The Malpractice "Crisis": Fibs vs. Facts

The Malpractice “Crisis”: Fibs vs. Facts

Fib: High medical malpractice awards are driving up the cost of medical malpractice insurance:
FACT: Consumer groups, a bipartisan legislative committee, and even the insurance industry say insurers' bad business practices, not jury awards, are driving up premiums:

"[M]edical malpractice premiums charged by insurance companies do not correspond to increases or decreases in payouts, which have been steady for 30 years. Rather, premiums rise and fall in concert with the state of the economy." Medical Malpractice Insurance: Stable Losses/Unstable Rates, Americans for Insurance Reform (www.insurance-reform.org), under the direction of J. Robert Hunter (Director of Insurance for the Consumer Federation of America, former Federal Insurance Administrator and Texas Insurance Commissioner) October 10, 2002.
"[The] insurance industry has played a role in the continuing limitations on accessible and affordable insurance coverage for the health care providers …" Final Report of the Insurance Availability and Medical Malpractice Industry Committee, a bipartisan committee of the West Virginia Legislature, issued January 7, 2003.
"I don't like to hear insurance-company executives say it's the tort system - it's self inflicted.'" - Donald J. Zuk, Chief Executive of Scpie Holdings Inc., a leading malpractice insurer in California, Wall Street Journal, June 24, 2002.

Fib: Caps on non-economic damages will bring down doctors' malpractice insurance premiums:
FACT: Experience in states with caps has shown - and insurance executives and tort "reformers" admit - that caps and tort "reform" won't lower doctors' premiums.

In California, which limits non-economic damages to $250,000, the average actual premium is $27,570 - 8 percent higher than the average of all states that have no caps on non-economic damages. Medical Liability Monitor, 2001.
Malpractice premiums in California increased by 190% during the first 12 years following enactment of the $250,000 MICRA cap. Proposition 103 Enforcement Project Study, 1995. It took California's Proposition 103, which instituted stringent insurance reform, to lower and stabilize malpractice premium rates.
"[A]ny limitations placed on the judicial system will have no immediate effect on the cost of liability insurance for health care providers." Final Report of the Insurance Availability and Medical Malpractice Industry Committee, a bipartisan committee of the West Virginia Legislature, issued January 7, 2003.
"Nevada's new medical-liability program won't see immediate improvement in premium rates after a recent legislative initiative … [A]nother company insuring physicians for medical liability, American Physicians Assurance, also wasn't planning any reduction." Best's Insurance News, August 20, 2002.
"We wouldn't tell you or anyone that the reason to pass tort reform would be to reduce insurance rates." Sherman Joyce, President of the American Tort Reform Association, "Study Finds No Link Between Tort Reforms and Insurance Rates," Liability Week, July 19, 1999.
"Insurers never promised that tort reform would achieve specific premium savings ..." From a March 13, 2002 press release by the American Insurance Association (AIA).
An internal document citing a study written by Florida insurers regarding that state's omnibus tort "reform" law of 1986 said that "The conclusion of the study is that the non-economic cap ... [and other tort 'reforms'] will produce little or no savings to the tort system as it pertains to medical malpractice." Medical Professional Liability, State of Florida, St. Paul fire and Marine Insurance Company, St. Paul Mercury Insurance Company.
In Missouri, which has caps, the number of claims has been declining, the cost per claim has been declining, yet medical malpractice premiums are going up.

Fib: Pennsylvania is experiencing a doctor "exodus."
FACT: The number of doctors practicing in the state continues to increase.

Between 1999 and the end of 2002, the number of doctors paying into the state's MCARE Fund increased by more than 900. The MCARE numbers are the most reliable measure of physician population because only doctors actually practicing in the state are required to pay into the fund. Meanwhile, the Pennsylvania Medical Society, which continues to claim that more than 1,100 doctors have left the state, has admitted to an 800-doctor gain since 2002, according to The Morning Call of Allentown, Pa.
The nonpartisan, independent General Accounting Office issued a report in August 2003, in which it found no evidence of a doctor "exodus" in Pennsylvania and no significant reduction in the availability of health care due to malpractice pressures.

Fib: Juries are giving medical malpractice victims outrageously high awards.
FACT: Median payouts are relatively low - and have not risen significantly over the past decade.

Despite questionable "anecdotal" evidence of excessive jury verdicts, the hard facts show that malpractice awards are rarely excessive. The median malpractice payout for 2000 is $125,000, according to the National Practitioner Databank. Even when a jury awards millions to a plaintiff, the amount actually collected is limited by the defendants’ insurance policy limits.
"Not only has there been no 'explosion' in medical malpractice payouts at any time during the last 30 years … payments (in constant dollars) have been extremely stable and virtually flat since the mid-1980s." Medical Malpractice Insurance: Stable Losses/Unstable Rates, Americans for Insurance Reform, October 10, 2002.

