MEDICAL SOCIETY OF THE STATE OF NEW YORK

July 10, 2017

Alphonso David, Esq.

Counsel to the Governor
State Capitol, Executive Chamber
Albany, New York 12224

Re: S.6800 (DeFrancisco)/A.8516 (Weinstein) – AN ACT to amend the civil practice law and rules, in relation to accrual of certain causes of action

Dear Mr. David:

We are writing to you to request as strongly as we can that Governor Cuomo veto the above-referenced legislation that would amend the CPLR to substantially lengthen the statute of limitations for medical malpractice actions, purportedly when there is an alleged negligent missed diagnosis of cancer or a malignant tumor.  As this measure is almost certainly to lead to significant increases in the cost of liability insurance for physicians and hospitals at a time when no increases can be tolerated, the Medical Society of the State of New York strongly opposes this measure and urges its defeat.  

The effect of this drastic proposal is that it would greatly increase the numbers of medical malpractice lawsuits against physicians and hospitals and impose huge new costs when physicians and hospitals are barely able to cover the costs they have now.  An actuarial study of similar legislation indicated that legislation of this type would require medical liability premiums to be increased by nearly 15%.  Given that many hospitals and physicians all across New York State are barely able to keep their doors open now to continue delivering the care expected by our patients, any increases even approaching this amount would undoubtedly prompt a very serious access-to-care problem throughout New York State.  

Furthermore, this legislation will undoubtedly accelerate growth in health care costs in New York State, as many physicians will feel they have no choice but to subject their patients to potentially unnecessary referrals to specialists or to unnecessary additional diagnostic tests to reduce their risk of being sued as a result of the increased risk this legislation would create.  This, in turn, will further increase health insurance premiums for businesses, increase cost sharing requirements for insured New Yorkers, and result in increased costs to the Medicaid program, which provides coverage to millions of New Yorkers.    

The timing of this legislation could not be worse.  As you know, there are multiple malpractice insurance companies operating in New York State that are in serious financial jeopardy which can ill-afford to absorb the substantial costs of a greatly expanded cause of action.  In fact, the financial status of one of these companies, PRI, had become so poor that the Department of Financial Services recently had to act to remove its administrators. 

Moreover, with the US House’s recent passage of the AHCA and the Senate’s consideration of the very similar BCRA, there is enormous uncertainty in our health care system because of proposals in the AHCA that could profoundly restructure New York’s Medicaid system. Indeed, Governor Cuomo has been among the most vocal opponents to these proposals because of the havoc that these proposals could wreak on New York’s already fragile health care system and the New Yorkers who depend upon this care availability.

History

New York’s current statute of limitations for medical liability cases was enacted in 1975, at a time when New York State was facing a crisis so severe that no insurer was willing to write medical liability insurance policies for physicians.  This crisis literally threatened to shut down New York’s health care system, as insurance companies in New York and across the country concluded that the risk of lawsuits had been so expanded in New York that it was no longer insurable.  The Legislature at that time enacted several reforms to ensure at least the availability of medical liability insurance. One of the most important of these reform provisions was a bill to restore, at least partially, a statute of limitations which had been completely eviscerated through expansive judicial interpretation.  After rates continued to jump to the point of being unaffordable once again, the Legislature had to again act in 1985 and 1986 to prevent another medical malpractice crisis in the state.  The reforms adopted by the Legislature included the “Certificate of Merit” rule, periodic payment of damages, pre-trial screening panels and establishment of the Excess Medical Malpractice Insurance Program which provides a second layer of medical liability insurance for physicians.   Recognizing that comprehensive medical liability reform could not simply be one-sided, the mid-1980s reform package enacted by the Legislature also included a significant increase in the statutory limits on attorney contingency fees in medical liability actions that were initially enacted during the mid-1970s crisis.

While these provisions have helped to provide some modest stability in New York’s medical liability insurance market, there have since been periodic significant jumps in the cost of medical liability insurance with physicians in Long Island, New York City and the Lower Hudson Valley continuing to pay at or among the highest premiums in the country.    Yet while dozens of other states across the country reacted to their own malpractice crises by enacting legislation to reduce these costs, including enacting reasonable limits on awards, and far tighter controls on expert witnesses, New York State has failed take similar actions.   As a result, while many other states have seen significant drops in their medical liability insurance costs over the last decade, in New York these costs have continued to steadily rise, thereby cementing New York’s legacy as having the worst medical liability climate in the country.

The below charts highlight some of the trended premium information provided in a recent AMA study (https://www.ama-assn.org/system/files/media-browser/prp2014-05mlm.pdf) referencing data reported in the Medical Liability Monitor.  As you will note, our premiums went up as premiums in other major metropolitan markets went down.

