Overturning Horton – Part I

Recent Oregon Supreme Court guts jury system, puts corporate profits over people

Sen. Prozanski: Good morning, everyone. We’ll go ahead and get started. I’ll call to order the Senate Committee on Judiciary. Thanks for everyone that’s here. Today, we’re going to do a very quick work session for a possible introduction of Committee bill measures and also we will be doing our public hearing on Senate Bill 487. With that, I’m going to go ahead and open up the work session for possible introduction of Committee measures. Senator Linthicum?

Sen. Prozanski: We’ll close the work session and we’re now going to go ahead and start with our public hearing on Senate Bill 487. First, let’s get the summary, and then I’m going to be bringing up Representative Lininger and then I think we are going to the panels after that. Ann, if you’d want to come on up?

Rep. Lininger: Chair Prozanski, members of the Committee, today you have Senate Bill 487 before you. This increases the cap on wrongful death damage awards from 500,000 to a million dollars and it removes the statutory cap on other causes of action. It sets the annual adjustment to the wrongful death cap on changes to the consumer price index, declares emergency, effective on passage.

Sen. Prozanski: All right, thank you. Representative Lininger, thank you for being here.

Rep. Lininger: Thank you, Chair Prozanski, and members of the Committee. I’m Ann Lininger. I’m the State Representative for House District 38, in southwest Portland. I’m proud to be here today in support of Senate Bill 487. This morning, as I was getting up, I was reading the newspaper and I saw an article in The Washington Post about an employer that has hundreds of women employees who have come forward with assertions of sexual assault, sexual harassment, and essentially a culture of sexual predation at the employment place. It’s all around the country, this employer.

It really made me think. We have some significant problems of sexual abuse, other kinds of abuse of vulnerable people. For those of us who have experienced sexual assault or sexual harassment, it’s a profound harm that has effects that go on long after any physical effects have happened. That’s true also for people who have suffered child sexual abuse, elder abuse, catastrophic injury of other types.

This bill, Senate Bill 487, brings forward some important tools to help deal with it. You’re going to hear from some other witnesses today who can speak powerfully and on a personal level to the kinds of harms that this bill will help people find justice in response to.

I’m going to tell you first a couple things about the bill and turn it over to other witnesses and other experts. The bill does three things. It restores the ability of a jury to award – in response to abuse, catastrophic injury claims – an amount of non-economic damages that the jury thinks is appropriate.

In a Oregon Supreme Court decision in May of 2016, a decision was made to impose an artificial $500,000 cap on the ability of surviving plaintiffs, injured people, to obtain non-economic damages. The bill would walk that back to the position of law that existed for 17 years prior to that time, that worked well, in which a jury could award an amount of damages that it deemed appropriate for people who had suffered catastrophic injury.

The bill does a second thing. It raises to $1 million the non-economic damages that are available to a family in the event of wrongful death.

These are the surviving family members when someone has wrongfully died at the fault of someone else. Last year, there was a bill that would have raised that level to $1.5 million. I actually opposed that bill, and I’m here today in support of this bill, which has the provision that would raise it to one million.

In the last iteration, we heard a lot of feedback from people who said, “Gosh, if it were only $1 million, that would be an appropriate level that would impose an appropriate amount of pressure on wrongdoers, but $1.5 million is too high.” Here we are today, the proponents adjusted their request from $1.5 to $1 million.

In fact, if you paid for inflation the level that it’s currently at, a $500,000 cap for non-economic damages in wrongful death, if you had paid that for inflation, the amount today would actually be above one million, modestly. In my view, a $1 million cap at this point is absolutely appropriate and reflects the kind of negotiation and compromise that is the hallmark of the legislative process.

Finally, this bill would establish the same rules going forward for all open cases. With that, I want to reiterate that I think it addresses the profound need to put pressure on wrongdoers to compensate surviving victims of harm and to compensate the families of people who have passed away because of wrongdoers’ harm. I think it reflects some good back and forth between proponents and opponents. I look forward to your opportunity to consider and discuss this bill. Thank you.

