Morris M. Auster, Esq.                                      Division of Governmental Affairs

Senior Vice President /                                       MEMORANDUM IN OPPOSITION
Chief Legislative Counsel 

IN SENATE RULES COMMITTEE                                    S.6738 (DEFRANCISCO)

IN ASSEMBLY JUDICIARY COMMITTEE                        A.8466 (WEINSTEIN)                                                                                                       

AN ACT to repeal Section 474-a of the Judiciary Law, relating to contingent 
fees for attorneys in claims or actions for medical, dental or podiatric malpractice

This bill would eliminate the statutory limitation on contingency fees for attorneys in claims or actions for medical, dental or podiatric malpractice.  At a time when physicians and hospitals across the State desperately need relief from exorbitant liability costs, this bill would actually increase them substantially.  Therefore, the Medical Society of the State of New York is strongly opposed to this measure.

Enacted in 1976, Section 474-a of the Judiciary Law, requires a sliding scale attorney fee schedule for contingency fees in medical, dental and podiatric cases.  This law was enacted in response to a severe medical liability crisis in New York State and was one of several tort reform measures designed to curb the increasing frequency and severity of malpractice claims.  The purpose of the controlled sliding scale was to diminish the incentive for malpractice plaintiff attorneys to needlessly drag out litigation in the hope of achieving a larger contingency fee as well to discourage the bringing of frivolous claims.  Even more importantly, the goal was also to assure that an injured plaintiff received a fair proportion of the award which a jury had determined to represent his or her damages.  Finally, it was the Legislature’s intent to assure that the out of control costs of New York’s liability system were at least somewhat restrained.  It should be noted that, when this legislation was passed by both Houses in 2000, it was vetoed after numerous newspapers across the State issued editorials in opposition to the bill.

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.  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 and had by far and away the highest per-capita medical liability payments in the country.

The timing of this legislation could not be worse.  We now have multiple malpractice insurance companies operating in New York State that in serious financial jeopardy.  Moreover, there is enormous uncertainty in our health care system because of proposals in the AHCA that could profoundly restructure New York’s Medicaid system.  Should this measure be enacted, it will inevitably create an even greater imbalance in New York’s tort system.  According to a recent actuarial study, it will increase liability costs to physicians by over 10%.  It will clearly result in higher health care costs for businesses and consumers.  Additionally, the repeal of the contingency fee controls could have a devastating impact on injured parties themselves – those who are supposed to be the ultimate beneficiaries of these awards because it would significantly reduce the amount of the jury’s intended compensation which plaintiffs actually receive.

Based on the foregoing, the Medical Society of the State of New York strongly opposes this bill and requests as vigorously as we can that it be defeated.

                                                                           Respectfully submitted,