THE MALPRACTICE “CRISIS:” MYTH

I. The real cause of increased insurance rates is the insurance “cycle” and insurance mismanagement, not high payments to malpractice victims.

1. “For all the worry over higher medical expenses, legal costs do not seem to be the root of the recent increase in malpractice insurance premiums. Government and industry data show only a modest rise in malpractice claims over the last decade…. When the [bond and stock] markets turned sour and the reserves of insurers shriveled, companies began to double and triple the costs for doctors.” New York Times, February 22, 2005.

2. Medical Malpractice Insurance: Stable Losses/Unstable Rates in Pennsylvania, Americans for Insurance Reform (AIR), released a study on the malpractice “crisis” on January 16, 2003. AIR is a coalition of nearly 100 consumer groups around the country.  Their comprehensive study reached two primary conclusions:

“Over the last 30 years, the amount that medical malpractice insurers have paid out in Pennsylvania, including all jury awards and settlements, directly tracks the rates of medical inflation. Not only has there been no “explosion” in medical malpractice payouts at any time during the last 30 years, but payment, (in constant dollars) has been extremely stable and virtually flat since the mid-1980s.”

“Medical malpractice premiums charged by insurance companies over the last 30 years in Pennsylvania have not corresponded to increases or decreases in payouts. Rather, premiums rise and fall in concert with the estate of the economy — insurance premiums increase or decrease in direct relationship to the strength or weakness of the economy, reflecting the gains or losses experienced by the insurance industry’s market investment and their perception of how much they can earn on their investment “float”… that doctors’ premium provide them.”

3. “The medical malpractice insurance crisis in Pennsylvania is not caused by the legal system, but is linked to cyclical economics. In fact, the real crisis in that state is the quality of medical care being given: 4.7% of the doctors are responsible for 51.4% of all malpractice payments.” January 2003 study by Washington, DC-based consumer group, Public Citizen.

“People need to understand that insurers are hiking malpractice rates for doctors because they have lost money on their investments,” said Public Citizen President Joan Claybrook. “Doctors who stage walk-outs are falsely demonizing American’s legal system. Capping damages, which doctors are calling for, will only hurt those who have suffered the most. As the Council of Economic Advisors have said, “the tort system promotes patient safety.”

4. Legendary consumer advocate Ralph Nader issued this statement on the malpractice crisis January 6, 2003:

“[I]nsurance companies are scaring many doctors with specters of litigation volume that simply do not exist. Malpractice cases filed and actual payments in constant dollars have been level for many years. If physicians would total the entire amount of premiums they paid last year and divide it evenly by all physicians practicing in the United States, the average premium is less than $10,000.00 per doctor per year.  So why are some doctors paying $50,000.00 or $100,000.00 per year to their malpractice insurers? Because the companies … [are] not surcharging the few bad physicians…the good specialists pay as much as incompetent ones with a large number of payouts…. When obstetricians are gouged, they scream loudly, threaten not to deliver babies or actually go on strike. This makes perfect visuals for televisions…. Meanwhile, the insurance companies are laughing all the way to the bank.  There are no visuals for the slowly dying and other human casualties who receive neither justice nor compassion nor compensation.”

5. This is a statement by J. Robert Hunter which appeared in an article in the National Underwriter magazine dated October 7, 2002, “I am a former federal insurance administrator who advised President Gerald Ford on the situation pertaining to the medical malpractice coverage crises of the mid-1970s. At that time, at his request, I provided him with an analysis showing that the problem was not an explosion in lawsuits as some had suggested, but the economic cycle of the insurance companies.”  “The cause of the current crisis is the same as the crisis in the 1970s and 1980s – fallout from the economic cycle and the business practices of the insurance industry, not loss trends. Medical malpractice claims show no explosion. Instead, there is an explosion in premiums charged by mismanaged insurers.”

6. “Industry analysts say insurers’ investment loses, not just jury awards, are behind the crisis. In bull markets, insurers count on investment income to offset underwriting losses; that ended when the 1990s stock bubble burst.” Time, June 9, 2003.

