Our host Sean Harris talks with attorney Michael Shroge about proposed legislation to establish a Medical Compensation System in Ohio and how it could impact Ohioans.

Sean: Hello and welcome to Civilly Speaking, OAJ’s podcast of trending legal topics. I am your host Sean Harris. We are very pleased today to have with us Michael Shroge from the Cleveland office of Plevin & Gallucci. Michael, hello and welcome.

Michael: Thank you for having me.

Sean: We have heard in the news and John Van Doorn has shared with us about this idea of a Medical Compensation System. Tell us, first of all, where is this idea coming from?

Michael: First, we could talk about when it has occurred and where it has occurred and who is behind this. So in April of 2015, House Bill 157 was introduced in the Ohio State Legislature by Representative Jim Butler out of the Dayton area. We had advanced notice that the bill was going to be introduced but did not know at that time the breadth of what it entailed. Upon admission, it has been introduced through the insurance committee and has now stayed there since it’s admission. It did not move in the last session of the House, but was reintroduced this year and it appears as though it will be discussed within committee over the next few months.

Sean: Is this a bill that appears to be generated by the medical community, hospital community. Does it have support from doctors and hospitals?

Michael: No, I think to understand the motivation behind the bill is to understand the breadth of House Bill 157. So, the portion that we are going to focus on today will be what has now been labeled the Medical Insurance Compensation System (MICS), which is a very small part of a much larger piece of legislation. That is, at least if you believe the PR behind it, aimed at trying to reign in medical costs in Ohio. Rep. Butler admitted this portion along with other portions of the bill that address Medicaid spending along with transparency in medical costs, all in an effort to bulk together a huge number that he can try to demonstrate as savings to Ohioans. That then gives you the motivation for why the MICS was being introduced. It was not introduced directly by the Ohio Hospital Association or the Ohio State Medical Association. Nor is there any belief that they were behind its creation or admission into the House. Rather, through our work in investigation, we have found similar bills that were previously introduced in Georgia, in Florida and in several other states that seem to appear to rise out of a non-profit group in Georgia that ironically is owned by an individual who runs the largest medical staffing company in the southern states. So, clearly the language within the statute is geared towards trying to reduce any potential exposure to individual physicians and privately owned physician companies.

Sean: So, you have kind of talked to us about why or maybe what some of the motivations are, at least as far as we know, talk to us about what the MICS accomplishes. We’ve heard it kind of described as a workers’ compensation like system.

Michael: So, this is the interesting part of the bill. It is a complete C change in the law specific to medical negligence. It proposes to introduce a system that does away with the right to a jury by trial for an injured individual. It replaces our constitutional system with what we believe to be, although there have been no studies to talk about the shear vastness in cost of what this will be, be a gigantic bureaucratic system to handle any allegations in claims of injuries caused or deaths caused by medical negligence through the compensation aspect of a claim. So, I think at this point it is important to understand a few of the basic mechanics at least at the starting point. What the bill provides is that a physician or a medical group that has insurance, and that is important, only physicians or medical groups that have a right to participate within this system will be those who have medical malpractice or medical negligence insurance. As a side note, the bill is silent right now as to the limits that will be required by those doctors. There is some fear over that because obviously we would like to have some assurances that even at a basic point those coverages are large enough to now cover the huge economic expense that is medical injuries. However, assuming that the physician or medical group has insurance, they can participate within the system. If they do not have insurance, a claim against a doctor or a hospital or a medical group that does not have medical malpractice insurance would have to submit to our current jury system. The system is sold as a no fault system, as you mentioned much like the workers’ compensation system. However, it’s not truly a no fault system. The way that the bill is sold as a no fault system is to say there is absolutely no barrier to a claimant making that claim. So, from that standpoint with the system that we have now the affidavits of merit and other civil procedural rules would in essence be gone. If we sort of make believe here, we can imagine your little standalone office for filing medical insurance compensation claims and the patient walks in and says I would like to fill out a claim, they allow you to fill out the claim and you are now in the system. This is where as an organization we have significant concerns and where we are opposed to anything that has this type of legislation because at that point the claim goes into a one-sided system. It is going to be run by doctors and or politicians, decided by physicians on behalf of physicians. There is absolutely nothing within the bill at this point that provides any oversight or protections from the general public. So not only are we doing away with the jury system to decide these claims, even at an entry level, we are doing away with any right on behalf of any citizen of Ohio to have any oversight over the negligence that doctors and hospitals create.

