[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



                                                   S. Hrg. 102-000 
 
 ARE SKYROCKETING MEDICAL LIABILITY PREMIUMS DRIVING DOCTORS AWAY FROM 
                          UNDERSERVED AREAS?
=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                     WASHINGTON, DC, JUNE 14, 2005

                               __________

                           Serial No. 109-20

                               __________

         Printed for the use of the Committee on Small Business


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

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                      COMMITTEE ON SMALL BUSINESS

                 DONALD A. MANZULLO, Illinois, Chairman

ROSCOE BARTLETT, Maryland, Vice      NYDIA VELAZQUEZ, New York
Chairman                             JUANITA MILLENDER-McDONALD,
SUE KELLY, New York                    California
STEVE CHABOT, Ohio                   TOM UDALL, New Mexico
SAM GRAVES, Missouri                 DANIEL LIPINSKI, Illinois
TODD AKIN, Missouri                  ENI FALEOMAVAEGA, American Samoa
BILL SHUSTER, Pennsylvania           DONNA CHRISTENSEN, Virgin Islands
MARILYN MUSGRAVE, Colorado           DANNY DAVIS, Illinois
JEB BRADLEY, New Hampshire           ED CASE, Hawaii
STEVE KING, Iowa                     MADELEINE BORDALLO, Guam
THADDEUS McCOTTER, Michigan          RAUL GRIJALVA, Arizona
RIC KELLER, Florida                  MICHAEL MICHAUD, Maine
TED POE, Texas                       LINDA SANCHEZ, California
MICHAEL SODREL, Indiana              JOHN BARROW, Georgia
JEFF FORTENBERRY, Nebraska           MELISSA BEAN, Illinois
MICHAEL FITZPATRICK, Pennsylvania    GWEN MOORE, Wisconsin
LYNN WESTMORELAND, Georgia
LOUIE GOHMERT, Texas

                  J. Matthew Szymanski, Chief of Staff

          Phil Eskeland, Deputy Chief of Staff/Policy Director

                  Michael Day, Minority Staff Director

                                  (ii)
?

                            C O N T E N T S

                              ----------                              

                               Witnesses

                                                                   Page
Brown, Dr. Delorise, Cleveland Medical Center....................     3
Fields, Dr. Larry S., American Academy of Family Physicians......     5
Price, Dr. Winston, President, National Medical Association......     6
Rios, Dr. Elena, President & CEO, National Hispanic Medical 
  Association....................................................     8
Colom, Mr. Wilbur, Attorney at Law, The Colom Law Firm...........    10

                                Appendix

Opening statements:
    Manzullo, Hon. Donald A......................................    35
    Westmoreland, Hon. Lynn......................................    37
    Velazquez, Hon. Nydia........................................    38
Prepared statements:
    Brown, Dr. Delorise, Cleveland Medical Center................    43
    Fields, Dr. Larry S., American Academy of Family Physicians..    45
    Price, Dr. Winston, President, National Medical Association..    52
    Rios, Dr. Elena, President & CEO, National Hispanic Medical 
      Association................................................    56
    Colom, Mr. Wilbur, Attorney at Law, The Colom Law Firm.......    63

                                 (iii)


   Are Skyrocketing Medical Liability Premiums Driving Doctors Away 
                         fromUnderserved Areas?

                              ----------                              


                         TUESDAY, JUNE 14, 2005

                   House of Representatives
                                Committee on Small Business
                                                     Washington, DC
    The Committee met, pursuant to call, at 10:07 a.m., in Room 
2360, Rayburn House Office Building, Hon. Donald A. Manzullo 
[Chair of the Committee] Presiding.
    Present: Representatives Manzullo, Bartlett, Kelly, 
Musgrave, Poe, Sodrel, Fortenberry, Westmoreland, Gohmert, 
Lipinski, Christensen, Bordallo and Moore.
    Chairman Manzullo. Good morning. Welcome to our second 
hearing on the important subject of medical liability reform. I 
appreciate everybody who is participating.
    We have been blessed with the best system of medicine in 
the world, but we are having a crisis of access. The problem is 
not a case of whether a patient has health insurance, though it 
is the driving force behind the cost of health insurance. Today 
it could be difficult to find a doctor to treat you.
    Headlines are replete with stories of women having to drive 
several hours because they cannot find a doctor to deliver 
their baby. It is hard to believe that in the 21st century many 
women have difficulty finding a doctor to deliver their child.
    If you are in a car accident in southern Illinois and need 
a neurosurgeon, chances are you will be airlifted to another 
State, which could be a couple of hundred miles away, because 
there simply are no neurosurgeons left to treat you in that 
area.
    Unfortunately, we live in a time where lawsuits against 
doctors are rampant, and multimillion dollar court decisions 
and jury awards have left doctors with medical liability 
premiums that increase 40 to 50 percent a year. Doctors in 
certain high-risk fields of medicine can expect to be sued at 
least once in their career.
    Between 2000 and 2003, the number of medical liability 
claims has jumped 46 percent in Illinois, to more than 35,000 
claims. The average indemnity per claim has also risen 
dramatically. In 1990, the average indemnity was about 
$310,000. In 2003, it was nearly $600,000, according to the 
Illinois State Medical Insurance Exchange. As a result, doctors 
are retiring or leaving the practice of medicine. Emergency 
rooms have closed. Doctors simply cannot afford to pay premiums 
that spike every year with no end in sight.
    The problem has been exacerbated in the rural areas and 
inner cities, where doctors are leaving in droves. Millions of 
rural and inner city residents are in danger of losing the 
basic ability to see a doctor when they are ill.
    Fortunately, Illinois has just passed medical liability 
reform that the governor has promised to sign, but there are 
many other States that do not have caps on non-economic 
damages. Caps help, but they are not the total solution to it.
    I am hopeful the House will soon take up bills such as H.R. 
534, the Help, Efficient, Accessible, Low-Cost, Timely Health 
Care Act of 2005 introduced by Representative Chris Cox.
    The President supports reforms in our medical liability law 
that would improve the ability of patients to collect 
compensation for economic losses, ensure that recoveries of 
non-economic damages would not exceed $250,000 and limit 
punitive damages to $250,000. Congress has to pass legislation 
to address the problem.
    I have practiced law for 22 years before being elected to 
Congress; and though I did not do any medical liability defense 
or plaintiff work, what has really disturbed me and what I 
think has exacerbated a solution on it has been the fact that 
people will blame the medical crisis upon trial lawyers. I 
guess that bothers me because they work within the system of 
laws, and they use the laws that are on the books.
    If your kid is involved in a car accident, you are going to 
want to find the finest trial lawyer in the State. And I think 
in the past several months at least I have been talking to 
folks involved in the medical profession, saying you do not 
accomplish something positive by talking down a profession. 
Just as medical doctors have studied for years to achieve their 
expertise, so have people involved in trial litigation; and it 
just has been counterproductive as far as I am concerned to try 
to pit the two professions against each other.
    Illinois came up with a remarkable solution where, I 
believe, Governor Blagojevich is an attorney himself, and both 
houses of the legislature are in Democratic hands. The only way 
to bring about a result is you just have to show the enormity 
of the problem, and that is what happened in Illinois where it 
became almost impossible to find a neurosurgeon in the southern 
part of the State. Everybody got together and said let us come 
up with something that we think is workable, with caps of 
$500,000. Plus, there also is a provision in that bill that 
says if a study shows that perhaps an insurance company may be 
gouging, which I do not think is the case, but if that is the 
case, then there is the opportunity to do is a very in-depth 
investigation on that.
    [Chairman Manzullo's opening statement may be found in the 
appendix.]
    In terms of opening statement, we are waiting for our 
Ranking minority Member to come and also Dr. Donna Christian 
Christensen, who is a physician, a member of our panel from the 
Virgin Islands. I have asked her, if she wants, she can have 
the opportunity to give an opening statement because she is 
also a physician; and I begged her to stay on the Small 
Business Committee because of the talent that she lends.
    So let us go with our first panelist. What I would like you 
to do is, how many here have never testified before Congress? 
Okay. Two have not. Our goal here today is for you tell us your 
story. Let us know about the nature of your practice and what 
has happened to your medical malpractice premiums and the 
impact, if any, upon the community. This is the time to tell 
the story. I am more concerned about your telling the story 
than the possible solutions that you may want to offer, because 
those have all been on the table. We have discussed those as a 
whole.
    Dr. Brown, I am going to start with you. Dr. Delorise Brown 
is an endocrinologist who practices in East Cleveland, Ohio. I 
have had the opportunity of knowing your brother for several 
years, and he is the one that alerted me to your situation.
    We have what is called a 5-minute rule. When you see the 
yellow light, that means 4 minutes have expired; and you have 
about a minute to conclude.
    Sit back, relax, take a glass of water. This is your 
opportunity to tell members of Congress--and there is a lot of 
press here, also--what your story is.
    Dr. Brown, we look forward to your testimony.

  STATEMENT OF DELORISE BROWN, M.D., CLEVELAND MEDICAL CENTER

    Dr. Brown. Good morning, Chairman Don Manzullo and members 
of the Small Business Committee. My name is Delorise Brown.
    I am a practicing internal medicine physician with a 
subspecialty in endocrinology from the great State of Ohio. As 
a small business owner, I employ six staff members. Together, 
we support the highly underserved East Cleveland community. I 
would like to thank you for holding this hearing to discuss the 
effect of skyrocketing medical liability premiums which are 
driving physicians who practice in underserved communities 
across this great Nation out of business.
    Mr. Chairman, I have been in private practice for 27 years. 
My late husband, Alvin Butler, held a Ph.D. In organizational 
development from Case Western Reserve University; and I made a 
conscious decision to provide medical service to the 
underserved. My husband and I decided to focus on our efforts 
within East Cleveland, Ohio. As of the census of the 2000, 32 
percent of the East Cleveland population and 28 percent of 
families live below the poverty line, earning less than $12,602 
per year.
    As a physician, I am finding it ever more difficult to 
maintain sound principles of medicine; and I am forced to 
practice defensive medicine. The practice of defensive medicine 
requires me to avoid high-risk patients and procedures, 
limiting my ability to service the needs of my past and current 
patient population. In my opinion, defensive medicine is a 
deviation induced by the threat of medical liability. My 
malpractice insurance has required me to stop caring for 
nursing home patients, some of whom I have provided services 
for over 20 years.
    Operating a small business during our current economic 
climate is very difficult. However, it is exacerbated by the 
skyrocketing cost of medical malpractice insurance. As I 
stated, East Cleveland is a poverty stricken community; and the 
majority of my patients cannot afford traditional health care 
insurance. Most patients have Medicare and Medicaid or some 
other managed health care plan which establishes fee schedules 
that limits the remuneration value for services rendered. As a 
result, it is becoming increasingly more difficult to afford 
purchasing advanced medical equipment that is critical to 
enhance the level of care for my practice.
    Last year, President Bush visited Cleveland and spoke on 
the topic of electronic medical records, EMR. President Bush 
stated, and I quote, "When you multiply the efficiencies to be 
gained all across the spectrum, whether it be individual 
doctors or hospitals or networks, that's why some predict you 
can save 20 percent of the cost of health care as a result of 
the advent of information technology."
    Last year, the cost of EMR's ranged from 60 to $180,000. 
The cost of electronic medical records is completely out of 
reach for me as a physician. I do believe that EMRs provide 
several levels of benefits and that EMRs would assist in 
driving down the overall costs associated with running my 
medical practice, in addition to ensuring accurate 
recordkeeping of patient information. To date, medical 
malpractice insurers do not provide any credit or cost 
reduction to physicians who implement EMR solutions within 
their medical practice.
    Just as I previously stated, medical malpractice insurance 
companies require physicians to practice defensive medicine, 
which specifically limits the physician's ability to generate 
income by setting restrictions upon the physician that 
potentially assist in limiting medical liability. This concept 
does not make sense to me, as I have been affected by frivolous 
lawsuits which have served to move me from a standard market to 
a nonstandard market. I am presently in negotiations to renew 
my medical malpractice insurance; and I am uncertain, as are 
some of my colleagues, as to what market will be available to 
me this year.
    To give you some history, in 2001, my medical malpractice 
cost me $5,266.79 for an entire year; and I thought that was 
outrageous then. But then, in 2002, my malpractice was $18,861, 
with a tail, which covers prior acts, of $15,000, totaling 
$33,861 for that year; and then I had to pay a $5,000 
deductible for each lawsuit. And in 2003 my malpractice was 
$50,673, with a tail of $19,500, totaling $70,173, with a 
deductible of $10,000 per lawsuit. And in 2004 my malpractice 
cost me $73,259, still with a deductible of $10,000 coverage. 
So, as you can see, from 2001 malpractice costs were lower, at 
$5,266.79, then skyrocketed to $73,259 within 3 years.
    This is I think in part due to several malpractice 
insurance firms leaving the State of Ohio and in part to the 
growing epidemic of medical malpractice lawsuits plaguing the 
medical industry. For the first 22 years of being in practice, 
I have had three lawsuits. Within the last 5 years, I have had 
five lawsuits. I am not alone, as this lawsuit trend has 
affected a great number of my colleagues as well. If this trend 
continues, we will be forced out of private practice or driven 
away from serving underserved communities across this great 
Nation.
    Chairman Manzullo. I kind of have to stop you right there. 
It is really, really important for witnesses to get into the--
tell us what is going on with the premiums, okay, because that 
is a lot of money.
    Dr. Brown. Yes, it is.
    [Dr. Brown's statement may be found in the appendix.]
    Chairman Manzullo. Dr. Fields is the President-elect of the 
American Academy of Family Physicians. He comes to us from 
Ashland, Kentucky.
    Doctor, we look forward to your testimony. You are going to 
give us some good background on what is going on in your 
profession. You are an actual practitioner yourself.

