Code blue

Lawmakers call for an emergency
checkup on Illinois’ medical liability law

by Bethany Carson

Heart rates are up at the Capitol over what some call a “crisis” in the state’s health care system.

Lawmakers from both sides of the political aisle say medical malpractice insurance costs are rising at alarming rates, driving doctors out of state and leaving patients with fewer options. So far, more than 100 measures on this issue are in play, and legislators from both chambers have begun meeting to negotiate a bipartisan proposal that might win approval in this politically charged election year.

But the prognosis for major reform isn’t good. A triad of well-financed interest groups representing physicians, insurance providers and trial lawyers has yet to agree on a diagnosis, let alone a treatment. Lawyers blame insurance companies for the increasing cost of malpractice coverage. Insurance companies blame lawyers for filing too many malpractice suits that boost premiums. And doctors blame both. Legislators are stuck in the middle.

They’ve been here before. Generally, Democrats oppose limits on malpractice awards, while Republicans support them. And the Illinois Supreme Court has twice struck down legislators’ attempts to impose limits on awards patients can receive for noneconomic reasons, such as pain and suffering.

So, because legislators want to accomplish some reform this session, they say caps are temporarily off the table in the Democrat-controlled General Assembly. Instead, a group of lawmakers from the Chicago region and some downstate areas, who say the problems have grown more acute this year, are pushing changes aimed at easing the legal and financial pressures on doctors. They would limit the time patients have to file claims and create a fund to help cover malpractice costs. The governor, too, is expected to announce a plan before the legislative session’s scheduled adjournment at the end of May.

Meanwhile, legislators from across the state are getting an earful. While the price of policies that cover doctors when patients sue has been rising more sharply in key counties — Will, Cook, St. Clair and Madison — doctors in other counties are beginning to feel the pinch. And they’ve asked their legislators to make changes, or risk losing medical services.

A bipartisan coalition of senators has reacted by proposing some reforms, including limitations on lawsuits that tend to drive up the cost of insurance. They’ll have their hands full getting any agreement, though. The complex cause-and-effect relationship of the malpractice system and the cross-party connections of the affected interest groups stymies a cut-and-dried solution. Yet one key negotiator predicts that House and Senate leaders will allow this year’s debate to unfold on the floor before lawmakers leave for the summer.

The heart of this issue remains access to health care, says Sen. Kirk Dillard, a Hinsdale Republican. And, by this measure, doctors argue Illinois fares poorly. The American Medical Association cites this state as one of 19, including Kentucky, Missouri and Ohio, that face what they term a medical crisis. The contributing factors include a decline in the availability of medical specialists, stemming from the high cost of malpractice insurance, and an insufficient number of insurers.

Doctors who operate on hearts or brains, and those who deliver babies, are among the hardest hit by rising insurance costs, especially if they practice in Cook and Will counties in the northeast region of the state or in St. Clair and Madison counties in the Metro East area across from St. Louis. The premiums doctors in these regions pay have skyrocketed in the past two years, and insurance companies have been less likely to cover those considered to be at high risk of being sued.

Ten insurance companies offer malpractice coverage throughout the state, but only one covers all types of doctors, according to Dr. William Kobler, president of the Illinois State Medical Society.

Fewer insurance companies translates into higher costs for malpractice insurance. Dillard calls these costs “outrageous” and says they play a part in decreasing access to treatment for head trauma in the Chicago area.

Farther south in Carbondale, a neurosurgery team will leave in the next few months. Dr. Theo Mellion and Dr. Sumeer Lal of Neurological Associates of Southern Illinois are moving their practice to another state with a “more physician-friendly environment,” they wrote in an open letter announcing the move.

“There’s no head trauma being done south of Springfield,” says George Maroney, hospital administrator for Southern Illinois Healthcare. “It’s a step backward for this medical community because it took us a long time before we could develop this program.”

The Illinois Medical Society says the problem is no longer specific to a single area of practice, either, meaning more legislators are noticing the red alert for more doctors in their regions. “This whole thing is a deck of cards,” Maroney says. “If the governor and the General Assembly do not solve this problem, you have a rippling effect of physicians leaving the larger communities and then impacting the smaller communities.”

But no one knows for sure how many doctors statewide have stopped practicing in Illinois. Data provided by the state contradicts anecdotal reports.

But that is partially because the Illinois Department of Professional Regulation does not track migration of doctors. Physicians can hold Illinois licenses but practice elsewhere, or not at all. In December, the agency counted 39,037 licensed doctors, about 1,000 more than six months earlier, when it counted 37,925.

