Ed,
Thanks for posting your plaintiff's lawyer's brief on behalf of that part of the profession. Like the NYT and the WP, the reporting or briefing is significant not only for what it reports but for what it chooses not to report.
This topic is inherently difficult because you get selected statistics from either side, in other words, you get statistics which support their brief.
Just to provide a little balance, here's an article which presents the other side of the debate:
iii.org
"Medical Malpractice
THE TOPIC
OCTOBER 2004
Medical malpractice insurance covers doctors and other professionals in the medical field for liability claims arising from their treatment of patients.
The cost of medical malpractice insurance has been rising. The hard market began in 2000, after almost a decade of essentially flat prices. Rate increases have been precipitated in part by the growing size of claims, particularly in urban areas. Among the other factors driving up prices is a reduced supply of available coverage as insurers exit the medical malpractice business because of the difficulty of making a profit and rapidly rising medical care costs. A Towers Perrin survey predicts that health care costs will rise by 12 percent in 2004 on top of an estimated 15 percent last year. Depending on plaintiffs’ age and degree of medical impairment, medical costs resulting from the medical malpractice incident may continue for decades.
Rate increases have caused hardship for doctors in some cases. The medical community is pushing for limits on noneconomic damages and other reforms that may reduce costs.
RECENT DEVELOPMENTS
Financial Data: According to the National Underwriter Data Services, the medical malpractice combined ratio, a measure of profitability, was 137.5 in 2003, the latest data available. This means that for every medical malpractice premium dollar collected, insurers have been paying out almost 1.38 dollars in claims and expenses. The combined ratio for medical malpractice has barely changed since 2002. Losses and loss adjustment expenses rose slightly in 2003 from the previous year but premiums rose 18 percent for the period. For all lines of insurance, the combined ratio was 99.5 in 2003 and 106.8 in 2002.
According to data from the National Association of Insurance Commissioners, medical malpractice insurers’ return on net worth was a negative 7.4 percent in 2002, down from a negative 4.7 percent in 2001. Results have deteriorated steadily from 1998 when the rate of return was 7.6. Results in 2002 were worst in the following states: Arkansas, Nevada, Montana, Mississippi, Illinois, and Missouri, with return on net worth ranging from minus 33.7 percent in Arkansas to minus 24.4 percent in Missouri.
Claims: The cost and frequency of claims continue to rise. A study by Aon Risk Services, released at the beginning of 2004, finds that medical malpractice claims costs have increased at a steady 9.7 percent since 2000 and are likely to rise at the same rate in 2004. Frequency, or the number of claims, is growing at 3 percent a year; claim severity (the dollar amount) is increasing 6.5 percent annually. Hospital liability claim costs for 2004 are expected to reach almost $150,000 per claim, compared with $79,000 per claim in 1996. The average claim against a physician is expected to reach $178,000, compared with $120,000 in 1996.
In January 2004 the Congressional Budget Office released “Limiting Tort Liability for Medical Malpractice.” The study found that on average premiums for all physicians nationwide rose by 15 percent between 2000 and 2002, almost twice as fast as total health care spending per person. The increases during that period were even more dramatic for certain specialties such as obstetricians/gynecologists (22 percent) and internists and general surgeons (33 percent). Average claim payment rose from $95,000 in 1986 to $320,000 in 2002, representing an annual growth rate of almost 8 percent. However, while the size of claims is rising steadily, the rate or frequency of claims per 100 doctors has remained more or less constant, with about 15 claims filed, about 30 percent of which result in insurance payouts. The study also found that insurers faced reduced income from investments, which in the past helped offset underwriting losses.
Federal Tort Reform Legislation: On April 7 the U.S. Senate rejected Republican leaders’ third attempt at legislation limiting medical malpractice lawsuits. This version of the bill narrowed the breadth of reform to focus on two of the areas most affected by the crisis: the obstetrics/gynecology and emergency/trauma care sectors. The bill would have limited noneconomic damages to $250,000 and established a fee schedule for lawyers’ contingency fees. Senate Majority Leader Bill Frist vowed to continue pressing for malpractice reforms.
State Actions: In Oregon, Nevada and Wyoming ballot initiatives will give voters the opportunity to limit noneconomic damages in medical malpractice cases. (Florida has another type of initiative, which would cap lawyers' fees at 30 percent of the first $250,000 in compensation and 10 percent of any compensation above that amount.) In Oregon, where a statutory cap on damages was found unconstitutional by the state Supreme Court in 1999, passage of the initiative will amend the constitution to allow a $500,000 noneconomic damages cap. In Wyoming, the initiative seeks authority for the legislature to impose caps.
In Nevada the initiative includes proposals that would prohibit lawmakers from limiting attorneys' fees and also medical malpractice damage awards, overturning a 2002 law that caps awards for pain and suffering in medical malpractice cases at $350,000. A September 2004 poll taken by the Las Vegas Review-Journal found that 46 percent of respondents support the proposal, 39 percent are against and 15 percent are undecided.