Sen. Prozanski: Thank you. Any questions for the Representative? Ann, thank you very much for being here. The Chair’s prerogative, what I’m going to do is there’s a number of people who want to give testimony today. I’m going to call people up in panels. I’m going to break it up, because we have a number of individuals that are in the proponent side.

What I’m going to do is I’ll bring up two panels separately, the proponents. Then, the opponents, I want to bring them in so we can have a mix, and then we’ll pick up some more that are listed at this point as proponents. With that in mind, let me go ahead and call up the first panel, will be Bob Joondeph, Sherry Stock, and Max Woodbury. If you would please come forward. We need to probably help Max with the chair. Bob, are you going to start off?

Bob Joondeph:  I’ll start off this morning.

Sen. Prozanski: Okay.

Bob Joondeph:  Thank you. Senator Prozanski, members of the Committee, my name is Bob Joondeph. I’m the Executive Director of Disability Rights Oregon. I’m here this morning to speak in favor of Senate Bill 487. Our support comes from our experience. I’ve worked at Disability Rights Oregon for over 30 years now. During that time, we’ve served thousands of people who have disabilities. Those disabilities can arise at birth or as the result of disease or injury or natural progressive types of genetic disorders over time.

One of the things that almost invariably occurs when a disability arises within a family is an enormous amount of stress and an enormous amount of a change of life. What we say is that everyone has an opportunity to become a member of the disability community through an injury or a disease or some other occurrence.

When that happens, it not only affects the individual, but it affects their entire family. We have seen countless instances in which families are broken, parents divorce with the added burdens of a child or a spouse become too great for that family to sustain itself. We see countless instances of depression, anxiety that come with the added burdens that might be associated with the disability.

I’m here to say that people with disabilities can lead very productive lives in which they are able to achieve just the same things that we all do, but the challenges of having mobility impairment or having a sensory impairment or a brain injury or a developed mental disability, particularly a severe mental illness, are difficult to handle. They’re real. They have a real effect upon people.

When that injury or disability occurs as a result of the wrongdoing of another person, these are true, tangible injuries, profound injuries, that are oftentimes not compensated through direct damages in a legal case. That is why we are here to support Senate Bill 487, to give people the chance, really, to be more successful in their lives and to overcome the difficulties that they encounter. Thank you.

Sen. Prozanski: Thank you. Who’d like to go next?

Sherry Stock: I will. Hi, Senator Prozanski, and members of the Judiciary Committee. My name is Sherry Stock. I am the Executive Director of the Brain Injury Alliance of Oregon. I’ve been there for 16 years. I’m also the parent of a child that was severely injured by a drunk driver, geez, 50 years ago, so that’ll give you my age. He’s at about an 18-month-old level. The drunk driver had no insurance, so there was no recourse. What we did is we sued the insurance company for covering him, even though he had, I think it was only $15,000 at the time, that didn’t even do a thing for Mark.

I’m here obviously in support of Senate Bill 487 and to talk to you about traumatic brain injury and what the effects can be. Most of the people that I deal with after a brain injury, there are some kids, but most of them are adults that may be in an automobile accident, maybe an assault, maybe a work injury.

When you have a brain injury, that might not affect your intelligence, but it might affect how you interact and work and the abilities that you have. It might look that you’re fine, but you might never be able to return to work. One of our survivors is an attorney that was a passenger in a car rollover accident. Actually, they hit a pothole and they went flying. This was a few years ago. She’s never been able to return to work. She struggles to keep a home now and keep things going. The max that she got at the time was $30,000 and that’s all there was.

There was another man, some of you might know, Max Conrad, but Max was playing football, walked out on the field, sustained a concussion. He stayed home, severe headaches, nausea. There was a football game the next Friday. The coach made him come in, sent him back to play, and told him to, “Suck it up, take it for the team.”

