AAI Encouraged with House Passage of HR 5

March 14, 2003

Rodger Lawson, president of the Alliance of American Insurers (AAI), issued the following statement upon House passage Thursday of the “Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) Act of 2003” (HR 5):

“The Alliance of American Insurers is very encouraged with today’s House passage of HR 5. This action will help avert a growing health care access crisis in our country, which is being driven by the growing size and frequency of claims and soaring defense costs.

“Even if a case is meritless, with no monetary award to the plaintiff – and the vast majority of cases are (about 70 percent) – the average cost to defend a doctor or hospital is about $29,000. For cases won at trial, the average cost escalates very quickly, easily topping $85,000 or more. So it becomes critically important to enact the common-sense reforms included in the HEALTH Act.

“We hope the Senate follows the House’s lead and passes the bill, so the President may sign it into law as quickly as possible.

“The HEALTH Act is patterned after California’s Medical Injury Compensation Reform Act (MICRA), which has provided meaningful relief for doctors and insurers laboring under increasing costs of litigation – without sacrificing care for the medical consumer. It is a balanced and reasoned solution that has been successful at the state level.

“HR 5 includes many items that will lower health care costs: it would cap recoveries for non-economic damages; it would reserve punitive damages for cases where they are justified; it would provide for payments of judgments over time rather than in a single, lump sum; it would ensure that old cases could not be brought years after an event; it would reduce the amount doctors must pay if a plaintiff has received other payments from an insurer to compensate for their losses; and would provide that defendants pay judgments in proportion to their fault.

“The Alliance of American Insurers supports meaningful medical malpractice reforms, such as the use of caps for non-economic damages and abolition of joint and several liability in all types of litigation as a means to reduce escalating jury awards and settlements.

“Reforming the medical malpractice system is critical, because the rising costs of health care are borne by more than just medical liability premiums: workers compensation, automobile, homeowners, etc., all have a medical cost component that is being impacted by the current crisis.”

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