6 New Hampshire Bar Journal Fall 2012

THE EARLY OFFER ALTERNATIVE IN MEDICAL MALPRACTICE LITIGATION:

A Statutory Trap to Limit Liability

by Holly B. Haines1

with contributions by William D. Woodbury2

INTRODUCTION OnJune27,2012,overthevetooftheGovernorofNewHampshireandovertheobjectionsofthetwolargestmedicalmalpracticeinsur‑ers inNewHampshire,medicalmalpracticeplaintiffs’ lawyers, theNewHampshireAssociationforJustice,andNewHampshirecitizensharmedbymedicalmalpractice,theNewHampshirelegislaturepassedSB406,theso‑called“EarlyOffer”bill,intolaw,enactingRSAchapter519‑C.Thisnewlawwaspushedthroughthelegislatureinlessthanfivemonths,withonlytwopublichearings,withconsiderationandhearingbyonlyonecommittee(Judiciary)ineachchamberoftheGeneralCourt,andafterbeingrejectedbyeveryotherjurisdictionintheUnitedStateswhereithasbeenproposed,aswellasbytheUnitedStatesCongress.3Perhapsmostnotably,thislawwasnotnecessaryinNewHampshiresinceinsurersandphysicianshavealwayshadtherighttomakeanearlyoffertoaplaintiffifanegligentmedicalerroroccurred. Medicalmalpracticepractitionersonbothsidesoftheaisleshouldbeawareofthisnewlaw,whichchangesmanyoftherulesformedicalmalpracticeclaims.4Yourclients,bothpatientsanddoctors,areatriskofharmiftheyoptintothisnewalternativesystem.Manyinjuredpatientswillunknowinglyhavealreadydonesobeforetheyevencometoyouforhelp,makingtheircasesevenmoreexpensivetopursueandlesslikelytoleadtoafavorableoutcome.Manydoctors,iftheyoptintothissystemwithouttheirmedicalmalpracticeinsurer’sconsent,areatriskforlosingliabilitycoverageformedicalinjuryclaims.5 Thisnewlawisone‑sidedinboththebenefitsitoffersandthepenaltiesitimposes.Itunilaterallytiltstheplayingfieldinfavorofhospitalsandmedicalprovidersbyprovidingthemwiththebenefitofofferingplaintiffslessfortheirinjuriesanditconverselytiltstheplayingfieldagainstinjuredplaintiffsbypenalizingthemiftheydonottaketheearlyofferfromthemedicalprovider.Byoptingintothis

systemandacceptinganearlyoffer,injuredpatientslosetheirrightto recover all of their non‑economic damages caused by medicalinjury,aswellastheirrighttoappealanyadversedeterminationoftheireconomicdamages.6Byeliminatingrecoveryofnon‑economicdamages,suchaspain,suffering,lossofenjoymentoflifeandlossofearningcapacity,thisbillunreasonablydiscriminatesagainstthosealreadydisadvantagedclassesofplaintiffssuchaswomen,theelderly,thepoor,andthosemostseverelyinjuredbymedicalnegligenceandmostinneedofan“earlyoffer.”7Theseverityofinjuryscaleforad‑ditionalpaymentswillalsohaveadisparateimpactacrosstheseclassesofplaintiffs.8 If,afterreceivinganoffer,injuredplaintiffsoptoutofthesystembecausetheyrealizetheofferwouldnotadequatelycompensatethem,theywillberequiredtosecureajuryverdictof125percentoftheearlyofferattrialtoavoidpayingthemedicalprovider’sattorney’sfeesandcostsfromtheearlyofferprocessandpostabondjusttoenterthecourt‑roomandexercisetheirconstitutionalrighttoaremedy.9Nosimilarpenaltiesareimposeduponthehospitalsandhealthcareprovidersusingthissystemifaplaintiffreceivesaverdictsubstantiallyinexcessofarejectedearlyoffer.ItisnotablethatNewHampshire’stwolargestmedicalmalpracticeinsurancecompaniesprojectthatphysiciansandhospitalswillbesubjecttoincreasedreportingrequirementsunderthissystemandcanexpecttoseeincreasedpremiumsformedicalliabilitycoverage.10Theymayalsoneedtofindnewmedicalliabilityinsurersifthesecompanieswithdrawtheirbusinessfromthestate.11 Inthisarticleweexaminethenewlaw,thehistoryoftheearlyofferlawproposalintheUnitedStates,thewaythelawwasenactedinNewHampshire,whatitmeansforNewHampshirecitizens,whyitisunworkableasenacted,andweoffersuggestionstoimproveitsimplementationifitstaysonthebooks.

THE NEW LAW: RSA CH. 519-C Fivemonthsafterbeingsubmittedasanadmittedly“latebill,”12andnothaving“thebenefitofthethoroughsubcommitteeconsider‑ationnecessaryforanewanduntestedprocedure,”13thefinalversionofSB406passed,attachedtotwounrelatedbillstogetthevotesneeded

7 New Hampshire Bar JournalFall 2012

topasstheGeneralCourt.ThefinaltitleofSB406,aftertheoverrideoftheGovernor’sveto,was:“Anactrelativetoestablishinganearlyofferalternativeinmedicalinjuryclaims,relative to confidentiality of police personnel files and establishing a committee to study referrals of patients for use of implantable medical devices.”14 Thereportedpurposeofthislawistoreform“thelegalsystemforresolvingclaimsformedicalinjury”and“toencouragefastandefficientpaymentofmeritoriousclaims.”15Thisisagoodpurposeforanewlaw,towhichfewwoulddisagreeifitspurposeisachieved.Un‑fortunately,thispurposeisbasedonseveralerroneousormisinterpretedfactualfindings,resultinginanunnecessaryandcounterproductivelaw that imposes unreasonable burdens on injured plaintiffs andprovideslimitedbenefitstomedicalproviders. First,thelegislaturefoundthecurrentlegalsystemformedicalinjuriesinefficientbecauseitproducesinconsistentresultsforsimilarinjuriestodifferentplaintiffs.16Thisfindingisabsolutelycorrect,butitisgrosslymisinterpretedbythelegislature.Individualplaintiffsshouldreceiveindividualizedresultsfortheirinjuries.Individualizedresultsforplaintiffsinjuredbymedicalnegligencemeanthatthesystemisworkingasitshould.AllNewHampshirecitizensaredifferentandtheeffectofaninjuryononecitizenmaybedrasticallydifferentthanitseffectonanother.Forthisreason,NewHampshirecitizensareen‑titledtobemadewholefortheirinjuriesandbecompensatedfortheirindividualizedlosses;losseswhichmaywelldiffersubstantiallyacrossplaintiffsdespitesimilarinjuriesarisingfromsimilarincidencesofmedicalnegligence.Alawthateliminatesindividualizedrecoveriesfornon‑economiclosswillhaveadisparateimpactfordifferenttypesofplaintiffs. Second,thelegislaturefoundthatthecurrentlegalsystemwasinefficientbecausetherearelongwaitsforthepartiestogettheircasesresolvedduetothecomplexitiesofmedicalinjurycasesandthestatu‑toryrequirementsforspecializedmedicalevidenceandtestimony.17Whiletrue,thesesystemicdelaysandinefficienciesareattributedtotheverystatutesthatthelegislatureenactedinothereffortsattortreform,suchastheaddedlegislativerequirementsforthecomplexevidenceandexpertwitnessescontainedinRSACh.507‑EandthestatutoryscreeningpanelprocessunderRSACh.519‑B,supposedlyalsoenactedtoresolveclaims formedical injury“asearlyandinexpensivelyaspossibletocontainsystemcosts.”18 Third, the legislature found that the current legal systemwasinefficientbecause thecostsof litigationareexorbitant inmedicalinjuryclaims.19Costs,however,arenotlikelytodecreasesubstantiallyunderasystemofearlyoffersbecausethelitigationcostsinmedicalinjuryclaimsaresubstantiallyfront‑loadedingatheringinformationandhavingitreviewedbymedicalexperts.Oncemedicalexpertshavereviewedtheclaim,thepartieshaveagoodideaifitismeritorious.Ifaclaimhasmerit,insurerswillasktomediateandresolveitwithoutlitigation.Suchmediationallowsresolutionofaclaimwithoutlitiga‑tionandwithouttakingawaytheplaintiff’srighttobecompensatedforhisorhernon‑economiclosses.Mostmedicalinjuryclaimssettlepriortotrial.Litigationcostsareincurredbecauseinsurersspendinordinatesumsfightingvalidclaimsandprovidersrefusetotakeresponsibilityfor

theirnegligence.Consequently,theonlywaycostswilldecreaseunderthisstatutorysystemisifmorevalidandfairearlyoffersaremadebyinsurers,includingcompensationforplaintiffs’non‑economiclosses,toavoidthehighlitigationcostsofgoingthroughthescreeningpanelprocessandtrial. Fourth,andfinally,thelegislaturefoundthatthecurrentlegalsystemwasinefficientbecauseclaimsformedicalinjuryresultinthepracticeofdefensivemedicine,whichmeansphysiciansareorderingunnecessarytestsandtreatment,withlittleornoexpectedbenefittotheirpatients,inordertoguardagainsttheirownliability.20IfthatistrueandthosephysiciansreceivepaymentsfromMedicareorMedicaid,theyarecommittingfraudunderfederalandstatelaw.AphysicianwhobillsMedicareorMedicaid for testsandproceduresperformedforapurposesuchasavoidingliabilityexposure,asopposedtobeingmedicallynecessary forapatient, iscommittingfraudunder thosestatutoryschemes.21

Inenactingthislaw,thelegislaturesaidthatmedicalmalpracticevictims“willbenefitfromtheearlyofferprocess...asitprovidestheoptionofasimple,clear,processdefinedinstatutethatprovidespromptandsurerecoveryofalleconomiclossesassociatedwithmeritoriousclaims.”22Inexchangeforthebenefitsofthisprocess,amedicalmal‑practicevictimgivesuptherighttoseekdamagesforpain,suffering,emotionaldistress,lossofenjoymentoflife,andhisorherspousegivesuptherighttoseekdamagesforlossofcompanionship,supportandservices,andhisorherrighttoappealanadverseeconomicdamagesdetermination.23Unfortunately,thisearlyofferprocessisneithersimplenorclear.Nordoesitcomeclosetoassuringpromptandsurerecoveryforalleconomiclossesbyplaintiffs. Thewaythisearlyofferprocessworks,accordingtothestatute,isasfollows:

Whenapatientisinjuredbymedicalnegligence,heorshehasthreeoptions:(1)sufferinginsilenceanddoingnothing;(2)re‑questinganearlyofferunderRSACh.519‑Candreceivinglimitedcompensationforhisorhereconomiclosses;or(3)pursuingatraditionalmedicalmalpracticeclaiminthecourtsunderRSACh.507‑EandRSACh.519‑Binanefforttobemadewholebyreceivingfullcompensationforhisorherinjuries.Ifthepatientchoosestorequestanearlyoffer,thenheorshemustexecuteawaiverofhisorherconstitutionalrightstoajurytrialandafree,complete,andpromptremedyforthedamagesheorshehassuffered.24Thepatientmustalsofileadetailednoticeofclaimwiththemedicalprovider.25