STATEMENT OF LARRY S. FIELDS, M.D., AMERICAN ACADEMY OF FAMILY 
                           PHYSICIANS

    Dr. Fields. Yes, I am in private practice in rural Kentucky 
with four partners. I started as a solo practitioner and built 
the practice up.
    I really appreciate the opportunity to be here on behalf of 
not only my four other partners but the 95,000 of the American 
Academy of Family Physicians and, much more importantly, 
probably the 50 million odd--well, they are not all odd--but 50 
million patients that allow us the privilege of taking care of 
their health every day. So I sincerely thank you for this 
opportunity, and the AAFP would like to commend the Committee 
for its continued and successful work in alleviating some of 
the burdens of small businesses in the United States.
    As you mentioned, it is a particular honor to be here 
because one of your members, Dr. Christensen, is one of our 
members; and she is also the leader of the Congressional Black 
Caucus Health Brain Trust.
    As Dr. Brown said, a large percentage of family doctors 
work and own small businesses. We have all the same problems 
that small businesses have. The average revenue of a family 
physician practice in 2003 was $360,000; and out of that we 
must pay all the normal things, staff, electricity, rent and 
medical liability insurance premiums. All of those costs have 
risen, and most of them predictably over the last several 
years. However, the liability rates have been increasing. Mine 
particularly has doubled, and the obstetrics unit at my 
hospital had to close because people just quit delivering 
babies because they could not afford the premiums.
    So when that happens, when these premiums rise, I have very 
little choice because we cannot absorb that kind of cost. So I 
either have to cut services, to cut premiums like obstetrics. I 
have to reduce the size of my staff, which has the doubly 
regrettable consequence of further reducing services and 
providing the human suffering of unemployment. I could borrow 
money, which is usually the path to bankruptcy for small 
business. Or I could sell to a larger entity that can afford to 
pay the high premiums that are currently affecting most of us.
    But the people who suffer most from this are our patients. 
This is really what its all about. They are your constituents, 
and they no longer have a medical home. They are no longer able 
to find those familiar faces, the friendly faces that they have 
come to depend on to humanize medicine and provide a safe haven 
for them in the complex world of medicine in the 21st century.
    I practice in eastern Kentucky, which is a beautiful, rural 
and underserved area. I was born 25 miles from where I 
currently practice. Last year, the liability carrier that I had 
had for 22 years dropped our practice without ever a dime being 
paid in claims. They just said we are not going to insure you 
any more. And that, for about 2 months, posed a real risk that 
18,000 human beings would not be able to find those familiar 
faces that I spoke about. That would have been a real tragedy 
for the patient.
    Like Dr. Brown, my heart aches every day when I see the 
hardship, the financial hardship that defensive medicine 
produces on my patients, defensive medicine like it is 
practiced in the emergency rooms, hospitals and physicians 
offices, including mine as well as yours.
    I have a colleague, Dr. Julie Wood, who is from Missouri. 
She practiced in her home town as a family physician, providing 
full-service medical care for 6 years. A year or so ago, she 
got a notice that her liability premium, even though she had 
never had a claim, would rise from $19,000 to $71,000. Dr. 
Wood, who happens to love, as most of us do, mothers and 
children and the special bond that physicians develop with 
expectant mothers, felt she had no choice. She had to take a 
position in Kansas City with a large medical center that could 
afford to pay her liability premiums.
    So what are we supposed to say to people, the people she 
had to leave behind? Because there is no OB now in a quarter of 
northern Missouri from St. Joe to Hannibal. These people, some 
of them, can drive 2 hours to see Julie in Kansas City, but 
what do we say to the 15-year-old intellectually challenged 
young girl who rode her bicycle to see Dr. Wood for care so 
that her baby could be born healthy? What are we supposed to 
tell them? Do we say because they are poor or not as smart or 
live in the wrong place that they do not deserve good prenatal 
care?
    I have got another friend, Dr. Neil Brooks, from 
Connecticut, who practiced in the town where he grew up for 30 
years, part of a four-physician group. The town was about 
30,000 people. Three years ago, his liability premium went up 
600 percent. It rose to $31,000. So at age 51 Dr. Brooks had to 
leave the practice that he had cared for for four generations 
of his friends and neighbors.
    Chairman Manzullo. We have sort of run out of time here, 
Dr. Fields. Hopefully, we can pick up the rest of your 
testimony in the Q and A session later on.
    [Dr. Fields' statement may be found in the appendix.]
    Chairman Manzullo. Dr. Winston Price is the President of 
the National Medical Association. He hails from Brooklyn, New 
York.
    Dr. Price, we look forward to your testimony.

 STATEMENT OF WINSTON PRICE, M.D., NATIONAL MEDICAL ASSOCIATION

    Dr. Price. Thank you very much, Chairman Manzullo.
    Highly distinguished Members of the House, fellow 
panelists, ladies and gentlemen, as you heard, I am the 
President of the National Medical Association. This represents 
the largest member organization for physicians of African 
decent, and we represent also the many millions of patients and 
citizens that we serve. We have served as a leading advocate 
for American health care for over a century; and we thank the 
Committee for the opportunity to testify this morning and would 
hasten to inform the audience that with regard to the 
elimination of health care disparities, particularly for those 
based on race and ethnicity, our resolve remains as strong as 
ever and our efforts will continue unceasingly for what is good 
for health care for all Americans.
    We have already heard some of the alarming statistics, as 
you elucidated, that define this growing crisis in America with 
respect to the availability and affordability of medical 
liability insurance. All Americans are now threatened, whether 
they live in rural, urban or suburban areas; and all Americans 
are affected and in real jeopardy of a failed access to health 
care regardless of race, ethnicity or socioeconomic status. 
However, it is fair to note that those who already suffer 
disproportionately from poor health service access and health 
disparities are even further burdened by the lack of liability 
insurance in this crisis.
    Many of our colleagues in the American Medical Association 
and in the Obstetrics and Gynecology College share the 
designation of red States. In both Illinois and New York, Mr. 
Chairman, where you are from, and New York, where I am sure you 
love to be, this designation is not symbolic of how people 
vote, whether they are voting Republican. This designation, 
rather, betrays the lack of access to health care created by 
the liability insurance crisis; and there are 18 other States 
that fall into that same category.
    The result of that is that many physicians have had to 
close their practices; and, as you know, their practices 
represent to a large degree small business and jobs for many of 
the community individuals. They have had to go to greener 
pastures, and many times that means simply going to States that 
have better situations with respect to the malpractice crisis.
    These are troubling statistics, and I would direct your 
attention southward to Mississippi, one of the poorest States 
in our country, that has some of the worst health indicators 
for our Nation, a State whose citizens need even greater access 
to care than presently exist. But in this State one 
practitioner after another is being driven out of town, 
figuratively, by the malpractice issue.
    Let me add a personal touch to this particular situation 
and tell you about Dr. Myers down in Mississippi whose practice 
in Mississippi had to close at the end of this year as a result 
of the malpractice crisis. And Dr. Myers is unique. He travels 
more than 2 hours between his clinics, serving some of the 
poorest of our Nation, logging more than 50,000 hours per year, 
because he still makes house calls. But his five clinics had to 
close because the malpractice insurer decided that he was too 
much of a risk with the patients who were too sick to be 
insured. As a result of this, he obviously, as the transcript 
says, had to file a lawsuit to try and stay in business, but 
for the last 6 months he has been out of business in all of 
those five clinics.
    For expediency of time, let me share the situation of a 
colleague who is a surgeon. As you know, among African-
Americans the ability to have specialists in all areas of 
health care, particularly in the surgical specialties, OB-GYN, 
orthopedics and neurosurgery, this is a luxury. These 
individuals have seen premium increases as much as 200 or 300 
percent, some paying as much as $100,000 a year for their 
medical malpractice coverage.
    Mr. Chairman, it is fair to say that we are at a crisis 
state within our health care system; and indeed our health care 
system, with the liability issue, particularly with those who 
suffer from health disparities, is itself in critical 
condition.
    So I ask you, Mr. Chairman, your Committee is tasked with 
trying to make sure that small business is able to be 
successful. The practitioners in this country who serve all of 
you in this room, we are all in jeopardy of lack of health care 
service. Your mothers, your wives, your daughters and your 
granddaughters deserve access to quality health care. Those 
individuals who are traumatized on the roads of our highways 
deserve to have access to the excellent trauma surgery that is 
available in our health care system.
    Thank you, Mr. Chairman.
    Chairman Manzullo. Thank you, Dr. Price.
    In summarizing your testimony, you left out the fact that 
Dr. Myers had never had a medical malpractice lawsuit filed 
against him.
    Dr. Price. That is correct. Thank you.
    Chairman Manzullo. It is extremely important.
    [Dr. Price's statement may be found in the appendix.]
    Chairman Manzullo. Our next witness is Dr. Elena Rios, 
President and CEO of the National Hispanic Medical Association. 
We look forward to your testimony.

