Bob White 00:00:00 It's because just like a nuclear detonation, there's fallout associated with those. Well, there's fallout associated with these nuclear verses.

Keith Reynolds 00:00:21 Welcome to Off the Chart with Medical Economics, a podcast featuring lively and informative conversations with healthcare experts, opinion leaders and practicing physicians about the challenges facing doctors and medical practices. I'm your host, Keith Reynolds, and today we feature a conversation between medical economics editorial director Chris Maslany and Bob white, president of the doctor's company. This one is an in-depth look into state level changes to malpractice caps, the recent explosion in massive plaintiff verdicts, and what all this could mean for your bottom line.

Chris Mazzolini 00:01:02 Bob white, president of the doctor's company. Thanks so much for joining me on the show today.

Bob White 00:01:07 Well, I'm happy to be here, Chris. I'm looking forward to talking to you.

Chris Mazzolini 00:01:10 Let's start with a definition of the topic we'll be discussing. Medical malpractice damage caps. You know, what are they and why they are they important for physicians to know about them?

Bob White 00:01:23 Damage caps are a way that individual states choose to address limitations on damages that can be awarded to patients who sue health care providers for claims.

Bob White 00:01:37 generally speaking, they only apply to non-economic damages. there are a couple of states that that limit a total recovery, which which also includes the economic losses, but generally speaking, they only apply to non-economic damages. And states enact those laws as a way of controlling loss costs, which are the main drivers of insurance premiums and most of these states that enacted, caps on non-economic damages did so at a time when insurance was either unavailable or unaffordable for doctors. And they passed this element of public policy as a way of controlling the cost of insurance to keep healthcare available and and affordable in their states.

Chris Mazzolini 00:02:23 So are these caps something that are, they stay the same every year? Are they, you know, linked to inflation or anything like that? Can you kind of describe like how these tend to grow?

Bob White 00:02:36 Sure. There are some caps, on damages that were enacted with inflationary escalators that are tied to an index like the consumer price index. And they go up every year, every two years, depending upon what the law says, to keep pace with inflation.

Bob White 00:02:54 There were some states who enacted non-economic damage caps that had no inflationary escalator associated with them. So they sit where they were at the time the cap was enacted. And in some cases that goes back to the middle of the 70s, the 1970s. And California, for example, is a state like that in Colorado is also a state like that, that had caps with no escalator associated with them.

Chris Mazzolini 00:03:23 You bring up Colorado. I know that there's been some news lately about malpractice caps in Colorado. Can you talk a little bit about what's going on in that state? And you know why? It's something that, you know, doctors should take note of?

Bob White 00:03:37 Well, what's going on in Colorado is actually a carbon copy of what went on in California. Okay. And in in 2019, the plaintiff's bar decided to get enough petitions, signatures on a petition to put a referendum on the ballot to abolish the cap on non-economic damages in California. that was scheduled to go on the ballot in the presidential election of November of 2020.

Bob White 00:04:10 But because of the Covid, problem, they chose to defer that pursuit of that initiative to a later date because they were concerned that, voters would be enamored with doctors and health care providers. And it wasn't a good time to to try to abolish the Cap. So they reinstituted their pursuit. And, late 2021. And what happens is, both sides do polling to determine what their positions ought to be and, and how best to tell their story to the public. And the side that was fighting to keep the cap, on the books started looking at the polling results and and feeling that they didn't have a good chance of defeating the referendum. So they entered into negotiations with the plaintiffs bar and the plaintiffs bar, and the side representing health care providers that benefited from the cap worked out a compromise that allows the cap to go up over a ten year period, and then after it goes up to the maximum at at the end of ten years, it has an inflationary escalator that keeps the cap moving north. What happened in what happened in Colorado is precisely the same thing that happened in California.

Chris Mazzolini 00:05:40 So just for context, for our listeners, can you explain a bit like what are the numbers we're talking about? Like, what is the cap right now in California if you if you have that.

