Tort Law Changes Won't Reduce Malpractice Premiums

For Immediate Release: October 29, 2009

Contact: Ray De Lorenzi, American Association for Justice
202-965-3500 x369
AAJ Press Room

New Data Shows Tort Law Changes Won’t Reduce Malpractice Premiums

Insurance companies lobby to limit patients’ legal rights,
yet never pass savings onto physicians or consumers

Washington, DC—Tort law changes have failed to reduce malpractice insurance costs, and states with caps on damages often have higher premiums than states without caps, according to an analysis of just-released liability data.

While insurance companies have claimed tort law changes would lower physicians’ premiums, this has not been the case. There is either no difference in rates between cap and non-cap states, or cap states actually have higher premiums – underscoring how a state’s liability laws play no role in lowering insurance or overall health care costs. Doctors’ premiums rise and fall based on the insurance cycle, totally unrelated to the legal system.

The new data shows:
• Average liability premiums across internists, general surgeons and OB/Gyns are nearly identical for states with or without caps.
• Average liability premiums for OB/Gyns are nearly identical for states with or without caps.
• Average liability premiums for general surgeons are 9.3% higher in states with caps.
• Average liability premiums for internal medicine are 9.9% higher in states with caps.

“Malpractice insurers promised tort law changes would lower premiums, yet it has not happened,” said American Association for Justice President Anthony Tarricone. “While these companies make record profits off the backs of doctors, patients injured through no fault of their own are often unable to seek recourse. This information comes at an important time in the health care debate – providing clear evidence that tort law changes won’t decrease costs.”

The above statistics were derived from data released this month in Medical Liability Monitor. More information and charts on this data can be found at www.justice.org/clips/premiums2009.pdf.

As part of its ongoing series on the topic, AAJ earlier released Medical Negligence: A Primer for the Nation’s Health Care Debate, The Truth About “Defensive Medicine,” and The Insurance Hoax: How Doctors and Patients Pay for the Huge Earnings of Medical Malpractice Insurers, all of which can be located at www.justice.org/medicalnegligence.

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As the world's largest trial bar, the American Association for Justice (formerly known as the Association of Trial Lawyers of America) works to make sure people have a fair chance to receive justice through the legal system when they are injured by the negligence or misconduct of others--even when it means taking on the most powerful corporations. Visit http://www.justice.org.

Caps undermine accountability and don’t deliver cost savings.

GTLA member and Communications Committee Chairman Andy Childers wrote the following piece appearing in the AJC today:

Caps undermine accountability and don’t deliver cost savings.

By C. Andrew Childers

We’ve been told for so long that lawsuits and large jury verdicts are the reason for our excessive health care costs that, despite the absence of any factual basis for such an allegation, some still think it’s true.

Supporters of so-called tort reform claim that the threat of lawsuits forces doctors to order unnecessary or excessive tests and procedures to protect themselves — a phenomenon they call “defensive medicine.”

In reality, both the Congressional Budget Office and the Government Accountability Office under President George W. Bush cast serious doubts as to whether defensive medicine even exists.

The town of McAllen, Texas, may illustrate this point best, as it is the home of the most expensive health care in the nation. Despite having caps on damages an injured victim may recover, doctors in McAllen still routinely order excessive testing and procedures. They don’t do so out of fear of lawsuits — Texas law already immunizes them.

They do so because the fee-for-service structure set up by the health insurance industry actually encourages doctors to order them. The more tests and procedures doctors perform, the more they get paid. After Texas capped damages, allowing negligent doctors to harm patients without the fear of lawsuits, the number of medical malpractice complaints to the Texas State Medical Board actually rose from 2,942 to 6,000 in just one year.

During the debate over reforming our health care system, tort reform — and more specifically, caps on damages a victim may recover no matter how badly he or she is injured — has been slyly added to the mix by the those out to derail health care reform at any cost. The facts prove that placing arbitrary limits on medical negligence verdicts would have little or no impact on the overall costs of health care.

The New England Journal of Medicine published a study concluding that “portraits of a malpractice system that is stricken with frivolous litigation are overblown.” The National Bureau of Economic Research found that tort reform laws do not avert physician shortages nor do they lead to better patient care.

Data from the American Medical Association shows that the number of practicing physicians has actually been increasing across the board for many years. And the number of physicians is significantly higher in states without caps on damages.

In most states, malpractice premiums have continued to go up, while the number of malpractice claims filed has remained stable or has gone down. Less than 1 percent of all civil cases are malpractice cases, and 48 states already have malpractice limits. And yet, the cost of health care continues to skyrocket.

