Deal would raise cap on malpractice suits in Va.

Virginia's doctors and trial lawyers have negotiated a truce in their battle over damage awards in medical malpractice cases, and their compromise is likely to become state law this year.

The Medical Society of Virginia and the Virginia Trial Lawyers Association agreed to a plan that calls for increasing the state's limit on payouts in such lawsuits by $50,000 a year, beginning in 2012, until it reaches $3 million in 2031.

The cap has remained frozen at $2 million since 2008. For the past two years, the groups have been trying to agree on the issue, at the behest of the leaders of the General Assembly's courts of justice committees.

"We invested a lot of time and energy and resources into coming to this point," said Michael Jurgensen, the medical society's senior vice president of health policy. "We feel it's good for physicians. We feel it's good for patients, and we feel it's also good for the trial bar in the state."

Jack L. Harris, the trial lawyers association's executive director, said his group would never be fully satisfied with a law that included the cap, but "we are happy to have been able to sit down with the medical society and work out a way to move forward."

Two identical bills outlining the agreement already have been filed for the General Assembly session beginning Wednesday. Sens. Richard Saslaw, D-Fairfax County, and Tommy Norment, R-James City County, introduced SB771. Del. David Albo, R-Fairfax and chair of the House Courts of Justice committee, is the chief patron of HB1459.

In 1976, Virginia established a $750,000 cap on medical malpractice awards, which state legislators have gradually increased over the following three decades, according to the medical society.

The Virginia Birth-Related Neurological Injury Compensation Program pays for a lifetime of medically necessary expenses for children with birth-related injuries, keeping those cases out of the courts.

Virginia is among a handful of states to limit both economic and non-economic awards in malpractice suits, according to the Physician Insurers Association of America. Virginia's $2 million cap before the new agreement was one of the highest, said Larry Smarr, the association's president.

Base rate premiums for medical malpractice insurance in Virginia ran between $9,000 and $76,000 a year in 2010, depending on a doctor's specialty, said Michael Matray, editor of Medical Liability Monitor. That ranked in the mid-range compared to other states, he said: "It's very reasonable to practice in Virginia."

Virginia's medical society has supported the cap, saying it holds down medical liability premiums and makes the state an attractive place for physicians to practice.

Jurgensen said his group didn't see a pressing need to raise the limit, as few of the state's payouts came near the $2 million cap. Data from the Virginia Board of Medicine showed that seven out of 111 claims in 2008 came in above $1.5 million, he said.

"That number remains very small, even to this day," Jurgensen said. "We felt that the cap at that time was still reasonably set."

By contrast, the state's trial lawyers' association traditionally has opposed caps. Juries should have the power to set award amounts, Harris said, and payouts should cover future medical care needed by a plaintiff.

"In the end, someone is going to pay for this health care," he said, "and our belief has always been that it ought to be the negligent party."

Harris also said that medical liability insurers' rates seem to depend more on how their investments perform than on a state's cap or payouts. Jurgensen and Smarr said return on investments affects rates, but not more than other factors, such as awards and the costs of defending claims.

The two sides identified their priorities after legislators made it clear that they expected a change.

The trial lawyers wanted to make sure the cap kept rising, to more closely reflect inflation. The medical society wanted the increase to be gradual, so physicians and insurers could better adjust.

An agreement between these two interests - and for such a long period of time - struck academics, trade association leaders and others as unusual.

The Virginia Hospital and Healthcare Association supports the agreement, said Katharine Webb, a senior vice president.

However, the group also wants the medical liability reform effort to address a 2006 decision by the Virginia Supreme Court that allows factual documents about hospital incidents to be admitted as evidence at trial.

Previously, many Virginia circuit courts considered such incident reports to be privileged quality-assurance documents.

In the malpractice-cap agreement, Thomas L. Hafemeister, an associate professor at the University of Virginia School of Law, said both sides risked medical inflation going against their interests in such a long-term agreement.

Jurgensen and Harris said they considered tying the cap to inflation, but that made the calculation more complicated and uncertain.

Hafemeister and others predicted the rising cap wouldn't cause physicians to pass along significant fee increases to patients, at least in part because their fees usually are negotiated with health insurers rather than directly with patients.

"Managed care has been pretty effective at holding down their ability to pass on costs," Hafemeister said.

Albo said his bill could be heard on the House floor as soon as Jan. 21.

"I'm actually surprised they came to a decision," he said. "If it makes sense to them and is reasonable to them, then it's fine by me."

Amy Jeter, (757) 446-2730, amy.jeter@pilotonline.com