By Christopher Guadagnino, Ph.D.

Published June 2001

• Malpractice reform gains momentum

• Tuesday in Harrisburg journal

• Legal obstacles to tort reform in Pa.

• React to this article in the Discussion Forum.

Jeffrey A. Baum, M.D., is first vice-president of the Pennsylvania Orthopaedic Society (POS) and a clinical assistant professor at the Department of Orthopedics at UPMC. He is a member of Three Rivers Orthopedic Associates-UPMC.

PND: Physicians in parts of Pa. are being hit with very large increases in their medical malpractice insurance premiums. How acute is the medical malpractice insurance problem in western Pa.?

JAB: Compared to the eastern part of the state, it’s not as acute. Clearly, physicians are talking about it. I think the cost is still manageable in the western part of the state for several different reasons. Historically, the rates in western Pa. have not been bad as the eastern part of the state, and I absolutely believe it’s due to the number of plaintiffs and lawyers in and around the Philadelphia area. The number of large awards in western Pa. has not been as great, although we have seen in the past year three comparatively large awards—one in Washington County last October for over $22 million, a settlement in Indiana County this year for over $6 million, and just recently there was a settlement in Mercer County for a little over $12 million. Two of those cases were tried by lawyers from outside of this area. The Indiana Co. case was tried by Sen. Arlen Spector’s son and he told the local community, "We’re coming back." Clearly, the plaintiff’s lawyers are coming from all over the place. This whole educational process on the malpractice issue that physicians are undergoing is rapidly coming to a head. I know of two general surgeons in the area who retired early because they didn’t want to pay their malpractice premium increases. I have not heard of any orthopedists leaving the area because of this, as yet. People have talked about it. There are some orthopedists outside of Allegheny County who were having trouble recruiting physicians. I know they’re having trouble in Sharon, Pa. trying to get an orthopedist to do spine work. I don’t know of any orthopedists who have downgraded their practice, going from operative to non-operative orthopedics, as yet.

PND: Does the acuity of the problem vary by specialty?

JAB: I think so. There is talk about two neurosurgeons leaving Erie and two leaving Johnstown. That hits close to home because my sister-in-law was in a very bad car accident in Johnstown about ten years ago, and had she not received immediate care by that neurosurgeon, I think she would have died. Johnstown is not a big community, but it’s big enough to support a couple of neurosurgeons. If they’re thinking of leaving because of the malpractice situation, I think that’s a very worrisome scenario. I have heard from a couple of obstetricians in Sewickley that they don’t know if they’re going to keep delivering babies. In Allegheny County proper, I haven’t really heard of any obstetricians going just to gynecology and not delivering any babies anymore. There still a number of neurosurgeons that are still doing everything.

PND: Are there physicians in western Pa. who think this is primarily a Philadelphia problem?

JAB: Unfortunately, I think that’s true. But part of my role as board member and soon-to-be president of POS is to try to educate physicians about the seriousness of the problem. I talked to an orthopedist in Abington, which is north of Philadelphia, who is in a group of nine or ten and they couldn’t get insurance. They have a good malpractice history, but because they were located so close to Philadelphia, no insurer would insure them. They finally went to the hospital and the hospital helped them out and they did get insurance. But six of his partners are thinking of leaving. They can’t recruit anybody. There’s no question that the crisis is greater in the eastern part of the state and, unfortunately, many western Pa. physicians have blinders on, and they don’t see anything past Harrisburg. But I think the problem could come here within a year or less. There’s a friend of mine who is in a group of six. They had to go borrow $250,000 to pay their malpractice premium January 1 to stay in business. There was another group of either seven or eight, they had to borrow $350,000 and pay it off over the year. So, you’re talking about more than $20,000 a month that you’re going to have to come up with to pay this malpractice premium off over the year. That’s a huge expense.

PND: Is there resentment by western Pa. physicians who feel that they are paying premiums that accrue from a problem caused by Philadelphia?

JAB: Yes. Because of the huge amount of some the awards—$50 million and $100 million toward the end of last year in Philadelphia County—the CAT Fund as a pay-as-you-go system has to distribute that cost throughout the rest of the state to come up with that money. So, there’s no question that physicians in the western part of the state are paying in. The thing that has changed dramatically since Act 135 was passed in 1996—basing the CAT Fund surcharge upon the Joint Underwriters Association, your specialty and your location—is that orthopedists statewide are paying in to the CAT Fund about twice as much as is paid out on their behalf. That is a statistic that we got from a someone who worked at the CAT Fund for about five years and is currently working to implement a CAT Fund privatization plan.

PND: How would you gauge the commitment level in western Pa. to working for some kind of reform?