7. Center for Justice and Democracy – September 25, 2002. Study entitled, “Understanding Today’s Medical Practice Insurance ‘Crisis.’”

“Today’s insurance crisis for doctors is only a small part of a much larger insurance problem that is effecting all kinds of policyholders… [however] the AMA and the associated medical lobbies are not pushing for insurance reform. They are primarily lobbying organized medicine’s long-stand priority—law suit restrictions—even though such limits will not solve the current insurance crisis.”  During years of high interest rates and/or excellent insurance profits, insurance companies engage in fierce competition for premium dollars to invest for maximum return. They may engage in severe under pricing and insure very poor risks just to get premium dollars to invest. When investment income decreases because interest rates drop, the stock market plummets or accumulative price cuts make profits unbearably low, the industry responds by sharply increasing premiums and reducing coverage.”

8. Wall Street Journal, June 24, 2002. “A decade of short-cited price-slashing led to industry losses of nearly $3 billion last year.”

9. “Insurance companies are boosting rates partly to make up for price wars in the 1990s, when competition kept premiums low, and to counter recent declines in their investment incomes.” USA Today, March 4, 2003.

10. According to Duke University economist, Frank A. Sloan, if lawmakers want to reduce premiums, they should focus on insurance reforms. Sloan says that medical malpractice insurance “is the most cyclical health policy there is …. There are periods of time when premiums stop going up and no one is interested, then again we get a crisis and everyone says that juries are terrible.” As quoted in the New York Times, January 17, 2003.

II. Several Pennsylvania insurance carriers have been sued by the state for corruption or mismanagement.

1. In the past few years, four insurers writing medical malpractice coverage in Pennsylvania have gone bankrupt. In each instance, it was not verdicts or settlements which put them out of business, but instead the Insurance Department for the Commonwealth of Pennsylvania concluded that they were all victims of their own fraud and mismanagement.

• In 2001, the Pennsylvania Insurance Department, citing fraud and abuse, sued several managers and directors of one of the largest malpractice carriers in Pennsylvania, PHICO. The suit claimed that broad-based mismanagement had led the company into bankruptcy.

• According to the complaint, from 1997 to 1999, “The company achieved enormous premium growth by, in part, substantially under pricing its competitors, even though competition was intense and premiums were already low. The company aggressively underpriced the competition even in markets in which the company had no previous experience.” The complaint went on to note that “The strategy of offering low prices and highly competitive and unfamiliar markets was fraught with risk.”

• In the late 1990s, two other large malpractice insurance carriers in Pennsylvania, Physicians Insurance Company (PIC) and Physicians Insurance Exchange (PIE) were indicted for widespread criminal fraud and RICO violations relating to mismanagement and plundering of the company by high level officers. Both companies filed for bankruptcy as a result of these actions. Just last month, the Pennsylvania Insurance Department filed suit against the accountants for Reliance Insurance claiming that because of their lack of scrutiny, insurance executives had been able to skim more than $200 million from the carrier, thus sending it into bankruptcy.

2. “I don’t like to hear insurance company executives say it’s the tort system – it is self-inflicted.”

Donald J. Zuk, Chief Executive of SCPIE Holdings, Inc., a leading malpractice insurer in California. Wall Street Journal, June 24, 2002.

III. Doctors are not leaving the state or closing their practices.

1. A study published in the March 2008 issue of the Journal of Empirical Legal Studies found that there was no link between malpractice premiums and OB/GYNs relocating out of state. The study done by researchers at George Mason University and the Harvard School of Public Health, looked at data from all fifty states between 1992 and 2002 and concluded that most OB/GYNs did not respond to increases in insurance premiums by closing their practices or moving out of state. Likewise, they concluded that “tort reforms” such as caps on damages did not help a state to attract new OB/GYNs.