Bob White 00:05:51 Well, today the cap in California, it just went up again. I think it's 400,000. and it goes up and it's in 20 2023 is when the change took effect. It was 350,000. I think it goes up in $50,000 increments every year for ten years. Okay. And the the cap is part of the the package in California. What the plaintiff's bar got in California is not just an increased cap, but prior to this new legislation, there was only one cap in California, and it applied to all health care providers. So the patient only got one cap. Okay. you could only collect before the change $250,000, and that's all you could collect. Now, California has three caps associated with the law. You can have one for a doctor, a second cap for another doctor, and a third cap for a health care institution, okay.

Bob White 00:07:02 Or a health care entity. So not only do they have a cap of about $400,000 today, but they have three of them. So essentially, if the plaintiffs lawyers creative enough to find causes of action that they can successfully prosecute against, two doctors and a health care entity, the cap is essentially $1.2 million per claim. on for non-economic damages.

Chris Mazzolini 00:07:32 Yeah. In Colorado, you're saying that that we're basically seeing the same situation play out that we saw in California? Look.

Bob White 00:07:39 Colorado's law is already passed, okay? They went to the table with the plaintiffs bar, just as California did, and negotiated a deal that they presented to the legislature and got the legislature to pass a bill that both sides negotiated and agreed upon. And so that law was passed I believe in May. And and it is a done deal.

Chris Mazzolini 00:08:05 Okay. When we see the plaintiffs, when you're saying the plaintiffs bar is pursuing this just just for general context in our conversation, what is the reason why like what is their argument for increasing the caps?

Bob White 00:08:18 Well, they honestly feel they're advocates for their potential clients okay.

Bob White 00:08:24 And and they feel and and the problem with caps with no escalator is a cap passed 40 or 45 years ago, may have been a good thing and made sense 40 or 45 years ago, but it doesn't apply to real life today. you can you can also look at it from the standpoint of who else benefits besides the patient. The lawyers do. Okay, because the whole idea behind pain and suffering was, was to create a pot of money to pay a legal fee, a contingency fee because it it's hard for people to, award money, for economic damages and economic losses alone, knowing that a lawyer is going to take a piece of your lost wages, your medical bills, all of those things that came out of your pocket. So a long time ago, the whole concept of pain and suffering was brought about primarily to manufacture a fee for the contingency fee based plaintiff's lawyer.

Chris Mazzolini 00:09:30 Okay. Yeah. Thanks for sharing that context. That helps. is this something you had described a bit before? How different states have sort of different, you know, laws and rules on the book when it comes to caps? Is this a trend we're going to see in other states, like because of what California and Colorado have done, is this other other states that are going to try to follow suit?

Bob White 00:09:49 Well, there are 26 states with caps.

Bob White 00:09:54 what we're seeing, and it's all related to social inflation, is an effort to roll back tort reforms, across the board. The trend isn't for there to be new caps. In fact, the the most recent, new cap that was enacted was Iowa back in, I believe it was 2022 or 2023, in response to a $97.4 million judgment against a hospital and a group of OB gyns for a brain damaged baby. And once they saw that verdict, that became the poster child for tort reform. And they immediately passed a cap on non-economic damages. But clearly, tort reforms are under attack all across the country. there's just the American Tort Reform Association just awarded five states the title of, lawsuit infernos for raising their cap as Maryland and, and New Hampshire did, Missouri was one of the states they cited, for defeating five bills. The most important of which, from from a potential defendant's point of view, is lowering the statute of limitations from five years to two years. Their legislature defeated that bill, and they also awarded a, Colorado that designation for the passage of their tort reform bill and New York for the Grieving Families Act, which would, it's been passed twice before and vetoed by the governor.

Bob White 00:11:30 This is the third year they've passed it, which would give New York the most lucrative wrongful death statute in the country and allow people to recover that no other state allows to recover in a wrongful death claim. So, it's the trend driven by changes in societal attitudes is clearly tort reform rollbacks. And when you hear us talk about social inflation, that's part of the mix that we're talking about.

