Implications of the HEALTH Act

Issue March 2005 By Andrea R. Barter, Esq.

Pending in both the House and Senate in the next few weeks is the Help Efficient, Accessible, Low Cost, Timely Health Care (HEALTH) Act, which proponents say will decrease premium costs and increase the availability of medical malpractice insurance. Opponents argue that the bill will severely limit the ability of patients and other health care consumers to hold health care and medical products providers accountable.

As currently drafted, the bill will affect both federal and state litigation.

According to the American Academy of Trial Attorneys (ATLA) and Anthony Tarricone, past president of the Massachusetts Academy of Trial Attorneys and national officer of ATLA, hidden within the bill are 12 provisions that arguably won't change insurance premiums but will affect plaintiffs' recovery.

These include the following:

•  The bill covers product liability claims against pharmaceutical and medical device manufactures, and civil actions against nursing homes, HMOs and insurers.

•  The legislation reduces the amount of time an injured patient has to file a lawsuit to one year from the date the injury was discovered or should have been discovered, but not later than three years after the "manifestation" of injury. This statute of limitations, which is much more restrictive than a majority of state laws, would cut off meritorious claims involving diseases with long incubation periods.

•  Noneconomic damages are capped at $250,000 in the aggregate, regardless of the number of parties against whom the action is brought.

•  The bill completely eliminates joint liability for economic and noneconomic damages.

•  The bill gives the court power to restrict plaintiff's attorney fees regardless of whether recovery is by judgment, settlement, or any form of alternative dispute resolution. The bill specifies that contingent fees, regardless of the number of plaintiffs, may not exceed: (1) 40 percent of the first $50,000 recovered; (2) 33 1/3 percent of the next $50,000 recovered; (3) 25 percent of the next $500,000 recovered; and (4) 15 percent of any recovery in excess of $600,000. Defendants have no such restrictions.

•  Defendants in medical malpractice and medical product liability cases will have an absolute right to introduce evidence of "collateral source" benefits. The plaintiff can then introduce evidence of amounts paid to secure that benefit, but the bill does not address introduction of evidence of the extent of the doctor's liability insurance.

•  Punitive damages may only be awarded if the plaintiff proves by the heightened standard of "clear and convincing" evidence that (1) the defendant acted with malicious intent to injure the plaintiff or (2) the defendant understood the plaintiff was substantially certain to suffer unnecessary injury, yet deliberately failed to avoid such injury. The bill does not create punitive damages in those states that currently do not recognize them. It further limits punitive damages to two times the amount of economic damages or $250,000, whichever is greater.

•  Punitive damages may not be sought by the plaintiff initially. At the court's discretion, a plaintiff may be allowed to file an amended pleading for punitive damages only after a finding by that court that there is a substantial probability that the plaintiff will prevail.

•  The bill completely immunizes manufacturers of drugs and devices that are approved by the FDA from punitive damages; and extends immunity to manufacturers of drugs and devices that are not FDA-approved, yet are "generally recognized as safe and effective." Also, it immunizes the manufacturer or seller of drugs from punitive damages for packaging or labeling defects.

•  Medical products and medical provider suits must be brought separately.

•  All future damages over $50,000 are to be paid periodically.

•  The bill includes a sweeping preemption of state law, including state rules regarding joint and several liability, the availability of damages, collateral sources, attorneys' fees, and periodic payments. The bill does not preempt any state defenses designed to protect health care providers. The bill would leave in place existing state damage caps on economic, non-economic, or punitive damages, but would impose the caps in the bill on states that do not have limitations on damages, including states whose limitations were struck down as unconstitutional by state supreme courts.