House healthcare bill cuts incentives to states that cap attorney fees, damages

A provision in House Democrats' recently unveiled healthcare bill would offer incentive payments to states that reform their medical lawsuit rules -- but only if local governments do not pass laws that limit awards or cap attorneys' fees.

The proposed rule is likely to anger congressional Republicans, who have made tort reform a signature issue throughout this year's healthcare debate.

At issue is a small section toward the very end of the more than 1,900-page Affordable Health Care for America Act, which House Speaker Nancy Pelosi (D-Calif.) revealed on Thursday. The section promises free money for use on healthcare to states that create alternative medical liability guidelines "after the date of enactment" of Democrats' proposed insurance reform.

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Although the bill specifies the amount is entirely up to the appropriations process, it does set one key condition: States are ineligible for those federal dollars if they "limit attorneys' fees or impose caps on damages."

Instead, local governments' new liability rules must focus on such general topics as increasing healthcare access, accurately disclosing errors and quickly resolving disputes if they want any of the proposed incentive money, according to the bill

Ultimately, some Democrats are likely to argue that states do not need the incentive payments if they are currently taking the initiative to revise their medical liability laws -- regardless of how they opt to do it.

Republicans, however, are already raising questions about the incentive rules. At least one top GOP lawmaker on Friday reminded Speaker Pelosi that previous cost estimates predicted the country could save about $54 billion through tough tort reform.

“Republicans agree with President Obama that defensive medicine drives up health care costs, but unfortunately Speaker Pelosi’s bill suggests that House Democrats are more focused on political interests than substantially reducing the costs of care by getting trial lawyers out of the examining room,” said Brad Dayspring, press secretary for House Republican Whip Eric Cantor (Va.).