My amendment would prohibit the General Assembly from limiting the recovery of economic damages for injuries resulting in death or injuries to persons or property, but would allow the General Assembly to limit by statute the recovery of non-economic damages for injuries resulting in death or injuries to persons or property.

Non-economic damages are paid to compensate an individual for physical and emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other intangible, non-monetary losses. The United States is the only country in the world that provides unlimited compensation for non-economic damages.

Unlike economic damages, which can be determined using quantifiable information, the determination of non-economic awards is entirely subjective.  Juries receive little guidance on how to value non-economic damages.  They have no quantitative standards to make their decision, and must apply their own personal values to select a monetary figure they believe is fair.  Because non-economic damages are not defined, they are the most variable component of jury valuations, differ considerably for cases of similar severity, and are often excessive.

To place limits on non-economic damages, we must change the state Constitution to allow the legislature to debate the issue.  We are not advocating for a particular financial limit or cap at this time, only for the opportunity for elected officials to deal with the matter of limits on non-economic damages through the legislative process.

This Constitutional amendment would have to be passed by the General Assembly in two consecutive sessions, and then be approved by the voters of Pennsylvania through a statewide ballot question.

This is only the first step in a process that will ultimately allow the people of Pennsylvania to decide whether they want to bring our constitution up to date.  This is the time to begin the process of restoring to the General Assembly a power given to us by the founding fathers in our original Pennsylvania Constitution.

As you are well aware, our state faces a crisis in our health care industry and, to a lesser extent, in our business community as well.  This is a crisis that will not be overcome with MCARE abatement alone.  We need start down the path of solving this crisis and using all the tools that are available to us.  My amendment is one of these tools.

The Problem

Tort costs have risen from $205 billion to $233 billion in 2002, the largest ever increase.

Pennsylvania Malpractice Insurance premiums have increased 1,400% in the last 25 years.

During this same time, premiums across the United States have increased at a rate of 505% and in California, a state of aggressive tort reform, the increase in premiums over this same time was just 167%.

Pennsylvania had 10% of the nation’s insurance payouts in the year 2000, but, Pennsylvania has just 5% of the nation’s population.

Because of these shocking statistics, and many others, the American Medical Association lists Pennsylvania as a State in Crisis -- one of 19.

The Milliman Study points out that Pennsylvania ranks 3rd in the nation with losses per physician -- 171% of the country wide average.

The State Federation of Medical Boards reports that Pennsylvania lost 1,071 actively practicing physicians from 2001 to 2002, while neighboring states showed increases.

The Pennsylvania State Medical Board reported to the Pennsylvania Medical Society that 4,565 physicians with PA licenses requested that their licenses be placed on "inactive" status in the most recent renewal cycle in 2003; of those, 583 have current PA addresses, which means that almost 4,000 DO NOT.

Half of Pennsylvania's physicians are over the age of 50, while we've dropped to 41st in the nation for the number of practicing physicians under the age of 35.

There are only three orthopedic surgeons in the state under the age of 35.

We know we are losing doctors in Pennsylvania to other states that have favorable tort climates where medical malpractice insurance is affordable.

A nationwide survey of medical and surgical residents asked this question: If you were to begin your education again, would you study medicine or would you select another field?  The answer: 76% of residents say they would choose medicine, down from 95% in 2001.

I have here a letter signed by 1,251 students at Pennsylvania medical schools.  These students are very aware of our medical malpractice insurance crisis in Pennsylvania and they write, “We believe that the provisions of House Bill 1326 best represent the concerns of the medical students who have signed this letter.  We strongly encourage you to support this legislation.”

As you know, my amendment mirrors language contained in House Bill 1326, which passed the House last June.

To further illustrate their concerns, less than 25% of residents and fellows studying in Pennsylvania report that they will practice in our state.

The Family and Community Medicine Residency Program administered by Penn State University and Good Samaritan Hospital in Lebanon reported that all six 2002 graduates left Pennsylvania to practice.

While in 2001 only one of six graduates remained in the state, according to Program Director Edward Paul, MD, who further reported that the institution was having difficulty filling residency positions for 2003.

In Centre County, Dr. Randy Payne, an ER Physician from Port Matilda, gave up medicine in 2003 due to constant threats of malpractice.

