Tort Reform Not Forgotten in Historic Legislative Session

The General Assembly worked tirelessly throughout the 2011 legislative session to push through hundreds of bills aimed at dismantling the old liberal guard.  In the area of tort reform, several significant legislative improvements were offered with bi-partisan support.  Two of the bills, HB 542, “Tort Reform for Citizens and Business” and HB 709, “Protect and Put NC Back to Work,” even survived Gov. Bev Perdue’s trigger happy veto pen.

This unusual outcome is likely because parties from both sides of the aisle have realized that reforming the tort system, the legal system created to correct civil wrongdoing, is long overdue. Tort reform is vital to keeping insurance costs down, ensuring good doctors remain in the medical field and guaranteeing that North Carolina remains an attractive place for businesses.

HB 542 was signed into law June 24, 2011.  One of the most important and controversial provisions in this bill requires evidence of past medical expenses to be limited to the actual amount paid to satisfy medical bills as opposed to the amount charged.  For example, a medical provider may charge $100,000 for a medical service, but due to a contractual rate with the patient’s insurer the actual amount paid and collected is much less, say $70,000.  Under HB 542, the patient would be limited in a malpractice suit to the $70,000 actually paid and not the $100,000 that was never collected by the medical provider.

This provision seems fair.  If medical providers routinely agree to accept lower rates, then shouldn’t they only be liable for the rate amount they routinely accept?  Before this bill, juries were only allowed to hear evidence of the full charges which was much higher than the amount actually received by providers, leading to runaway juries with astronomical jury awards.

Another important reform bill, HB 709, passed the House and Senate with near unanimous support.  Through this legislation, lawmakers affirmed their desire to keep our state’s business climate competitive and ensure a fair worker’s compensation system.

A key provision includes bringing North Carolina’s indemnity costs in line with nearby states by limiting the duration of temporary total disability benefits.  It also provides an opportunity for injured workers to extend benefits beyond the 500 week cap if they can make the case before the Industrial Commission.  This bill incorporates the first major workers’ compensation reform legislation in the state Legislature since 1994.  HB 709 was signed into law by Gov. Perdue on June 24, 2011.

Gov. Perdue missed an opportunity to reform medical malpractice liability, however, by vetoing SB 33, the “Medical Liability Reforms Act.”  Medical malpractice reform would reduce the number of frivolous lawsuits, drive down the cost of health and malpractice insurance, and attract new medical jobs to North Carolina.

SB 33 would allow patients to continue to recover full medical expenses and lost wages, but would implement an upward cap of $500,000 for noneconomic damages such as pain, suffering, and emotional distress.  The new cap does not apply if a defendant is grossly negligent, or acts with malice or reckless disregard, and the malpractice results in an individual’s death, disfigurement, permanent injury, or loss of a body part.

Furthermore, the legislation protects emergency room providers by offering a higher threshold, holding them to a standard of care of a reasonable emergency room doctor rather than a routine family practice physician.  Including this provision seems reasonable considering emergency doctors must make split second decisions on a daily basis.

The probability of an override remains unclear as the Legislature returns for its July session.  The Senate passed SB 33 by a wide margin but the House passed the legislation 62-44, with 11 Democrats and 11 Republicans voting contrary to party lines.  If the measure is modified to change the $500,000 cap structure, Gov. Perdue has also expressed the possibility of signing it into law.

With frivolous lawsuits, every North Carolinian pays the price through increased medical and health insurance costs and decreased access to affordable care.  The General Assembly made great strides in the area of tort reform this session but legislators must continue to push for medical liability reform if North Carolina wants to be at the forefront of an effective and fair tort system.

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