2. “Despite claims that Pennsylvania is losing doctors to other states as a result of high liability insurance premiums, official statistics from the American Medical Association and from the Federation of State Licensing Boards show an actual per capita increase in treating physicians.” Medical Malpractice Litigation in Pennsylvania, Vidmar, May 2006.

3. On a per capita basis every state in the Union has more physicians now than they did three years ago. American Medical Association, “Physician Characteristics and Distribution in the US,” 2003-2004 edition.

4. Figures released on May 17, 2004, by the Pennsylvania Department of Insurance showed again of nearly 1,800 doctors since 2002. The figures indicate that as of 2004 there were 37,231 doctors in Pennsylvania whereas in 2002 there were 35,474. M-Care statistics made public May 17, 2004.

5. An analysis of the 2006 financial statements of the leading malpractice insurance carriers show that the companies are doing quite well financially:

“The data contained in these [financial] statements demonstrate that the premise on which the insurance industry based its “tort reform” campaign of the last several years — that malpractice claims have been increasing — is false. Specifically, the 2006 annual statements reveal that the amount the leading malpractice insurers project they will pay out in claims in the future has declined; that the amount they have actually paid out in claims has declined; and that their surplus — the extra cushion they have accumulated over and above the amount they have set aside to pay claims in the future — has increased to an all time high. In addition, the 2006 annual statements reveal that notwithstanding the record surplus and profits of these carriers, they generally declined to issue any dividends to their policyholders.”

“No Basis for High Insurance Rates,” J. Angoff, May 2007, sponsored by the American Association for Justice.

6. “Pennsylvania doctors are not leaving in droves because of rising malpractice premiums, contrary to their relentless three-year campaign to convince state lawmakers and the public otherwise.

7. New government statistics…show little or no dip in the number of doctors. …[A]nd a separate set of previously undisclosed figures – from the Pennsylvania Medical Society itself – indicate there are probably more physicians in Pennsylvania than ever.”  The Allentown Morning Call, April 18, 2004.

8. You have read the scary news stories about Pennsylvania’s ‘disappearing doctors.’ You have heard that hospitals are closing down left and right.  But have you personally experienced this supposed doctor shortage? Has your doctor packed up his stethoscope in disgust and headed off in his Mercedes to a state that has capped pain and suffering awards?  No?  Maybe that is because there is not doctor shortage or at least little compelling evidence of one.

A recent news story noted that there was an overall gain of 800 doctors in the state from 2002-2003.” Editorial, Lebanon Daily News, April 24, 2004.

9. A number of Pennsylvania doctors rose 5.6% from 1994 to 2002…. In comparison, the state’s overall population grew just 3.3% from 1990 to 2000. Public Citizen, “The Facts About Medical Malpractice in Pennsylvania,” March 2004.

10. Under a headline of “Was Malpractice Crisis Even a Crisis?” the Scranton Times found no evidence of a doctor exodus in Pennsylvania. “No state agency has a running count of how many doctors are leaving the state, but the State Department of Insurance tracks how many pay into the state’s catastrophic fund, a requirement for practicing here.

11. A recently revised count shows more physicians are practicing in Pennsylvania now than before premiums started to jump. The Department reports 35,180 doctors paid into the fund in 2002, 50 more than the previous and 1,000 more than in 2000.” Scranton Times Tribune, November 28, 2003.

12. Under a headline reading “What Crisis?: Malpractice Premium Spikes Do Not Force Docs Out,” The Washington Post said that in response to claims by the medical community that doctors are being forced to leave their practices due to high malpractice premiums, “The General Accounting Office has reached a very different conclusion…. Investigators who studied nine states found instances of localized, but not widespread problems of access to healthcare mostly in scattered, often rural areas that have long-standing problems attracting doctors.

13. In many of those highly publicized accounts of doctors who have retired or moved on are, according to the GAO, either ‘not substantiated,’ temporary, or involved only a few physicians.

14. In Pennsylvania and West Virginia, for example, … the number of doctors per capita has actually increased in the past six years according to the GAO.” Washington Post, September 16, 2003.

