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House passes bill to cap ‘pain and suffering’ payouts in medical malpractice suits

The Capitol in Washington is seen at dawn, Wednesday, Jan. 18, 2017,  as the city prepares for Friday's inauguration of Donald Trump as president. (AP Photo/J. Scott Applewhite)
J. Scott Applewhite/AP
The Capitol in Washington is seen at dawn, Wednesday, Jan. 18, 2017.

The U.S. House of Representatives voted Wednesday to pass a bill that would set a federal limit on settlements for patients in medical malpractice lawsuits. The Protecting Access to Care Act would cap payments at $250,000 for non-economic damages, commonly known as “pain and suffering” compensation. Payments for economic damages, or actual out-of-pocket medical expenses and lost wages, would have no limit.

The law is based on California’s medical malpractice damages cap, which went into effect in 1975. California is among a handful of states with the $250,000 ceiling — the lowest in the country. States that currently have higher limits or no limit at all would have to abide by the new guidelines.

The bill is designed to save health care costs through two channels:

  • Supporters say it will directly reduce overhead for doctors by cutting down their malpractice insurance premiums.
  • Indirectly, they argue it will persuade doctors not to practice defensive medicine, reducing waste from unnecessary tests and procedures.

“What you’ll probably see if you adopt non-economic damage caps is a modest to small reduction in health care costs,” said Seth Seabury, health economist at the USC Schaeffer Center for Health Policy and Economics. “Malpractice premiums total are very small compared to general health care expenditures. There’s a lot less spending on malpractice insurance than there is on prescription drugs or other bigger-ticket items.”
The Congressional Budget Office estimates that if passed, the bill could save about $50 billion over the next 10 years. Total U.S. health care spending averages about $3 trillion per year.

A 2010 study published in Health Affairs estimated the annual cost to the health care system due to malpractice insurance premiums and defensive medicine at less than 3 percent of total spending. But studies vary widely in their estimates, putting the cost of defensive medicine anywhere from 0 to 40 percent, Seabury said.

That range should leave lots of room for cost savings in states with strict damages caps — but research has shown that medical liability reform hasn’t convinced physicians to change their behavior.

“Even in states where there are caps, doctors get sued,” said Allison K. Hoffman, a professor at the UCLA School of Law. “And doctors, rightfully, do not want to be sued. They don’t want the stigma or the time of liability.” 

A national damages cap may not do much to rein in costs, she added, but “to the extent it does, it does so by taking dollars out of pockets of people who have been injured.”

Lower-income people who can’t claim high economic damages are particularly affected, she said, because it becomes more difficult for them to find a lawyer willing to take their case.

The bill heads to the U.S. Senate next. President Donald Trump has indicated that if the Senate passes it, he will sign it.