Dr. Mark Blossom, an Internist, was forced to leave his practice in Kennett Square, Delaware County, in 2003 because of rising malpractice costs. He is now practicing in Montana.

Dr. Brian Marien, a Vascular Surgeon at the Community Surgical Group in Kingston, Luzerne County, was forced to curtail services in December 2002 as a result of skyrocketing malpractice premiums.

An Ob/Gyn, from the Pocono Medical Center who testified at a House Policy Committee hearing in March of last year, has stopped doing OB.  As a result of the three OB’s who have stopped delivering babies, there is now a nine month wait to get an appointment with the remaining obstetricians.

And Dr. Cyril Abrams, a Cardiologist at Roxborough Hospital. relocated to Charlotte, North Carolina during the summer of 2003.

Pennsylvania’s Insurance Commissioner testified before the Senate Banking and Insurance Committee on this subject.

There are some that want to blame our medical malpractice insurance industry, what we have left of it, for the crisis.

Let’s look at the facts that were given to us by the Insurance Commissioner:

In 2001, Pennsylvania’s Medical Malpractice Insurance industry had a 127% loss ratio.

For every one dollar in premium collected, the industry paid out $1.27.

The Insurance Commissioner also told us that the Insurance Industry’s stock losses are not to blame.

Pennsylvania closely regulates how much in holdings an insurance company can place in preferred and common stock and bonds.

Companies writing premiums in Pennsylvania have very little of their investable assets in stocks and bonds.

Why Caps Work

United States Secretary of Health & Human Services Tommy Thompson said of a recent departmental study on medical malpractice insurance premiums, “Our broken medical litigation system is affecting a patient’s ability to find a doctor.  This study confirms and quantifies the association between reasonable limits in medical lawsuits and the supply of physicians available to treat patients who need them.”

The National Practitioner Database tells us that the average loss for a physician in a state without a cap on non-economic damages is twice as high as a physician in a state with a cap -- $8,000 as compared to $4,000.

The average medical malpractice insurance premium for a physician in a state without caps on non-economic damages is 29% higher -- $16,000 as compared to $12,000.

We all know that the rates our physicians in specialty fields pay is astronomical in Pennsylvania.

According to a US Department of Health and Human Services study, insurance premiums for doctors and hospitals are 17% less in states that have some sort of cap on non-economic damage awards.

The Milliman Study also tells us that the 15 largest states that have caps have seen lower costs for premiums.

This same study takes a close look at Pennsylvania and its unique current situation as one of the worst states to practice medicine.

It finds, conservatively, that if Pennsylvania were to enact a cap on non-economic damages, we would see malpractice insurance premiums reduced by at least 18%.

A former member of this body and current United States Congressman Jim Greenwood introduced House Resolution 5 in the US Congress that would place limits on medical malpractice non-economic damage awards in medical malpractice cases only.

A Congressional Budget Office study says HR 5 would reduce liability premiums by an average of 25 to 30%.

Last year, our Governor put together his Medical Malpractice Taskforce to make recommendations to him on short-term and long-term solutions to our crisis in Pennsylvania.

The short-term solution was to enact some sort of MCARE abatement.  The Governor embraced this idea and we worked with him to do this in December.

The Taskforce also met many times to come up with long-term solutions.

Subcommittees were formed.  The professionals met many times.

The Governor’s Task Force Subcommittee on Insurance met and I will quote from its report, “Not unexpectedly, as noted above, on a scale of ‘one’ to ‘ten,' caps on general damages scored no lower than ‘nine.'  This was clearly the insurer’s most important tort reform issue.”

The Governor of Florida put together a similar task force to make recommendations on how to solve that state’s medical malpractice insurance crisis.

When allowed to freely come up with a recommendation, here is the report’s number one priority, and I quote:

“The Legislature should, in medical malpractice cases, cap non-economic damages at $250,000 per incident.  The Task Force believes that a cap on non-economic damages will bring relief to this current crisis.  Without the inclusion of a cap on potential awards of non-economic damages in a legislative package, no legislative reform plan can be successful in achieving the goal of controlling increases in healthcare costs, and thereby promoting improved access to healthcare.  Although the Task Force was offered other solutions, there is no other alternative remedy that will immediately alleviate Florida’s crisis of availability and affordability of healthcare.”

