Legal Lines with Locke Meredith
Sean Fagan
Show #101
Mr. Meredith: Hello, I’m Locke Meredith and I’d like to invite you to join me on the next Legal Lines. I’ll have on the show Sean Fagan, he’s my partner in law practice. We are going to talk about the effect of Tort reform, Malpractice specifically, Tort reform and also what affect does that have on your ability to sue your insurance company or for medical malpractice. So join me with Sean Fagan on the next Legal Lines.
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Mr. Meredith: Welcome to Legal Lines, I’m Locke Meredith and I am very pleased to have on the show today Sean Fagan. He is my partner in the practice of law. We are going to talk about some really very interesting issues. Currently on the issue is the Healthcare Plan being contemplated by Congress. Sean, thanks for being on the show. Let’s educate folks on the consequences of the various positions taken by both the Republicans and the Democrats of what they are proposing up in Washington D.C right now.
Mr. Fagan: Right now the big obvious debate is how are we going to handle healthcare?
Mr. Meredith: It is out of control. Expenses of health insurance and health care are out of control.
Mr. Fagan: There are no two ways about it. I don’t think that anybody can seriously say that some sort of reform doesn’t need to occur. The question is what form does it take? Right now the most radical approach that is being put up by Congress is let’s take over the whole healthcare industry. Lets see if we can have healthcare that covers essentially everybody in the country and whether that is a wise thing to be done by government versus business.
Mr. Meredith: At least one positive thing is that Congress now recognizes that this is an area of our economy and of our experience in America that has to be fixed because it is absolutely broken. Let’s explain to the folks why. First of all, one of the elements that I am hearing banted around right now is the whole idea of tort reform being some great component to solving the problem of these great healthcare expenses. So let’s discuss it in the context of cases that you and I have actually handled here in the State of Louisiana, which has one of the strongest tort reform programs in the Nation. Tell the folks what we have in terms of Louisiana tort reform.
Mr. Fagan: We have one of the most restrictive liability statutes in the country. We have medical malpractice act statute that covers both public and private healthcare providers, that is one of the most restrictive in the country.
Mr. Meredith: And let’s talk about that because that is really what this healthcare is focusing on. In Louisiana, the maximum amount that you can recover from mental and physical pain and suffering, disfigurement, dysfunction, and disability is what?
Mr. Fagan: Five hundred thousand dollars.
Mr. Meredith: That’s it?
Mr. Fagan: Since 1976.
Mr. Meredith: Since 1976 the most that you can collect for those damages is five hundred thousand dollars?
Mr. Fagan: That’s right and of course the genesis of that was the idea that the healthcare industry in particular was under assault. There were not any Doctors that were going to be able to practice in Louisiana. Healthcare costs were going to be too high because the insurance costs were going to be too high. The solution was to come up with a comprehensive act that was going to limit liability and therefore reduce insurance rates, make healthcare affordable for all of the citizens of the State, and provide good healthcare.
Mr. Meredith: And the bottom line is that they are saying “look the most you will have to pay, no matter what the damages are to the victim, is five hundred thousand dollars.” Therefore, your exposure to the amount the insurance company will have to pay is limited. Therefore your premiums should be controlled, Doctors please stay here.
Mr. Fagan: That’s right.
Mr. Meredith: Well in fact their premiums have continued to go up haven’t they?
Mr. Fagan: That’s right. Premiums have gone up every year since 1976, even though the cap has not changed since 1976.
Mr. Meredith: Now let’s talk about the consequences. In 1976 this cap on damages was placed. Here we are almost thirty years later, thirty two years later it hasn’t been changed. For a person, as I understand it, the real value, if you took five hundred thousand dollars in 1976 and you converted it into today’s dollars and take into account and adjust for inflation, it would be worth one hundred and seventy thousand dollars.
Mr. Fagan: Even less, One hundred and thirty thousand dollars according to the 2009; if you go into the government database they have an inflation calculator, you put five hundred thousand dollars in for 1976, what is it worth today in 2009, it would be 1.8 million. To keep up with inflation the cap would have to be 1.8 million just to give people in 2009 the same recovery that people had in 1976.
Mr. Meredith: So if you were injured in 1976, you would have gotten five hundred thousand bucks. Today, in reality that person is way better off than you are because you would only be getting about one hundred and thirty thousand.
Mr. Fagan: That’s correct.
