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CURRENT STORIES


Proposed malpractice fund may not hold all the answers

by Lawrence Messina

THE ASSOCIATED PRESS

CHARLESTON -- West Virginia is not the first state to consider a fund to help malpractice victims fully recover a jury damage award. But the dozen or so states that have traveled down this route have largely encountered a bumpy ride.

Wisconsin set up a patient compensation fund in 1975 that now has a $450 million deficit. What's more, the governor there has proposed raiding the fund for $200 million of its $600 million reserve to help close the state's budget hole.

South Carolina's fund for malpractice judgments needs $150 million more than it has in reserve to pay current and expected future claims.

In Pennsylvania, the fund that acts as an extra layer of malpractice insurance has a $2 billion unfunded liability.

"We know that we have some very challenging questions to answer," Chuck Jones said last week as he chaired the first meeting of the three-member panel studying the creation of such a fund in West Virginia. Jones is also executive director of the state Board of Risk and Insurance Management.

At least three states besides West Virginia are considering establishing such funds in the wake of new laws that cap malpractice jury awards or otherwise shield doctors from paying the full amount of a judgment.

Ohio recently hired a private Illinois firm to assess the feasibility of such a fund. Pinnacle Actuarial Resources reported back earlier this month that such a fund is viable -- though not as envisioned by legislation enacted there this year.

The fund as contemplated by lawmakers would help malpractice victims shortchanged by a new cap on non-economic damages, or compensation for life-altering injuries. Pinnacle disagrees with this approach.

"The costs we expect to be eliminated from the medical malpractice system would not be realized and there is also the potential for increased system costs," the May 1 report said.

Though West Virginia has also capped non-economic damages, any compensation fund would not cover the difference between the cap and an actual jury award.

"There was a great concern that it not be used for non-economic damages," said Steve Summer, a study panel member and president of the state hospital association, at last week's meeting.

But West Virginia's fund would offset a $500,000 cap on all damages in trauma-related cases. The state's study must also weigh how much the fund can give any one patient.

Payment limits in other states range from $100,000 for Florida's fund for infant-related cases to $1.05 million under Nebraska's fund. South Carolina and Wisconsin have no coverage limits. The Ohio study recommends a $250,000 limit.

States have also had problems with funding sources. All rely on payments from doctors, hospitals and other facilities covered by the funds, either through direct fees or premium surcharges relayed by private insurers.

But rising insurance costs are what prompted most of the states to consider limiting malpractice awards in the first place. Health care providers are finding themselves squeezed by hikes in the assessments for the funds.

Pennsylvania recently allowed doctors there to defer payments owed the Medical Care Availability and Reduction of Error fund for six months, following threats to leave the state because of insurance costs.

"They've tried to offer some short-term relief while they work on long-term solutions," MCare Press Secretary Roseanne Placey said Friday.

Last year, Pennsylvania lawmakers reduced the fund's coverage limit from $700,000 to $500,000, Placey said.

In Florida, a group of doctors that opposes damage caps for malpractice victims views a compensation fund as an alternative. This group proposes a malpractice review board assess cases and award damages. Victims who disagree with the board's ruling or damage award could then file a lawsuit in court.

West Virginia's study panel is expected to report to the Legislature in December. The law that called for the study does not mandate the creation or funding of such a program. Changes in the law that cap damages or limit a doctor's share of a malpractice verdict take effect in June.

------

Lawrence Messina covers the Statehouse for the Associated Press.