15. “Doctors are not leaving the state in droves. In fact, according to the Pennsylvania Licensing Board, the number of physicians in Pennsylvania grew from 34,330 in 2001 to 36,921 in 2002, an increase of 7.5%.

16. According to the American Medical Association, Pennsylvania ranks 5th nationally in the total number of physicians among states. More particularly, Pennsylvania is home to 5% of all doctors in the United States, and of doctors under the age of 35, Pennsylvania is home to 5.5% of the nation’s young doctors.”

17. “Contrary to reports of fleeing doctors in the year 2000, Pennsylvania ranked 9th highest nationally for physician concentration, a top-10 position it has held since 1992.”  Allentown Morning Call, March 24, 2002.

18. According to the Medical CAT Fund, the number of physicians in Pennsylvania has remained relatively constant up through 2002.

19. In response to arguments that certain doctors have either left the practice or quit doing high-risk procedures, a study by USA Today found that, “there is little statistical evidence that more than a tiny percentage of doctors nationwide are making such decisions.” USA Today, March 4, 2003.

20. “On average, doctors still spend less on malpractice insurance, 3.2% of their revenue, than on rent.” USA Today, March 4, 2003.

21. Threats of going out of business have generally accompanied past insurance “crises” in the mid-1970s and mid-1980s, yet the number of physicians nationally has risen substantially over the past few decades.

• “Doctors are threatening to quit practicing some specialties or move out of the state while South Florida hospitals and trauma centers have threatened to shut down or have curtailed services.” St. Petersburg Times,1987.

22. “Doctors and hospitals in West Virginia have been saying for weeks that they would have to close their doors at the end of this month when three major insurance companies planned to cancel malpractice insurance coverage.” The Washington Post, May 24, 1986.

IV. There is no sharp increase in verdicts, settlements, or lawsuits.

1. Statistics from the Pennsylvania Supreme Court for 2010 demonstrate:

a. A decline in the number of malpractice lawsuits filed statewide for a sixth consecutive year.

b. A 45% decline in the number of malpractice lawsuits filed in 2010 as compared with the “base year” of 2000-2002.

c. 80% of verdicts in 2010 were in favor of a doctor or hospital.

Pa. Supreme Court, May 18, 2011, Press Release

2. Between “base year” of 2000 and 2009, medical malpractice filing have creased by 44% statewide. News Release, Administrative Office of Pennsylvania Courts, April 19, 2010.

3. According to the Governor’s office, there is no medical malpractice “crisis” in Pennsylvania, and instead this state has been a “success story” in its handling of medical malpractice. The Governor points to the following statistics to support his claim:

a. Total malpractice lawsuits have decreased by 41% since 2002.

b. For the fifth straight year, payments to victims of medical malpractice have decreased.

3. Payments to malpractice victims are more than 50% less than they were in 2003.

c. The two largest private insurance carriers in Pennsylvania have either decreased their premiums or kept them flat since 2002.

d. The number of physicians practicing in Pennsylvania has increased between the year 2000-2009.

Press Release, Office of Governor Ed Rendell, April 23, 2009.

4. Even the leading advocacy group for legal reform, The American Tort Reform Foundation, acknowledges that the medical malpractice climate in Pennsylvania has improved significantly in recent years. “In Pennsylvania, medical malpractice filings fell nearly 40% statewide from … 2000 to 2007 …. According to the Pennsylvania Medical Society’s 2007 report, physician insurance premiums also dropped between 2002 and 2007 as the liability climate improved.” See Annual Report, “Judicial Hellholes 2008-2009,” The American Tort Reform Foundation.

5. According to statistics released by the Pennsylvania Supreme Court, there has been a 38% decline in the number of medical malpractice lawsuits filed between 2002-2006.

Press Release, Administrative Office of the Pennsylvania Courts, April 25, 2007.