Inaveinsimilartocriminalpleaandsentencingforms,thewaiveroftheseimportantconstitutionalrightssaysthatthepatienthastherighttoanattorney.26 Incontrast tocriminalpleaandsentencingforms,however,ifthepatientdoesnothaveanattorney,themedicalprovider,ratherthanthecourt,appointsa“neutral”advisorforthepatientatthemedicalprovider’sexpense.27Afterconsultingwiththeattorneyor“neutral”advisorappointedbythemedicalprovider,thepatientthenonlyhasfivebusinessdaystodecideifheorshewantstoparticipateintheearlyofferprocessandgiveuphisorherrighttobemadewholeinthetraditionaltortsystem.28Thedetailednoticeof

8 New Hampshire Bar Journal Fall 2012

claimrequirementisessentiallyequivalenttoastandarddemandorsettlementpackageintraditionaltortlitigationbecauseitmustincludemedicalrecordsandbills,theoriesofliability,causationanddamages,andademandforeconomiclossessuchaslostwages,medicalbillsandout‑of‑pocketcosts.29 Aftergettingafreelookatthepatient’spotentialcase,themedicalproviderthenhas90daystorespondtothepatient’snoticeofclaimbyeitherextendinganearlyofferordecliningtoextendanofferofsettlement.30Alternately,themedicalprovidercanrequireamedicalexaminationbeforerespondingtotheoffer,givingthemedicalprovideranadditional30daystodecidewhethertoextendanearlyoffer.31Ifthemedicalproviderextendsanofferunderthisprocess,thepatienthas60daystodecidetoaccepttheoffer,rejecttheofferorrequestahearingtodisputetheofferedamount.32 Ifthepatientacceptstheearlyoffer,themedicalprovidermustpayhisorherpreviouslyincurredeconomiclosseswithin15daysandpayfutureeconomiclossesastheyaccrue.33

“Economicloss”meansmonetaryexpensesincurredbyoronbehalfofaclaimantreasonablyrelatedtoamedicalinjuryanditsconsequences,includingactual out-of-pocket medical expenses,replacementservices,additional payment to the claimant pursu-ant to RSA 519-C:7,and100percentoftheclaimant’ssalary,wagesorincomefromself‑employmentorcontractworklostasaresultofthemedicalinjury.Economic loss does not include:painandsuffering,punitivedamages,enhancedcompensatorydamages,exemplarydamages,damagesforlossofenjoymentoflife(hedonicdamages),inconvenience,physicalimpairment,mentalanguish,emotionalpainandsuffering,andloss of the following: earning capacity,consortium,society,companionship,comfort,protection,maritalcare,parentalcare,attention,advice,counsel,training,guidanceoreducation,and all other non-economic damages of any kind.34

Theadditionalpaymentreferencedisapaymentbasedsolelyonthenatureoftheinjurytheplaintiffsustainedanddoesnottakeintoac‑counttheeffectoftheinjuryonindividualplaintiffs.35Theadditionalpayment can range from$2,100, fora temporary injury involvinginsignificantharm,to$140,000,forapermanentinjuryresultingingraveharmordeath.36Howinjuriesareclassifiedunderthisseverityscaleisnotdefinedinthestatute.NoristhereanyexplanationforarbitrarilylimitingthevalueofthelivesofNewHampshirecitizensat$140,000.ThestatutereferencestheNationalPractitionerDataBankseverityscale,butprovidestheinjuredpatientnoinsightregardingitsmethodology. Theprovidercandisputeapatient’sfutureclaimsforeconomiclossesbymerelyissuingadenialtothepatient,meaningeitherthepatient will not be compensated for his or her claimed economiclossesorthepatientwillhavetogothroughanadministrativehearingeachtimeasubmittedlossisdenied.37Again,therewillbenorighttoappealandthepatientwillbeboundbythedeterminationofthehearingsofficer.38Thiscouldsubjectanunwarypatienttoafutureofunendinglitigationthroughadministrativehearingsjusttogeta

hopeofcompensationforhisorherlossesbecausethereisnolimitonthefrequencywithwhichamedicalprovidercandenyapatient’sclaim.39Inlieuoftheprospectofongoinglitigation,thepatientcanagreetoalumpsumpaymentforhisorherfutureeconomiclosses,whichmustbeagreeduponandapprovedordeterminedbyahearingofficer.40Thisisadangerousoptionforsomeonewithachronicillnessorinjury,forwhichthefutureconsequencesmaybeunknown. Ifthepatientchoosestorejecttheearlyoffer,heorshemustpayapenaltyandpostabondtogetbackhisorherconstitutionalrightsandaccessthetraditionaltortsystemofjustice.41Oncethathappens,thepatientmustthenrecoveratleast125percentoftheearlyofferamountfromajury,orthepatientmustpayforthemedicalprovider’sattorney’sfeesandcostsincurredintheearlyoffersystem.42Theques‑tionremainswhetherthis125percentrequirementreferstothetotaljuryverdictoronlytheeconomiclosscomponentoftheverdict,whichwouldimposeanevengreaterpenaltyonapatientforexercisinghisorherconstitutionalrights.43Ineitherevent,apatientcanwinattrialandstillbepenalizedbecauseheorshewillhavetopaybothparties’attorney’sfeesandcostsoutofhisorherjuryaward.Thiswillhaveasubstantialchillingeffectoninjuredpatientsandwilldiscouragethemfromexercisingtheirconstitutionalrightstoaremedyawardedbyajuryattrial. ThefinaloptionforapatientwhoreceivesanunacceptableearlyofferfromamedicalprovideristochallengetheamountoftheofferandrequestahearingattheInsuranceDepartmentbeforeahearingsofficer.44Thehearingsofficermustbe“apersonof judicialand/orlegaltraining...chosenbyagreementofthepartiesfromalistofneutralpersonsmaintainedbythejudicialbranchofficeofmedia‑tionandarbitration.”45ThehearingisacomplexalternativedisputeresolutionproceduregovernedbyNewHampshireAdministrativeRulesfor the Department of Insurance, Chapter 4800 and RSA 519‑C:10(2012).Thehearingislimitedtofourissues:(1)whethertheearlyofferincludesallofthepatient’seconomiclosses;(2)whetherpastorfutureeconomiclossesarereasonablyrelatedtotheinjurycausedbymedicalnegligence;(3)whatseveritylevelforadditionalpaymentsthepatient’sinjuryfallsunder;and(4)whatthenetpresentvalueofanearlyofferisforpurposesofdeterminingattorney’sfees.46Thishearingsprocessisverysimilartoatrialinthatpartiesmayfilemotionsforsummaryjudgmentonissuesindisputeandpartiesmustfilewitnessandexhibitlists.47Thehearingsofficer’sdecisionisbindingontheparties,however,andthereisnorighttoappeal.48Furthermore,ifthehearingofficerfindsthatthepositionofeitherpartyisfrivolous,theofficercanawardattorney’sfeesandcostsupto$1,000.49

Whenaplaintifffilesatraditionalmedicalinjurylawsuit,thecaseisreportedtotheNewHampshireMedicalBoard,whichtriggersanimmediateinvestigation.Proceedingsundertheearlyofferchapterareconfidential;however,meaningthemedicalprovidercangetafreelookattheplaintiff’scasewithouteverbeingsubjecttothereportingrequirementsoftheBoardofMedicine.50Infact,thereisnoreportingrequirementatallforthemedicalproviderunlessafinalsettlementisreachedundertheearlyofferprocess.51Apatientalsocannotbringclaimsagainstadditionalmedicalproviderswhocausedhimorher

9 New Hampshire Bar JournalFall 2012

harmifheorsheacceptsanearlyofferfromoneprovider.52Despitethis,aproviderextendingtheearlyoffercanbringacontributionclaimagainstothernegligentmedicalprovidersandthepatientisexpectedtocooperateandparticipateinthoseadditionalproceedings.53Statutesoflimitationsonclaimsremainthesame,excepttheyaretolledfortheperiodthatapatientparticipatesintheearlyofferprocess.54 Finally,insurancecompaniesaregrantedarightofsubrogationagainstthemedicalproviderswhomakeearlyoffersforanymedicalbillsorlostwagestheyhavealreadypaidforthepatient’sinjuries.55Thisprovisionisproblematicforbothpatientsandprovidersbecausethe economic lossesallowedunder the earlyofferprocessareonlyout‑of‑pocket costs, which means payments a patient makes afterinsurancepoliciesorothercollateralsourceshavebeenexhausted.56Consequently,eitherthemedicalprovidermustmakeanearlyofferforthevalueofallreasonablemedicalbillsincurredbytheplaintiff,regardlessofwhoorhowmuchisalreadypaid,toensurethereareenoughfundstopayapplicablesubrogationliens,orthemedicalpro‑vidermustmakealowballofferexcludingallmedicalbillsorwagespaidfromothersourcesandbesubjecttosuitinthefuturefromthoseinsurancecompanieswhochoosetoasserttheirsubrogationrightsagainsttheprovider. PerhapsthegreatestconcernofalltoNewHampshirepatientsandpractitionersshouldbethewaiverofrightsform,whichiswritteninconfusinglegaljargonanddoesnotinformthepatientofalloftherightsheorsheisgivingupbyenteringintothisprocess.57Further‑more,thereisnothinginthestatuteprecludingmedicalprovidersfromincludingthiswaiverformoptingpatientsintothisprocessinstandardadmissionpacketssignedwhenpatientspresentfortreatment.58Ifthathappensandapatientunknowinglysignsthiswaiverformonadmis‑sionformedicaltreatment,inadvertentlyoptingintothisprocess,andthenthepatientisinjuredbymedicalnegligenceandfailstosubmitanoticeofclaim,heorshemaybeprecludedfrombringingamedi‑calinjuryclaiminthetraditionaltortsystem,because“aclaimant’sfailuretosubmitnoticeofinjuryrequestinganearlyoffer...shallnotbesubjecttoreviewinanyhearing,courtorproceedingofanykind.”59Thisprovisionraisessignificantconstitutionalconcerns. InhisvetomessageonSB406,GovernorJohnLynch,whohasnever been an opponent of tort reform, recognized the problemsinherentinthisstatuteasbeingweightedtowardmedicalprovidersandlacking“certainfundamentalsafeguardsthatarenecessarytoprotectinjuredpatients.”60TheGovernorwasparticularlytroubledbythewaiverofrightsandfive‑daylimitationprovidedfor injuredpatientstoconsultwitha“neutral”advisorappointedbythemedicalprovider.GovernorLynchwrotethatitwas“tooshortaperiodoftimeforanunrepresentedpatienttoadequatelyconsultwiththeadvisorconcerninghisorherrightsandthemeritsoftheircase[especiallywhen]themedicalproviderisaffordedatleast90daystoevaluateapatient’srequestforanearlyoffer.”61TheGovernoralsoopposedthechillingeffectofthepenaltiesimposedonpatientsforexercisingtheirlegalrightstoaremedybyrejectinganearlyoffer,specificallycitingtheone‑sided“loserpays”provisionrequiringthepatienttopostabondtogototrialandachieveaverdictgreaterthan125percentofthe

earlyoffertoavoidpayingattorney’sfeesandcosts.62Unfortunately,thelegislatureoverrodetheGovernor’svetoandweareleftwiththisgame‑changing legislation that has been rejected by every otherjurisdictionintheUnitedStateswhereitwaspresented.

