Memorial Hospital head Harry Maier discusses med mal reform

Ann Knef Jun. 9, 2005, 11:50am

Belleville Memorial Hospital

(Editor's note: Memorial Hospital President Harry Maier responded to several questions related to the hard-fought medical malpractice reform legislation that passed this session in the state legislature, capping pain and suffering damages at $500,000 for doctors and $1 million for hospitals. For balance, calls were made to Swansea plaintiff's attorney Judy Cates, vice president of the Illinois Trial Lawyers Association, for perspective from the plaintiff's bar. Cates did not respond by press time.

According to State Rep. Tom Holbrook (D-Belleville), Governor Rod Blagojevich will travel to the Metro-East to sign the bill into law as soon as the bill reaches him from the clerk's office.

State Sen. Dave Luechtefeld (R-Okawville) said he believes the governor will sign the bill out of political expediency.

"I think he has to do it," Luechtefeld said. "He will do whatever it takes. He doesn't want to go through an election cycle without signing it. It's all about his re-election."

The Record: You have been a vocal critic of the medical malpractice insurance reform recently passed by the state legislature. Please explain your position.

Maier: Memorial Hospital very much appreciates the sustained and aggressive efforts by State Rep. Tom Holbrook, State Sens. James Clayborne and William Haine, and several other area legislators to challenge a number of powerful groups and to take a lot of abuse from their Chicago Democratic colleagues in pressing for meaningful malpractice reforms.

The personal abuse heaped on Sen. Clayborne was simply despicable and unconscionable. However, if you consider the individuals who made these vicious attacks, perhaps the old adage applies that, when you set your expectations low, you are never disappointed.

Our area legislators clearly understand the devastating negative impacts on access to critical care health services for their southwestern Illinois constituents of losing more than 180 physicians from Madison County and St. Clair County during the last two-and-a-half years.

In this hostile legislative environment with which they had to contend, the new provisions for case certification and expert witnesses are an important first step forward in starting to address this crisis. The provision for caps on non-economic damages, although initially set too high, is an important starting point in at least getting such caps on the table.

When doctors, hospitals, and residents in southwestern Illinois started more than two-and-a-half years ago demanding meaningful legislative reforms, several major objectives were identified as being critical to reversing the physician flight forced by malpractice insurance unavailability and unaffordability, and to reducing the lottery-type atmosphere of the Illinois court system that was permitting numerous non-meritorious lawsuits to be filed, costing substantial unnecessary defense costs for these lawsuits, and forcing settlements of otherwise non-meritorious lawsuits--all of which dramatically increased malpractice insurance rates.

First, insurance companies had to be incentivized to return to Illinois.

Second, insurance companies had to have an environment in Illinois through which they could offer malpractice insurance to physicians at affordable or economically-sustainable rates.

Based upon the experience of numerous other states, one of the fundamental underlying mandated reforms involved reasonably capping non-economic damages. This would provide the predictability insurance companies demand in order to offer affordable malpractice coverage to physicians. This applied particularly to ISMIE which insures approximately 75 percent of Memorial's medical staff and which had eliminated offering coverage to new physicians except under very stringent and limited circumstances.

Unfortunately, the $500,000 cap on non-economic damages will not provide the level of predictability demanded by insurance companies to produce lower malpractice rates for physicians. Actuaries for physician insurance companies have previously determined that, as in other states, this cap on non-economic damages can be no more than about $350,000.

At the same time, the $1 million cap on non-economic damages for hospitals will, according to many actuaries, not reduce, but actually increase, hospital commercial insurance rates or the self-insurance financial reserves that hospitals must set aside if they are self-insured. These actuaries believe that this cap on non-economic damages can be no more than about $750,000 without increasing current hospital insurance costs.

Up to this point, no major malpractice insurer has announced even a willingness to consider a re-entry into Illinois to sell malpractice insurance. Without such competition for the one or two major remaining insurers, rates will not decrease, even after the constitutionality of caps on non-economic damages has been confirmed.

Neither has ISMIE, to date, committed to reduce current insurance rates with a $500,000 cap, or to resume offering coverage availability to new physicians at affordable rates. In addition, no major hospital insurers, existing or new, have been willing to commit to reducing current insurance rates for hospitals with the new $1 million cap level.

Also making Illinois' new total $1.5 million cap level very non-competitive are the comparable cap levels on non-economic damages in surrounding states.

For example, and most troubling, just across the river, Missouri passed sweeping malpractice reforms, including a $350,000 single all-inclusive cap for all defendants in a malpractice case. After the constitutionality of this cap has been confirmed, hospitals in Madison County and St. Clair County will face a new exodus of physicians who can commute to abundant practice opportunities in Missouri.


Insurance companies will be able to price malpractice coverage for physicians from Illinois who practice in Missouri dramatically less with a $350,000 single, all-inclusive cap than the same insurance companies could price identical coverage in Illinois with a combined $1.5 million cap.

