Jury Out On How 'Tort Reform' Issue 1 Will Drive Down Premiums, Ramp Up Doctors' Interest

Aug 31, 2018

Among all the popular measures on the Arkansas ballot this November, none is as hydra-headed, or has forged unlikely alliances, as Issue 1.

It would give the legislature rulemaking power over the courts and put a limit on fees collected by trial lawyers in lawsuits. The most talked about element, though, is that it would cap courtroom awards for plaintiff's seeking punitive damages and compensation for pain and suffering — though it wouldn't limit awards for lost wages or hospital bills, or in cases of intentional misconduct — at $500,000.

Nationally, this kind of amendment is what is commonly referred to as "tort reform."

Seventeen states don’t have such a limit on awards a plaintiff can receive in a civil case. Arkansas and Kentucky are the only two in the south.

In the past few months, an eclectic group of special interest groups have come out for and against Issue 1. Hospital associations and most state legislators are for it. So is the Arkansas Chamber of Commerce. Meanwhile, the Arkansas Trial Lawyers Association, Arkansas Bar and the socially conservative lobbying agency The Family Council oppose it, as has Supreme Court Chief Justice Dan Kemp (because of the legislative overreach, not necessarily the tort reform). 

The ballot effort's biggest financial backer is the Arkansas Hospital Association, which gave $450,000 to Arkansans For Jobs & Justice, the group spearheading the campaign.

Jodiane Tritt, the association's vice president, says her group’s support boils down to protecting, and attracting, young doctors.

"If you look at a map and you can see tort reform in other states, states that touch our state, there's something in all of those states. When brand-new doctors graduate, get through their residencies and are looking for places to practice, that's one of those factors that those doctors are going to consider."

Doctors will want to locate in a place where malpractice suits cannot yield huge penalties against them, she says.

According to the state medical board, Arkansas has 10,790 active licensed physicians. Over in Mississippi, a state that has passed tort reform, there are slightly fewer residents, and yet, slightly more doctors.

A paper published in 2017 in the journal Health Economics Review examined tort reform in Texas, a state that implemented similar caps to the ones proposed in Arkansas in 2003. The study found malpractice tort reforms had little influence on reducing the cost of care paid by private insurers. In other words, the insurers of doctors and medical institutions levied more or less the same premiums even after tort reforms went into effect.

And a paper published in the International Review of Law and Economics in 2015 found no credible evidence to support the claim that physicians were leaving Texas to go to states with tort reform before 2003, or that there had been a dramatic increase in physicians in the state after 2003.

But other research suggested it does make a difference. Tritt says a net positive effect of Issue 1 may be to shrink the number and intensity of malpractice suits altogether, thus saving doctors and hospitals time and money.

"Many times it costs a lot of time for our doctors and personnel who work in the hospital because they're not in the hospital if they're in a deposition."

But most malpractice suits don't actually make it to trial. Most end in settlements, which Issue 1 would not limit.

What's more, the number of reported malpractice payments in Arkansas last year was lower than all other surrounding states that do have tort reform, according to the National Practitioner Data Bank

Christopher Trudeau, a professor at the University of Arkansas-Little Rock's William H. Bowen School of Law, and is an expert on health law.

"Ask any doctor what they don't want, they don't want any lawsuit. They don't necessarily think about going to court. And so there's some research actually suggesting that tort reform doesn't stop defensive medicine."

So-called "defensive medicine" is that test or procedure a doctor orders not for its diagnostic merit, but just to guard against a potential malpractice suit.

Cutting down on defensive medicine should in theory lower healthcare cost, and in turn lower insurance premiums, that's not so certain.

On the other hand, if the costs associated with malpractice suits are less than one percent of total healthcare spending, Trudeau argues the reforms in Issue 1 would still lower premiums.

"There is a study suggesting that those states that have implemented a few tort reform measures have reduced medical malpractice insurance rates by 2.5 percent and employers' contribution to insurance by about 3.5 percent. So there is some data that suggests this will reduce insurance rates, but with that limitation, it's not like it’s going to reduce it 20 percent, it's going to reduce it smaller amounts."

As of now, the average insured Arkansan spends about $230 per month on health insurance. If tort reform passes, it remains to be seen whether that figure, or the number of doctors in the state, will go up or down.

This story is produced by Arkansas Public Media. What's that? APM is a nonprofit journalism project for all of Arkansas and a collaboration among public media in the state. We're funded in part through a grant from the Corporation for Public Broadcasting, with the support of partner stations KUAR, KUAF, KASU and KTXK. And, we hope, from you!