If this sounds familiar, it is because this same conclusion has been reached by many people that have testified before our Senate Judiciary Committee, our Senate Banking and Insurance Committee and also the many hours of testimony taken in the House.

Other States

Pennsylvania is one of only five states that have a constitutional ban on the legislature to limit non-economic damages. The other states are Arizona, Kentucky, Oregon and Wyoming.

Most importantly, no state has a constitutional exception for medical liability cases only.

There are 26 states that have some sort of cap on non-economic damages in place.  Eight of these states place a cap on non-economic damages in all civil suits like this amendment attempts to do.

Twenty-four states do not have any cap in place.

According to the American Medical Association, there are 19 states in crisis such as Pennsylvania.  Twelve of these states still do not have a cap in place, Pennsylvania being one of them and seven have recently enacted caps.

The AMA notes that 25 states are showing problems.  Of the 25 states that have shown problem signs, 12 states do not have caps.  Eleven of these states have caps on non-economic damages and 2 of the 25 have caps on total damages.

The AMA also points out that 6 states do not show signs of any crisis.  All of them have caps. Interestingly, 4 of these 6 have capped total damages -- economic and non-economic.

Closing

The General Assembly needs to have the broad authority to respond to any crisis, like the one we currently face with our health care system.  The business community and the health care community are unified in its position that the General Assembly enacts a broad constitutional amendment that provides the potential for relief to both health care and non-health care employers.

With your support of my amendment, you are not voting to cap anything.  You are not voting to enact a cap number.  You would not be voting to set limits or delineate subject areas where damages can or cannot be recovered.  These are all areas that must be seriously and fully debated when crafting a statute after the constitutional amendment process is completed.

My amendment does not enact a cap on non-economic damages.  My amendment does not overly complicate our state Constitution by distinguishing between health-care and non-health care professionals or create unequal treatment clauses.

There will be plenty of time to debate the parameters of any proposed cap after the constitution has been amended.  Now is not the time, and the constitution itself is not the place for that debate to be held.

Given the complex and lengthy process of changing the state Constitution, logic dictates that broad tort issues should be addressed at one time.  The same principles that apply to the medical liability system apply to the liability system as a whole.

Proponents of broad-based reform are committed to bringing stability, fairness, and predictability to the tort system.  Not only is access to health care at risk, but jobs and the economic viability of the Commonwealth -- and the two are inextricably linked.

Health care providers make significant economic contributions to their communities and the state.

Hospitals provide $17.5 billion in direct total industry output, of which $11 billion is “value added” activity and includes employee compensation, proprietary income, property type income, and indirect business taxes.

The direct employment effect of the hospital sector is 259,449 jobs.  Businesses rely upon a strong health care system to attract and retain a good workforce, as well as to expand their services; workforce health benefits and costs are directly impacted by the stability of the health care system.

The United States Chamber of Commerce’s second annual poll of corporate counselors and senior litigators on the fairness or reasonableness of state liability systems continues to find a majority of states deserve a grade of fair to poor.  The Chamber Institute for Legal Reform and Harris Interactive found an overwhelming majority of those polled (82 percent) said a state’s litigation environment affects important decisions, such as where to locate or do business.  And 65 percent ranked state court liability systems as only “fair” or “poor,” up from 57 percent last year.

Bringing up the bottom -- those states perceived as having the worst performance -- were Mississippi, West Virginia, Alabama, Louisiana and Texas.  Pennsylvania ranked 31st among the states, which resulted in our state being given a “poor” ranking.

The current liability system changes the way that both health care providers and businesses provide their services, produce goods, and compensate employees, and the results are not consumer-friendly.

When physicians leave the state or scale back their practices; when hospitals reduce services and jobs in the community; when major businesses can’t expand and small businesses must reduce jobs and output, all Pennsylvanians are affected.  Numerous public opinion surveys since the late 1990’s show that Pennsylvania voters recognize there is a problem.

With your support of my amendment, you are giving the voters of Pennsylvania the opportunity to decide whether or not Pennsylvania and its General Assembly should join the 46 other states that have the constitutional authority to enact caps on non-economic damages.

With your support of my amendment, you are taking a first step in solving this crisis and using one of many tools that are or will become available to us.