JOINT TORT REFORM SUBCOMMITTEE REPORT Download version in Microsoft Word format This is a report for the Joint Tort Reform Subcommittee consisting of Co-Chairs: Senator David Fowler and Representative Rob Briley. The other members serving on the committee are: Senators: Representatives: Roscoe Dixon John DeBerry Joann Graves Joe Fowlkes Joe Haynes Jere Hargrove Doug Jackson Russell Johnson Jeff Miller Kim McMillan Mark Norris Chris Newton Larry Trail Gary Odom Mike Williams Randy Rinks Part I. The following is a chronological list of meetings including the person or persons who spoke at that meeting, who they represented and/or what topic they addressed. JULY 15, 2003 SPEAKER 1. Carol A. Mutter Adjunct Professor at the University of Tennessee College of Law Overview of tort law in Tennessee and how it compares to other state tort systems. JULY 16, 2003 SPEAKER 1. Carol A. Mutter Adjunct Professor at the University of Tennessee College of Law Continuation of the overview of tort law in Tennessee and how it compares to other state tort systems. AUGUST 5, 2003 SPEAKERS 1. Subhi D. Ali, MD Tennessee Medical Association president 2. Michael A. McAdoo, MD Tennessee Medical Society 3. Jeffrey J. Gleason, MD Tennessee Medical Society 4. Lee M. Carter, MD Tennessee Medical Society 5. Cornelia A. Clark Director, Administrative Office of the Courts Analysis of Judgments and Court Filings AUGUST 6, 2003 SPEAKERS: 1. Betsy Wood Vice President of Government Affairs Tennessee Hospital Association 2. Charlotte Burns Administrator of Hardin County General Hospital Current THA President 3. Tony Spezia Chief Executive Officer of Covenant Health 4. David Kumatz Senior Vice President of Insurance Services, THA 5. Mike Cole Executive Director of Tennessee Health Care Association 6. Jim Nasso Vice President of Wesley Housing Corp. 7. Gerald Coggins Vice President of National Healthcare Corp. SEPTEMBER 2, 2003 SPEAKERS: 1. Steven C. Williams President and CEO State Volunteer Mutual Insurance Company 2. Jim Howell Vice President for Claims State Volunteer Mutual Insurance Company 3. John Mize Tillinghast-Towers Perrin SEPTEMBER 3, 2003 SPEAKER: 1. Paula Flowers Commissioner Department of Commerce and Insurance OCTOBER 14, 2003 SPEAKER: 1. Cheye Calvo Committee Director with the National Conference of State Legislatures Implementation of Tort Reform in Surrounding States and the Impact of Tort Reform OCTOBER 15, 2003 SPEAKERS: 1. Judy Eads Assistant Commissioner Department of Health Health Licensure and Regulation 2. Dr. Robert Ripley Board of Medical Examiners Roll of the Board DECEMBER 2, 2003 SPEAKERS: 1. Mickey Bilbrey CEO of University of Tennessee Medical Center Unique Role of Teaching Hospitals Vicarious Liability: Impact on Hospitals that Train Residents 2. B. W. Ruffner, MD Erlanger Medical Center Vicarious Liability: Impact on Physicians who Train Residents 3. Reginal Coopwood, MD Metro General Hospital Physician Resident Exposure to Risk of Lawsuits and Subsequent Permanent Impact on their Careers 4. Jerry Hickson, MD Vanderbilt University Medical Center Patient Safety and Quality Improvement 5. Julia Morris Deputy General Council Vanderbilt University Medical Center Reporting Issues Relative to State and Federal Requirements DECEMBER 3, 2003 SPEAKERS: 1. Bill Hubbard Attorney (on behalf of Tennessee Network of Community Organizations and Tennessee Mental Health Organizations) Overview of Problems 2. Randall Lea Assistant Commissioner Resources and Community Development Department of Children's Services 3. Bill Wilder CEO of Huffaker & Trimble Insurance Perspective 4. Robin Atwood Tennessee Network of Community Organizations 5. Brian McGuire AARP 6. Carol Westlake Tennessee Disability Coalition 7. Andy Bennett Tennessee Attorney General's Office Part II. The following is a list of findings determined by the committee: MEDICAL MALPRACTICE/PHYSICIAN LIABILITY 1. The Committee finds that increases in medical malpractice insurance premiums are and have been a consideration in the decisions of physicians to continue their practice or maintain the same level and type of services. There was little evidence that access is in jeopardy throughout the state, but there was some evidence that specialties in rural areas have been impacted (though the degree was uncertain and unquantifiable) and might tend to be adversely impacted first. 2. The Committee finds that Tennessee does not really regulate medical malpractice insurance premiums, unlike some other states, but the committee was not able to determine from the limited testimony what impact premium regulation would have on premium stability or availability of coverage. 3. The committee has determined that medical malpractice insurance premiums for physicians have increased in the last two or three years at rates greater than in previous years. However, it cannot at this point in time reach any definitive conclusions as to the cause of those increases without further information. 4. The committee acknowledges that there is evidence tending to show a correlation between the imposition of limitations on damages in medical malpractice cases and stability in medical malpractice insurance premiums, but the committee also finds that the correlation was not absolute or quantifiable and that other reforms and factors may contribute more directly and timely to market stability. 5. Except for the report by Dr. Jerry Hickson regarding a “no fault” system, no testimony was provided by any presenters regarding the need for or the effect of any kind of reforms other than a limitation on damages, some of which other reforms Tennessee has already adopted into law. The committee desires to have more information on how these other reforms are working in other states and what combination of factors or reforms may be keeping medical malpractice insurance costs stable in those states with the greatest premium stability. 