JAB: The intensity is certainly at a lower level than what it is in the eastern part of the state. I know that the 1200- to 1300-physician group at UPMC—the University of Pittsburgh Physicians—has paid in about three times as much money to the CAT Fund as has been paid out in their behalf. They are very involved in trying to bring some sort of resolution to level the playing field. When we tried to get tort reform five years ago through Act 135, a lot of the bigger institutions and specialty doctors ended up paying a lot of money to the CAT Fund. The primary malpractice insurance carrier’s amount, which used to be $200,000, is now up to $500,000, and the CAT Fund surcharge is based upon a percentage of that premium. It’s getting outrageous.

PND: What is organized medicine doing?

JAB: The Pennsylvania Medical Society (PMS) has done a lot of good things trying to educate physicians. They’ve had Tuesdays in Harrisburg during which physicians are going there to talk to their legislators. But the POS has taken a different approach. We hired a separate public relations firm, purchased some radio ads across the state, and we’re planning more media coverage in the next few months to try to educate, not just the physicians, but also the public, to get them to understand what it means. I don’t want to have an access problem in western Pa. I don’t want to wake up one day and realize that I can’t get malpractice insurance.

PND: Hospital medical staffs and county medical societies in southeastern Pa. have been paying for buses to Harrisburg for lobbying trips and purchasing full-page ads in local newspapers. Is that happening in Pittsburgh or elsewhere in western Pa.?

JAB: As yet, no, I would say not. I think that’s part of the problem—it’s just not reached the fervor that it has in the eastern part of the state. That, again, is what POS is trying to do. The Pa. House Insurance Committee is holding a hearing at the university about all of these issues. UPMC is going to give testimony from some of their physicians, and the POS, along with the university’s government relations office, is helping to bring in an orthopedist from Indiana Pa. to give testimony. The PMS has had a few meetings. At one of them in Allegheny County back in February, there were about 60 or 70 physicians, including quite a few orthopedists and some obstetricians. People were upset and people were concerned, but not as upset as they’ve been in the eastern part of the state. The Allegheny County Medical Society is having a meeting with state senators and representatives to try to educate them. It’s extremely expensive to do media ads. That’s why the POS decided to hire a PR firm, because we need to fight fire with fire. You don’t go one day without seeing some type of ad by the trial lawyers in western Pa. They’re on TV. They’re in the newspapers. One big plaintiff’s firm always buys the back of the yellow pages. Every time you pick up the phonebook, they’re there.

PND: What challenges do various divisions present to achieving a unified tort reform front, i.e., physician v. hospital, one region v. another region, one specialty v. another specialty, employed physician v. non-employed physician?

JAB: You hit the nail on the head. That’s the whole issue. The PMS, which traditionally has been very heavily influenced by primary care doctors although they have a fair number of specialty doctors more involved recently, don’t want to get rid of the CAT Fund right now because they see that as a potential source of increased expense. It may be an increased expense early on because you have to somehow get rid of this unfunded liability if you privatize the CAT Fund. I think most of the specialty organizations would be in favor of getting rid of the CAT Fund. If you’re an internist in Punxsutawney, Pa. and you’re paying $4,000 or $5,000 for your malpractice insurance and you get a 26 percent CAT Fund surcharge, which was the average last year, that’s another $1,000. But if you’re an orthopedic surgeon or obstetrician or neurosurgeon and you’re already paying $50,000 or $60,000 and you get a 26 percent surcharge on top of that, now you’re talking seventy-five, eighty, ninety thousand dollars.

The hospitals are trying to get rid of the CAT Fund because they have paid in a lot more money recently. Four years ago my group sold their practice to the university, and if you’re in a huge corporation you can absorb those huge malpractice insurance premium spikes easier than private practitioners can. So, the tort reform commitment from employed physicians may be diluted. I know for a fact, in talking with the people at the university, that the individual doctor probably doesn’t know what he or she pays for their malpractice insurance. But I guarantee you every doctor in private practice does, because they have to write this check January 1 to get malpractice insurance or they’re not allowed to practice medicine.

PND: How will you bridge those divisions?

JAB: We need to work together to solve this—the PMS, the specialty groups and the hospital association. We had a couple of PMS representatives who are orthopedists at our board meeting in early May and we plan to have a committee to work with the PMS to try to get some issues resolved. My concern as a board member and the incoming president of the POS is what’s best for orthopedic surgeons. This whole issue of privatizing or getting rid of the CAT Fund has become very inflamed over the past few months. I don’t want it to seem like the POS doesn’t want to work with the PMS. That could not be farther from the truth. Our goal is to try to work with all the health groups that are trying to look at this issue. We can’t do this alone.