Flashback in Medical Economics

25 years ago:
June 9, 1975

As the malpractice crisis worsened, doctors in high-risk specialties saw their liability insurance costs double or triple within a single year. In several states, they faced high-five-figure premiums—if they could still get coverage at all. Commercial carriers were fleeing the market before a relentless surge of claims and giant awards to plaintiffs.

Coast to coast, organized medicine led the clamor for legislative relief from the litigation plague. State lawmakers began to respond, and our publication spread the hopeful news.

Senior Editor Stanly (that's right, no "e") Ferber reported on the measure hailed by many doctors and other observers as the most promising of state-level actions: Indiana's malpractice relief law. Although that law stopped short of providing every reform doctors wanted, it did give them several important gains:

• No physician could be held responsible for an award or settlement of more than $100,000 for a single malpractice action. Maximum compensation for a plaintiff was fixed at $500,000—with everything above $100,000 to be paid from a special state fund financed by surcharges on all health care providers' malpractice premiums.

• Contingency fees for plaintiffs' attorneys were curbed. No cap was applied to the lawyer's fee for winning an award up to $100,000, but for larger awards, the ceiling was set at 15 percent.

• Indiana's statute of limitations was tightened, restricting malpractice filings to two years after the alleged negligence occurred—except in cases involving small children. Then the two-year clock would start running at age 8.

• A medical review panel would look at each claim before it went to trial. The three-doctor panel was to include one physician chosen by each side, with the third physician picked by the other two. The panel's finding would be admissible in court if either party insisted on taking it there.

The new law was lauded—and not just by Hoosier physicians. Organized medicine, insurance industry leaders, and defense attorneys throughout the nation hailed it. Not surprisingly, the plaintiffs' bar complained that it gave doctors favored status and should be wiped off the books.

Meanwhile, in New York state, a program aimed at resolving patients' claims before they reached a judge and jury was showing progress. Senior Editor Arthur Owens described it, conservatively, as "one small light at the end of the tunnel."

New York's compulsory malpractice mediation program, launched in Manhattan in 1971, was extended by the mid-'70s to the whole Empire State. Each malpractice claim had to go before a mediation panel that typically included a presiding justice, a doctor from the specialty involved in the case, and an active trial lawyer. Attorneys for the two sides made presentations to the panel and responded to questions. Usually, the litigants didn't attend.

When the panelists reached their decision on the claim, they attempted to get the opposing sides to accept it. If they couldn't, the presiding justice could order another hearing or put the case on a court calendar.