Some smaller carriers of medical liability insurance are exiting Pa., forcing physicians to scramble to find another carrier or face substantially higher rates imposed by the Joint Underwriters Association (JUA). Major medical liability carriers are poised to raise their premiums by 50 percent or more statewide, imposing the proportionally heaviest burdens on Philadelphia-area physicians, whose premiums are already significantly higher than physicians elsewhere in the state.

In response, a group of 18 orthopods who perform 80 percent of orthopedic surgeries in Delaware County has announced that they will drop surgery as of Jan. 1. A large plastic surgery group in Delaware County is considering doing the same thing, which would leave five hospitals in that county without surgeons to perform burn and trauma services such as hand and face reconstruction.

Meanwhile, the political landscape appears to be shifting. Since the recent election of Judge J. Michael Eakin, believed to be more of a "strict constructionist" than the retiring Justice he replaces, Pa.’s Supreme Court now has a majority of Justices who are less likely to strike down tort reform legislation, as the Court did in 1997.

The prospect of further disruption of patient care, combined with a worsening medical liability climate and a more receptive Supreme Court may hasten movement of tort reform legislation. A bill to privatize the CAT Fund, which has previously been approved by the Pa. Senate, has recently been approved by the Pa. House Insurance Committee and has the chance of reaching the House floor for a vote before the General Assembly recesses in mid-December. Additional tort reform provisions would likely be amended to that bill, or to another insurance bill.

Liability Landscape Worsens

Pa.’s liability insurance market continues to harden. The venue of many medical malpractice cases in the surrounding counties continues to be moved to Philadelphia, where Jury Verdict Research data from 1994 through August 2001 notes that the median verdict is nearly $1 million—more than double the median in cases from the rest of the state—with 50 percent of all malpractice awards in Philadelphia being greater than $1 million, compared to only 26 percent of cases tried outside of the county.

The JUA—upon whose rates the CAT Fund bases its surcharges—filed and was approved for an overall 20 percent rate increase for all classes.

PMSLIC was approved for a 40 percent across-the-board rate increase effective Jan. 2002, according to Anna Lavertue, director of communications and quality.

MIIX filed, and in late Nov. was awaiting Pa. Insurance Dept. approval of, an overall 50.7 percent premium increase across the state, broken out into two rate levels, according to Edward Grab, senior vice president: a 30 percent increase for specialties including radiology, pathology, ophthalmology, minor surgery, cardiology, pediatrics and orthopedic surgery; and a 60 percent increase for specialties including general surgery, cardiovascular surgery, neurosurgery and ob/gyn.

Medical Protective filed for rate increases this past July and is still evaluating next year’s filing, says Steven Spina, regional vice president of the company’s northeast operations. Its current rates represented an increase over the previous year of one percent for Philadelphia and Delaware counties, 40 percent for Chester County and Lehigh Valley, and a 14 percent decrease in Bucks and Montgomery counties, he notes. Spina says he anticipates overall rate increases next year, driven primarily by the preponderance of loss activity coming from the southeastern part of the state.

Physicians with some other malpractice insurers face uncertain coverage or are certain to lose coverage. PHICO was taken over and put under rehabilitation by the state Insurance Dept. this summer after posting unacceptably low surplus reserves. Fearing the company’s liquidation, a number of PHICO-covered physicians from West Virginia have closed their offices and were forced to find other medical liability insurers, with similar consequences expected across Pa., according to the Pennsylvania Medical Society (PMS).

Commerce and Industry Insurance Company of Ohio (C&I) sent letters to physicians informing them that, because of "unsatisfactory underwriting results in the entire line of Physicians’ business in Pennsylvania which has proven to be an unprofitable line of business for us," the company will not renew their malpractice insurance policies. The PMS estimates that some 800 physicians in Pa. are affected.

Another company, Florida Physicians Insurance Group, has also stopped writing policies in Pa., reported the Pittsburgh Tribune-Review.

Physicians Respond

Premier Orthopedic & Sports Medicine Associates, LTD., a group of 18 orthopedic surgeons, sent a letter to physicians in its referral network announcing that it "will be unable to provide surgical care after January 1, 2002, as a result of the continued dramatic increase in malpractice premiums."

