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Obama budget includes money to overhaul malpractice laws

Putting his own stamp on a long-standing Republican priority, President Obama is launching a drive to overhaul state medical malpractice laws and cut down on wasteful tests doctors perform because they fear lawsuits.

Obama's budget calls for $250 million in Justice Department grants to help states rewrite their malpractice laws in line with recommendations that his bipartisan debt reduction commission issued last year.

"I think the president is very serious about following up on this," Health and Human Services Secretary Kathleen Sebelius told the Senate Finance Committee on Tuesday.

Specific reforms the money could be used for exclude caps on jury awards that the American Medical Association and GOP lawmakers have pursued for years without success. But they do include measures unacceptable to trial lawyers, an interest group that contributes heavily to Democratic candidates.

Topping the list of ideas in an Obama administration summary of the proposal are health courts. Specially trained judges -- not juries -- would decide malpractice cases, awarding compensation from a set schedule. Plaintiffs' lawyers say that would undermine the constitutional right to trial by jury. But proponents say it would bring predictability, resulting in lower malpractice insurance rates for doctors.

"Health courts offer much more protection for fearful physicians than caps because you are unlikely to get a crazy verdict when you have an expert judge," said lawyer Philip Howard, founder of Common Good, a nonprofit group.

Speaking for trial lawyers, Gibson Vance, president of the American Association for Justice, called the idea "bad policy and bad for patients."

In a related development, a new study shows that imaging tests such as MRIs and X-rays frequently are performed so that doctors can protect themselves from lawsuits.

A review of 2,068 orthopedic patients throughout Pennsylvania showed that almost 35 percent of the imaging costs were ordered for "defensive" purposes, researchers from Children's Hospital of Philadelphia reported at the annual meeting of the American Academy of Orthopaedic Surgeons in San Diego.

Malpractice lawsuits often hinge on charges that the doctor should have ordered more tests, said the lead author of the study, Dr. John Flynn, associate chief of orthopedic surgery at Children's Hospital. "Such a claim may be the driving force of so much of the defensive test ordering," he said.

The cost of defensive medicine is difficult to estimate, but conservative estimates start at around $50 billion a year.

Other malpractice reforms that could be funded under Obama's grant proposal include:

Creating a legal defense for doctors, hospitals and other providers who follow guidelines for best clinical practices and use electronic medical records.

Programs that require hospitals and doctors to disclose mistakes early, offer an apology and compensation.

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