He was knocked out again, this time for seven months in a coma. His dad actually does documentaries for HBO, so kind of had the incredible future before him and he’s now at about a second grade level. Because there was a $200,000 cap, he’s living on actually Oregon Health Plan and welfare.

There’s a lot of different things. Brain injury affects more than 1.3 million people, but more than that, over 80% of all returning veterans have a brain injury. Almost 87% of everyone in prison has a brain injury. The homeless is about the same amount, about 87% of homeless are people with a brain injury. It’s a very serious issue. It’s important, when something happens to someone, that you have the resources there and that they’re covered. Once again, we’re in support of Senate Bill 487. Thank you.

Sen. Prozanski: Thank you very much. Max?

Max Woodbury: Hi, Chair Prozanski, Committee. My name is Max Woodbury. I’m here to support the bill as well, to restore justice for injured Oregonians. 20 years ago, I was working at a Superfund cleanup site as a fuel geologist. I was working above an underground walkway about a dozen feet above ground and working on a work platform.

I wasn’t presented with any sufficient fall protection. There could have been a railing, there could have been some sort of harnessing device, but there wasn’t. I fell on August 12th, 1996, straight onto my head. It was only a dozen feet, but fortunately enough for me, I had my hardhat on. The force of my fall straight onto my head went straight to my neck and fractured cervical [vertebrae], the third through the seventh.

I am considered a C6 quadriplegic. A lot of people see me in a manual wheelchair and assume that I’m a paraplegic. That is not the case. I don’t have full function of my fingers, my triceps. I don’t have function below my shoulders. A lot of people see me in a wheelchair and assume that, “Wow, he can’t walk.” While that is the case, that is relatively the easy part of being a quadriplegic.
Every morning, I have to do a morning routine, which can take me up to three to four hours. I can’t go to the restroom by myself independently, like everyone else just normally. Because of that work environment and that negligence, I have to deal with this every day.

Another thing that a lot of people don’t think about when you think about someone who’s a quadriplegic or a paraplegic or paralyzed is reproductive function or sexual function. Those are things that were taken away from me. After 20 years, I’ve had the fortune to at least find a woman that I love and have kids. I feel lucky for that. There’s a lot of paralyzed people that are not so fortunate.

The dream of going out in this beautiful Oregon wilderness and going on a hike with my kids doesn’t happen. I can go on a nature walk, but I can’t spend more than a few minutes out on a accessible trail. There’s a lot of things like that. Just being able to do the diapers of my children is something that I can’t help with as a father. I’m here to say that having just a $500,000 cap for just any sort of injury doesn’t really encapsulate the experiences of all of us. I’m here to support that and restore justice for injured Oregonians. Thank you.

Sen. Prozanski: Thank you very much for your testimony, Max. Any question for anyone on the panel? Thank you all very much for coming forward, and telling your story, Max. Our next panel’s going to include, I believe it’s John Anderson, Brenda Tracy, and Klarissa Oh.

John Anderson: I’ll start off this morning. Chair Prozanski and members of the Committee, my name is John Anderson. I’m representing sexual abuse victims. I’m here today to urge the support of this Bill that holds organizations that choose to turn a blind eye to sex abuse predators, to sweep it under the rug and move the problem somewhere else, accountable.

When I was a young 14-year-old Boy Scout in Portland, until I was almost 16-years-old, I was sexually abused by my scoutmaster. Once the abuse was found out, I thought everything would be taken care of, but that was far from the truth. Nothing was ever done.

I believed for 40 years that, somehow, it was my fault. Even to this day, I’m still struggling to tell myself that I have done enough to make up for my own perceived fault. It was not my fault at all. I was a child, not the 55-year-old man that sits in front of you, but a 14, 15-year-old child, like your own kids, grandkids, or children you see in middle school. It was the scoutmaster’s fault. He was the adult and purposely chose to have sex with a child.

Then, for years, I thought the Boy Scouts would never let something like this happen. They are considered a moral institution, protecting and teaching children. Upon a chance meeting with a friend that I had from the same troop, I found out that he was also abused. I had thought it was just me that had been abused in this troop.

