Category: Blog

Proponents of tort reform are considering asking Congress to revive the Republican-created Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act, which died in committee in 2011. (GovTrack)  Supporters say that the Affordable Care Act (ACA) did not go far enough to reform the tort system.  (Politico)  The revived HEALTH Act, among other things, would institute a $250,000 federal cap on damages gotten from medical malpractice cases.  A federal cap would please insurance companies and many doctors because it would decrease their liability to pay when patients successfully bring a civil action.  Patient advocacy groups and many lawyers would be unhappy because such a cap would prevent patients from being able to collect high sums of money for emotional claims and would hurt the bottom lines for many medical malpractice lawyers.    Some opponents to caps on damages even suggest that large jury payouts may help make patients safer by holding doctors and healthcare facilities responsible for their care.  (Forbes)

Aside from a $50 million total allowance to experiment with alternatives to the medical liability system on the state level, the ACA does not make any change or reform to the existing tort system. (Politico)  In spite of losing the battle over tort reform in ACA negotiations, proponents of tort reform have once again called for a $250,000 federal cap on noneconomic damages and shorter statutes of limitation.  (AMA)  If supporters of caps can convince the Republican Party to revisit the HEALTH Act, tort reform could become a major political issue in the near future.  Regardless of whether a federal cap is instituted or not, the implementation of the ACA will change the way the healthcare system works as a whole, and therefore will affect the role of litigators within the system.

So what is the future of tort reform in the medical malpractice system?  The short answer is that nobody knows—yet.  The industry is already evolving, as states enact provider liability shields, damages caps, and no-fault funds to pay victims of medical malpractice.  (Harvard)  But predictions about whether claims will increase or decrease under the ACA vary widely.  There are two irreconcilable schools of thought: those who think that the number of claims will increase as the number of people using healthcare services increases, and those who believe that fewer patients will need to bring claims because their insurance will cover their expenses.

If The Number of Claims Decreases Under the ACA: 

Medical malpractice lawyers would face challenges if the number of claims decreases.  Litigators are already forced to use profitability as a major factor when considering whether or not to take on a case.  Often, if the amount of profit predicted at the verdict is less than the amount it would take to try the case, the case is deemed not viable for trial.  The amount of realized profit from a case with a huge award may not be very much if the lawyer had to spend a lot of money to try the case.  The practice of taking the highest-paying cases in favor of lower paying ones is troubling because it leaves clients who have a potentially viable claim without options.  If the number of claims decreases, medical malpractice lawyers will have to choose their cases more carefully than ever, and choose from a potentially less profitable pool.   (CNN)

Compounding this problem is the practice of placing state caps on non-economic damages, which has grown in popularity over the last decade, is hurting the litigators who must pick and choose their cases and the clients with less profitable cases.  Along the same vein as state caps, many support the implementation of a federal damages cap.  There are many potential benefits to a federal damages cap, the most obvious being that doctors would not have to worry about going bankrupt after a medical malpractice case, and could practice medicine without that fear looming over them.  But a federal damages cap could also effectively shut down the medical malpractice tort system if it prevented attorneys from collecting money necessary to pay for the case out of the case’s award.  Unless an alternative system was put in place, this could prevent patients with small claims from securing representation at all.

If the Number of Claims Increases Under the ACA: 

Courts have faced the overcrowding of claims issue for decades, and adding 20-40 million potential new plaintiffs may compound the problem.  As one litigator points out, “The more people you have accessing medical care, the greater the potential incidence of medical mistakes in which injuries or death occur.”  (PR Newswire)

While the fear of further court backlog is valid, there are possible positive aspects of an increase in claims.  For medical malpractice litigators, more complaints mean more choice in which cases to take on.  Currently, many lawyers choose their cases based on how much money they are predicted to bring in.  Having more clients coming to litigators can be a great thing.  Lawyers who currently turn down small-profit cases could take them on if they had other larger cases whose payouts would act as a sort of ‘insurance’ policy for the smaller cases.  Cases with large profit margins could potentially pay for otherwise not-viable cases.  This gives the lawyers trying those cases more freedom to choose the cases that appeal to them both intellectually and financially, rather than relying on only one of those criteria.