The same applies to hospital commercial insurance premiums or the amounts that actuaries require hospitals to set aside or reserve if they are self-insured. In addition, these dramatically-different cap levels may encourage a substantial increase in the filing of lawsuits by St. Louis attorneys licensed in Illinois, since the amounts recoverable are so dramatically higher in Illinois.

The combined $1.5 million cap will also continue to encourage plaintiff lawyers to sue multiple parties in most lawsuits, even though several may have had only a minor role in caring for a patient.

The increased malpractice insurer regulation will not encourage insurers to re-enter the Illinois market. The new provisions for strengthened certificate of merit requirements, more stringent expert witness standards, and structured settlements may somewhat help reduce the frequency of lawsuits, but will not, without significant additional reforms, overcome the high cap level limitations which will not incentivize insurers to re-enter the Illinois market or to offer affordable insurance for Illinois physicians.

As a result, if the tort reform enacted so far does little to incentivize insurance companies to return to Illinois, does not reduce current high unsustainable physician premiums, does not reduce current high unsustainable hospital insurance costs, and if the increased insurance regulation scares off companies from re-entering the Illinois market, the major objectives of tort reform will not be achieved--and doctors will continue to leave Illinois for states which have enacted meaningful reforms.

Quite frankly, it won't matter at that point who turns out to be right in this debate. Hospitals will not be able to recruit physicians to replace those that have left or those that will leave unless the malpractice insurance unavailability and unaffordability problems are resolved and the perceptions by doctors of unfair treatment by the local court systems are addressed.

Consequently, the Illinois legislature needs to start working now on Step Two and subsequent steps to enact additional meaningful reforms that will resolve these problems on a long-term basis. If not, this area's healthcare system will be irreparably damaged, jobs will be lost, and access to critical healthcare services for voters and their families throughout Southwestern Illinois will be further curtailed.

The Record: There appears to be a split in the medical community--those that believe the compromise was better than no reform at all--and others who believe no action would be better than a bill that doesn't go far enough. How will this divide impact the Metro-East?

Maier: While there may be some differences of opinion among various hospitals and physicians, I have spoken with no one who believes the legislation in its present form and by itself will actually resolve the malpractice crisis and keep physicians in Illinois.

Some believe it is an important first step--others believe to the contrary. I suspect that, over the next several weeks, all of the parties will agree that additional reform measures need to be enacted as subsequent steps forward in order to incentivize insurance companies to return to Illinois and to offer affordable malpractice coverage essential to keeping doctors in Illinois.

The Record: With whom and/or what are you most frustrated regarding the results in Springfield?

Maier: I am particularly frustrated that powerful Chicago Democratic politicians don't seem to give a damn about the seriousness of the healthcare crisis in southwestern Illinois caused by the loss of over 180 physicians in our two counties over the last two-and-a-half years because of the unavailability or unaffordability of malpractice insurance for our physicians.

I am particularly disappointed that these powerful politicians were able to force a "compromise" on the cap levels by demanding that they be increased from $250,000 for physicians and $500,000 for hospitals as originally proposed by Rep. Holbrook.

I find the comments made about Sen. Clayborne by some of his colleagues to be both offensive and totally inappropriate for elected legislators to make. They need to be held accountable.

The Record: What else do you predict will happen in the short- and long-term regarding the med mal legislation?

Maier: The longer the governor delays signing this legislation, the more opportunity it will provide for a flurry of lawsuits to be filed against doctors and hospitals before the new legislation takes effect.

Second, I believe that Memorial as well as a number of other self-insured hospitals will, as a result of the $1 million cap levels for hospitals, see self-insurance costs rise significantly at the end of this year as a result of higher actuarial funding requirements for their self-insurance programs.

The Record: In general, how has the cost of defending Memorial Hospital in malpractice suits affected operations?

Maier: During the last several years, Memorial Hospital has spent about $1.5 million each year in defending malpractice cases.

Obviously, these are resources that could have been better allocated to a variety of other productive purposes. Because of being forced to form the Memorial Captive Insurance Company to keep 32 physicians (to date) available in the community since they could not obtain malpractice insurance elsewhere or obtain insurance at economically-sustainable rates, Memorial's operations have not been impacted to the degree experienced by some other area hospitals.

However, operating a malpractice insurance company on a long-term basis in addition to dealing with the financial challenges of today's healthcare environment is not desirable or in the best interests of the patients Memorial serves throughout southwest Illinois.

It is in everyone's best interest for the Illinois legislature to pass additional reforms as quickly as possible to incentivize other insurers to return to Illinois so that Memorial can concentrate on one thing--serving the healthcare needs of residents of Southwest Illinois.

Want to get notified whenever we write about Illinois Trial Lawyers Association ?
Next time we write about Illinois Trial Lawyers Association, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

Illinois Trial Lawyers Association
401 W Edwards St
Springfield, IL 62704

More News