Following up on yesterday’s discussion of an emergency physician’s critique of medical malpractice reform in Pennsylvania, in which the physician claimed, without any evidence, that the number of defendants in malpractice cases has risen recently, negating many of the benefits of malpractice reform.

Put simply, he missed the boat. The number of defendants does not have much to do with the premiums by healthcare providers. It is just not an issue.

Three of the primary reforms of the Medical Care Availability and Reduction of Error (MCARE) Act of March 20, 2002, however, did have a substantial impact on medical malpractice in Pennsylvania.

Before we get to those though, let me reference another post of mine about contingent fee lawyers as venture capitalists. Medical malpractice plaintiffs are almost exclusively represented on a contingent fee basis, with the plaintiff’s law firm advancing all costs in the matter and not collecting any fee unless the injured patient recovers through a settlement or verdict. If the injured patient does recover, the firm will have its costs reimbursed from that recovery and will take a portion of the recovery as its attorneys fees.

All of which is to say that plaintiffs’ attorneys already have a big financial incentive to bring only meritorious cases, since they don’t get paid and don’t get their expenses reimbursed if they lose.

Three of the major changes by the MCARE Act were:

  1. tightening of requirements for qualifying expert physician witnesses,
  2. requiring plaintiffs file a “certificate of merit” signed by a qualified physician prior to filing suit, and
  3. requiring plaintiffs bring suit in the venue in which the malpractice occurred.

The expert witness qualifications and certificate of merit both have the same effect on medical malpractice cases: they make it a lot more expensive to file, litigate and try cases.

Expert fees are by far the largest cost in medical malpractice cases. An initial review by a non-specialist physician for purposes of obtaining a certificate of merit will cost a thousand dollars at least, often more, while a full review and expert report (not including trial testimony) will cost at least $10,000, usually much more. In complicated cases involving specialist physicians or multiple experts, expert fees alone will easily exceed $50,000 and can, in a single malpractice case, exceed $200,000.

The certificate of merit thus operates as a tax: if you want to file a medical malpractice suit, you will have to spend several thousand dollars before you can even start the process. The expert qualifications, in turn, removes from the potential pool a number of less qualified – and thus less expensive – experts.

For a well capitalized firm with multiple established medical malpractice attorneys and a focus on trial, the effect of these two provisions is minor. Even without MCARE, all of our cases are reviewed extensively prior to agreeing to representation and filing suit, including through the use of outside expert physicians as consultants. Moreover, as a matter of pure trial advocacy, we seek out highly qualified experts, more than qualified under MCARE’s guidelines, because they are more effective in litigation and more credible at trial.

But that’s not the case for everyone, and the effect of the two expert provisions was to consolidate the medical malpractice market, with most solo and generalized personal injury attorneys leaving it altogether and referring their cases to more established and specialized attorneys and law firms.

The two expert provisions are probably the biggest reason for the drop in number of filings: now the bulk of cases are referred to and reviewed by firms better equipped to assess the viability of the claims, resulting in more rejections of weaker cases pre-suit.

Although I believe the MCARE expert requirements can be a bit tight in very specialized areas where the number of "qualified" experts across the country is in the double digits, it’s hard for me to complain about a procedural change that shuttles business to my firm while not substantially increasing costs (for the same reasons, you should probably take what I say with a grain of salt, as I am not unbiased here).

With regard to the venue restriction, normally a plaintiff (in any case) files in the county in which the “transaction or occurrence” happened. There are, however, numerous exceptions to this rule, leading to a concern about plaintiffs “gaming” the system by, for example, adding physicians located in plaintiff-friendly counties (like Philadelphia and Allegheny counties) for purposes of establishing venue then later dismissing them.

With the institution of the certificate of merit rules, the possibility of “gaming” was significantly, but not entirely, reduced, as it became much harder to simply add a defendant-physician to a lawsuit.

Although the venue provision likely only had a moderate effect on the number of filings, it likely had a substantial effect on the size of payouts made for settlements or verdicts. The reason for that is simple: by and large, suburban and rural juries award less to plaintiffs than urban juries. Moreover, regardless of the extent of such a phenomena, defense and plaintiffs’ lawyers believe it to be the case, and so respectively offer and accept lower settlements.

If you are of the “tort reform” mindset, that is a good thing, since you presume that juries in general award too much.

I do not think I will change anyone’s mind on this subject, but I do want to raise the point that suburban and rural juries view medical malpractice liability in a different context from urban juries. The former are generally subjected to far more propaganda from the insurance lobby, a relentless assault of horror stories about hospitals closing and doctors leaving and greedy trial lawyers playing the jury slot machine on the road to jackpot justice. Suburban and rural jurors also typically have access to one, and only one, hospital, and are prohibited by law from knowing the amount of their verdict which will be covered by insurance rather than the hospital itself.

As such, I submit to you that plaintiffs in suburban and rural venues are not given a fair chance, as suburban and rural jurors are led to believe that they are in essence entering awards against themselves, rather than an insurance company.