Gov. Paterson’s proposal to lift the cap on attorneys’ fees for malpractice suits could bankrupt some hospitals or force others to cut vital services and raise patient costs, industry ex perts warn.
New York City hospitals already pay $1.4 billion in medical-malprac tice insurance premiums and would have to cough up another $500 million or more if Paterson pushes the plan through the leg islature, according to the Greater New York Hospital Association.
“You already have hospitals losing money. You have Medi caid cuts. If you increase your premiums, it might very well put somebody under,” said GNYHA executive vice-president Susan Waltman, whose association represents more than 300 hospitals.
The Post reported last week that Paterson is eager to eliminate a two-decade-old medical-malpractice reform law that created “contingent fees” for plaintiff lawyers who win awards or settlements.
Under the current sliding-scale fee system, lawyers can receive 30 percent for the first $250,000 in judgments. The amount drops to 25 percent for the next $250,000 and 20 percent for the following $500,000. The fee decreases to 15 percent for the next $250,000 and hits 10 percent for judgments over $1.25 million.
Paterson’s proposal would be a windfall for lawyers, who could take a flat one-third cut on judgments and settlements.
Paterson’s office declined to comment.
Hospitals and insurers fear that without caps, plaintiff lawyers will swing for the fences and file bigger claims to get higher judgments.
This will affect the money insurance companies pay out to victorious plaintiffs. The insurers, in turn, would likely increase the rates it charges doctors.
Bigger awards and settlements drive up the premiums that hospitals and doctors pay for malpractice coverage. One insurance executive projected that premiums will skyrocket by 25 to 40 percent. Large city hospitals already pay more than $100 million a year in premiums.
The president of New York Trial Lawyers Association, Nick Papaine, said uncapping fees would not spawn more lawsuits and higher claims.
“There have been independent studies that show that contingent fees do not result in fewer claims or smaller payouts,” he said.
He said the proposal is just one part of a legislative package that would reduce malpractice premiums and health-care costs while improving patient safety.
jfanelli@nypost.com