Frequently Asked Questions about HB 2

How did the Special Session occur?

The Governor called the General Assembly into session after negotiating the outlines of legislation to be considered there with Senate President Miller and House Speaker Busch. The Governor did not consult with MedChi, MHA or other interest groups about the terms of the deal he negotiated with the presiding officers; these terms represented what the Governor judged to be the best achievable deal. After announcing the Special Session, the Governor accepted an invitation to join a MedChi leadership conference call, where he described the outline of issues he had negotiated. He emphasized that he shared physicians’ desire for more robust reforms than those represented in the agreement, and that his efforts to pursue medical liability reform had been the most difficult project of his political career. The Governor reiterated a message he had expressed to doctors throughout the previous year: the driving force in the negotiations was politics, not policy, and achieving any result legislatively would entail a compromise.

What was in the agreement among the Governor, President and Speaker?

The Governor, Speaker and Senate President agreed on an approach to the malpractice crisis, but some important issues were explicitly left unresolved, and agreement about others was sketchy. Ultimately, the unresolved issues overwhelmed the Special Session and produced a veto battle, while bare conceptual agreement about other important issues masked an absence of agreement about details. The result was a chaotic Special Session, whose flawed product is in need of further work.

The three leaders’ agreed-upon approach, in concept, was to combine a slate of modest liability reforms with a malpractice insurance rate stabilization program for physicians, plus increased Medicaid payment, funding for both of which was explicitly left unresolved. In addition to the open funding question, there was virtually no detailed agreement about specifics of the rate stabilization program or even about certain of the liability reform measures. Regarding funding, the Speaker and Senate President advocated eliminating the HMO premium tax exemption, while the Governor proposed using General Fund revenues.

Regarding liability reforms, the leaders agreed to a cryptic list of items described in a document entitled, “Issues Discussion.” (Verbatim reproduction follows.) The items included liability reforms that would be enacted in a Special Session, as well as certain matters that the leaders agreed not to tackle, such as “No restriction on Plaintiff attorney’s fees” and “No Good Samaritan immunity for emergency departments and physicians.”

What was in the Governor’s bill?

Regarding liability reforms, the Governor’s bill was drawn from the “Issues Discussion” document and included the following items. (Comparison of the Governor’s bill to HB 2, final version, and to original House version):

The Governor’s bill did not include various other liability reforms that physicians have advocated, like mandatory use of structured settlements, Good Samaritan immunity for emergency department, attorney’s fee limitations, and collateral source rule.

Regarding its rate stabilization program, the Governor’s bill created a program similar in concept to the one enacted in HB 2 and, if it had been enacted, the Governor’s bill would have been subject to the same basic criticisms. In brief, the Governor’s bill, like HB 2, would have created a type of “reinsurance” program in which short-term rate relief was to be achieved through long-term “reinsurance” agreements with the State. However, the liability of the State under these programs would be limited to the amounts appropriated to the fund, leaving the insurers uncertain whether they would ever be able to recover monies they need from the fund to pay claims, jeopardizing their financial integrity, their AM Best ratings and their relationships with true market reinsurers.

Was broad California (MICRA)-type liability reform ever on the agenda?

No. The negotiation among the Governor, Speaker and Senate President set the agenda for the Special Session. While the Governor stated repeatedly that he supported more robust reforms than those described in his own bill, he likewise reminded physicians repeatedly that in order to accomplish any liability reform, it would be necessary to negotiate with legislative leaders, especially in the Senate.

Did MedChi support the Governor’s bill going into the Special Session?

Yes. MedChi supported the Governor’s bill for the same reasons it ultimately supported HB 2 against the Governor’s veto. The Governor’s bill was an imperfect piece of legislation that made a start on liability reform. The Governor’s bill was a compromise that did not contain the broad California (MICRA)-style reforms, which physicians have advocated. But the Governor’s bill represented action in the face of an emergency that combined modest liability reforms with a commitment to rate stabilization and increased Medicaid payment. All of these statements were true of the Governor’s bill and justified MedChi’s support of it. They also are true of  HB 2 and justify MedChi’s support of that bill.

How does HB 2 compare with the Governor’s bill?