In talking with him, I come to find out that the Boy Scouts had known that this scoutmaster was a pedophile and he had already abused kids in another troop down in California. Once they found out about the abuse in California, they moved him up here to Portland. In the same troop that I was, he abused around 15 or more boys, including, at the time, my 12-year-old brother, who had hid it from everyone, until I came forward, only about eight years ago.

The Boy Scouts, just like the Catholic Church, knew the sex abuse of children was going on. They allowed so many childrens’ lives to be forever changed and turned upside down. They had perversion files on these pedophiles and simply moved them from state to state or club to club. One of these files was only created years after my abuse, when the same scoutmaster tried to start another troop in Portland.

It is only because of cases like mine and those of so many other men who bravely stood up do institutions make change. The fact that sex abuse is morally wrong didn’t facilitate any changes in the organizations, not until there were financial consequences or they were forced by the courts did the organizations make needed changes to protect the children. I urge you to restore power to our juries and to hold these institutions accountable. Thank you.

Sen. Prozanski: Thank you. Ladies, who would like to go next?

Klarissa Oh: Chair Prozanski, Vice Chair Thatcher, and members of the Committee, my name is Klarissa Oh. I am one of the founders of Oregon Abuse Survivors In Service, OAASIS. I am currently serving as their education director. I am here today in strong support of SB 487.

I am honored to join the panel of supporters of this bill, especially the courageous, graceful survivors, who are sharing their experiences of abuse and strength. Thank you for shining light on this abuse, which so often flourishes in the shadows. Thank you for listening and considering this important legislation.

OAASIS is building a movement that empowers communities to prevent child sexual abuse and to help survivors live full, healthy, even joyful lives. We are working towards a future where all people experience a loving childhood free of abuse and trauma and all people who have been sexually abused are supported to heal.

SB 487 is important to us, because it insures that people who are sexually abused as children can finally hold the people who abuse them accountable, as well as the negligent institutions that knowingly looked the other way and allowed offenders access to vulnerable children.

We just heard John Anderson’s moving testimony. John shared about the abuse he experienced by a Boy Scout troop leader and the negligent, dangerous response from the Boy Scouts. As he said, John’s abuser had been a known problem in the San Francisco area, but instead of being held accountable, the Boy Scouts transferred him to Portland, where he abused more than 10 other boys in the mid-1970s.

By turning a blind eye, the scouts allowed this troop leader and other known abusers to continue to work unsupervised with children, allowing offenders to sexually abuse more children. The Boy Scouts did not fix this situation, John’s courage and civil cases did.

Through John’s civil case and others like this, the real facts and flaws in the reporting system were uncovered. He forced institutional change to put the focus where it should have been all along, on protecting children. As we saw in John’s case, oftentimes the only way to get powerful, trusted institutions and corporations to change their ways is to hold them accountable through the civil justice system.

SB 487 will restore the powers of juries to hear the facts of the case and determine case-by-case justice, instead of applying a one-size-fits-all limit on what a jury can determine is fair and just. There is no one-size-fits-all experience of child sexual abuse. The emotional and psychological pain of child sexual abuse don’t appear on X-rays like a broken bone, but the impact can be just as fracturing to survivors’ long-term health.

The pain of child sexual abuse is real and intensely felt. Victims of child sexual abuse are far more likely to attempt suicide, turn to alcohol, illegal drugs to numb their pain from the abuse. Survivors can live full, healthy, and joyful lives, but have more barriers to overcome than children who are safe from that abuse.

There is also no one-size-fits-all process that survivors go through on their paths towards healing. In the eight years since I’ve helped found OAASIS, I’ve walked along countless survivors who were sexually abused as children, helping survivors to live more fully. They can heal, but the healing process extends over a lifetime.

I ask you to stand with me and countless victims of child sexual abuse to ensure they receive justice on a case by case basis. There should never be an arbitrary one-size-fits-all value placed on a survivor’s quality of life. Survivors deserve their day in court. Please join me in supporting Senate Bill 487.