6. A recent study by Americans for Insurance Reform tracking medical malpractice payments nationwide from 1975 through 2005 reached the following conclusions:

•“Total pay-outs have been stable, tracking the rate of medical inflation, but premiums have not. Rather, premiums that doctors pay rise and fall in sync with the state of the economy, reflecting profitability of the insurance industry, including gains or losses experienced by the industry’s bond and stock market investments.”

• “History showed that the insurance industry had not cut, and had no plans to cut, insurance premiums as a consequence of tort restrictions…. In other words, there was no correlation between claims experience, tort reform and insurance rates.”

• “Since 1975, medical malpractice paid claims per doctor have tracked medical inflation very closely ….”

• “While insurer pay-outs per doctor directly track the rate of medical inflation, medical insurance premiums do not. Rather, they rise and fall in relationship to the state of the economy…. Not only was there no ‘explosion’ in lawsuits, jury awards or any tort system costs to justify the astronomical premium increases that doctors have been charged in recent years. These rate increases were rather driven by the economic cycle of the insurance industry, driven by declining interest rates and investments.”

Medical Malpractice Insurance: Stable Losses/Unstable Rates, 2007, March 28, 2007.

7. In a study of seven large states, the US Department of Justice found that a majority of medical malpractice claims resulted in no payment to the patient. Medical Malpractice Insurance Claims in Seven States 2000-2004, US Department of Justice, Bureau of Justice Statistics, March 2007.

8. The number and total value of malpractice payments to patients nationwide have been flat since 1991. Both show a significant decline since 2001, when the last so-called malpractice “crisis” began. “The Great Medical Malpractice Hoax,” Public Citizen, January 2007.

9. “In 2003, President Bush described the medical liability system as a “giant lottery.”  This assertion, however, is unsupported by the facts….The value of payments made to injured patients corresponds appropriately to the degree of harm suffered by the victims.”

The Great Medical Malpractice Hoax,” Public Citizen, January 2007

10. A comprehensive study released in 2006 by researchers at the Harvard School of Public Health entitled, “Claims, Errors and Compensation Payments in Medical Malpractice Litigation,” New England Journal of Medicine, May 11, 2006, provides empiric data to debunk myths of a medical community burdened by frivolous claims or a legal system paying compensation to unworthy victims. The major conclusions reached by a panel of physicians who reviewed some 1,500 case files from five liability insurance carriers were as follows:

• There is no substantial impact caused by so-called frivolous claims. The study found that most claims without merit were resolved appropriately, i.e. without payment. The researcher stated that, “portraits of a malpractice system that is stricken with frivolous litigation are overblown.” Page 2031.

• The legal system generally produces accurate results in that claims with merit are compensated while those without merit are not. To the extent the system “gets it wrong,” it usually errs on the side of the doctor. “Although the number of claims without merit that resulted in compensation was fairly small, the converse form of inaccuracy — claims associated with error and injury that did not result in compensation — was substantially more common.” Page 2031.

This propensity of a jury to “err” on the side of the doctor, said the study, contributes to a larger overall problem whereby many legitimate victims of malpractice never even file lawsuits. “[F]ailure to pay claims involving errors adds to a larger phenomenon of underpayment generated by the vast number of negligent injuries that never surface as claims.” Page 2031.

11. “Juries are often characterized as biased against doctors …., but research shows that doctors win in more than two out of three cases tried to juries and the amount of jury awards are positively related to the seriousness of the injury…. Very large awards are usually settled for a small fraction of the actual verdict. In any event, jury awards constitute only a small fraction (between 5-7%) of all malpractice payouts; most cases are settled prior to trial.” Medical Malpractice Litigation in Pennsylvania, Vidmar, May 2006.

12. There has been an “astounding” drop in claims filed in Pennsylvania since 2003, and the drop coincides with actions taken by the Supreme Court…. Thus, “it is hard to escape the conclusion that the changes in the Pennsylvania tort system have been effective in eliminating frivolous filings.” Medical Malpractice Litigation in Pennsylvania, Vidmar, May 2006.

