US Tort Reform Bill Kills Deterrent Effect of Litigation Against Bad Nursing Homes Posted on July 31, 2017 by Larry Bodine By Martin P. Schrama The latest tort reform measure, H.R. 1215, the Protecting Access to Care Act of 2017, would place caps on medical malpractice damages, limit attorney fees, and change statutes of limitations. Among other changes to current law, non-economic damages in medical malpractice lawsuits would be limited to $250,000 – and juries would not be informed of this cap on damages. Litigation enables residents of nursing homes who suffer adverse outcomes, or their families, to be compensated. The availability of noneconomic damages to nursing home victims, along with the deterrence effect of litigation in improving or maintaining quality of care, should be considered when assessing tort reform. The bill would apply to health care lawsuits where coverage for the care was provided or subsidized by the federal government, including through subsidies or tax benefits. H.R. 1215 would preempt state laws governing health care litigation in several areas, including statutes of limitation, joint and several liability, product liability, and attorney contingency fees. Proponents of the bill claim that the bill would lower medical liability insurance premiums, and by extension, cut the incidence of so-called “defensive” medical treatments and lower costs associated with federal health care programs such as Medicaid. Deterrent effect of litigation Consumer groups and other opponents of the tort reform bill support litigation as a vehicle for compensating victims of substandard care and as a deterrent that encourages facilities to give better quality care. A recent study addresses the potential deterrent effect of nursing home litigation on the quality of nursing home care. The study assesses whether the threat of litigation serves as a deterrent to substandard care. The issue is whether placing caps on medical malpractice damages would negatively affect nursing home patient care. The study used claims data to test the market-level effects of changes in the malpractice litigation environment. That data was combined with facility information on quality and an area-based measure of litigation threat to address the relationship between litigation and quality of care. The quality of care is a function of malpractice claims as resources are diverted to address lawsuits. The deterrence effect results when the expected probability of a lawsuit and associated costs causes facilities to choose higher levels of care quality. The issue is whether facilities actually invest in increased quality in response to increased liability threat. Tort reform has historically treated nursing home medical malpractice separately from medical malpractice in other types of facilities. Economic damages constitute a smaller proportion of damage awards in nursing home cases because residents are generally older and not employed. The role of non-economic damages in the deterrence effect, therefore, plays an important part of the risk/benefit analysis involving tort reform and nursing home malpractice. The study concluded that the threat of malpractice litigation may serve as a deterrent to low quality care in nursing homes as measured by increases in RN-to-total staffing ratios in response to rising malpractice threat and by a reduction in pressure sores among highly staffed facilities. The deterrence effect was strongest among for-profit, chain, and large facilities. The deterrence effect may prompt low-staffed facilities to increase the RN ratio. Martin P. Schrama is a Shareholder in Stark & Stark’s Commercial Litigation, Mass Tort, Intellectual Property and Green Litigation Groups. He has extensive experience litigating on both the trial and appellate levels of the federal and state courts of New Jersey and New York. This experience also extends to regular practice before AAA, JAMS and various other alternate dispute resolution fora. He can be reached at mschrama@stark-stark.com and 609.895.7334. Visit www.stark-stark.com.