In the U.S., preventable medical errors are the leading cause of accidental death — and the sixth leading cause of death. A study by the Institute of Medicine found that 98,000 Americans die each year as a result of this preventable negligence. Just 6 percent of doctors are responsible for nearly 60 percent of negligent care — and the courts are the only effective means of holding them accountable. But capping damages a victim may recover undermines this accountability.

Our forefathers devised a fair and just way for citizens to seek justice when someone harms them — through a trial before a jury. They didn’t believe that government should predetermine the outcome of a trial by limiting how juries assess individual cases. Taking away patient rights — by capping damages and limiting their 7th Amendment right to trial by jury — does not improve the quality of our health care system or produce cost savings. Health care reform should be about making sure that every American has access to quality, low-cost health care, not about limiting the constitutional rights of innocent patients harmed by preventable medical negligence.

C. Andrew Childers, an attorney with Childers & Schlueter, is a member of the Georgia Trial Lawyers Association.

Editorial in the Marietta Daily Journal

Joe Kirby, Editorial Page Editor of the Marietta Daily Journal pens a great column:

No Miracle Cure
by Joe Kirby
Columnist
September 20, 2009 01:00 AM

Let's say you go to the doctor or surgeon for what is supposed to be a routine procedure, like a colonoscopy or facelift. But thanks to the doctor's or hospital's negligence or ineptitude, the outcome is anything but routine. For a Marietta woman whose case was heard last week by the Georgia Supreme Court, the outcome was horribly disfiguring facial scars - scars so severe her lawyers describe the photographs of them as too gruesome for public distribution.

"Too bad," say tort reform-minded lawmakers around the country about the victims in such cases.

They are pushing to put caps on damage awards in malpractice lawsuits brought in the wake of such cases. In fact, the Georgia Legislature already imposed such caps back in 2005 shortly after the Republicans took control of that body for the first time in more than a century. They capped "pain and suffering" awards (as opposed to economic damage awards) at just $350,000.

I'm sure that $350,000 is more than enough to ease the pain of a mangled face. Aren't you?

And what about the case of an unfortunate Fulton County infant, who, thanks to a botched circumcision in 2004, will go through life missing a third of his penis? I'm sure that every last one of the males reading this column feels that $350,000 would be more than adequate compensation for spending the rest of their life missing a third of his penis. Especially any tort reform-minded congressmen or state legislators, apparently.

Many tort reformers in Georgia and around the country are enamored with the notion that malpractice reform should be the cornerstone of any effort to improve the nation's health care system. They want to make it much harder to pursue meritorious medical malpractice lawsuits and want to cap awards at ridiculously low levels in order to try to dissuade people from filing them, and attorneys from taking them.

The 2005 Georgia General Assembly was on the cutting edge of med-mal reform back in '05, you might say. The law it passed, with its $350,000 cap on non-economic damages, is so severe - so hard-hearted - that if your stay-at-home spouse, or your young child (i.e., anyone who is not employed or who lacks an earnings history), is inadvertently killed or maimed for life by a doctor, the most the plaintiff can hope to ever recover via a jury trial is that $350,000.

The state Supreme Court last week heard arguments in the case brought by Betty Nestlehutt, now 75, of Marietta, whose doctor inadvertently shut off nearly all of the flow of blood to the skin of her face during plastic surgery, causing gaping wounds to later open up across the lower half of her face as the skin died.

After hearing all the evidence, the 12-person jury found her pain and suffering damages were worth $900,000. Her doctor's lawyer argues that that amount should be automatically reduced to $350,000. The Supreme Court must decide on the constitutionality of the caps - that is, whether, as Justice Carol Hunstein wondered aloud last week, the caps have turned the right to trial by jury into a "hollow right."

Tort reform advocates argue that soaring malpractice insurance fees are driving doctors out of Georgia and into retirement; hence the need for the caps. Yet in Georgia, doctors are not required to even carry malpractice insurance. All I know is that the phone book is still overflowing with listings for doctors - just as it was before the awards were capped - and that WellStar Kennestone Hospital's "footprint" atop the hill on Church Street keeps getting bigger and bigger.

Those pushing for med-mal reform like to portray it as "jackpot justice." And yes, there have been abuses, such as John Edwards' shamelessly over-the-top - and eventually extremely lucrative - summations to juries in a string of lawsuits on behalf of babies who he claimed suffered cerebral palsy because their doctors failed to perform Caesarian deliveries.

And Republicans also argue, credibly I think, that the fear of lawsuits has caused doctors to practice "defensive medicine" - ordering multitudes of expensive but often unnecessary tests, mostly for "CYA" reasons in case they are later sued.