13. “For every seven patients who suffered a negligent injury, just one claim was filed.”

Medical Malpractice Litigation in Pennsylvania, Vidmar, May 2006.

14. There has been a 37.8% decline in the number of malpractice lawsuits filed in Pennsylvania between 2000-2005. Press Release, Pennsylvania Supreme Court dated April 25, 2006.

15. In Pennsylvania, the malpractice crisis is over.” William M. Sage, Columbia University Professor, Philadelphia Inquirer, January 2, 2006.

16. Payments made by the M-Care Fund, the excess layer of coverage for Pennsylvania Physicians and Hospitals, have declined in recent years after various reforms were passed by the state legislature. For example, payments by the M-Care Fund reached a high of $379,000,000 in 2003, but those payments dropped to $320,000,000 for 2004 and dropped further to $232,000,000 for 2005. Press Release of Governor Rendell dated October 24, 2005.

17. A study compiled from 2004 annual reports of the nation’s fifteen largest insurance companies found that:

• Over the past five (5) years, malpractice premiums have increased by 120% while claims pay outs have remained essentially flat.

• The insurance companies’ projection of future claims payments is decreasing. Jay Angoff, former Insurance Commissioner for the State of Missouri, “Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry,” The Center of Justice and Democracy, 2005.

18. “The size of damage claims paid out by physician insurers has been more or less steady since 1991, according to the National Practitioner Data Bank, a government service that tracks doctor errors and malpractice claims…. Over ten years, malpractice payments have grown an average of 6.2% per year.  Guess what? That is almost exactly the rate of medical inflation… it is also worth noting that, nationwide, malpractice payments by physicians and their insurers were less than 1% of the country’s overall healthcare costs.” Business Week, March 3, 2003.

19. “[F]igures collected by the federal government show that court judgments in malpractice cases have not risen nearly as fast as some advocates [of tort reform] have asserted. In fact, the average size of judgments against doctors and other healthcare workers dropped in the first nine months of 2002 according to government numbers.” New York Times, January 17, 2003.

20. A study by the Philadelphia Inquirer found in the first seven months of 2003 the number of medical malpractice law suits filed in Philadelphia County decreased by 65% compared to the same period in the year 2002. From January through July, there were 913 malpractice suits filed in 2002, whereas in 2003, that number was down to 326.  Philadelphia Inquirer, August 31, 2003.

21. A study of Texas malpractice verdicts and settlements between 1988 and 2002 done by professors at the University of Texas, Columbia University, and the University of Illinois found that total pay outs to malpractice victims over that time period were quite stable.  The concluded that the recent spike in medical malpractice premiums in Texas was not caused by rising pay outs on malpractice claims. The study relied on a comprehensive data base maintained by the Texas Department of Insurance. Stability, Not Crisis:  Medical Malpractice Claim Outcomes in Texas 1998-2002, Journal of Empirical Legal Studies, July 2005.

22. Based on the latest available data, researchers at Johns Hopkins University found that Americans file more medical malpractice claims than their counterparts in Canada and Great Britain, but the average awards were actually 14% higher in Canada and 36% higher in Great Britain. “Health Spending in the United States and the Rest of the Industrialized World,” Health Affairs, July/August 2005.

23. Over the past eight years, the number of medical malpractice lawsuits filed in Pennsylvania has decreased by 25%. Statistics compiled by Pennsylvania Unified Judicial Court System.

24. A recent study by researchers at Johns Hopkins University dispelled the notion that malpractice litigation causes doctors to practice too much defensive medicine, thereby driving up the costs of health care. “There is a popular misconception that we pay much more for healthcare in the United States … because malpractice claims drive up costs…. Higher costs associated with malpractice insurance have only a marginal effect on overall health spending.” Health Spending in the United States and the Rest of the Industrialized World,” Health Affairs, July/August 2005. The study finds that the most significant factor impacting healthcare costs is simply the high cost for medical services in the United States.