Two other recent state polls found a majority of respondents against some caps on jury awards. In Connecticut, a majority of those polled said they favored limiting jury awards for pain and suffering to $1 million, but not to $250,000. The poll was commissioned by the Connecticut State Medical Society. In Illinois, a poll for the St. Luis Post-Dispatch and the television channel KMOV-TV shows that a strong majority of Illinois residents oppose the notion that pain-and-suffering monetary awards in malpractice suits should be capped at a set amount as a means of controlling insurance costs and stopping the exodus of doctors.
A lawsuit was filed in state court in Miami in late August 2004 to test the constitutionality of Florida's new $500,000 cap on medical malpractice noneconomic damages. Lawyers argue that the law strips a person of his or her constitutional right to access to the courts. The measure was enacted last year in an effort to control skyrocketing medical liability insurance rates for doctors.
Mississippi has become the most recent state to implement reforms. In June Governor Haley Barbour signed a bill that limits damages for pain and suffering to $500,000 in medical malpractice cases and $1 million in other cases. The new law also includes restrictions on punitive damage awards.
Effects of Tort Reform, MICRA: A study conducted by the RAND Corp.’s Institute of Civil Justice in Santa Monica, California, found that the 1975 California Medical Injury Compensation Reform Act (MICRA) has reduced the damages that doctors and their insurers are ordered to pay in medical malpractice lawsuits by 30 percent. MICRA limits jury awards for pain and suffering to $250,000 and also limits attorney fees. The study, which reviewed 257 plaintiff verdicts, also showed that compensation to injured patients declined by 15 percent while the fees for plaintiffs’ attorneys fell by 60 percent. Caps on economic damages were imposed in 45 percent of trials that ended in a victory for plaintiffs. Those with the highest percentage loss as a result of caps on noneconomic awards were often those with injuries that caused relatively little economic loss but a significantly lower quality of life, according to the study. A major effect of the law was to make plaintiffs’ lawyers accept more of the cost of the litigation. The law, which was enacted when California was facing an insurance crisis, is being considered as a model for medical malpractice reform in other states.
Proposals to Ease the Crisis:
(1) Increase Medicaid payments to obstetricians: In Virginia, to stem the loss of doctors who practice obstetrics, one of the higher risk specialties, in rural- and low-income areas, in August, Gov. Mark Warner issued an emergency order raising Medicaid payments by 34 percent. Other states have also considered similar subsidies.
(2) Create a no-fault system that would provide more money for injured patients and would pay to treat all injuries, not just those caused by negligence: Costs would be high but under the current system 60 percent of every dollar goes towards legal and administrative costs. By some estimates, under a no-fault system the proportion would drop to 20 to 30 percent.
(3) Take action against the small proportion of doctors with multiple judgments against them and who drive up the cost of insurance for all: In Florida, where a constitutional amendment that that would take away medical licenses from those with three or more medical malpractice judgments against them has been proposed, a study found that about 7 percent of the state's practicing doctors would be affected.
(4) Form Joint Underwriting Associations: The Missouri Medical Malpractice Joint Underwriting Association (JUA) was activated in July 2004 after the state determined that coverage in the open market was difficult to come by. So that it’s not in competition with private insurers, the JUA is issuing “occurrence” type policies. These pay claims that stem from incidents that happened when the policy was in force even if the claim is filed after the policy has expired. Since the JUA is a new entity, it does not have claims outstanding from earlier periods. Most medical malpractice insurers now write policies on a claims-made basis, paying claims that are filed when the policy is in force even if the incident happened some time ago. The JUA’s rates must be actuarially sound but if, despite this, it loses money, it can call on liability insurers doing business in the state to share the losses in proportion to each company’s market share.
(5) Appoint a commission to study the problems and evaluate possible solutions, as in Ohio.
(6) Set up a market assistance program as in Ohio and other states: Operated by the insurance department or other agency or association, programs are designed to help applicants for medical malpractice insurance find coverage.
(7) Form a Captive or Risk Retention Group: Risk retention groups (RRGs) and captives are part of what is known as the alternative market. In 2003 between 30 and 40 such groups were formed in the health care field. RRGs provide an alternative for health care providers facing 200 to 300 percent increases in premiums for malpractice insurance from traditional insurance companies. One example is a group of Texas doctors who, in September 2003, set up a captive to offer medical malpractice coverage to the 3,000 doctors working within the Memorial Hermann Health hospital system. In this captive, policies are limited to $500,000 per claim with a $1 million in aggregate claims per year. The captive planned to write $10 million in premiums in its first year.
(8) Create special courts of law to handle medical malpractice cases: In Massachusetts, the Administration of Governor Romney and the Harvard School of Public Health are studying the possible establishment of tribunals of administrative law judges in that state.
(9) Ask patients to pay a voluntary fee to offset insurance costs, as some doctors are reported to have done.
Jury Awards and Settlements: New research from Jury Verdict Research suggests that jury awards are stabilizing, but the range of awards is moving upwards. Median medical malpractice jury awards have held steady at about $1 million over the three years 2000-2002, according to JVR. However, awards ranged from a low of $11,000, almost double the amount the previous year, to a high of $95 million. The average award in 2002 hit $6.25 million, up from $3.91 million in 2001. However, only a small faction of cases go to trial.