6. The committee desires to have more detailed claim and court case information reported and would recommend for passage legislation that would provide the committee with a clearer picture of the litigation and claim trends in Tennessee, the impact of litigation (and claims) on medical malpractice insurance premiums, and those actions that might best lead to premium stability. HOSPITAL LIABILITY 1. The committee has determined that liability insurance premiums for hospitals have increased in the last two or three years at rates greater than in previous years and that the rate increases seem to have been at rates greater than those applicable to physicians. However, it cannot at this point in time reach any definitive conclusions as to the cause of those increases without further information. TEACHING HOSPITALS 1. The committee has heard testimony to the effect that some hospitals are concerned about vicarious liability if they serve as a teaching facility for interns and residents. This concern has arisen as a result of the Tennessee Supreme Court’s decision in Johnson v. Lebonheur. The committee believes the availability of teaching hospitals is important the citizens of this state and that it is particularly important with respect to the provision of services to the indigent. The Committee further believes that for the purpose of vicarious liability, the intern and resident should be considered an employee of the teaching institution, not the Hospital at which the resident or intern is practicing. However, the Committee also finds that a teaching hospitals should not be relieved from all liability relative to the practice of a resident or intern at a teaching hospital simply because it is a teaching hospital. However, a teaching hospital should not be subject to liability under any theory of vicarious liability simply because it is a teaching hospital. Liability for teaching hospitals should attach only upon proof that the hospital committed a negligent act that is a proximate cause of harm. At this time, the Committee would recommend that legislation be introduced that would make clear being a teaching hospital at which a resident or intern may have committed an act of malpractice does not in itself give rise to any liability nor should it in and of itself subject the teaching hospital to vicarious liability based on the tradition principles of the law of agency. However, any such legislation should make clear that liability may be imposed on a teaching hospital for which the resident or intern was, in fact, its agent under the traditional principles of agency. TEACHING PHYSICIANS 1. The committee also heard testimony that in view of the decision in Lebonheur that teaching physicians are concerned about liability being imposed on them under some form of vicarious liability or agency theory. The Committee further finds that there are a number of teaching physicians who provide their service without remuneration and that their teaching services are critical to the ability of our medical colleges to provide education to residents and interns at our teaching hospitals. 2. The Committee also finds that attending physician should not necessarily be relieved from all liability relative to the practice of a resident or intern at a teaching hospital simply because the individual is an attending physician. However, a teaching physician should not be subject to liability under any theory of vicarious liability or agency simply because the individual is a teaching physician. Liability for teaching physicians should attach only upon proof that the teaching physician committed a negligent act that is the proximate cause of harm. At this time, the Committee would recommend that legislation be introduced that would make it clear that a teaching physician assigned to a resident or intern who may have committed an act of malpractice is not liable except for his own acts of negligence in the treatment of the patient or in the oversight of the treatment by the resident or interns and that negligence of a resident or intern should not be imputed to a teaching physician simply because the individual is a teaching physician. NURSING HOMES 1. The committee has determined that liability insurance premiums for nursing homes have increased in the last two or three years at rates greater than in previous years and that the rate increases seem to have been at rates greater than those applicable to physicians and hospitals. However, it cannot at this point in time reach any definitive conclusions as to the cause of those increases without further information. 2. The Committee heard testimony regarding the negative impact of litigation on nursing homes in Florida and did hear testimony that some attorneys from out of state have begun to solicit nursing home clients in this state. However, the Committee believes that it is the proper role of the judicial branch to determine what steps, if any, should be taken to regulate attorney solicitations and the admission of unlicensed attorneys to practice pro hoc vice. 3. The Committee finds that premium increases for nursing homes are often difficult to absorb because of the number of beds for which reimbursement is set by the state and federal governments. This makes the increase in premiums of greater concern to the state as decreases in available beds would impact the state’s ability to serve its medicaid eligible population in need of nursing home services. 