   STATEMENT OF ELENA RIOS, M.D., NATIONAL HISPANIC MEDICAL 
                          ASSOCIATION

    Dr. Rios. Thank you, Chairman Manzullo, members of the 
Committee and guests. It is an honor to be here today.
    I represent the National Hispanic Medical Association, 
established in 1994 as a non-profit organization representing 
Hispanic licensed physicians in the United States. The mission 
of the organization is to improve the health of Hispanics and 
others underserved. I applaud your commitment to understand the 
effect of medical malpractice litigation on the access to 
health care, particularly to minority patients subjected to 
disparities in health.
    Our health system is the best in the world, but in order to 
be proud of that system we need to develop new strategies to 
improve the quality of health care delivery.
    Chairman Manzullo. Doctor, could I have you get right to 
the gut of your testimony? You know what I am looking for.
    Dr. Rios. Sure. I will focus on three points.
    The Hispanic physician, unique to the medical delivery 
system, needs to be protected from the malpractice crisis. 
Hispanic patients suffer from increased disparities in health 
and require increased access to care; and there is a need for 
increased research on Hispanics and health disparities, no 
matter what crisis we talk about.
    In terms of Hispanic physicians, let me just say that the 
unequal treatment report from the Institute of Medicine brought 
up the fundamental principal that minority physicians are 
critical to the increased patient health outcomes and thus a 
primary focus for reducing disparities in health care delivery.
    The literature demonstrates many examples of studies on the 
outcomes of minority health professionals serving a major need 
in the United States, namely that they provide health and 
mental health care services for minority patients of their own 
ethnicity and for those on Medicaid and uninsured.
    According to the AMA, approximately three-fourths of all 
practice-based physicians work in or own small practices. Among 
practice-based physicians, roughly 33 percent are in solo 
practice; 26 percent are in practices with between two and four 
physicians; 16 percent are in practices with five to nine 
physicians.
    As for Hispanic doctors, we only number about 5 percent, or 
36,000, of the total United States physicians in the country. 
Of these, 3,600, or 10 percent, are full-time faculty of 
medical schools, according to the AAMC; and less than half of 
those make up full-time physician administrators, either public 
or private sector. So, thus, there is only about 23,000 
Hispanic doctors in this country in private practice. We 
estimate that at least one-third of those are foreign doctors 
who are about to retire, which is about 7,500.
    Due to the limited results of national, namely Federal, 
recruitment programs of minority students to medical schools 
over the past 3 decades, these physicians will not be replaced 
at the same rate that they leave practice. Currently, only 
about 5 percent of 65,000 medical students in this country are 
Hispanic, which is about 3,000 plus.
    I think the most important point here is that the growing 
Hispanic population, 43 million now, 14 to 15 percent of the 
country, and by 2050 one out of every four Americans, will be 
of Hispanic background. We cannot afford to lose any of our 
Hispanic doctors.
    NHMA believes it is vital to the health of America with a 
growing minority population that we urge you, as leaders in 
Congress, to create opportunities to increase the number of 
Hispanic physicians to protect those in practice; and indeed we 
also strongly feel that we need to develop a more culturally 
competent physician workforce through education programs for 
medical students and residents and licensing requirements for 
CME for non-minority physicians.
    But, like all doctors, Hispanic doctors are being 
turnedaway from their practices. I would like to just tell you 
three personal stories from our members.
    One, Dr. Luis Aguilar, an internist from Tucson, Arizona. 
He says, subspecialists are leaving. They are limiting their 
practice. They are retiring early. They have had to assume a 
defensive strategy, limit accepting challenging patients, see 
more patients to help defray increased costs, order more tests, 
not chancing any clinical judgment. Our compliance committee in 
the local hospital has employed more rigorous guidelines more 
from a defensive posture then from good medicine, and access to 
services is thus affected. There is now an extraordinary length 
of time to see any specialist or to schedule a test, for 
example, an MRI or a mammogram.
    Dr. Miguel Cintron is an obstetrician from Harlingen, 
Texas. He says, I practice OB-GYN. I am also Chief of Staff at 
the Valley Baptist Medical Center in Harlingen, Texas. As you 
know, the Rio Grande Valley is an area with a very high 
malpractice suit rate and, as a result, high malpractice 
premiums. The Rio Grande Valley is predominantly Hispanic. Mine 
is a story in my role as Chief of Staff.
    About 4 years ago, due to high malpractice premiums, we 
lost two general surgeons from practice in our area. One was an 
experienced surgeon with over 30 years of practice. Another one 
was a young surgeon who by himself performed more operations 
than all the other surgeons together.
    Ours is a designated Trauma 3 Level Medical Center which is 
a "safety net" for the whole Rio Grande Valley in the field of 
trauma. After the loss of these two surgeons from practice, it 
has been impossible to recruit general surgeons to our 
facility. Many surgical patients have to be sent elsewhere, 
away from their families, to get their procedures, including 
cancer patients.
    Fortunately, the cardiovascular surgeons have voluntarily 
stepped up to the plate and have been performing general 
surgery cases to hold the fort, but this cannot be a permanent 
solution.
    We have also established the Regional Academic Health 
Center, trying to train and retain physicians in a medically 
underserved area, but, again, this is not enough. The 
malpractice issue is a deterrent for this to happen, since the 
same issues the surgeons have are all held by other 
specialties. Hence, the medical malpractice problem has 
overflowed to being a health care access problem.
    The third doctor, Dr. Neredia Correa, is an obstetrician 
from the Bronx, New York. She says, the issue of malpractice 
insurance has reached critical proportions. In the past few 
months, I have been setting up a private practice in women's 
health, which is my specialty. The premiums have risen from 
$59,000 a year for part time to as high as $110,000 for full 
time.
    Chairman Manzullo. We have got a red light flashing in 
front of you, so we are going to have to cut you off at the 
pass. Is that okay with you?
    Dr. Rios. That is fine.
    Let me end with a concluding statement that I think these 
high costs have really transferred to a lack of access for 
many, many Hispanic patients around the country, and I think it 
is critical that something be done to reform medical 
malpractice.
    Chairman Manzullo. Thank you.
    [Dr. Rios' statement may be found in the appendix.]
    Chairman Manzullo. Our next witness is Wilbur Colom. We 
look forward to your testimony. We could call you doctor also 
with your juris doctorate.