THE HISTORY OF EARLY OFFER ALTERNATIVES SB406,theso‑called“earlyoffer”legislation,wasdrafted,inlargepart,byJeffreyO’Connell,aretiredUniversityofVirginiaLawprofessor.Hehasbeenadvocatingforearlyofferprogramsthroughtheelimina‑tionofnon‑economicdamagesandcreationofno‑fault insurancesystemsforthepast40years.63ProfessorO’Connellis“aproponentoftortreform,particularlyintheareaofmedicalmalpractice.”64Infact,ProfessorO’Connellhasbeenwritingabout“no‑fault” insur‑anceforaccidentsandpersonalinjuriessinceatleast1971.65Hehasbeenadvocatingfor“no‑fault”insuranceplanssuchasearlyoffersformedicalmalpracticeclaimssincetheearly1970s.66Hehasbeenadvocatingeliminatingpaymentforpainandsufferingtovictimsofalltypesofaccidentssinceatleast1972.67Finally,ProfessorO’Connellhasbeenadvocatingforanearlyoffersystemtocompletelyeliminateplaintiffs’personalinjuryclaimsforatleast30years,since1982.68 Professor O’Connell has presented this system to many statesacrossthenationoverthepastthreedecadesandtotheUnitedStatesCongressin2006.69None,however,statutorilyadoptedtheapproachuntilhecametoNewHampshirethisyear.Moststateshaverejecteditasbeingtooradicaltobeenacted.70DespitehavingacknowledgedthevalidityofaNew England Journal of Medicinestudydocumentingthatnuisanceormanifestlyinvalidclaimsarenotwidespreadand,generallythemedicalmalpracticeclaimsresolutionsystemleadstotherightresult,71ProfessorO’Connelladvocatesforthissystembecausehefeelsthatmedicalmalpracticecasesaretoocomplexandexpensivetopursue,whichresultsinexcessive,unpredictableliabilityexposureforinsurancecompanies.72 InexplaininghisearlyoffersystemtolawstudentsattheUniver‑sityofVirginia,ProfessorO’Connellproposedenactinglegislationatboththestateandfederallevelstosimplifymedicalmalpracticeclaimsbyallowingphysiciansandhealthcareproviderstoavoidliabilitybyhavingtheoptiontopaymedicalexpensesandwagelossesperiodicallyastheyaccrue,beyondanycollateralsourcesalreadyavailabletothepatient.73 If thephysicianmakes thatoffer, thepatient is requiredto accept it unless he or she can prove gross negligence beyond areasonabledoubt.74Hesuggeststostudentsthatthisproposalshouldapplytoalladverseeventsduringmedicalcare,regardlessoffault,andhelikenstheproposedsystemtorecoveryundercontractclaimsandnon‑liabilityinsurancepoliciessuchasfireandlifeinsurance.75UnderProfessorO’Connell’ssystem,nonon‑economiclosseswouldberecoverable.76Thiswouldeliminatepainandsufferingaselementsofdamagesforplaintiffsandcompensationforpainandsufferingwouldbenon‑recoverable.Hesaysthereasonforeliminatingthesedamageelements is tomove the liability systemcloser toothercontractualinsurancedisputes,notingthat“painandsufferingareuniqueinthepaymentofclaimsforpersonalinjuries.Theyarenotrecoverableincontractclaimsorpropertydamageclaims.”77

10 New Hampshire Bar Journal Fall 2012

Professor O’Connell made a similar presentation to the NewHampshirelegislature,essentiallyadvocatingfortheeliminationofthebasicpremisesoftortcommonlawthatapersoninjuredbythelegalfaultofanotherisentitledtoasumofmoneytocompensatefortheharm:78

I[am]stunnedattheappallinglyinefficientwaythatthelawdealswithpersonalinjuries.Therearetwobasicissuesthatleadtobitter,prolongedandoftenuncertainarguments,andthat[sic]iswhetherornotthedefendant,inthiscaseahospitalprovider,ahealthcareprovider,wasnegligentaboutwhichtherecanbealmostinfinitedisagreement.Andsecondly,tortlawallowstheplaintiff,claimanttorecoverthemonetaryvalueoftheirnonmonetaryloss,theirpainandsuffering.Andtheproblemistryingtodeterminethevalueofsomebody’spsychicpainfromanachingbackoralostlimbisobviously,onceagain,conducivetoveryprolong[ed]argument.Theresultis,asothershavesuggested,istremendousuncertaintyaboutwhetherinsuranceisgoingtopay....

Now,nootherformofinsuranceisanythinglikeas[sic]uncertainasthat.Imean,whenIdiemylifeinsurancepaysmeontheactofmydeath...wedon’thavealotoflitigationoverthepaymentoflifeinsurance....Andthesamethingistruewithpainandsuffering.WhenIdieitdoesn’tmakeanydifferencewhethermysurvivors,especiallymywife,lovemeorhatedme,orwas[sic]indifferenttome...no,there’safaceamountonthepolicyandthat’spaid.....

And,thesamethingistruewithhealthinsurance.Mywifegivesbirthtoachild,she’spregnant,...thechildisborn,wepaytheobstetricbillsandthebillsfromthehospital,andthematterisclosed....wedidn’ttakepicturesofherandsay,youknowyou’vegotahellofaclaimhereforherpainandsuffer‑ing.Wejust,onceagain,putinforourbillsandwerepaidthem.....

And,whenthere’sfireinsurance;afire,myhomeisdestroyedbyfire,thereisn’tanyinquiryaboutwhetherIwascareless,Iwassmokinginbed,Ileftsomeoilyragsunderthecellarstairs,andoh,there’safire,andIpaidintheinsuredevent[sic]...Ican’tgetthepsychicvalueofthelossofthehousebecausemygreatgrandfatherbuiltit,no,I’mpaidthefaceamountofthefireinsurancepolicy.79

Theproblemwiththesecommentsisthatmedicalmalpracticeandpersonalinjuryclaimsaregovernedbytortlaw,whichisuniquefromcontractlawbecausetheydorequireharmcausedbythelegalfaultofanother to trigger recovery. Life insurance,fire insurance,andhealthinsuranceareallpremisedoncontractlawthatyoupayapremiumtobereimbursedforcertainitemsorserviceswhenaneventoccurs.Theydonotrequirefaulttobeprovenforcompensationtobepaid.Incontrast,liabilityinsurancewillonlypayforlosseswhenaninjuryiscausedbynegligenceandfaultisproven.Lossalonedoesnottriggercoverageunderprofessionalliabilityclaims.80Professional

liabilitycoverage ispremisedonafindingof faultornegligence.81Liabilitytriggerscoverage.A“no‑faultprocessisnotcompatiblewithtraditionalprofessionalliabilitycoverage.”82

ProfessorO’Connell acknowledges asmuchwhen he explainswhymedicalmalpracticeclaimsarenotamenabletotrueno‑faultinsuranceprinciples,recognizingthatmedicalproviderscannotbeheldliableeverytimeapatientsuffersaninjuryduringmedicalcare.83Heacknowledgesthatsomeinjuriesarerisksoftheprocedurebeingperformed,othersarecomplicationsfromtheunderlyingdiseaseorinjuryand,others,however,areduetoadverseeventsorcausedbythenegligenceofamedicalprovider.84DespitethisO’Connellproposesthisstatutewithano‑faultfoundationtogivedefendantsanincentivetomakeanearlyoffertovictimsfortheirneteconomiclosseswhenanadverse eventoccurs. If anearlyoffer ismade,plaintiffsmustthengiveup theirrights toreceivecompensationfor fullcommonlawdamagesforeconomicandnon‑economiclosses.85O’Connell’searlyoffersystemcleverlytakesadvantageofpre‑existingcollateralsourcesbyonlypayingformedicalbillsandrehabilitationexpensestotheextentthattheyexceedothercollateralpaymentsourcessuchashealthinsurance,andonlypayinglostwagestotheextentthattheyarenotcoveredbycollateralsourcessuchasdisabilityinsurance.86 If,aftergettinga free lookat theplaintiff’scaseanddelayingpursuitofitthroughthejudicialsystem,adefendantchoosesnottomakeanearlyoffer, theplaintiffcanproceedwithlitigationinthenormalcourse,whichplaceseveryoneinthesamepositionastheywerebefore.87Ifadefendantmakesanearlyofferthatislowandaplaintiffdeclinestheoffertopursuefullcompensation,theplaintiffisimposedwithahigherburdenofproof.88Defendantswillmakeanearlyofferonlywhenitmakeseconomicsenseforthemtodoso.89Anearlyofferwillonlybemadewhentheamountwillbelessthanthedefendant’sforecastofpotentialliabilityandreservesmadeforlitiga‑tion.90Meanwhile,plaintiffsoptingintothissystemlosetheirrighttoafullandfairrecoverydeterminedbyajuryorjudgeattrial.91

ProfessorO’Connellmakeshisbiasesregardingtheearlyoffersystemclearbynotingthatcostsavingstotheinsurerareprerequisitestoaninsurermakinganearlyoffer.92ProfessorO’Connellalsoisclearabouttheone‑sidednatureoftheearlyoffersystem,explainingthatearlyoffersareviableonlyifdefendants,not claimants,areallowedtomakebindingearlyoffers.93Hesaysthatifplaintiffsareallowedtobinddefendantstoearlyoffers,theywoulddosothroughbring‑ingfrivolousclaims.94Bythedefendantinitiatingthesystem,whenpresentedwithamarginalormeritlessclaim,thedefendantdoesnothavetomakeanofferatall.95 ProfessorO’ConnelldemonstratedsimilarbiasinpresentinghisproposaltotheNewHampshirelegislature,stating:

We’renottryingtopayafloodofnewclaimants....,[thebill’s]beenrathercarefullydraftedtoseetoitthatwedon’timposenewburdensonthedefendantbecausethedefendanthasanoptionofsaying,isthisaworthyclaimbasedonourcriteriaorhowwedefineaworthyclaim.And,ifitisn’t,wewon’tmakeanoffer.…Andsothesavingsinbothattorney’sfeesandnotpayingfornon‑economiclossforclaimantswhowantthatwillbeverysubstantial.96

11 New Hampshire Bar JournalFall 2012

Oneofthenon‑economiclosseshespecificallyexcludesinhisproposalislostearningcapacityoftheplaintiff,oftenoneofthelargestele‑mentsofeconomiclossinatortclaim.Thisisbasedonhismisguidedunderstandingofwhatlostearningcapacityis:

Lossofearningcapacityhasaspecialmeaning.Thisbillwillpayforlostearnings[notlostearningcapacity].Lostearningcapac‑itymeansthecapacityofsomeonewho’snotworkinganddoesn’tplantowork,buthaslosttheopportunitytowork,sothat’snoteconomicloss.Soinotherwords,ifI’mahomemakerandI’mmarriedtoaverywealthypersonwho’stakingcareofmeandIhavenoprospectsofhavingtogotowork,andIlosemycapacitytowork,I’m[not]entitledtocompensationforthatlostopportunity.ButifIlostactualworkwagesIwouldbeentitledunderthisplanbyallmeanstorecoverthem.So,lostearningcapacityisatermofartthat,ineffect,isnon‑economicloss.97

