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Caps on Awards to be Debated

(06/16/2003, Miami Herald )

For months, the public debate over how to resolve Florida's medical malpractice insurance crisis has hinged on a single issue: Should lawmakers cap the amount of noneconomic damages juries can award for medical malpractice victims?

The issue has dominated the picket signs of white-coated doctors marching on the state Capitol and spawned heated rhetoric between Gov. Jeb Bush, who supports a $250,000 cap, and the anti-cap Senate.

It's pitted insurance companies and doctors, who say the caps would help bring down insurance costs, against trial attorneys and patient advocates, who say it would take money from the victims who need it most.

Despite all the brouhaha, the battle over caps may well end up a pre-game skirmish. When lawmakers return to Tallahassee today for a four-day special session, they will face an equally vexing issue: How much new protection do they give insurance companies against challenges by doctors or victims that they mishandled claims?

Proposed reforms to the state's "bad faith" law is a huge issue for insurance companies and one that threatens their alliance with doctors on medical malpractice reforms.

If caps on noneconomic damages will help insurance companies limit settlements when one of their clients makes a medical mistake, revisions to the state's bad-faith law could limit insurance companies' exposure when they make a mistake of their own.

Who loses? Doctors and victims, say trial attorneys and Citizens for Patients Rights, a St. Lucie County-based advocacy group launched by doctors who are upset that the Florida Medical Association has embraced the insurance industry's proposed bad-faith reforms.

"Why should I give insurance companies more power than they already have over me?" said Dr. Rene Loyola, a Stuart physician and founding member of the advocacy group.

Democratic Sen. Rod Smith, a former state attorney from Gainesville, predicts proposed bad-faith reform will overshadow all debate about caps.

"At times we lose sight of the fact that there is a difference between doctors and insurance. Caps are extremely important to doctors, psychologically and economically. But for insurance companies I'm not sure it's not been more of a stalking horse. Their real concern is bad faith," Smith said. ``And for trial lawyers, stopping bad-faith reform is probably just as important [as stopping] caps."

Among the biggest challenge for lawmakers, however, is just understanding the state's bad-faith law. Even Bush, a self-described policy wonk, expressed exasperation with the topic last week. "It's so complex," he told reporters.

Technically, bad faith only becomes a real issue in medical malpractice cases after a jury finds a doctor liable and awards damages, which usually exceed the value of the doctor's insurance policy.

In "bad faith" claims, doctors or their victims allege that the insurance firm failed to act in good faith before trial by refusing to offer a reasonable settlement to end the case. In those cases, doctors or wronged patients contend, insurance companies should pay the full jury verdict, even if it far exceeds the original insurance policy's value.

So while bad faith only comes into play in the few cases that end up with a jury verdict for malpractice, the insurance industry contends it actually plays a role in every claim. Because rather than risk having to pay more after a jury trial, insurance firms say they opt to settle more claims early by offering higher payouts. Those payouts then drive up premium costs.

'Bad faith is the baseball bat plaintiffs' attorneys hit us over the head with all the time," said Mark Delegal, a lobbyist for Jacksonville-based First Professional Insurance Co., the largest malpractice policy writer in Florida, with 6,000 clients. 'They say `Settle now or we have a bad-faith claim.' "

But trial attorneys and some doctors argue that any revisions of bad-faith law must not go so far that it jeopardizes the one tool they have to ensure that insurance companies actually must come to the table to negotiate.

Bad-faith claims, they say, are the only redress for doctors or victims who are wronged when insurance firms put their financial goals ahead of their financial responsibilities to doctors who face medical malpractice claims.

"They want to shift the risk and the responsibility to the injured or the doctor," Richard Slawson of Palm Beach Gardens, a past president of the Florida Academy of Trial Lawyers, said last week. ``That's the whole mission of the greedy insurance industry."

Both chambers of the Legislature and Bush have endorsed plans that would grant insurance companies immunity from bad-faith claims as long as they can show that before trial they offered a settlement worth the full value of the doctor's policy.

But in a sign of how complicated the negotiations over bad-faith changes will be, neither the House, the Senate nor Bush can agree over the deadline by which insurance companies must offer the settlement.

The House would require companies to make the full-value offer within 180 days of the first notification that the plaintiff was pursuing a medical malpractice claim; the Senate plan would allow 270 days. But the governor has proposed that insurance companies need only to make the offer at least 120 days before trial begins.

The other major issues lawmakers will tackle when they consider bad faith this week:

" Bush, along with the House, want to rewrite the bad-faith law so that it is more specific about what constitutes bad faith, leaving less room for judges or juries to decide. But the Senate has rejected the notion so far, saying judges, not a one-size-fits-all statute, are better equipped to assess the complex natures of individual bad-faith claims.

" Bush wants to restrict who can pursue a bad-faith claim. Currently, victims whose jury awards outstrip the value of their doctors' insurance policies are able to pursue bad-faith claims against the insurance company in hopes of collecting the rest of their award. Bush would change the law so that only doctors have that right, though they could assign that right to the victim.

" Bush also wants a change that would limit how much insurance companies that have been found liable for bad faith will have to pay. Rather than pay a full jury award, Bush's proposal would limit a company's payout to no more than the long-term assets of the doctor. Supporters contend that it will remove the incentive for victims' attorneys to go after insurance companies' "deep pockets." Critics say it amounts to a de facto cap on damages.

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