4. The Committee further finds that the nursing home population is a very vulnerable population. No measures intended to stabilize liability premiums in order to ensure the continuation and availability of nursing home services should fail to take the unusual vulnerability of this population into consideration. 5. The Committee further suggest that consideration be given to other actions that might improve the quality of care and reward good providers such as improving oversight of nursing homes, encouraging risk management, developing experience ratings, and facilitating alternative forms of insurance such as group self-insurance. CARE FOR THE DEVELOPMENTALLY DISABLED/CHILDREN IN STATE CUSTODY 1. The committee finds that liability insurance premiums for those agencies (not for profit) that are serving children in state custody and for those agencies (not for profit) that are serving the developmentally disabled under state contract have increased in the last two or three years at rates greater than in previous years, and that the rate increases seem to have been at rates greater than those applicable to physicians and hospitals. The Committee further finds that the number of companies writing liability insurance for these entities has substantially decreased in recent years. 2. The Committee finds that the need for foster care for children in state custody is expected to increase as children are to be moved from residential care to foster care under the Brian A. settlement. The Committee further finds that the state cannot accommodate all children in state custody if those children being served by private agencies had to be shifted to foster families contracting directly with the state. 3. The Committee finds that the need for residential care for the developmentally disabled being served under state contract is expected to increase as these individuals are moved from institutional facilities to the community under certain federal orders. The Committee further finds that the state cannot accommodate all the individuals required to be moved from institutional facilities to residential facilities if there are not enough private agencies available to serve those individuals. 4. The Committee would recommend that consideration be given to finding some means of stabilizing the liability premium rates for private agencies that provide care to children in state custody and residential care for the developmentally disabled, but that any remedy be narrowly tailored so as not to provide immunity or limitations on damages with respect to those individuals not in state custody or not being served under state contract. INSURANCE REGULATION The Committee heard testimony that our state does not approve insurance premium increases in advance of the increase. Rather, rate filings with respect to premium increases are made with the Commissioner after the premium increases have gone into effect (called “use and file”). The Commissioner said this approach favors and emphasizes markets while pre-approval favors and emphasizes regulation. Under current law, rates may be disapproved only if found to “excessive, inadequate or unfairly discriminatory.” Tennessee is one of only 8 states that are “use and file” states. Twenty-one states are “file and use” states and 22 states require prior approval before a rate can be used. Some of the information not reported to the Department of Commerce and Insurance is: Loss data reflecting settlement, judgements and administrative costs in Tennessee v. other states Specific rate increases for each class of policyholder and number of policyholders impacted by each rate increase Number of policyholders involved in claims losses Out of state factors impacting rate decisions. Out of the top 6 carriers in 2002, only two casualty insurers submitted rate information to the Department of Commerce and Insurance. PATIENT-PHYSICIAN PRIVILEGE/PRIVACY The Committee considered the effects of the Court’s decision in Givens v. Mulliken, 2002 75 S.W. 3d 383, that extended a right of privacy or confidentiality with respect to communications between a patient and treating physician, thereby prohibiting the then current practice of counsel for the party being sued by the patient from ex parte communications with the treating physician. The committee recognized that there were two different scenarios in which defense counsel may desire an ex parte conversation with the treating physician: (i) those in which the patient has sued for personal injuries resulting from an act of medical malpractice and (ii) those in which the patient is suing for personal injuries unrelated to an act of medical malpractice. The Committee would recommend legislation that would allow defense counsel to have ex parte communications with a physician in connection with actions for medical malpractice. The committee considered, but did not reach any conclusion as to whether ex parte communications should be allowed in other kinds of actions for personal injuries. The Committee does believe, however, that any legislation directed at allowing ex parte conversations in other actions give consideration to the delicate balance of competing interests, including the expectation of privacy that patients might have, the need for confidentiality for proper treatment, the need to minimize the expense of litigation and the value to the parties and the judicial system of expediting litigation. MISCELLANEOUS The committee would like to continue to monitor the cost of medical malpractice premium rates for doctors and hospitals and continue to study information as to what is or is not causing these rates to grow or decline and would recommend an official study committee be established. Part III. Please find attached a compilation of testimony from the Committee’s meetings. (unavailable online at this time)