Inmakingthisstatement,ProfessorO’ConnelleithershowedablatantdisregardforNewHampshirelawordemonstratedwhyhisproposallacksallcredibilityandreason.TheNewHampshireSupremeCourtdefineslossofearningcapacityasanelementofeconomiclossrecover‑ableasdamagesinapersonalinjuryclaim:

Lossofearningcapacitydamagesare“basedupontheamountbywhichtheearningcapacityoftheplaintiffhasbeenreducedthroughtheconductofthetortfeasor.”Restatement(Second)ofTorts§906(b)commentcat462(1965).“[T]hemeasureofdamagesforimpairmentofearningcapacityisthedifferencebetweentheamountwhichtheplaintiffwascapableofearningbeforetheinjuryandtheamountwhichheorsheiscapableofearningthereafter.”2J.Stein,Stein on Personal Injury Damages§6:5,at6–15(3ded.rev.1997);see2J.Nateset al., Damages in Tort Actions§10.01,at10–3to10–6(2006)(notingdistinctionsamongclaimsfor“futurelossinearnings,”“futurelossofearningcapacity,”and“lifetimelossofearningcapacity”).98

Consider,forexample,thata30‑yearoldfemalelawyerisperma‑nentlyinjuredbymedicalnegligenceduringtreatmentofpost‑partumcomplicationswhilesheisonmaternityleave,andsheisunabletoreturntoworkasanattorney.Becauseshewasnotcurrentlyworkingatthetimeofherinjuryanddidnotplantoforthedurationofhermaternityleave,underProfessorO’Connell’sanalysis,nowcodifiedatRSA519‑C:1,IV,shewouldnotbeentitledtolostwagesorlostearn‑ingcapacity.UnderexistingNewHampshirelawshewouldbeandshouldbeentitledtoboth,becauseshehadthecapacityforsignificantearningsandearningsgrowthwhenshereturnedtotheworkforceafterhermaternityleavebasedsolelyonhereducation,trainingandexperience.UnderProfessorO’Connell’sapproach,notpayingdamageclaimslikethistoinjuredplaintiffsisbeneficialbecauseitisacostsavingstoinsurers. ProfessorO’Connellsummeduphisproposalbymakingclearhisgoalistosaveinsurersmoneyandpayplaintiffslessasfollows:

We’renottryingtopayafloodofnewclaimants....Butwecan,byencouragingpaymentpromptly,without[]non‑economicloss,

andmuchlessexpensivelyastoattorneys’feesonbothsides,wecanmakemuchbetterapplicationofrulestotakecareofclaimsthatwe’renowpaying.Andthatiswhatthisbilltriestodo,andI would hope that New Hampshire would be the first to try it.99

IV. HOW NEW HAMPSHIRE BECAME THE FIRST TO TRY EARLY OFFERS DouglasDean,PresidentandCEOofElliotHealthSystem,heardProfessorO’ConnellspeakaboutearlyoffersataseminarandquicklysoughtitsimplementationinNewHampshireinanefforttopreemp‑tivelylimitliabilityexposureandlossesinaneraofmanagedcare.100DeanspokeonbehalfoftheNewHampshireHospitalAssociation,theNewHampshireMedicalSocietyandtheNewHampshireDentalSocietyinsupportofthebill,explaining:“We’reallconcernedforthefutureofhealthcareandtheabilityoflimitedresource[s]tobeabletofundthedemandsthatweprojectthatwilloccurinourstate.And,it’snottoomuchmorecomplexthanthat.”101

Ourpractitionersaredoingeverythingtheycantomaintaintherisingtidesofdemandinthiscommunity.Theyfearsuiteveryday.....

ButIwilltellyouthisasahospitaladministrator.I’mconcernedforthenextcoupleyears.We’vejustgonethroughaverydifficult

Would you let your case rest on a house of cards...

ECONOMISTS

Examining Economic Damages Since 1982

Serving Vermont and Jurisdictions

Throughout the Northeastern United States

• Personal Injury • • Wrongful Death •

• Wrongful Termination • • Divorce •

• Medical Malpractice • • Commercial Losses •

Economic & Policy Resources, Inc.

800.765.1377 info@epreconomics.com www.eprlegaleconomics.com

12 New Hampshire Bar Journal Fall 2012

yearwithMedicaid.Oneoftheresponsesofthestateandthecon‑siderationsforthestateandMedicaid[i]smanagedcare.Man‑agedcarehasoneconceptthatwillallowthestatetosavemoney,that’slessmedicalintervention.Thistypeofsituationinmedicalmalpracticeservesexactlyagainstthattypeofopportunityforthestate.Andtogivethesepractitionersanopportunitytofunctionwithinanenvironmentwherethey seethemselvessolelyinapro‑fessionalstateofobligationintheinterestofthepatientandnotfearmedicalmalpracticereprisal.And,that’swhatmotivatesthiswholediscussion.102

AsDeanmadeclearthroughhistestimony,managedcaremeanslesscarebeingprovidedtoNewHampshirepatients,whichwillresultinmoreliabilityexposureforhospitals. Thispreemptivelimitationonliabilityexposureforhospitalsanddoctorsinthemanagedcareeraappearstobetheunderlyingpurposeforenactingthislaw. Basedonthetestimonyoftheproponentsofthelaw,thepurposeisnot,asstatedinthefindingsandpurposeofthestatute,“toencouragefastandefficientpaymentofmeritoriousclaims,”103duetotheinconsistentresults,litigationdelaysandcostsof thecurrent system,whichnotablyare listedas thefindingsandpurpose in every tort reformmeasureadvocated in the legislature.Indeed,Dr.CynthiaCooper,PresidentoftheNewHampshireMedicalSociety,whotestifiedinsupportoftheearlyoffersystemstated:

Wedon’tcompletelyagreewiththepreambleofthebillbe‑causewebelievethepretrialpanellaw,RSA519‑Bisworking,butwedosupporttheideaofofferingpatientsandhealthcareprovidersanotheroptiontogetaquickresolutiontomalprac‑ticecaseswithouthavingtogothroughafullblown,jurytrial.....

Youcanjustgetitdone;goonwithyourlife.And,insteadofgoingthroughdepositionswhereyouarepersonallyattacked,andwheresometimesthelawyerswilltrytoattachyourhouse,yourcar,eventhoughyouhaveinsurance,justtoscareyouintosettling.It’sjustaterriblesituation....I can’t emphasize enough that I think the early offer will take some of this emotional part out of it [for doctors],andIencourageyoutopassitasstated.104

DoctorCooper’stestimonyisironicbecause,inadditiontobeingabillthatcompletelyfavorsphysiciansandtakestheemotionalpartoutoflitigationforthembyallowingtheirinsurerstojustpaytheirclaimssotheycangoonwiththeirlives,itleavestheinjuredvictimofmedicalmalpracticecompletelyvulnerable,subjecttotheemotionalcostsofboththeirinjuryandthisearlyofferprocessandunabletorecoverfortheiremotionalsufferingduetothetotaleliminationofnon‑economicdamages.Theinjuredvictimsarethenleftwithemo‑tionaltraumafromthemalpractice,whichtheywilllivewithforrestoftheirlifewithoutcompensation.Theonlylegitimateandfairwaytodecreasethecostsofmedicalmalpracticetoeveryoneistodecreasetheincidencesofmedicalmalpractice.Thislawmakesnoefforttodothatandplacesnoheightenedregulationsorscrutinyonthephysicians

itprotects. WhileDougDeanbroughtJeffreyO’Connellandtheearlyofferidea to New Hampshire hospitals, it was Senator Jeb Bradley whointroduceditasa“latebill”totheNewHampshireSenateonFebru‑ary8,2012.105SenatorBradleydescribedthebillasan“innovativeconcept,”supportedbytheNewHampshireHospitalAssociation,theNewHampshireBusinessandIndustryAssociation,theNewHampshireMedicalSocietyandtheNewHampshireDentalSociety.106 SenatorBradleycalledthebill“awin,win,winandawinfor...thepatient,theprovider,theattorneyandthepublic.”107Hesaiditwasnecessarybecause it currently takes four years for medical injury claims toproceedthroughthesystemanditwasawinforeveryonebecauseitbringscertaintyandrationalitytotheoutcomesoftheseclaimswhileavoidingcostlyandprotractedlitigation.108 Notably, thisbillwasnot supportedby the twomajormedicalmalpracticeinsurersinthestate,whoresolvemedicalinjuryclaimsonbehalfofmedicalprovidersandwillbeaffectedbythisprocessmorethananyoneotherthanpatients.109Bothinsurers,ProSelectandMedi‑calMutualofMaine,reportedthatthissystemwasunnecessaryinNewHampshirebecausetheyalreadyhaveeffectiveearlyofferprocessesinplaceandNewHampshiremedicalinjuryclaimsareusuallyresolvedwithintwotothreeyearsofpresentation,ratherthanthefourorfiveyears they see inother states.110NewHampshire InsuranceDepart‑mentstatisticsonclosedclaimssupportthetestimonyofthemedicalmalpracticeinsurersandwereignoredorgrosslymisconstruedbythelegislature.111 Proponentsofthisbillconsistentlyreportedtothelegislaturethatthemajorityofmedicalinjuryclaimstakefouryearstoresolve.TheactualstatisticsfromtheInsuranceDepartmentbeliethisassertion.Thosestatisticsshowthat87percent(86.9percent)ofmedicalinjuryclaimsareclosedwithinthreeyearsofbeingbroughtand62percent(61.5percent)ofmedicalinjuryclaimsareclosedwithintwoyearsofbeingbrought.112Thesestatisticssupportthetestimonyoftheinsurersandtheexperienceofourofficeforresolutionofmedicalinjuryclaims.Itappearsthatthestatisticsmisrepresentedtothelegislatureactuallyrepresentthetimefromdateofinjurytodateofclaimclosure.Thistimeframewouldpresumablyremainunchangedunderthislawsincestatutesoflimitationsforenteringtheearlyofferprocessareidenticaltothosefortraditionalmedicalinjuryclaims.TheInsuranceDepart‑mentstatisticsfordateofinjurytodateofclaimclosureshowthat64percent(63.7percent)ofmedicalinjuryclaimsareclosedwithinfouryearsofinjuryand79percentofmedicalinjuryclaimsareclosedwithinfiveyearsofdateofinjury.113Insum,thelegislaturepassedthisbillonerroneousstatisticsonclaimsdatamanipulatedby theproponentsofthelegislationandignoredthetestimonyofallofthepeoplewhoareactuallyinvolvedinresolvingtheseclaims,themedi‑calmalpracticeattorneys,themedicalmalpracticeinsurers,andthepatientsthemselves. ThepresidentofMedicalMutualofMainesaidasmuchwhenexplainingherobjectionstothelaw:

[T]hepurported‘earlyofferprogram’establishedbySB406wases‑sentiallydevelopedbypersonswhodidnothaveexpertiseinmedical

13 New Hampshire Bar JournalFall 2012

professionalliabilityclaimsmanagementorlitigationand...isnotonlyunnecessary,butwillinevitablyandsignificantlyimpacttheabilityofcompanieslikeMedicalMutualtoholdpremiumratesatareasonablelevelandmaypotentiallyimpactourcontinuedabilitytodobusinessin[theStateofNewHampshire].114

