Consumer Group Responds to Governor Schwarzenegger's Incorrect Claims About the Impact of Medical Malpractice Caps

SANTA MONICA, Calif., Oct. 29 /PRNewswire-USNewswire/ -- Consumer Watchdog sent the following letter to Congressional leaders today in response to a letter sent by California Governor Arnold Schwarzenegger in which he incorrectly cited California's draconian limits on the legal rights of injured patients as a successful cost containment tool. Consumer Watchdog is a nonpartisan nonprofit with offices in California and Washington, D.C. The Governor's October 27, 2009 letter is available at www.gov.ca.gov/archive/press-releases/.

October 29, 2009

The Honorable Harry Reid
Majority Leader
United States Senate
Washington, DC 20510

The Honorable Nancy Pelosi
Speaker of the House
U.S. House of Representatives
Washington, DC 20515

The Honorable Mitch McConnell
Minority Leader
United States Senate
Washington, DC 20510

The Honorable John A. Boehner
Minority Leader
U.S. House of Representatives
Washington, DC 20515

Dear Senator Reid, Senator McConnell, Madam Speaker and Mr. Boehner,

Tuesday, California Governor Arnold Schwarzenegger wrote you regarding his views on health care reform. While Consumer Watchdog has detailed its views on comprehensive federal health reform many times over the past year, we write today in response to a particular element of the debate addressed by Governor Schwarzenegger, in which he incorrectly cited California's draconian limits on the legal rights of injured patients as a successful cost containment tool.

The plight of injured patients and families subject to unjust legal restriction in California has been well documented. Jury-ordered compensation been slashed by a one-size-fits-all damages cap unadjusted for three decades. Too many children, seniors and people with limited wage loss are unable to get legal representation and are locked out of the justice system altogether because of the restrictions. (See "Malpractice Law May Deny Justice," by Dan Costello, Los Angeles Times, December 29, 2007. For video testimony about the real impact of caps see http://www.JusticeForPatients.org.)

That human toll, however, is not the subject of this letter. Our purpose is to correct Governor Schwarzenegger's analysis of the relationship between malpractice caps and malpractice premiums.

California has, indeed, maintained severe caps on malpractice liability for doctors for more than 30 years, but the Governor ignores the fact that the caps did nothing to reduce doctors' insurance premiums for the first 13 years of the law. We have documented that premiums for California doctors went up by 450% between 1975 and 1988. Only after California voters enacted the comprehensive insurance regulatory system, known as Proposition 103, did doctors begin to see relief from skyrocketing malpractice rates. (You can read our study at http://www.consumerwatchdog.org/documents/1008.pdf.)

In fact, in 2002 and 2003, medical malpractice insurers were attempting to push doctors' premiums skyward in California as in the rest of the nation. Our organization used Proposition 103's right to challenge insurers' rate proposals and fought off $66 million of attempted rate hikes. That is, even with the longstanding and severe malpractice caps in place, doctors in California were facing the same insurance hikes at the beginning of this decade that faced doctors everywhere.

In our challenge to a proposed rate hike by one of California's largest medical malpractice insurers, SCPIE, the company's Vice President and chief actuary James Robertson testified:

While MICRA was the legislature's attempt at remedying the medical malpractice crisis in California in 1975, it did not substantially reduce the relative risk of medical malpractice insurance in California. (A copy of the SCPIE testimony is available at http://www.consumerwatchdog.org/documents/2058.pdf.)

The reason California doctors have fared comparatively well is not the limitations on patients' rights in California, but the voter-imposed limits on insurance company profiteering. We would be pleased to provide more details on this issue.

Sincerely,
Douglas Heller, Consumer Watchdog

cc: The Honorable Max Baucus
The Honorable Christopher J. Dodd
The Honorable Charles E. Grassley
The Honorable Mike Enzi
The Honorable Charles B. Rangel
The Honorable Henry A. Waxman
The Honorable George Miller
The Honorable Dave Camp
The Honorable Joe Barton
The Honorable John Kline

Members of the California Congressional Delegation
The Honorable Arnold Schwarzenegger