The comparison chart compares the liability provisions of HB 2, as finally enacted, with the Governor’s bill and also with the House bill as passed by the House. It shows that the final product of the Special Session fundamentally is similar to the Governor’s bill. In addition, the House bill included liability reforms—Good Samaritan immunity, expert witness and apology provisions—that were even stronger than the Governor’s proposal, although these were removed by the Senate before final passage. The Governor’s bill did include economic damages provisions creating a presumption that Medicare rates are the appropriate measure for future medical expense, and adjusting lost wages claims for income taxes. The House bill included a version of the latter item and not the former. The final version of HB 2 included neither provision; instead, it substituted a provision that the trial court may engage independent experts to assess economic damages, codifying an existing procedural rule. The following summarizes the differences in the liability provisions:

HB 2:  cap reduced to $812,500

HB 2: same

HB 2: substantially same.

HB 2: same

HB 2: same

Regarding rate stabilization, both the Governor’s bill and HB 2 took the same approach. Both proposed a type of “reinsurance” fund, in which participating insurers would limit their rate increases in exchange for access to the fund. The concept of the fund for participating insurers is to make up amounts they need to pay claims, since they will have limited their premium intake. However, insurers balked at both the Governor’s bill and HB 2 because, in their details, both present problems for the industry. Specifically, insurers are concerned that they will have inadequate funds with which to pay claims because, by participating, they will have limited their premium intake and the legislation (both Governor’s and HB 2) creates uncertainty that they will actually be able to recover the monies they need to pay claims from the fund. As a result, companies in the industry are uncertain whether they can participate in the stabilization program without putting themselves in financial jeopardy. Specifically, insurers other than Medical Mutual know that if Medical Mutual participates because of political pressure or is forced to participate, they will immediately be uncompetitive because Medical Mutual’s rates will be artificially low.

Does this legislation need fixing?

Yes. In addition to the need for additional liability reforms, HB 2 needs remedial work, especially to address concerns of the medical liability insurers about the rate stabilization program. The industry has been digesting the details of the bill and is increasingly uneasy. The companies are concerned that, if implemented as written, the bill could have the effect of driving the out-of-state companies out of Maryland and forcing Medical Mutual to become, in effect, a monopoly. This of course is not in physicians’ interest, so MedChi is working with the insurance industry to address flaws in the bill, and legislative leaders have expressed openness to the prospect of revision.

Why didn’t MedChi support the Governor’s veto?

See MedChi document, Why MedChi Supported Allowing HB 2 to Become Law?

ISSUES DISCUSSION

Consensus Issues

Colorado Apology Law
Mandatory Mediation
Increase in Number of Jurors in civil cases
Fines for Hospitals Failure to Report
Loser pays for Hospital Privileges
Lesser Burden of Proof for Board of Physicians in Standard of Care cases
Health Claims Arbitration Office abolition
Require Insurers to report to MIA
Enhanced Certificate of Merit- Applicable to both parties
Medical Experts- (1) require active clinical practice within one year; (2) board certification required if defendant is board certified; (3) No more that 20% of time in activities related to personal injury claims (not just testimony-related); (4) Bd. Of Physicians review of expert testimony- no sanctions may be imposed.
Economic Damages- Past Medicals paid at actual cost
-         lost wages reduced by tax amount
Future Medical Bills- rebuttable presumption that Medicare rate is correct
Non-economic Damages Cap- remains at $650,000
                                                No $15,000 escalator for 3 years
Increase Medicaid reimbursements- $10 million in general funds for OB’s, neurosurgeons, orthopedists, and emergency room physicians
Insurance- MedGuard protection- Make elective
Establish a People’s Counsel for Medical Malpractice Insurance
No restriction on Plaintiff’s attorney’s fees
No Good Samaritan immunity for emergency departments and physicians
Do not allow evidence of uncompensated care
Offer of Judgment- Available to both parties
“Three strikes and you’re out” for plaintiff’s attorneys who file frivolous cases

 Remaining Issues

Cap on Non-economic Damages in Death Cases- Single Cap
Reinsurance Fund- (a) Mechanics and (b) Fund Source
Periodic payments/structured settlements- $100,000 threshold
Limited collateral source for governmental benefits

Other Outstanding Issues