Morris M. Auster, Esq.                                      Division of Governmental Affairs

Senior Vice President/                                               MEMORANDUM  IN  OPPOSITION

Chief Legislative Counsel

ON ASSEMBLY JUDICIARY                          A.1415 (WEINSTEIN)
COMMITTEE AGENDA

AN ACT to amend the general obligations law, in relation to settlements in tort actions; and to repeal certain provisions of law relating thereto

This measure would repeal current §15-108 of the General Obligations Law and re-enact a new §15-108 that would encourage the settlement of cases by requiring the non-settling co-defendant in a tort action to choose whether to reduce his/her liability exposure by the stated settlement amount or the settling tortfeasor’s equitable share prior to the first opening statement of the trial.  Because this legislation creates the possibility that payouts will exceed an actual jury verdict, which in turn could cause physician medical liability insurance premiums to increase at a time when no further increases can be tolerated, MSSNY opposes this legislation.

Under current law, the plaintiff is never entitled to receive more than what has been awarded to him/her by a jury.  A jury verdict is, therefore, reduced by the greater of the dollars paid by settling defendants or the share of fault allocated by the jury to a defendant who has already settled.  This bill fundamentally departs from these long-standing principles by permitting the plaintiff the potential to be unjustly enriched by collecting more than the jury ultimately determined the non-settling defendants' equitable share to be if the settling defendant settles for an amount that exceeds their equitable share of the award. 

Take, for example, a case with two defendants, where defendant A agrees to settle with the plaintiff for $80,000.  The case goes to trial, where the verdict is found for the plaintiff for $100,000, with A and B each found 50% responsible.  Under current law, even though defendant B would have been obligated to pay $50,000 if defendant A did not settle, under current law, defendant B is permitted to discharge their legal obligation to the plaintiff by paying $20,000 because defendant A has settled for $80,000 ($100,000 - $80,000).  Under this proposal, defendant B would be obligated pre-trial to "roll the dice" and guess whether it is better for them to be responsible for their proportionate share or reduce their obligation by the settled amount.   Therefore, there is a very good chance that defendant B would have to unnecessarily pay significantly more.  Defendant B could be obligated to pay $50,000 (instead of the $20,000 under current law), meaning that the plaintiff would be unjustly enriched by $30,000.  

Given the extraordinary costs of medical liability insurance that many physicians must pay, combined with the enormous changes in health care delivery and payment that is placing huge new financial pressures on physician practices and hospitals, it is irresponsible to consider legislation at this time that might actually increase these costs.  Many New York physicians already pay liability premiums that far exceed $100,000 and some even exceed $300,000!  

The timing of this legislation and other bills to expand tort liability could not be worse.  We now have multiple malpractice insurance companies operating in New York State that in serious financial jeopardy which can ill-afford to absorb the substantial costs of a brand new cause of action.  Moreover, with the US House’s recent passage of the AHCA, there is enormous uncertainty in our health care system because of proposals in the AHCA that could profoundly restructure New York’s Medicaid system. 

For many physicians currently struggling to keep their practices afloat due to the enormous changes taking place in health care delivery, this legislation could be the “final straw” to drive them out of practice and into other states. Many New York physicians pay liability premiums that far exceed $100,000 and some even exceed $300,000!  The cost of medical liability coverage for the 2015-16 year is:

  • $338,252 for a neurosurgeon in Nassau and Suffolk counties;
  • $186,630 for an obstetrician in Bronx and Richmond counties;
  • $141,534 for an orthopedic surgeon in Nassau and Suffolk Counties; 
  • $132,704 for a general surgeon in Kings and Queens counties, and
  • $134,902 for a vascular surgeon or cardiac surgeon in Bronx and Richmond counties.   

Moreover, malpractice payouts in New York State continue to be far out of proportion to the rest of country.  For example, a recently released report by Diederich Healthcare showed that once again New York State had by far and away the highest number cumulative medical liability payouts ($711,718,250), nearly two times greater than the state with the next highest amounts, Pennsylvania ($374,018,550), and far exceeding states such as California ($263,874,600) and Florida ($248,911,150).    At the same time, New York had by far and away the highest per-capita medical liability payments in the country, far exceeding the second highest state Massachusetts by nearly 20%, the third highest state Pennsylvania by 23%, and the fourth highest state New Jersey by 26%.   Remarkably, it was more than 500% more than California!

It is little wonder that a recent analysis from the website WalletHub listed New York as the worst state in the country in which to practice medicine, in large part due to its overwhelming liability exposure as compared to other states in the country.  Legislation such as this will make this embarrassment even worse!

At the same time physicians face these exorbitant costs, health plans continue to reduce payments to physicians by inappropriately denying, delaying and reducing payment for needed care.   Exacerbating these problems are the increasingly large patient balances that are accruing as a result of a significant increase in the use of high deductible health insurance plans.   At the same time, physicians face substantial new costs as a significant component of their revenue base will be conditioned on participation in often unwieldy value-based payment schemes both in Medicare and in Medicaid, including the need to invest tens of thousands of dollars to implement electronic medical record systems.    When factoring all these problems together, it is no surprise that regions all across New York State are beginning to see shortages in several specialties, according to reports issued by the Center for Health Workforce Studies.

With all these enormous changes occurring in patient care delivery, physicians need comprehensive reform of our flawed civil justice system and reduction in our medical liability costs, not legislation that increases costs and exacerbates existing problems.

This bill would do nothing to address the problems facing our health care system, and would instead make these problems worse.  Physicians need liability cost decreases, not increases!

For all of the reasons stated above, we urge that this measure be defeated.

                                                                          Respectfully submitted,

5/15/17

MMA - oppose                                                 MSSNY DIVISION OF GOVERNMENTAL AFFAIRS