Senate Health, Education, Labor and Pensions Committee and Senate Judiciary Committee Hold Joint Hearing on Role of Litigation in Patient Access to Ca

EDWARDS:

Thank you, Mr. Chairman.

Ms. Peel, welcome. We're glad to have my neighbor from Raleigh here testifying today. I appreciate you being here.

Let me go to the question just raised by Senator Alexander, because I think we have to be very careful not to have a complete disconnect about what we're talking about. The president likes to use the term, frivolous lawsuits. I think it's important to distinguish between frivolous lawsuits and the remedy that's being proposed here.

Frivolous lawsuits are lawsuits that should never have been brought, that have no merit, where the contentions of the person bringing the case should never have been in the court system. What the president is proposing is that we put a limit on the most serious cases, because what he's suggesting is that the way to curb frivolous lawsuits is to limit the rights of the most seriously injured, because they are the only people affected by non-economic damage caps, which is what we're talking about.

Let me just say to begin with I think that talking about the lawsuit lottery is not productive. We have people, including some people in this audience, people with kids, that have been paralyzed for life, children who are blinded, who I represented for 20 years, and those families, I promise you, don't think they've won any lottery.

EDWARDS:

They're faced with very, very difficult circumstances, not for a year, not for five years, but for 60, 70, 75 years.
So I think that's not a good way for us to talk about this issue.

I do believe that the doctors have a serious complaint. I think the question is what is it that's causing this problem, and there is a difference between cases that should never have been brought and cases where people are very—in many cases, kids, women, senior citizens—have been very seriously injured, because the cap on non-economic damages for people who earn a good living, the senators at this table and others—economic damages are not being capped.

So if you make a good living, and you've had a huge economic loss as a result, you're going to have—your recovery will be just fine. It's people like Ms. McDougal, children—these caps on non-economic damages hit children and seniors and women like a laser, particularly, for example, a stay-at-home mom who's not working and, as a result, has no lost wages or what's commonly talked about as economic damages.

So I think we have to be very careful about distinguishing between frivolous lawsuits on the one hand, cases that should never have been brought—and I was interested in Senator Dodd's idea about dealing with doctors on an individual loss basis—and, secondly, cases of people who are very badly hurt, in many cases, kids, and putting a limit on their rights. Those two things have nothing to do with one another.

Mr. Smarr, I want to ask you a couple of questions, if I can. You were testifying about MICRA and whether MICRA has had an effect or whether it's Prop. 103 that had an effect in California. I mean, I've got from the state insurance commissioner the actual numbers in California as opposed to your chart.

In 1976, the insurance premiums paid in California, the year that MICRA was passed -- $228 million; in 1988, $663 million, an average increase of 24 percent. So over the first 12 years that MICRA was in place, there was an average increase of 24 percent.

In 1988, Prop. 103 was passed. Between 1988 and 2001, in other words, for the 13 years after passing Prop. 103, insurance premiums went from $663 million to $647 million. They actually went down.

So for the first 12 years that MICRA was the law of California, insurance premiums went up 24 percent a year. I doubt that the doctors think that's OK. And after Prop. 103 was passed, the insurance premiums actually came down over the course of the next 13 years.

Mr. Angoff, is that your understanding of roughly what happened?

ANGOFF:

Yes, it is, Senator.

EDWARDS:

On the issue of cases that shouldn't be brought, so- called frivolous lawsuits, in my state, as in your state, Mr. Angoff, we have a requirement of what's called an affidavit of merit. And the idea is that before a case comes to court and gets involved in the court system, we make the lawyers involved thoroughly investigate the case, have the case, in fact, reviewed by an independent expert in the field to make sure the cases that are actually getting into the court system are cases that have merit.

Now, I know that's not a nationwide law. That law only exists in selected places around the country. It exists in North Carolina. It apparently exists in Missouri. I think, actually, it's a very good idea, because we want cases that are going to be in the court system, taking up the courts' time, taking up costs—Commissioner, you talked about some of the costs associated with defensive cases, and those costs are legitimate and acceptable so long as they're cases that are serious and ought to be in the court system and should have been brought.

On the other hand, if they're cases that shouldn't be in the court system, then we would like to find a mechanism to make sure that the cases that get into the court system are actually meritorious and are serious cases, like the cases that I described earlier. And whether this is the specific mechanism—I think it's actually a good one, but if there's another better way to do that, we should talk about that, because we don't—I can only speak for myself. I did this kind of work for 20 years, almost 20 years, and I did this myself, anyway.

But it seems to me that we want to make sure that people who are bringing cases have serious, legitimate cases that belong in the court system, and some screening mechanism to make sure that that's true, I think, is reasonable. I don't think it's reasonable—and I agree with Senator Dodd about this—to say to women and kids and senior citizens who have been paralyzed for life or blinded, "We're going to take away your rights."

First of all, I don't think there's any cause and effect. I think this testimony today shows absolutely no cause and effect between those two.

And I do, I might add, have a little trouble—and Senator Kennedy asked questions about this—accepting the argument which I hear being made that the fact that the malpractice crisis in the '80s and this malpractice crisis, which is very real for the doctors—no question in my mind about that—have no relation to the fact—it's just a pure coincidence—that those happened to be times that the market was doing poorly. It's difficult for me—and I hear all your use of numbers, but it's just difficult for me to accept that those things have nothing to do with one another.

GREGG:

If the senator wouldn't mind concluding his remarks, we do have others.

EDWARDS:

I will conclude there. Let me just say one last thing. I do think that we need to do something about the problems that the doctors are facing. I think these insurance premium increases are serious.

I think the place that I differ with some of the witnesses, at least, is about addressing what the cause of those problems are. And if we can keep cases that shouldn't be in the system out of the system, I think that's a very good thing, and we should figure out a way to do that. At the same time, I still believe that there is a relationship between what's happening in the markets and investment income, which Senator Kennedy asked about, and these premium increases, which clearly are much more than even what you're contending are the increases in payouts.

Thank you, Mr. Chairman.