Seth Higgins: How lawsuit abuse is killing healthcare in Pennsylvania

Since the end of the Covid-19 pandemic, Pennsylvania has been rocked by hospital closures, reductions in healthcare services, and a steady stream of news about hospital systems’ shaky financial positions. The causes of this are many, but a decline in pandemic related federal funding for hospitals — coupled with inflationary pressures and labor shortages — are commonly cited factors.

The seemingly endless waves of bad news cause our political debates around healthcare to take one of two forms. Either both sides of our political divide blame one another for the state of healthcare while offering few actionable solutions, or people simply resign themselves to the view that healthcare policy is a hopeless morass.

However, there are two policy options at Pennsylvania’s disposal that can improve healthcare affordability and accessibility: tort reform and the elimination of lawsuit venue shopping. These policies should enjoy bipartisan appeal, but as we’ll see, it isn’t so simple.

These reforms were recently raised at a public hearing on hospital and health system sustainability in front of the Pennsylvania Senate Institutional Sustainability and Innovation Committee.

In his opening remarks, Penn Highlands Healthcare CEO Steve Fontaine stated that, “Rural healthcare facilities cannot withstand the significant financial shock that can be experienced with an uncapped medical malpractice lawsuit” and “tort reform and venue shopping needs to be addressed” in Pennsylvania.

These views were reiterated by Nicole Stallings, the President and CEO of the Hospital and Healthsystem Association of Pennsylvania, which is an advocacy organization that represents hospitals in Harrisburg. She said, “between the threat of nuclear verdicts and the recent Supreme Court rule change allowing venue shopping, our hospitals are one lawsuit away from closing their doors.”

As these statements indicate, Pennsylvania has a toxic legal framework that combines unlimited claims on non-economic damages in medical malpractice cases with the ability for trial lawyers to venue shop for plaintiff friendly courts and jury pools.

To explain further, when someone sues a doctor for medical malpractice, he can seek economic damages, such as lost wages, medical expenses, and lost earning potential; and non-economic damages, which can include difficult to quantify losses such as pain and suffering. Pennsylvania is one of about fifteen states without a limit on non-economic damages.

This means one lawsuit can result in a claim massive enough to economically cripple a doctor or entire hospital system. This is the feared “nuclear verdict” Ms. Stallings was referencing.

The next ingredient in this deadly arrangement is the ability for trial lawyers to venue shop. This change occurred in 2022 when the Pennsylvania Supreme Court issued a ruling that overturned two decades of precedent. As Spotlight PA reported at the time, “the state Supreme Court directed that plaintiffs can resume filing medical malpractice cases in any county in the state, rather than restricting them to filing in the county where the alleged medical harm occurred.”

The article goes on to state:

“[This] is a huge win for trial lawyers in the state, who have long argued that limiting plaintiffs when it comes to the venue is unfair because juries in some counties, especially in more conservative rural areas, are seen as far less friendly to malpractice claims than others.

But critics of the decision say it will once again open the floodgates to plaintiff lawyers engaging in so-called venue-shopping, the practice of filing lawsuits in jurisdictions — with Philadelphia topping that list — where juries award larger payouts. Such an increase would then lead to skyrocketing insurance rates for care providers.”

It is too early to fully understand the impact of this ruling, but early indications suggest the critics were correct. The American Medical Association reported that Pennsylvania is experiencing some of the fastest-rising medical malpractice premiums in the country. 

Malpractice premiums are much higher in Philadelphia than the rest of the state. As Philadelphia courts extend their reach across the commonwealth, higher malpractice insurance costs will follow. This is particularly troubling for rural hospitals that operate on razor-thin margins and for specialties that have costlier insurance premiums, such as obstetrics.

Taken together, this is a lethal regulatory environment for the few remaining specialists in rural Pennsylvania. While it is hard to know the extent, this likely contributed to the fact that what was once a maternity care sandbox in Pennsylvania has grown to a maternity desert that can be seen from space.

As I suggested, something can be done about this. The easiest fix is for the Pennsylvania legislature to pass a law capping non-economic damages in medical malpractice cases. This isn’t a novel idea. Ohio already has a law limiting non-economic damages to $250,000 in most instances.

The next solution, limiting the ability to venue shop, is a more difficult problem to solve. This would require the Pennsylvania Supreme Court to reverse its 2022 decision or for the Pennsylvania legislature to pass a constitutional amendment that removes rulemaking power from the Court. 

Theoretically, both policies should be able to receive bipartisan support and draw together diverse political coalitions. After all, Mr. Fontaine, the CEO of Penn Highlands that was quoted as supporting these reforms, leads the primary healthcare provider for much of rural northern and western Pennsylvania, including in my native Elk County. I have been critical of the leadership of Penn Highlands on several occasions, but on this point, Mr. Fontaine is correct. Political progress requires us to set aside differences to advance shared interests.

Conservatives have long opposed litigation happy trial lawyers that claim to speak for the little man while raking in massive sums of money by burdening institutions and businesses with frivolous lawsuits. Conversely, healthcare affordability and accessibility are key components of the Democratic Party’s identity.

Only one hurdle remains: trial lawyers. When trial lawyers think of heaven, they don’t envision St. Peter’s pearly gates. They instead picture the inside of a Philadelphia courtroom. For this reason, this powerful constituency funds politicians on both sides of the aisle, but they are particularly powerful within the Democratic Party. Trial lawyers also play an outsized role in funding election campaigns of Democrat-aligned judges, so they won’t surrender this policy regime without a fight.

Voters may want to improve the accessibility and affordability of healthcare, and the tools are there to move policy in that direction. But as long as trial lawyers and politicians beholden to them don’t want that, Pennsylvanians can’t have it.

Seth Higgins is a native of Saint Marys, Pennsylvania. He currently resides in Philadelphia.