Fib: There are many frivolous medical malpractice lawsuits.
FACT: Most people with legitimate medical malpractice claims never go to court.

A study done by the Harvard Medical Practice Study Group determined that for every 8 potential medical malpractice claims, only 1 claim was actually filed. “Patients, Doctors, and Lawyers: Medical Injury, Malpractice Litigation and Patient Compensation in New York,” Harvard Medical Practice Study Group (Cambridge, Mass.: Harvard University, 1990).
"Legal professionals, legislators, and the public in general often receive a distorted picture of medical negligence litigation based on selective reporting of cases by the mass media and by propaganda efforts of groups advocating changes to American tort laws." “Medical Negligence, the Litigation Process and Jury Verdicts in Medical Malpractice Cases: Implications for Indiana,” Neil Vidmar, Ph.D., Russell M. Robinson II Professor of law at Duke Law School, December 2, 2002. See also “Java Jive: Genealogy of a Juridical Icon,” Michael McCann, William Haltom, and Anne Bloom, 56 University of Miami Law Review 114 (2001).

Fib: Non-economic, or "pain and suffering," damages make up the bulk of payouts to malpractice victims.
FACT: That is a completely unsupportable claim. The Pennsylvania Insurance Department does not keep any data on how jury verdicts in malpractice cases are divided between economic and non-economic damages. The vast majority of cases are settled out of court for a lump sum payment, so there is no distinction between economic and non-economic damages. While the medical lobby, in arguing for caps, cites "anecdotal" evidence - an occasional multimillion-dollar verdict for pain and suffering - there is NO evidence that pain and suffering damages have contributed to any increase in payouts.

Fib: Malpractice payouts are caused by greedy victims trying to "hit the lottery."
FACT: Most malpractice victims or their survivors file lawsuits because they are severely injured or killed, not because they want to get rich quick. Meanwhile, medical errors remain at epidemic proportions in the United States, killing as many as 195,000 patients a year by one estimate, but the medical lobby refuses to discuss patient safety as a way to lower the number of lawsuits.

Fib: Insurers constantly settle frivolous lawsuits in order to "make them go away."
FACT: Insurers themselves admit that they don't settle frivolous claims.

"In interviews with liability insurers that I undertook, the most consistent theme from them was: 'We do not settle frivolous cases!' … [Insurers'] policy on frivolous cases is based on the belief that if they ever begin to settle cases just to make them go away, their credibility will be destroyed and this will encourage more litigation." “Medical Negligence, the Litigation Process and Jury Verdicts in Medical Malpractice Cases: Implications for Indiana,” Neil Vidmar, Ph.D., Russell M. Robinson II Professor of law at Duke Law School, December 2, 2002.

Fib: We should follow the example of California, where caps are working:
FACT: Though California has some of the most draconian limits on the rights of patients in medical malpractice (via a 1975 law called MICRA), average medical malpractice premiums are higher than in states without caps, premiums and health care costs continue to rise, and most Californians want to eliminate the cap. The state had to pass insurance reform to stop skyrocketing premiums after its tort "reform" succeeded only in filling insurers’ pockets.

In California, which limits non-economic damages to $250,000, the average actual premium is $27,570 - 8 percent higher than the average of all states that have no caps on non-economic damages. Medical Liability Monitor, 2001.
Malpractice premiums in California increased by 190% during the first 12 years following enactment of the $250,000 MICRA cap. Proposition 103 Enforcement Project Study, 1995. It took California's Proposition 103, which instituted stringent insurance reform, to lower and stabilize malpractice premium rates.
Since 1998, premiums in California have risen 37% compared to the nationwide average of just 5.7%. American Medical Association, Socioeconomic Characteristics of Medical Practice, 2000-2002.
California's health care costs have continued to skyrocket at a rate faster than inflation since the passage of MICRA. Inflation as measured by the Consumer Price Index rose 186% between 1975 and 1993; yet California's health care costs grew by 343% during the same period. In addition, California's health care costs have grown at almost twice the rate of inflation since 1985.
Californians overwhelmingly oppose their state's caps. A 1997 statewide poll of Californians shows: 74% approve of removing MICRA's limit on non-economic damages in certain cases; 66% believe the MICRA cap should be eliminated for doctors who negligently harm children and 58% believe the MICRA cap should be eliminated for doctors who negligently cause death. Fairbank, Maslin, Maulin, & Associates California statewide poll, 1997.

Fib: Non-economic damage caps limit only frivolous "pain and suffering" claims by plaintiffs.
FACT: Non-economic damages compensate for real injuries and losses.

Non-lawyers frequently refer to non-economic damages as damages for "emotional distress." This is a misnomer. Non-economic damages compensate for real, permanent harms that are not easily measured in terms of money, including blindness, physical disfigurement, loss of fertility, loss of sexual function, loss of a limb, loss of mobility and the loss of a child.

