States take the lead on tort reform. (Frontlines).

Long-term care facilities, along with other healthcare providers, are facing a major crisis in the costs of insurance for malpractice and related liability. According to data collected by Aon, a risk-management firm, the nationwide costs of insurance have more than doubled within the past five years. In some areas, such as southeast Pennsylvania, annual increases in liability insurance premiums of 40% are the rule.

Although it could be difficult to believe, other health specialties might be coping with the liability crisis even more poorly than long-term care. Average jury awards for birth outcomes allegedly affected by medical errors exceed $2 million; the size of these awards allegedly forced many hospitals and group practices in Pennsylvania and Florida to close down obstetrical units. Meanwhile, the only trauma center in Las Vegas, Nevada, shut down after private physicians working in the facility were unable to secure affordable insurance. In Mississippi, where the state enacted a cap on liability insurance premiums, insurers withdrew from the market, leaving clinicians and facilities without access to coverage. Nursing homes and other long-term care facilities are just beginning to experience similar horror stories, and it has been estimated that their insurance costs have jumped from 5% to more than 10% of their annual revenue, on average.

Everyone agrees that the premiums reflect higher business costs incurred by the insurance companies. Just what the key costs are behind all this, though, are less than clear. Spokesmen for the insurance industry place the blame on juries who award multimillion dollar payments to compensate patients and their family members for pain, suffering and other noneconomic effects of alleged malpractice. According to this theory, massive jury awards affect even cases settled out of court because insurers are willing to pay more in settlements rather than risk letting a jury "punish" their clients with huge cash penalties. State trial lawyer associations respond that the costs incurred by insurance companies mostly reflect losses suffered in their investment portfolios. Insurance companies previously had been able to keep their malpractice premiums artificially low by investing in the skyrocketing stock markets, so the story goes, but since those markets went sour, insurers have been forced to charge the "real" cost o f paying for malpractice awards.

Not surprisingly, all of this is being thrashed out in the legislative arena. Republicans generally accept the premise that reckless juries and greedy trial lawyers are at the root of the liability crisis. President George W. Bush has called for limits on how much money juries can award for damages in healthcare suits; 10 years ago, his father called on the states to make similar changes. In April, Rep. Jim Greenwood, a Republican from the hard-hit Philadelphia area, responded by introducing H.R. 4600--the Help Efficient, Accessible, Low Cost, Timely Health Care Act of 2002. The so-called HEALTH Act would prohibit patients and family members from suing a healthcare provider years after the alleged malpractice and would limit the amount of noneconomic damages that could be awarded by a jury. It also would allow courts making awards to consider how much money had been paid to the plaintiffs from other sources. In addition, Rep. Greenwood's bill prohibits the award of punitive damages for use of products that c omply with FDA standards.

The debate over these types of changes splits on partisan lines. Trial lawyers and their associations are major contributors to the Democratic Party, and Democratic legislators' positions on liability tend to reflect these lawyers' interests. The Democrats cite the public interest by arguing that any legislation that limits the right to sue healthcare providers removes the most important protection that patients have against inept care.

As a result of this political divisiveness, nearly all of the House members who joined Rep. Greenwood as cosponsors of H.R. 4600 are Republicans. Four of the six Democratic cosponsors are "Blue Dogs"--rural congressmen who vote like their Republican colleagues. The only urban Democrat who supported the legislation, inner-city Philadelphia's Chaka Fattah, withdrew her cosponsorship of H.R. 4200 under pressure from Democratic colleagues.

The history of malpractice insurance in California does offer hard evidence that setting limits on jury behavior can make a real difference. In 1975, California experienced the first great malpractice liability crisis, with insurers increasing premiums and pulling out of many markets. The California legislature responded by passing the statewide Medical Injury Compensation Reform Act