BACKGROUND
Brief History: The insurance industry tends to be cyclical. The medical malpractice insurance segment experienced a period of crisis in the early 1970s, when several private insurers left the market because of rising claims and inadequate rates. The exodus of capacity resulted in an availability crisis. Over the next 15 years, various attempts were made to ease the explosion in claims costs — tort reform, increased diagnostic testing, improved peer review, and increased communication between doctors and patients. These efforts appear to have had a positive impact. The number of claims dropped. However, the size of claims — the dollar amount — has continued to grow, although initially not at the fast pace reported earlier in the decade.
Aggressive campaigns to reform state laws governing medical liability lawsuits began in the 1970s. Every state except West Virginia passed reforms. New Hampshire's entire reform act was subsequently struck down as unconstitutional by its Supreme Court, but Indiana's, which was the most comprehensive in the nation when it went into effect in 1975, has been found constitutional in all challenges and has helped to keep physicians' premiums down in that state. California's Medical Injury Compensation Reform Act (MICRA), also enacted in 1975, which caps noneconomic damages and modifies the collateral source rule, is also considered a model law, see below.
Responding to the problem of availability, physicians formed doctor-owned malpractice insurance companies to provide coverage. These companies now write about half of all the medical malpractice insurance in the nation. Since these new companies had not experienced any losses, they could initially charge much lower rates. Later they suffered the fate of their private insurer predecessors, having to pay claims of increasing frequency and size as prior malpractice incidents of those they insured came to light. This, in turn, necessitated charging higher insurance rates.
Reasons for the increased incidence of malpractice claims are not entirely clear, but several contributing factors have been suggested. In addition to the fact that people became more litigious than in the past, the crisis of the 1970s, which was extensively reported by the media, may have made people more aware of physicians' vulnerability to malpractice suits. Other factors were the loss of an intimate relationship between families and their doctors and the use of medical experts to testify in malpractice cases. Physicians have also accused lawyers of being excessively eager to bring malpractice suits because of the high fees the lawyers can collect when their clients win.
More recently, there has been a rise in public distrust of the medical profession and publicity about the number of medical errors which has led the public to believe standards are declining when in fact the reverse is true. In addition, changes in the judicial environment are increasing costs. It is easier to litigate, to find counsel and build a case using information on the Internet, for example. Some industry observers say that juries have become desensitized to large numbers. While awards do get reduced, the results of appeals are not publicized, which leads to higher claim demands and settlements. Others cite a growing resentment to large for-profit health care firms, the caliber and strength of the plaintiffs’ bar and a greater willingness on the part of physicians to testify against another physician.
Prevalence of Medical Malpractice: A study (generally known as the Harvard study) commissioned by New York State in 1986, and released in 1990, showed that actual malpractice is relatively rare. Of the New York hospital cases examined, the incidence of adverse events, or injuries resulting from medical "interventions" or treatment, was 3.7 percent. The percentage of adverse events due to what the physician team characterized as "negligence" (not necessarily a legal definition) was 1 percent. However, only one in eight who suffered from an adverse event due to negligence filed a medical malpractice claim, and only one in 15 received compensation. Most adverse events resulted in only minimal and transient disability and most of the patients' medical care expenses were paid for by health insurance. This helps to explain why only a small percentage of patients who are injured as a result of negligence file medical malpractice claims. However, a significant portion (22 percent) of patients who did not file medical malpractice claims suffered moderate or greater incapacity. In a second phase of the study, researchers confirmed that some of the tort claims filed provided little or no evidence of medical malpractice or even an adverse event, suggesting that the tort system is "very error-prone," at least in its initial stages.
Effects of Tort Reform: Between February 1986 and May 1987 the General Accounting Office issued five reports on medical malpractice. The third, published in December 1986, "Medical Malpractice: Six State Case Studies Show Claims and Insurance Costs Still Rise Despite Reforms," singled out the reforms enacted in California in 1975 as among the most effective in moderating increases in the cost of malpractice insurance and the size of awards.
California’s reforms have helped stabilize the medical malpractice environment in that state, making the coverage more affordable than in many other urban areas. MICRA has seven major elements: a collateral source rule which requires that juries be told when plaintiffs have other sources of compensation for their injuries, a cap of $250,000 on noneconomic awards such as compensation for pain and suffering, and periodic payments rather a lump sum for awards of more than $50,000. It also requires lawsuits generally to be filed within three years of the injury, includes a specific scale for attorney’s fees, requires that plaintiffs' attorneys give 90 days advance notice to the defendant of their intention to file a lawsuit, and stipulates that contracts for medical services may include provisions for binding arbitration.
Types of Medical Malpractice Tort Reform: A Health Policy Report on the medical malpractice liability crisis published in the January 15, 2004 issue of the New England Journal of Medicine focuses on tort reforms, noting that they can be divided into three types: reforms limiting access to the courts, through shortening statutes of limitation, for example; reforms intended to modify liability rules, to control the number of claims and size of payouts by eliminating joint and several liability, for example; and reforms directly addressing the size of awards, through caps on damages, for example."
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