The Early Offer Alternative in Medical Malpractice Litigation: a Statutory Trap to Limit Liability
| Jurisdiction | New Hampshire,United States |
| Citation | Vol. 53 No. 3 Pg. 0006 |
| Pages | 0006 |
| Publication year | 2012 |
2012 Fall, Pg. 6. THE EARLY OFFER ALTERNATIVE IN MEDICAL MALPRACTICE LITIGATION: A Statutory Trap to Limit Liability
Volume 53, No. 3
Fall 2012
INTRODUCTION
On June 27, 2012, over the veto of the Governor of New Hampshire and over the objections of the two largest medical malpractice insurers in New Hampshire, medical malpractice plaintiffs' lawyers, the New Hampshire Association for Justice, and New Hampshire citizens harmed by medical malpractice, the New Hampshire legislature passed SB 406, the so-called "Early Offer" bill, into law, enacting RSA chapter 519-C. This new law was pushed through the legislature in less than five months, with only two public hearings, with consideration and hearing by only one committee (Judiciary) in each chamber of the General Court, and after being rejected by every other jurisdiction in the United States where it has been proposed, as well as by the United States Congress.(fn3) Perhaps most notably, this law was not necessary in New Hampshire since insurers and physicians have always had the right to make an early offer to a plaintiff if a negligent medical error occurred.
Medical malpractice practitioners on both sides of the aisle should be aware of this new law, which changes many of the rules for medical malpractice claims.(fn4) Your clients, both patients and doctors, are at risk of harm if they opt in to this new alternative system. Many injured patients will unknowingly have already done so before they even come to you for help, making their cases even more expensive to pursue and less likely to lead to a favorable outcome. Many doctors, if they opt into this system without their medical malpractice insurer's consent, are at risk for losing liability coverage for medical injury claims.(fn5)
This new law is one-sided in both the benefits it offers and the penalties it imposes. It unilaterally tilts the playing field in favor of hospitals and medical providers by providing them with the benefit of offering plaintiffs less for their injuries and it conversely tilts the playing field against injured plaintiffs by penalizing them if they do not take the early offer from the medical provider. By opting into this system and accepting an early offer, injured patients lose their right to recover all of their non-economic damages caused by medical injury, as well as their right to appeal any adverse determination of their economic damages.(fn6) By eliminating recovery of non-economic damages, such as pain, suffering, loss of enjoyment of life and loss of earning capacity, this bill unreasonably discriminates against those already disadvantaged classes of plaintiffs such as women, the elderly, the poor, and those most severely injured by medical negligence and most in need of an "early offer."(fn7) The severity of injury scale for additional payments will also have a disparate impact across these classes of plaintiffs.(fn8)
If, after receiving an offer, injured plaintiffs opt out of the system because they realize the offer would not adequately compensate them, they will be required to secure a jury verdict of 125 percent of the early offer at trial to avoid paying the medical provider's attorney's fees and costs from the early offer process and post a bond just to enter the courtroom and exercise their constitutional right to a remedy.(fn9) No similar penalties are imposed upon the hospitals and health care providers using this system if a plaintiff receives a verdict substantially in excess of a rejected early offer. It is notable that New Hampshire's two largest medical malpractice insurance companies project that physicians and hospitals will be subject to increased reporting requirements under this system and can expect to see increased premiums for medical liability coverage. (fn10) They may also need to find new medical liability insurers if these companies withdraw their business from the state.(fn11)
In this article we examine the new law, the history of the early offer law proposal in the United States, the way the law was enacted in New Hampshire, what it means for New Hampshire citizens, why it is unworkable as enacted, and we offer suggestions to improve its implementation if it stays on the books.