Sydney Jennings 00:12:06 Say, Keith, this is all well and good, but what if someone is looking for more clinical information?

Keith Reynolds 00:12:11 Well, then they want to check out our sister site, Patient Care Online. Com the leading clinical resource for primary care physicians. Again that's patient care online.com.

Chris Mazzolini 00:12:27 I mean you know obviously we just we just kicked off the football season. And one of the things I think about with like malpractice damages is that it's almost like an athlete's salary. Like once somebody breaks that barrier and signs a lucrative contract, it seems like other similar things sort of follow suit. Is that sort of what we're talking about? Like, once, you know, you get a giant, you know, verdict like that 94 million won that you had mentioned.

Chris Mazzolini 00:12:51 then do we, do we that sort of like, you know, raise the raise the sea level on all of these things? Is that sort of what we're thinking about here?

Bob White 00:13:00 Well, actually, societal attitudes changed and that's engendered these verdicts. Okay. in the last ten years, the number of verdicts in excess of $10 million nationwide has increased 400%. In other words, from the end, from beginning of 2014 to the end of 2023, we saw verdicts in excess of $10 million go from 12 per year in 2014 to 59 per year in the end of two of 2023. Okay. And the average of the top 15 medical professional liability verdicts that that we watch these every year, the average is going up 240% from 2014 through 2023. In fact, in the one year period from 2022 to 2023, the average of the top 50 verdicts went from 32 million to 48 million, a 50% year over year increase in the average. That's what we're talking about here.

Chris Mazzolini 00:14:13 So obviously, you have these societal pressures, you know, to get back to the topic of the of the caps a bit, you know, what, what have you, you at the doctor's company or and just in the malpractice insurance industry in general, you know, what have you found is some of the, the after effects of caps rising like what what what what are the side effects for, for lack of a better word, on what happens when these caps rise?

Bob White 00:14:38 The effects on us are the effects on every insurance company, I think.

Chris Mazzolini 00:14:42 I think both the effects on the malpractice industry. But but even more important, the effects on physicians and physicians who maybe are dealing with an adverse event. Like what? What is sort of the after, like when a cap rises, what happens as a result? Do we see more lawsuits? to be seen. Higher verdicts. You know what? What are we talking about here?

Bob White 00:15:03 Well, the pressure on the people who have to make the decision about whether to try a case or settle it, you're less likely to try cases when you see verdicts happening at least once a week, somewhere in this country that are astronomical. Okay. So what it does is it tends to cause us to want to try fewer cases, for one thing. And and on the other hand, when you're in the claim settlement process, talking to the plaintiff's lawyer about settling a case, they write demand letters to us that go to the a copy of it goes to the doctor. Okay. In these cases where the hospital and they talk about how their case compares to other cases that have been tried in that general vicinity.

Bob White 00:15:50 Okay. That venue is what we call it. And they try to pick cases that are similar in terms of their facts and circumstances and similar in their injury to the one that we're trying to settle, and they'll show you these big verdicts, okay. And and these big verdicts not only lower our our desire to try these cases, but they drive up how much it costs us to settle. And nothing drives up lost costs faster than settling more cases and paying more for every settlement. Okay, that's the fallout. When we call these cases nuclear verdicts, it's because just like a nuclear detonation, there's fallout associated with those. Well, there's fallout associated with these nuclear verdicts, and that's the fallout. Okay. Your verdicts are the yardstick by which every settlement is measured. Okay. And that's that's the axiom that we deal with. And when you're a doctor and you look at these numbers and you have $1 million policy, as most doctors in this country have, you have to ask yourself, do I want to risk everything I've taken a lifetime to earn, to try to protect my professional reputation.

Bob White 00:17:08 It's a difficult question. They're already suffering from burnout because of all the things that are going on in society. And then you put the risk, this decision and the risk associated with this decision in front of them just hastens the syndrome.

