W.House sets $25 mln for medical liability project

WASHINGTON (Reuters) - The White House said on Thursday it had allocated $25 million in grants to states for a pilot program that would seek to ease the impact of malpractice suits on the U.S. medical system, as President Barack Obama pushes for sweeping healthcare reform.

Obama offered the plan in a speech to Congress last week in connection with the wishes of many legislators, particularly Republicans, that medical malpractice laws be reformed as part of an overhaul.

The U.S. healthcare industry costs $2.5 trillion annually but leaves 46 million Americans uninsured and with little access to medical care.

Obama and his fellow Democrats in Congress are fighting hard for legislation on reforms to the system, the president's top domestic policy priority. But they have so far failed to win Republican support.

"Many doctors report that they practice costly 'defensive medicine' because they are fearful of lawsuits," Health and Human Services Secretary Kathleen Sebelius told a news briefing at the White House.

Republicans and doctors have long sought changes in the U.S. malpractice system, such as caps on some types of awards and reductions in spiraling malpractice insurance costs. Trial lawyers -- who traditionally are generous donors to Democrats -- have opposed many reforms.

The trial lawyers organization quickly issued a statement saying that any malpractice change should not risk patients' right to seek justice if they are injured.

"Any changes to the malpractice system must focus on patient safety and preventable medical errors, not limiting patients' legal rights," American Association for Justice President Anthony Tarricone said.

Sebelius said the pilot programs would start quickly.

"The president feels so strongly about this that he wants us to move ahead right now. He's not using this as a lever in the healthcare (reform) debate," Sebelius said."

The demonstration program will provide grants for up to three years for up to $3 million each for states and health systems to develop patient safety and medical liability programs, the White House said.

It will also offer one-year planning grants for up to $300,000 for states and health systems that want to implement plans.

The program calls for a review of the initiatives, to be conducted and reported in December.

(Editing by Xavier Briand)