Health Law Daily Wrap Up, HEALTH CARE REFORM—CBO REPORTS: Malpractice legislation would set limits on recoveries, lower health care cost, (Mar 24, 2017)

By Susan L. Smith, J.D., M.A.

Protecting Access to Care Act of 2017 (H.R. 1215), which would impose limits on medical malpractice litigation in state and federal courts, would lower costs for health care directly and indirectly, according to a cost estimate published by the Congressional Budget Office (CBO). The CBO and the Joint Committee on Taxation (JCT) estimated that enacting the legislation would reduce deficits by almost $50 billion over the 2017-2027 period. Further, the CBO noted, national health spending would be reduced by about 0.4 percent, if the legislation was enacted. The limits proposed under H.R. 1215 would cap awards and attorneys’ fees, modify the statute of limitations, and eliminate joint and several liability (CBO Report, March 22, 2017).

Lowered costs. H.R. 1215 would lower premiums for medical liability insurance and reduce the use of health care services prescribed by providers when faced with less pressure from potential malpractice suits. Lowered premiums and the reduction in health care services, would lead to lower spending in federal health care programs and lower premiums for private health insurance. Lowered costs for health care arising from enactment of the legislation would lead to an increase in taxable compensation and a reduction in subsidies for health insurance purchased though a marketplace.

The CBO estimates that the legislation would reduce discretionary costs for the Federal Employees Health Benefits (FEHB) program, Department of Defense (DoD), and Department of Veterans Affairs by about $1.5 billion over the 2017-2027 period. The legislation would reduce federal direct spending by about 0.4 percent for Medicare, Medicaid, FEHB, DoD, and TRICARE-for Life and subsidies for enrollees in health insurance marketplaces.

Preemption provisions. The medical malpractice legislation would preempt state laws governing health care lawsuits in the areas of statutes of limitation (three-years for medical malpractice claims, with certain exceptions), joint and several liability (replacement with a fair share rule), product liability, and contingency fees (sliding-scale limits). The preemptions would be intergovernmental mandates as defined in the Unfunded Mandates Reform Act (UMRA) (P.L. 104-4). In addition, in certain circumstances, H.R. 1215 would require both federal and state courts to direct periodic payments of damages. Although the mandate would increase the administrative responsibilities of courts, the CBO estimates the costs would be insignificant.

Private sector mandates. The legislation would impose private-sector mandates on plaintiffs who file medical malpractice claims or medical product liability claims and their attorneys. The legislation would limit a plaintiff’s ability to recover the entire amount of compensatory damages that could be collected under current law by establishing a cap on noneconomic damages ($250,000). The legislations also would establish a cap on attorneys’ fees in medical malpractice cases. In addition, the legislation would eliminate a right for a plaintiff to file a medical product liability claim against health care providers by exempting providers that prescribe or dispense a medical product approved by the FDA (safe harbor).

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