         STATEMENT OF WILBUR COLOM, THE COLOM LAW FIRM

    Mr. Colom. Yes, sir. Thank you, Mr. Chairman.
    I graduated from Antioch School of Law which was designed 
to champion the low-income and minority people. I have served 
on its board. I have been an adjunct professor. I established 
my own law firm in 1977. And we have eight lawyers in three 
offices and approximately 40 professionals. In your terms, I am 
a small business as well.
    By way of full disclosure, I would like to state that I am 
a Republican; and I am proud to be co-chair of the ATLA, 
Association of Trial Lawyers of America, Republican Trial 
Lawyers Caucus. My Republican credentials go back to being on 
Thad Cochran's first Campaign Committee for United States 
Senate, to serving on Ronald Reagan's Transition Team, to being 
on the Mississippi Republican Executive Committee through much 
of the 1980s and in 1987 being the unsuccessful Republican 
nominee for State treasurer. In 2004, I was a George W. Bush 
delegate to the Republican National Convention. I am a long-
time supporter of many Republican candidates. I have continued 
to support our President, although we disagree on issues 
involving medical malpractice.
    I started my legal career working in a rural legal services 
program operated primarily for poor farmers for east 
Mississippi and west Alabama. The scarcity of physicians back 
in the 1970s in rural Mississippi is something that I have 
witnessed firsthand for almost 3 decades.
    I do not know how to entice physicians to practice in rural 
and poor communities, but the one thing that I do know is that 
this problem has been around for over 30 years and medical 
malpractice claims and caps have nothing to do with it. 
Limiting the rights of the underserved, the poor, the abused is 
not going to improve the situation.
    I agree wholeheartedly that doctors have a medical premium 
crisis, but it is not caused by lawsuits. In fact, there is no 
so-called liability crisis. I pointed out in my more extensive 
testimony that in the counties in which I live in rural 
Mississippi in the four county area there has been not a single 
judgment against a physician in 15 years; and in the county 
just south of me with an overwhelming black population, 
considered one of the most favorable venues use for plaintiffs 
in the country, no physician has ever lost a case. Physicians 
who serve in rural areas are generally revered.
    What I was going to testify was confirmed by the 
physicians. I think they should come and support our position 
on this issue. Dr. Fields testified that his company or firm 
was dropped without a claim ever being filed against them. 
Another physician he described had no claim filed against her. 
Dr. Myers in my home State of Mississippi again, high premiums, 
dropped from coverage, no lawsuit filed against him.
    The problem is not lawsuits. The problem is of things 
within the insurance industry. Frankly, the insurance company 
pointing at lawsuits as a cause of high premiums is much like a 
quarterback faking a pitch. Its only purpose is misdirection. 
The only question for us is whether or not we are going to fall 
for it.
    Caps have the constant effect of excusing carelessness and 
ignoring accountability for physician performance and making 
good physicians pay for the misconduct of poor physicians.
    With that, I will stop.
    Chairman Manzullo. Thank you very much for this excellent 
testimony.
    [Mr. Colom's statement may be found in the appendix.]
    Chairman Manzullo. Let me move right to Dr. Fields.
    Mr. Colom mentioned the fact that the insurance company 
came in with the high premium. Was there another insurance 
company available?
    Dr. Fields. It was not immediately available. Our hospital 
stepped in and allowed us to temporarily obtain coverage 
through the hospital.
    Chairman Manzullo. Okay. Anybody else on the--I can 
understand where we are going here, but we have been challenged 
by I think some very well-documented statements by Mr. Column. 
Dr. Fields and then Dr. Price.
    Dr. Fields. Well, those statements, I am afraid, fall into 
the category of myth and--
    Chairman Manzullo. Not all of them, but get particular on 
them. You mean on caps or what?
    Dr. Fields. Caps work. They are one of the few reforms that 
have been shown to work. I happen to be Chair of our Strike 
Force on Medical Liability; and we are actually producing a 
document about this particular problem, what works, what does 
not work and what is a myth. The insurance companies' 
investment strategies is a myth. The bad doctor problem is a 
myth. It is the threat of lawsuit that produces defensive 
medicine, and it is the lawsuits themselves that produce the 
high premiums because insurance companies in many States or 
most have to set aside money when a suit is filed.
    Chairman Manzullo. Let me get on to something else here.
    I am sorry. Dr. Price, you had an answer for that.
    Dr. Price. I just want to mention with respect to the caps, 
certainly, and I would agree with Dr. Fields that one of the 
things that we have seen with respect to the malpractice crisis 
is that the justification by the insurance companies has always 
been that the claims are what is driving up the cost and I 
think one of the key issues in terms of oversight over the 
insurance companies say-so that there is some accountability 
issues for the premiums they put in place. We have a number of 
physicians who are not able to put in place the very things 
that our President of the United States says will help to 
reduce the accidents in health care and help to make better 
physicians and that is moving towards the use of technology. 
But physicians who are spending as much as 100 and $150,000 on 
malpractice insurance when it is not supported by claims or 
suits that are valid, certainly does not give them the 
armamentarium to go ahead and purchase the electronic clinical 
management systems that are going to improve health care. There 
is something wrong about that system.
    Chairman Manzullo. Dr. Brown.
    Dr. Brown. Yes. I am in private practice, I am a solo 
practitioner, and, as I mentioned before, that at least in Ohio 
the availability of the insurers has been a problem. The 
insurance company that I was using left the State of Ohio so 
that left fewer companies to cover, and whether or not they 
adjusted their price accordingly I have no idea, but I think 
that has to be a factor of the availability of insurers. People 
have gotten out of this business for one reason or another, and 
I think that has contributed to the cost, and certainly capping 
the amount for non-economic damages has made a difference. 
There are statistics out here to prove that that is the case.
    Chairman Manzullo. Mr. Lipinski, we have a broken clock, so 
I will keep time. So when we get to 4 minutes I will lightly 
tap and we will try to work it on that basis.
    Mr. Lipinski. I thought you might call me doctor, too.
    Chairman Manzullo. You have an earned doctorate, that is 
right.
    Mr. Lipinski. Actually, I prefer not to be called doctor. I 
am the kind of doctor that, as they say, cannot do you any 
good, unlike the doctors we have here in front of us today.
    As the chairman mentioned, Illinois just recently passed a 
medical malpractice law which was somewhat of a surprise given 
that it is a Democratic State legislature, both houses, and a 
Democratic governor, but it is definitely something that is an 
important issue, and there is no question about that, the 
problem with losing doctors.
    The questions that I have really revolve around what 
exactly--what else can be done. In Illinois, the caps were set 
at $500,000 for doctors, a million for hospitals, for maximum 
non-economic damages. But they also made changes requiring 
insurance companies to reveal more about how they set rates, 
also making it a little bit more difficult to bring lawsuits in 
regard to affidavit of merit for a case so that--to try to 
prevent frivolous lawsuits. And other things, such as even Dr. 
Fields says, it is not a problem of bad doctors, but things 
that were put in this law included posting--maybe I should wait 
for this.
    I guess we are safe here for now. I just wanted to start 
with Dr. Brown because I know Dr. Brown mentioned in her 
testimony that there were other recommendations to reform 
medical malpractice insurance. And I was wondering, there 
definitely is a problem. We have between 44,000 and--I think 
the number is between 44,000-98,000 deaths occur each year in 
hospitals, according to the National Academy of Science, and 
that is just in hospitals. There are certainly problems there. 
What else can we do besides and what should we do? What would 
work? What would help with this problem of losing doctors 
besides the caps on malpractice rewards?
    Dr. Brown. Well, I think that you touched on one of the 
things that at least happened to me personally, is that 
somehow, regardless of what the gentleman said, somehow we have 
to be able to stop frivolous lawsuits. How do you make sure 
that the lawsuit is a proper one so that I do not end up having 
to pay a lawyer to defend me?
    For instance, I had a patient who had a goiter on a routine 
examine. Did a TSH. It was completely normal. Put her on 
suppressive therapy. I got sued because she claims she 
developed Graves Disease. If you put a patient on Synthroid or 
any thyroid preparation and it stopped, it does not cause a 
disease. So somebody should have been privy to that 
information. This has been dismissed, and it has been dismissed 
three times. So that is an example of how do you stop those 
kinds of things from occurring.
    Mr. Lipinski. Do you think these kind of things could be 
stopped?
    Dr. Brown. There has to be some kind of advent of looking 
at or being held responsible for bringing a lawsuit against a 
physician that will lead to more and more costs, adding to the 
costs of malpractice. Because I have had three different 
lawsuits where this has happened, where on one case I did not 
even take care of the patient for a month and a half prior to 
her death and just because my name is on the chart I am sued. 
Twenty-eight people got sued on one patient. Those kind of 
things I think somehow--
    Then, on top of that, I think the insurer has to be held 
responsible, too. If a lawsuit comes out of something because 
the insurer did not allow the doctor to do what was 
appropriate, then I think the insurer should be liable for 
those damages. I will give you a perfect example.
    I have a patient right now who is past the age of 50, needs 
a screening colonoscopy. The insurance company refuses. What if 
she develops colon cancer? Who is going to get sued? I am. I 
should not be held responsible because I have asked them not 
only on one occasion but on several occasions, and the patient 
has asked her insurance company, why are not you covering this? 
Well, their excuse is your stool for occult blood is negative. 
What if it is a right-sided colon cancer, it can be negative 
and she could still have cancer.
    Chairman Manzullo. Mrs. Kelly.
    Mrs. Kelly. I thank you.
    Dr. Price, I am really interested in what your 
recommendations are for us. I want to point out to this 
Committee that in 2001 six of the top eight medical malpractice 
awards came from New York courts. Now I represent New York. I 
represent a district in New York. In 2003, it was four of the 
top six. New York is considered a red-alert State by the 
American College of Obstetricians and Gynecologists because 67 
percent of the OB-GYNs have been forced to restrict their 
practice, retire or relocate to another State. According to the 
Long Island Business Journal, 45 percent of OB-GYN residents 
who graduated from New York medical schools left the State. We 
have 55 percent of the orthopedic surgeons Nationwide who do 
not any longer do some kind of certain high-risk procedures, 
like 39 percent of them do not perform back surgery, spine 
surgery any more.
    These numbers are outrageous. Because we used to have in 
the United States of America the best medical care in the 
world. This system clearly has some problems.
    You have pointed out in a couple of things here. You 
suggest that Congress in the next step respect States' rights 
by allowing States that have already enacted damage caps to 
keep the caps in place and have the flexibility to change them. 
I applaud that. I hope that members of this Committee hear 
that.
    Mrs. Kelly. I also see here that you have said that you 
think we should reexamine the processes by which malpractice 
insurance premiums are set by insurance commissioners at the 
State level. Do you think, and there is my question to you, do 
you think at the Federal level, we could get in there, pass a 
bill to effect that and get it right enough that we can help 
protect doctors like you, especially the doctors who are 
serving our underserved patients?
    Dr. Price. You bring up interesting points. I think one of 
the fundamental problems is, in addition, not looking 
specifically at the individual lawsuits and the nature by which 
they come about, but I think we have to look at the health care 
system as a whole and ask ourselves whether we want to put 
energy, effort and resources into training individuals in a 
profession to provide critical care to individuals and then 
create a system over on top of that where we can put them out 
of business.
    If you think about it, medicine is the only profession in 
this United States where, in 1 minute, you can lose more money 
than you can make in a lifetime. And so I ask you whether the 
oversight in terms of how the premiums are set, irrespective of 
whether there was overt or covert damage, is that the system 
that we really want in place?
    One of the other things you can take as an example of how 
the Federal Government can be creative--and I am not suggesting 
that the Federal Government should have the full oversight over 
how the individual States embark on their controls over this 
issue--but when we decided that the immunization program was an 
effective public health strategy and when we recognized there 
are a lot of apparent pushback into damage caused by some of 
the vaccine, we had the wherewithal to say, we are not going to 
dismiss the fact that injured individuals are entitled to some 
compensation, but we are going to create a pool of money so 
physicians don't have to think about whether or not to give an 
immunization based on the risk of lawsuit. They knew that a 
fund was available. Imagine the creativity of this United 
States, the best health care system in the world, to say to 
obstetricians, go out and practice your profession, provide the 
expert care that you can and recognize that bad outcome is not 
the equivalent of malpractice, but yet those injured infants 
and those parents and families who are suffering are entitled 
to some compensation. Well, we have shown we can pool our 
resources. We have got enough money in the Federal Government 
to allow for some compensation, but we should not, we cannot 
afford to put physicians out of practice.
    Now, you know, the money trail follows the money, and it is 
no surprise that in New York where real estate costs and the 
cost of living is high that attorneys will create a system 
