Wisconsin’s medical liability climate took a turn for the worse this week when the Wisconsin Supreme Court overturned Wisconsin’s cap on non-economic damages. The Wisconsin Hospital Association, along with the Wisconsin Medical Society, immediately responded at a news conference held at the State Capitol within hours of the release of the high court decision.

Speaking at the news conference, WHA Senior Vice President Eric Borgerding told the press that the ruling would have a detrimental impact on the physician workforce issue. "We fear that rather than being a destination state for physicians, we will see an exodus," Borgerding said. "We should be learning from the mistakes of other states, not bending over backwards to repeat them."

As a new physician just joining a practice in Stoughton, Meetul Shah, MD, said at the news conference he would have located to his native state of Illinois, but the high cost of liability insurance in that state was a deterrent. He chose to leave the state of Washington following his residency for the same reason. Now, he learned that the Supreme Court had removed the cap on non-economic damages in Wisconsin. "A huge reason I left Washington State was because of a malpractice insurance problem that was not going away," Meetal Shah told Channel 15 in Madison. "Interesting that I have moved to place that has a malpractice insurance problem."

Representative Curt Gielow (R-Mequon), chairman of the Assembly Medicaid Reform Committee, also participated in the press conference. Gielow said the decision will force doctors to practice "defensive medicine," which will drive up health costs. He committed to working to find a solution. "I can pledge to those affected that we will try to craft a solution that does meet constitutional issues," Gielow added.

While the ramifications of the ruling are clear, potential remedies are less certain at this time. What is certain is that a remedy will be sought, and soon.

"This must be fixed," said WHA President Steve Brenton. "We will not stand by and watch Wisconsin become Illinois, or any of the dozens of other states where frenzied litigation is slowly destroying access to affordable health care."

Options range from passing legislation to address the court’s concerns, to pursuing an amendment to the state constitution. Whatever the strategy, enacting a solution has become an immediate and top priority for legislative leaders and for WHA.

"This is another example of an activist court overstepping its authority. This shortsighted ruling jeopardizes quality health care for every resident in the state, especially for folks in rural areas," said Assembly Speaker John Gard. "Fixing this ruling will be a top priority for Assembly Republicans."

In a press release, Rep. Sheldon Wasserman, ranking Democrat on the Assembly Health Committee, also expressed his commitment to finding an immediate solution.

"As Justice Crooks noted in his concurring opinion, Wisconsin can have a constitutional cap on non-economic damages," Wasserman said in his release. "The Legislature must act immediately … I am confident that we can come up with a cap that balances the rights of Wisconsin citizens to jury trials with the legitimate legislative objectives of encouraging health care providers to practice in Wisconsin and reducing overall health care costs."

"Right now, all options for a fix are on the table, and WHA will aggressively pursue them," said Borgerding "Whatever is proposed to preserve Wisconsin’s stable and nationally envied medical liability climate will be fought tooth and nail by the plaintiffs bar. We’re ready."

The broad implications of this ruling go beyond medical liability and raise serious questions about the current balance between the Legislative and Judicial branches of government. Many beyond the medical community view the decisions as a troubling sign that Wisconsin’s Supreme Court is ready, willing and able to second guess, and change, the intent of the Legislature.

"Today, the Wisconsin Supreme Court crossed over and established itself as an activist court, and this has terrible implications for Wisconsin’s economy," said James S. Haney, president of Wisconsin Manufacturers & Commerce. "This ruling sets up the court as a super Legislature that can overturn state laws on its whim, and that will make Wisconsin a place where businesses won’t create jobs. Not only will we be losing jobs, we’re going to be losing great doctors and driving up health care costs."

The overreach in authority was not lost on certain members of the Court. Justice David Prosser, a former Speaker of the Assembly, took majority Justices to task in a scathing dissenting opinion.

"Here, pages and pages of obfuscation are required to disguise the majority’s adoption of a new level of scrutiny never used before in Wisconsin," Prosser wrote in his dissent. "The majority lays the groundwork for invalidating other damage caps and preventing the Legislature from responding to this decision. When the court insulates its decisions from review by the United States Supreme Court and response by other branches of state government, it is effectively destroying the checks and balances in our constitutional system."

