State nears changes in medical malpractice

ALBANY -- With his push to secure medical malpractice changes in this year's budget, Gov. Andrew M. Cuomo has ignited an emotional debate that pits doctors against patients over how to compensate negligence victims.

The battle has featured two of the state's most powerful interests -- hospitals and trial attorneys -- going head-to-head.

"It will be one of the biggest debates we'll have this year and in recent years. Period," said state Sen. Kemp Hannon (R-Garden City), Senate Health Committee chairman and a supporter of malpractice caps.

Cuomo's plan

Cuomo would limit awards for pain and suffering -- as opposed to medical expenses and lost income -- to $250,000. Other states with such caps include California and Texas.

He also would create a state indemnity fund -- made possible by a new tax on hospitals -- to pay malpractice awards to families of infants who suffer brain damage at birth, the impetus for many lawsuits.

"This plan is the best I've seen," Cuomo says of his $52-billion Medicaid budget, which includes the malpractice changes. "Might there have to be adjustments to the plan? Of course. But will the plan work as a totality? Yes."

But Assembly Democrats, led by Speaker Sheldon Silver, a trial attorney himself, oppose the measure. Lawmakers and the governor were still hammering out the issue in budget talks. The deadline is Friday.

Dr. Allen Ott, a Southampton obstetrician, says he hopes Cuomo wins that battle. Physicians say huge malpractice insurance costs are making it nearly impossible for obstetricians to stay in business.

Beginning in 1972, Ott has delivered thousands of babies at Southampton Hospital. He enjoyed the work but gave it up in 2007 when his insurance premiums rose once again -- to more than $188,000.

The obstetricians in his practice, Hamptons Gynecology and Obstetrics, now pay about $200,000 a year each -- the going rate on Long Island, which has the state's highest malpractice premiums. Ott said leaving obstetrics slashed his own premiums nearly in half.

"We're extremely busy but it's hard for us to attract doctors to join us," Ott said. "They don't want this costly malpractice insurance."

He added: "When premiums get to almost $200,000 a year, something's gotta give."

Malpractice awards cost New York hospitals and doctors more than $640 million in 2009 -- more than the combined total of the next-ranked states, Pennsylvania and California, according to the Kaiser Family Foundation.

Meanwhile, New York physician insurance premiums have increased more than 75 percent since 2003, the state Medical Society says. It estimates the $250,000 cap would reduce premiums by 24 percent. Hospitals accepted Medicaid cuts and a tax on inpatient revenue in exchange for the cap and infant fund, which together they say saves them $700 million a year.

"This is an idea whose time has come," said Dr. Leah McCormack, of Forest Hills, the medical society president.

But many groups oppose the idea, including the New York State Bar Association, a variety of consumer advocates and the AARP. They say Cuomo's plan would allow wealthy plaintiffs to continue to collect huge courtroom awards based on lost income, while saddling the poor, seniors and very young, whose incomes are smaller, with the cap.

Cuomo's critics instead want the state to make hospitals and doctors improve safety measures.

"The governor's deal with the hospitals is lose-lose," said Blair Horner, of the New York Public Interest Research Group. "Patients still get hurt, and they won't get money when they do."

A family's story

That's how Errol and Carol Ferguson feel.

Their daughter, Shanikki, 26, suffered severe brain damage in 2006 after, they contend in a lawsuit, medical mistakes were made in her treatment at Franklin Hospital Medical Center in Valley Stream.

According to their suit in State Supreme Court in Queens, Shanikki went into a coma after an accidental painkiller overdose was administered. Then 21, she was in the hospital for back pain from her sickle cell trait condition, treatment she had received several times before at Franklin without a problem, her family said.

Shanikki, a Duke University graduate who now cannot move or speak, is diagnosed with static encephalopathy -- defined by medical dictionaries as "unchanging, permanent brain damage." Doctors say she won't improve.

Franklin, several physician practices and 20 doctors are named as defendants. In court papers, the hospital denied any negligence. Lawyers for the defendants declined to comment. A trial is set for June. The bar association believes Cuomo's plan, if enacted this year, would apply to Shanikki's case, said a spokeswoman.

"How can you put a cap like that on a situation like my daughter's?" asked Errol Ferguson, 54, of Valley Stream, a state Labor Department auditor.

Shanikki now lives at Park Terrace Nursing and Rehabilitation Center in Queens. She smiles when her mother, a law firm recordkeeper, plays "Friends" reruns and cries when she sees tears in her mother's eyes. Carol brings her daughter home each weekend, where the family has arranged for physical therapy services that private insurance no longer will cover. It costs $2,000 a month.

Ferguson's lawsuit asks for $1.3 million for lost income and unspecified amounts for medical expenses and for suffering. Her parents say a $250,000 cap might leave them vulnerable to unforeseen expenses.

"It will take so much time and money to care for my daughter," her father said.

But Ott and other physicians say large payouts hurt doctors and patients, sweeping money out of the health system and causing defensive medicine, such as unneeded Caesarean section births. "What we have to do," Ott said, "is look at the overall good."

THE CUOMO PLAN

In his Medicaid budget bill, Gov. Andrew M. Cuomo has proposed a two-pronged plan to reduce medical malpractice payouts.

1. A $250,000 cap on 'non-economic damages.

How it works: Victims who win in court could still get large payouts for medical expenses and compensation for lost income. But the amount they could win for "pain and suffering" would be capped.

What it saves: $384 million annually for hospitals; doctors expect their malpractice insurance premiums to fall by 25 percent. The state gets $170 million in new revenue from an assessment the hospitals accepted in exchange for the malpractice savings.

2. A new state-backed insurance fund for neurologically impaired infants.

How it works: Parents of infants who win a settlement or verdict would have to apply to the fund for part of their payout. The fund only indemnifies hospital defendants; doctor payouts still would flow through their insurance companies. The state would contribute $100 million a year to the fund.

What it saves: Another $320 million a year for hospitals. The state saves $40 million a year in Medicaid.

-- Michael Amon