Just to then finish up with the initial procedures within the system, the patient makes the claim. At that point it is submitted to a physician panel for review, an initial determination is made as to whether or not the claim has merit. Now, where they sell this as a no fault system is to say that there is going to be a heightened standard of evidence or a heightened standard on behalf of the physician. That is, it will be presumed that negligence occurred and the insurance company on behalf of the physician will have to provide evidence that the care met the standard of care to overcome the initial presumption. But again, we come back to this overriding theme here that that decision is going to be made by a panel of doctors. Now, assuming we have two different tracks. If the physician reviewer determines that there is merit to the claim, the claim will then go to the next stage will be an actuarial stage. The actuarial stage will be a governor appointment insurance representative who will somehow magically determine the value of the claim. Now it should be noted, that at the initial stages of the claim as well as at the actuarial stage the system is really rigged on behalf of the physician and the insurance company. They have a right to ask a patient to submit to independent medical exams. They have an absolutely right under this law to demand any piece of medical evidence they want from the patient. If the patient refuses to give it the claim can be denied. So you can imagine somebody goes in to have their tonsils taken out and they lose their right arm. It perceives that the doctor in this system could go back and ask for this patients birth records. There are no evidentiary protections that would exist within the civil rules or the rules of evidence. Assuming the panel then awards money, the right of appeal exists only on behalf of the physician. The physician would then appeal potentially and that would go into a regular claim in the court of common pleas much like we have now with the bureau of workers’ compensation. You exhaust your administrative appeals; you then have a right to appeal into the court of common pleas. At that particular point, however, it is not an appeal of determination, at least on the physician’s part, of whether or not he did right or wrong here. It is purely an appeal of the value of the claim. The patient has absolutely no right under the system to file an appeal once the award is made. The dollar amount is the dollar amount. So from that stand point you have a governor appointed actuary from the insurance industry who may say that your claim is worth $100 and at that point is to say ok I will take my $100 or you go home.  On the other side of it, however, the physician can say I think that is too much money, file his right of appeal, and try to have that reduced. There is only really one stick at that point being that the physician or his insurance company and is if they do file their appeal they lose what is built into this law and that is a modifier of damages. I can talk about that in a few minutes. The only other thing that I will say about the mechanics of the bill is going back to the beginning, if we are at that point in the road where the physician reviewer determines that there is no merit, at that point the patient does have a right to appeal. However, again much like the workers’ compensation system, if you go into the common pleas system at that point the only determination that is being made is whether the patient can participate in the MICS. It won’t be a jury trial. It will typically be by a judge. It’s going to be just a determination whether it goes back down for redetermination of damages.

Sean: Michael, what you have described here is as fascinating as it is frightening. Of course I am just brimming with questions after that explanation. Let me back up to the set up, you mentioned that this would undoubtedly be a bureaucracy. Do we presume or does the statute spell out whether this is a public bureaucracy or publicly funded government run or has there been attempts made to privatize this system?

Michael: Right now the bill is a little bit vague as it relates to how the system will be funded.  There is no doubt that what it envisions is a massive system. We know comparatively that the bureau of workers’ compensation system is a massive system; more so in dollars than necessarily by personnel. In addition within the mix, we could not only have a massive monetary bureaucratic process but also a massive boondoggle for the amount of people it is going to take to run a system like this. At least in terms of the plain language of the bill, there is language that either individual providers or their insurance companies are going to pay a tax.  Which obviously is fascinating that this is clearly Republican introduced legislation that is proposing probably one of the largest taxes on physicians and medical providers in the State of Ohio.

Sean: And potentially expansion of government at the same time.

Michael: What we perceive to be one of the largest that we have seen in Ohio in several decades. So, there is some irony to that. Obviously the system does speak to the issue that the insurance companies will have to step up and wind up paying for at least the general fund that will be created to pay claims. I don’t think anybody has the illusion that the insurance companies are going to bear that cost on their own. They are clearly going to pass those costs on to not only the individual physicians and the practices, and if that happens the physicians and practices aren’t going to bear that cost, those costs now are going to be borne by the patients of Ohio. So not only do you take away a patient’s right to a jury trial, but now across the entire population of Ohio you are creating a massive peripheral tax on the public of Ohio.

Sean: One thing that we didn’t hear you mention during your description of the statute, and I’m afraid I know the answer to this question, but are there any provisions made for any type of discovery if the system were to come into being or the patient left with whatever they have?

