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Read Making a Killing

home / healthcare / in the media

BestWire
Apr 06, 2004

by Chris Grier, Washington bureau manager

CITING A CONFLICT, GROUP CALLS FOR FRIST TO BOW OUT OF MALPRACTICE DEBATE

WASHINGTON (BestWire) - Citing his investments and his family's ties to the country's largest hospital chain, a California consumer group has filed an ethics complaint against Senate Majority Leader Bill Frist, alleging that his advocacy of medical-liability caps will "line his own pockets."

The Santa Monica-based Foundation for Taxpayer and Consumer Rights, which has often campaigned against caps limiting medical-malpractice awards, wrote a letter to the Senate Select Committee on Ethics on April 6 urging Frist's "immediate removal" from votes and debate on pending medical-liability legislation.

"We believe this conflict should disqualify Sen. Frist from involvement in any legislation concerning liability limits benefiting hospitals and malpractice insurers, and can no longer be overlooked," FTCR representative Carmen Balber wrote to Ethics Committee Chairman George Voinovich, R-Ohio.

Frist, R-Tenn., was meanwhile on the Senate floor, trying for the third time this year to pass a bill limiting medical-malpractice jury awards.

"I think it's important to note that this is pure politics," said Frist spokesman Nick Smith. "There's nothing there."

Smith said that the Senate ethics committee has repeatedly ruled that there is no conflict of interest to prevent Frist from participating in health-care matters. Smith also said Frist's holdings are in a blind trust, so called because they prohibit Frist from managing his investments.

Frist has a number of personal and financial ties to the HCA hospital chain and its subsidiary malpractice insurer, Health Care Indemnity Inc., which, according to 2003 A.M. Best Co. data, is the seventh-largest malpractice writer in the United States, with a 3.9% market share and $341 million in direct premium written. Frist's brother and father founded HCA, which owns and runs
179 hospitals across the country. Although Smith said Frist does not sit on the HCA board, his brother, Thomas Frist Jr., does, and has been HCA's chairman and chief executive officer. The FTCR said he holds more than 5.5 million shares of stock, worth about $240 million.

Senate Office of Public Records documents show Sen. Frist and his wife and children hold HCA stock in a broad amount ranging from $10.15 million to $30.35 million in December 2000; the filings do not specify in greater detail. Since then, an amount ranging from $1,125,000 to $2,320,000 in HCA stock was put in the trusts since then; about $625,000 was sold.

The advocacy group, in its letter to Voinovich, said that HCA doctors and hospitals and HCI, its insurer, would greatly benefit from a cap on medical-malpractice damages, because the insurer's risk "would plummet while profits soared." Not even if Frist were to lobby for a direct appropriation for HCA would the hospital chain fare better, the group wrote, "because a liability limit will pay off indefinitely."

Frist has been at the forefront of medical-liability reform in the Senate, pushing three nearly identical bills seeking to limit noneconomic "pain and suffering" damages in medical-liability cases.

The most recent bill. S. 2207, filed March 12 by Sen. Judd Gregg, R-N.H., "The Pregnancy and Trauma Care Access Protection Act of 2004," would establish a three-year statute of limitations for lawsuits; cap noneconomic "pain and suffering" awards at $250,000; and limit the contingency fees lawyers can collect from such cases.

It also has a host of other provisions, all of which would have the effect of reducing insurers' losses. The bill proposes more stringent rules regarding medical witnesses who would qualify as experts, tilting cases in favor of doctors and insurers; it also allows a judge to reduce damage awards by any amount the plaintiff would get from a collateral source, such as workers' compensation, meaning that medical-malpractice insurers will end up paying less. Defendants and, therefore, insurers, would also be allowed to pay damages in installments, rather than as a lump sum. Punitive damages would only be awarded in cases where with malice or where hospitals "deliberately failed to avoid unnecessary injury the claimant was substantially certain to suffer."

The bill also bars awarding punitive damages against manufacturers, distributors and providers of medical products that comply with U.S. Food and Drug Administration standards, as long as they were used in connection with obstetrical or gynecological services or emergency or trauma-care services.

Frist has touted the legislation as a measure intended to help doctors who deliver babies, but the provisions in the bill apply to "any health-care lawsuit." The only provisions of those bills specific to any particular medical speciality are the nine paragraphs within the 10-page bill addressing the prohibitions against punitive damages.

Two earlier attempts to pass the malpractice bills stalled when Frist and the GOP couldn't muster the 60 votes needed to forestall a threatened Democratic filibuster.

According to 2002 A.M. Best Co. data, the top five U.S. writers of medical-malpractice insurance, as measured by market share and direct premiums written, were: MLMIC Group, with 10.7%; American International Group, with 7.2%; GE Global, with 7.1%; ProAssurance Group, with 5%; and Zurich/Farmers, with 4.7%. Farmers announced its exit from the market last year, citing 2002 losses of more than $100 million on its malpractice policies.
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Email the author: Chris.Grier@ambest.com


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