Mr. Meredith: Alright, the other component of it is that you limit the exposure, the personal liability of any medical doctor in this State for malpractice to one hundred thousand dollars. That is the most that individual can be sued for, and of course they purchase insurance for that. You think that would be the maximum premium justified. Of course, their premiums have continued to go up year after year for the last thirty two years.
Mr. Fagan: Which doesn’t make sense because you said it yourself, the most you can be exposed to is a hundred thousand dollar loss. Why would the premium go up in your case? I mean it’s not like there is an additional loss the insurance company has to worry about. One hundred thousand dollars is it. It’s been that way since 1976 but the premiums have not remained stagnant.
Mr. Meredith: So if the victim is not being fully compensated and not recovery anymore money because that damage has been capped, and the Doctor’s exposure hasn’t gone up but his premiums are, who is making the money?
Mr. Fagan: And that’s the
Mr. Meredith: That’s the issue isn’t it?
Mr. Fagan: Yes.
Mr. Meredith: Let’s also talk about the fact that in Louisiana you have the Medical Review Panel. There is the talk about the frivolous law suits, or malpractice lawsuits that are filed and that increases the cost of healthcare because you are going to deal with the premiums and all of that. Well we set up in Louisiana, the Medical Review Panel. Explain that to folks.
Mr. Fagan: The way that works is that before you step into a court room you have to go thru a panel of three Doctors that practice in the same field as the Doctor that has been accused of malpractice.
Mr. Meredith: And there’s no conflict of interest, if they know him they can still sit on the panel.
Mr. Fagan: That’s right. There are oaths that they take. As in most states it’s a relatively small community, especially if you are dealing with a specialization like, you know pick one that deals with a very small group of patients. They are going to know each other well. So it’s hard to find someone who doesn’t know someone else in the field. The bottom line is that, you get rid of the frivolous law suits. Why? Because the three doctors give an opinion at the end of the panel and if they say that medical malpractice has not occurred you then have an opportunity to review their rationale and if they are right, no Attorney in their right mind is going to carry the case forward.
Mr. Meredith: Because in essence you are getting almost for free, reported expert opinions of whether or not malpractice occurred. Of course as statistically proven I think ninety eight percent of Medical Review Panels find that there was no medical malpractice.
Mr. Fagan: Yes
Mr. Meredith: So it makes you question the process a little bit.
Mr. Fagan: It’s an extremely high percentage but again it’s a flawed system in the sense that it is tough to have the folks judging each other. It’s a difficult position to be put in. When it comes to the lawsuits generally what you find is, as any Attorney that’s out there practicing, whether it is on the Plaintiff or Defense side, you are running a business. You aren’t going to take a frivolous case forward just for the heck of it. So you look at the cases and the ones that generally go into the court system are ones that are well founded and are by no means frivolous.
Mr. Meredith: Lets point out that the bottom line is to prosecute a medical malpractice claim it is probably one of if not the most expensive type of case to litigate. Your client doesn’t have the money. Typically they aren’t fronting the costs. You have to hire out of state experts who are ten, twenty or thirty grand if not more to testify. You have multiple levels of experts. It’s critically expensive. You aren’t going to move forward unless you really think there is something there.
Mr. Fagan: And put on top of that, you know that there is a limited recovery for your client.
Mr. Meredith: That’s right. Its five hundred thousand dollars.
Mr. Fagan: So if you spend a lot of money on the case, the client doesn’t get as much for their injuries.
Mr. Meredith: It’s important to note also that you cannot file a lawsuit until you have gone thru this Medical Review Panel. Assuming all goes as according to plan.
Mr. Fagan: That’s correct.
Mr. Meredith: So you have to go thru the Medical Review Panel session first then you can file the lawsuit. Let’s talk about that and ARISSA on the next segment. This is Locke Meredith with Legal Lines and Sean Fagan we will be right back.
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Mr. Meredith: Welcome back to Legal Lines. I’m Locke Meredith and again I’m pleased to have on the show Sean Fagan. He’s my partner in the practice of law. We are talking about healthcare issues imposed by the Federal Government and how Louisiana deals with medical malpractice.
Sean, we were talking the process that one has to go through when they file a medical malpractice claim and basically there are a lot of hurdles that you have to jump over. Let’s talk about it in the sense of frankly, a very sad case that we’ve been involved in where a fourteen year old girl ultimately had her leg amputated because of medical malpractice as determined by a jury.
