Nevada lawmakers moving to change state's liability cap

Physicians and trial lawyers in Nevada are fighting over a bill that doctors fear could unhinge the state's noneconomic damage cap in medical liability cases and drag with it a stabilizing liability climate.

At the same time, the state Supreme Court is trying to bring the two sides together to resolve a backlog of medical liability cases through a so-called settlement marathon.

Nevada law places a $350,000 cap on pain and suffering awards. But a recent bill, backed by the trial bar, would lift that limit in cases of "gross negligence."

While plaintiff lawyers say the change would help sift out more serious cases involving a "conscious" disregard for patient safety, doctors worry that the definition of gross negligence is left intentionally ambiguous.

"Any case a jury considered 'bad' could fall under that premise, so it could apply to a broad range of cases" that normally would fall under the cap's protection, said Rudy R. Manthei, DO. He is chair of Keep Our Doctors in Nevada, a coalition of health care organizations -- including the Nevada State Medical Assn. -- that pushed for tort reform.

Doctors also likened the gross negligence standard to more of a criminal standard, which requires proof of intent. Without the cap's protection, physicians would be vulnerable to punitive damages not covered by medical liability insurance.

Doctors pledged to continue their fight. The Assembly voted April 20 to approve the bill. By this article's deadline, it was headed to a largely Democratic Senate.

Dr. Manthei credited the cap and other reforms -- passed in 2002 and approved by a 60% vote in a 2004 referendum -- with reducing physicians' liability insurance premiums by as much as 40% since 2002. The state also saw an influx of physicians and insurers who once fled the state in the face of skyrocketing liability costs.

If the bill were to pass, those improvements could disappear, warned James Hooban, CEO of the physician-owned insurer, Independent Nevada Doctors Insurance Exchange. Premiums could nearly double. The measure also could reverse an overall 30% reduction in claims filings in recent years, he said. It would give patients as many as five years to sue, up from the current two-year statute of limitations.

The bill emerged, in part, in response to a hepatitis C outbreak allegedly caused by the unsafe use of syringes at a Las Vegas endoscopy clinic. Trial lawyers pointed to the incident as an example of the kind of conduct that could go unpunished unless physicians are held to a higher standard.

"This [bill] just makes sure that grossly negligent physicians don't get protections they were never meant to have in the first place," said Bill Bradley, a member of the Nevada Justice Assn., a trial lawyers trade group.

Dr. Manthei said added liability burdens are not the answer. "Why create a system that penalizes all of health care?" he asked, noting that in egregious cases, the state medical board can revoke doctors' licenses.

Such litigation has contributed to a backlog of more than 400 medical liability cases filed in Clark County, the state's largest. The issue prompted the state Supreme Court to step in to try to resolve the matter using a different approach: a settlement marathon.

Case resolution the goal

Two-judge teams will spend the month of May evaluating the merits of the cases -- the oldest of which dates back to 1991 -- and advising parties of their settlement options. The process is voluntary.

"Our intent is to get as many cases resolved as possible, so only the most serious and complex go to trial," Justice Michael A. Cherry said.

Arthur Ritchie, chief judge in Clark County's 8th Judicial District, said many of the lingering suits came in anticipation of the cap's passage in 2002. That year, claims spiked from an average of 180 per year to 327, he said.

Since then, claims have leveled off to 180 annually, excluding a frenzy of cases filed in 2008 following the hepatitis C outbreak. Population growth and a lack of judicial resources also exacerbated the backlog, Ritchie said.

"We have to take a creative approach, and this is an alternative way to help folks resolve these cases," he added.

Despite butting heads in the Legislature, physicians and trial lawyers found some good in the strategy.

"If we can get meritorious cases resolved, that's good for everybody," Bradley said. "In egregious cases, there needs to be full accountability, and cases that do not have merit need to be taken out of the system."

Dr. Manthei agreed, but said the cap has played an important role by curbing excessive awards. Since its passage in 2002, average settlements dropped 18% from $380,000 to $310,000. He added that the backlog showed that the cap had not diminished patients' access to the courts.

"But frivolous cases are still there, and we still have a problem where people think a bad outcome is bad practice," he said.

The print version of this content appeared in the May 11, 2009 issue of American Medical News.

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