Chris Mazzolini 00:17:25 Yeah. You drive a lot of doctors. Yeah. I mean, I imagine a lot of doctors are sort of like when you're facing one of these situations, it's got to be, you know, incredibly stressful, are sort of, you know, wrestling with, you know, wanting to prove their innocence. But then the potential risk, like you said, of, you know, dealing, you know, like it's like so I imagine the pressure to settle is probably very high.

Bob White 00:17:48 It is. And and we still have doctors who who feel strongly about defending their cases. But if we don't turn this situation around in the courtroom, it's going to just get worse as time progresses. the biggest verdict in 2014 was $62 million. The biggest verdict in in 2023 was 485 million.

Bob White 00:18:12 The biggest verdict in 2024 is 535 million. Okay. So we're talking about humongous numbers okay. And and it's just something has to be done. And and and the obvious answer is caps. Okay. But caps are being eroded. the public's heart just isn't in caps. It may take it may take further restrictions on access to health care before they see the connection between what they're doing to the medical profession through these cases and the quality of their own life. They've already lost the disconnect because the problem of nuclear verdict isn't isn't just associated with medical professional liability. It's across the board. They haven't gotten the message that they're paying for more for goods and services when they find against these companies. Yeah, I think there's a feeling that there's some corporate irresponsibility that they're trying to correct. And and it's it's true that the tactics the plaintiffs lawyers are using in this courtroom have have helped engendered these big verdicts. They it's called the reptile theory was put forth in a book in 2009, written by a trial lawyer and a jury consultant who's usually a psychologist, and it teaches them how to use tactics, that cause fear in the minds of jurors.

Bob White 00:19:50 In other words, it it triggers the part of our brain we inherited from the reptiles. neuropsychologists. Tell us that's the area where the fight or flight syndrome emanates from, and they use tactics designed to show the defendant as a threat to the community safety, who has to be punished in order to deter others from acting in a similar way. So they're getting these verdicts to to punish the defendant. A total perversion of our court system, which was designed to make an injured party whole. And yet we're producing verdicts that that enrich the next five generations of the plaintiff's family.

Keith Reynolds 00:20:36 Oh, you say you're a practice leader or administrator. We've got just the thing. Our sister site, Physicians Practice. Com your one stop shop for all the expert tips and tricks that will get your practice really humming again. That's physicians practice.com.

Chris Mazzolini 00:20:55 Yeah. So, you know, I'm thinking as we're as we're talking like for physicians, you know, they always tell us at medical economics how much sort of the fear of malpractice. It's like one of those main things that, like, keeps them up at night, right, of worrying about something like this creeping up.

Chris Mazzolini 00:21:09 And you know what? What advice obviously, you know, at the doctor's company, you guys are you know, you have a, you know, physician clients, policyholders, and you have a, you know, data about, you know, what? When things go right and when things go wrong, you know, what? What advice do you have for physicians? Like what are the like? The basic stuff that they need to do is sort of their defense hygiene to protect themselves from, you know, you can never eliminate a completely. But but what are some of the things that you can do that you have to make sure you're doing, or maybe stuff you shouldn't be doing to make sure you're as ironclad as you can be? if something comes up.

Bob White 00:21:48 Well, doctors hate to hear it, but it begins and ends with a good set of records. And there's a lot out there in the way of electronic health care records. Now that help queue logic and completeness in charting. And and and so we we like those systems.

Bob White 00:22:07 And there's some of these that are capturing the conversation for example between a patient and a physician which is, which is good from the standpoint of making the doctor more connected to the patient when they're in the exam room and helping to build rapport. and, and it used to be that, what was generally true, was also true of malpractice cases. You had to not like somebody in order to sue them. Okay. Today it's not so much the truth. It's an economic exercise more than anything else today. But building rapport was also, an important aspect of this. And and it remains that today, although it's probably less true today. I always talked to doctors about, talking to their patient with one foot in the hallway and one foot in the exam room or their hospital room. you're you may say all the right words and you may say exactly the same thing, but your body language is telling the patient a different story. Building that rapport with a patient and getting that patient to feel comfortable enough to ask you the kinds of questions they need to ask to get comfortable with a less than perfect outcome is probably the most important thing, because the bottom line that that drives patients to plaintiffs lawyers is to get answers they couldn't get, the patient couldn't get from a health care provider.

