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‹ FEATURED DISCUSSION

September 27, 2004

The Kerry-Edwards plan: soundbites, but no reform

By Ted Frank

Dr. Chusid repeatedly claims that the Kerry-Edwards plan will supposedly "[r]educ[e] the risk of a physician facing a frivolous suit." But he refuses to say precisely what the candidates mean by "frivolous suit." Dr. Chusid tries to dodge the question by calling it one of "minutiae." But this is not trivia: it is the centerpiece of the issue, and is the difference between real reform and fake reform. Does the Kerry-Edwards plan address the lawsuits that doctors are most concerned about, or is it an empty soundbite to neutralize an issue where the two have a poor track record?

As I discussed earlier, when laypeople speak of frivolous malpractice suits, they are talking about the meritless suits that cost doctors money to defend and, worse, often unfairly tar doctors with malpractice verdicts through pseudo-scientific expert testimony and demagogic second-guessing; caps will reduce the profitability of such tactics, and thus reduce the incentive to engage in such suits. Dr. Chusid's counter-argument--that caps can only have an effect on the 2% of plaintiffs who reach a favorable verdict--relies on the assumption that caps would have no effect on doctors' ability to settle malpractice cases. But, in fact, under the current system, it is the threat of a large jackpot judgment that forces insurers to settle a meritless case. It's clear that caps remove this extortionate aspect of the settlement value of the case. Only if one posits that plaintiffs' lawyers are irrational will one be able to claim that caps will not reduce malpractice litigation. The fact that the plaintiffs' bar is feeding millions to politicians and advertising to stop the trend of caps is evidence that the plaintiffs' bar knows the adverse effect caps will have on Trial Lawyers Inc., and the benefits that will redound to the rest of us.

Still, Dr. Chusid insists that the Kerry-Edwards plan will stop "frivolous lawsuits." If this is so, and it can be done without the occasional problem caused by caps, perhaps it is worth a try. But the problem is the disconnect between the colloquial and the legal meaning of the word "frivolous." A case can be completely meritless, but not frivolous under the law, so long as it was not brought for purposes of harassment or other "improper purpose." So are the "frivolous lawsuits" that the Kerry-Edwards plan purports to address something meaningful, or is the use of the term a narrow equivocation? Dr. Chusid's refusal to answer the question perhaps gives a hint. Fortunately, we don't need to guess very hard. Senator Edwards co-sponsored a medical-malpractice "reform" bill, S. 1374, that addressed this very question. To qualify as "frivolous," a lawsuit must

(1) be presented for an "improper purpose"; and
(2) neither be "warranted by existing law" nor by a good-faith "argument for the . . . modification . . . of existing law"; and
(3) have no evidentiary support nor reasonable assumptions "based on a lack of information or belief."

Clearly, this is not the category of cases that is causing a malpractice crisis and runaway awards. The number of medical malpractice cases that are "frivolous" under this restrictive definition is extraordinarily low; the number of cases that Kerry-Edwards consider "frivolous" that are in the system today that are not addressed by existing laws is close to, if not precisely, zero. The Kerry-Edwards plan's attack on "frivolous litigation," unless substantially different than the legislation previously co-sponsored by Edwards, will do nothing to reduce malpractice litigation, much less the malpractice litigation that most concerns doctors.

But the Kerry-Edwards plan's reform is even more illusory than that. Recall that one of the planks of the plan is to require "certificates of merit" that a qualified medical specialist has approved a case. This is a low bar: to survive a summary judgment motion, a plaintiff needs to present expert medical testimony of malpractice. Moving the requirement earlier in the process does nothing to prevent attorneys from continuing to hire professional testifiers. Moreover, the "certificate of merit" effectively inoculates attorneys from any finding that they've filed a "frivolous" suit under the S. 1374 definition of "frivolous"--virtually the only exceptions would be presenting fake evidence to the "qualified medical specialist" or a forged certificate of merit. The "three strikes and you're out" plank of the Kerry-Edwards plan becomes essentially toothless, imposing sanctions on only the most foolish and incompetent of lawyers. The lawyer who wins $23 million by persuading a jury to adopt the fiction that cerebral palsy is caused by failure to perform a C-section remains unaffected.

The Kerry-Edwards plan announces that it will bar punitive damages "unless intentional misconduct, gross negligence, or reckless indifference to life can be established." Unfortunately for those who wish to claim that this is tort reform, in just about every state punitive damages require a showing of conduct that is intentional, grossly negligent, or reckless--and some states require a greater showing than that. It is simply not true, as Dr. Chusid claims, that this proposal will resolve "most" punitive damages.

The Kerry-Edwards plan seeks to repeal the McCarran-Ferguson Act. Why this is a short-sighted idea is far too complex to be explored in this space. But the concept is based on the myth that the malpractice insurance problem is a function of evil insurance companies rather than the billions insurance companies are paying to lawyers because of the malpractice litigation crisis. The main effect on malpractice insurance by repealing McCarran-Ferguson would be to "undermine the risk sharing industry's ability to classify and share risk", increasing the expected cost of insurance, and making health care more expensive for everyone.

We have no details on what the Kerry-Edwards plan mean by "non-binding arbitration." But doctors have reason to be wary. As Walter Olson noted, one Democratic proposal for non-binding arbitration in the House of Representatives, H.R. 1219,

turned out on inspection to include a kicker that would have pre-empted and invalidated all forms of alternative dispute resolution other than mediation--including arbitration programs that work well in some states in forestalling litigation--as well as all contractual barriers to suit.

Even if a party unambiguously won the arbitration, the losing party could reject it and proceed to trial--and exclude the findings of the ADR from evidence at trial. State taxpayers would likely end up footing the bill for the fruitless mediation because of the unfunded mandate that the mediation be "affordable" and "reasonably convenient." Such a bill would unambiguously make the malpractice litigation crisis worse. Recall that the benefit of caps was that it reduced settlement pressure on doctors; by reducing settlement pressure, one reduces the number of lawsuits. In contrast, Kerry-Edwards, by forcing doctors to go through an additional level of litigation through mediation, while potential damages remain uncapped, makes it more expensive to litigate, which increases settlement pressure. The prospect of increased settlement pressure will increase the number of malpractice lawsuits, and the problem will get worse.

The late-night-comedy stereotype is that Bush is shallow compared to Kerry as a candidate of substance. But when it comes to medical malpractice reform, it is Kerry who is resorting to what is at best an empty soundbite of "stopping frivolous litigation" and at worst a counter-productive proposal that will benefit noone but attorneys. The Bush administration has proposed a concrete plan that will reduce malpractice insurance rates, end the malpractice lawsuit lottery, reduce unfair malpractice litigation, and, by thus decreasing the number of good doctors forced to leave practice, improve medical access for the public at large.

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