Inadditiontofindingthelawunnecessary,themedicalmalprac‑ticeinsurershadmanyconcernsaboutitsimplementationbecauseitmayencourageafloodofclaimantsbyallowinganyoneinjuredbymedicalmalpracticetogivenoticeofaclaimandwouldsignificantlyincreaseadministrativeburdensandreportingrequirementsduetothepayment schedulesandperiodicpaymentprovisions for futureeconomiclosses.115TheinsurancecompaniesmadeclearthatthenewcostsimposedbythissystemmayprecludethemfromcontinuingtodobusinessinNewHampshireandthatmedicalprovidersaresubjecttolosingcoverageiftheyoptintothissystemwithouttheconsentoftheirinsurers.116

Despite the insurers’ objections, the legislature effectively dis‑missedthethreatsthattheseinsurerswouldwithdrawtheirbusiness.Inaddressingtheissueoftheincreasednumbersofclaims,thepropo‑nentsmadeclearthatthisbillwasnotcreatedtohelppatientsinanymanner;butwascreatedsolelytoreducecostsformedicalprovidersandreducethepayoutsmadetoinjuredpatients. AttorneyJamesBianco,whorepresentedDougDeanandtheElliotHealthSysteminassistingtodraftthislegislation,explainedthat:

[T]hefloodgateiscontrolled...anybodycangoforwardifyouhaveaclaim.Butyoudecide,theinsurerorthehospital,orphysi‑cianwhetherit’smeritorious.IfyoudonotwanttopayallyouhavetosayisI’mnotgoingtopayyou.Youcontrolthatallegedfloodgate.Andthenapersongoesofftocourtjustastheydonow,nochangeinthat.117

Hispartner,AttorneyBobBest,whoassistedwithdraftingthislegisla‑tion,explainedtheexpectedpayoutsandclaimsratesbasedonhisowninterpretationofInsuranceDepartmentreportsandsaidthat,forwhatisclassifiedasalevel5injury,whichwouldhavereceivedanaverageverdictorsettlementof$177,000inthetraditionaltortsystem,patientscannowexpecttoreceive$82,000undertheearlyoffersystem,whichisa54percentreductionintheamountaninjuredpatientreceives.118Meanwhile,henotedthatunderthecurrentsystemonly35percentofmedical injuryclaimsmade result inpaymentsand thatwouldnotchangeunderthenewlaw:“Wedon’texpectittobeanyhigherapaymentrateoranyhigherafrequencyofclaimsbecausetheinsurercontrols thegateandwillmakepaymentson thoseclaims.”119 Insum,becauseinsurerscontrolthegateanddecideifanyearlyofferwillbemade,therewillbenoimpactoninsurersotherthantoreducetheamountofpaymentsmadetoinjuredpatients.Patients,however,willbeleftinaworsepositionunderthislawthantheywouldbeforebecausetheycanexpecttoreceivepaymentonthesameclaims,butwillreceivelessthanhalfofwhattheywouldinthetraditionaltortsystem.Thisresultisnotawinforpatientsinanyway. Finally,andpurportedlyinrecognitionthatsomeofthepatientsmostgrievouslyharmedbymedicalnegligencemayhavenoeconomic

losses,thelegislaturecreatedaminimum“additionalpayment”basedontheseverityoftheinjurysustainedbythepatient.Asinitiallyintro‑duced,theadditionalpaymentscalebasedonseverityofinjuryrangedfrom$1,700foratemporaryinjuryinvolvinginsignificantharmto$117,500,forapermanentinjuryinvolvinggraveharm,andallotting$57,000,foraninjuryresultingindeath.120Thesearbitraryandlowvaluesresultedinsignificantoppositionacrosstheboard.Afterseveralamendments,thefinaladditionalpaymentscaleisnotmuchbetter,rangingfrom$2,100foratemporaryinjuryinvolvinginsignificantharmto$140,000forapermanentinjuryinvolvinggraveharmordeath.121Theclassificationofinjuriestodetermineadditionalpay‑mentsissupposedtobedeterminedbytheNationalPractitionerDataBankseverityscale.122Whilethisseverityofinjuryscaleappearsfaciallyneutral,itisnotbecauseitfailstotakeintoaccountthedifferencesbetweenandamongindividualplaintiffs.Forexample,a99‑yearoldbedriddenplaintiffwithnospouseorfamilywhoiskilledbymedicalnegligenceatanursinghomewouldreceivethesamerecoveryasa29‑yearoldwifeandhomemakerwhohomeschoolsherfourchildrenwhoiskilledbymedicalnegligence.Inthetraditionalsystem,theestatesof theseplaintiffswouldreceivevastlydifferentrecoveriestocompensatefortheirlosses. AfterintroductionintheSenateinFebruary2012,thebillwasamendedslightly,passedbytheSenate18‑5,largelyalongpartylines,andreferredtotheHouseJudiciaryCommittee.123TheHouseJudiciaryCommitteeheldtheonlypublichearingonthebillinApril2012,atwhichobjectionstothelawwerelargelyignored.124HouseRepresenta‑tiveBrandonGiuda,aChichesterattorney,thensubstantiallyrewrotethebillinMay2012toeliminatetheSenateamendmentsandbringitclosertoitsoriginalformandintent.125ThebillwasacceptedbytheHouseandreferredbacktotheSenatewhichdidnotconcurwiththeHouseamendments.126 Itwas then referred toaCommitteeofConference,whichmustunanimouslyapproveabillforittopass.127Senator MollyKelly, whohadbeenappointed to the committee bySenatePresident,PeterBragdon,voicedextremeoppositiontothebillasamended,asshehadintheSenate.Inanefforttopushthisbillthroughthelegislature,SenatorKellywasunceremoniouslyremovedfromtheCommitteeandreplacedbyoneofthebillsponsors,SenatorForsythe.128Notsurprisingly,havingremovedtheopposition,thebillpassed throughtheCommitteeofConferenceandwasapprovedbybothhousesoftheGeneralCourt,theHouseofRepresentativesvot‑ing220‑141infavor,andtheSenatevoting18‑4.129ThebillpassedtheGeneralCourton June6,2012, less than fourmonthsafter itsintroduction.130 TheGovernorofNewHampshire, recognizing thelackofprotectionsforpatientsinthisbill,vetoedthelawonJune20,2012.131TheGeneralCourtoverrodethevetoonJune27,2012,andthebillbecamelawwithaneffectivedateofJanuary1,2013.132 Thisbill,rejectedbyeveryotherstatethatconsideredit,passedtheNewHampshirelegislatureinrecordspeedovertheobjectionofallpartieswhoaremostaffectedbyit.SenatorBradleymadeclearwhenheintroducedthisbillthathewantedtoseetortreformmeasurespassed,sayinghewouldliketoseemeasurespassedinNewHampshiresimilartothose,“mostnotablyinTexas.”133Unfortunately,however,hedidnotpresenttheTexasanalysisofearlyofferproposalsonmedical

14 New Hampshire Bar Journal Fall 2012

malpracticecases,whichwasconductedin2009,totheNewHampshirelegislature.134Texashasneveradoptedanearlyoffersystemaspartofitstortreformmeasures,whicharestrongerthanmoststatesinthenation,andwouldlikelyrejectitsproposal.

V. EVIDENCE FROM TEXAS ON THE EFFECTS OF EARLY OFFERS In 2009, Bernard Black and David Hyman, professors at theUniversityofTexasandUniversityofIllinoislawschoolsandCharlesSilver,afinanceprofessorattheUniversityofTexasSchoolofBusiness,conductedanin‑depthanalysisoftheeffectsofProfessorO’Connell’sproposed“earlyoffer”rules.135TheiranalysiswasbasedonareviewofdetailedclosedclaimdatafromTexasfrom1988through2005.136The authors studied claims data from both tried and settled casesand found similar results forboth sets.137ThedataanalyzedcamefromtheTexasClosedClaimsDatabase(TCCD),apubliclyaccessibledatabasemaintainedbytheTexasDepartmentofInsurance(TDI),whichcontainsindividualreportsofallclosedpersonalinjuryclaimsinvolvingpayoutsof$25,000ormore.138 For this study, the authors attempted to simulate the effect oftheearlyofferprogrambyapplyingitsrules(paymentofeconomicdamagesandattorney’sfeesbutnotnon‑economicorpunitivedam‑ages)tothecasesintheTCCDdataset.139Forsettledcaseswithoutanapportionmentofdamages,assumptionsweremadebasedupontheresultsintriedcasesandasensitivityanalysiswasperformedbychangingtheassumptions.140Toestimatetheeffectsofanearlyofferprograminthisstudy,theauthorsalsoassumedthatplaintiffsanddefendantsagreedontheamountofeconomicdamagesandthatde‑fendantsmadeanofferequalto100percentofeconomicdamagesplusapercentagemeanttocoverattorney’sfeesandcosts.141Theauthorsrecognizedthatthisassumptionofagreementdoesnotcarryovertoexistingclaimsresolutioninthetortsystem.“Instandardlitigationmodels,costsavingsandriskaversiondrivethepartiestosettlemostcases. Casesgo to trialwhen theparties settlement rangesdonotoverlapbecausetheydisagreeontheplaintiff’schancesofprevailing,onexpecteddamages,orboth.”142

The conclusions of the Texas study were that early offers willsharply reduce payouts to plaintiffs in cases with small economicdamages (under $100,000) and would normally increase payoutsincaseswitheconomicdamagesover$200,000,soanearlyofferisunlikelytobemade.143“Whetheranearlyofferprogramwillaffectpayoutsturnsonwhetherfastpaymentof100percentofeconomicdamagesplusattorney’sfeesislargerorsmallerthanthestatusquo”throughtortlitigation,whichmeansslowerpaymentbutrecoveryofeconomic and non‑economic and potentially punitive damages.144“Defendantswillmakeearlyoffersonlyiftheyexpecttogainbydoingso,”whichiswhyearlyoffersareonlylikelytobemadeincaseswithsmalleconomicdamages.145Becauseofthis,theauthorsfoundthat“[a]nearlyofferprogramwillhaveverydifferenteffectsondifferenttypesofplaintiffs,withespeciallylargepayoutreductionsforelderlyanddeceasedplaintiffs.”146Afteranalyzingthedifferingdemographicsoftheplaintiffsintheclosedclaimdatasets,theauthorsconcluded

that early offer programs will result in “large payout declines forelderlyanddeceasedplaintiffs,limitedeffectsonemployedadultsinnon‑deathcasesandchildren,andalmostnoeffectonbabycases.”147“Ingeneral,payoutreductionsarelargestindeathversusnon‑deathcases;elderlyversusnonelderlycases;adultnonelderlyunemployedversusemployed.Althoughtheprogramisfaciallyneutral,itsimpactvariesgreatlydependingonplaintiffdemographics,employmentstatusandtypeofharm.”148

