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States that have caps on medical malpractice damages also tend to have lower insurance premiums for doctors — but that does not mean the two go hand in hand, according to a new report. The five-state study by the General Accounting Office cautions that although damage caps and lower premiums appear correlated, there are so many intervening factors that a direct link is not provable. And some states without damage caps have avoided the malpractice crisis altogether, the study notes. The GAO also drew two other conclusions that re-stoke the debate on whether malpractice suits should be curtailed through tort reform: Access to health care has been reduced in states that are suffering a malpractice insurance crisis, but not because of higher premiums; and there’s no evidence that “defensive” medicine — unnecessary procedures to ensure against suits — raises the cost of health care. In fact, the Aug. 29 report by the congressional investigative arm says, doctors’ claims about health care access being crippled by lawsuits often turn out to be false. Even before its release, the report angered physicians. The American Medical Association asked the GAO to delay release to do further research, according to Randy DiRosa, an assistant GAO director. The AMA apparently believed the GAO had not gathered enough information from medical associations in crisis states, DiRosa says. However, the GAO had talked to those associations and evidence from them formed the basis of the findings, says DiRosa. The five states covered in the report — Florida, Mississippi, Nevada, Pennsylvania and West Virginia — “were among the most visible and often-cited examples of ‘crisis’ states by the AMA,” the report states. Katherine Marks Hatwell, an AMA spokeswoman, declines to address why the association asked for the delay. In a statement, the AMA says the report confirms that “America’s medical liability crisis is causing access to health care problems in high-risk medical specialties.” The report shows “that tort reform works,” the AMA adds. Like its previous report on the subject released in July, the GAO’s new effort offers encouragement and disappointment to plaintiffs’ lawyers and doctors. It also says there is not enough information for the GAO to come down on one side or the other. The more recent report, “Medical Malpractice; Implications of Rising Premiums on Access to Health Care,” made these points: • Recent increases in malpractice premiums “were consistently lower” in states with caps on noneconomic damages: States with caps had single-digit percentage increases in the past seven years; while those without sometimes had rises of more than 25 percent. Payments on claims between 1996 and 2002 also tended to be lower in states with caps. But the GAO report also highlights Minnesota, which has the lowest premiums and the mildest increases but no damage caps — and no crisis. There, claims are prescreened in a discovery system that allows lawyers and insurers to assess the claims’ viability before getting into court. • In the five states studied, “actions taken by physicians in response to malpractice pressures have reduced access to services affecting emergency surgery and newborn deliveries.” One Pennsylvania hospital no longer has full orthopedic on-call surgery coverage because three of its five orthopedic surgeons left in 2002 in response to high premiums. However, the GAO noted that such problems were concentrated in rural areas that traditionally have difficulty retaining doctors. Interestingly, the report states that many doctors’ claims of service reduction turned out to be bogus: “In each of the five states we found that actual numbers of physician departures were sometimes inaccurate or involved relatively few physicians.” • Studies cited by the AMA and other medical groups that show increased costs from defensive medicine are “not reliable.” As an example, the GAO cites a U.S. Department of Health and Human Services study that claims there might be a 5 percent to 9 percent reduction in hospital costs nationally if defensive procedures were eliminated. That study, the GAO notes, was based only on elderly patients treated for two types of heart disease and “therefore cannot be generalized across all services, populations and health conditions.” The AMA’s negative reaction to the report underscores the difficulties both sides have had in digesting recent research on the malpractice issue. While the GAO has painted a complicated, nuanced picture of the crisis in which no single factor accounts for the controversy, doctors and plaintiffs’ lawyers have steadfastly blamed each other. Those advocates took similar positions on the GAO’s previous study, released in July, of whether suits led to premium increases. That report concluded that while there was a correlation between premiums and suits, there is no hard link and the needed breakdown of claims payments from insurance companies — in terms of economic and noneconomic damages — is still missing. Nonetheless, both sides argued that the July report supported their view, which they reiterated last week. In the past year, doctors have mounted several one-day strikes to demand a $250,000 cap on noneconomic damages in malpractice suits. They say high verdicts are increasing their malpractice insurance premiums so much that they are being forced out of business. Plaintiffs’ lawyers deny that claims have become suddenly worse. They blame premium increases on the medical profession for not evicting bad doctors and on the insurers for improperly managing their investments. They also note that the number of suits filed in recent years has actually decreased. The GAO report states that malpractice insurance ranges from about $4,000 a year for a specialist in internal medicine based in Minnesota (where there is no crisis and no caps), to $174,000 for general surgery in some parts of Florida (where doctors’ protests have been fierce). Between 1998 and 2002, the report states, some malpractice premiums increased only 2 percent in Minnesota, but the same policies went up 98 percent in Florida. “I think it was fairly supportive of our position although it obviously couldn’t conclude definitively on access to care and defensive medicine costs,” says Raymond Cantor, director of government affairs for the Medical Society of New Jersey. “We have a better feel for what’s going on access-wise in New Jersey, we did our own survey last year and we found nearly half of all practices had either laid off staff, deferred purchasing equipment or stopped doing certain procedures.” Cantor claims there is only one pediatric surgeon in each of Ocean and Monmouth counties, and that Warren and Sussex have no neurosurgeons. “I know of hospitals who don’t have O.B.s on call,” he says. That statement enrages Abbott Brown, a partner in West Orange’s Bendit Weinstock, who frequently speaks for Association of Trial Lawyers of America on the issue. “Warren and Sussex never had any neurosurgeons!” he says. “They’re small community hospitals. That has nothing to do with the malpractice crisis. Twenty years ago were there 20 neurosurgeons in Warren? I don’t think so.” Brown believes the new report confirms that the medical societies have been using scare tactics. “‘You’re not going to get a doctor to deliver your baby!’” he says, mocking the physicians’ lobby. “Those access arguments are just a big, fat lie, and this report confirms it. St. Barnabas has 120 O.B./GYNs on staff … their marketing materials list the number.” Stephanie Fox Pierson, an adjunct professor who teaches medical malpractice law at Seton Hall University School of Law in Newark, is less inflammatory in her assessment. “There is no pattern that any one solution works,” she says of the GAO’s report. She notes that California has caps but that the report indicates rate regulation may be the main factor keeping premiums down there. “I don’t think they concluded that caps alone are the basis for any decrease in premiums,” she says. New Jersey Insurance Commissioner Holly Bakke has previously called for more research into the roots of the crisis and is trying to get a breakdown of damage payments from the National Association of Insurance Commissioners. The state Department of Banking and Insurance expects to publish a report this week or next into Princeton Insurance Co.’s inability to find a reinsurer, and its consequent decision to stop writing new policies. Princeton is one of the main medical malpractice carriers in the state. The department held hearings into Princeton’s troubles on Aug. 6. If the report concludes that reinsurance cannot be found, the department will activate the state Reinsurance Association to provide coverage, according to department spokeswoman Mary Cozzolino. While Princeton’s problems might speak to the doctors’ belief that the New Jersey insurance market is getting worse, it’s more complicated than that, Cozzolino says. “As other states were losing companies, New Jersey was actually adding them,” she says.

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