction. I am concerned we are in a crisis mode. People think things have to change immediately, and I do know we have to find a way to let this work and see if it will bring down medical malpractice rates.
Dr. Kessler:
I will read my testimony on S.B. 97 (Exhibit E).
Chairman Amodei:
To what do you attribute the shortage in applications to medical school?
Dr. Kessler:
I believe the reasons are multifactorial. It is partially due to the fact medical practice does not carry the respect or the salary it once did. There is also a demographic factor in terms of the number of people of the age to apply. That is not to say medical school seats were not filled; they were. There were still two applications for each seat, but the quality of the medical pool has decreased. For instance, the University of Nevada accepted somebody with an 18 Medical College Admissions Test score. That is a complicated way to score things, but they would not even have interviewed that person 2 years ago. I will continue with my written testimony.
I urge you to pass S.B. 97, because the legacies we leave depend upon it. Mr. Bradley made a couple of specific comments I would like to address. He said A.B. No. 1 of the 18th Special Session would eliminate frivolous lawsuits. It will not. Currently the definition of frivolous lawsuit is such that if there is an expert medical opinion there is merit in the case, then it cannot be frivolous. Assembly Bill No. 1 of the 18th Special Session mandates there be such an opinion, and so by definition, there can be no frivolous cases. It does not instruct judges any differently, although there is pending legislation that attempts to correct the definition.
Senator Nolan touched on the fact the noneconomic damage award is from each defendant to each plaintiff, which is different than other states. It means if there is an injury during a surgery, the surgeon, the assistant surgeon, the hospital, and the anesthesiologist, all may be liable for $350,000 to each plaintiff, for instance, a mother, a father, and a child. Mr. Bradley says the joint and several liability rule is only there to protect people’s abilities to collect their full economic damages. It does possibly ensure people collect the most damages. However, if we are going to say somebody should be responsible for something that is not their fault, then what we are really arguing for is a no‑fault system of settling cases. I believe physicians would be happy to talk about a no-fault system of compensation. Actually, I believe it is an important issue we should be talking about. If we are going to ask people who are not responsible for damages to pay them, we might as well ask my aunt, who is not a physician, to pay them. It is just not fair.
Senator Titus:
Dr. Kessler, as an academic myself, I can assure you academic research is never, by its nature, apolitical or nonpartisan. Who funded and sponsored the institute you attended as a fellow this past year?
Dr. Kessler:
The institute is the Osteopathic Heritage Health Policy Fellowship.
Senator Titus:
Is the institute associated with the Heritage Foundation, by any chance?
Dr. Kessler:
It is.
Senator Titus:
That is one of the most conservative think tanks in the country. You can never argue it is nonpartisan or apolitical.
Dr. Kessler:
This is the Osteopathic Heritage Health Policy Fellowship; it is not the Heritage Foundation Health Policy Fellowship.
Senator Titus:
Is it associated with the Heritage Foundation?
Dr. Kessler:
No, it is not associated with the Heritage Foundation.
Senator Titus:
Do they receive any money from the Heritage Foundation or do they just happen to have the same name?
Dr. Kessler:
All of the money funding the fellowship came from the sale of a nonprofit hospital which when sold, went into a foundation with a mission to improve the healthcare of the nation, specifically in Ohio, where the hospital was located. That is its only goal.
Senator Titus:
Did other people attend, or just osteopaths?
Dr. Kessler:
Other people also attended.
Senator Titus:
How do you get to be one of these fellows? Could I apply to be one?
Dr. Kessler:
Yes, you could.
Senator Titus:
Could you send me information on how to apply or do they have a Web site?
Dr. Kessler:
Yes, they do have a Web site, which I will try to download and send to you. I should say applicants tend to be associated with the osteopathic profession in some way. However, in my class we had someone who was a financial officer of a hospital, we had a nurse who worked with a residency program, we had somebody who was a physician at the National Institutes of Health. These are not all practicing physicians, and not even all physicians.
Senator Titus:
It sounds interesting. I would just like to look at it a little further if you can send it to me.
Dr. Kessler:
It was one of the best things I have done in my life. I have to tell you, however, to be prepared for an incredible amount of work.
Chairman Amodei:
Is there anybody else in Clark County waiting to testify? Seeing none, I will close the hearing on S.B. 97 for Clark County. Is there anybody else in Carson City who would like to testify on S.B. 97?
Kerry L. Earley, Attorney, Keep Our Doctors In Nevada:
I just have two points. I know Senator Nolan mentioned the point on the hard cap, but I want to make sure everybody understood it. Yesterday, Mr. Meyer said the hard cap is per injury. That is step one. The next step, when he went through the $1 million/$3 million, is per plaintiff/per defendant; that is the stacking part. The second thing is on the exceptions. When you go through the seven included in the legislative history, they are the exact cases I face all the time, in which we need help on the cap for noneconomic damages. When you talk about organic brain damage, hemoplegia, paraplegia, and so forth, if you look at those exceptions, those were the exact cases where pain and suffering awards are all over the board, and there is no predictability. That is exactly what caps address.
Chairman Amodei:
The record will stay open for submission of anything relevant to S.B. 97, and all parties are free to speak with members of the committee throughout the process. To the extent we understand the perfect world for the people from Mr. Bradley’s entity leaves things the way they are and the perfect world for the context of S.B. 97 gets rid of both exceptions, and to the extent there is any appetite before April 2, to either leave S.B. 97 as is or get rid of it completely, I am sure we will find a way to address these needs.
Senator Titus:
When we say a perfect world for Mr. Bradley and the people he represents leaves it as is, that is not really true. The perfect world would have been prior to the 18th Special Legislative Session. We have already come way down this path toward tort reform, so let us not throw those efforts out as if that would be a perfect world. A great deal has already been done. I just wanted to put that into perspective.
Chairman Amodei:
We will close the hearing on S.B. 97, and we are adjourned at 10:23 a.m.
RESPECTFULLY SUBMITTED:
Jo Greenslate,
Committee Secretary
APPROVED BY:
Senator Mark E. Amodei, Chairman
DATE: