Enactment of a cap on punitive damages, affidavits of noninvolvement, pretrial mediation conferences, and sanctions for filing frivolous claims and motions represent the first substantial tort litigation reform in Pennsylvania in decades. While there is disagreement over what impact these changes will have on the cost of medical malpractice insurance, passage of Act 135 can be expected to bolster the hopes of those seeking broader tort reform legislation.
Pennsylvania's physicians and other health care providers have been trying to reform the Commonwealth's medical malpractice litigation system for many years. Opposition from the Pennsylvania Trial Lawyers Association, one of the most effective lobby groups in Harrisburg, has stymied every attempt to impose meaningful limitations on the potential liability of health care professionals. Once, about ten years ago, the President Pro Tempore of the state Senate practically ordered the two sides to keep talking until they reached consensus. Even that incentive was not enough, however, and the legislature adjourned that year without addressing the issue. Finally, this year, the atmosphere was right for the legislature to act, but it took a crisis in the Medical Professional Liability Catastrophe Loss Fund ("CAT Fund") and a considerable amount of compromise on the part of the medical community to get the job done.
Doctors and hospitals are required to purchase malpractice insurance from the CAT Fund to cover potential claims above a certain amount. CAT Fund surcharges are set by the Insurance Commissioner as a percentage of the premium paid to the private insurance market for basic coverage. In recent years, the cost of CAT Fund coverage has soared for a variety of reasons. This year, doctors had to pay surcharges of 164%; for 1997, the surcharge requested by the CAT Fund Director was 254%, meaning that a physician who paid $10,000 for basic coverage in the private insurance market would pay $25,400 to the CAT Fund for coverage up to $1.2 million. Physicians finally became so upset that their statewide organization called for elimination of the CAT Fund and advised their members not to pay the surcharges until the legislature acted to reform the medical malpractice litigation system.
The General Assembly responded by unanimously passing House Bill 2210 which represented a consensus reached between the medical community and the trial bar. HB 2210 contained a number of changes to the CAT Fund itself, including a gradual increase in the amount of insurance coverage to be purchased from the private market and a provision intended to level out surcharges in future years. What has received the most attention, however, are the changes the new law makes to the tort system.
Punitive Damages
Act 135 caps the amount of punitive damages in most cases at 200% of the amount awarded to compensate the plaintiff for his injuries. Punitive damages may only be awarded if the defendant's conduct was "willful or wanton" or if it involved "reckless indifference to the rights of others." Such damages will not be available in cases of gross negligence or where the defendant is vicariously liable for someone else's conduct, unless the defendant knew of and allowed such conduct to occur. In assessing punitive damages, the trier of fact can consider the character of the defendant's act, the nature and extent of the harm to the patient and the wealth of the health care practitioner. The new law separates the consideration of any punitive damages from the rest of the trial process and requires the trier of fact to first resolve the defendant's liability and the amount of any compensatory damages. While Act 135 caps the amount of punitive damages, it also sets a minimum of $100,000, although the trier of fact is permitted to return a lower verdict.
Frivolous Motions, Claims and Defenses
The new law requires the party filing a malpractice claim or his attorney to sign every pleading, thereby certifying that he has read the document, that it is well-grounded in fact and law and that it is not being filed for purposes of delay or of needless increase in the cost of litigation. The court is authorized to impose sanctions on a party or his attorney who files an improper certification, including a civil penalty of up to $5,000 and payment of the other party's costs and attorney fees.
Informed Consent
Act 135 imposes a duty on physicians to obtain the informed consent of their patient before conducting certain procedures, including, among others, surgery and anesthesia, radiation, chemotherapy, blood transfusions and experimental medications. Informed consent will not be required in cases of emergency, although the law gives no guidance as to what circumstances constitute an emergency. The Act specifically permits the physician to present evidence indicating what information the typical physician would provide under similar circumstances. A physician cannot be held liable for failure to obtain the patient's informed consent unless the patient proves that having information about the risks and alternatives involved would have been a "substantial factor" in his decision whether to undergo the procedure.
Affidavit of Noninvolvement
Health care providers named as defendants in medical malpractice actions may have the case against themselves dismissed by filing an affidavit of noninvolvement with the court. The affidavit must establish that the party was misidentified or otherwise not involved, individually or through his "servants" or employees, in the care and treatment of the claimant and was not obligated to provide for his care and treatment. The plaintiff may, of course, challenge the affidavit and, if the court finds that it was knowingly false or inaccurate, the provider can be required to pay the plaintiff's costs and attorney fees related to the affidavit challenge.
Expert Reports
If an attorney files a complaint alleging that the doctor deviated from a standard of care, the attorney must certify in the complaint that he has a report from a qualified expert which states thstandard of care, that the defendant deviated from that standard of care and the information upon which the expert bases his opinion. There are exceptions to this requirement as being a precondition to the filing of a malpractice claim, such as where the patient first contacted the attorney less than 120 days before expiration of the statute of limitations, where the doctor fails to provide medical records within 60 days after being requested to do so, and where it cannot be determined whether or not a standard of care has been violated without first obtaining pretrial discovery.
Health care practitioners had been seeking more comprehensive reforms of the tort litigation system, including a strict statute of limitations (measured from the date of injury or from the date when the doctor's alleged breach of duty occurred, if the injury did not manifest itself immediately); binding arbitration of malpractice claims; and a strong presumption that the patient gave informed consent to a procedure if he signed a consent form. Legislation containing these reforms and others actually passed the House of Representatives in May of this year, but became stalled in the Senate until earlier this month. It would appear that the changes the medical community did not succeed in obtaining were potentially more significant than what they actually got out of the legislative process. In any event, doctors and hospitals are better off now than before Act 135. Only time will tell what impact, if any, the new law will have on malpractice insurance rates.
Perhaps a more interesting question for the insurance industry and the larger business community is what does the enactment of Act 135 portend for broader tort reform efforts in the next session of the General Assembly? Business interests have been seeking reform of Pennsylvania's products liability laws for as long as the doctors have been trying to change the malpractice system. Their hopes have certainly been raised a few notches by the doctors' recent success, however limited. On the other hand, it took a legitimate crisis atmosphere to get the medical malpractice reforms through the General Assembly and that crisis alone probably would not have been enough if the doctors and lawyers had refused to compromise. Even so, the business community is expected to push hard for broad tort reform beginning when the legislature returns to session in January. Other states have had success in recent years which Pennsylvania reformers will point to in support of their efforts.
With Republicans in control of the Governor's Office and both chambers of the General Assembly, the chances are good that products liability and other tort reforms will at least receive consideration on the legislative agenda. If those bills are ultimately successful, the business community will owe some measure of thanks to their doctor friends who paved the way in the closing days of the 1995-1996 legislative session.
This Update was prepared by Patrick T. Beaty, Esquire. Mr. Beaty is Special Counsel in Saul Ewing's Harrisburg Office concentrating in Government Relations and Administrative Law. If you would like additional information, please contact Mr. Beaty by telephone at (717) 238-7672; by fax at (717) 257-7580; or by email at pbeaty@saul.com.