Maryland Lawmakers Agree on Med-Mal Bill But Governor Vows Veto Due to Tax Feature

The Maryland General Assembly, meeting into the early morning hours Thursday, approved a medical malpractice insurance reform package that Gov. Robert Ehrlich said he would veto because of a dispute over a tax on HMO premiums.

The House approved the measure by a 85-44 vote. The Senate, voting at 3:32 a.m. at the end of a marathon 17-hour working day, approved it by 32-13.

The bill will provide immediate relief for doctors, reducing their 33 percent increase in malpractice insurance premiums to just 5 percent for 2005. It also would put new restrictions on malpractice lawsuits, a measure that lawmakers said will hold the line on future rate increases by reducing the cost of malpractice settlements.

Democratic legislative leaders said the bill will solve the state’s malpractice crisis and ensure that doctors will be available when Marylanders need them.

But the proposal would apply a 2 percent tax on HMO premiums, adamantly opposed by Ehrlich, that would be used to underwrite the cost of malpractice insurance. The new revenues also would be used to increase the amount of money paid under the Medicaid program to doctors in specialties such as obstetrics who are under the most severe financial pressure from low insurance reimbursements and high insurance premiums.

Ehrlich said late Wednesday that the “net result of this exercise is a tax bill” which he said is unacceptable. He vowed to introduce a stronger malpractice bill, without the tax increase, when the 2005 legislative session beings Jan. 12.

“We’ll roll up our sleeves and get ready for round two in two weeks,” Lt. Gov. Michael Steele said.

Senate President Thomas V. Mike Miller urged Ehrlich not to make a rash decision, saying he should “take plenty of time to reflect on this bill and all the good it does.”

“He’s got tunnel vision on this HMO tax,” Miller said.

A veto would be “completely irresponsible,” said Sen. Brian Frosh, D-Montgomery, a lead negotiator.

Busch also appealed to Ehrlich to sign the bill, saying, “It defies logic for him to criticize what has been accomplished.”

But Ehrlich said he would not sign any bill that included the HMO tax.

“We didn’t call these folks into special session so they could pass a regressive tax that will be passed on to those who can least afford to pay it,” the governor said. Ehrlich said even with the state facing a potential deficit of more than $300 million next year, he could find the $42 million to pay for the first year of the malpractice reform legislation.

Karl P. Riggle, a Hagerstown surgeon who helped organize a group of doctors to press for malpractice insurance reform, said the bill did not go as far as doctors want but is a good beginning to restoring balance to the legal system.

Asked about Ehrlich’s threat to veto the bill, Riggle said he hopes the governor will “take time to do what I want to do, and review the whole bill.”

The governor summoned lawmakers to Annapolis on Tuesday for a special session to deal with what he says is the most important issue facing the state of Maryland. Doctors have been hit with increases in premiums for 2004 and 2005. The increases have been even steeper for some doctors in high-risk specialties such as obstetrics and neurosurgery.

Ehrlich proposed strict restrictions on malpractice lawsuits, arguing that frivolous suits and excessive malpractice awards had driven up the cost of malpractice insurance to the point that some doctors could no longer afford the premiums and were curtailing or shutting down their practices.

When he announced he would call the special session, the governor said he, Miller and Busch were close enough to an agreement to make it likely they could get something done quickly.

But there was never an agreement on a funding source, and, unable to get the governor to budge on the HMO tax, the speaker and Senate president put together their own plan, hoping that if Ehrlich followed through on his veto threat, they could get support from enough Democratic lawmakers to override the veto.

Republicans made a final effort in the Senate on Wednesday afternoon to block the HMO tax. Senate Minority Leader Lowell Stoltzfus tried to remove the HMO tax and replace it with some of the money Maryland receives as its share of the national settlement between the states and tobacco companies. The attempt was rejected with most Democrats voting against it.

“I think this is a reasonable way to get off the impasse” over the HMO tax, Stoltzfus said.

But Democrats said the cigarette restitution money should not be touched because it is used to provide health care to poor people.

Sen. Paula Hollinger, D-Baltimore County, chided the governor for his unrelenting opposition to the HMO tax even though he increased the state property tax, imposed a sewer fee and increased automobile registration fees.

“Property tax, car tax, flush tax. There didn’t seem to be any problem with that,” she said.

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Provisions of Legislative malpractice insurance bill

Key provisions of the malpractice insurance reform legislation approved by the Senate and House of Delegates early Thursday .

• Noneconomic damages (pain and suffering): Temporarily freezes cap at the current level of $650,000; reduces cap in wrongful death cases from $1.6 million to $812,500.

• Economic damages: Allows court to appoint a neutral expert to determine payments for future medical bills and lost wages.

• Expert witnesses: Sets stricter standards for doctors who testify against other doctors in malpractice cases.

• Apologies: Apologies or expressions of regret made by doctors to patients would no longer be admissible in court, but admissions of fault would be allowed.

• Funding source to underwrite malpractice insurance premiums: 2 percent tax on HMO premiums.

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Topics Legislation Maryland Medical Professional Liability