Medical Malpractice Proposal Seeks Out Public Vote

By Arkansas Business Arkansas, National, News Source

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  • June 13, 2016

Advocates of capping noneconomic damage awards in lawsuits against health care providers have taken a new tack. They want to amend the Arkansas Constitution instead of making change through the Arkansas Legislature.

“Every time we wanted to do something legislatively, it wouldn’t go anywhere,” said Michael Morton of Fort Smith, an outspoken backer of the proposed amendment who operates 30 Arkansas nursing homes. “I’m tired of negotiating without getting anything accomplished. If people don’t like it, fine. If people like it, fine.”

Morton and other proponents want to put an “Amendment to Limit Attorney Contingency Fees and Non-Economic Damages in Medical Lawsuits” to a vote of the people. Canvassers are busy gathering signatures to put their proposal on the Nov. 8 ballot.

In addition to capping monetary awards for pain and suffering and other noneconomic damages at $250,000, the measure would limit contingency fees to 33.3 percent for lawyers suing doctors, clinics, hospitals and nursing homes.

The issue is beginning to draw familiar battle lines seen whenever the banner of “tort reform” has been raised to alter the legal landscape.

“I haven’t seen the pros,” said Matt Haas, CEO of the Arkansas Trial Lawyers Association. “But then I haven’t seen a need for what it purports to do either. I don’t think we’ll be in favor of this proposed amendment.”

One of its stated intents is to prohibit lawyers from charging “excessive contingency fees” in medical injury cases. The proposal draws the line at 33.3 percent for attorneys filing medical malpractice suits.

In complicated cases, 40 percent is considered the norm in Arkansas and often comes into play should the lawsuit involve an appeal.

Haas and others question whether the true purpose of the contingency fee cap is to reduce legal fees and put more money in the hands of clients.

“The cap doesn’t apply to defense lawyers,” said Don Elliott Jr., partner at Fayetteville’s Elliott & Smith Law Firm. “Why not put a cap on defense fees?”

In analyzing the financial viability of a case, the 33.3 percent contingency fee could be a deal killer for a plaintiff’s attorney and put justice out of the reach of many, according to Haas.

The same goes for capping noneconomic damages.

“We would have to turn down a higher percentage [of cases] if we were limited on damages,” Elliott said.

He believes the proposed $250,000 cap on noneconomic damages will draw opposition from various constituencies.

“It basically would place the value of a life at $250,000 if there are no economic damages,” Elliott said.

“I would hope that this would appeal to people, regardless of whether they’re Democrat or Republican, who are against abortion because this puts an arbitrary value on life. How can you do that?”

The life lost in a wrongful death case varies with the details of each situation, which may not justly conform to the $250,000 noneconomic damage cap.

“The time lost from not getting to spend time with your grandfather has a value, but what is that?” Haas said. “All people may have been created equal, but people have different value.”

Trade Group Support

While no group has stepped out to officially oppose the measure, trade groups representing nursing homes and doctors have given their public nod of approval to the ballot initiative.

The Arkansas Health Care Association board of directors voted to endorse the proposed amendment in April. The Arkansas Medical Society board of trustees did likewise at its annual meeting last month.

“This is something that various health care providers have pitched in and contributed to over the years,” said Rachel Davis, executive director of the AHCA. “It’s important to note that punitive damages are not included in this.”

A punitive damage cap was a part of Act 649 of 2003, much of which was disassembled as unconstitutional in a series of rulings over the years by the Arkansas Supreme Court.

The current effort to limit jury awards by changing the state Constitution itself is in large response to the judicial battering of Act 649.

“We’ve been wanting to do something in Arkansas for a long, long time,” said Morton, president of Central Arkansas Nursing Inc. “But legislatively, we just couldn’t get it done. We were advised that we need to take it to a vote of the people.”

Health Care Access for Arkansans is helping shepherd the proposed amendment through the referendum petition process.

The ballot question committee is led by lobbyist Chase Dugger of Beebe, executive director, and Little Rock urologist Dr. Stephen Canon, treasurer.

The group started collecting signatures during the first week of May after the proposal was certified by the state attorney general’s office on April 20.

“We’re a little over halfway to our goal of 130,000,” Dugger said. “We’re bumping at 70,000 right now.”

As proposed, the $250,000 cap on noneconomic damages would apply to each defendant in a case where judgment is rendered in favor of the plaintiff. The cap figure is subject to adjustment for inflation or deflation every two years in a ruling by the Arkansas Supreme Court.

Based on what he’s seen in Texas, Morton said the cap is something that will affect all taxpayers in Arkansas.

Before noneconomic damages were capped, nursing homes paid an average of $5,500 per bed for professional liability insurance, he said. That number fell to less than $500 after the change.

That decline in the cost of doing business lowered the Medicaid reimbursement rate.

Morton expects a similar taxpayer savings to occur in Arkansas.

“This is something that’s been simmering and simmering for a long time,” he said. “If we fail, we’ll try again.”