AMA, 90 Medical Organizations Oppose Tax Changes That Encourage More Lawsuits

AMA joined with 90 other state medical societies and national specialty organizations in sending a strongly worded letter to Treasury Secretary Tim Geithner opposing the U.S. Treasury Department’s consideration of a change in policy to allow a special tax deduction for trial attorneys who enter into certain types of contingency fee contracts with their clients. Specifically, the Treasury Department is considering a reversal in long-standing tax policy maintaining that court and other litigation expenses advanced by trial attorneys in contingency fee cases are not deductible as business expenses. Such a change is estimated to cost taxpayers over $1.5 billion and could act as a financial incentive for trial attorneys to file more speculative lawsuits against physicians and other healthcare providers, contributing to higher medical liability insurance premiums and the overall cost of healthcare. Despite the fact that most medical liability claims are dropped or dismissed, defending against meritless claims averages over $22,000 and takes physicians away from patient care. The letter also expresses concern that a change in tax policy would conflict with long-standing state ethics rules against trial attorneys providing financial assistance to clients without the expectation of being paid back upon the successful conclusion of the case.