Sen. Prozanski: Thank you. Brenda?

Brenda Tracy:    Good morning, Chair Prozanski, and members of the Committee. My name is Brenda Tracy. I am honored to be here today with these other survivors in support of Bill 487. I am a survivor of child sexual abuse. I am also the survivor of a gang-rape by four college football players that happened in 1998.

Just over two years ago, I came forward with my story in the Oregonian and since have fought diligently for survivors like myself. As you see, it never gets easier. I always keep thinking I’m going to come here one day, because I’ve been before you several times, and I keep thinking it’s going to get easier. I keep thinking that I’m not going to cry and I’m not going to get overwhelmed with these feelings when I hear other survivors come forward and I share my own story. As you see, one of the non-economic things that happens to us is that it never gets easier.

Since 1998 and my gang-rape, I have suffered. I have dealt with depression, I have dealt with a borderline eating disorder. I have dealt with suicidal ideation. I spent 16 years wanting to die. I don’t know if people really understand what it’s like to be in a body that has been brutally raped and degraded and defiled by another human being. It is difficult and it is torture to live and exist inside that body.

For 16 years, every day I struggled with wanting to die, being unable to kill myself, because I had two boys, my children. I was a single mother. One of the consequences of that, and I’m embarrassed to admit this, is that I was not the best parent I could have been to my children. I actually resented my children, because they were the reason I had to live. Because of that, I yelled a lot. I was easily frustrated and irritated with them. I was not the mother that I should have been to them.

I have since had to apologize to them. I didn’t even tell my oldest son what happened to me until he was 17 and that was only after he had dropped out of school. He had began to do drugs and alcohol and he attempted to commit suicide himself by smashing his car into a telephone pole.

It was only then, when I was faced with his possible death, that I disclosed what had happened to me. That’s how much shame I was wrapped in by what had happened to me, that it took my own son possibly dying for me to speak my truth. The idea that we would place a $500,000 price tag on my life, my son’s life, and our experience is appalling to me. It hurts to feel that that is the worth of my life, and my experience, and my family’s experience, and other survivors’ experience.

We deserve our time before a jury to say what we need to say and to let others decide what that damage should mean. I don’t want that price tag on me and I don’t want any other survivor to have that price tag. I would ask that you do restore justice for survivors.

The other thing I want to address is that I have spent the last two years traveling the country, speaking at different colleges about my experience. I have been to about 23 of them now in about seven months. This price tag will be seen by those universities. Universities are already not dealing with this issue. They are already sweeping these cases under rug.

Every day on my social media timelines, I hear about rape on college campuses. In Texas, one of the most egregious cases we’ve heard of is a lawsuit that alleges 53 rapes by 31 football players over four years at Baylor University. This is happening all over our country. If we decide that the cap is $500,000, what incentive is there for universities to do better? There is none. They will look at me and they will look at other survivors and they will say, “We can afford that. We can afford that price tag.”

Because of our reputation and because of our desire to not be exposed and to not deal with this issue, they will continue to sweep it under the rug. We will be hurting survivors. We will be supporting colleges to continue to do what they’ve been doing for decades, which is to ignore this issue and allow lives to be ruined.

I can’t support that and I know that that will happen. I’ve seen that. I’ve talked to so many survivors. I would just ask that you restore justice for survivors. I ask that you would take this very seriously. I thank you for the time that you’ve allowed for me to share my story, just thank you.

Sen. Prozanski: Thank you, Brenda. Questions for anyone on the panel? Thank you all very much for coming forward and telling your story. We really appreciate hearing from you directly. Thank you.

Sen. Prozanski: I’m going to go ahead and call up a panel, Jim Dorigan, Susan Forray, Kevin, is it Reavis?

Kevin Reavis: Reavis.

Jim Dorigan: I can start out. Chairman Prozanski and members of the State Judiciary Committee, thank you very much for allowing us to testify here today. My name is Jim Dorigan. I’m Senior Vice President and Regional Operating Officer for the Doctors Company, which insures over 2,600 Oregon physicians.