Despite the official numbers, lawmakers are listening to the warnings from individual doctors. “It’s just devastating if something isn’t done this year,” says Sen. David Luechtefeld, a Republican from Okawville. “I think it’s the biggest problem in our district down south this year.” He represents Washington County, which neighbors St. Clair County to the west, where doctors are leaving because insurance rates are among the highest in the state. “Hospitals are in bad shape if we don’t do something this year.”

When the hospitals suffer, the pain trickles down to general practitioners, according to Maroney. He says when specialists leave a major medical center, the immediate effect is that general physicians no longer have somewhere close to send their critical patients. “In the small communities, the physicians will have to start sending their patients to St. Louis,” he says.

While downstate legislators say their doctors must send patients to out-of-state specialists, Chicago legislators say their doctors flee to Indiana, Wisconsin or other border states to take advantage of lower insurance costs. Thus, a Democrat from northern Illinois speaks with the same urgency as southern Illinois Republicans. “I think it’s time for something,” says Sen. Susan Garrett of Lake Forest. “We, as legislators, are on the front line. We’re in the trenches. We’re hearing from our constituents.”

She says she has heard from more than 300 physicians who attended a public hearing in the Chicago suburbs on Valentine’s Day. “They’re very, very frustrated, and they’re angry, and understandably so,” she says.

The doctors’ frustration spreads like a virus. Luechtefeld adds that the decline in the medical industry feeds regional economic problems. “When the doctors leave, an awful lot of jobs are lost. It’s devastating to the economy. Most of the hospitals have a team of two or three heart surgeons. For every procedure, they have about three or four nurses; they have anesthesiologists; they have secretaries. When those two doctors leave, very likely 20 people will be affected in some way or even lose their jobs. And then multiply that when 50 doctors leave.”

This trend isn’t unique to Illinois. Nationwide, obstetricians and gynecologists experienced a 22 percent increase in insurance premiums between 2000 and 2002, according to the Congressional Budget Office’s 2004 report. On average, premiums for all physicians nationwide rose about 15 percent in the same period.

While Illinois mirrors these statistics, some counties saw rates spike much higher than the national average.

Malpractice liability insurance for obstetricians and neurosurgeons increased in some cases by more than 60 percent in 2003, according to ISMIE Mutual, the largest such insurer in Illinois.

Companies charge more to insure neurosurgeons and obstetricians in Cook, Will, St. Clair, and Madison counties than in other areas of the state. Doctors who practice in those counties are considered high-risk because they are most likely to get sued and, if they lose, pay more for their patients’ losses. Thus, ISMIE’s 36 percent increase in obstetricians’ insurance rates increased those doctors’ premiums by $37,000. They paid $103,000 in 2002 and $140,000 a year later.

Obstetricians in rural Illinois saw the amount they pay for insurance increase by 35 percent, from $57,000 in 2002 to $77,000 in 2003. Although rural specialists practice outside of the high-risk counties, they pay higher premiums because so many things can go wrong when delivering a baby.

Brain surgeons who buy coverage from ISMIE, similarly saw a 36 percent increase, from $168,000 to $228,000 in the high-risk counties. Rural brain surgeons saw a 35 percent increase, from $93,000 to $126,000 in one year.

ISMIE raised its prices by 35 percent in July 2003, according to a summary it filed with the Illinois Department of Insurance, because that increase reflected the reality that its clients had more medical malpractice claims filed against them. ISMIE announced another 7.4 percent increase for this summer.

Almost 80 percent of such claims never result in a payment to the patient, but most still involve substantial legal expenses, according to ISMIE. The company paid $33.5 million over the last five years in verdicts, settlements and accompanying legal expenses in Madison and St. Clair counties alone, Dr. Phillip Johnson told lawmakers in December at a legislative summit sponsored by Senate Minority Leader Frank Watson. That hearing in Collinsville attracted more than 600 participants, including doctors, lawyers, representatives of insurance companies and, mostly, interested citizens, says Patty Schuh, Watson’s spokeswoman. They were expecting a 100-person crowd. “This is truly a grass-roots effort,” she says. “It is regular citizens driving the action.”

Johnson, a family doctor in Litchfield and a member of the ISMIE Mutual board of directors, also told lawmakers claims that do make it to the courtroom are likely to cost more money than in past years.

One particularly high-cost and high-profile case was detailed in a Chicago Sun-Times report in February. The newspaper wrote that one family received $30 million for the 1998 death of their newborn son. Family members alleged the medical staff was negligent and the jury agreed.

ISMIE argues its average payout per claim increased nearly 60 percent from $385,000 in 2001 to $612,000 in 2003.

