Lawmakers, Ehrlich digging in heels over malpractice subsidy


The opening day of a rare special session of the Maryland General Assembly ended with legislative leaders locked in a showdown with Gov. Robert L. Ehrlich Jr. over how to subsidize the insurance bills of doctors.

Both the Senate and House of Delegates rejected a malpractice reform proposal unveiled by Ehrlich last week that would impose some limits on lawyers and lawsuits, and use general taxpayer dollars to assist doctors with their insurance bills.

Instead, each chamber passed competing versions of malpractice plans that are alike in one key respect: They contain a tax on health maintenance organization premiums that Ehrlich promised to veto. The proceeds of the temporary tax, estimated at about $80 million yearly, would defray insurance costs.

A committee of House and Senate negotiators was to begin meeting today to craft a compromise bill, which could include many provisions supported by Ehrlich. But barring unforeseen changes, the final product is expected to include the new levy that the governor said is unacceptable.

"Veto," Ehrlich flatly told reporters yesterday afternoon, when asked what would happen if such a bill landed on his desk. To reinforce his point, he spelled it out: "V-E-T-O."

Later in the evening, he said neither the House nor Senate version provided enough reform: "What we see is a trial lawyer bill, drafted by the trial lawyers, to benefit the trial lawyers."

After months of holding news conferences with doctors to raise visibility of the insurance issue, Ehrlich called for the holiday-week session to address what he says is a growing crisis that limits access to medical care. He called yesterday's results "profoundly disappointing" but said he was not ready to give up trying to craft a plan agreeable to all sides.

"This crisis is real," Ehrlich said during an afternoon news conference. "It gets worse minute by minute, day by day."

Legislative leaders, too, pledged to keep trying and said they were poised to give the governor much of the solution he asked for.

"We all have to come to the middle," Senate President Thomas V. Mike Miller said. "He should sleep on it and declare victory. It's a victory for him."

House Speaker Michael E. Busch called on Ehrlich to accept the House version of the bill, which received preliminary approval shortly before 10 p.m. and which the speaker said contains more of the limits on lawsuits than the governor asked for.

"I think it is an opportunity for the governor to reach out and be the problem solver on this issue, and I hope he takes that direction," Busch said. If the governor vetoes the bill, "it would be like grasping defeat from the jaws of victory."

Nonetheless, the veto threat raises the tangible prospect that the first special session of the assembly since 1992 will end without a resolution to an issue that lawmakers canceled vacation plans to address.

Veto override

Lawmakers could attempt to override a veto when they meet for their regular session next month. A majority of three-fifths would be needed in each chamber.

Leading Republicans blamed the discord on questionable negotiating by Miller and Busch.

Miller, Busch and Ehrlich appeared to have reached an agreement on key aspects of lawsuit reforms earlier this month. But since then, the president threw his support behind a different plan, and the speaker moved forward with his own bill.

"They really messed up this process, in my opinion," said Sen. J. Lowell Stoltzfus, the minority leader from the Eastern Shore. "They reneged on what they agreed to."

Ehrlich sounded aggrieved that the agreement had not held up. "When I was a member here, commitments made were commitments kept," he said.

But Democrats faulted the governor for hastily convening the session - which costs $45,000 a day - without a firm agreement in place.

"Had there been serious negotiations between the governor and presiding officers, they could have reached a solution earlier," said Del. Samuel I. Rosenberg, a Baltimore Democrat.

Miller denied that he violated an agreement, even though Busch says the Senate president agreed to the lawsuit limits contained in Ehrlich's bill. Miller denies he agreed to all elements.

Some components of the governor's plan, such as reducing plaintiffs' awards of lost wages to account for income taxes, "was not explained to me, and I would never agree to that," Miller said.

Democratic leaders say it would be irresponsible to increase spending without offering a way to pay for it. Maryland should follow the practice of about 30 other states and the federal government by removing an exemption that allows HMOs to avoid paying a 2-percent premium tax that all other insurers pay.

'Classic loophole'

Del. Kumar P. Barve, the House majority leader from Montgomery County, said removing the exemption for HMOs was simply closing "a classic loophole." He accused Ehrlich of resisting attempts to close loopholes that allow businesses to avoid taxes.

Another House leader, John Adams Hurson, a Montgomery County Democrat who heads the chamber's health committee, said the Democrats were not wedded to the HMO tax but wanted to be sure there was a source of money, lest the governor cut Medicaid and other programs.

"Pick a revenue source, and we'll be with you - but pick one," he challenged Republicans during floor debate.

Republicans countered that the HMO tax would be passed on to the working poor and was a regressive way to raise money. "The people that can least afford to pay for health care will have to pay more for health insurance," Stoltzfus said.

Miller for the first time linked the medical malpractice debate to the slots issue, which has dominated Annapolis since Ehrlich's election in 2002.

"The governor told me that if the House would consider a slots bill, then the governor would sign the HMO tax," Miller said yesterday morning.