This is a major issue for healthcare providers in that the availability and affordability of insurance provides access to care for patients in the state of Oregon. This bill being proposed doubles the cap on non-economic damages for wrongful death and eliminates non-economic damage cap for bodily injury cases in Oregon.

We heard a lot of very sad and touching stories today from victims and injured parties, but the reality is many of those cases we heard about today would not be impacted under the current law by limiting damages. For example, they talked about damage in the university system on rape cases. The universities are already covered under the Oregon State Tort Claims Act, so they would not be impacted.

A number of these cases involved criminal conduct and involved perpetrators of crimes that would not have assets or insurance coverage to provide these large limits of liability potentially caused by the damages. Also, the economic damages are important. Economic damages in these cases cover all of the healthcare cost, future medical cost, lost wages, the cost to replace any services.

We’re talking about trying to make somebody whole through this. The non-economic damages are the pain and suffering and they’re very hard to quantify. As you can see with how sympathetic these cases are, especially for healthcare providers, that the non-economic damages have an extreme level of unpredictability and can really drive up the cost of any of these cases.

The other issue that hasn’t been addressed is punitive damages, which are designed to punish people for their actions in criminal and in the system. Unlimited punitive damages are also available in these type of cases. We’re looking at limiting damages in cases.

I provided testimony, but we look at what our states around the country do. In the West Coast, in the 19 western states, 16 of 19 states have bodily injury limitations of $500,000 or less. On the wrongful death cases, 13 of 19 states have limitations on non-economic damages to $500,000.

Oregon doctors currently pay more for professional liability than California doctors. California, since 1986, has had a $250,000 cap on non-economic damage awards. If we look around our surrounding states, as I said, 16 of 19 states cap damages at $500,000 or less. We’re not an outlier, looking at this.

Medical professional liability rates or malpractice insurance rates for rural providers in Oregon are not affordable at this point. The legislature has addressed that. They subsidized premiums for doctors practicing in rural areas. The majority of cases against healthcare providers are driven by bad outcomes, not bad medicine.

Over 80% of these cases that are brought against healthcare providers are closed without an indemnity payment, either in the course of investigation or after a trial. Over 85% of cases against healthcare providers at the trial court level are won by the defendant or the doctor.

Putting in the unlimited damages or non-economic or a million dollars of non-economic damages, it will create costlier litigation for healthcare providers. It will drive up the cost of healthcare and will drive up the cost for insurance. In Florida, after a cap was struck down by the Florida courts, the number of cases against Florida healthcare providers increased by 23%.

Two sessions ago, we worked with the Senate and Senate Bill 483 was passed Early Discussion and Resolution. We have a vehicle to resolve cases without using litigation and we’re just starting to see the effects of that. We’re hoping that that will continue to benefit injured parties and healthcare providers. The healthcare system is under great financial pressure and even more so with the ACA Act in peril.

Access to healthcare is critical to rural Oregonians and for underserved populations statewide. Another important thing about this Bill, it will be retroactive for all wrongful death and bodily injury cases, therefore, any of the cases pending now have the potential for unlimited damages. We’re currently defending 79 physicians in litigation and 10 of those cases are wrongful death cases, so it could have huge economic impact for both us and the healthcare providers involved.

I urge you to vote no on Senate Bill 487 to preserve and promote access to healthcare for all Oregonians. Oregon’s caps on non-economic damages ensures that injured patients receive fair compensation, while preserving access to healthcare for reducing costs for doctors, nurses, healthcare providers, and helping them serve the most vulnerable populations. Thank you very much.

Sen. Prozanski: Thank you. Who’d like to go next?

Susan Forray: Good morning, Senator Prozanski, other members of the Committee. I’m Susan Forray. I am a Principal and Consulting Actuary with Milliman. I specialize in medical liability coverage. A part of that practice includes estimating costs associated with legislation such as this.