One of the group’s physicians, Nicholas A. DiNubile, M.D., says he had to lay off office staff and dip into personal savings several times to make payroll. "As an orthopedic surgeon who’s been in private practice almost 20 years, I have never been sued. I have never had a lawsuit against me and I’m paying almost $100,000 currently—I think that is outrageous," he says.

DiNubile, who is chief of orthopedic surgery at Delaware County Memorial Hospital, as well as an orthopedic consultant to the Philadelphia 76er’s and to the Pennsylvania Ballet, expects that dropping surgery will bring his malpractice insurance premium to below $20,000, from the $100,000 he currently pays.

DiNubile says his group’s decision could produce serious disruption to patient care. "Our orthopedic group covers some 80 percent of the orthopedic care in our county. We cover eight hospitals, including a major trauma center. If we are not available to do any surgery or take any emergency call, it could be devastating. I believe that there will be patients who can’t get their emergency needs met and may need to be transferred to other hospitals or maybe even out of state," he says.

While DiNubile says that economic survival is his group’s immediate goal, he declares that its longer-term goal is to emphasize the severity of the current crisis and to make the point that orthopedic surgeons in southeastern Pa. pay among the highest malpractice premiums in the country and are reimbursed at the lowest rates of any major metropolitan market. DiNubile concedes that it is difficult to convince lawmakers that the problem requires a statewide solution, given that orthopedic surgeons in the western part of the state, because they pay lower malpractice premiums and often have higher reimbursement, do not feel the severity of the problem.

The problem is not entirely confined to the Delaware Valley, however. A survey of half of the 70 surgeons at Westmoreland Regional Hospital in Greensburg, recently reported in the Pittsburgh Tribune-Review, found that 64 percent are losing their liability coverage next year and another 70 percent face 40 percent rate hikes. One of the hospital’s orthopedic surgeons said that 29 percent of the survey respondents have curtailed high-risk medical procedures, the Tribune-Review noted.

"The more physicians who make this decision," DiNubile declares, "The more powerful the message will be. I think that if you saw any of the big, high profile Philadelphia groups step up and say, ‘We can’t take this anymore,’ that message would hit Harrisburg overnight. Short of that, you would need pockets of smaller groups making this decision."

According to Pennsylvania Orthopaedic Society (POS) lobbyist Jonathan Bigley, several large and small orthopod groups in the five-county Philadelphia region who have received notices of substantial malpractice insurance premium hikes are also considering dropping surgery.

Orthopods may not be acting in isolation. Associates in Plastic Surgery, a six-physician group in Delaware County, placed an open letter in The Daily Times in early Nov. addressed to patients, colleagues and legislators and declaring that, due to a substantial increase in malpractice premiums for 2002, the group may be forced to stop performing surgery as of Jan. 1.

The group is losing its coverage because its primary carrier, Clarendon, is pulling out of Pa., forcing the group to find a new carrier or face JUA rates, says Francis X. DeLone, Jr., M.D., one of the group’s partners. DeLone says his group won’t know what its malpractice insurance rates will be until mid-December, at which time the group will decide on its course of action.

In the meantime, DeLone says his group is discussing the business aspect of the insurance decision with colleagues to see if they are having similar concerns and what they might be doing to try to find a solution to high malpractice premiums. DeLone stresses that his group is mindful not to breach antitrust law: "We are not encouraging other people to do this [drop surgery] in any sense whatsoever—not anything remotely like a job action or strike."

DeLone’s group comprises the only plastic surgery providers doing hand, reconstruction, facial trauma and burn center consultation at Crozer, Taylor, Springfield, Delaware County Memorial and Riddle hospitals, he says. "No plastic surgeon would be available at any of those five hospitals," DeLone notes, if his group were to stop performing surgery.

Both DiNubile and DeLone concede that it is not economically feasible to sustain a practice without performing surgery. If no tort reform legislation appears to be moving in a month or so, they both say that some of their partners would probably return to surgery as a stopgap measure and try to encompass the work of the entire group.