Theauthorsfoundthatanearlyofferprogramiseffectivelyacaponnon‑economicdamages,becauseitincludesanofferofeconomicloss, a percentage for attorney’s fees and an additional minimumpaymentfornon‑economiclosses.149Thedifferencewithanearlyoffercaponnon‑economicdamages,however,isthatitisonlyavailableatthedefendant’selectionanditdoesnottranslatetothetraditionaltortsystem.150Non‑economicdamagescapsdisproportionallyaffectcertaingroupsandhaveaprofoundnegativeimpactonthem.151Theauthorsfoundthatearlyoffersrarelyaffectbabycasesduetotheseverityoffutureeconomiclosses,buttheysignificantlyaffectelderlyanddeathcasesandaveragepayoutsdeclinemore than66percent.152This isstrikingbecauseoftentheplaintiffsmostseverelyharmedbymedicalnegligencewillreceivetheleastrecovery.Likewise,theplaintiffsmostinfinancialneedofanearlyofferaretheoneswhoareimpactedthemostbythissystembecausetheireconomiclosses,numerically,arethesmallest.Consequently,theirearlyofferswillbethelowestandtheywilllosetheopportunitytorecoverfornon‑economiclosses. Theauthorssuggestthatwhendecidingwhethertoreformthesystemformedicalinjuryclaimstheunderlyingquestionforsocialvalueshouldbe:howdothebenefitswegetfrommedicalmalpracticelitigation–bydeterrenceofmedicalmalpracticeandachievingfaircompensationforinjuredpatients–comparetothelitigationcostsfortheclaims?153Ifthebenefitsoutweighthecosts,nothingshouldbechanged.154Theauthorsassumebasedontheiranalysisthatearlyofferswilldecreaselitigationcosts,butwillalsodecreasecompensa‑tiontoplaintiffs.155Thequestionthenbecomeswhethertheearlyoffersystemwillincreasedeterrenceofmedicalmalpracticeorincreasetheincidenceofmalpracticeduetoeasysettlementrequirementsoutofcourtwithoutpublicaccountability.156“Willanydecreaseindeterrencebeoffsetbyincreasedaccesstohealthcarethroughreducedhealthcarecosts?Thequestioniswhethertheearlyoffersystemismorefairormoreefficientthanourcurrentsystem.”157

The law passed in New Hampshire would not pass any socialvalue analysis based on the answers to these questions. We knowfromthetestimonyintheNewHampshirelegislaturethatthissystemisonlybeingproposedbecauseincidencesofmalpracticeareexpectedtoincreaseundermanagedcare.Wealsoknowthattheincreasingincidencesofmalpracticewillnotreducehealthcarecostssinceinsur‑ancepremiumsareexpectedtorise.Consequently,underanysocialvalueanalysisofthissystem,SB406shouldneverhavebecomelaw.

VI. PRACTICAL EFFECTS OF THE EARLY OFFER ALTERNATIVE TheTexas study foundsignificantproblemswith thepractical

15 New Hampshire Bar JournalFall 2012

effectsoftheearlyoffersystem,whicharedirectlytranslatabletoNewHampshire. First, the early offer system is extremelyone‑sidedand resultsininequitabletreatmentofplaintiffsanddefendants.158Thesystemimposeshugepenaltiesonplaintiffswhorefuseanearlyofferandthenfailtoproveahigheramountofeconomicdamagesattrial,butthereisno similarpenalty foradefendantwhomakesanunreasonableoffer,which is rejected,whenaplaintiffgetsaverdict significantlyhigherthanhisorherdemandorthedefendant’soffer.159Indeed,inNewHampshire,themedicalproviderisgivensomuchdiscretiontomakeanofferandsomuchcost‑cuttingmotivationtoeliminateaplaintiff’sclaimedeconomicdamagesthataplaintiffmaybeforcedtogototrial,despitehavingameritoriouscase.Ifaplaintiffdoessoandrejectsanunreasonableoffer,heorshemaystillbepunishedbypayingdefensefeesandcosts,despitewinningaverdictattrial. In addition to the inequitable penalties imposed, there is aninequitable treatment of litigation costs and attorney’s fees acrossplaintiffsanddefendants.160Thestatedgoalofthelawistodecreaselitigationcostsforall.Plaintiffs,however,areawardednoneoftheirlitigation costs and their attorney’s fees are reduced by 13 percent(from331/3to20percent)whenanearlyofferismade,butthereisnocorrespondingeliminationofinsurerspayingdefenselitigationcostsorreducingfeesby13percent.Totrulyachievethestatedgoalsofthelitigation,theremustbeanequalreductioninlitigationfeesandcostsforplaintiffanddefenseattorneysasaquidproquo.161Thisone‑sidedreductionmaymakeitmoredifficultforinjuredplaintiffstoobtaincounseltobringclaimsbecausenoout‑of‑pocketcostswillbepaidandtheattorneyfeeisreducedby13percentandbasedonlimitedtonodamages.162

Second, by eliminating recovery of non‑economic losses, theearlyoffersystemhasasignificantlydisparateimpactacrossdifferentclassesofplaintiffsanddifferentdemographicgroups,specificallyonwomen,theelderly,children,andthepoor,whoarealreadythemostunderservedanddisadvantagedgroupsinsocietyandwhorepresentthelargestportionofmedicalmalpracticeplaintiffs.163ArecentstudyconductedbytheHarvardSchoolofPublicHealthshowedthatwomenconstitute60percentofmedicalmalpracticeplaintiffs.164Babiesandtheelderly(overage65)represent31percentofmedicalmalpracticeplaintiffs.165Therewasnoanalysisofdifferenteconomicclassesinthisstudy.JoanneDoroshow,theExecutiveDirectoroftheCenterforJusticeandDemocracyhassaid:

Billslikethisareparticularlyharmfultowomen,children,theelderlyandthepoorwhomaysuffergrievouslybuthavefeweco‑nomicdamagesbecausetheirincomesarelowornolongerexist.Womenareparticularlyharmedbyeliminationofnon‑economicdamagesbecausecertaininjuriesaffectingtheirsexualorrepro‑ductivehealtharecompensatedonlythroughnon‑economicdam‑ages.Non‑economicdamagecapsthereforeamounttoaformofdiscriminationagainstwomenandcontributetounequalaccesstojusticeorfaircompensationforwomen.Thisbillisworsethanacapbecauseitcompletelyeliminatestherighttorecoverfornon‑economiclosses.166

Inseveralstates,capsonnon‑economiclossesthatdiscriminatelike thishavebeencharacterizedas“killgrannycheap” tort reformeffortsbecauseanelderlyplaintiffwhoiskilledbymedicalnegligencewillhavelimitedpastlossesandnofutureeconomiclosses.167Thisef‑fectivelygivesdefendantsanincentivetoprovidepoormedicalcaretotheseplaintiffsbecauseitwouldmostlikelybecheapertoletthemdieunder thisstatute thantospendtimeprovidingfuturemedicalcare.Furthermore,ifanearlyofferiscombinedwithacollateralsourcerule,defendantsmaypaynothingforeconomiclossestothesetypesofplain‑tiffs.168ThisisespeciallytrueinthecasesoftheelderlyordisabledwhoreceiveMedicareorMedicaid,whichpaysforallmedicalexpensesandwhoaremostlikelynotemployedsotherearenoothereconomiclossestorecover.169Anothersignificantcomponentofnon‑economiclosses,whichwasimproperlyeliminatedfromthislaw,isthelossofearningcapacity.Womenonmaternityleaveorprofessionalsonsabbaticalfromtheworkforceareparticularlyharmedbythisprovision.170

Third,theamountsofadditionalpaymentsbasedontheseverityscale are well below the value of the actual injuries.171 Paradoxi‑cally, thepatientswith themostsevere injuriesandstrongestcasesareharmedthemostbythecaponnon‑economicdamagesthroughthisseverityscale.172Thescheduleofpaymentsontheseverityscalearbitrarily caps non‑economic damages and eliminates plaintiffs’constitutional right to be made whole for their injuries by a jury.DukeUniversityLawProfessorNeilVidmarhastestifiedagainstsimilarcompensationschedulesandobserved:

Evenwhensomeleewayisbuiltintocompensationschedules,theycannottakeintoaccountthenumberoffactorsandextremevari‑abilityofpainandsuffering,physicalimpairment,mentalanguish,lossofsocietyandcompanionship,andotherelementsofdamagesthatfallundertherubricofnon‑economicdamages.Thatiswhythesemattershavebeenentrustedtojuries.Theyprovidejusticeonanindividualizedbasis.173

Fourth,earlyoffershavenodeterrenteffectonnegligentmedicalcare.Earlyoffersavoidpublicaccountabilitythroughthelitigationprocess.174Lackofaccountabilitymeanslessattentionpaidtonegli‑genterrors.Additionally,byplacingarbitraryvaluesontheamountofalifeoralimb,doctorsknowtheywillnotsuffermuchpenaltyforharmingapatientandwillnotbedeterred. Fifth,andfinallywithrespecttotheNewHampshiresystem,itisnotavoluntarysystemforplaintiffs.Asthetestimonyatthelegislaturemadeclear,themedicalprovidercontrolstheearlyofferprocessanddecision.Ifaplaintiffoptsintothisprocess,heorshemustwaiveimportantconstitutionalrightswithoutknowingwhat, ifany,offerwillbemade.175Furthermore,aplaintiffcannotoptoutofthisprocesswithoutpenaltyafterfivedays.Ifaplaintiffunknowinglysignsthisformonadmissionfortreatment,heorshewillforfeithisorherrightscompletely. Thewaiverdocument itself is complexandconfusingandcannotbethebasisofinformedconsent.176Itconflictswiththestatuteinseveralrespectsandiswritteninlegalesethatfewlaypersonswouldbeabletounderstand.Itdoesnotmakeclearthegravityoftherightstheplaintiffisgivingawayortheenormityofdiscretionthatis

16 New Hampshire Bar Journal Fall 2012

beinggiventothemedicalprovider.177Nordoesitmakeclearthatthepatientwillbeoptingintothisprocessfortheremainderoftheirlifeiftheysufferedpermanentinjuryrequiringongoingmedicalcareorresultinginongoingwageloss.178 Thereislittledoubtthatanuneducatedoruninformedpatient,particularlyonewhoiscatastrophicallyinjuredandsuffering,willbepressuredbythehospitaltoacceptafractionofwhatheorsheneedsordeserves,particularlyforfuturelegalexpenses.179Whenthereisaninjurywithseriouscomplicationsthatmaynotbeknownforyears,alaypersonwillhavenoideawhathisorherfutureneedsmaybeformedicalcarewithouttheassistanceofcounselormedicalexperts.180Thiswaiverandthissystemaredesignedtosettleclaimsbeforetheextentoftheinjuryisknown.Theextentandrepercussionsofmedi‑calinjuriesoftentakeyearstobefullyrealized.Undertheearlyoffersystem,plaintiffsmaybeforcedintoyearsoflitigationortotakealumpsum,whichwillnotmakethemwholebutwillseemlikealotofmoneyinthefaceofmedicalbillsandothercostsresultingfromtheirinjuries.Onlywhenthemoneyisgonewilltheplaintiffrealizetheextentandscopeoflossessustainedandtheeconomicrealityoflivingundertheirnewmedicalconstraintsandexpenses.Furthermore,whenalumpsumofferismade,aplaintiff’slifeexpectancyduetohisorherinjuriesmaybeunknown,whichwillleadtofurtherlitigation.Finally,theseverityoffutureeconomiclossesmayexceedadefendant’smalpracticecoverage.Thisisespeciallytrueincasesinvolvinginfantsorchildren.Whenthishappens,eitheraplaintiffwillnotbeabletobecompensatedforhisorherinjuriesorthedefendantwillmerelydeclinetomakeanearlyofferinaclearlymeritoriouscase. OneofNewHampshire’sleadingconsumerprotectionadvocates,Professor Peter Wright at the University of New Hampshire SchoolofLaw,hassignificantexperienceindealingwithwaiverformsanddisclosurestatementsandpredictssignificantharmtoplaintiffsfromthewaiverform:

Overmyyearsofpracticingandteachingintheareaofconsumerprotection,IhavefoundtheLegislature’sunduerelianceupondis‑closurestatementsasameansofprotectingconsumerswoefullymisguided.Therecentfinancialcrisisinournationaleconomyaptlyillustratesthisfailure.Disclosureoffinancingterms,mandatedbyTruthinLendingandsimilarstatutes,utterlyfailedtowarncon‑sumersoftheperilsofoptionarmmortgages,adjustablerateand80/20loansandotherpredatoryschemes.Consumerseitherfailedtoreadorfailedtounderstandthedisclosureswhichwerewhiskedundertheirnosesatloanclosing.Thereisaveryrealpossibilityofsimilarabuseinthehandsofanaggressiveclaimsadjusterintentonsteeringinjuredpatientswithmeritoriousclaimsintothewaiverofsignificantfinancialrecoveryundertheguiseofspeedyprocess.181

Unfortunately,theNewHampshirelegislatureignoredtheseadmoni‑tionsandenactedthislaw.