where they can step it up one notch. And so as we see we are at 
the top of the ladder in terms of malpractice payouts in New 
York, that is not going to get better unless we change the 
system. I applaud you for helping us with some of those 
changes.
    Mrs. Kelly. I thank you, Dr. Price.
    I want to point out, between 1998 and 2002, 70 percent of 
New York's neurosurgeons were sued as well as 60 percent of the 
OB-GYN, 60 percent of our orthopedic surgeons and 60 percent of 
our surgeons. We cannot keep going at this pace. I applaud you 
for that idea. I think perhaps we can model that over the same 
kind of thing as some other insurance pools work and perhaps 
that can help us, but certainly, we do have a medical crisis in 
this Nation when we have percentages that high of doctors being 
sued and we find out that many of these suits are specious 
suits.
    And I thank you all for appearing here today and I 
appreciate your ideas
    Chairman Manzullo. Let me get in Dr. Christensen's 
questions before we break. We have to go vote, and then we will 
be coming back. I am sure we can pick that up after the break.
    Dr. Christensen.
    Mrs. Christensen. Thank you again for holding the hearing 
on the malpractice issue. I am a little under the weather, but 
I will try to perk up for this, because I am so pleased to see 
not only a representative from my academy of family practice 
but my President of the National Medical Association and Dr. 
Rios, with whom I work very closely and have done so for years 
on issues of minority health, up here.
    I am sure there is--while there might be disagreements over 
the causes and remedies for this issue, I am sure we will all 
agree that the medical system, our system of health care, is in 
a crisis in general. And again, as I did last time for the 
record, I just want to say that while medical malpractice is a 
major part of the problem, it is not the only problem. And I 
hope that while maybe not in this committee, we can in the 
Congress address some of the other issues that are creating a 
crisis and may lead us to a catastrophe, such as the 45 million 
uninsured, the assault we are experiencing on Medicaid, the 
fact that we are ignoring a crisis that is closer to us in 
Medicare, the high cost of medicine, the cuts in the programs 
that protect the public health and the high cost of medicine to 
name a few as well as some of the inequities that minority 
physicians are facing in some of those underserved areas as 
well, such as this disparate reimbursement rates in certain 
communities for the same services.
    But I guess one of my questions I would start out with 
would be with medical liability, is the premium increases the 
only reason that doctors are leaving underserved areas today?
    Dr. Price. Not at all. One of the issues is related to the 
ability to have a successful small business. And you alluded to 
the fact of the differential reimbursement. As you know, in 
many of the minority communities--and understand that the 
liability issue is not a race issue. It is not a black-white 
issue, but occurring across all of America. And one of the 
examples that I had is an obstetrician-gynecologist who is 
practicing in Nevada taking care of the Caucasian population. 
He is one of our members and in fact one of my classmates, and 
he is frustrated.
    But the key issue with respect to why people are leaving is 
they just cannot maintain an effective small business. I have 
kids come up to me when I do mentoring, and they ask me what 
profession to go into, and jokingly, sometimes I say, if you 
want to be successful and have a good business, don't go into 
medicine. And if you think about it, that is becoming so much 
of a realism that you cannot employ your community, pay them a 
competitive salary, keep pace with the demands of HIPAA 
regulations and trying to pay for electronic medical records 
and the security and risk of practicing in a poor community. So 
it is a business issue that is at stake.
    Mrs. Christensen. Reimbursement and the practice as well 
for which there is no subsidy.
    Dr. Fields, in your experience, even though we are talking 
about underserved areas and some of them may be rural areas, 
are there increased lawsuits and high payments in some of these 
rural areas that can account for the increase in the premiums 
that we are seeing?
    Dr. Fields. Yes, there is an increased--actually, the 
amount of awards. And while the specter of medical liability is 
an equal opportunity employer, it hits everybody, it doesn't 
hit everybody equally because, if you are black, if you are 
Hispanic, if you live in eastern Kentucky or Macon, Missouri, 
or Vernon, Connecticut, it robs you of the ability to obtain 
all that this country can offer in the way of help. And one of 
the things I wanted to do here today is come here with a 
promise from the American Academy, a promise to support you in 
this committee in all of your efforts and provide whatever 
resources we can and to make a promise that if we can free the 
physicians in America to do what they are trained to do, which 
is the right thing for each patient each and every time, we 
will deliver to you the most cost-effective, highest-quality, 
most accessible health care system in the world.
    Chairman Manzullo. We will take that.
    And one thing we cannot change is the clock. We are going 
to recess for 15 or 20 minutes. We have one vote. And no votes 
until 4:30. You won't be here that long, but we will have 
plenty of time for questions when we get back.
    [Recess.]
    Chairman Manzullo. While we are waiting for Mr. 
Westmoreland, Dr. Price, you had attempted--you had raised your 
finger and wanted to make a point two questions ago. Do you 
remember what that was about?
    Dr. Price. Thank you, Mr. Chairman. I just wanted to tell 
you how personal this was. I was at a meeting the other day, 
and my own personal physician came up to me and said he had a 
problem with malpractice and--thinking he just wanted to relate 
some strange frivolous suit--he--unfortunately, his payment for 
his malpractice insurance premium to the same company that 
insured him for the last 15 years arrived 2 weeks late. And 
when he attempted to reinstate his insurance by simply sending 
the premium again with a note, they told him that they were not 
going to reinstate his insurance. He was paying a premium of 
about $9,000 per year. And what they offered him as an 
alternative was to take a risk pool insurance policy for 
$40,000 a year. Not only can he not pay that, but it is not 
conducive to a good small business.
    Chairman Manzullo. Let me hold you right there.
    Mr. Colom, that is a good introduction.
    Mr. Colom. I want to point out anecdotal information is 
plentiful. But when you look at the real data, the medical 
liability monitor with insurance companies' premiums in capped 
States are actually 9.8 percent higher than States without 
caps.
    Chairman Manzullo. Is that true for California also and 
Wisconsin?
    Mr. Colom. California premiums are higher.
    Chairman Manzullo. We have people moving from Illinois to 
Wisconsin. But Wisconsin has not only capped but an indemnity 
fund, which is a backup for those real tough cases. But go 
ahead.
    Mr. Colom. We support those sort of remedies to help 
doctors reduce their premiums, but the total malpractice claims 
have only gone up 1.7 percent from 1991 and 2003 when it 
adjusted for inflation. And the same number of physicians have 
risen 31 percent. So--and I point out, you talk about anecdote, 
my insurance--I am a lawyer--has tripled. Our property 
liability has tripled.
    Chairman Manzullo. When I practiced law the last year, I 
think my liability insurance was about $600 a year. That was in 
1992, and I had to buy a tail for 22 years and that was $5,000. 
I mean it is negligible to compare.
    Mr. Colom. It would cost you $40,000 now for that same 
insurance.
    Chairman Manzullo. Oh, come on. What do lawyers pay now for 
liability insurance?
    Mr. Colom. Very few lawyers pay less than $20,000. If you 
were going to carry a half million dollars to a million dollar 
limit, you are going to pay anywhere in the area of $15,000 to 
$20,000. Large firms pay $100,000 to $150,000.
    Chairman Manzullo. Dr. Price, go ahead.
    Dr. Price. I appreciate Mr. Colom's comments, but you 
cannot contrast that to medicine. I mean, how many physicians 
can put up a sign inviting patients to come in for an 
appendectomy when they are at a state of crisis and say, my fee 
is a million dollars, and I am only going to take 30 percent of 
that. There is so much regulation over what physicians can get 
reimbursement for to cover those increases. Our solution, when 
we get the increases, is to go out of business. And that is 
unfair to the public.
    Mr. Colom. The point I am trying to make is the increase in 
premiums have nothing to do with the lawsuits. If we had the 
insurance companies here at this table, and they won't show 
up--
    Chairman Manzullo. Wait a minute. We had a hearing here 
about 6 weeks ago in March, and we had insurance companies, 
including the man who started the captive in Pennsylvania. And 
the issue there is, in some States, there is only one company 
that will offer insurance. And he had started that, and this is 
not-for-profit. There are no shareholders in it. The only 
stakeholders are the physicians that write the checks to be 
part of the captive and he said when somebody talks to us about 
unreasonable premiums, he says we only charge what we 
absolutely must charge. And then there are so many insurance 
companies going out of business. I mean--Dr. Brown, you got 
hit, you went from $5,000 in 2002 to what is it, $103,000?
    Dr. Brown. I didn't have the tail off this last year.
    Chairman Manzullo. You were changing insurance companies 
and had to pay a tail each time?
    Dr. Brown. The insurance company would no longer insure me 
from before. It has to do with the number of insurers in the 
market, at least in Ohio. A lot of companies left Ohio.
    Chairman Manzullo. How many are left?
    Dr. Brown. Only three or four at maximum right now. There 
is a new one that I am negotiating with right now, but I am 
going to be paying about $68,000. I have to pay about $28,000 
for the malpractice that didn't reduce, and I have to pay a 
$38,000 one-time fee because the insurance company is not 
underwritten by anyone who is new. So, we, the physicians, are 
really putting up the money for this.
    Chairman Manzullo. Are there any endocrinologists in East 
Cleveland?
    Dr. Brown. Other than myself, there is a practicing 
endocrinologist that practices at the hospital, but he is not 
in the community itself.
    Chairman Manzullo. What would happen if you left that area?
    Dr. Brown. There would be a lot of diabetics that don't 
have a specialist that can help to fine-tune their care. So 
prevention would be a problem in terms of complications. 
Diabetes is a chronic disease with a major impact on the costs 
of medical care. From that standpoint, it will be devastating. 
As far as--that is the major disease process that I am treating 
in that area, and then, of course, it is on the rise in the 
country.
    Chairman Manzullo. Congressman Sodrel.
    Mr. Sodrel. Forgive me if I am asking a question that is 
covered someplace in the testimony. I was kind of in and out. 
But my question is, what percentage of your costs of practice 
is medical liability insurance? In real life, I was in the 
trucking business and bus business, and you look at labor costs 
being 33 percent of what your total expenditures are or fuel 
costs being 15 percent.
    Dr. Brown. Talking about 38 percent; 38, 40 percent. And 
when you are limited on what you can make--the problem is I am 
in a community where there are patients who don't have the 
insurance that pay a higher amount. So we are limited with 
Medicare and/or Medicaid or a company that totally limits the 
amount that you are going to make, then you have to see more 
patients or you have to cut staff. Just as he said before, 
there are too many variables that you have to try to adjust 
just to stay in business. And if you want to do anything, like 
EMRs that cost $60,000 to $180,000 to try to lower your costs, 
at least you can reduce the number of people working for you 
using such a system, but can you afford to buy it?
    Mr. Sodrel. I have a brother who is a doctor in Florida. 
And he is a doctor for V.A. Just because of this problem. He 
couldn't be in private practice; said he couldn't afford to be 
in private practice. And a lot of doctors in Florida are 
sending more to the insurance companies than they are taking 
home to their families.
    Dr. Brown. In situations where you are in private practice, 
you are the burden. Everything falls on you. You don't have 
anybody who can come over here and say, can I borrow $10,000 to 
take care of this? I have to pay it out of my pocket. And my 
staff isn't going to work for free.
    Dr. Price. And many practices are running at about 45 to 55 
percent in overhead costs. And part of the problem we are 
seeing every day in terms of the vendors that we have to do 
business with, sending us very apologetic notes saying that due 
to increased costs, they have to increase their fees, whether 
it is vaccines, paper or software or even the biological waste 
that we have to contract with to remove from our office, 5, 6, 
7 percent. We have no recourse.
    And when we see that from a malpractice insurance because 
of the major jumps in costs, many physicians have no choice. I 
have seen physicians when I worked with managed care crying and 
begging me as a medical director of a national organization 
asking me if there was some way that I could lend them money, 
front them money from the insurance company just so they could 
pay their staff and keep their doors opened. And these are 
physicians, highly trained physicians literally crying. That is 
unfair to this Nation.
    Mr. Sodrel. As you pointed out earlier, if you want the 
best and the brightest to pursue a career in medicine, it has 
to be worthwhile because of all the years you spend in medical 
school and the money you spend for education and then find 
yourself in the position you are in today. Thank you.
    Chairman Manzullo. Dr. Christensen.
    Mrs. Christensen. Thanks, Mr. Chairman.
    Looking through some of the testimony and some of the 
measures in reform that both family physicians and other 
physician organizations are supporting, almost all of them 
include limits on payments for noneconomic damages, reducing 
awards by amount of compensation from collateral sources. But 
in reviews of States where there has been a significant 
increase in insurance premiums, as I look at the awards that 
have been paid out, there hasn't been a commensurate increase 
in the awards. So if awards have remained relatively stable and 
insurance premiums are still increasing, why are we supporting 
the limits on payments for noneconomic damages that don't seem 
to be related to the cost of insurance premiums as far as I can 
see?
    Do you want to start, Dr. Brown.
    Dr. Brown. At least in Ohio, I can't really agree with 
that. We just had a young man that was awarded $13 million 
because he was injured during birth and ended up with a 