"What comes first, the chicken or the egg? We sat and had a meeting in the House lounge, and the governor said he feels frustrated that the House has deprived him of his funding mechanism for the past two years, and they want him to sign a tax which is not his source of funding."

But a slots bill is not expected to be discussed during the special session. Busch brushed aside questions about gambling, and Ehrlich press secretary Greg Massoni called Miller's comments "absurd."

"We've made it abundantly clear that this is the most important crisis in the state right now, and it's not related to anything else," Massoni said.

Throughout the day, lawmakers debated how far the state should go in limiting trial lawyers.

Sen. Sharon M. Grosfeld, a Montgomery County Democrat, said restrictions on lawyers and lawsuits would have little impact on insurance costs.

"The reality is that tort reform won't affect the attorneys. It will affect the patients," she said. "Do we hear about the victims? Do we ever put a face to it? No. We always talk about those bad lawyers making too much money. ... We should really go to the heart of the problem, which is the lack of insurance regulation."

The House plan more closely follows Ehrlich's ideas on lawyer limits. Del. Anthony J. O'Donnell, a Southern Maryland Republican who is House minority whip, said on the floor that the House bill is similar to Ehrlich's and "the biggest difference is the HMO tax."

'Right direction'

Compared with the Senate version, the House would tighten the amount plaintiffs could collect in lost wages, cut deeper the cap on "pain and suffering" damages in death cases, and tighten standards for doctors serving as expert witnesses in malpractice cases.

Amendments added to the bill late last night strengthened it even further, doctors said. "We're moving in the right direction," said Dr. Mark Artusio, a Frederick surgeon who has said he will suspend his practice Jan. 1 if there isn't sufficient reform.

Republicans in both chambers failed in their attempts late yesterday to revive the governor's bill. The effort failed by largely party-line votes, although it put most Democrats on record as supporting the HMO tax.

In the House, 11 Democrats sided with the Ehrlich plan. One Democratic senator did: Roy P. Dyson of Southern Maryland.

If no bill comes out of the special session, health care providers said, there might not be a dramatic difference in health care next week, but the situation will continue to worsen.

The Jan. 1 date "has symbolic importance as much as actual importance," said Calvin Pierson, president of the Maryland Hospital Association: "It's a very significant day because this issue has reached the breaking point in many physicians' minds."

T. Michael Preston, executive director of MedChi, the state medical society, said a failure to act this week would continue "a slow, steady bleed of physicians and services."

On the other hand, he said, a tort reform bill now would encourage doctors "like a signal from the Federal Reserve that moves the stock market."

Ehrlich said he was preparing to renew his fight when the General Assembly convenes in two weeks for its regularly scheduled session.

His fallback plan, he said, is to reintroduce the same bill. Even if a Jan. 1 deadline that doctors face for paying their insurance bills is missed, they could still benefit later if legislation is approved allowing them to qualify for rebates, Ehrlich said.

The governor acknowledged that he was surprised that the House introduced its own bill but noted it was fairly similar to his. But he was clearly angered by the Senate moves. He dismissed the bill drafted by Sen. Brian E. Frosh, a Montgomery County Democrat, as "nothing of real substance" and called it a "real bad start."

"It's not a resolution that the people of Maryland can live with, nor a bill the people of Maryland want," Ehrlich said.

Nonetheless, Ehrlich insisted he continued to hold out hope that a compromise acceptable to him would be crafted in conference committee:

"Ultimately, what ends up on my desk may look far different."

Toward that end, the governor has enlisted the help of three former senators, including Robert R. Neall, a one-time Republican turned Democrat who is an expert on state budget matters and a friend of Miller.

Ehrlich also appeared ready to fend off criticism that the special session was a waste of time and taxpayer money if it ends in a stalemate. He said convening the session had brought home the critical need for reform.

"This is well worth it," he said. "People stopping on the sidewalk have thanked me for this."

Contested legislation

Here are some key points in the Senate and House versions of the malpractice reform bill. The legislation introduced by Gov. Robert L. Ehrlich Jr. was rejected in committee yesterday by both houses.

Economic damages

Senate: Would pay full projected lost future wages, as is currently the case.

House: Would pay 85 percent of projected lost future wages, to account for taxes.

Noneconomic damages ('pain and suffering') in wrongful death cases:

Senate: $975,000 limit

House: $650,000 limit

Standard for expert witnesses:

Senate: No change.

House: Tighter standards, such as requiring doctor to be certified in the area he is reviewing.

Funding source to help doctors pay for premiums:

Senate: Remove exemption from 2% premium tax on HMOs.

House: Remove exemption from 2% premium tax on HMOs.

How the money would be allocated to doctors:

Senate: Three-member board of Ehrlich administration officials would decide later.

House: Doctors would receive across-the-board 5 percent premium increase, rather than the scheduled 33 percent, with the state fund paying the insurers the difference. If insurer claims were less than projected, they couldn't tap the fund.

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