Nationwide, the average payout has grown by about 8 percent annually, from $95,000 in 1986 to $320,000 in 2002, according to the Congressional Budget Office’s January 2004 report. The cost of defending a malpractice suit also more than tripled, from $8,000 in 1986 to about $27,000 in 2002, the report says.

Johnson told lawmakers the only way to cover rising legal costs is to increase insurance premiums for medical providers.

For their part, attorneys argue the insurance industry tells a lopsided story. “The increases in premiums are unjustified if you try to pin it all on a judicial system or verdicts and settlements, because the numbers just don’t add up,” says Mike Schostok, president of the Illinois Trial Lawyers Association. While he agrees the cost of hiring experts to defend malpractice cases has increased, he says that’s part of a natural cycle of economic activity.

Insurance companies base their premiums on how much they expect to pay in future claims and the number of claims filed in previous years. Because it can take as long as five years for an insurance company to pay a claim, insurers rely on income earned from investing the money they receive from premium payments. The amount they make from their investments has declined nationwide for the past few years, the Congressional Budget Office report concludes, causing companies to set higher insurance rates to compensate.

Further, competition between insurance companies influences their prices. When more companies offer insurance in one area, they keep their prices lower to attract more customers. Less competition means insurers can charge more. For example, PIC WISCONSIN, a major Illinois malpractice insurer, left the Illinois market in February. Maroney of Southern Illinois Health- care says PIC WISCONSIN insured about 30 percent of his medical staff, including the two Carbondale neurosurgeons who announced their departure last month. Now, nearly a third of his staff needs to find new insurance, he says. “They don’t have too many options.” When the element of competition ceases, then the remaining companies can charge not-so-competitive rates, he says. According to the federal report, though, prices start to level out again when the remaining insurance companies pick up the doctors who lost their coverage.

Trial lawyers are predicting a business recovery and a resultant drop in insurance rates. “The worst is over, and I’ve heard that from very informed people in the insurance industry,” Schostok says. “There will be more companies probably coming into the market, which will result in increased opportunities for doctors to find insurance coverage.”Maroney says he sees no indication of that happening anytime soon.

Some answers should be available when the state insurance department presents its annual report to the General Assembly this month. “Our goal is always to increase the number of writers because the more insurance companies writing, the better off the consumer is,” says Deirdre Manna, acting director of insurance.

Politics could contaminate the negotiations. Interest groups support legislators’ campaigns in hopes of building alliances, and trial lawyers traditionally contribute to Democrats, while doctors most often contribute to Republicans.

In the midst of an election year, legislators naturally are drawn to a deep well of cash, as revealed in the data compiled by political scientist Kent Redfield at the University of Illinois at Springfield. In the 2001-2002 election year, the Illinois State Medical Society donated $1,328,422 to campaigns. Of that, Republicans received $790,350, while Democrats received $538,071. The Illinois Trial Lawyers Association, on the other hand, donated more to Democrats than to Republicans. That group shelled out $840,265 in total campaign contributions. Democrats received $815,015, Republicans $25,250.

Maroney says both parties will have to cooperate to arrive at a solution. “Democrats and Republicans have to start supporting one group — it’s not the doctors; it’s not the lawyers — it’s the people. All these people are potential patients.”

Still, lawmakers will have to accommodate these powerful interest groups and their constituents, as well as meet the need to hammer out good policy.

They’ve tried before. In 1976, the last time Democrats controlled both legislative chambers and the governor’s office, Republicans managed to get caps through the General Assembly, only to have the state Supreme Court rule that the $500,000 cap was “arbitrary” and discriminated against “the most seriously injured victims.” In 1995, when Republicans controlled both chambers and Jim Edgar was the Republican governor, another cap was approved. It, too, was struck down by the state’s high court, which ruled that the arbitrary, one-size-fits-all $500,000 cap would not only discriminate “in favor of a select group,” but also prohibit judges from considering circumstances in individual cases.

Nevertheless, policy-makers are pressing the legal system again, in Illinois and elsewhere. Democrats in the U.S. Senate recently debated limiting awards for pain and suffering to $250,000. Though the federal government hasn’t succeeded in approving such caps, 34 states have proposed reforms in malpractice liability, according to the National Conference of State Legislatures, a bipartisan research organization. Of those, 11 states — Arkansas, Florida, Idaho, Montana, Nevada, New Hampshire, New York, Ohio, Texas, Utah and West Virginia — enacted laws concerning liability for damage awards during last year’s legislative session.

And, according to the U.S. Department of Health and Human Services, 24 states, including Indiana and Wisconsin, already limit jury awards for pain and suffering, which Illinois lawmakers say entices doctors and insurance companies to cross state lines.