"Longer term," says DeLone, all of us would probably look for other places to go work. We would move to Delaware, New Jersey or elsewhere."

The stopgap measure of some physicians in a group returning to surgery is not sustainable either. "If doctors need to keep paying these bills, they’re going to work harder. If you start spending less time with patients, if you start trying to do more surgeries, you’re probably feeding the problem. You’re going to see less patient communication. You’re possibly going to see an increase in medical errors," says DiNubile, who adds that three physicians regard their group’s action as their last hope for inducing some tort reform movement in the legislature and plan to leave the area if no movement occurs.

The question of how much physician flight the malpractice situation is producing remains controversial. Census data of physicians paying into the CAT Fund has not shown significant physician flight at this time, says CAT Fund Director John H. Reed, Esq., who notes that there are more physicians practicing in Pa. now than there were five years ago.

Reed acknowledges that malpractice premiums in southeastern Pa. are the highest in the state and that physician census has dropped somewhat there. Census data of CAT Fund-covered physicians by county indicates that Philadelphia’s number dropped to 9,087 in 2000, from 9,575 in 1999, while Delaware County’s number dropped to 1,796 in 2000, from 1,846 in 1999.

Certain specialties in southeastern Pa. (Bucks, Chester, Delaware, Lehigh, Montgomery, Northampton and Philadelphia counties) have also seen a declining census: ob-gyn dropped to 966 in 2000, from 1,178 in 1997; while orthopedics dropped to 515 in 2000, from 597 in 1997. Neurosurgery has increased to 109 in 2000, from 101 in 1997.

By themselves, those figures are not likely to make a convincing case for or against the occurrence of physician flight. Localized gaps in access to health care services may make the case more emphatically.

"When it starts affecting patients and employees, then I believe that the lawmakers will pay attention more," DiNubile says, predicting that his hospital will have to lay off employees if his group is not performing emergency or elective surgeries. DiNubile adds that his hospital has lost eight surgeons this year because of the malpractice situation, including its only neurosurgeon and an experienced vascular surgeon, which he says puts the community’s patients at risk. "If you have an aneurysm and you go to that hospital and the clock is ticking, you want the best trained vascular surgeon. If you have a head injury, you want a neurosurgeon. That’s an access problem."

In late Nov., Thomas Jefferson Health System organized the first of several planned meetings of representatives from Jefferson’s hospitals, physicians from Delaware Co., a representative from the University of Pennsylvania Health System and Philadelphia First—a business coalition—to formulate responses to the region’s malpractice situation. The group of 15 to 20 individuals met to discuss "how we can try to make Harrisburg understand the severity of the issue and to push forward an agenda of serious tort reform," says Barbara G. Frieman, M.D., president of Thomas Jefferson University’s medical staff.

Frieman says the group’s business community representatives are concerned about the financial pressures the malpractice situation places on the region’s health care employers, and she notes that those representatives will actively solicit the participation of other health systems to join the group.

Frieman says the group believes that Harrisburg does not recognize the need for tort reform as a major issue. "We agreed that we need to supply them with that incentive in whatever way we can, individually and as a group," Frieman says.

Although no specific strategies were developed at the group’s first meeting, the group did discuss the option of physicians dropping surgery. "People felt that that was an appropriate maneuver to bring the problem to the fore," Frieman says. "But it may not even be necessary. There may be enough physicians going out of business in the next six months that access to health care will reach a crisis level."

Frieman is an associate of the Rothman Institute, a group of 23 Philadelphia orthopedists, and says that her group has talked about the option of dropping surgery, but is waiting to see what happens over the next few months before making any final decisions. She says that dropping surgery helps make the malpractice crisis public, but she believes that it does not help the bottom line in the long run.

"If there isn’t a solution in the near future," Frieman says, "Our practice already has New Jersey offices. It’s very easy for all of us just to move to New Jersey."

Legislative Opportunity

Judge Eakin’s election to the Supreme Court holds promise for the survival of future tort reform legislation, as well as for possible reinstatement of Act 135 tort reform provisions that were struck down by the Court in early 1997.

