Malpractice cap haunts Legislature’s final weeks

By Richard Haugh

As the 2009 legislative session winds down, lawmakers are facing a ghost from the past in the form of a proposed overhaul of the state’s medical malpractice law.

House Bill 1344, introduced April 9 by Rep. Christine Scanlan, D-Dillon, and Sen. Betty Boyd, D-Lakewood, would raise the cap on medical malpractice awards for pain and suffering — known as noneconomic damages — to differentiate them from direct costs such as medical bills, tying the cap to inflation.

In 1988, a new law set caps on noneconomic damages at $250,000, and it was raised to $300,000 in 2003. Total awards in a medical malpractice lawsuit cannot exceed $1 million, although a judge can set that cap aside.

The Colorado Trial Lawyers Association (CTLA) argues that even with the 2003 upward adjustment, the cap is worth roughly half that amount in today’s dollars. If HB 1344 passes, the CTLA says it would restore the original purchasing power of the cap by raising it to about $465,000, and then tie annual increases in the cap to inflation.

“It’s been increased just one time in 21 years, and that was by only $50,000,” said David Woodruff, an Englewood trial lawyer and member of CTLA’s board of directors. “This would simply catch up to inflation, and then provide an indexing along with the rest of the (damage award) caps that are in place in Colorado.”

Last year, the CTLA backed Senate Bill 164, co-sponsored by Senate President Peter Groff, D-Denver, and current Speaker of the House Terrance Carroll, D-Denver. That bill was more ambitious in its proposed changes. SB 164 called not only for a hike in the cap on damages and an index to inflation, but would have created a new classification of damages for impairment and disfigurement, which critics said could lead to more malpractice payouts. The bill did not survive the 2008 session.

This year’s bill also would require the state insurance commissioner to publicly post any med-mal insurance company’s premium increase request that exceeds 5 percent, and, if requested “by a person acting in good faith,” hold a hearing on the rate increase. Critics say that could lead to a rash of expensive, time-consuming hearings for the state’s med-mal insurers.

The Colorado Medical Society argues that if HB 1344 passes, malpractice insurance premiums would rise an average of 11 percent, and uncertainty about inflation adjustments would lead to further premium hikes, which would, in turn, lead to a jump in the cost of medical care that would be passed on to patients and employers. The CMS also says malpractice premium increases would drive doctors out of Colorado and make it more difficult to recruit physicians to the state.

In any case, this is not a good time to bring legislation that could raise costs, said Edie Sonn, director of public affairs for the CMS. She said legislators have told the physician group the bill is a distraction.

“I question the strategy of bringing this bill forward in the last three weeks of the session when legislators are dealing with the biggest budget crisis we’ve ever seen,” Sonn said. “Why is this coming back now?”

The CTLA, CMS and officials from Gov. Bill Ritter’s office were scheduled to meet Wednesday afternoon in an attempt to hash out details on the bill, said the CTLA’s Woodruff. If a compromise can be reached, he said, the governor has indicated he would sign the bill.

The CMS also would like to see a compromise, Sonn said — but not if it means an increase in the pain-and-suffering cap without other changes in tort law.

“That would put doctors and hospitals and others in a world of hurt,” she said. “If we’re going to do that, we need to talk about other fixes to the broken litigation system.”