Thursday, May 21, 2009

Years of Dedication Lead to Historic Lawsuit Reform

OKLAHOMA CITY (May 21, 2009) – House Republicans lauded the signature of landmark lawsuit reform legislation today, which will help reduce health care costs for all Oklahomans, reverse a doctor and nurse shortage trend and attract business and economic development to our state.

For over a decade House and Senate Republicans have sought reforms to Oklahoma’s justice system, where frivolous lawsuits have increased health care costs, driven talented doctors out of our state because of high malpractice insurance rates and told companies to look to more business-friendly states when considering relocation or jobs creation.

“The days of Oklahoma being known as a jackpot justice state are over,” said House Speaker Chris Benge. “This legislation will change the economic landscape of our state and will say to companies that we welcome their business in Oklahoma. Our goal throughout the years was to find a solution that would keep the doors of the courthouse open to those with legitimate claims, but reduce the number of frivolous lawsuits that do nothing but drive up costs for all Oklahomans and this legislation is true reform that does just that.”

House Bill 1603 contains the following major provisions:

Noneconomic damages (so-called “pain and suffering” awards) would be capped at $400,000 outside of exceptional circumstances. In rare cases involving medical malpractice where the cap is lifted, any amount greater than $400,000 could be paid with a reinsurance policy the state would purchase. The bill creates a task force that will study the details of the policy and payment options prior to implementation.

The reinsurance policy would pay up to $20 million a year to injured Oklahomans in exceptional circumstances of gross negligence or severe disfigurement. It is estimated such a policy would cost less than $1 million annually for the additional protection.

In order to have access to the reinsurance policy, doctors are required by the legislation to carry at least $1 million in medical liability insurance, which covers the majority malpractice cases. There is currently no state minimum requirement for insurance coverage.

The policy is a unique agreement that gives physicians a hard cap for medical liability insurance purposes but allows Oklahomans who have extenuating circumstances to receive awards above the cap.

“After years of blocking reform, it is exciting to see Gov. Henry finally agree to sign comprehensive tort reform into law,” said Rep. Dan Sullivan, an attorney and author of House Bill 1603. “By enacting lawsuit reform, we will be telling the business and medical communities that we welcome them and do not see them as a mark for future litigation. All Oklahomans will benefit from reform to our civil justice system.”

This law will allow insurers to sell medical liability insurance to doctors at lower rates because they won’t have to build up enormous reserves to cover the rare “jackpot” award that would otherwise bankrupt the company.

One of the main reasons doctor’s insurance currently costs so much is the impact of frivolous lawsuits – even though 70 percent of medical liability claims were dismissed between 2004 and 2007, Oklahoma’s major doctor’s insurance company spent $50 million defending those cases.

Those costs should be significantly reduced with this new law, allowing for cheaper insurance policies to be sold to doctors.

In turn, those lower insurance rates will make it easier to attract doctors to currently underserved areas of Oklahoma, particularly rural communities. Today, women all across Oklahoma often have to drive to Oklahoma City or Tulsa to deliver a baby because few local doctors will perform that service due to litigation threat and high insurance rates.

“It is critical for Oklahoma to keep more of the doctors we train in our state-of-the-art medical schools,” said Rep. Doug Cox, R-Grove and an emergency room doctor. “For years many doctors have fled to lawsuit reform-friendly states like Texas, and this law will work to keep them practicing right here in Oklahoma, especially in underserved rural areas. Every dollar we can save in malpractice premiums can be passed on in savings to patients.”

The bill was signed into law today by Gov. Brad Henry and it goes into effect Nov. 1, 2009.
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