VII. POTENTIAL IMPROVEMENTS TO THE EARLY OFFER SYSTEM Asunfairandunbalancedas itmaybe, the reality is that the

“earlyoffer”systemisnowthelawinNewHampshireandmustbefollowed.AfterconductingtheirdetailedanalysisofclosedclaimsinTexas,theauthorsmadecertainsuggestionsastohowanearlyoffersystemcouldbemadefairerbymakingtheprocesstwo‑sided,withbenefitsandrisksforbothsides.182Someofthosesuggestionsinclude:(1)placingincentivestosettlecasesonbothsidesforafairamountbycreatingadutytosettlemeritoriousclaims,ratherthanhavingitbeanoptionelectedbydefendants; (2) imposingpenalties fornotsettlingonbothsidesbycreatingasimilarpenaltyforthedefenseifaplaintiffrefusesanearlyofferandreceivesaverdictforeconomicdamagessignificantlyinexcessofhisorherdemandorthedefendant’searlyoffer;(3)requiringpaymentoffulleconomicdamageswithoutconsiderationofcollateralsources;(4)payingfullmarketvalueforattorney’s fees and including out‑of‑pocket costs in an early offerorreducingdefenseattorney’s feesandout‑of‑pocketcosts inkind;(5)eliminatingtheplaintiffpenaltyforrefusinganearlyoffer;(6)requiringdefendants tocarrymoremalpractice insuranceineventeconomicdamagesexceedmalpracticecoverage;and(7)recognizingtheuncertaintyoffutureeconomicdamagesandaccountingforthatintheoffersmade.183

Underthistwo‑sidedsystem,thereisat leastapresumptionofequalfootingforplaintiffsanddefendants.184Atwo‑sidedearlyofferprogrammovestowardthestatedpurposeofexpeditingcompensationforplaintiffsfortheirfulleconomiclossesandcreatesincentivesforbothsidestoresolveclaimsandimposespenaltiesforbothsidesiftheyunreasonablydonot.Atwo‑sidedearlyofferprogramisevenhandedbecauseitpunisheswhicheversiderejectsasettlementofferthatwouldhaveotherwisefullycoveredeconomiclossesandreducedlitigationcosts.185Whileatwo‑sidedearlyofferproposalislikelytospeedsettle‑mentsandreducelitigationcosts,itdoesnotcorrectfortheinherentdeficienciesintheearlyofferprocess,whichincludeweakeneddeter‑renceofmalpracticeandpayoutreductions thatdisproportionatelyaffectalreadydisadvantagedplaintiff’sgroups.186

CONCLUSION Longknownforbeingfirstinthenation,NewHampshirenowhasthedubiousdistinctionofbeingfirsttoenactthislawthathasbeen rejectedbyallother stateswhohaveconsidered it. Bydoingso, New Hampshire’s victims of medical malpractice will also bevictimsofthisradicaltortreformlegislationdraftedsolelytobenefitNewHampshire’sself‑insuredhospitalsandmedicalproviders.ThislegislationeliminatescenturiesofNewHampshiretortcommonlawandinfringesupontheNewHampshireConstitutionbyeliminatingtherightstoafull,fairandfreeremedybeingawardedbyajuryinmedicalinjuryclaims.187 Thislawisunnecessaryandunfairtoplaintiffs.Nothinginourcurrentsystempreventsmedicalprovidersfromsettlingvalidclaimsquicklyandfairlybeforetheyeverenterlitigation.Manyprovidersalreadydothisandmostinsurersalreadyhavetheseprogramsinplace.Expediencyisnotthegoalofthislaw.Thegoalistosaveinsurancecompanies money and pay patients less as incidences of medicalmalpracticeincreaseundermanagedcare.Ifplaintiffsrejectanearly

17 New Hampshire Bar JournalFall 2012

offer,theyarepunishedbyhavingtopayapenaltybypostingabondjusttoaccessthecourtsandregaintheirConstitutionalrightsand,then,despitewinningattrial,theymaybepunishedfurtherbyhav‑ingtopaydefenseattorney’sfeesandcostsiftheydonotgetaverdictsignificantlyhigherthantheearlyoffer.Ifplaintiffsacceptanearlyoffer,theywillneverbemadewholebecausethelawarbitrarilylimitsthecompensationtheycanreceivenowandthencondemnsthemtoalifetimeoflitigationthroughadministrativehearingswithmedicalproviderstoreceivepaymentforfutureeconomiclosses.Thisongoinglitigationincreasescoststobothinjuredplaintiffsandmedicalprovid‑ers,yettheseincreasedcostsareneveraddressedbythestatute.Wecandiscernnogoodreasonwhyalawthatisharmfultoandopposedbybothpatientsandtheinsurersofmedicalprovidersshouldhavebeenallowedtobecomelaw. Thesuccessofthis“earlyoffer”lawalsohasimplicationsbeyondourstateborders.Nationalnewsreportsandblogsmakeclearthatthisprofit‑driventortreformmeasurewillbeintroducedinotherju‑risdictionsincomingmonths.Aswithotherlegislation,oncepassedinonestate,otherswillquicklyfollowunlesslegislatorsareeducatedaboutthedangersofstrippingawayconstitutionalrightswithillusorypromisesofsettlementundertheguiseofan“alternative”and“vol‑untary,”one‑sidedsystem.Theinherentdeficienciesintheearlyofferprocesswillresultinweakeneddeterrenceofmedicalmalpracticeinourstateinthiseraofmanagedcare.Theyalsowillresultinpayoutreductionsthatdisproportionatelyaffectthemostdisadvantagedclassesofplaintiffs,includingwomen,theelderlyandthepoor.Theonlywaytoreducemedicalmalpracticecostsistodetermedicalmalpractice.Thislawdoesnothingtoachievethatanduntilalegislativeproposaldoes, tortreformmeasureslikethisshouldnotremainlawinNewHampshire.

ENDNOTES1 HollyB.HainesisanattorneyatAbramson,Brown&Dugan,P.A.inManchester,whereshedevotesherprofessionalpracticetorepresentingplaintiffswhoareinjuredbymedicalmalpracticeinNewHampshire. 2 WilliamD.WoodburyisanattorneyatNormandin,Cheney&O’Neil,PLLC,inLaconia.AttorneyWoodburyservesontheBoardofGovernorsandastheLegislativeCommitteeChairfortheNewHampshireAssociationforJusticeanddevotedcountlesshoursatthelegislatureonbehalfofNHAJandthecitizensofNewHampshireinactiveoppositiontopassageofSB406.

3 SeeOfficialDocketofSB406availableat:http://gencourt.state.nh.us/bill_status/bill_docket.aspx?lsr=3067&sy=2012&sortoption=&txtsessionyear=2012&txtbillnumber=sb406&q=1;andStatementofJoanneDoroshow,ExecutiveDirector,CenterforJusticeandDemocracyatNewYorkLawSchooltotheHouseJudiciarycommitteeinoppositiontoSB406–AnActEstablishinganEarlyOfferAlternativeinMedicalInjuryClaims(April26,2012).

4 SeeN.H.RSAch.519-C(effectivedateJanuary1,2013).

5 Coverys(ProSelectInsuranceCompany)CommentsonNewHampshireSB406AnActEstablishinganEarlyOfferinMedicalInjuryClaims(May18,2012).

6 SeeN.H.RSA519-C:1,IVandRSA519-C:10,XI(2012)

7 SeeRSA519-C:1,IV(2012).

8 See RSA519-C:7(2012).

9 SeeRSA519-C:2,XII(2012).

10 LetterfromGreggL.Hanson,PresidentandCEO,Coverys(ProSelectInsuranceCompany),toGovernorJohnLynch,RequestingVetoofSB406(datedJune13,2012)andLetterfromMaryElizabethKnox,VicePresidentofClaims,MedicalMutualInsuranceCompanyofMainetoGovernorJohnLynch,RequestingVetoofSB406(datedJune12,

2012).

11 See id.

12 EstablishinganEarlyOfferAlternativeinMedicalInjuryClaims:HearingonSB406BeforetheSenateComm.onJudiciary,162ndGeneralCourt,2012Session(N.H.March15,2012)(statementofJebBradley,Senator)

13 HouseJudiciaryCommitteeMinorityReport,34HouseRecord44,HJ21,pp.2378-2391,162ndGeneralCourt(May16,2012).

14 2012N.H.Lawsch.288.

15 2012N.H.Law288:1.

16 2012N.H.Law288:1,II(a).

17 2012N.H.Law288:1,II(b).

18 N.H.RSA519-B:1,I(2007).

19 2012N.H.Law288:1,II(c).

20 2012N.H.Law288:1,II(d).

21 See, e.g.42U.S.C.§1320c-5(a)(1)and42U.S.C.§1395y(a)(1)(A).

22 2012N.H.Law288:1,V.

23 2012N.H.Law288:I,VI.

24 RSA519-C:2,III(2012).

25 See id.

26 RSA519-C:13,I(2012).

27 Id.andRSA519-C:3,I(2012)

28 RSA519-C:13,I(2012)

29 RSA519-C:1,VIII(2012).

30 RSA519-C:2,IVandVI(2012).

31 RSA519-C:2,VIIandVIII(2012).

32 RSA519-C:2,IX(2012).

33 RSA519-C:5,I&II(2012).

34 RSA519-C:1,IV(2012)(emphasisadded).

35 RSA519-C:7,II(2012).

36 See id.

37 RSA519-C:5,IIandRSA519-C:10.

38 RSA519-C:10,XI.

39 See id.

40 RSA519-C:5,IV(2012).

41 RSA519-C:2,XII(2012);

42 See id.;but cf.RSA519-C:13(requiringplaintifftoobtaineconomic damagesofgreaterthan125%oftheamountoftheearlyoffertoavoidpayingdefenseattorney’sfeesandcostsincurredunderRSA519-C.).

