For more than an hour on Wednesday the House debated legislation that would make important changes to North Carolina’s tort system. (See House Bill 542 – Tort Reform for Citizens and Businesses (Rhyne, R-Lincoln; McComas, R-New Hanover; Brisson, D-Bladen; Crawford, D-Granville). The chamber then passed the measure by a vote of 85-32, sending it to the Senate.

One of the provisions in H542 is particularly important for physicians. It is known as the “actual medicals” provision because it would require that evidence of past medical expenses be limited to the amounts actually paid to satisfy medical bills. Evidence of outstanding medical bills would also be limited to the amounts necessary to satisfy those bills. Current law only allows juries to hear evidence of the full charges, which can be much higher than the amounts actually paid to physicians and other providers. This rule creates a misperception among juries about the plaintiff’s medical costs, leading to awards of “phantom” damages. The NCMS invested significant resources to ensure the actual medicals provision would produce the expected result.

Other provisions in the bill include:

1.  Codifying standards for expert witnesses (other than experts on the standard of care in medical malpractice actions, to which special rules apply).
2. Creating a rebuttable presumption that drugs approved by the FDA for safety and efficacy, are safe and effective for their approved use. The presumption can only be rebutted by clear and convincing evidence. The rebuttable presumption is not available if the drug manufacturer engaged in specific types of wrongdoing such as: selling the drug after it was ordered removed from the market by the FDA; intentionally withholding or misrepresenting certain material information from the FDA, in violation of a final agency action; or making illegal payments to a government agency official or employee to gain approval of the drug.
3. Establishing a cap ($10,000) on attorney’s fees awarded by the court in small cases (damages under $20,000) when the court finds an insurer unreasonably refused to settle prior to trial.
4. Codifying current law on land possessors’ liability for harm to trespassers. In general, there is no duty of care to trespassers. Exceptions include incidents of intentional harm, harm to trespassing children caused by artificial conditions, and failure to exercise ordinary care upon discovery of helpless trespassers.

A coalition of business and medical interests, including the NCMS, support H542. There was significant opposition from plaintiffs’ lawyers, especially to the actual medicals and FDA presumption provisions. The House defeated an attempt by plaintiffs’ lawyers to create an exception to the actual medicals provision for any discounts given under insurance contracts, which would have destroyed its effectiveness. The House voted to remove a section that would have given most of any large punitive damages award to the state, rather than the plaintiff.

The NCMS is grateful for the hard work of the House leadership, key sponsors, and supporters of this legislation. If enacted into law, this proposal, together with Senate Bill 33-Medical Liability Changes (Apodaca, R-Buncombe; Brown, R-Onslow; Rucho, R-Mecklenburg), will represent much-needed progress on the liability issue. The NCMS will continue to work diligently for enactment of these proposals during the 2011 session.