Mr. Fagan: That’s correct. It went thru the Medical Review Panel process. In that particular case the Medical Review Panel said there was no malpractice. We went to jury and the jury considered all of the evidence.
Mr. Meredith: We hired a State expert and spent thousands of dollars.
Mr. Fagan: That’s right. It was an expensive case to try because trying to find an expert in the State was difficult given the specialties involved. So some out of state Doctors came in, they were the top in their field in terms of writing and the research, and the practice and they came in and said there’s no question about the malpractice. The young girl’s arteries, the artery in her leg and vein were both severed in an operation that resulted in her losing her lower leg. The Doctors all agreed that should have never occurred if it was done properly.
Mr. Meredith: Let’s talk about what she went through because it was severed and then they tried to sew it back up and fix it on multiple occasions. They never did get the flow of the blood back through the limb, it basically died over several weeks and then a month or so later they had to amputate the leg of a fourteen year old girl.
Mr. Fagan: That’s right.
Mr. Meredith: A lot of suffering.
Mr. Fagan: A lot of facts that were just difficult. On the medical malpractice side it wasn’t the sympathetic facts, although they were sympathetic, that drove the case. It was clear that when you really looked at the procedure that a mistake had occurred. It doesn’t mean that the Doctors were bad Doctors, it doesn’t mean they are evil Doctors, it just means that they made a mistake just like if you were driving down the road and you were adjusting your radio and you hit somebody. It doesn’t make you a bad driver, or an evil person.
Mr. Meredith: Let’s make it clear we so very much appreciate the sacrifice that Doctors and their families make in our society. We are not in any way deriding Doctors. They are such a great contribution to our society. We are frustrated with a system right now.
Mr. Fagan: And the system in that case, was in a girl that will never be able to work in the work force the way that she could have.
Mr. Meredith: Tremendous economic loss. Bottom line is it was tried by a Jury, they found that it was malpractice. There were several different positions involved and they found that two of them had committed separate acts of malpractice. The most that can be collected because of the “tort reform” we have here in Louisiana is?
Mr. Fagan: Five hundred thousand dollars. Even though she has economic loss in terms of her inability to earn income for her entire life, she is limited to five hundred thousand dollars. Both on her loss of income as well as her injury for pain and suffering.
Mr. Meredith: Scarring, disability, everything that goes with it.
Mr. Fagan: That’s right. All of that is limited to five hundred thousand dollars. The irony of that is, we put into context the tort reform and what the government is talking about now, is this girl is now likely to be on Medicaid and Medicare where she otherwise would have not been had there been a full recovery allowed to her through the insurance that is afforded to the Doctor.
Mr. Meredith: In insurance, the concept of insurance is to shift the burden of the risk amongst the entire population, instead of making the sole victim bare the brunt of that loss, particularly if it wasn’t their fault. That’s the bottom line that’s happening because this victim is in such dire straits she is going to be forced on, as you indicated, the social system or network that we have to hopefully provide care for her. But who knows?
Mr. Fagan: That’s right.
Mr. Meredith: Let’s talk about the effect that ARISSA has had on the whole healthcare industry because what we are talking about is that in this case, this was allegations of malpractice against Doctors but there are situations where there have been allegations against insurance companies for not authorizing timely care or appropriate care. But you can’t go after them, the only party you can go after is the Doctor. The reason that you can’t go after them is ARISSA. In fact, I’m thinking of that movie where I forgot the actors name but he takes on this big insurance company and he wins at the very end and everybody’s high fiving because he has taken care of his client. That’s a fantasy it can’t happen in America. Explain why.
Mr. Fagan: Most people don’t realize it but if you work at a job and through your job you get something other than wages. A healthcare plan, a pension plan, anything that comes from your employer other than wages is presumptively covered by ARISSA which is a Federal statute that covers coast to coast. It preempts, meaning that it wipes out virtually any state law that might normally apply to that and only applies the Federal Law. What happens in ARISSA is that it is so comprehensive that most employers have no idea that what they offer their employees as an incentive to come to work is governed by Federal Law. They find out too late at the expense of employees, especially when it comes to healthcare.
Mr. Meredith: So let’s bring it down in a nutshell. Basically because of potentially one of the benefits that you receive for working somewhere is health insurance and because that is considered an employee benefit, ARISSA Law, Federal law then applies to the management of that insurance product and the healthcare you get. You can’t use any State law remedies at all to go after an insurance company that doesn’t provide timely or appropriate care because Federal law says that they are the only law you can use.