Bob White 00:23:37 Okay. So making that patient comfortable enough with you as a person to ask you the things that are bothering them, along with a good set of records, is probably the best protection you could have against a lawsuit.

Chris Mazzolini 00:23:55 You know, one thing as you're speaking that I, was thinking about is how, you know, many of our physicians that, you know, we talk to a lot of physicians on a regular basis. And there's been a feeling, I think and, you know, we our main audience is primary care. And there's which has been which is very relationship driven. But there's been a lot of sentiment lately that like, health care has become more transactional, right? More patients are, you know, going to like whether it's like the pharmacy, you know, clinic or an urgent care or like, you know, it's like I have an ear infection. I need to get that dealt with. And there's less about the relationship. And I wonder if you know what your thoughts are on, like sort of some of that relationship sort of eroding out of modern health care that is kind of maybe contributing to some of this.

Bob White 00:24:44 Well, we refer to it as retail medicine. When you go to CVS or you go to Walmart to shop, and you also make a visit to a health care provider in, in the retail setting. And that's, that's a. little bit on the problematic side because that that rapport that needs to get built may not be built quite the same way. over time, I may get proven wrong on that. I mean, it it all comes down to how well that health care provider, regardless of the setting they're in, relates to the patient and makes that patient feel comfortable. but these are things that that create barriers for that report to be built when it's transactional and not seen as a rendering of a personal service, a deeply personal service. And, and that's that's how we want patients to feel deeply involved with their doctor.

Chris Mazzolini 00:25:46 Yeah. I mean, definitely like on our from what we hear from physicians is that that's what they, they that's why they went into medicine to begin with that they want that relationship.

Chris Mazzolini 00:25:57 I guess the last thing we've covered a lot of ground. Is there anything, whether it's about damage, caps or anything in regarding to the the malpractice market that that we haven't discussed that you would like to mention?

Bob White 00:26:10 No, I think I think doctors, have a lot of choices out there. you know, we're a doctor owned company, and, and I always feel, concerned when I hear doctors talk about us as just another, set of, letters in the alphabet soup of insurance companies they could buy insurance from. And and I think when doctors look, for their choices, they need to look at the business model, the company the company is working with. And, and we're by our members who are all doctors and for our members and everything we do, we are not a scorekeeper. Okay? There there are even some doctor owned insurance companies who have become scorekeepers. In other words, they take the losses, they add their overhead, and they send out the bills. Okay. That's how involved they are in trying to change things.

Bob White 00:27:12 You want an insurer that's going to advocate for you, okay. Across the country if if they're big enough as we are okay, we're a nationwide insurer. We get involved in over 5000 pieces of legislation across the country. We are not willing to accept the status quo as a lot of insurance companies do. You want somebody who's going to advocate for you, because advocacy is the only thing that's going to turn around. The problems we've been talking about here today.

Chris Mazzolini 00:27:45 Bob White is the president of the doctor's company. Bob, thanks so much for joining me today. I really appreciate it.

Bob White 00:27:50 Chris, it's a pleasure to be here.

Keith Reynolds 00:28:06 Again, that was medical economics editorial director Chris Maslin and Robert White, the president of the doctor's company. My name is Keith Reynolds, and on behalf of the whole medical economics team, I'd like to thank you for listening and ask that you please subscribe to the show on Apple Podcasts and Spotify. Also, if you'd like a digest of the best stories Medical Economics publishes delivered straight to your email six days a week, subscribe to our newsletter at Medical economics.com, medical economics, Patient Care Online and Physicians Practice are all members of the MJD life Sciences family.

Keith Reynolds 00:28:37 Thank you.