Staff Report
Published Nov. 3, 2009

U.S. Sen. Lindsey Graham, R-S.C., introduced legislation Monday that would require losing plaintiffs in medical malpractice lawsuits to pay legal costs for both sides.

The so-called “loser pays” bill, which Graham and U.S. Sen. Saxby Chambliss, R-Ga., sponsored, is meant to reduce the number of frivolous medical malpractice lawsuits, the senators said.

As the nation debates health care reform, some say health care and insurance cost are unnecessarily inflated by physicians who feel pressured to perform unnecessary tests or practice “defensive medicine” out of fear of lawsuits. Proponents of tort reform also say the cost of physicians’ malpractice insurance drives up medical costs.

“Reform of medical malpractice is one of the key missing ingredients from the health care reform proposals being debated in Congress,” Graham said in a statement. 

“When both parties in a lawsuit are subject to financial penalty, people think longer and harder about bringing a questionable case forward,” he said.

Read the Business Journal’s ongoing series on health care reform:

• Part 1: Small businesses say they can’t compete with insurance costs
• Part 2: Health care providers call for reform but differ on what shape it needs to take

The bill, called the Fair Resolution of Medical Liability Disputes Act of 2009, would require preliminary, nonbinding arbitration for medical malpractice claims before they go to court. 

If one or both of the parties rejects the arbiter’s decision, the claim can be taken to court. But, in doing so, the party would fall under the loser-pays rule.

If the court judgment is less favorable than the arbiter’s decision for the party that rejected it, the rejecting party pays the opposing party’s attorney fees from the date of the arbiter’s decision, unless the court finds that the requirement would be unjust.

States could create their own alternative dispute resolution system.

The new system would apply only to doctors who count Medicare patients as at least 25% of their total patients.

“While no one with a valid claim for medical malpractice should be denied his day in court, those who bring frivolous lawsuits raise the cost of health care for everyone,” Chambliss said in a statement. “‘Loser pays’ should go a long way toward discouraging such junk lawsuits and lowering the cost of practicing medicine.”