Chief Justice Abrahamson and Justice Walsh-Bradley wrote the majority opinion that overturns Wisconsin’s non-economic damage caps. Justices Crooks, Butler joined with them. Justices Prosser, Wilcox and Roggensack opposed the ruling.

"With respect to the Wisconsin Supreme Court, this decision has awakened some sleeping giants, some organizations that don’t usually pay that much attention to the make-up of the court or its decisions," said Borgerding. "U.S. Supreme Court justices are appointed. Wisconsin Supreme Court justices are elected."

• In joining the discussion about rising health care costs, WHA has emphasized that the primary contemporary "cost driver" is utilization of health care services…as opposed to the "usual suspects" (hospital capital spending, provider profits, and hospital and physician pricing).

A recent article published in Health Affairs provides overwhelming evidence confirming our claims. That article claims, "The rise in (health care) spending is attributable to a rise in treated disease prevalence and spending per treated case." In other words, an aging population and unhealthy lifestyle choices are leading to a rise in obesity, asthma, cardiovascular disease, diabetes, etc. And the emergence of new pharmaceuticals, diagnostic and treatment tools and disease management strategies is successfully responding to these demographics. The result is a recipe for health care spending often described as "skyrocketing."

These findings hugely complicate the legitimacy of "sound bite" solutions being offered by some under the guise of "universal coverage." The notion that "global budgets" will somehow better rationalize health care spending falls apart unless global budget advocates are prepared to embrace annual spending increases substantially higher than "normal" inflation…or…endorse rationing as a strategy to moderate health care spending. Neither is likely.

Here’s a link to the Health Affairs article entitled, "The Rising Prevalence of Treated Disease: Effects on Private Health Insurance Spending": www.wha.org/healthaffairs7-05.pdf. And here’s a link to a WHA PowerPoint presentation on 2005 Health Care Cost Trends: www.wha.org/2005hctrends7-05.pdf.

• When Congress passed the Reagan Administration’s proposal to move from cost-based Medicare payment to prospective payment in 1983, the argument was that PPS payment rates would provide incentives for the "efficient" delivery of health care services and lead to reductions in length of stay and improve the deployment of resources.

Twenty-two years later, CMS now supports dismantling the principles that are at the foundation of Medicare PPS as they propose to expand the post-acute care transfer policy from 30 DRGs to 231 payment groups. The "transfer" policy basically penalizes hospitals for early discharges. In a comment letter blasting the CMS initiative, AHA says that the new proposal "undermines the concept behind DRG payments, which are based on a system of averages." AHA points out that under PPS, hospitals are often paid far less than the cost of patient care for longer-than-average lengths of stay but occasionally offset those losses with lower costs associated with shorter lengths of stay. But as CMS tightens down the "transfer" policy, PPS will become a "lose-lose" proposition for hospitals.

WHA is calling upon members of the Wisconsin Congressional Delegation to oppose the transfer policy expansion. And two "Dear Colleague" letters are being circulated on Capitol Hill opposing the initiative, which has the potential of costing Wisconsin hospitals millions of dollars in new Medicare losses, thus increasing the "hidden tax" on health insurance premiums paid by Wisconsin employers.

Steve Brenton
President

"With the cap removed on non-economic damages, both groups are concerned that Wisconsin could be plunged into the medical liability crisis that other states have experienced," said Susan Turney, MD, CEO/EVP of the Wisconsin Medical Society.

In those states that do not have caps, physicians have relocated to states that have more reasonable medical liability rates; in fact, some physicians in those states have moved their practices to Wisconsin.

"Wisconsin’s system has been a model for the rest of the country, and has been credited with attracting physicians to practice in our state," according to WHA President Steve Brenton. "Through its decision, the Court upsets the balance in our medical liability system that was created by the State Legislature to protect the interests of all Wisconsin patients."

Unlike patients in most states, Wisconsin patients who are injured by medical liability have access to unlimited economic damages through the Injured Patients and Families Compensation Fund. The Fund ensures that all injured patients are fully compensated for past and future medical costs, lost earnings, and other economic damages. The cap on non-economic damages, currently set at $445,775 and adjusted annually for inflation, was a critical part of Wisconsin’s public policy that ensured Wisconsin’s medical liability environment balanced the interests of protecting injured patients while not harming patients’ access to needed medical care.