neurologic damage because of, if I remember correctly, forceps 
or something like that. And there was no way that this person 
was going to make $13 million in their lifetime. So I think--
    Mrs. Christensen. What I am saying is, I think Texas is one 
of the States that they looked at, but when independent 
organizations looked at this and they looked at the awards, the 
amount of awards over a period of time, there really hasn't 
been a significant increase.
    Dr. Brown. I don't think it is fair to use Texas. At least 
in Ohio, people have left Ohio and gone to Texas because it is 
cheaper for malpractice. I know several gastroenterologists who 
practiced at Hillcrest Hospital at Mayfield Village who left 
and went there. So there are some differences between States. I 
don't think you can make a statement like that across the 
board.
    Mrs. Christensen. I am actually referring to some studies 
that were done.
    Dr. Price. I agree with you, and I have seen those studies, 
and I think where you are going is saying that if the actual 
payouts are not the basis for the premium, why set a cap? I 
think what it does is it shifts the framework by which 
insurance companies try to justify the increases. And 
certainly, if there are major payouts with no caps, it serves 
as fodder for those companies to justify to the physicians, who 
are not knowledgeable about those studies, that they have to 
increase the premiums because of that. And you realize that 
many of these companies are not not-for-profit companies. They 
are for-profit. If you go into some of the buildings that these 
companies have and look at their portfolios and annual 
statements, they are making money. And there is only one source 
that is putting money into their profit margin.
    So I think what the caps do is it starts to reduce this 
litigious society. And I use this as an anecdote: If you are an 
unemployed individual, and we have several in this State, there 
is one way that you can do better than the lottery in terms of 
percentages of getting paid, and that is, you go into a 
hospital or you go into a physician's office and you hope that 
the medical errors occur. And you simply find an attorney who 
will work on a contingency fee and will say there is no cost to 
you at all.
    Chairman Manzullo. Can I interrupt on that? I don't know if 
that is the case. I mean, somebody goes in the hospital because 
he is unemployed and first of all, if he doesn't have 
insurance, the hospital is going to make it a very short stay, 
right?
    Dr. Price. Can't do that.
    Chairman Manzullo. And people are going in just in hopes 
that their--I think the figure three-tenths of 1 percent of all 
medical liability lawsuits filed actually go to trial, is that 
right, Mr. Colom?
    Mr. Colom. Pretty close.
    Dr. Price. They don't go to trial, but they settle. Many 
physicians suffer because they have policies that don't give 
them the option to challenge the lawsuit, but many other 
physicians are advised by their attorneys thinking that they 
are getting good advice and told to settle and only comes back 
to bite them later on when they find out the terms of 
settlement.
    Mr. Colom. Virtually every State requires, in order for you 
to succeed in a medical malpractice suit, that you have at 
least one physician who is in that profession, that area of 
specialty to testify. You can't get past the Daubert standards, 
any other standard, you are down on summary judgment unless you 
have another physician in that same specialty prepared to 
testify that the conduct was negligent. In most States now, 
unlike any other lawsuit, before you can file lawsuits in most 
States now, you have to have a certificate or you must have 
made a good faith inquiry to determine whether or not under the 
rules for lawyers, Rule 11 for sanctions, that you have expert 
testimony, that you have a good claim. And that is only true 
for physicians.
    And I can tell you, I am sympathetic with your situation. I 
think you guys are the best physicians in America, that we need 
you a heck of a lot more than we need the ones doing cosmetic 
surgery in the suburbs of Los Angeles, and you are paying too 
much in premiums. And I think we need to get it down, but we 
really need to find out what will really get it down, not the 
misdirection of the insurance companies trying to deflect the 
real reason. The real reason has nothing to do with lawsuits 
and has nothing to do with claims against you doctors, but with 
other things.
    Dr. Price. I would agree. If we are going to revisit the 
McCarran-Ferguson Act, which is what really needs to be looked 
at in terms of how insurance companies are regulated, how the 
process is conducted, I think we would get into some of the 
meat of what is going on with respect to those premiums.
    Dr. Brown. I must be off somewhere else. In Ohio, it is 
different. I don't understand. I got sued for a bug allegedly 
in a person's ear; showed up in the emergency room 4 hours 
later. And I was told to settle for $250, and it came back to 
bite me in the butt. That is not fair. And I got sued because 
some gentleman was left in the hallway. How in the world if the 
lawyers were regulated, how can I get a lawsuit? I was out of 
town. I had to fly back for this frivolous suit, I call it, 
because what do I have to do with somebody being left in the 
hallway, but they had the ability to sue me anyway. It was 
nothing about malpractice. So they are able to bring a lawsuit 
against me in Ohio. It was dismissed, but the point is I still 
had to get a lawyer to defend myself. I am out of town. I have 
to fly back just for this, and it didn't even make sense. 
Lawyers, at least in Ohio, have a different kind of way of 
doing things than what you are saying.
    Dr. Price. There are expert witnesses. But not being 
derogatory to our profession, you can find a physician, a 
professional to say whatever you want to spin it enough that it 
will get by and become a trial. Many physicians suffer 
needlessly as a result of litigation that is charged to the 
physician. And again, bad outcome is not malpractice. And 
number two, physicians, who, because of the structure of HMOs 
and oversight we put in place, if a patient is on our panel, 
you are deemed to be responsible for that patient 24/7 
irrespective of where you are. And to drag that physician into 
a court of law, even to the point of an attorney's office to 
have an examination before a trial, that physician is placed at 
risk because they are not earning income and not conducting 
their business during the 3, 4, 5 days they are involved in 
this trial. We have to change the system. And granted, it may 
not be related to the claims that are paid, but it is related 
to premium notices that come to physicians. And we have got to 
change it. There is a way to do it.
    Dr. Fields. One of the reasons, if I might, that premiums 
in a State don't track with awards in a State is most of these 
liability insurance companies are doing multi-State business. 
And physicians in one State are subsidizing physicians in other 
States. And Indiana is a perfect example of that. They have had 
liability reform for many years. Their premiums stayed down. 
Their major carrier was sold, and now they are subsidizing 
three other States. So their premiums are rising, but it 
doesn't have anything to do with Indiana, but it has to do with 
what is going on in the other States. And currently, we have a 
system where any lawyer who can find a client and an expert, 
which they advertise for heavily in very blatant forms, can 
drag a physician through the court system for 5 years. Every 
year that physician is paying higher and higher premiums. And 
then, at the end of the day, most of the money doesn't go to 
the alleged victim, if anything is awarded at all. But it is a 
system that promotes a lottery mentality. It is the lawyers. It 
is the amounts that the damages are paid. The AMA is clear on 
that.
    Chairman Manzullo. Mrs. Christensen, can I ask a few 
questions?
    Mr. Colom, I know you have a response to that answer.
    Mr. Colom. I think the AMA is sincere in its desire to 
control outrageous premiums, and we really support what you are 
trying to do. And we just keep asking, why not go to the real 
source? You know, one thing I am going to concede to you, 
doctor, at the end, this system is a system that creates a lot 
of inconvenience. I got sued recently. I had a news letter from 
my law firm, and we sued a guy who was the head of the 
Environmental Protection Agency, chairman in Mississippi. My 
guy who writes the newsletter referred to him as a fox in a hen 
house. He sued me. And we were in litigation for 3 years. I won 
it on summary judgment. Inconvenient, but it is the nature of 
our system. And I think that is true.
    But there is a lot of inconvenience in a system such as 
ours that is so democratic. Doctors complain to us all the 
time, they have to come to court personally in personal injury 
cases, and they have to sit and wait. And juries complain they 
have to sit and wait. I am sympathetic. We can work on things 
like that to make the system better, but this is a system that 
has existed for 500 years. And just like this is the best 
medical system in the world, without a doubt, this is the best 
legal system.
    Dr. Brown. Doesn't mean it should have to exist for 500 
more.
    Dr. Fields. I would contest the word inconvenient when 
somebody is questioning your professional judgment and alleging 
that you participated in the death of someone. I take affront 
to the term inconvenience.
    Mr. Colom. I know you people take it--everybody who is sued 
feels really bad, but she won the lawsuit.
    Dr. Fields. That is not the point.
    Dr. Price. If we at the Federal level or at the State level 
have regulatory oversight, and we know how much is being paid 
out on premiums, and we know how many physicians are 
practicing, and we know how many patients we are serving, why 
are we having so much difficulty deciding, with all of the MBAs 
and actuaries we have at our disposal, and determining what is 
a reasonable premium by specialty of physicians? Why are we not 
able to tell a physician whose company goes out of business 
that we have a Federal or State emergency fund to keep you in 
practice so that you can take care of America's ill until there 
is some solution found to put an insurance company back in your 
State?
    Chairman Manzullo. The problem is, according to Mr. Colom, 
we don't have a crisis. The statement on page two is, ``I agree 
wholeheartedly that doctors have a malpractice premium crisis, 
but it is not caused by lawsuits. In fact, there is no so-
called liability crisis.'' Is there any area of agreement here?
    Mrs. Christensen. He agrees there is a crisis. The issue 
is, what is the best way to resolve it? Not a quick fix, not 
something that makes some people feel good, not a political 
fix, but a fix that gets to the bottom of the issue. And I 
think, you know, just to single out caps as the primary way to 
address it is not looking at some very, very important other 
causes of the problem, and the insurance companies are part of 
it. Doctors take a history. They examine their patient. And 
then they use their training to kind of figure out, okay, this 
is the problem. This is what I found. This is how we are going 
to treat it. And that is what we have to do with the problem, 
not just assume that caps are going to be the right way to 
approach this. We need to look at what are the real causes and 
address all of them.
    And to me, also caps may be unfair--noneconomic damages may 
be unfair to certificate segments of our community because--
particularly minorities. And my understanding is that also they 
don't even get the payments on their capped damages.
    Mr. Colom. Mr. Chairman, I would say one of the big issues 
I would observe, and I represent a few physicians, is that 
reimbursement has gone down. It is more difficult to run a 
small business as a physician now, removing the issue of 
liability. It is managed care reimbursements. Rural hospitals 
are closing, even the ones that are run by States that have 
sovereign immunity and have capped their total damages so they 
can only, in Mississippi, where a local county hospital is 
limited to $500,000 economic and noneconomic damage, still 
struggles because of the reimbursement of Medicare and 
Medicaid. And think of that situation.
    Perfect example, someone has their liability capped at 
$500,000 economic and noneconomic damages, and they are still 
having trouble. The clinics run by the State, whether they are 
the doctors or employees of the State, again subject to these 
absolute caps, are having trouble surviving. That is 
absolutely--the data will not support the claim that the 
liability is the issue, particularly--
    Chairman Manzullo. Dr. Fields, you mentioned in your 
testimony that an OB unit closed in a rural area in Kentucky. 
Was that you or your testimony?
    Dr. Fields. My hospital.
    Chairman Manzullo. Would you tell us what caused the 
closing?
    Dr. Fields. Liability premiums for obstetrics in Kentucky 
went up. I am not sure of the percent, but it was 300, 400 
percent in like a year. Every obstetrician that delivered 
babies in our hospital stopped delivering babies to lower their 
premiums.
    Chairman Manzullo. Let me stop you right there. Have there 
been claims against the hospital that precipitated that?
    Dr. Fields. No.
    Chairman Manzullo. How many insurers were there--were 
available?
    Dr. Fields. Three.
    Chairman Manzullo. Mr. Colom, what do you do in that case?
    Mr. Colom. It is not a liability problem.
    Chairman Manzullo. You mean liability on the part of the 
doctors?
    Mr. Colom. Right. They have no claims, which is true. 
Again, I keep searching for--you can come up with the 
anecdotes--if you look at, across the spectrum--
    Chairman Manzullo. What do you do in that case? And we had 
the hearing in April where a man who had set up a captive, one 
State only, period, so they don't use community experiences as 
it were, bring in other States for what they charge for the 
premium. And the captive was the only one in the State, and all 
they charged was the absolute minimum. What do you do in a case 
like that where the doctors still have a difficult time trying 
to afford the insurance and the captive, which is comprised of 
doctors themselves, are setting their own rates, and they say 
even with us doing that, it has been difficult to keep down the 
rates? Wouldn't litigation be causing that insurance to go up?
    Mr. Colom. There is no evidence to suggest that. And I 
think it is important to keep in mind, there is no--
    Chairman Manzullo. The evidence they gave is, it is not 
just the payment but the cost of litigation.
    Dr. Price. What State are you talking about?
    Chairman Manzullo. In Pennsylvania. And of course, they 
don't have exactly a rosy time going on up there. There is a 
hidden side on this, and Mr. Colom, you are the only one that 
can answer that. Have you had a clear case--you do malpractice 
litigation. Do you plaintiff or defendant?
    Mr. Colom. Just plaintiff.
    Chairman Manzullo. Have you ever had a case where it is 
very clear--someone cut off the wrong leg, that is probably a 
