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Latest data show state’s tort reform act delivered a knock-down blow

Laid out as a chart, the numbers look a bit like an electrocardiogram—perhaps fittingly, since they show the number of medical malpractice cases filed each month in North Carolina.

They show a massive spike, not unlike a heartbeat, in September 2011 as plaintiffs’ attorneys raced to file malpractice cases before an expansive tort reform law took effect Oct. 1, 2011.

But unlike a heartbeat cycle, the number of malpractice suits has never bounced back. Rather, it’s flatlined.

The most recent year’s data released by the North Carolina Administrative Office of the Courts this month strongly suggest that the 2011 tort reform law has permanently depressed the number of lawsuits being filed against allegedly slipshod doctors and hospitals.

The tort reform law, which started as Senate Bill 33, made a number of substantial changes to the rules for medical malpractice suits, but the most significant one, attorneys said, limited awards for all non-economic damages—pain and suffering, emotional distress, and the like—to $500,000. Because of that cap, some cases that previously might have brought in big verdicts are now difficult for lawyers to justify taking on given the high cost of litigating medical malpractice claims and the uncertainty of prevailing on them.

As expected, the number of cases filed monthly plummeted as soon as the law went into effect, but much of that was the aftereffect of so many cases being filed sooner than they otherwise would have.

But now that three years—the length of time a plaintiff has to file a medical malpractice claim—has passed since the law took effect, the new data give the clearest picture yet of what kind of effect it will have on medical malpractice law in North Carolina.

According to data from the AOC, in the 26 months prior to September 2011 an average of 40.1 medical malpractice cases were filed in state courts each month. In September 2011,  however, the number swelled to 322 cases. (See Chart 1) Many of those cases are either still pending or only recently concluded.

John Madden, a malpractice defense attorney with Smith Anderson in Raleigh, predicted that the number of cases may rebound somewhat once all of those cases are finally disposed.

“If you think of the snake eating the bowling ball, that bowling ball has made its way through the snake now,” Madden said. “There may be fewer cases that get filed than previously because some folks may get deterred by the cap on non-economic damages and other factors. But I think that cases are still going to get filed. Maybe not as many as before, or not by the same lawyers as before, but I think they’re going to come back.”

Fallen and can’t get up

Plaintiffs’ attorneys were conspicuously pessimistic, however, that the volume of malpractice cases would recover any time soon to anything like previous levels.

Charles Monnett, a plaintiffs’ attorney in Charlotte, said that the cap on non-economic damages in particular has had a chilling effect on the number of claims being filed, but that the cumulative effect of the changes brought by the law has restricted access to the courts for people with claims that are legitimate but whose expected damages might be only in the low six-figures.

“It’s just incredibly expensive and difficult to pursue these claims, and some of these changes make it economically infeasible to pursue claims,” Monnet said. “It’s definitely not a level playing field. The truth is that they [doctors] have the advantage pretty much every step of the way. The crisis in medical malpractice litigation is that too many legitimate claims now go uncompensated.”

The most recent data from the AOC would appear to give credence to plaintiffs’ attorneys’ predictions.

The number of cases filed has recovered somewhat since the months right after the law took effect, (See Chart 2) but data from the last two years show ebbs and flows with no obvious upward trend. Over the last two years, 25.5 cases have been filed on average monthly, substantially lower than the average before the law took effect. (See Chart 3)

The experiences of other states that passed tort reform laws also suggest that such laws tend to permanently depress the number of malpractice cases filed. After Texas passed a law in 2003 capping non-economic damages, medical malpractice suits fell by two-thirds, although the cap in Texas is only half of what it is in North Carolina and therefore likely to have a much more significant impact.

No country for old plaintiffs

The data from AOC can’t speak to the specific factors that are driving the drop in the number of malpractice cases being filed, but plaintiffs’ attorneys said that the cap on non-economic damages has hit certain types of plaintiffs especially hard.

“Generally, you need a young working person who had large out-of-pocket losses such as future medical expenses, loss of earning capacity, and things of that nature.” Monnett said. “Children, homemakers, old people, have all been devalued by these changes.”

Other provisions of the law have had bite as well. One change gives more protection to doctors providing emergency treatment, requiring plaintiffs to prove their cases by clear and convincing evidence rather than merely a preponderance of the evidence. Under another change, plaintiffs have to offer evidence of the amounts that they actually paid to settle medical bills rather than the amounts originally billed by the medical provider, which are often much higher.

Wade Byrd, an attorney in Fayetteville, particularly noted that the law also requires a plaintiffs’ expert to review all the pertinent medical records, not just the plaintiffs’ medical care, before a complaint is filed.

“That does place a more onerous burden on the ability to file the case in a timely manner,” Byrd said. “Just because you send a request for medical records doesn’t mean that you receive those records in a timely fashion.”

Some plaintiffs’ attorneys expressed surprise that the number of medical malpractice suits hadn’t fallen even further than it has, and theorized that as experienced attorneys become more selective in the cases they pursue, less experienced attorneys may be picking up slack. Attorneys also described an anecdotal perception that as the number of cases has shrunk, some malpractice defense attorneys have begun litigating cases more aggressively, requiring more time to be invested in each case.

Defense attorneys interviewed for this story strongly disputed the contention that cases were being handled any differently by defense attorneys. Beth Stanfield, a defense attorney for Lincoln Derr in Charlotte, said that any increase in the amount of time invested per case may be a function of the kinds of cases that remain viable after the passage of the law.

“Just as in other states that have passed tort reform, you see the cases that are more catastrophic in nature continue to be filed,” Stanfield said. “Those types of cases tend to be fairly significant and involve a great degree of commitment and work. We really don’t know whether the number of cases being filed is going to increase from here on out, but I think the type of cases is going to keep both sides of the bar working.”

Follow David Donovan on Twitter @NCLWDonovan

 

For special NC Bar Association Subscription offer contact Jim Shea at jim.shea@thedolancompany.com.

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