A favorable medical liability environment is an important factor to attract and retain physicians. When physicians are in short supply, rural and inner city areas are usually the hardest hit, according to Brenton. The Supreme Court recognized this fact but, nonetheless, found the Legislature did not have a rational basis for enacting Wisconsin’s statute.

This is particularly disturbing because Wisconsin’s population demographics skew heavily towards older adults, who typically require more health care services than younger people. Wisconsin is already feeling the impact of what has become a national shortage of physicians, a situation that is expected to grow much worse in the future.

"Wisconsin had it right. We had a balanced medical liability system, including unlimited economic damages and a cap on non-economic damages. It was a rational way to protect injured patients economically, while not harming patient access to important medical care," said Dr. Turney. "I’m very nervous about the future."

"Wisconsin’s stable health care environment is endangered by today’s (July 14) state Supreme Court decision to weaken the state’s medical liability reforms. The Wisconsin Supreme Court superceded the will of the people and removed caps on non-economic damages in medical liability actions. This action sends yet another message to Washington that we need federal liability reforms to protect all America’s patients.

"Nearly 30 years ago, the Wisconsin State Legislature acted to provide the state with a remedy for the clear social and economic problems caused by the broken liability system. Wisconsin has certainly benefited from medical liability reforms that include a reasonable cap on non-economic damages. These common-sense reforms are proven to reduce frivolous lawsuits, stabilize insurance premiums, preserve competition in the liability insurance market, trim health care costs, and most importantly, preserve patient access to health care.

"Wisconsin courts have consistently deferred to the policy choices of the State Legislature, and rejected challenges to the state’s medical liability reforms. Nothing in the law has changed that would require the Wisconsin Supreme Court to second-guess the Legislature’s choice of reforms. The only change that has occurred is the make-up of the state Supreme Court, and that is not a sufficient basis for overturning the will of the people."

In addition to the Ferdon decision, the Wisconsin Supreme Court issued several opinions to end its term, including three this week, involving health care issues. WHA has been actively following these cases. Below is a brief summary of those cases and the Court’s decisions. WHA continues to examine the ramifications of these decisions and will be providing further analysis in future editions of The Valued Voice.

The plaintiffs in this case challenged the validity of a Wisconsin statute intended to reduce health care provider’s insurance premiums by reducing medical malpractice jury verdicts through the use of evidence of expenses that a plaintiff has incurred, but has not paid. Under the unmodified collateral source rule, the damages that a plaintiff is entitled to recover from a defendant cannot be reduced by payments or benefits from other sources.

The statute reviewed by the Supreme Court had previously been interpreted as abrogating the collateral source rule and has been a key part of Wisconsin’s comprehensive medical liability system. WHA and the Wisconsin Medical Society together filed an amicus brief with the Court in support of the statute and the abrogation of the collateral source rule.

In its July 14 decision, the Court did not invalidate the statute as unconstitutional, but concluded that evidence of payments made by Medicare for the treatment of the plaintiff that was admitted pursuant to the statute could not be used by a fact-finder to abrogate Wisconsin’s collateral source rule. Additional information on this complex case will be provided in future editions of The Valued Voice.

Phelps v. PIC Wisconsin

This case involved the care provided by an unlicensed first year resident to a woman who was in labor with twins. It was determined that the first year resident did not provide adequate care and one of the twins died.

This case presented several questions to the Court, including whether a first-year medical resident is afforded protection under Wisconsin’s cap on non-economic damages in medical malpractice cases and whether certain communications between a first-year resident and more senior physicians are protected by Wisconsin’s peer review privilege. The case also presents issues regarding the standard of care applicable to a first-year resident and other issues.

WHA and the Wisconsin Medical Society together filed an amicus brief with the Court arguing that the non-economic damage cap applies to first-year residents and that communications between the resident and his senior physicians are protected by the peer review privilege.

