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Read Making a Killing

home / healthcare / in the media

The Monitor (Tribune Business News)
Sep 12, 2003

by Rachel Williamson

McAllen, Texas, Doctors Look to California for Medical Malpractice Cap Effect

McALLEN, Texas--Dr. Juan Jimenez, a McAllen surgeon, a few days ago heard that California doctors are a little more relaxed in their medical practices than they used to be.

One of the reasons Jimenez wants Proposition 12 to pass is because of events in California, where the medical malpractice situation once closely mirrored what is happening in Texas.

In the mid-1970s, 28 years before Proposition 12 was placed on the ballot for Saturday's Texas election, similar legislation limiting medical malpractice awards was presented to California voters.

California voters approved the measure and by the late 1980s, and doctors started to see their medical malpractice insurance premiums drop after experiencing years of skyrocketing costs.

Like Proposition 12, the California Medical Injury Compensation Reform Act of 1975 was proposed to help liability insurance rates decrease.

MICRA limits jury awards in medical malpractice cases to $250,000 for pain and suffering, according to the Pacific West Law Group in California.

Before the passage of MICRA, doctors in California, like their Texas counterparts, were threatening to leave the state because of the high malpractice premiums.

Since MICRA passed, fewer lawsuits have been filed and fewer have been successful, said Brock Phillips, a California lawyer who defends doctors in malpractice cases.

As a result, medical malpractice insurance carriers experienced a drop in pay-outs, Phillips said.

However, a California consumer advocate group contends that MICRA was not the reason for the state's eventual insurance rate decreases.

"Caps have no effect other than to further line the pockets of insurance companies," said Carmen Balber, a consumer advocate with the Foundation for Taxpayer and Consumer Rights in California.

The foundation monitors legislation related to caps on noneconomic damages across the country, Balber said.

"The California experience shows us that limiting access to justice doesn't bring down insurance rates," said Abby Sandlin, a spokesperson for Texans Against Proposition 12.

Only when insurance companies are forced to justify their rate increases do premiums start to decrease, Sandlin said.

In California, even after MICRA's passage, malpractice insurance premiums continued to rise, Balber said.

It wasn't until Proposition 103, an insurance reform measure, was passed in 1988 that California's insurance rates started to stabilize, Balber said.

The reform forced insurance companies to justify their rate changes with California regulators.

The timing of insurance rate decreases with Proposition 103 was a coincidence, said Robert Hertzka, president-elect of the California Medical Association and a San Diego anesthesiologist.

Proposition 103 related mostly to auto insurance reform, said Peter Warren, vice president of Communications of CMA.

The idea that Proposition 103 was the reason for liability insurance decreases has been debunked, Hertzka said.

Dr. Benjamin Bujanda, a member of the Hidalgo-Starr Counties Medical Society, also heard that California's insurance situation improved with noneconomic damage caps.

The cap is the first part of a two-step process that includes insurance reform, Bujanda said.

Bujanda talked to doctors in California about their experience and found out that insurance reform alone will not bring down insurance rates.

"If we start with reform now, lawyers will be against us, insurance companies will be against us," he said.

Insurance companies already are being regulated, said Rep. Joe Nixon, R-Houston.

Nixon wrote Proposition 12 and authored House Bill 4, which has put a $250,000 cap on noneconomic damages in medical malpractice lawsuits.

A senate bill passed in the last legislative session requires insurance companies to justify their rate increases.

The three liability insurance carriers in Texas have to file their rates with the Department of Insurance, said Ben Gonzalez, a public information officer for TDI.

"A lot of what we did mirrored the California issue in 1975," Nixon said.

"I mean, we're doing 28 years later what they did in 1975. This isn't anything new or innovative. There are 24 states with caps, six of them already have a $250,000 cap and it has worked in California."


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