Malpractice lawsuits have long been expensive propositions for doctors and hospitals, especially as regards obstetrics, where an injured infant can mean a lifetime of expensive medical care. A recent court decision, however, threatens to pump these costs through the ceiling and is bringing matters to the point where hospitals are considering closing their obstetrics units rather than risking tremendous losses. Correcting the problem will require a fix to state law — if such can be secured under the watchful eyes of the trial lawyers. Luckily, it seems a deal might be reached.

The case at hand, Desiderio v. Ochs, stems from the tragic story of Samuel Desiderio, who was born in 1986 with hydrocephalus. Samuel underwent surgery at New York Hospital in 1990 and afterward suffered brain damage. A jury determined that, accounting for inflation as instructed over an assumed 55-year lifespan, care for Samuel would cost $50 million. However, after applying a formula set forth in a 1985 law — a tort reform law designed to prevent overcompensation — the bill ran to $140 million, a result upheld on April 8 by the New York State Court of Appeals. Part of the problem is that the formula, Article 50-A, effectively accounts for inflation a second time, at a rate of 4% a year. The Court of Appeals decision is in line with past decisions, but establishes that the Court is unwilling to overturn the problematic formula no matter how absurd the outcome.

Though the judges upheld the award, they were unanimous in the assessment that the result was not the one intended by the Legislature. Judge Albert Rosenblatt wrote, in a concurring opinion, “This appeal tests the separation of powers doctrine to its limits. It would have been easy enough for a less dutiful court to ignore the words of the statute and apply its own methodology, reasoning that the Legislature could not possibly have intended this result. The Court, however, has not done that.” Judge Rosenblatt further stated that New York State and City, which filed briefs in the case, “made cogent assertions, contending that the Legislature did not likely conceive of a result so far out of line with accepted standards of compensation.” But, he continued, “they ask too much of us. As judges, it is not for us to pick up the legislative pen and rewrite the statute.”

The judges were in the right not to rewrite the statute, no matter how absurd the outcome. The flip side of this, however, is that it is now for the Legislature to take up, as the Court unanimously urged it to do. The complication is that the trial lawyers, who work on contingency, are going to oppose vehemently any move that could reduce the amounts of awards — and the many settlements that are based on the highest awards. One compromise being discussed would be to purchase the trial lawyers’ acquiescence by offering to remove the cap on malpractice contingency fees, which are currently limited to 10% of the excess over $1.2 million.

It remains to be seen if this is the tack that will be taken by a number of New York hospital groups, which, as our Julie Satow reported in yesterday’s New York Sun, are busy drafting a bill to reform how malpractice costs are calculated. It could be the best deal available as this poorly written law festers, already potentially having infected hundreds of back malpractice cases that will be decided or settled under Desiderio regardless of what reform is undertaken going forward. But before Albany acts, it — and the voters — might remember that much of the tax increases now passing are going to fund a health care system whose costs are already swollen by malpractice premiums and the defensive medicine practiced to avoid lawsuits.