The Court held in this case that the resident in this case should be held to the standard of care applicable to a first year resident. Further, the Court found that a letter written by a supervising physician concerning the care provided by the resident was not protected under Wisconsin’s peer review statute because the letter was not part of the hospital’s peer review process. The Court also held that the medical malpractice damage caps do not apply to first year medical residents, but remanded the case for a determination of whether the resident is a borrowed employee of the hospital and is, therefore, covered as an employee of the hospital.

The case involved the birth of an extremely premature baby. An ultrasound examination performed prior to the baby’s birth showed that his lungs were not sufficiently developed. Once the baby was born, the hospital provided care and comfort to the child, who died two and a half hours after birth.

The question presented to the Supreme Court was, does EMTALA, the 1986 law that requires a hospital with an emergency department to provide "an appropriate medical screening examination" to anyone who "comes to the emergency department" to be examined or treated, apply to hospital birthing centers.

The Court held that, notwithstanding the language of the statute, EMTALA applies not only to hospital emergency departments but also to hospital birthing centers. "The duty to provide a medical screening examination should not depend upon the hospital room - be it the emergency room, the birthing center, or an operating room - into which a baby is born," Justice David Prosser wrote for the majority.

This week cumulative 2005 totals for the Wisconsin Hospitals PAC, Conduit and AHA PAC fundraising campaigns reached $111,000.

According to WHA’s Jodi Bloch, "since the official campaign started in April, contributions to these funds have come in steadily from individuals associated with over half of the hospitals across the state. While that’s a good start, to successfully achieve the goal of raising $175,000 this year, more individuals from other hospitals must recognize the important role contributions play in building a successful government relations program."

WHA President Steve Brenton explained why it is critical to achieve the goal of raising more money from more individuals because, "success is based on strength in numbers, and that means we need representatives from every Wisconsin hospital making contributions to these funds to cultivate success in Madison and Washington."

As reported in last week’s Valued Voice, at the end of July, aggregate individual totals by hospital/system will be published in WHA’s The Valued Voice as will individual totals by contribution level in order to recognize those who have really responded in 2005 and in doing so recognize the importance of political contributions in the advocacy process.

To find out more information about Wisconsin Hospitals PAC, Conduit or AHAPAC, contact WHA’s Jodi Bloch or Jenny Boese at 608-274-1820.

HospitalCompare, the recently launched national public reporting Web site, was the subject of discussion between Nancy Foster, AHA senior vice president, and several representatives from Wisconsin hospitals. Foster met with WHA members on July 12 to exchange information and ideas on public reporting at the national level. Representatives from Wisconsin hospitals included: Bill Bruce, Hillsboro; Pam Felland, Baraboo; George Johnson, Reedsburg; Rick Palagi, Sauk Prairie; Tom Rampulla, Columbia-St. Mary’s; Sue Pelatzke, UW Health; Pat Schroeder, Covenant; Charles Shabino, Wausau; Mary Starmann-Harrison, SSM-Wisconsin; Tim Size, Rural Wisconsin Health Cooperative; and Ruth Yarborough, Janesville.

Foster provided an overview of the Hospital Quality Alliance (HQA) indicating that the HQA is a public-private collaboration established to promote reporting on hospital quality of care via the HospitalCompare Web site. Foster said the goal is to make information about hospital performance available to the public to assist consumers in making an informed choice and to stimulate efforts to improve the quality of care. She added that "the commitment on the national level is to dovetail with local public reporting efforts."

While the content of the HospitalCompare Web site was viewed by the group, Foster shared the consumer feedback that was collected during the development of the Web site. Tim Size, executive director of the RWHC, then provided an overview of the National Rural Hospital Association’s Policy Brief on Public Reporting of Hospital Quality in Rural Communities. Issues identified on the Hospital Compare Web site related to this policy brief were discussed by attendees. Foster indicated that many of these issues will be addressed in the near future so that:

• Consumers will be able to select the hospitals that they want to compare from all hospitals reporting on the site.
• Symbols with negative connotations will be replaced with neutral symbols.
• Text will be rewritten to more accurately reflect the role hospitals and the limitations of the national data collection system.

Dana Richardson, WHA’s vice president of quality, discussed current issues associated with public reporting of quality data including resource limitations and the need for consumer education. The group recommended that AHA take the lead in informing consumers how to utilize the information on the Hospital Compare Web site in accordance with the existing role of the health care providers in public education.

