Medical-liability reform stalls.

While a January speech by President George Bush suggested the medical-liability crisis would see solutions in 2003, political and economic events left physicians still scrambling for coverage, paying higher premiums, leaving one state for another with lower costs, or retiring from practice.

Federal attempts to bring a plan on medical liability to a vote have been repeatedly delayed, as both the House and Senate failed to agree on key points in proposals, most notably a cap on noneconomic damages.

State legislature attempts in New Jersey, Pennsylvania, Missouri, Kentucky, North Carolina and Nevada to pass legislation to help physicians deal with the cost of medical-liability insurance fell short as proposals either died in committee or were voted down by the legislature.

The power of the trial bar helped to defeat the federal and state cap reform initiatives in 2003, according to Dr. Richard Anderson, chief executive officer and chairman of medical-liability insurer The Doctors Co. "Although in poll after poll 70% of Americans favor caps on noneconomic damages, in state after state the influence of the trial bar is disproportionately large and works to defeat and to mitigate reforms," Anderson said.

Texas, Florida, New York and Idaho legislatures were more successful with proposals. In Texas, a constitutional amendment passed in September will permit next session's legislature to implement caps on noneconomic damages. The legislation has led to at least one company--Texas Medical Liability Trust--lowering medical-liability premiums slightly as others wait to see the effect of the legislation. "The triumph in Texas was a significant victory. The litigation environment there was out of control," Dr. Anderson said.

In Florida, physicians believe new legislation may not provide full relief from rising premiums. The state department of insurance advised the new legislation will provide an average 8% reduction in premiums, with individual changes based on each company's book of business.

In New Jersey, legislative efforts failed to pass any relief for physicians. One of the state's largest writers--Princeton Insurance--ceased writing new business in August, as the state activated a reinsurance pool for liability insurers to help ease market constraints.

Nationally, the fifth-largest writer of medical liability coverage--Farmers Insurance Group--withdrew from the market in all states, citing more than $100 million in losses in 2002 alone.

In Virginia, state regulators placed Reciprocal of America and Reciprocal Group in receivership as financial analysis found the company insolvent. As a result, regulators in Tennessee placed three companies in that state in receivership due to their fiscal relationship to Reciprocal Group.

Medical Insurance Exchange of California ceased writing new business in Nevada and issued nonrenewal notices to the 58 physicians it insured in the state. While other insurers are still accepting business, including a state insurance pool reactivated in 2002, the additional pressure on the fragile market was cause for concern in the medical society.

Looking ahead, Anderson said that to overcome the trial bar lobby the American public will have to demand legislators, judges and juries who want to deal with this crisis. "Before reaching this land, the situation will get worse, but through the darkening clouds we'll see the ultimate solution," Anderson said.

America's Medical-Liability Crisis: A National View

The American Medical Association reports 19 states are in crisis, where the medical-liability situation is threatening patient's access to care. Twenty-five states are showing problem signs and six states, with caps in place for noneconomic damages, are not in danger, according to the AMA.

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Source: American Medical Association