Obstetrical Premiums – NY vs. FLA, IL AND CA

Location

2005 Premium

2010 Premium

2014 Premium

2005-2014 %

Los Angeles, CA

$63,272

$49,804

$49,804

-21%

Miami, Fla

$272,490

$201,808

$190,829

-30%

Chicago, IL

$186,913

$177,441

$177,441

-5%

Long Island, NY

$156,877

$204,864

$214,999

+37%

Source: AMA and Medical Liability Monitor

General Surgery Premiums – NY vs. FLA, IL and CA

Location

2005 Premium

2010 Premium

2014 Premium

2005-2014%

Los Angeles, CA

$54,505

$41,775

$47,595

-13%

Miami, Fla

$243,184

$190,088

$190,829

-22%

Chicago, IL

$130,872

$118,909

$118,909

-9%

Long Island, NY

$83,738

$114,770

$134,723

+61%

Source: AMA and Medical Liability Monitor

Proponents of this legislation argue that many other states have incorporated such “date of discovery” exceptions into their statutes of limitation for medical liability actions.     However, this is the proverbial “apples and oranges” comparison.  The vast majority of these states with “date of discovery” rules also have enacted caps on non-economic damages in medical liability actions, thereby significantly offsetting the enormous costs of this provision.  Moreover, those states that have “date of discovery” rules, but no caps on damages, include Alabama, Delaware, Iowa, Kentucky, Rhode Island, Vermont and Wyoming, where physicians pay far less in medical liability insurance premiums than those paid by physicians in New York City, Long Island and the Hudson Valley.  

New York’s Exorbitant Costs

For many physicians currently struggling to keep their practices afloat due to the enormous changes taking place in health care delivery in large part brought on by implementation of the Affordable Care Act, this legislation could be the “final straw” to drive them out of practice and into other states.  As noted above, 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 2016-17 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 Deiderich 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, a state that has enacted comprehensive medical liability reform!

Moreover, as reported in the publication OB-GYN News, New York physicians had 210 malpractice payments of $1 million or greater in 2014, shockingly 3.5 times highest than the 61 such awards for next highest state, Illinois.  And it was 5 times more than the 43 such payments in California, again a state that has enacted comprehensive medical liability reform.

New York is already a huge outlier when it comes to medical malpractice awards!  It is therefore little wonder that a recent analysis from the website WalletHub listed New York as the absolute 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.

At the same time physicians face these exorbitant costs, physicians continue to face stagnant or declining payments from health insurance companies by inappropriately denying, delaying and reducing payment for needed care.   Indeed, a recent study reported in the Annals of Internal Medicine concluded that, for every hour a physician spends delivering care to patients, another 2 hours must be spent on administrative responsibilities. 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.   Nearly 21% of responding physicians indicated that ¼ - ½ of their patients now face deductibles of $2,500-$5,000.  Not only that, physicians face substantial new costs as a significant component of their revenue base will be conditioned on participation in value-based payment systems both in Medicare and in Medicaid that all but require tens of thousands of dollars (per physician) in investment and upgrading of electronic medical record systems.   

When factoring all these challenges 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.   A recent HANYS report indicated that 86% of upstate hospitals reported instances when they had to transfer patients from their emergency departments because of a lack of a needed specialist available.  Taking all these factors together, the number of physicians working in employment arrangements has nearly doubled from 2012 to 2015, largely the result of these enormous financial pressures. 

With all these challenges facing physicians seeking to be able to continue to provide care to patients in New York, it would be unconscionable to foist this huge new cost on their practices without taking additional steps to bring down their costs.  Patient wait times to see needed specialists, already too long for many, will likely grow as physicians limit the types of cases they will take on, retire early or move to another state.

Drafting Errors/Ambiguities

Even if this bill were only to be applicable to missed cancer diagnosis cases, as its proponents have asserted, it would have severe adverse consequences for patient care delivery.  But what makes this bill even worse are some of the ambiguous provisions which may extend many other claims (besides missed cancer diagnoses cases) from the existing qualified 2.5 year limit.   Specifically, the bill defines accrual as either “(a) when one knows or reasonably should have known of the alleged negligent failure to diagnose a malignant tumor or cancer, whether by act or omission and knows or reasonably should have known that such negligent act or omission has caused the injury;” or “(b) the date of the last treatment where there is continuous treatment for the same illness, injury or condition which gave rise to the accrual of an action.”    The bill states that “such action” shall be commenced “no later than seven years from the act, omission or failure complained of or last treatment where there is continuous treatment for the same illness, injury or condition which gave rise to the said act, omission or failure …” By “such action,” does the bill mean cases alleging failure to diagnose cancer since that was the subject of the prior provisions? Or since this provision does not use the word “accrual,” does it mean all cases?  It would likely take litigation to resolve this question.

Furthermore, the bill would just not be applicable to treatment provided after the effective date of the legislation (were it to be signed), but would be applied to treatment prior to the effective date of the bill   for which insurers have already collected premiums but not set aside reserves to cover these types cases.   And again, there is great ambiguity as to which cases these retroactive provisions would apply.  Does it apply to care provided within 2.5 years of the effective date, or does apply to care provided within 7 years of the effective date?   There could be numerous interpretations, and costly litigation would again be needed.  In any event, the costs of compliance in either circumstance would be enormous.  Insurers could be forced to impose a retroactive assessment on their insured hospitals and physicians to pay these claims.   This would be an unmitigated disaster.  It would inevitably result in creating new barriers to patients receiving needed care.

Conclusion

We reiterate that enacting this one sided legislation without enacting corresponding reforms to bring down the exorbitant cost of liability insurance would have severe adverse consequences on New York’s health care system, which in turn would further erode patients’ ability to access timely needed care.  

In this regard, we urge Governor Cuomo to veto this flawed and harmful legislation and instead call for the enactment of comprehensive medical liability reform to address concerns raised by all sides.     

Respectfully submitted,


MORRIS M. AUSTER