Foster indicated that the NQA is planning to add H-CAHPS experience of care data and information on surgical complications to the Hospital Compare Web site by 2007. In addition, the NQA is looking at pediatric, OB and measures relevant to rural health care providers.

The Task Force on the Wisconsin Technical College System (WTCS) created by Assembly Speaker John Gard met on June 14 to review progress on issues of access to baccalaureate degrees and on credit transfer. Members of the task force expressed their concern about the lack of urgency and vision shown by both WTCS and the UW System in addressing consumer, learner and industry needs. Comments and opinions voiced by committee members reflected concern that while most of the world is moving at warp speed, the credit transfer process seems to be moving in a covered wagon.

The committee’s comments were made following a presentation by Dan Clancy, Wisconsin Technical College System president, and Larry Rubin, UW Systems assistant vice president of academic and student services, on a report issued by the Committee on Baccalaureate Expansion (COBE) that included 13 recommendations to increase the number of Wisconsin residents with baccalaureate degrees. That report is available at www.uwsa.edu/opar/cobe/final_report.pdf They also reported that the Wisconsin State Budget for 2005-2007 includes $500,000 for projects with this same goal.

Reporting on credit transfer, Rubin reported that 36 general education courses offered by Wisconsin Technical College Districts had been evaluated by the 31 UW campuses and that ‘most’ of the campuses had agreed to transfer ‘most’ of the courses. It was also revealed that courses taken at UW Colleges two year campuses must be evaluated for transfer to four-year campuses and that not all courses taken at these campuses are accepted.

Chair Sue Jeskewitz asked WHA’s Judy Warmuth and Jodi Bloch to report on AB 246, legislation that requires the Technical System to standardize their application processes and curricula for health occupations. Warmuth outlined the need for a single application process versus the specific, individual processes used by each district. She also emphasized the need for standardizing course numbers, course content and outcomes within each health occupation. Standardization enhances the ease of transfer and credit acceptance among the programs in both the Technical Colleges and University System. This flexibility is critical to meeting the needs of today’s mobile generation of students because it allows easy re-entry into educational programs and assures best use of taxpayer investment in education.

Spokespersons for the WTCS countered that the legislation was unnecessary and impinges on each district’s autonomy. While the bill passed the Assembly as part of The Republican Leadership’s 100-Day Agenda, it has had a hearing, but has not yet received a vote in the Senate Committee on Higher Education and Tourism.

The group requested to continue meeting for the purpose of checking on state progress toward a system of taxpayer-funded education that supports today’s students needs and desire for flexible, accessible educational systems in Wisconsin.

Register today for Fred Lee’s service excellence and patient loyalty workshop, "If Disney Ran Your Hospital – Some Things You’d Do Differently."

Each attendee will receive a copy of Lee’s award-winning book, If Disney Ran Your Hospital – 9 ½ Things You Would Do Differently named the 2005 James A. Hamilton Book of the Year by the American College of Healthcare Executives.

Lee has the unusual distinction of having been both a senior vice president of a major medical center and a cast member at Disney University. Lee was recruited by Disney because of his expertise in helping hospitals achieve a culture that inspires patient and employee loyalty. This followed his role as senior vice president at the 1,500-bed Florida Hospital, where he developed a nationally acclaimed guest relations program.

The seminar will be held on August 18, 2005, from 9 am to 4:30 pm at Country Springs Hotel & Convention Center in Stevens Point. A brochure and a registration form are included in this week’s packet and available on-line at www.wha.org. A special team registration rate for three or more attendees per facility is available. Each attendee will receive a copy of If Disney Ran Your Hospital – 9 ½ Things You Would Do Differently at the seminar.

Entries for the Global Vision Award must be received no later than 5 pm on August 5.

Need to review the nomination brochure and form? Visit the WHA web site: www.wha.org/about/globalvision.aspx

Send entries to Jennifer Frank, WHA Foundation, Inc., PO Box 259038, Madison, WI 53725-9038, or contact Jennifer by email: jfrank@wha.org, fax: 608-274-8554, phone: 608-274-1820.

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