Earlier this week, Representatives Rhyne (R-Lincoln), McComas (R-New Hanover), Brisson (D-Bladen), and Crawford (D-Granville) introduced HB 542 – Tort Reform for Citizens and Businesses. This bill significantly reforms the current tort system in North Carolina. Many elements of the proposal target medical malpractice litigation. HB 542 encompasses the provisions of SB 33 – Medical Liability Reforms, Apodaca (R-Henderson), but also includes a collateral source rule, actual medical costs language and a $250,000 cap on noneconomic damages.

•  Cap on Noneconomic Damages. Noneconomic damages would be capped at $250,000, indexed to inflation.
• Actual Medical Costs. Juries will hear, for the first time, about actual medical costs. Now, juries only hear about full charges and base their awards for medical costs on those numbers. This provision would make a significant difference in the cost of all types of litigation. Actual costs are typically 1/3 to 1/2 of billed charges.
• Collateral Source Reform. Juries will hear, for the first time, about other sources of payment available to the plaintiff for losses claimed in a lawsuit.
• Appeal Bond Reform. Generally, anyone appealing a large jury award is required by law to purchase a bond for the full amount of the award. This protects the plaintiff’s right to recover if the appeal fails. Appeals of large jury awards can be almost impossible, though, if the mandatory bond is not available or is too expensive. The House proposal would allow the court to set a more modest bond based on relevant factors such as the amount of the judgment, the available insurance, and the net worth of the defendant.
• Bifurcation of Trials. Establishing liability in negligence cases usually involves showing that a.) the defendant was negligent, and that b.) the negligence caused harm. Jurors sometimes confuse the two, and interpret evidence of harm as evidence of negligence. In medical malpractice cases, this leads to the classic error equating bad outcomes with negligence. The House proposal would permit separate trials of these two issues, leading to more accurate jury decision making.
• Punitive Damages Distribution. Plaintiffs will no longer get to keep punitive damages awards over $75,000. In those cases, 25% of the amount over $75,000 would go to the plaintiff, and 75% would go to local schools. Punitive damages were capped by the General Assembly in 1995 at the greater of $250,000 or three times compensatory damages.
• Definition of a Medical Malpractice Action. The definition of a medical malpractice action would be broadened to include additional professionals and providers, including hospitals, nursing homes, and other institutional providers.
• Rule 9(j) Improvements. Medical experts reviewing medical care for potential malpractice claims would be specifically required to review all of the reasonably available medical records pertaining to the alleged injury.
• Emergency Care. Limited immunity would be provided for medical care providers in certain medical emergencies. Providers would be liable if the trier of fact (generally, a jury) finds that the provider’s deviation from the standard of care constituted gross negligence.
• Periodic Payments. Large awards of future damages (i.e., $200,000 or more) would be paid on a schedule. The payments would end upon death of the plaintiff, with exceptions for amounts representing loss of future earnings or loss of future household services.
• Expert Witness Reports. Experts would be required to provide a signed report containing a complete statement of their opinion(s), the basis for those opinions, the information considered in forming the opinions, qualifications of the witness, publications list, compensation arrangement for their testimony, and a list of other cases in which the expert testified during the past 4 years. Direct testimony by the expert would be limited to the fair scope of the report.

Wednesday morning the House Select Committee on Tort Reform held a public hearing to receive public comment on HB 542. Sammy Thompson, a medical malpractice defense attorney with the Smith Anderson law firm, spoke on behalf of the NCMS to support the medical liability provisions in the bill, which will bring greater predictability to the medical liability process. The committee also heard opposing comments from groups such as the North Carolina Advocates for Justice and the North Carolina Coalition for Patient Safety.

The committee will be considering amendments to HB 542 at their next meeting on Thursday, April 7, 2011 at 11:00 AM. If your Representative is a member of the Select Committee on Tort Reform, now is the time to contact them and express your support for HB 542. The action you take today will have a great impact on the final outcome of this legislation.