Conclusion:

Of course there is the possibility that, as the ACA is implemented, the number of medical malpractice claims stays relatively unchanged.  However, the tumultuous nature of healthcare law makes it unlikely that nearly any aspect of medical care will stay the same.  As one journalist phrased it, when discussing malpractice insurers, “[a] new healthcare world is emerging, and malpractice [lawyers] are going to have to figure out a way to profitably live in it.”  (Property Casualty)

        After strong opposition from multiple states which culminated in the Supreme Court case National Federation of Independent Business v. Sebelius, health insurance exchanges of the Patient Protection and Affordable Care Act (PPACA) began implementation on October 1, 2013.  Though not without website glitches and continuing opposition from House and Senate Republicans, the White House has claimed that many people have signed up and have begun to take advantage of the benefits the PPACA has to offer. (White House)  To be clear, the PPACA is a federal law with state components, including specific state insurance exchanges.  Following the NFIB v. Sebelius, several states with legislatures controlled by Republicans opted to reject the expanded Medicaid coverage provided for by the Act.  As of September 2013, 25 states and the District of Columbia have adopted the Medicaid expansion.  (Advisory.com)  States that have not yet expanded their Medicaid programs can choose to opt in at a later time.  (CNN Money)

            What has come to light since the PPACA has been implemented is the significant impact it will have for smokers.  (Journal Times)  While one of the purposes of the PPACA exchanges is to reduce the cost of insurance across the board, not enrolling without a penalty (or having an alternate source of health insurance) is currently not an option for smokers and non-smokers alike.

            In fact, smokers in some states may have to pay as much 50% more in premiums than non-smokers if they sign up for insurance through the PPACA. (USA Today)  In some cases, the premium that smokers will pay might completely negate the subsidy for which some smoking health plan enrollees would qualify for in the marketplace. (Chicago Sun Times)  For example, if someone would qualify for a $6,000 subsidy on an insurance policy costing $8,000, his out-of-pocket cost would be $2,000.  Under the PPACA, factoring in the 50% surcharge on the original $8,000 sticker price, the same plan might cost $12,000.  However, he would still only get a $6,000 subsidy, because the subsidy cannot be applied to the smokers’ penalty.  That means he would ultimately pay $6,000 out of pocket, instead of $2,000. (Reuters)

            Smokers tend to be overrepresented in the lower income demographic, who currently rank high among the uninsured.  Incidentally, those who fall in the relatively lower income bracket are the people who would be most likely to want to buy insurance through the PPACA because they are currently uninsured.  If the goal of the Affordable Care Act is to protect the most vulnerable by offering them affordable insurance, then it seems paradoxical to dissuade smokers — who make up a fifth or more of the population — from signing up.  (Reuters)

            Organizations such as the American Lung Association favor the 50% premium surcharge, as they see it potentially providing the impetus smokers need to quit their habit.  They have characterized the premium as providing a focus on prevention in healthcare, especially as related to tobacco cessation.  (Lung.org)  It seems as though the purpose of the higher premium charges are to penalize the people who put not only themselves but others at risk by smoking, and incentivize ceases such behvarior. (USA Today)

            Regardless of the purpose of the PPACA’s treatment of smokers, Washington, D.C. and states including California, Massachusetts, Rhode Island, Connecticut, New Jersey, New York and Vermont have already taken the steps to prohibit insurers from applying a tobacco surcharge.  Many other states have lowered the maximum surcharge allowed.  (Web MD)  How this premium will impact the popularity of the PPACA with the 20% of the population comprised of smokers is yet to be seen.

Cancer patients, and patients with a wide range of other ailments, may not be receiving the best possible medicine because the required drugs are in shortage.  The prescription drug market is consistently afflicted with shortages, both minor and major.  Each shortage can affect one particular drug, or a range of drugs within a class.  In 2011, the United States experienced 251 drug shortages. In the same year, 183 (nearly 75%) of these shortages were of sterile injectable drugs, most commonly used for cancer treatments.  (FDA Factsheet)  Doctors do not have the option to prescribe the drugs they believe to work best because they are unavailable.  (The New York Times)

Manufacturing costs are a major contributor to the problem.  Sterile injectable drugs are very costly to make, and thus not many companies are willing to take the risk of setting up facilities to make them.  Further, the facilities that make such medicines are subject to many regulatory rules, including caps on drug prices. This means that, even when there is strong market demand for more product, manufacturers may not be able to afford to produce them, Plainly said, these drugs do not become more expensive when supply is at issue, as they might in an unregulated market, they become scarce. The manufacturing web is so fragile that a certain factory closing can extend a shortage for several months or even years.  (Medscape)

The prescription drug market is “characterized by sporadic shortages of individual drugs and occasional periods during which many drugs in a class are in shortage,” and few legislative or regulatory solutions have made a difference in solving the problem.  (ASPE Brief)  The Food and Drug Administration (FDA) takes measures to prevent and solve these shortages, which include working closely with drug manufacturers to help restore availability and working with other potential manufacturers to encourage them  to increase production to prevent future shortages.  (FDA.gov)  Unfortunately for FDA, its power is limited, and legislative response to this problem has been insufficient.