Yes, we should be very wary of the pitfalls of Obamacare, but be ware as well of tort reformers' claims that malpractice reform is the miracle cure that will, almost by itself, cure all that ails the country's medical system.

There has to be a better way of protecting doctors from frivolous lawsuits than by the kind of arbitrary, one-size-fits-all jury-award caps passed by the Georgia General Assembly. Those caps have nothing to do with the evidence of the case and serve only to hurt catastrophically injured patients whose claims have already passed muster by a judge and jury.

If you don't believe me, just ask Ms. Nestlehutt - or wait a few years, and ask that poor kid from Fulton County.

Joe Kirby is Editorial Page Editor of the Marietta Daily Journal and author of "The Bell Bomber Plant."

'Tort Reform' would not lower healthcare costs

The New York Times blog, "Prescriptions: Making Sense of the Health Care Debate" posted an informative interview on August 31, 2009. Author Annie Underwood interviews Tom Baker, professor of law and health sciences at the University of Pennsylvania School of Law, about so-called "tort reform" and the national health care debate.

Q.

A lot of people seem to have taken up the cause of tort reform. Why isn’t it included in the health care legislation pending on Capitol Hill?

A.

Because it’s a red herring. It’s become a talking point for those who want to obstruct change. But [tort reform] doesn’t accomplish the goal of bringing down costs.

Q.

Why not?

A.

As the cost of health care goes up, the medical liability component of it has stayed fairly constant. That means it’s part of the medical price inflation system, but it’s not driving it. The number of claims is small relative to actual cases of medical malpractice.

Q.

But critics of the current system say that 10 to 15 percent of medical costs are due to medical malpractice.

A.

That’s wildly exaggerated. According to the actuarial consulting firm Towers Perrin, medical malpractice tort costs were $30.4 billion in 2007, the last year for which data are available. We have a more than a $2 trillion health care system. That puts litigation costs and malpractice insurance at 1 to 1.5 percent of total medical costs. That’s a rounding error. Liability isn’t even the tail on the cost dog. It’s the hair on the end of the tail.

Q.

You said the number of claims is relatively small. Is there a way to demonstrate that?

A.

We have approximately the same number of claims today as in the late 1980s. Think about that. The cost of health care has doubled since then. The number of medical encounters between doctors and patients has gone up — and research shows a more or less constant rate of errors per hospitalizations. That means we have a declining rate of lawsuits relative to numbers of injuries.

Q.

Do you have numbers on injuries and claims?

A.

The best data on medical errors come from three major epidemiological studies on medical malpractice in the 1970s, 1980s and 1990s. Each found about one serious injury per 100 hospitalizations. There hasn’t been an epidemiological study since then, because people were really persuaded by the data and it’s also very expensive to do a study of that sort. These data were the basis of the 1999 report from the Institute of Medicine, “To Err Is Human.”

Q.

And what percent of victims make claims?

A.

Those same studies looked at the rate of claims and found that only 4 to 7 percent of those injured brought a case. That’s a small percentage. And because the actual number of injuries has gone up since those studies were done — while claims have remained steady — the rate of claims is actually going down.

Q.

So the idea that there are lots of frivolous lawsuits is . . .

A.

Ludicrous.

Q.

In those cases that are brought, are jury awards excessive?

A.

There are already caps on awards in many states. These tend to be on non-economic damages — not medical expenses or lost wages, but typically on pain and suffering. The first was in California in the 1970s. There is pretty good research on that, showing it reduced medical liability payments. These caps vary from state to state, but they’re generally set around $250,000 to $500,000.

Q.

Many people would think that a quarter-million to a half-million dollars is a lot of money for pain and suffering.

A.

When California adopted its cap in the mid-1970s, it set it at $250,000. That doesn’t mean everyone got that much. It was the maximum. But that was considered a fair amount at the time. Since then, think how much inflation has eaten into that. These caps typically don’t index for inflation.

Q.

So a patient can get reimbursed for medical costs, but they’re limited for pain and suffering.

A. They get reimbursement of medical costs in principle. But in fact, they don’t, because the lawyer has to be paid. These cases can cost $100,000 to $150,000 to bring, so the patient has to deduct that amount from any award.

Q.

Why are these cases so expensive?

A.

You need expert witnesses who must be compensated for their time, which is valuable. You need depositions, which are expensive. You have to hire investigators. You have to pay your junior staff. It’s not worth bringing a suit if the potential award is less.

Imagine you go to the emergency room with appendicitis. For whatever reason, they fail to diagnose it. Your appendix bursts, and you spend a couple weeks in the hospital. I’ve had lawyers tell me they would not take a case like that, even if it’s a slam-dunk. The damages wouldn’t be enough — medical expenses, maybe a month of lost salary, although the patient might have short-term disability insurance that would cover a large part of that. It’s not enough to justify going to court.