I was asked by the Oregon Liability Reform Coalition to take a look at the legislation and estimate the costs specific to wrongful death claims. As I submitted with my testimony, we did an analysis based on Oregon medical liability claims data. We were provided with closed claim data by the three largest writers of professional liability coverage in Oregon.

We received, as part of this data, over 15,000 claims for medical liability over a 15-plus year period. Based on this data, our analysis indicated that, if the cap on non-economic damages for wrongful death claims were to be increased from 500,000 to one million, that the average indemnity payment on those wrongful death claims would increase by approximately 20%.

In addition, analysis indicates that there would be, as Mr. Dorigan mentioned, additional claims filed. We estimated the cost associated with those additional claims as an additional 15%. Combining these two, we believe that we would see an increase in cost on wrongful death claims of close to 40%. Now, the other thing I would like to talk about is, as I mentioned, that was based on Oregon claims data going back as far as 15 years.

Okay, you can see here the chart that I’m about to talk about. In 1999, as you know, the courts in Oregon overturned the cap on bodily injury damages. The data that you see here on the screen, this is publicly-available data, it’s based on claims submitted to the National Practitioner Data Bank for individual medical providers in Oregon.

You can see that in the years leading up to 1999, when that cap on non-economic damages was in place, the average indemnity payment on the medical liability claim in Oregon was approaching $200,000. In 1999, that cap was overruled by the court, at which point in time the severity increased, what we call the severity, the average indemnity payment increased beginning the following year, approached close to $300,000, so roughly a 60% increase in average indemnity payments.

This is a chart that I have used in other states to make a similar point. It happens to be Oregon in this case, so I think it is certainly very relevant here, but I think it’s been illustrated for other states as well who’ve looked at this issue.

The same data source allows us to look at the number of claims that are filed against individual providers and paid on behalf of those providers. If we normalize for the number of claims, both in Oregon and countrywide, if we normalize back to 1999, again, the year of the cap overturn, which you’ll see if you look at the green line, the green line is the countrywide frequency. What we call “frequency” is the number of claims relative to the number of physician providers. You can see that green line began to fall starting around the 2002 time period.

After the cap on damages was overturned in Oregon, we actually saw an increase in the number of claims against providers following the overturn of the cap. Certainly I’ve seen the same thing in other states, where caps on damages have been either increased or overturned. We see that here. The resulting increase in Oregon was about 30% greater than what we were seeing around the rest of the country at the same time.

Lastly, there were, I would say, about seven states in the 2003 to 2005 time period that implemented non-economic caps on damages. That was a time period where there was a lot of discussion nationwide about this issue. Again, here we’ve normalized back to 2001, the orange line that you see here is all states other than those seven. You can see there has been a falling number of claims relative to the number of providers since that time.

What’s interesting is that, for those seven states that implemented caps on damages, there’s a noticeable decrease in the claim frequency a couple of years following the implementation of the cap on damages. Now, the reason it follows by a couple of years is this is based on claims paid, so of course it takes some time for there to be an event and for that event to be reported and eventually resolved two to three years later. That’s why we see this two to three-year lag here.

I think it is very noticeable that the implementation of caps on damages hasn’t increased on the number of claims that are filed, the associated costs, and of course, the overturn of caps on damages, as we saw looking back in Oregon 18 years, has an impact on the number of claims, as well increasing that number of paid claims.

Lastly, I’d like to refer to some research that’s been done by others in the area of access to healthcare. Others have alluded to this issue as well. This is a study from the Journal of the American Medical Association, “The adoption of direct malpractice reform has led to greater growth and the overall supply of physicians.”

It’s not just opinion or talk, if you will, that there isn’t impact on access to healthcare. This has been supported by studies in very reputable publications, again, such as the Journal of the American Medical Association. Evidence clearly indicates an increase in physicians in high-risk specialties after the adoption of non-economic damage caps. Malpractice insurance premiums are a significant deterrent for surgeons. In addition, caps on malpractice damage awards attract surgeons to areas.