In 2012, Congress passed the Food and Drug Safety and Innovation Act of 2012 (FDASIA).  Title X of that Act is committed to the issue of drug shortages, and, in part, requires that manufacturers give the FDA prior notification when a shortage is predicted.  Other requirements laid out in Title X include allowances for expedited FDA review of drugs that may help alleviate a shortage, creating an FDA task force dedicated to the issue of shortages, maintaining a drug shortages list, agency analysis of manufacturing quotas (including the ability to change the quotas if a particular drug seems likely to be in shortage), and allowances for hospital repackaging of drugs so that they may be distributed in a more efficient way.  (FDASIA 2012 Summary)

Title X puts forth ideas that could potentially solve part or all of the shortages problem, but some of these measures have flaws that make them potentially useless.  FDASIA undercuts itself often.  For example, section 506D of Title X mandates the creation of a drug shortages taskforce.  The taskforce is to create a strategic plan which should include measures to increase communication between manufacturers and FDA.  The taskforce should also ensure that the Secretary of Health and Human Services considers shortages when executing regulatory actions, considers the implications shortages have on clinical trials, and examines opportunities for more manufacturing partnerships.  Given enough time, these steps could create a useful taskforce, especially if it fosters improved communications between manufacturers and the agency regulating them. But the taskforce is simply not given the time required to become fully ingrained in the market/regulation system.  Section 506(f) is a sunset provision, meaning that the structure and purpose of the taskforce are to end exactly five years after the bill was enacted.  This means that even if it begins to succeed, the taskforce will cease its operations at the end of five years.  It has, essentially, been hobbled with “lame duck” status since the very instant it was created.  Though sunset provisions are not uncommon in legislative acts, one as short as five years does not give the taskforce much time to assert itself before losing its mandate.  Generally, sunset provisions are meant to prevent outdated laws in the far future, but here the sunset provision renders the taskforce useless in a much smaller timeframe.

Despite the other contradictory measures, at least one part of the FDASIA has been proven effective: the early notice requirement.  This requirement forces manufacturers to inform FDA if they anticipate a shortage to be imminent, and has been effective in helping to coordinate efforts to curb existing shortages or even prevent them outright.  The effectiveness of the plan can be seen in the numbers: new shortages are at the lowest they have been since 2006.  (Salon)  It is possible that, given enough time, other sections of the act will prove equally or more effective, and in the future shortages will not be as much of a burden on the medical community as they currently are.  But unless new ideas and initiatives are given more time to become effective and do their jobs, drug shortages will remain a serious problem for the medical community.

HealthCare.gov, the online marketplace for enrolling in the health insurance exchanges implemented by the 2010 PPACA, has left the Obama administration with egg on its face after sputtering to life on October 1, 2013. A series of technical glitches has brought unwanted attention to an already beleaguered initiative and has precipitated calls for the resignation of Kathleen Sebelius, Secretary of the Department of Health and Human Services (USA Today).

In the first five days of operation, 9.5 million unique users visited HealthCare.gov to shop for insurance. Only 36,000 completed the enrollment process (The Hill). This high rate of failure discouraged potential users and traffic on the site dwindled.

The administration has at least been able to blame last weekend’s hiccup on Verizon, the operator of the federal data hub responsible for running the enrollment website (Politico). The hub failed on Sunday, blocking any potential enrollees in the federal exchange and those of 14 states and D.C., but returned to service on Monday morning (Reuters).

This, one of the latest in a string of technological embarrassments, came after a Friday announcement that the administration indicated it does not expect to fully resolve glitches until the end of November (Washington Post). The same announcement revealed that management of HealthCare.gov had been ceded to a private contractor, Quality Software Services Inc. (QSSI), based in Columbia, MD.

Numerous errors have prevented most would-be shoppers in the online marketplace from completing their enrollment. The administration has blamed overloading of the web portal, yet contractors involved in development of the site point to insufficient testing of the site prior to launch (AP).

Firms such as QSSI and CGI Federal also expressed bewilderment that the administration directed designers to prevent HealthCare.gov users from shopping anonymously. This means that, while users of most e-commerce sites are able to shop online and set up accounts only at check out, HealthCare.gov shoppers must create accounts before even viewing available rates. HHS indicated that users are only able to see if they are eligible for tax credits once signed up and thus shopping without an account, or “window shopping,” would prevent users from properly evaluating rates (McClatchey). The outcome was greater site traffic and overloaded servers. Limited window shopping is now available.

The Obama administration has yet to reveal any enrollment figures, though states operating their own exchanges, such as Connecticut, Kentucky, Maryland, and Washington have been forthcoming with enrollment data (ProPublica). Some analysts suspect the administration is embarrassed by modest numbers and is waiting until those improve to publish results. Obama has made no secret of his goals for the exchanges program and is undoubtedly underwhelmed by current progress towards those targets.