Fib: Non-economic damage caps don't harm people.
FACT: Non-economic damage caps deprive patients most seriously injured by medical malpractice of legitimate compensation and discriminate against children, women, seniors and minorities.

When children, women, seniors, and minorities win malpractice lawsuits, more of their compensation is made up of the non-economic damages that are taken away by caps. (Because they get less in lost wages, or “economic” damages, than white males in the workforce). Therefore, in states that cap non-economic damages, children, women, seniors and minorities usually receive significantly less compensation than white males with exactly the same injuries. Is this fair?
Despite having no impact on health care or insurance costs, non-economic damage caps have a tremendously negative impact on the permanently injured - especially, for example, children who may live for 70 years with brain damage or other catastrophically debilitating injuries.
California's 1975 cap on non-economic damages is worth $40,389 in 2002 dollars. A patient would need to recover $1,547,461 in 2002 for the equivalent medical purchasing power of $250,000 in 1975.

Fib: Politicians should impose a one-size-fits-all arbitrary cap on cases instead of letting juries decide cases on their individual merits, because juries can't be trusted to give reasonable verdicts:
FACT: Juries are competent and conservative, and jury verdicts tend to be consistent with judgments of neutral medical experts.

"The assertion that jurors decide cases out of sympathy for injured plaintiffs rather than the legal merits of the case … have been made about malpractice juries in the United States since at least the nineteenth century. Yet, research shows no support for these claims." “Medical Negligence, the Litigation Process and Jury Verdicts in Medical Malpractice Cases: Implications for Indiana,” Neil Vidmar, Ph.D., Russell M. Robinson II Professor of Law at Duke Law School, December 2, 2002.
A 1992 comparison of jury verdicts and the reviews of insurance company-hired doctors showed that jury verdicts tended to be "consistent with" the doctors' assessments of medical records. “The Influence of Standard of Care and Severity of Injury on the Resolution of Medical Malpractice Claims,” Taragin et al, 117 Annals of Internal Medicine 780 (1992).

Fib: A Bush Administration U.S. Health and Human Services (HHS) report shows that America's legal system is the cause of high medical-malpractice insurance rates for doctors.
FACT: The one-sided "report" is nothing more than 28 pages of medical and insurance industry talking points.

Key sources in the "report" have direct money ties to the insurance industry. Law Professor Jeffrey O'Connell, cited throughout the report, took $67,000 from the insurance industry to oppose the 1988 California insurance reform initiative (Proposition 103, which was approved by voters) to roll-back insurance rates.
The American Tort Reform Association (ATRA) and the law firm of its general counsel, Victor Schwartz, are cited frequently, including as a source of statistics. Schwartz's law firm - Shook, Hardy & Bacon - lobbies for USAA Insurance Co., Health Insurance Association of America, CIGNA Corp., and the American Association of Health Plans.
The "report" relies on data from the Physician Insurers Association of America, a trade group of medical-malpractice insurance companies owned by health care providers.
Key numbers are dubious or old. A company called Jury Verdict Research (JVR) is cited as a source of jury awards in medical malpractice cases. But on June 24, 2002, The Wall Street Journal reported that Jury Verdict Research's 2,951-case database "has large gaps." The company collects information unsystematically, can't say how many cases it misses, and doesn't include "zero" verdicts, the newspaper reported.
"Personal correspondence" is cited repeatedly as a source of statistics. Some of the most exaggerated examples of premium increases are based on the personal correspondence of U.S. Rep. Charles "Chip" Pickering (R-MS).
The "report" relies heavily on a survey of doctors conducted by Harris Interactive and paid for by the American Medical Association.
Key facts are left out. When claiming that malpractice premium increases are higher in states that don't cap malpractice awards, the "report" omits examples that don't fit its argument. Nine states without damage caps had no increase in premiums, but that doesn't appear in the "report."

Fib: High malpractice premiums for doctors cause the patients' health insurance premiums to rise.
FACT: The cost of medical malpractice liability premiums amount to less than 1 percent of total U.S. health care costs.

The Consumer Federation of America reports that medical malpractice premiums comprise only 0.59 percent of national health care costs - so even eliminating medical liability altogether would do little to reduce health care costs. Malpractice Suits Not Driving Medical Costs Up, Says Group, The New Orleans Times-Picayune, May 5, 1999, at E3.

Fib: Caps will solve today's malpractice "crisis."
FACT: Caps will only add insult to injury for patients most seriously injured by malpractice, and unfairly discriminate against children, women, seniors, and minorities - while enriching the insurance companies that caused premiums to rise because of their own bad business decisions and investments.
Juries, not a one-size-fits-all arbitrary cap determined by politicians, should decide what medical malpractice victims receive in compensation.

The only thing we need to reform is the insurance industry - not the legal system.