History Lesson: Tort Reform in Iowa

Traditionally, Iowa has been home to “Midwest values” with respect to medical malpractice, the tenets of which are reasonable plaintiffs and juries and responsible jurisprudence. Over the past decade, these tenets began to drift. The number of medical malpractice cases increased, and more cases were settled than litigated—and with changing outcomes. Cases that were litigated had more verdicts in favor of the defense, creating a steep win-lose situation for the parties involved. In cases that were settled, the values began to rise, typically based on outside experts’ views on the issues, which can be skewed because they are brought on by plaintiffs and may present evidence that tacitly supports the claims. On May 5, 2017, Iowa’s medical liability landscape changed again when Gov. Terry Branstad signed tort reform bill SF 465, essentially creating a more equitable balance.

Years of work on behalf of multiple medical societies, including the Iowa Orthopaedic Society and the Polk County Medical Society, culminated with the bill’s signing and what Gov. Branstad called a “historic achievement for every physician, resident, and medical student in the state of Iowa.” Since the 1970s, there have been multiple efforts to pass a malpractice reform bill in Iowa. Local and state-run medical societies continued to lobby for tort reform on a yearly basis, regardless of which party held the state’s House, Senate, and governorship. In 2004, both the House and Senate passed a $250,000 cap on noneconomic damages, but it was vetoed by the governor. It wasn’t until 2017 that tort reform became a reality in Iowa.

Details concerning key provisions in the bill demonstrate how important this legislation is to physicians and surgeons in Iowa. The bill outlined a $250,000 cap on noneconomic damages, except in the most egregious situations where impairment of bodily function or substantial disfigurement took place. The bill also strengthened expert witness standards, enacted a certificate of merit for all medical liability suits, and expanded candor protections for physicians.

The law also established a statewide standard governing the qualifications of individuals serving as experts, essentially removing the specter of outside “hired guns” whose expert opinions may or may not be consistent with the local standard of care. Specifically, any expert in a malpractice case must be licensed in the same or substantially similar specialty as the defendant and be in active practice or in academia in the five years prior to the incident. The state also now requires filing an affidavit at or near the start of a liability suit to certify that the case itself has substantive merit. Together, these elements of the legislation are believed to have been instrumental in restoring some semblance of balance in the system and removing from the mix marginal cases that may have been settled for nuisance value.

Given that the new legislation contained a future start date (July 1, 2017), there was a rush by plaintiff counsels to initiate cases under the old system. This created an odd juxtaposition, in which many cases that had not been fully vetted were filed before enactment date in order to avoid being subject to the major tenets of the new legislation—a net increase in cases overall. Since enactment, the “seesaw” effect has occurred: a reduced number of cases, a more tightly grouped case mix accepted by plaintiff counsels, and case acceptance centered on prospective high-value economic matters (while knocking out superfluous ones). It is estimated that case volumes have shrunk by 20 percent to 30 percent. Our analysis indicates that plaintiff counsels are doing a simple cost-benefit analysis upfront, recognizing that there is little room to maneuver under the caps put in place. Cases with perceived merit move forward, but those that are deemed more speculative do not.

With the passage of SF 465, physicians in Iowa had hoped that the number of malpractice claims, as well as payouts, would decrease. The authors’ anecdotal experience suggests an approximate 30 percent decrease in malpractice premiums. It is anticipated that this reduction will be sustained and possibly further decreased as future cases are filed under the new system. However, there is concern that the certificate of merit may be perceived as a validation of a compensable issue. Jurors may be conditioned that a certificate “would not have been issued” had medical malpractice not occurred, irrespective of the facts. This may reintroduce some level of nuisance suits, in which plaintiff counsel obtains a certificate based on a fact issue, then presses for settlement based on the value of litigation and avoidance of that expense.

It is difficult to predict the long-term impact of this tort reform; however, it can be said conclusively that it has changed the medico-legal environment in Iowa for the foreseeable future. It is the hope that all stakeholders approach medical malpractice as responsible stewards under a common-sense tort reform model. And, when allegations of medical malpractice arise in earnest, it is our hope that with reasonable plaintiffs and juries and responsible jurisprudence, productive outcomes for all will be achieved.

Craig Mahoney, MD, is a practicing orthopaedic surgeon and partner at Iowa Ortho in Des Moines, Iowa. He is a member of the AAOS Medical Liability Committee and the Board of Councilors. He can be reached at cmahoney@iowaortho.com.

Kevin Ward is chief executive officer of Iowa Ortho. He can be reached at kward@iowaortho.com.

References:

  1. Schocke M: The future of the Indiana Medical Malpractice Act. The Indiana Lawyer July 13, 2016.
  2. 10 years of tort reform in Texas bring fewer suits, lower payouts. Insurance Journal 3, 2013.
  3. Fact sheet: caps on compensatory damages: A state law summary. Center for Justice and Democracy June 22, 2017.

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