Michael: At least by description it is really one sided as it relates to that. Now, the bill does, and I am going to give it this much credit, it does leave vague and open the fact that an administration, a CEO of the mix, will create rules that will govern part of this process. At least in terms of the introduction of this bill, it is absent and silent what those rules are. In essence, Rep. Butler and the supporters of HB157 are saying we think this is a great system; however we don’t know what this system is going to be. We will leave that up to a governor appointed person to create all of the rules that will govern the discovery within the process. The few rules that are written within the legislation right now appear to be very one sided. They allow the insurance company and the physician or care provider to demand as much discovery as they want. It really is open ended not only in terms of exposing the patient to additional exams and evaluations but also a complete destruction of their privacy and privilege of their private medical information. So obviously when a patient is injured and wants to approach the system, one of the questions that the bill proposed that they have to answer is “when I enter the threshold of the office to file my claim am I also prepared to also completely give up all of the privileges that have been afforded to me by our current rules and federal regulations through HIPPA laws?” There are minor provisions for the patient to demand certain information from the other side but it is very unclear as to what that will be. There does not seem to be any provisions of the right to take depositions of the physicians or care providers or administrators or nurses or anybody peripheral to the claim to do a full level of discovery on the negligence aspect of the claim.

Sean: Michael, you’ve explained, and it sounds like this is nothing short of a massive reorganization of the medical liability system in Ohio, has there been any kind of study to try and figure out what would be the effects if this does become law?

Michael: So we know within our industry and within members of OAJ who I have spoken with since the introduction of this bill that as practitioners we are, and I’ve indicated this to Rep. Butler and other interested parties, they don’t realize the partner that they have in members of OAJ who are the ultimate gate keepers of claims that are brought here in Ohio. And what they don’t recognize and they don’t appreciate is the number of times, like within my particular practice within medical malpractice, how many calls I receive that I tell people “you really don’t have a claim, you can’t move forward with a claim.” Well the interesting thing about this bill is that it immediately reverses my analysis of a case. There will be no analysis. So, anybody who has a Band-Aid taken off wrong in the emergency room and comes out with a Band-Aid burn and feels they have been wronged can go to their medical insurance compensation system office and file their claim. I will start with the anecdotal evidence on the plaintiff’s side, we believe that the number of claims will rise by somewhere in the range of on the low end an additional 50% to probably more in the range of 60-70% of claims that are currently being brought.

Sean: Cause as you mentioned there is no barrier?

Michael: That’s correct. You fill out a piece of paper, you sign your name to it, and your claim under this law on its face is a valid claim that now has to be disproved by the doctor. You know, you are flipping what we have now which is that the burden of proof initially is on the patients. The doctor or care provider need do nothing to defend themselves. They don’t have to offer any evidence. This says the opposite. I brought my claim, it appears to have merit by law and now the physician must prove that they met the standard of care. From an insurance perspective we have seen some evidence not only out of Georgia, which the similar bill has been strongly opposed by the insurance industry in the southern states, but we were provided with some data by what I believe to be the largest insurance provider here in Ohio for professional negligence. They believe the claims will go up in/around the 60-65% range. They believe that the immediate cost to them will exceed well over $100,000,000. I may have that wrong, but it was a massive amount of money. Because, obviously if they are provided coverage to their individual insureds and a claim is made, they will have an absolute obligation to defend. With that being said, we know that the claims will go up. We know that the intermediate barrier of the quality of analysis that lawyers from our organization  bring to these claims to protect the system from either the overabundance of claims or frivolous claims will be gone.  What we now have is a system that exposes physicians to an absolute unknown but likely massive number of claims where they will have been alleged to have practiced negligently.

Sean: Let me play devil’s advocate here, just for a minute. We know that over the past 15, 20, 30 years in Ohio Medical Negligence cases have become increasingly difficult under the current system. Verdicts are way down across the stash. How could this system be any worse from a plaintiff attorney’s perspective than what we have now?

