Once more unto tort reform.

Throughout his single six-year term on Capitol Hill, Sen. John Ensign (R-Nevada) has been dedicated to one national issue. As he explained in a speech in 2004:

  I am a veterinarian, and I know medicine is not an exact science.
  Mistakes are made. If there is medical malpractice, the patient
  deserves to get compensated, no questions asked, and our civil justice
  system has the ability to do that. But because the courts are so
  filled up with frivolous lawsuits these days, and some of the jury
  awards are so incredibly high, it motivates people to basically say
  let's go hit the lawsuit lottery because the system is broken.

According to Ensign, the growth of malpractice lawsuits is the largest obstacle to improving access to quality healthcare for millions of Americans. He describes unrestricted jury awards for malpractice, and the vanishing availability of affordable liability insurance, as responsible for forcing clinicians to abandon their practices while driving up the cost of care.

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This spring, both AHCA and AAHSA have endorsed Ensign's annual legislative effort to place national limits on healthcare liability. His Medical Care Access Protection Act of 2006, formally designated as S.22, would cap noneconomic damages in liability suits at $500,000 if more than one institution is involved. The act allows the award of punitive damages against any person in a healthcare lawsuit "only if it is proven by clear and convincing evidence that such person acted with malicious intent to injure the claimant, or that such person deliberately failed to avoid unnecessary injury." On the rare occasions in which punitive damages would be allowed under the act, they would be limited to the greater of twice the amount of economic damages or $250,000. Unlike some of Ensign's earlier attempts to legislate healthcare-related tort reform, S.22 applies to assisted living residences and nursing homes.

It may be difficult for the embattled long-term care community to remember but, until the mid-1990s, nursing homes were reportedly considered good liability risks and enjoyed insurance coverage at a much lower rate than that charged to other healthcare facilities. That changed dramatically in 1999, when several multistate insurers sharply increased rates for nursing home liability insurance. In Florida and Texas, insurance losses resulting from lawsuit judgments against nursing homes were unusually high. As the situations in Florida and Texas worsened, insurers spread their losses to the rest of the country. Nursing homes in Alabama, Arkansas, Georgia, Mississippi, and West Virginia all experienced liability cost increases of more than 30% in 2001.

Eventually, nursing home liability insurance became unavailable at any cost in Florida and Texas. Elsewhere in the United States, according to an actuarial study commissioned by AHCA from Aon Risk Management, the average annual cost of providing liability coverage for a single long-term care bed had soared by 2003 to literally 10 times the cost of insurance in 1990. The annual premiums for liability insurance for 10 nursing home beds in 2003 equaled the annual salary of a nursing home aide. Some of the increased reimbursements that long-term care facilities received for quality upgrades were diverted to paying the skyrocketing rise in insurance costs.

Researchers at the National Conference of State Legislatures have determined that at least part of the increased cost for nursing home liability insurance results from change in the frequency and costs of civil lawsuits. After 1995, the number of claims against nursing homes increased dramatically, in part because of the rise of Internet advertising by attorneys specializing in medical malpractice cases. In addition, these legal specialists were able to win large jury awards against long-term care facilities for pain and suffering and also assessed "punitive" damages. Until the 1990s, such awards had been relatively rare in the nursing home field.

Ensign's focus on the liability issue probably is influenced by the fact that his home state of Nevada has been affected by changes in healthcare liability insurance. At one point, the surgical trauma centers in Las Vegas, Nevada's largest city, were forced to shut their doors because they were unable to purchase liability insurance at any price. Opponents have argued, however, that the problem results from inaction among state insurance commissions and state legislatures. Florida and Texas, the first states to feel the full effects of the nursing home

liability insurance crisis, began to implement remedies as early as 2001. The Florida legislature enacted numerous legal and tort reforms, including a two-year statute of limitations and limits on punitive damages. Texas passed legislation that allows nursing homes to be covered by the state-run joint underwriting association and requires insurance rates for nonprofit nursing homes to be discounted by 30%. By 2004, more than 100 bills related to nursing home liability insurance had been introduced in more than two dozen states, but conflict between supporters of trial lawyers and supporters of the insurance industry blocked passage of real reform in most of the legislatures.

Ensign insists that the healthcare liability insurance issue "is a national problem and it requires an immediate national solution." His justification is that the federal government now pays 60% of all medical expenses via Medicare, Medicaid, and the Department of Veterans Affairs. Some Democrats, however, have pointed to Ensign's rhetoric about the legal profession as a better explanation for his crusade. When Ensign says, "we have an overly litigious society where unscrupulous trial lawyers basically say bring your Rolodex and we will find out who we can sue," he is effectively attacking a profession that overwhelmingly supports Democratic candidates. Opponents of S.22 note that the bill contains no clause that requires insurers to pass on the benefits of tort reform to the healthcare industry, nor does it anticipate any other change in how the insurance industry operates.

Even so, although opponents of legislation similar to S.22 have managed to prevent its passage by the U.S. Senate in the past, the chances are good that Ensign's Medical Care Access Protection Act will pass this year. By broadening its application to include a wide range of healthcare providers, Ensign has brought a large number of political allies on board. Perhaps most important, although President Bush has mentioned tort reform as a healthcare objective of his administration, this legislation is perceived as "belonging" to Ensign.

All of this explains why a bill that could lower some costs while showily punishing the "predators" of the legal profession has a good chance in a year when no one expects much else from Washington on healthcare.

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