very, very clear case of medical malpractice where the 
community of doctors themselves would say, this is not a 
judgment thing, this is just medical malpractice and the 
attorney for the insurance company stroked the case to build a 
file, no one talks about that, do they?
    Mr. Colom. Very common.
    Chairman Manzullo. I did litigation myself and was not 
involved in medical liability, because it was a one-man firm. 
You didn't have the resources to do that. But does anybody talk 
about the cost of defense attorneys in a case--not an open 
intersection case, someone blowing a stop sign, and somebody 
sitting down to figure out the amount of damages, not the 
liability where the defense firm will build the file just to 
charge a fee? Why doesn't anybody talk about that?
    Mr. Colom. I tell you the reason people are not talking 
about it, is because of instructions from the insurance 
company. One of the great things the insurance companies has 
going for them, the longer the litigation lasts, the more 
desperate the client becomes, because they still have to make 
that house payment or whatever other payment they have to make. 
And you know, my number--
    Chairman Manzullo. Lawyers can't make loans to clients, 
that is called maintenance, which violates the code of ethics.
    Mr. Colom. In Mississippi, we are limited to $1,500 or you 
could lose your license. That is all you can advance a client. 
And the most common thing--I mean, I had a perfect case, I knew 
was worth at least a million dollars. The client walked in to 
me and asked me to settle the case for $300,000, and I pleaded 
with the person not to, held on for three months, and she got 
$900,000. The insurance companies know they can string the case 
out. When the car gets repossessed, the person will take 
nominal value. The smaller claim, the less likely they are to 
pay it because they know they can string the case out.
    But I think there is an important principle as well, and I 
am going to stop at this point. We have to keep in mind that, 
Doctor, if you cap noneconomic damages at $250,000, if one of 
these doctors who works in a rural area is injured, he will be 
worth about one-tenth of the plastic surgeon in Los Angeles. We 
can't value people, their service, solely on income. And I 
think it is unfair to say arbitrarily that you are scarred 
across the face and you are a child, you are worth $250,000. If 
you are a housewife and you are killed by someone's negligence 
and you are 60 and you have no earning power, or some guy who 
is cutting faces for people in Hollywood who serve value other 
than to make people beautiful is worth $10 million. And that is 
the problem with caps. What juries can do is they can hone the 
remedy to the particular plaintiff who is there. You say, okay, 
there are bad examples, and there are bad examples. But if you 
follow those bad examples, the appellate system controls it. 
Outrageous verdicts, the judge reduces it. There is a thing in 
the law called a remitter; the judge says, bang, this is going 
down. On appeal, it gets reversed. You see the headlines, but 
the headlines are not the end of the story on these outrageous 
cases.
    Dr. Fields. There is a saying, if you say something loud 
enough and long enough, that you might convince some people to 
believe it. But most of that stuff is simply not true. If we 
cap noneconomic damages, we are going to affect your 
contingency fee. That is the thing that the trial attorneys are 
scared to death of, that somebody will go over that. Nobody is 
saying conduct or limit medical expenses, that sort of thing. 
Nobody is advocating that sort of thing. And you know, the 
trial attorneys also do the bait and switch, and they try to 
blame everybody else other than the trial attorneys. But it is 
pretty clear in Texas, where they passed liability reform and 
their rates went down 17 percent immediately, that some things 
do work to control the cost of liability insurance. And a lot 
of things don't work. And what doesn't work, primarily, is a 
lot of the insurance stuff that the attorneys always try to 
trot out to deflect attention from the root of the problem.
    Mrs. Christensen. I would like to ask Attorney Colom, what 
about limiting the contingency fees? I tend to agree with you 
on the cap issue. But limiting contingency fees is perhaps, you 
know, another approach.
    Mr. Colom. It is something I think that should be 
discussed. It depends on the particular circumstances of a 
case.
    Mrs. Christensen. I am more inclined to limiting 
contingency fees, finding ways to limit the frivolous suits 
because there are ways we can do that, maybe looking at the 
alternative to in court litigation. What would you think about 
that, Dr. Fields?
    Dr. Fields. Absolutely.
    Mrs. Christensen. And how effective do you think that would 
be?
    Dr. Fields. Absolutely. If we could find a system that did 
not involve attorneys, that involved like, you know, health 
court judges, that sort of thing, I believe we probably would 
be on the right track or maybe a no-fault system. And we are 
looking into those possibilities. But I am the AAFP's 
commissioner to the AMA's commission for health care 
disparities, and Dr. Rios serves with me on that commission. 
And I can tell you now that this problem of health disparities 
can be solved, but it will never be solved as long as 
physicians in America are hamstrung by a system that forces 
them to do things that they know they don't have to do simply 
to try to avoid getting entangled in the legal system.
    If somebody is egregiously injured, they deserve 
compensation, no question about. But why does it take a trial 
to do that? It should be a no-brainer. But those aren't the 
people who get lawsuits filed. Those aren't, in general, the 
people who get the money. It really isn't. And so you really do 
have to try to look at the system in an overall manner to 
determine what actually is effective and continuing to trot 
this out. And we should try to look at alternative systems, but 
we have to do something about the current problem in order to 
get to that system.
    Chairman Manzullo. Maryland just adopted a law about 3 
months ago that puts the 2 percent tax on--is it on HMOs or a 
sales tax--2 percent tax on HMOs, and I assume that is passed 
onto the consumer. I need Mr. Colom's attention here. He is 
huddling. Let me re-ask the question. Maryland just passed a 
law about 3 months ago that places a 2 percent user fee on 
HMOs, and I presume that is passed along to the consumer, but 
to create a fund. And did Maryland also adopt caps on it? 
Million dollar caps. Pretty high caps. And so the people and 
the governor vetoed it, and it was passed over his veto. And 
the theory there is the people who use the medical services, by 
paying 2 percent more--of course, that goes down to the 
insurance companies or maybe the 2 percent gets passed along to 
their deductible--create their own fund for problems caused 
within the industry itself. I am open to almost anything that 
is fair. What do you guys think about that?
    Dr. Price. Well, you know--
    Chairman Manzullo. You can tell that is Midwest. Sorry 
about that.
    Dr. Price. I think if you parallel what we have seen in the 
difficulties the airline industry has entailed over the last 4 
years, legislation was very quick to find solutions and create 
security surcharges and 9/11 fees and all sorts of mechanisms 
to add additional revenue. But nowhere within the crisis within 
health care, if we did not place caps on liability payouts, was 
there an effort to say to physicians, because of the increased 
costs, even if you wanted to go the route to say it was related 
to claims, to say that we are going to allow you to have an 
additional surcharge on your fees that you charge based on the 
liability or malpractice risk to your profession, because I 
think if--and I would agree with our esteemed Dr. Christensen, 
if you did not put a cap on pain and suffering, noneconomic 
damages, but you allowed physicians to continue to conduct a 
business, which said cost of business, overhead, additional 
charges to take care of those expenses, that we would still be 
in a deeper crisis because the consumer is the one who would 
have to bear those charges. I don't know if this 2 percent is 
the total answer.
    Chairman Manzullo. Dr. Bartlett, Ph.D. In physical science.
    Mr. Bartlett. I am sorry I couldn't be here for all of the 
questions and answers, but I am glad I had a chance to get back 
before the hearing adjourned. I read the title of our hearing 
this morning, is skyrocketing medical liability premiums 
driving doctors away from underserved areas? And I thought that 
was a little bit like the question, does the sun come up in the 
east? Of course, it does. I just wanted to note, Mr. Chairman, 
we keep talking about our health care system. We don't really 
have a health care system in this country. We have a really 
good sick care system. Ordinarily, our folk don't get involved 
in the system until they are sick, and it would be nice if we 
are able to evolve that to a health care system.
    Mr. Chairman, I have a very simple two-word bill that I 
think would solve a lot of these problems, and I just wanted to 
get the reaction of our panelists. My bill is short, and it is 
two words, loser pays. That is all the bill needs to say. That 
is what they do in England. And they have an amazingly small 
number of suits compared to us. What is wrong with that bill, 
Mr. Chairman, loser pays?
    Dr. Brown. Fine by me. We suggested that earlier that if 
someone files a lawsuit and they lose the lawsuit, why don't 
they pay for it?
    Mr. Bartlett. They do it in England.
    Dr. Brown. Because some suits I think are truly frivolous. 
And without any investigation by the lawyers, they should be 
held responsible for their actions.
    Dr. Fields. The lawyers will say because it takes peoples' 
rights away--
    Mr. Bartlett. How does that take rights away?
    Dr. Fields. Ask the lawyer, but that is what he is going to 
say. But that system is fine by me.
    Mr. Bartlett. If it is a legitimate suit, the lawyer will 
take it, and he will win, and the other guy will pay. If it is 
a frivolous lawsuit, he won't take it, and we won't clog up the 
courts and insurance premiums won't be going up.
    Mr. Bartlett. It has been working for a long time in 
England. Why would it not work here.
    Dr. Fields. It would.
    Dr. Price. Again, I think we are missing a fundamental 
issue. If you took all of the payouts, reasonable payouts for 
what is deemed to be malpractice, it is not in concert with the 
premiums that physicians pay. And again, I contend that even if 
you went State by State based on risk to the consumers in that 
particular State, physicians can afford to pay premiums to 
cover the risks to those patients based on what we know is 
likely to happen to a population of people over a period of 
time.
    Mr. Bartlett. Then why are the rates going up? Are the 
insurance companies simply gouging?
    Dr. Price. I do not want to use the term gouging but 
somebody is pocketing a lot of money that is not being paid out 
to consumers based on risk.
    Mr. Bartlett. Mr. Chairman, maybe we need to have a hearing 
and have the insurance companies here.
    Chairman Manzullo. We did.
    Mr. Bartlett. What did they tell us?
    Chairman Manzullo. We had somebody who had a captive, that 
was owned by the physicians themselves, and the only issue 
there was the amount of money that had to go into the reserve 
and that they charged just enough to meet the expenses or the 
overhead of it.
    Dr. Price. I think that is the exception. Let us be real.
    Chairman Manzullo. You are blaming the insurance companies.
    Dr. Price. I am saying most of the insurance companies that 
are getting away with exorbitant increases in premiums are 
doing very well profitably. I do not care if they are able to 
tweak their books and show that they are at an economic loss.
    Chairman Manzullo. Why not perform a captive in the State 
itself?
    Dr. Fields, do you have an answer to that?
    Dr. Field. Yes. We have actually looked into that, and that 
is not really the way it is; that insurance companies are not 
setting their premiums based on their investment strategies or 
how well they have done or whatever. Captives certainly can, 
and we have looked into captives, too, and captives can be 
effective in large groups, and they may have to be statewide, 
but that is an option.
    Dr. Price. But the start-up fee is too exorbitant for most 
groups to even begin to entertain them.
    Dr. Field. That is true. And when a suit is filed in many 
States, the insurance company is required to put more money 
into reserves even before the suit is litigated.
    Mr. Bartlett. Mr. Chairman, the clock is running down. I 
just have one more suggestion. I have talked to a lot of people 
about it, even lawyers, and they tell me, yeah, that is legal, 
and it would probably work. When you go to the doctor for your 
health care, the doctor says, Suzie, you have got a problem. 
There are two paths we can tread to treat your problem. The 
first path is a no-fault insurance. You would not have come to 
me if you did not trust me. You would be in front of another 
doctor if you did not trust me. So I believe you trust me. And 
I am going to do the best I can for you. If I should screw up 
or something is going to happen, you are going to be 
compensated for it, but you cannot sue me. There is going to be 
an awards board. If you choose to walk that path, then it will 
cost you $400 for the procedure.
    If you want to use Joe down the street to sue me if I screw 
up, then it will cost you $800 for the procedure and the other 
$400 you will have to pay out of your pocket. Suzie, which path 
would you like to tread to get your health care? I will bet you 
99.99 percent of the time the patient is going to say, Doc, I 
trust you or I would not be here. Let us go the no-fault 
insurance path. Why would this not get rid of most of the 
suits?
    Dr. Brown. Let me ask you a question before they answer 
that. Will that hold up in court?
    Mr. Bartlett. If we pass a law I assume it would hold up in 
court.
    Dr. Brown. As I understand it, under the current law--
    Mr. Bartlett. Why would it not hold up? It does for workers 
comp. That is exactly the way we resolve worker comp things. 
What is different?
    Dr. Price. The risk pool that was set up for immunization 
works the same way. There have been no successful lawsuits, and 
no one brings a lawsuit for damage from immunization.
    Mr. Bartlett. So why do we not do that? The insurance 
industry for health care would almost go away because we would 
hardly need them. There would not be more than one patient in a 
thousand that says, gee, doc, I am here because I think you are 
a quack and you are going to injure me and I want to have the 
chance to sue you. It is not going to happen; is it?
    Dr. Fields. It is a very rare day I go to the office 
intending to harm somebody. That kind of system, if you could 
get it by the judiciary after it left Congress, on the 
constitutional grounds--
    Chairman Manzullo. It works in these other areas, does it 
not?
    Dr. Rios. Yes.
    Mr. Bartlett. So why would it not work here?