Mr. Fagan: That’s right. The State law remedies that are available are very narrow. Generally, it is going to be the Federal law that will make or break the claim that you have made against your own healthcare insurance company for coverage.
Mr. Meredith: So we have two situations where you would potentially go after the insurance company. Either because they didn’t authorize appropriate or timely care like, lets say the Doctor says you need surgery and they say no we want you to go get a second opinion or we just aren’t agreeing to it or whatever or they deny coverage completely. So they either don’t do it timely or they don’t do it at all. But you can’t go after them.
Mr. Fagan: This is the thing. ARISSA was first enacted and was there for pensions. It was an ID and of course it grew and grew to also cover healthcare plans. Everyone knew that pension plans needed to be protected when this law was first considered. Since it grew out in healthcare no one really saw what was coming, how that law would impact the industry. What happens now is as you go down that path and you try to get the coverage, you can’t go after the insurance company because the insurance company both provides the plan and usually is the administrator. Under ARISSA law the administrator most of the time according to the plan document, has sole authority to not only interpret the plan but then to pay out, figure out what is covered under the plan. So when the insurance company both makes up the plan itself and is the one interpreting the participants coverage, the next thing you would say is if you disagree, is let’s go to court. Let’s make sure that they are interpreting it right. This takes that away.
Mr. Meredith: Let’s take out the conflict between the administrator and the provider. Who is that administrator employed by? Who do you think he is going to protect? He’s going to protect the insurance company not the person seeking the coverage or the benefit.
Mr. Fagan: There are specific examples that we have dealt with in our practice that highlight it. The amazing thing is and what most people don’t recognize is that now in 2009, over one third of all employee compensation packages are covered by ARISSA.
Mr. Meredith: Alright, let’s continue that on the next segment. This is Locke Meredith with Legal Lines and Sean Fagan. We will be right back.
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Mr. Meredith: Welcome back to Legal Lines. I’m Locke Meredith and I have on the show today Sean Fagan. He is my law partner and we are talking about the effect of malpractice tort reform and the Federal law ARISSA.
Sean we talked about the inequity, certainly in our opinion of the Louisiana medical malpractice tort reform in the context of a very sad case where a little girl had her leg amputated at age fourteen. We didn’t note that the jury awarded 3.8 million dollars in losses but all she can get is five hundred thousand dollars even though the Jury said her loss is 3.8 all she can get is five hundred thousand dollars even though we had three doctors that the jury found had committed malpractice.
Mr. Fagan: That’s right. In fact two separate acts of malpractice they found. What’s sad about it is that the vast majority of her award was for economic loss, not pain in suffering which would normally be subject to debate but hard losses this girl was going to sustain over her life. That’s limited to five hundred thousand dollars.
Mr. Meredith: And what is so frustrating for me is, I’ve read all kinds of articles about this, I’ve seen the number range from half of a percent up to two percent of the 1.5 trillion dollar healthcare component of our economy is related to medical malpractice.
Mr. Fagan: That’s right.
Mr. Meredith: That’s it.
Mr. Fagan: It’s like the tail wagging the dog.
Mr. Meredith: A half to two percent of that whole big pie is related to medical malpractice but they want to enforce this really just system on victims. It’s crazy.
Mr. Fagan: It is. Like I said it’s the tail wagging the dog.
Mr. Meredith: Let’s talk about ARISSA because it to me, is equally as frustrating. We talked about how basically Federal law has said we are not allowing you to sue your health insurance companies. If you get that insurance as a benefit of being an employee you have to use Federal law, you cannot use State law remedies. Of course the Federal law applicable is ARISSA and it doesn’t let you go after them.
Mr. Fagan: That’s right. The best illustration is a case we have had. A sophisticated insured.
Mr. Meredith: A Lawyer.
Mr. Fagan: A Lawyer. Is looking at having a surgery done that is really a cutting edge surgery. He does the research. He finds out that this surgery is only performed in Florida. He goes to his healthcare plan says “ listen I want to have this surgery done, its going to be done in Florida, will you guys cover it?” They say, and you know this is an ARISSA governed plan, so he takes steps that most people wouldn’t know to take because he is sophisticated in this regard. He asks what will you guys pay for this, they said he didn’t need any pre-certification. So he goes down and has the surgery done. It’s an expensive surgery and when it is all said and done he gets back and his insurance company says we are going to pay twenty percent of the entire cost.
