Will The New Tort Reform Laws Help You? September 2003 Marc Singer, CFP & Scott Wells, CFP A few weeks ago, the Florida legislature passed the first major tort reform in 15 years. In talking to doctors around the state, the consensus seems to be that the new laws may not help; in fact, they could even hurt physicians.   The supposed good news: First, let's examine the so-called soft caps. There is a $500,000 cap on non-economic damages, with a $1 million cap in case of wrongful death, permanent vegetative state, or catastrophic injury.   Also, there is a lower cap of $150,000/$300,000 for doctors who treat in an emergency room environment. Will it help? Remember that the crux of the entire malpractice crisis is that doctors can no longer afford their insurance premiums. Currently, the majority of higher risk specialties have been forced to lower their coverage to either $250,000 or go bare. Here is the dilemma. When an insurance company calculates premiums on a $250,000 policy, it is based on a maximum payout of $250,000 plus attorneys' fees. Realistically, if a judgment is for $251,000 or $5 million, the insurance company is only responsible for $250,000. Having a $500,000 cap on pain and suffering, plus economic damages, would not reduce the payout of an insurance carrier, and therefore, will not lower premiums at all. As far as the ER physician payout changes, it has been the opinion of our clients that most lawsuits do not come from the ER. If the ER cap holds, it might have a slight positive impact in these cases. How can a $500,000 cap lower the premium on a $250,000 policy? The bad news: Prior to the new rulings, financial responsibility for bare doctors involved the possibility of revoking a doctor's license 60 days after a final judgment, if up to $250,000 was not paid. The new law "requires" the Board of Health to revoke a license within 30 days of a final judgment, if no payment is made. We are not pleased with this change in the language. Normally, after a judgment against a bare doctor, settlement negotiations go on for several months. This change effectively requires that a doctor either settle a case, or declare voluntary bankruptcy within 29 days of a judgment. There may be a silver lining to this. In negotiations, the threat of an upcoming bankruptcy often will persuade plaintiff attorneys to settle. As we have written in previous articles, plaintiff attorneys are very familiar with the fact that they seldom collect anything when they are faced with the fact that there is not a deep pocket involved.   Conclusion: At last count, there were over 3,000 bare doctors in South Florida. This trend is anticipated to spread to Orlando, Tampa, and Jacksonville over the next several months. Until both the Florida legislature and the Federal government pass significant tort reform, Florida physicians should exercise the option of protecting themselves from malpractice lawsuits. While we don't know how the new tort reform will provide relief, we do know that our self-insured doctors are still seeing patients everyday and sleeping well at night.  Singer Xenos does not provide legal advice. Please consult with your own legal counsel.