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Friday, July 7, 2006

Simple solution for the OHSU liability cap

Commenters here have raised some interesting arguments for retaining some sort of special liability cap for OHSU. You can read them yourself in the comments to this entry. I'm not sure I'm buying them -- not as I stare at that infernal tram tower -- but let's assume that you do. Well then, we could solve this mess by retaining the cap -- just making it much larger, and adjusting it every year by some inflation factor.

The state agency liability cap (ORS 30.270) came in in 1967. Was the $200,000 limit put in place then? If so, let's just change it to reflect inflation over the intervening 38 years. What cost $200,000 in 1967 would cost $1,138,686.94 in 2005, according to the national Consumer Price Index.

Of course, the cost of medical care has gone up much faster than the cost of living generally. And the cost of living in Portland -- particularly housing -- has escalated much faster than it has elsewhere in the country. So let's be generous and set the new limit at $2 million, or even $2.5 million, and adjust it automatically every year for inflation. You could pick whatever inflation index you like.

If the recent court ruling is right, this is going to take an amendment to the state constitution. But if OHSU deserves a liability cap, it should not be at a number that was set decades ago. Certainly they're not talking about rolling back their prices up there to 1967 levels.

Comments (1)

As for the idea that the higher cap (or no cap) would deter experimental or daring procedures, we could institute a cap only for the type of work we want to encourage -- sort of like "orphan drug" laws.

Posted by: Jack Bog at July 7, 2006 03:24 PM

Here's an even simpler solution: eliminate sovereign immunity altogether. It's the basis of OHSU's tort cap.

The concept of sovereign immunity is based entirely upon the government America overthrew--a monarchy. Sovereign immunity is a holdover from English common law saying the king can do no harm. There are few concepts more antithetical to an alleged democratic government.

Still, it persists. Not hard to imagine why. In fact, the US Supers have been strengthening sovereign immunity recently. There are reasonable arguments sovereign immunity is simply unconstitutional but one doesn't need to be steeped in 1789 and tri-corner hats to know wrong from right. Is it right the government gets a free pass where Joe Lunchbucket would be liable?

I believe it was either Caligula or Mel Brooks who said, "It's good to be the king."

Posted by: Anahit at July 7, 2006 04:46 PM

The $200,000 cap was put in in the late 1970s following a horrible McMinnville School District bus/train collision in Lafayette, Oregon. Several children died - most were Hispanic, if my memory serves me correctly. The Legislature quickly put in a cap or strengthened or revised it to make sure the parents of those pesky little kids didn't get much money.
However, like many posters here, I thought OHSU was a *private* organization, not a government institution. I wish that question had been settled with this lawsuit, but apparently it hasn't?

Posted by: mac at July 7, 2006 06:53 PM

The cap is nothing but a sham to increase OHSU's profitability. They are shielded from liability over $200K while private hospitals are not. Yet is there any evidence that healthcare costs less at OHSU than at a private hospital?

Posted by: Trace at July 7, 2006 07:14 PM

actually, the only really decisive part of the ruling. as I understand it, was that it firmly and without equivocation defined OHSU as a public entity.

Posted by: Cat at July 7, 2006 09:25 PM

Oh, it's ALWAYS been a public entity, it just wants to act like a private one while holding on to the benefits (taxes and tort caps) of being a public entity. The reason: It wants to compete against the privates while using the benefits of being a public agency for competitive advantage. Of course, the other hospitals could just expand the definition of untreatable indigent care and send even more of their indigent patients to OHSU.

Note also that the level of indigent care provided at OHSU (over 50% of patients are considered indigent care) augurs for OHSU's support of a liberal Oregon Health Plan and also means that its "competitors" keep their mouths shut about OHSU minor abuses, so they can continue to divert large amounts of their indigent care to OHSU.

I personally don't know why anyone who had decent health care insurance would EVER want to go to OHSU for their care....unless, of course, their affliction is so unusual that nobody else treats it locally.

I've seriously considered a Medic Alert braclet that clearly states, "No, no, NOT the Hill!"

Posted by: godfry at July 8, 2006 09:36 AM

For anyone interested in the facts, OHSU is a public corporation. You can find the enabling legislation in ORS 353 and read for yourself the laws under which the organization operates.

In recent years, state support for both the hospital and university has been greatly reduced, from 30% of budget some years ago to 4% today. If the hospital doesn't make a profit, it can't afford to make the capital investment that keeps its facilities up to date, and thus would lose the ability to attract both paying patients and top physicians. Lose the paying patients, and you end up with a "charity hospital" that would require massive state aid just to stay open.

So you can raise the liability cap or eliminate it, but that will inevitably have other financial effects -- as in more state aid, or less care for the uninsured. Pick your option.

Posted by: Jim Holman at July 8, 2006 05:14 PM

This is my understanding of the status of quasi-immunity as of now. The Tort Claims cap applies to the quasi-governmental entity but not it's employees. Plaintiff may sue the individuals responsible for negligence and recover damages limited to the financial condition of the individuals (liability limits of insurance). While the entity liability is capped at 200k.
Here's the interesting part. The entity by statute must pay the employee defense costs and indemnify damage awards against it's employees for any vicarious liability as determined by the jury.

Me thinks the Supremes will clarify the murk. Stay tuned.

Aint the law grand!