Q.

So you’re saying that a case has to be serious to be worth trying.

A.

The medical malpractice system only works for serious injuries. What it doesn’t work for is more moderate ones. Lawyers discourage people from bringing suits if their injuries are not serious in monetary terms — a poor person or an older person who can’t claim a lot in lost wages. That’s why obstetrician-gynecologists pay such high premiums. If you injure a baby, you’re talking about a lifetime-care injury. Gerontologists’ premiums are exceedingly low.

That’s the reason I say if people are serious about tort reform, they should improve compensation for moderate injuries. Nobody likes that idea, by the way. They say it would make the system more expensive, not less expensive. More people would bring claims. That says to me that the critics are not serious about tort reform.

Q.

But it’s not just the cost of premiums and litigation. What about the charge that it causes doctors to practice “defensive medicine,” ordering tests that are expensive and unnecessary?

A.

A 1996 study in Florida found defensive medicine costs could be as high as 5 to 7 percent. But when the same authors went back a few years later, they found that managed care had brought it down to 2.5 to 3.5 percent of the total. No one has a good handle on defensive medicine costs. Liability is supposed to change behavior, so some defensive medicine is good. Undoubtedly some of it may be unnecessary, but we don’t have a good way to separate the two.

Q.

Tell me more about the 1996 study.

A.

It was published in The Quarterly Journal of Economics by Stanford economist Daniel Kessler and Dr. Mark McClellan, who was head of the Centers for Medicare & Medicaid Services under President George W. Bush. For two types of heart disease — heart attacks and ischemic heart disease — the authors found that 5 to 7 percent of the additional costs in Florida, compared to other states with lower medical malpractice liability, could be attributed to defensive medicine. This was based on 1980s data.

Using that estimate, some politicians used to say that medical malpractice cost the system $50 billion a year. But you can’t blindly say that all diseases are the same as heart disease, and if you want a nationwide estimate, you can’t say every state is the same as Florida. Furthermore, the second study, published in 2002 in The Journal of Public Economics, found that much of the difference disappeared as managed care took hold in Florida in the 1990s.

Q.

But many doctors complain about having to practice defensive medicine.

A.

Doctors will say that. But when you dig down, you find that what’s really happening is that doctors tend to do what other doctors around them do. They go along with the prevailing standard of care in their region — which in many cases isn’t even a state, but a city or county.

Q.

If medical malpractice doesn’t explain the high costs of our health-care system, what does?

A.

A variety of things. The American population is aging. We’ve had advances in technology that are expensive. We’re also a rich nation, and the richer you get, the more money you spend on health care. And compared to other countries, we have heavy administrative costs from the private-insurance system.

Q.

If it’s not true that medical malpractice is driving the high cost of medical care in this country, why won’t the argument go away?

A.

It makes sense to people intuitively — in part, because they’ve been told it so often. And it’s a convenient argument for those who want to derail the process. Maybe it’s a deep political game. Maybe they’re raising it to say, we’ll back off tort reform if you back off the public option.

Q.

What about former Senator Bill Bradley’s idea that medical courts with special judges should be established?

A.

Mr. Bradley has been backing tort reform for as long as I can remember, so this is hardly a compromise for him. I’m not saying medical courts would be a bad idea, as long as they’re not set up in a way that insulates medical providers from responsibility. That’s a big caveat.

Q.

What about Senator John Kerry’s assertion that it’s “doable” to rid the system of frivolous lawsuits?

A.

I guess it’s doable because there aren’t very many frivolous suits.

Speeding Bill Passes GA House

Gov. Sonny Perdue’s proposal to charge what some call "super speeders” an extra $200 on their traffic fines was passed by the Georgia House of Representatives.

Under the proposed law, speeders who are travelling at more than 85 mph on an interstate or four-lane highway and those who top 75 mph on other roads will be hit with the new fine.

There is a revenue implication: The governor’s office estimates that the new law could create an additional $23 million a year to help subsidize hospital emergency room operations and to improve emergency trauma care in rural areas.

Our thanks to Macon.com.

Is the FDA Broken?

Many think so. A recent article in Newsday highlights a number of problems.

"Many defenders acknowledge the FDA is struggling.

"'Broken' is the kind of word that's sort of a fighting word," said Dr. Frank Torti, the cancer researcher serving as acting FDA commissioner. "We have recognized for a long time that more is needed. Because of a lack of (legal) authorities and inadequate resources, it's really hard to do the job."

One Representative suggests that that the agency is either nonfunctional or dysfunctional, or both.

For more, go here.