Medical malpractice insurers earning more than ever

For Immediate Release: October 6, 2009

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

Medical Malpractice Insurers Earning More Than Ever

10 biggest malpractice insurers have average profits
higher than 99% of Fortune 500 companies

Washington, DC—As Congress debates nationwide health care reform, a new analysis reveals malpractice insurers have long-played a cruel hoax on legislators and the public. By systematically distorting profits and losses, insurers created phony “financial crises,” so lawmakers would limit the legal rights of injured patients. Today, while premiums and health care costs skyrocket, malpractice insurers have average profits higher than 99 percent of Fortune 500 companies.

The key findings of the report, which analyzes the annual financial statements of the 10 largest U.S. medical malpractice insurers, include:

• The average profit of these insurance companies is higher than 99 percent of all Fortune 500 companies and 35 times higher than the Fortune 500 average for the same time period.
• Malpractice insurers have seen their profit margins range from 5.9 percent to 74.8 percent, with an average of 31.2 percent.

Medical malpractice insurers have underestimated profits and overestimated losses, creating overblown insurance “crises” to garner support for limiting patients’ legal rights. Then years later after the “crises” abated, revised filings show the companies were never in the financial peril they claimed.

• After overestimating losses, insurers have since reported that losses over the last five years have been approximately 13.5 percent lower than initially reported.
• By overestimating losses, companies have underestimated profits. Insurers averaged about 5.1 percent higher profits last year and 12.4 percent higher profits two years ago; these levels of profits will likely rise as upward revisions are made.
• Medical negligence laws were passed under false pretenses. Overblown reported losses were used by the insurance industry to justify new measures restricting the rights of those injured by medical negligence.

“Insurance companies are gouging doctors on their premiums to mislead lawmakers. And today, injured patients are often left with no avenue to pursue justice, while health care costs continue to skyrocketing,” said American Association for Justice President Anthony Tarricone, managing partner at Kreindler & Kreindler LLP.

“As Congress looks to overhaul our nation’s health care system, it’s clear that limiting the legal rights of patients won’t lower health care costs or cover the uninsured,” continued Tarricone. “The focus should be on eliminating medical errors that injure or kill tens of thousands of Americans every year. Insurance companies clearly don’t need another handout.”

As part of its ongoing series on the topic, AAJ earlier released Medical Negligence: A Primer for the Nation’s Health Care Debate and The Truth About “Defensive Medicine.” These reports, as well as The Insurance Hoax: How Doctors and Patients Pay for the Huge Earnings of Medical Malpractice Insurers, 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.

Senate Hearing Highlights Victim’s Medical Device Nightmare, Asks Congress to Hold Manufacturer Accountable

Contact: Jennifer Fuson
American Association for Justice
Jennifer.Fuson@justice.org
202-965-3500 x369

Senate Hearing Highlights Victim’s Medical Device Nightmare, Asks Congress to Hold Manufacturer Accountable

Iowa Patient Testifies in Favor of Legislation to Restore Legal Rights
Through Civil Justice System

Washington, DC—Two years ago, Michael Mulvihill of Bettendorf, Iowa, was driving with his wife across the Midwest to visit his son, daughter-in-law, and grandchildren when he saw a blue light flash before his eyes. He felt his body shaking and thought it was from hitting road debris. He soon realized his heart defibrillator was malfunctioning and sending electrical shocks throughout his body while he was driving on the interstate.

His nightmare continues because he cannot hold the manufacturer of his faulty medical device accountable for their faulty product because of a U.S. Supreme Court decision last year that gave the manufacturer complete immunity. Today, Mulvihill will testify before the U.S. Senate Health, Education, Labor, and Pensions Committee, asking for Congress to pass the Medical Device Safety Act (MDSA), legislation that would restore the right of patients to hold manufacturers of medical devices accountable in court when their devices have malfunctioned.

Mulvihill had an irregular heartbeat, and was implanted with a defibrillator in 2006 to control his heart rhythm and pulse. The device intended to save his life nearly killed him and his wife when it malfunctioned while he was driving. The anxiety from the episode led Mulvihill into taking early retirement because his job required so much interstate travel.

A representative from Medtronic confirmed the device had shocked Mulvihill 22 times in 53 minutes. The wire that connects the defibrillator to the heart was recalled four months later after over a hundred reports of the lead malfunctioning had been reported to the Food and Drug Administration (FDA). However, because of a U.S. Supreme Court ruling last year, Mulvihill does not have any recourse to hold the manufacturer accountable.

In February 2008, the U.S. Supreme Court ruled in Riegel v. Medtronic that because the Food and Drug Administration (FDA) had approved a medical device through the pre-market approval process, patients injured by medical devices do not have any recourse to hold the manufacturers accountable. The Supreme Court ruled earlier this year in Wyeth v. Levine that patients harmed by prescription drugs can hold manufacturers accountable in state courts, creating a double standard between prescription drugs and medical devices.

“I relied on this medical device to save my life. Instead, the trauma I experienced because the device was not safe cost me my career and crippled my lifestyle,” said Mulvihill. “Medical device companies should be held accountable for the safety of the products they produce and profit from. I am asking Congress to restore my right to seek justice for myself and medical device patients everywhere.”

“Medtronic put profits ahead of patient safety. They were aware the device was failing at abnormally high rates but continued to market it, as alleged in lawsuits filed against the company,” according to Wendy Fleishman, Mulvihill’s attorney with Lieff Cabraser Heimann & Bernstein, LLP. “Medtronic should not receive the benefit of a judicial doctrine granting the company immunity.”

Medtronic’s Sprint Fidelis’ lead, like Mulvihill’s, is the subject of multidistrict litigation in U.S. District Court in Minnesota. In January, U.S. District Court Judge Richard Kyle dismissed over 1,400 patients’ cases, citing the Supreme Court decision in Riegel v. Medtronic. The ruling stated, “The Court recognizes that at least some Plaintiffs have suffered injuries from using Sprint Fidelis leads, and the Court is not unsympathetic to their plight. … Plaintiffs’ remedy, therefore, lies with Congress, and not with this Court.”

MDSA, sponsored by Sen. Edward Kennedy (D-MA), Rep. Frank Pallone (D-NJ) and House Energy and Commerce Committee Chairman Henry Waxman (D-CA), would restore the right to seek justice in state courts for victims of faulty medical devices like heart defibrillators, prosthetic knees, and hips.

“The Medical Device Safety Act is necessary to protect patients from defective devices and make sure manufacturers are held accountable,” said Linda Lipsen, Senior Vice President of Public Affairs at the American Association for Justice. “The Supreme Court has affirmed that state law offers an important layer of consumer protection, and Congress should make clear that this applies not just in cases of pharmaceutical drugs, but also medical devices approved by the FDA that are later faulty or malfunction.”

For copy of Mulvihill’s testimony, please contact kyle.murphy@justice.org.

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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.