    Dr. Fields. I do not see any reason it would not.
    Chairman Manzullo. Ask the guys in Illinois what has 
happened to the workers compensation premiums. That has gone 
through the roof.
    Mr. Bartlett. Yes, but it is not $100,000. I was a builder, 
and we had workers comp, and we had to pay for it.
    Chairman Manzullo. Yes, but, Roscoe, that has been how many 
years ago?
    Mr. Bartlett. If there were injuries, it goes up. And those 
things are based on your history. If you have an injury, it 
goes up. If you do not have injuries, by and by, it goes down.
    Chairman Manzullo. Let me ask you, I am sorry. It is your 
time.
    Mr. Bartlett. It is your time because the clock ran down.
    Chairman Manzullo. This has been fascinating, this sort of 
an open mike type of hearing which is what I really enjoy 
because I like when you guys ask questions and challenge each 
other to what is going on.
    On this question of loser pays, when I practiced law, I did 
a lot of business litigation contracts and stuff like that. 
Roscoe,what happens when you have two people who have a bona 
fide dispute against each other? Each has acted in good faith. 
Each is relying on a theory of law that may or may not prevail, 
but they cannot agree before court as to whether or not there 
should be a settlement. Do you think that the party that loses 
should have to jeopardize the sale of his house because his 
theory did not prevail in court, for example?
    Mr. Bartlett. I think that if you have the law loser pays, 
that almost none of those would ever go to trial because each 
party in it contests.
    Chairman Manzullo. It will be a deterrent to litigate.
    Mr. Bartlett. But a screwy judge or a whacky jury may 
decide for the other guy, and so you would not want to risk 
that in court so you will settle out of court. I think the 
legitimate cases would be solved out of court, and the 
frivolous cases would never be filed.
    Mr. Colom. I know one thing I am pretty sure of, and if you 
studied the English system, I think you will find out it is 
true, is that very few poor people would ever be able to file 
lawsuits because they could not pay and they could not go into 
the system. It becomes a system then--
    Mr. Bartlett. Sir, if you had a poor person come to you, 
and they had a really good case, would you not take that case 
if you were going to make some money on it? The only time you 
would not take that case is if it was a frivolous case, and you 
thought you were going to lose, and you would have to pay. Now 
there is no chance you would have to pay because there is no 
loser pays, so you take the case. And every once in a while, 
even though it is a frivolous case, you are going to win in 
court, and it does not cost you much to go to court anyhow so 
why not.
    Mr. Colom. The cases that I have that are slam dunks, the 
insurance carriers settle them. The cases that are frivolous, 
the judge dismisses them. The ones that go to trial are the 
ones that can go either way, and that is the dilemma you face.
    Chairman Manzullo. Those are the big ones.
    Mr. Colom. Those are the big ones, and they can go either 
way. That is always a question, when the case is so clear that 
the judge can dispose of it, it does not go to trial. Are you 
saying that if a person does not have the capacity to pay if 
they lose, they cannot file?
    Mr. Bartlett. It is not the person making that decision, it 
will be the lawyer making that decision.
    Mr. Colom. So that means a poor person can only pursue a 
claim if they have a lawyer who is willing to risk his wealth 
for them?
    Mr. Bartlett. There is another way of saying that which 
makes more sense. The lawyer is only going to take--
    Chairman Manzullo. I need this lawyer's card here.
    Dr. Price. One of the things I have not heard a solution is 
to how we continue to allow physicians who are taking care of 
the sickest of the sick and the poorest of the poor in practice 
while we wrangle through some of the issues that we talked 
about. Obviously, there is no magic bullet in terms of how we 
will solve this problem. This has been debated for a number of 
years. But the reality is that, among those 45 million 
Americans who are uninsured and probably more who have 
inadequate insurance, there are many rural and metropolitan 
areas where there are physicians dying and crying to work, to 
stay in business to take care of those populations. And we do 
not have a mechanism either at the Federal level or at the 
State level for many of those individuals to ensure they have 
health care. That is a solution I think we need to come to 
grips with in the short order.
    I am hoping that there will be some resolve within the 
Small Business Administration Committee to create that 
mechanism for those individuals.
    Chairman Manzullo. Let me as Chairman have the last 
question here even though I have heard some great closing 
arguments from non-attorneys. That is, Mr. Colom, in your 
testimony, in chief, you said you grew up in rural Mississippi, 
and you have seen the scarcity of doctors for the past 3 
decades. And I guess my question here is, across the board, is 
there more a scarcity now than there were 10, 20, 30 years ago, 
or is this just a phenomenon that started a couple of decades 
ago and continues? Why don't you take a crack at that?
    Dr. Fields, what would be a good response on that.
    Mr. Colom. My first job was a legal service attorney, and I 
are worked for the group called the Federation of Southern 
Cooperatives. And we only represented poor farmers in rural 
west Alabama and east Mississippi. Most of those rural counties 
have more physicians now than they did then for two reasons 
primarily. One, the incentives, giving medical students aid and 
in return they would go work in under served areas. And 
secondly, we have many foreign physicians who would get a visa 
in return for agreeing to come to the United States to serve an 
underserved area. That is what has had the most impact during 
my career.
    I have represented a few physicians, in fact, one who came 
from the Caribbean, who came here solely for that reason.
    We are making some improvements. What the physicians really 
need is help because they are really underpaid in rural areas. 
They cannot get reimbursed adequately. And they are forced to 
live a lifestyle not commensurate with their education because 
of that. And many of them leave to go to more urban areas 
because of the lifestyle and the income. That is the struggle 
at least in rural areas.
    Dr. Rios. I just want to say that I think it has gotten 
worse, and it has also gotten worse because of geographic 
distribution. The underserved areas are really, really hurting, 
and I do not think there has been much incentive outside of the 
Federal community health centers to be able to get doctors into 
underserved areas. And the doctors that have been in the 
Hispanic neighborhoods all over the country have been there for 
generations as solo small practice doctors, and they have had 
to take a cut in everything. But I think they have stayed there 
because they have such a demand. There is such a demand, and I 
do not think people have really studied the small private 
practice doctors in low-income neighborhoods to understand how 
to keep them going.
    And for Hispanic doctors, again, I mentioned this, the 
doctors from foreign countries that have come here are all 
retiring, and they were never replaced. The Federal Government 
started pushing out the four pathways and all of those 
programs, the visa programs to be able to help bring in doctors 
to some of these areas, and our minority recruitment has never 
escalated to the point where we would have parity for our 
populations. This goes for all minority doctors.
    And I also think the biggest problem with our doctors is 
they are not telling the younger students to go into medicine 
because of all the frustrations, because doctors are working 
part time and trying to get into other businesses, or some 
doctors are on disability. There are all kind of issues going 
on.
    And I am from California, and I know, in California, there 
has been a lot of problems with doctors leaving the State also, 
not just for malpractice but lots of reimbursement problems. 
And I think that, for minority communities, we definitely have 
a crisis, and we need to figure out a way to have special 
targeted reimbursements for doctors.
    Chairman Manzullo. Reimbursement is not going up. The 
government is broke. I do not care how you look at the pie, we 
passed the Prescription Drug Bill last year. There were 13 
parts to that bill. One of them dealt with drugs, and one of 
them supposedly addressed the issue of parity, that the rural 
hospitals would get as much as urban hospitals and also get 
reimbursement for the docs.
    The question here, Dr. Fields, if you want to tackle this, 
I am trying to find out if there is any agreement here at all. 
We could probably agree on the time of day. Dr. Fields, 
Attorney Colom says that his experience in the last 20 and 30 
years as a resident, someone who knows the area intimately is 
that he sees no increase in the number of doctors leaving rural 
areas. Do you agree with that?
    Dr. Fields. The number leaving rural areas right now is not 
great, unless they leave the State for a variety of reasons. 
However, the real point is what is going to happen in the 
future.
    We actually have a map that we trot out a lot which shows 
underserved areas, and they are red. And the rest of the area 
is white. If you take out the family physicians, the whole map 
almost in the United States turns red. And those primary care 
physicians are the ones who are operating on the smallest 
margins. So things like we are talking about today, if they 
continue, will almost have to affect that in an extremely 
negative way because we know what will happen to these areas if 
those doctors actually do leave.
    Chairman Manzullo. Dr. Jones, one of your predecessors 
testified a couple of years ago; he had that chart. That was 
the hearing when the head of HCFA came here, and he said he was 
not going to sit at the same table as a bunch of lobbyists. So 
the smart alec left, and then I issued a subpoena for him. I 
was going to throw him in jail for a year. He was governing 
HFCA. Fortunately, he is gone.
    Dr. Fields. How did Warren react to that?
    Chairman Manzullo. To call Dr. Jones a lobbyist, one of the 
most preeminent African-American physicians in the country and 
the incoming president of the American Academy of Family 
Physicians, it was incredible.
    Dr. Brown, I think you have the last word.
    Dr. Brown. Okay. Well, I will say this.
    Chairman Manzullo. Unless Dr. Christensen had something she 
wanted to add?
    Go ahead.
    Dr. Brown. Being in private practice, a solo physician, 
responsible for my own business, as I said, it is going to be 
very difficult to stay in private practice. I know friends of 
mine or colleagues of mine who are going to work for a managed 
care organization rather than stay in private practice because 
they are not making any money and they cannot afford to 
continue to practice. What I found is that, in order to pay my 
malpractice, I have to borrow from things that I should have in 
reserve for my future. And being in private practice does not 
allow me the ability to draw up on somebody else's retirement. 
So what am I going to live on in the future?
    It is an uncertain sort of an answer for me. So it is 
really going to drive me. If I continue along these lines, I 
will not be able to practice. It is as simple as that. The 
numbers do not support it.
    Chairman Manzullo. Well, this has been a high-spirited 
hearing, especially after the votes when we have the ability, 
with the open mike and fewer Members, to allow more 
interaction. I want to thank each of you for what I think is 
just tremendous testimony. If anything, it shows that a lot of 
work has to be done to try to convince enough people that there 
is a problem.
    And, Mr. Colom, you were four to one here. I appreciate you 
holding your ground, and I appreciate the physicians that have 
to actually be the brunt of the crisis as we see what is going 
on. I know one thing for sure, that is my wife's OB-GYN left 
the practice in medicine in Rockford, Illinois, when his 
premium went from $30,000 a year to $210,000 a year within 3 
years. And there is no way possible that he could have afforded 
to pay that. No claims. He went into the ministry. I guess if 
you cannot take care of somebody's body, take care of their 
soul. Maybe you will get some kind of a stipend to do that. But 
then the OB-GYN who delivered our three children moved from 
Michigan back to Rockford, Illinois. So he is there to help 
pick up the slack on that.
    We had a hearing in Congressman Kirk's district about 3 
years ago. Four women, OB-GYNs, practicing together, and their 
insurance premium for the last year was $430,000. The office 
manager made more than three of the four partners did. They 
made about $75,000 a year. The witness told us that, at this 
rate, she was going to leave being an OB-GYN and go back to 
work as a pharmacist, which was her prior profession, for about 
120-some thousand dollars a year. You can now find her at the 
Walgreen's, filling the prescriptions of her fellow physicians.
    I do not care how you dice this, this is a crisis. There is 
a crisis going on, and I do not know what the solution is at 
this point. It may be a combination of all things. In fact, at 
the last hearing, someone said, well, the doctors have got to 
police their own and get rid of those bad actors that are 
really committing acts of malpractice. And there was a colloquy 
going on, and someone said, yes, that happened in our State, 
but the doctor that we took away his license and he went out 
and he hired a trial lawyer to represent him to sue the medical 
licensing board. And I said, well, that is interesting.
    Dr. Christensen, do you have one last note.
    Mrs. Christensen. I just want to say, Mr. Chairman and 
colleagues, we have been talking about this issue up here for 
at least 4 years with some intensity and yet have done nothing. 
It is a crisis. Whether it is going to be resolved by tort 
reform or something with some kind of insurance reform or some 
combination of both, something needs to be done. And I would 
hope that, despite the fact that we do not have the 
jurisdiction over the issue in this committee, that we can help 
to find some common ground. There are some things that we ought 
to be able to agree on. The physicians today need some kind of 
relief, and I heard you say that we are not going to be able to 
increase physicians' salaries. But we have seen the rising 
costs of health care and the decreasing physician 
reimbursement, and that cannot go on unaddressed either. So I 
am hoping that we can look at some of the issues where there 
can be some common ground, some immediate kind of relief 
provided to the physicians and work with our colleagues who 
have jurisdiction to do something about it.
    Chairman Manzullo. Thank you. On this note, this hearing is 
adjourned.
    [Whereupon, at 12:34 p.m., the committee was adjourned.]

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