The supply of obstetrician/gynecologists decreased by 8% in the three years following premium increases in 1999. As a member of this industry, I can tell you I’ve heard several stories about patients in rural areas who had to drive, some patients a couple of hours, to get to their obstetrician, because an obstetrician that perhaps formally practiced in that area simply couldn’t afford the liability premium combined with the lower income of working in a rural area.

Lastly, caps appear to increase the supply of frontier rural specialist physicians by 10 to 12%. This is very much an issue, in particular for rural areas, access to healthcare in rural areas, as well as access to healthcare among specialist physicians in particular. Thank you.

Sen. Prozanski: All right, thank you. Kevin?

Kevin Reavis: Thank you. Chair Prozanski, members of the Committee, my name is Dr. Kevin Reavis. I’m the incoming President of the Oregon Medical Association. I’m a practicing general surgeon. I focus on the esophagus, stomach, and bariatric related diseases at the Oregon Clinic and I’m a clinical associate professor at OHSU.

Thank you for the opportunity to testify on State Senate Bill 487. We submitted written testimony for the record, for which I’d like to highlight the main points. I’d like to dovetail the previous presentation as well with a physician’s perspective on the issue at hand.

First, I want to stress that I want my physicians to understand firsthand the loss of a loved one and what it means to the family of their patient. We’re doctors. We’re at the bedside with grieving families day or night and we believe the remedy of both economic and non-economic damages should be available to the family.

Senate Bill 487 eliminates existing legislative cap on non-economic damages in injury cases and doubles the cap in wrongful death cases, effectively disregarding the new legal roadmap established in the case of Horton versus OHSU last year. This case reaffirmed the legislature’s constitutional role in establishing reasonable safeguards around damage awards in our court system.

The elimination of non-economic caps and doubling the wrongful death cap will disrupt Oregon’s currently stable malpractice insurance environment. Doubling the wrongful death cap will increase medical liability costs and, by that, increasing the monetary award for subjective non-monetary losses will result in liability insurance premium increases, we know that.

With little recourse to modify or negotiate these rates, providers are basically forced to accept the rates instead and find other areas of their practice that have to be cut, such as personnel, less services, less clinical operating hours, basically being less available for those in need. This directly affects patient care and their ability to access comprehensive care where they live.

Now, elimination of non-economic damage cap in injury cases will lead to increased healthcare cost, as we just heard. Maintaining a reasonable cap on non-economic damages, while allowing for unlimited economic damages, ensures the healthcare spending is appropriated to patients and not expended on unpredictable jury decisions or in the form of significantly higher liability premiums.

We believe that the legislature should consider the financial challenges to the entire healthcare system in Oregon and use the tools that its been given to safeguard the system from runaway costs. Now, Senate Bill 487, while very well-intended, has several unintended consequences. Both doubling a cap and eliminating a cap will hurt healthcare accesses, as we heard.

When considering moving to our state, healthcare providers seek out states where the physicians practice less defensive medicine and have lower insurance premium costs. Now, Senate Bill 487 jeopardizes Oregon’s competitiveness, especially compared to states such as California and others neighboring in the western United States.

As we know, the Rural Medical Liability Reimbursement Program, which ensures that Oregonians have access to the broadest possible range of specialty physicians by incentivizing rural practice, would also be jeopardized through increased costs. History has shown us that medical liability insurance costs have had a detrimental impact on the availability and affordability of healthcare services in rural areas.

Without the subsidies offered by the Rural Medical Liability Reimbursement Program, specialists, often obstetricians, pediatricians, neurologists, as referred to, are often forced to leave rural practice, because the cost of the insurance combined with overhead essentially clips their ability to earn a living.

This means that rural Oregonians who need this high-risk specialty care find themselves without access to critical care and either must forego care, risk their health, or seek services miles away from their home. Thank you, and I’d be glad to respond to questions from the Committee.

(Continued in next issue.)

Next week: The devastating rebuttal to the corporate lobbyist’s spin against the jury system