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Myth: Spikes in Litigation Cause Medical Malpractice Crises

5 comments

In a recently-published article in Chest, David A. Hyman, M.D., and Charles Silver, J.D. examine what they call "five myths of medical malpractice," the first of which is that medical malpractice crises are caused by a deluge of lawsuits against bad doctors. The data, according to the authors, just doesn’t support that assertion.

Myth—Spikes in Malpractice Litigation Cause Malpractice Crises

This myth says that "malpractice crises"—those times in history when malpractice premiums become too high for many doctors and hospitals to afford, and fewer insurance companies remain willing to offer coverage—is caused by sudden rises in payouts or claim frequencies.

Even the American Medical Association (AMA) perpetuates this belief, stating in March 2006 that, "Excessive meritless lawsuits against neurosurgeons and ER physicians threaten access to emergency care." Earlier, in 2002, Richard Corlin, M.D., past president of the AMA, stated that multi-million-dollar awards handed out by juries drive up the premiums, which then drives insurers out of the malpractice insurance market, while the remaining ones increase rates to try to cover future awards.

Research Doesn’t Support the Conclusion

According to Hyman and Silver, however, "extensive research indicates that these highly salient anecdotes of run-away jury verdicts are thoroughly unrepresentative." They assert that since most lawsuits result in voluntary settlements rather than jury verdicts, one must study closed claims to get a more accurate picture. When reviewing that data, the conclusion is that "both the frequency of malpractice claiming and the payments per claims were either stable or declining during the period that preceded the latest malpractice crisis."

American political activist and attorney Ralph Nader agreed in a 2003 article published by CommonDreams.org, stating, "Malpractice cases filed and actual payments in constant dollars have been level for many years; about nine of ten malpractice claims do not result in any lawsuits being filed, according to various studies. Yet the human toll is deadly. A Harvard study estimated that gross malpractice just in hospitals takes 80,000 American lives a year plus causing hundreds of thousands of serious injuries."

Data Shows Litigation Follows Injuries

Hymen and Silver go on to quote more data, noting that, "Payout per physician was roughly stable from 1992 to 2001, but began dropping in 2003 and is now 46 percent below the 1992 level." They acknowledge that the decline is largest in states that capped total or noneconomic damages, but noted other states without caps have also experienced large and sustained declines.

Should we be surprised that the data doesn’t support the myth? Hyman and Silver say no—the liability system responds to the frequency of serious medical injuries. Outlandish jury verdicts aren’t representative of most lawsuits, and are often dramatically cut by judicial oversight or through other means.

Research by the Robert Wood Johnson Foundation also noted, "The strongest studies have found that the malpractice environment has had only small or no effects on the supply of physician services overall."

What Then, Causes Medical Malpractice Crises?

Here, Hyman and Silver don’t have any real answers for us. They note that insurance scholars have theorized that underpricing and under-reserving in soft market periods may have something to do with it.

Nader asserts that some doctors are paying $50,000 to $100,000 a year to their malpractice insurers because "the companies have learned in the past thirty years to over-classify their risk pools, thereby reducing their number to specific specialties like obstetrics or orthopedic surgery in order to charge much more. In addition, by not surcharging the few bad physicians in these specialties, the good specialists pay as much as the incompetent ones with a large number of payouts to their wounded patients."

 

5 Comments

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  1. ErikL says:
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    I do not think this is as simple as it’s made out to be. I think there are quite a few variables when med-mal costs either go up or down. Most people don’t realize that all types of insurance are loosely related. If a carrier sees more risk then they did in the past….this can cause insurance prices in numerous markets to go up. Is this fair? No not really…..but this is how the insurance market works.

    I think something else this article should have touched upon is tort reform in Texas. This was supposed to decrease healthcare costs for Texans….and it didn’t do that at all.

    There are numerous factors that can effect medical malpractice insurance costs….and until we touch upon a majority of them….doctors and healthcare professionals will continue to pay a premium.

  2. Jay Menna says:
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    The tort reform in Texas did reduce malpractice insurance costs. Rates are 40% of what they were pre tort reform.

    Additionally 3 new malpractice insurance carriers (Advocate, Medicus and Capson) were born in Texas as a direct result of the tort reform.

  3. Jessica says:
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    So, Jay Menna, let me get this straight. Limit the recoveries of seriously injured people to less than they deserve. Bailout the wrongdoers by reducing the penalties to them and their carriers thus encouraging rather than discouraging their bad conduct. Require Texas taxpayers to pick up the difference in Medicare and Medicaid costs. As a result, Texas gets a couple of new insurance companies without a single dollar in reduced health care costs. Do you really think that is a “fair trade”?

  4. Mark Bello says:
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    Jessica: Well said. The trade off is not worth it. Insurance companies and negligent physicians are laughing at citizens who support “tort reform” against their own best interests. Tort reform encourages bad conduct by not punishing it. It bails out the bad guys and passes the buck to the taxpayers. And, worst of all, it under-compensates seriously injured victims who must turn to the entitlement system to make up the difference. I thought Republicans were for personal responsibility and less taxes. They are and always have been on the wrong side of this issue. Great post Eric!

  5. Jay Menna says:
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    Jessica:

    I did not comment on the merits or fairness in any way shape or form.

    I simply corrected a factual misrepresentation.

    Rates are, in fact, 40 Percent lower.

    It would seem that you are presupposing my motives.