43 Id.

44 RSA519-C:2,IXandRSA519-C:10(2012).

45 RSA519-C:1,V.

46 RSA519-C:10.

47 See id.

48 See id.

49 See id.atpara.XII&XIII.

50 RSA519-C:4(2012).

51 See id.

52 RSA519-C:9(2012).

53 See id.

54 RSA519-C:11(2012).

55 RSA519-C:12(2012).

56 Compare id,with RSA519-C:1,IV.

57 RSA519-C:13(2012).

58 See id.

59 RSA519-C:2,V.

18 New Hampshire Bar Journal Fall 2012

60 Governor’sVetoMessage,34HouseRecord53,pp.2631-2634,162ndGeneralCourt(June27,2012).

61 See id.

62 See id.

63 See Jeffrey O’Connell – Faculty Biography at University of Virginia School of Lawavailable at: http://www.law.virginia.edu/lawweb/faculty.nsf/FHPbI/1195694andJeffrey O’Connell - Publications Listavailableat:http://www.law.virginia.edu/pdf/faculty/oconnell/oconnell_pubs.pdf.

64 SeeUniversityofVirginiaLectureSeriesVideoofJeffreyO’ConnellExplainingEarlyOfferSystem,availableat:http://www.youtube.com/watch?v=QE3rC1DJlxA.

65 See, e.g.,JeffreyO’Connell,The Injury Industry and the Remedy of No-Fault Insurance(UrbanaUniversityofIllinoisPress)(1971).

66 See, e.g.,JeffreyO’Connell,No-Fault Insurance for Injuries Arising From Medical Treatment: A Proposal for Elective Coverage,24EmoryL.J.21-42(1975).

67 See, e.g.,JeffreyO’ConnellandRitaJamesSimon,Payment for Pain and Suffering: Who wants What, When and Why?(Champaign-UrbanaInsurorsPress)(1972)andJeffreyO’Connell,A Proposal to Abolish Defendants’ Payment for Pain and Suffering in Returnfor Payment of Claimants’ Attorneys’ Fees,1981Ill.L.J.333-69.

68 See, e.g.,JeffreyO‘Connell,Offers That Can’t Be Refused: Foreclosure of Personal Injury Claims by Defendant’s Prompt Tender of Claimant’s Net Economic Losses,77NW.U.L.Rev.589-632(1982).

69 See Doroshow, supranote3.

70 SeeEstablishinganEarlyOfferAlternativeinMedicalInjuryClaims:HearingonSB406BeforetheSenateComm.onJudiciary,162ndGeneralCourt,2012Session(N.H.March15,2012)(statementofJeffreyO’Connell,Professor,UniversityofVirginiaSchoolofLaw).

71 JeffreyO’Connell,The Large Cost Savings and Other Advantages of an Early Offer “CrimTorts” Approach to Medical Malpractice Claims,17WidenerL.J.835,838-39(2008).

72 See id.at840-43,see alsoVideoofJeffreyO’Connell,supra note64.

73 SeeO’ConnellVideo,supranote64.

74 See id.(thiswasinitiallyproposedtotheNewHampshirelegislatureaswell,butwaseliminatedbyamendment)

75 See id.

76 See id.

77 Id.

78 StatementofJeffreyO’Connell,Professor,UniversityofVirginiaSchoolofLaw,supranote70(commentsregardingeachtypeofinsuranceareconsolidatedandpresentedtogetherforeaseofnarrativereport).

79 AllquotesforallpersonstestifyingattheSenateJudiciaryCommitteeHearingonMarch15,2012aretheauthors’bestinterpretationoftheaudiorecordingofthehearingandarenotfromanofficialtranscriptoftheproceedings.Noofficialwrittentranscriptexists.Allattemptsataccuracyhavebeenmadeandanyerrorsaresolelyduetoqualityofrecording.

80 ProSelectInsuranceCompanyCommentsonNewHampshireSB406AnActEstab-lishinganEarlyOfferinMedicalInjuryClaims(May18,2012).

81 See id.

82 Id.

83 JeffreyO’Connell,etal.,Early Offers: An Approach to Medical Malpractice Reform,Contingencies,42-46(Sept/Oct2006).

84 See id. at43-44.

85 Idat42.

86 See id.

87 See id.

88 See id.at43.

89 See id.

90 See id.at46.

91 See id. at43

92 See O’Connell,supra note71,atp.840.

93 See id.at848.

94 Id.

95 Id.

96 StatementofJeffreyO’Connell,Professor,UniversityofVirginiaSchoolofLaw,supra

note70.

97 Id.

98 Laramie v. Stone,160N.H.419,428(2010).

99 StatementofJeffreyO’Connell,Professor,UniversityofVirginiaSchoolofLaw,supranote70.(emphasisadded).

100 EstablishinganEarlyOfferAlternativeinMedicalInjuryClaims:HearingonSB406BeforetheSenateComm.onJudiciary,162ndGeneralCourt,2012Session(N.H.March15,2012)(statementofDouglasDean,PresidentandCEOofElliotHospital/ElliotHealthSystem).

101 Id.

102 Id.

103 2012N.H.Law288:1.

104 EstablishinganEarlyOfferAlternativeinMedicalInjuryClaims:HearingonSB406BeforetheSenateComm.onJudiciary,162ndGeneralCourt,2012Session(N.H.March15,2012)(statementofCynthiaCooper,M.D.,President,NewHampshireMedicalSociety)(emphasisadded).

105 SeeOfficialDocketofSB406, supranote3.See alsoStatementofJebBradley,Senator,supranote12.

106 SeeStatementofJebBradley,Senator,supranote12.

107 See id.

108 See id.

109 LetterfromGreggL.Hanson,PresidentandCEO,Coverys(ProSelectInsuranceCompany),toGovernorJohnLynch,RequestingVetoofSB406(datedJune13,2012)(withsupportingmemoranda)andLetterfromMaryElizabethKnox,VicePresidentofClaims,MedicalMutualInsuranceCompanyofMainetoGovernorJohnLynch,RequestingVetoofSB406(datedJune12,2012).

110 See id.

111 SeeNewHampshireInsuranceDepartmentAnnualReporttotheMedicalMalpracticePanelandInsuranceOversightCommittee(November1,2011).

112 See id.atExhibit3-B(DateReportedtoDateofClosureforallClaims).

113 See id.atExhibit3-C(DateofInjurytoDateofClosureforallClaims).

114 LetterfromMaryElizabethKnox,VicePresidentofClaims,MedicalMutualInsuranceCompanyofMainetoGovernorJohnLynch,RequestingVetoofSB406(datedJune12,2012).

115 LetterfromGreggL.Hanson,PresidentandCEO,Coverys(ProSelectInsuranceCompany),toGovernorJohnLynch,RequestingVetoofSB406(datedJune13,2012)(withsupportingmemoranda)andLetterfromMaryElizabethKnox,VicePresidentofClaims,MedicalMutualInsuranceCompanyofMainetoGovernorJohnLynch,RequestingVetoofSB406(datedJune12,2012).

116 See id.

117 EstablishinganEarlyOfferAlternativeinMedicalInjuryClaims:HearingonSB406BeforetheSenateComm.onJudiciary,162ndGeneralCourt,2012Session(N.H.March15,2012)(statementofJamesBianco,Esquire).

118 EstablishinganEarlyOfferAlternativeinMedicalInjuryClaims:HearingonSB406BeforetheSenateComm.onJudiciary,162ndGeneralCourt,2012Session(N.H.March15,2012)(statementofBobBest,Esquire).

119 Id.

120 SB406asintroduced2/8/12.

121 SeeRSA519-C:7,II(2012).

122 See id.

123 SeeOfficialDocketofSB406,supranote3,andAmendments2012-1418sand2012-1472s(3/28/12).

124 SeeOfficialDocketofSB406,supranote3(4/18/12).

125 SeeOfficialDocketofSB406,supranote3,andAmendments2012-1980hand2012-2280h(5/16/12).

126 SeeOfficialDocketofSB406,supranote3(5/23/12).

127 SeeOfficialDocketofSB406,supranote3(5/23/12-5/31/12).

128 SeeOfficialDocketofSB406,supranote3(5/31/12).

129 SeeOfficialDocketofSB406,supranote3(6/6/12).

130 See id.

19 New Hampshire Bar JournalFall 2012

131 SeeOfficialDocketofSB406,supranote3(6/20/12).

132 SeeOfficialDocketofSB406,supranote3(6/27/12).

133 SeeStatementofJebBradley,Senator,supranote11.

134 SeeBernardBlack,DavidA.HymanandCharlesSilver,The Effects of “Early Offers” in Medical Malpractice Cases: Evidence From Texas,6J.EmpiricalLegalStud.723-67(2009).

135 See id.at723.

136 See id.(notinglimitationthatTexasimposedacaponnon-economicdamagesef-fectiveSeptember2003,sothelastcasesinthedatasetwerelimitedbythatcap).

137 See idat724.

138 See id.at727.

139 See id.at729.

140 See id.

141 See idat731.

142 Id.at726.

143 See idat724.

144 Id.at732.

145 Id.at724.

146 Id.at723.

147 Id.at724.

148 Id. at742.

149 See id.at738.

150 See id.

151 See id.at741.

152 See id.at742.

153 Id.at754.

154 See id.

155 See id.

156 See id.

157 Id.

158 See id.at755.

159 See id.

160 See id.

161 See id.

162 See id.at755-56.

163 See id.at756.

164 See DavidM.Studdert,MichelleMelloetal.,Claims, Errors, and Compensation Payments in Medical Malpractice Litigation,354NewEng.J.Med.2024,2026(2006)

165 See id.

166 StatementofJoanneDoroshow,supranote3.

167 Black,supra note134,atp.756.

168 See id.

169 See id.

170 See id.

171 See id.at756-57.

172 See id.at756.

173 TestimonyofNeilVidmar,RussellM.RobinsonIIProfessorofLaw,DukeLawSchool,beforetheU.S.SenateCommitteeonHealth,Education,LaborandPensions,“HearingonMedicalLiability:NewIdeasforMakingtheSystemWorkBetterforPatients,”June22,2006at18(citationsomitted).

174 SeeBlack,supranote134,at756-57.

175 SeeStatementofJoanneDoroshow,supranote3.

176 See id.

177 See id.

178 See id.

179 See id.

180 See id.

181 LetterfromPeterWright,ProfessoratUniversityofNewHampshireSchoolofLaw,toChairmanRobertRoweonHouseJudiciaryCommittee,inOppositiontoSB406(datedApril24,2012).

182 SeeBlack,supranote134,atp.757.

183 See id.

184 SeeBernardBlack,DavidA.HymanandCharlesSilver, O’Connell Early Settlement Offers; Toward Realistic Numbers and Two-Sided Offers,7J.EmpiricalLegalStud.379-401(June2010).

185 See idat395.

186 See id.at398.

187 SeeN.H.Const.,Pt.I,Art.14&20.

AuthorsAttorney Holly B. Haines is an attorney at Abramson, Brown & Dugan, P.A. in Manchester, where she devotes her professional practice to representing plaintiffs who are injured by medical malpractice in New Hampshire.  

William D. Woodbury is an attorney at Normandin, Cheney & O’Neil, PLLC, in Laconia. Attorney Woodbury serves on the Board of Governors and as the Legislative Committee Chair for the New Hampshire Association for Justice and de-voted countless hours at the legislature on behalf of NHAJ and the citizens of New Hampshire in active opposition to passage of SB 406.