Mr. Meredith: The surgery was I think around thirty thousand dollars and they said they were going to pay what five?
Mr. Fagan: Yes it was just a small percentage. Well naturally the Attorney says, well this crazy. I’ve got to come out of pocket with this, it has already been done, why didn’t you tell me up front? So an appeal starts, because under ARISSA you cannot go into court first, you have to go through the healthcare plans appeal process. This is what we were talking about earlier, in this case, its one of the largest insurance companies in Louisiana not only did it write the healthcare benefit plan for this Attorney’s employer but also is the administrator of that plan.
Mr. Meredith: Same person wearing two hats.
Mr. Fagan: That’s right. In theory they might be down the hall from each other and really don’t communicate but in reality we know that is not the case. They both work for the same company so now the administrator interprets the plan and said well we feel there are other physicians here in Louisiana that did that same procedure even though you couldn’t find them.
Mr. Meredith: And would do it for five thousand dollars.
Mr. Fagan: That’s right. This Lawyer knows the neuromedical community here in Baton Rouge, knows the spine specialists here in Baton Rouge, had contacted all of these different physicians to see if they knew someone who did this procedure and no one knew. These are some of the top spine surgeons in the state and they couldn’t identify somebody who did this procedure. That’s why he went out of state. When he comes back in they say, well not only did someone do it in Louisiana but they do it for a lot less and that’s why we are going to pay so much less.
Mr. Meredith: So they basically denied the appeal so the Lawyer filed suit and Federal law applies. File it in Federal Court, we aren’t going to use the State Court remedies because you can’t. The lawyer has no chance to depose, that is go to that administrator and have them say that oh yeah we have plenty of providers in Louisiana that do that and they will do it for five grand. You can’t go to that person and say I want to talk to you on the record.
Mr. Fagan: You can’t go in. This is the irony, I spoke in length to the attorney for the insurance company in this case. I said let me ask you something, if this Lawyer had called up and said, identify for me, is there a service that this lawyer could call and say identify for me physicians in Louisiana that do this practice, do this procedure, and then let me look at them and figure out which ones seem to be the most well versed in it. Is there a service through your company to do that? No. But after the Attorney has already had the procedure done all of a sudden there is a database they can go to that says what doctors do the service.
Mr. Meredith: But you have to accept that what they are saying is true because you are not allowed to go ask them any questions under oath.
Mr. Fagan: That’s right. Under ARISSA you do not have the ability to walk in and do discovery as you would in a normal case and say ok show me who these doctors are, that they do the procedure and what they charge. You can’t get that. The administrator has the ability to
Mr. Meredith: He’s god. He gets to say this is what I pronounce and you just have to take it and there is nothing you can do about it.
Mr. Fagan: That’s right. The Federal Courts have been stripped really of the ability to walk in and dig deeper as they would in any other case if this were to occur.
Mr. Meredith: Now I will say that I have been reading that there is a Supreme Court reading in a case recently called Travelers. For the first time, has started to address that they are going to look at the intent of ARISSA and not the exact verbatim language to try and apply it in circumstances. In that case it was dealing with New York requiring certain fees and they said the intent was not to exclude the ability of the State to impose fees. Maybe there is some light and a dark, dark end of a tunnel. Right now as it stands, you are at the mercy of your health insurance company because the Federal Government has basically protected them with a Federal law.
Mr. Fagan: What’s happened is, the crazy thing about this is that it has taken thirty five years ARISSA was enacted in 1974, that’s the problem with having a Federal law that once its put in place is subject to lobbying and groups that can really come in and exert their pressure, the law doesn’t get changed. After thirty five years The Supreme Court finally is coming in to take some proactive steps but over that thirty five year period the number of people who have probably become uninsured as a result of not stepping in, that comes back to what we were talking about with the healthcare debate right now making a national problem. Part of the problem was created by ARISSA.
Mr. Meredith: By the Federal Government enacting a law that basically eliminated the system that was set up to deal with this. If ARISSA did not exist that Lawyer could have sued his health insurance company using State law and allege look you acted unreasonably, you’ve got to prove to me that you had doctors that could do it and that would do it for this fee, and be able to show that they are not telling the truth but you cant do that and that is absolutely unfair.
Mr. Fagan: That’s right.
Mr. Meredith: And that is the great concern in what is going on in the Federal Government at this point.
Sean, thank you for being on the show. This is Locke Meredith and Legal Lines with Sean Fagan. Thank you for being with us.