Eakin attended the PMS’ most recent House of Delegates meeting and was informed about the negative impact the current tort environment is having on physicians, says Roger Mecum, PMS executive vice president.

Eakin appears to be sympathetic to the problem of shifting medical malpractice trials to Philadelphia, where awards are much higher than elsewhere. After his election, the Harrisburg Patriot-News quoted Eakin as saying, "If there is to be any change in venue rules, that has to come from within the court."

The Hospital & Healthsystem Association of Pennsylvania (HAP) and PMS also plan to be more aggressive in filing amicus briefs for malpractice cases appealed to the Supreme and Superior courts, says Jim Redmond, HAP’s senior vice president of legislative services, noting that Republicans won seven out of seven appellate court positions this November.

In an effort to persuade the Supreme Court to consider rule changes that the court struck down from Act 135, the PMS authored a letter to that effect and was scheduled on Sept. 11 to meet with Senate Leader Brightbill, HAP and the Pennsylvania Trial Lawyers Association to secure signatures in support of reinstatement, Mecum says. The Capitol buildings were evacuated on that day, and the parties are working on scheduling a new meeting, he adds.

Rule changes in the letter included early expert witness report, speedy proceedings, reduction of awards to present worth, delay damages and expert witness qualifications, as well as rules affecting venue, which go beyond Act 135. The trial lawyers have committed their support to reinstating all Act 135 provisions, but not to extend court rules beyond the scope of the Act, notes Mecum, who hopes to secure that commitment through negotiations at the meeting yet to be scheduled.

The Pa. Senate has unanimously passed a bill to penalize frivolous lawsuits (SB 406), as well as a bill to privatize the CAT Fund (SB 556). The frivolous lawsuit bill would: make law firms jointly liable for the actions of its attorneys; allow an injured party to recover attorney fees and court costs if the frivolous complaint is withdrawn; require the victim to prove only that the complaint was "primarily" for an improper purpose; and permit an injured party to recover for harm to reputation, costs of litigation, attorney fees, lost income and noneconomic losses such as emotional distress.

The House version of the frivolous lawsuit bill still sits in the House Judiciary Committee chaired by Rep. Tom Gannon.

The CAT Fund bill would: transfer the Fund to a new governing authority effective Jan. 1; cap future CAT Fund surcharges at 50 percent of the 2000 levels; and phase out the CAT Fund in six years by gradual increases in primary limits and corresponding decreases in the CAT Fund limits. A bond mechanism would be used to pay off the unfunded liability of the CAT Fund, currently estimated to be $2.8 billion.

The House version of the CAT Fund bill (HB 1802) has been voted out of the House Insurance Committee and has a chance of reaching the House floor before the mid-December recess, says Rep. Nicholas Micozzie, the bill’s sponsor. But the prospect of adding tort reform amendments to it may slow down scheduling the bill for a vote in order to build support, he notes.

Micozzie says a patient safety amendment was added to the bill in committee, by which a health care provider who participates in an established medical error reduction and prevention program would receive a discount in the Fund’s medical liability premium rates.

An amendment to restrict malpractice trial venue-shifting was also offered in committee, but did not have the votes to pass, says Micozzie, and was withdrawn for fear that it would kill HB 1802’s chance of being voted out of committee.

Micozzie says he will try to amend additional tort reform language—including venue and frivolous lawsuit language—to another insurance bill in his committee. He says he would rather see such language pass the committee rather than be offered for the first time on the House floor, but he does not rule out the latter possibility and would consider such amendments as part of HB 1802.

"HB 1802, if it moves to the floor, will create a vehicle to which it’s pretty certain that efforts will be made to get other issues of tort reform amended before the House vote," says Mecum. "The two that are pretty certain to be added are patient safety and venue, but there may be other tort reform measures added as well."

Physician actions such as dropping surgery, Mecum believes, send a message to those in Harrisburg who doubt that there is a malpractice crisis. "I regret that these things are happening," he says, "But on the other hand, it is complementary to our campaign of trying to get reform because we say we’ve got a crisis on our hands."