THE NEW LAW: RSA CH. 519-C
Five months after being submitted as an admittedly "late bill,"(fn12 )and not having "the benefit of the thorough subcommittee consideration necessary for a new and untested procedure,"(fn13) the final version of SB 406 passed, attached to two unrelated bills to get the votes needed to pass the General Court. The final title of SB 406, after the override of the Governor's veto, was: "An act relative to establishing an early offer alternative in medical injury claims, relative to confidentiality of police personnel files and establishing a committee to study referrals of patientsfor use of implantable medical devices."(fn14)
The reported purpose of this law is to reform "the legal system for resolving claims for medical injury" and "to encourage fast and efficient payment of meritorious claims."(fn15) This is a good purpose for a new law, to which few would disagree if its purpose is achieved. Unfortunately, this purpose is based on several erroneous or misinterpreted factual findings, resulting in an unnecessary and counterproductive law that imposes unreasonable burdens on injured plaintiffs and provides limited benefits to medical providers.
First, the legislature found the current legal system for medical injuries inefficient because it produces inconsistent results for similar injuries to different plaintiffs.(fn16) This finding is absolutely correct, but it is grossly misinterpreted by the legislature. Individual plaintiffs should receive individualized results for their injuries. Individualized results for plaintiffs injured by medical negligence mean that the system is working as it should. All New Hampshire citizens are different and the effect of an injury on one citizen may be drastically different than its effect on another. For this reason, New Hampshire citizens are entitled to be made whole for their injuries and be compensated for their individualized losses; losses which may well differ substantially across plaintiffs despite similar injuries arising from similar incidences of medical negligence. A law that eliminates individualized recoveries for non-economic loss will have a disparate impact for different types of plaintiffs.
Second, the legislature found that the current legal system was inefficient because there are long waits for the parties to get their cases resolved due to the complexities of medical injury cases and the statutory requirements for specialized medical evidence and testimony.(fn17 )While true, these systemic delays and inefficiencies are attributed to the very statutes that the legislature enacted in other efforts at tort reform, such as the added legislative requirements for the complex evidence and expert witnesses contained in RSA Ch. 507-E and the statutory screening panel process under RSA Ch. 519-B, supposedly also enacted to resolve claims for medical injury "as early and inexpensively as possible to contain system costs."(fn18)
Third, the legislature found that the current legal system was inefficient because the costs of litigation are exorbitant in medical injury claims.(fn19) Costs, however, are not likely to decrease substantially under a system of early offers because the litigation costs in medical injury claims are substantially front-loaded in gathering information and having it reviewed by medical experts. Once medical experts have reviewed the claim, the parties have a good idea if it is meritorious. If a claim has merit, insurers will ask to mediate and resolve it without litigation. Such mediation allows resolution of a claim without litigation and without taking away the plaintiff's right to be compensated for his or her non-economic losses. Most medical injury claims settle prior to trial. Litigation costs are incurred because insurers spend inordinate sums fighting valid claims and providers refuse to take responsibility for their negligence. Consequently, the only way costs will decrease under this statutory system is if more valid and fair early offers are made by insurers, including compensation for plaintiffs' non-economic losses, to avoid the high litigation costs of going through the screening panel process and trial.
Fourth, and finally, the legislature found that the current legal system was inefficient because claims for medical injury result in the practice of defensive medicine, which means physicians are ordering unnecessary tests and treatment, with little or no expected benefit to their patients, in order to guard against their own liability.(fn20) If that is true and those physicians receive payments from Medicare or Medicaid, they are committing fraud under federal and state law. A physician who bills Medicare or Medicaid for tests and procedures performed for a purpose such as avoiding liability exposure, as opposed to being medically necessary for a patient, is committing fraud under those statutory schemes. (fn21)
In enacting this law, the legislature said that medical malpractice victims "will benefit from the early offer process . . . as it provides the option of a simple, clear, process defined in statute that provides prompt and sure recovery of all economic losses associated with meritorious claims."(fn22) In exchange for the benefits of this process, a medical malpractice victim gives up the right to seek damages for pain, suffering, emotional distress, loss of enjoyment of life, and his or her spouse gives up the right to seek damages for loss of...
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