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Thursday, Feb. 11, 2010 07:05 am

Throwing insurance reform out with the bath water

Court voids entire law to end caps on malpractice awards

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Chief Justice of the Illinois Supreme Court Thomas Fitzgerald.
PHOTO BY MICHAEL TERCHA/MCT

The Illinois Supreme Court last week struck down a law limiting awards in medical malpractice cases, but the decision also does away with profit reporting requirements for insurance companies and numerous other rules.

In a 4-2 decision released Feb. 4, the state’s highest court called the 2005 “tort reform” law unconstitutional under the state constitution’s separation of powers clause, saying the law took away the judicial branch’s authority to reduce award amounts – essentially a “legislative remittitur,” according to Chief Justice Thomas Fitzgerald. The decision pertains to awards for non-economic harm – commonly known as “pain and suffering” awards. It is the third time the court has struck down malpractice award caps.

But because the law contains an “inseverability clause” that specifies the entire law is voided if any part is struck down, several other rules have been struck down along with the award caps. That includes requirements that insurance companies report to the state their profits, investment income, premium rates and a variety of other benchmarks used to determine whether the companies charge fair rates.

Also invalidated are rules that give doctors doing pro bono medical work immunity from malpractice suits, as well as rules excluding “apologies” from doctors as an admission of liability. The decision even invalidates a rule that medical liability insurance “rates shall not be excessive or inadequate, nor shall they be unfairly discriminatory.”

“When this law went into effect, we were fighting for severability,” says Peter Flowers, president of the Illinois Trial Lawyers Association. “Mr. (House Minority Leader Tom) Cross and his group of people were fighting for it not to be severable. What happens now is, unfortunately, the insurance reforms that were in that bill are now gone, and that’s the big issue, and that’s why the Republicans didn’t want it to be severable. They don’t want the insurance reforms.”

Flowers points out that one insurance company, ISMIE Mutual, dominates the medical malpractice insurance field in Illinois.

“Clearly the issue doesn’t have anything to do with caps and damages, but it has to do with the need for insurance reform in Illinois and not to allow one insurance company to control all of the medical malpractice insurance in the state,” he says. “That’s why you see rates somewhat driven up. That’s where the problem is.”

Dr. Steven Malkin, president-elect of Illinois State Medical Society, a physicians’ group associated with ISMIE Mutual, says the decision will hurt doctors practicing in Illinois.

“In Illinois, we can’t say ‘I’m sorry’ because we’re just going to get sued,” Malkin says, referring to the apology exclusion for liability. “Essentially, we’ve been told not to say anything. You’re not mean to people, but you don’t come out and say, ‘I’m sorry this happened.’ It’s a crime that you can’t just be honest with people.”

The court’s four Democrats voted against limiting non-economic damages – generally referred to as “pain and suffering” – while two of the court’s three Republicans dissented. Republican Justice Robert Thomas did not participate.

The majority opinion acknowledged that the law it struck down contained more than just tort reform, almost encouraging the legislature to pass the law again, though without the caps.

“Because the Act contains an inseverability provision, we hold the Act invalid and void in its entirety,” the decision says. “We emphasize, however, that because the other provisions contained in Public Act 94–677 are deemed invalid solely on inseverability grounds, the legislature remains free to reenact any provisions it deems appropriate.”

Sara Wojcicki, spokesperson for Minority Leader Cross, said Republican leadership hasn’t given up on tort reform.

“We’re going to look at legislation or possibly even a constitutional amendment,” Wojcicki said. “I think this is something that is a high priority for us.”

Contact Patrick Yeagle at pyeagle@illinoistimes.com.

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