Other states have addressed reforms in the legal system without issuing caps. Arkansas, for instance, specifies that experts who testify against doctors must practice in the same specialty area as the doctor under scrutiny. Ohio limits the time after the alleged injury that a person can file a claim seeking awards for pain and suffering.

Illinois lawmakers are borrowing some of these ideas, such as specifying who qualifies as an expert witness and limiting the amount of time a person has to file a claim. A coalition of senators, including Belleville Democrat James Clayborne, Chicago Democrat John Cullerton, Luechtefeld and Dillard propose to target the state’s legal system. Across the Capitol rotunda, House Republican Leader Tom Cross of Oswego has introduced similar legislation.

Dillard also wants to better equip juries. “The jury is entitled to be informed that the plaintiff will not have to pay income taxes on these awards, and I believe you would see a reduction in these awards if the jury knew they wouldn’t have to pay income tax.”

The most controversial proposal for reform has always been limits on awards for pain and suffering. Proponents cite California, which has been regulating the legal system and the insurance industry — and imposing $250,000 caps on pain and suffering — since 1975. California’s malpractice insurance rates also are the most stable and among the lowest in the nation, according to the American Medical Association.

Yet Illinois lawmakers assume the chances for approval of a cap are slim this session.

Doctors are disappointed, but they say immediate reform without caps is better than nothing. “[Caps are] our number one goal at the state and federal level, but until we change the ideological status of the [Illinois] Supreme Court, the access problem is our main focus,” says Dr. Kobler of the State Medical Society. “In some ways, it’s a good thing to be able to bring this up in an election year. We need to have people in the legislature who understand what the problem is. It’s not doctors against lawyers. It’s about people’s access to health care.”

While negotiators working on the bipartisan proposal want to target the state’s legal system, they also recommend reforming the insurance and medical industries. Sen. Dillard and Rep. Tom Cross, for instance, would require expert witnesses to be in the same practice as the doctor who is being sued.

Sens. Garrett, a Democrat, and Watson, a Republican, support restricting the venue where patients can file their claims. Lawyers and patients are attracted to Cook, Will, St. Clair and Madison counties because the courts in those counties have reputations for granting generous malpractice jury awards. Restrictions might help stabilize insurance rates in those high-risk counties, they say.

Cross and Dillard also suggest ways to limit so-called frivolous suits: A patient’s claim against a doctor would have to include a letter signed by a qualified health care professional who could certify its legitimacy. Doctors and lawyers support that provision, but lawyers also prescribe their own treatment: Reform the state’s insurance department. Schostok of the trial lawyers group would, for instance, make the agency accountable for setting and publicizing insurance rate increases.

Garrett agrees. She says insurance companies should have to get approval from the department if they want to increase their rates by more than 10 percent. “The insurance providers need to justify why their rate increases are at that level,” she says. “It doesn’t mean they aren’t able to increase their rates, but it just means that they have to be more accountable to the Department of Insurance and, ultimately, to the physicians and taxpayers.”

And if insurance companies do increase their rates by any level, Garrett wants to extend the amount of time doctors have to switch companies. They currently have 30 days; she wants to give them 60 so they can shop around for more competitive rates. To help the doctors know their choices, she wants to require the department to list all rates and contact information for insurers throughout the state.

And Garrett believes the state should help doctors form relationships with their patients, making them less likely to sue for malpractice. She suggests risk management courses so patients better understand the risks involved in medical procedures.

Cross, meanwhile, suggests providing grants to help doctors pay for malpractice insurance. Lawmakers from both parties and both chambers have agreed to continue discussions. Garrett says the need for change overrides any controversy. “The insurance industry’s not happy. The trial attorneys probably aren’t thrilled with me. The state agency, the Department of Insurance, probably would rather I not bring up this subject matter. So I understand the risk that’s involved in that,” she says. “On the other hand, I think this is the most important issue facing our state today. I couldn’t in good faith be doing my job without addressing this.”

Cullerton, who has been leading the discussions, says, “We’re going to get people to sit down and rationally describe the problem. There’s a lot of finger-pointing. We’ll get the real facts and see if we can alleviate the immediate problem. After you say caps are off the table, everything is on the table.”

Maroney of Southern Illinois Healthcare says at the least lawmakers should find a way this spring to control insurance costs and reduce the number of malpractice claims filed. “Premiums are the number one concern, but just as much as premiums is the cloud of fear that is literally driving physicians out of this state,” he says. “We’re basically pleading with our physicians to give it one more year and have faith in the system that our state can solve this problem.”

Cullerton says he expects support from Senate President Emil Jones and House Speaker Michael Madigan before the spring session is over. “Believe me, there’s going to be some progress.”

Illinois Issues, April 2004

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