Michael: It’s interesting because you could as a plaintiff, and I have indicated to Rep. Butler and the other interested parties, that there are some aspects of this bill that we think are plausible, we think they are tremendous.  We know since 2003, since the passage of tort reform, that we now have a massive reduction in the number of claims. And that’s not meaning frivolous claims. We are talking a massive reduction in the number of legitimate claims. Rep. Butler recognizes that because in his introduction of this bill in a very lengthy video that he produces and put out, he indicates that one of the problems with our current medical negligence system is the fact that certain claims just simply economically are not viable for attorney in this state or the patients to bring within the system. So on its face we say to Rep. Butler, hey this is fantastic. We do appreciate an effort to expand the access to, our preference being the courts, a system that allows legitimately injured patients to bring their claims. The other aspect of this system that we also believe is good is an effort or at least a goal to try to speed up the system to provide compensation to legitimately injured patients. Rep. Butler has spoken many times within the interested party meetings and then separate meetings that we have had with him as an organization that he perceives that this system will resolve claims at least within a year if not sooner than that. Where we now have a system that we know our Supreme Court advises a timeline of two years for complicated medical negligence cases. We’ve all had experienced, those of us who practice in this area, claims that go well beyond two years, four years, five years. So you take a look at those two basic aspects and we say hey, we could get behind those two parts. But then we get to the killer and the part that as an organization, with the philosophy and believes that we have, we cannot get behind a system that removes any right to a jury of your peers deciding whether or not you should be compensated for your injury. We already have massive limitations in what that means now with tort reform. This system takes it to the Nth degree. When I did my presentation recently at the Winter Convention I had a slide that literally had a nuclear bomb going off because that is how we view this. Any proposed system that does away with a right to a trial by jury to determine what damage should be awarded to an injured individual is something as an organization that goes against everything that we believe in. So, are there aspects of the bill that we absolutely say to Rep. Butler and the other supporters that we love? Yes, we do. Frankly, part of that scares the doctors and the hospitals and the insurance companies. Do we want to open up the flood gates to allow injured individuals to gain access to potential compensation? Of course we do, because we know that within our work and anecdotally within our practices the number of people who walk into our offices that we know have legitimate claims, at least believe they do, and have to say to them, the current system is not set up for you to be able to get justice. So do we like that part of it? We do. The part, as a whole and is the overriding umbrella for this system, is taking this out of our constitutional right to a trial by jury. Which we believe to be sacrosanct to every individual in Ohio, whether you are a republican or a democrat, whether you are an independent, or whether you are a tea party member. It doesn’t matter. Every individual in Ohio should be concern and suspect of a system that takes away your right to a trial by jury.

Sean: Michael, I want to shift gears here a little bit. We end each of these podcasts with a little game that I like to call five questions. Michael Shroge, question number one, other than a lawyer what is the most interesting job that you have ever had.

Michael: I used to lay down new ice in ice rinks.

Sean: When did you do that?

Michael: I was a teenager living in Detroit. We used to take down ice, recondition surfaces, pave the ice surfaces and there was nothing better than at 2 o’clock in the morning, because you had to do it at night, finishing the evening with really nice cold beer that you put down at the end of the ice making system. Pretty good stuff.

Sean: Question Number two, who is your guilty pleasure when it comes to music. Do you have an embarrassing musician that you care to admit?

Michael: Not necessarily embarrassing, although I got turned on to a group called Johnny Swim. Which now on a Sunday morning I can’t get away without playing because my kids are absolutely in love with the group.

Sean: Is it a kids group?

Michael: No, it’s actually an adult group. The daughter of Donna Summers. It’s a duo and I saw them on TV on special called Daryl’s House on Playdium with great live music and we were blown away with the quality of music. Now we own two albums, have them on our Sonos list, in Pandora and we play them all of the time.

Sean: Question Number three, what did your parents do?

Michael: My father was a self-employed electrical engineer. He owned his own business. He was a self-made man. My mother, at least for the early years of my life way back when women called themselves housewives, she was a housewife. She went into the workforce when I was a young teenager and worked within the collections system; first for a local department store and then on a much larger scale on behalf of a very large bank.

Sean: Question number four, what was your first car?

Michael: It was, not a Nissan, but a Datsun Sentra with 125,000 miles on it that had intermitted working front lights two which every once in a while, and I made a habit of caring two flashlights in the glove compartment, the front lights would go out. If I was by myself I would have a flashlight sticking out the window driving down the road. I can’t even make that up.

Sean: No problems with the local gendarmes?

Michael: I avoided them.

Sean: Very good. Question number 5, Michael we know that you practice law with President Frank Gallucci.

Michael: That’s correct.

Sean: True or False, Frank is really as good a cook as he makes himself out to be?

Michael: He is really as good of a cook as he makes himself out to be. But he gets a lot of help because he has so many famous chef friends that it has raised his game and he can’t show his face in his own home making food unless it is that quality.

Sean: Very good. Michael Shroge, thank you very much for joining us here on Civilly Speaking.

Michael: Thank you.