Posted by: geno at July 8, 2006 05:31 PM

Jim -- You are mistaken about OHSU's level of uncompensated care. See the WW's article from December 2005 on the subject. In 1995 OHSU provided 39% more charity care than the average Oregon hospital, but that has been declining for 10 years and in 2004 they provided 12% LESS than the average hospital. So other hospitals in the state provide more uncompensated care AND they are liable for appropriate damages in malpractice cases.

Also, let's be honest about the costs we're talking about. OHSU's own analysis showed a worst-case scenario of $43 million a year (which is absurdly high unless their doctors are really, really bad). That's about the same as they are spending on the tram, and even though that's a one-time cost, if you factor in the debt service on the hundreds of millions in construction they have done or plan to do, you're probably not far from that worst-case figure. Paying for malpractice will certainly cause them to cut back in some areas -- although uncompensated care isn't one of them because they've been slashing that for a decade -- but it's the morally right thing to do and a little more focus on medicine and less on expansion might do them some good.

Posted by: Miles at July 8, 2006 05:44 PM

From the little I've read, the cause of Jordaan's horrible catastrophy was that an alarm wasn't plugged in, so that when his airway dislodged, no one knew in time. Typically, this would be in the perview of a particular nurse, respiratory therapist or even doctor, wouldn't it?

I'm sure everyone involved was mortified with guilt and despair. Does anyone dispute that? I suppose I can understand the human need of all the onlookers to execute (punish) the person who made the mistake, but I suspect he or she was already suicidal over what happened.

If there is a matter for justice, isn't it about that one person who made the error? Evidently, even the most cruel and vicious onlookers have some compassion for the person at fault, the person who did the malpractice. I've seen nothing about individual punishment for an individual negligent act in this blog.

I understand why every person and entity up the chain is sued. They are remote and practically anonymous. But you know as well as I that it is about the pursuit of deeper pockets than those of a nurse or respiratory therapist, or even a single doctor.

I understand why the law firms involve themselves. Otherwise, the mother and son have no other way to ever hope for financial survival. Of course, altruism and heroics from the legal people would be a bit more convincing if Joordan's award weren't ultimately to be discounted by a 40%, or whatever, contingency fee.

I even understand why doctors and hospitals bill for bad outcomes: To to do otherwise is to admit responsibility and guilt. Of course, in this case that apparently was immediately stipulated. So in this case maybe no one has thought to break rank, see how unfair it is and make it right.

But, for Jordaan's tragedy to be displaced to the topics of monetary caps, malpractice insurance rates, legislative remedies, and constitutional amendments, that is a sham, that I don't understand.

The central problem here is not about liability caps and big malpractice awards. The problem is that all our friends and neighbors regularly accept catastrophic outcomes from life...from malpractice, accident, natural causes, aging and disease...and receive nothing from their fellow man but the indignity of Medicaid and occasional glances of sympathy.

Rather than indexing the liability cap, I suggest citizens find a way to self-insure the catastrophically unfortunate, starting by diverting the money now pouring into insurance premiums, legal fees and administrative costs.

Take all that money squandered on scavangers and opportunists and hand it directly to our growing class of castaways.

Posted by: WoodburnBob at July 8, 2006 06:54 PM

all our friends and neighbors regularly accept catastrophic outcomes from life...from malpractice, accident,

If the bad outcome is from malpractice -- negligence -- then your friends and neighbors are entitled to recover damages from the negligent person, and his or her employer. It's been that way in this country ever since it was founded. Even an "accident" (unintentional act) gives rise to damages if it is caused by someone's negligence or a defective consumer product.

The no-fault "system" you envision doesn't exist in most places -- although I think New Zealand has something along those lines. But everybody there pays for (and must live with the limitations of) that system. Here, everyone else pays, but OHSU gets a largely free ride, and its victims suffer more than victims of other wrongful acts. That's not right.

Posted by: Jack Bog at July 8, 2006 07:56 PM

I believe forcing OHSU to address this aspect of their care, would be doing them a favor, in a free market way. Why? Because it will make their product more attractive to those who do have insurance. Right now anyone who has surgery there is risking everything, because there is virtually no financial recourse should OHSU do something wrong. If your lifestyle changes dramatically because of their mistake, you must come up with a way to pay for it. That should drive a lot of business elsewhere. I believe they've gotten away with it because the community was not as aware of the cap as they are now. One of the side effects of the tram debate is that it drew OHSU into the spotlight, and when the story of the kid broke, the full downside of the current arrangement came into view. I also believe fixing this will help with the human element. If I were in the medical field, I'd feel more at ease knowing that my patient wasn't facing financial ruin if I made a mistake. The patient's safety net would also take some pressure off of me, and if something did go wrong, it would lessen my guilt. No one is trying to claim these people aren't doing heroic work. Let's not forget they were trying to help this kid. Can you imagine doing a heart operation on a baby? It's a lot tougher than anything most of us have to do. Now it's just up to the courts and the community to do a little corrective surgery on their financial set-up, for their own good.

Posted by: Bill McDonald at July 8, 2006 10:02 PM

It's been that way in this country ever since it was founded.

Just my point. Time for change. Wouldn't just this argument for the status quo have been marshalled against the XIII and XIX amendments, "no-fault divorce, "no-fault insurance"? Should those movements have been properly terminated by the principle of tradition?

Don't get me wrong here. OHSU's transformation from medical school, indigent municipal hospital and regional referral center into a Machiavellian kingdom serving Mammon is a disgrace, if not a high crime.

Posted by: WoodburnBob at July 9, 2006 08:43 AM

[Posted as indicated; restored later.]


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