For a number of reasons, compiling enrollment statistics is difficult. For example, enrollment for a user is only technically complete once the first month of insurance has been paid for (Atlantic Wire). In the first two weeks of operation for the 14 state-run health care exchanges, CNN discovered that 20,994 users had signed up and paid and another 96,980 had signed up but not yet paid (CNN).

Sebelius faced questioning from the House Energy and Commerce Committee on Wednesday, though her post seems secure for the moment (CNN). She admitted frustration and stated more than once: “I am responsible for the implementation of the Affordable Care Act” (Wall Street Journal). President Obama has expressed support for the under-fire Secretary as well as confidence the problems will be resolved (Politico). Nevertheless, HealthCare.gov crashed during Sebelius’ Congressional testimony (The Hill).

Now that the budget impasse that stagnating swaths of the federal government appears to have ended (Washington Post), it is worth considering what lessons might be learned from the shutdown—in particular, the shutdown’s effect on the health of Americans.

The enforcement of food safety was diminished. The FDA conceded at the beginning of the shutdown that it would “be unable to support the majority of its food safety, nutrition, and cosmetics activities…[and] safety activities such as routine establishment inspections,…some compliance and enforcement activities, [and] monitoring of imports” (HHS Contingency Staffing Plan). Inspections of any single inspection sight are infrequent, occurring only once every few years, but that only underscores the importance of maintaining the already meager inspection regime. The USDA continued to inspect meat, poultry and egg products during the shutdown (USDA Operations Plan for Absence of Appropriations), yet inspecting the majority of food, including all imports, is the FDA’s responsibility.

Congressional wrangling (over, inter alia, a tax on medical devices) also jeopardized likely health legislation. In late September the Senate HELP committee appeared poised to pass legislation increasing regulation of compounding pharmacies (HELP), following the passage of a similar bill by the House (CBS). One year has passed since the deadly fungal meningitis outbreak that has been blamed on contaminated drugs processed by the New England Compounding Center. NECC recalled drugs because of contamination but not, as suits filed in federal court allege, in time to prevent the drugs from being administered. In Tennessee, which has a one-year statute of limitations on product and health-care liability suits, several suits have been filed. 16 of the 64 killed were treated in Tennessee (Tennessean). The outbreak injured hundreds more and publicly illuminated the lack of FDA oversight of compounding pharmacies (New York Times). The Drug Quality and Security Act would create a new class of compounders called “outsourcing facilities” and places the class under FDA’s jurisdiction (MedPage Today). Though critics characterize the impending legislation as insufficient, a distracted Congress means a delay in progress, however minimal.

Also affected by the federal slowdown was the CDC, which monitors foodborne disease. The CDC furloughed 8,754 employees even though, as CDC Director Tom Frieden tweeted, “Microbes…didn’t shut down” (Twitter). In particular, 78 of the 80 foodborne pathogen analysts at CDC were furloughed (New York Daily News). Thirty of those analysts have since been recalled to cope with an outbreak of antibiotic-resistant salmonella that has reached 18 states and sickened more than 278 people. USDA’s Food Safety and Inspection Service announced that it would not shut down a processing plant to which much of the tainted poultry was traced, citing the processor’s timely submission and implementation of improved processing practices (Food Safety News). How much more quickly a fully-operational contamination-detection mechanism would have coped with the outbreak is unclear. But the shutdown has demonstrated the urgency of health preparedness missing since October 1.

While CDC was able to recall the 30 analysts to address the salmonella outbreak and generally retains the authority to recall its furloughed employees in case of emergency, its response was still slowed. The danger may not lie in CDC’s reactive capabilities, but in its proactive capabilities. The shutdown hampered CDC’s role as a hub for nationwide health crisis management. Without employees to field calls from state health agencies, the CDC would have been unable to coordinate state and interstate crises and attack growing epidemics. As flu season approaches, CDC leaders worried they would not be able to react timely to an outbreak. Similarly, they also worried about whether U.S. Muslims, 11,000 of whom will travel to Mecca for the annual Hajj pilgrimage, would be exposed to the MERS virus there, and whether the CDC would be able to respond in time if Americans carried the virus home (USA Today). Moreover, CDC had been forced to cut its quarantine staff at airports around the nation by 80 percent (Time).

In addition to preventing outbreaks of foodborne illness and communicable disease, individuals who are already sick faced barriers to new treatments. Two hundred new patients arrive at the National Institutes of Health each week to begin clinical trial programs with new drugs (CNN). For some, these new drugs may promise hope after all other treatment options have been exhausted. Ongoing trials have not been terminated but new enrollees were turned away. The week the government shut down, 30 of the patients beginning treatment programs would have been children—a third of them pediatric cancer patients.