25. Nationwide, claims against the industry as a whole have actually been flat since 1996.  Business Week, March 3, 2003.

26. The landmark Harvard Medical Practice Study done in the early 1990s found that only 1in 6 medical malpractice victims actually pursued a lawsuit. Similar findings were made from studies conducted in Utah and Colorado. Public Citizen, Medical Misdiagnosis, Congress Watch, January 2003.

27. Total claims paid out in Pennsylvania over the past 20 years show that the rate of increase is well below the rate of medical inflation. Claims paid between 2000 and 2001 actually decreased. Source: Pennsylvania Medical CAT Fund statistics.

28. A 10-year analysis of federal statistics shows that the mean payment for malpractice claims in Pennsylvania rank the state 21st from the top, i.e., right in the middle of the pack. 2000 Annual Report, National Practitioner Data Bank.

29. Pennsylvania’s rank in mean payments of 2000, was 25th nationwide.

30. “Doctors in Ohio are blaming a runaway court system for sending the price of their medical malpractice insurance through the roof in the past two years. But a Plain Dealer analysis of all malpractice lawsuits filed in Cuyahoga County from 1992 through September 2002 shows no pattern in either case load or jury awards that coincide with the recent dramatic rise in insurance rates.” Cleveland Plain Dealer, October 21, 2002.

31. According to a US Department of Justice study, doctors and hospitals win over 75% of the cases tried to juries. “A Short Guide to Understanding Today’s Medical Malpractice Insurance Crisis,” Center for Justice and Democracy (CJD), September 25, 2002.

32. “Less than 2% of malpractice claims result in a winning verdict at trial, according to industry estimates.” USA Today, March 4, 2003.

33. “According to the Consumer Federation of America, the average claims payout on medical malpractice claims has been virtually unchanged for the last decade.” CJD study.

34. “There is no explosion in litigation as claimed by opponents of the malpractice system.” Medical Malpractice – A Comprehensive Analysis, Professor Vasanthakumar N. Bhat, 2001.

35. Plaintiffs in medical malpractice cases lose twice as often as they do in other personal injury. Bhat book.

V. Medical errors cost the system far more than malpractice claims.

1. According to a 2006 federal study, medication errors are out of control in the United States. “Medication errors are surprisingly common and costly to the nation…. When all types of errors are taken into account, a hospital patient can expect on average to be subjected to more than one medication error each day…. There are at least 1.5 million preventable [medication errors] that occur in the United States each year. The true number may be much higher.” Preventing Medication Errors, Institute of Medicine, National Academy of Sciences (2006).

2. According to a 2006 study by Rand Health, the nation’s largest independent health-policy research organization, only 55% of Americans receive proper medical care as measured against objective indicators of quality of care. “Who Is At Greatest Risk For Receiving Poor-Quality Healthcare?” New England Journal of Medicine, March 16, 2006.

3. An analysis of 184,500 medical malpractice payments from 1991 to 2003 from data provided by the federal government found that malpractice payments, when adjusted for medical inflation (which typically has been about 4% per year) have remained flat over that 12-year period. “The Growth of Physician Medical Malpractice Payments,” Health Affairs, June 1, 2005.

4. “If you eliminated malpractice premiums [completely], the total cost of health care would fall by about 1%. It is silly to talk about malpractice premiums effecting the cost of health care.” J. Angoff, former Insurance Commissioner, State of Missouri.

5. An unprecedented study of Pennsylvania patients found that in 2004, 11,000 patients in the state acquired infections during their hospital stay and that 1,500 of them died as a result of those infections. Pennsylvania Health Care Cost Containment Council, July 2005. The publishers of the study indicated that the statistics may actually be underreported, and that they only reflect the “tip of the iceberg” on the problem of hospital acquired infections.

6. “Medical malpractice costs make up only a tiny fraction of total healthcare costs.  According to a study by the Consumer Federation of America, medical malpractice costs, as a percentage of healthcare costs, are at an all-time low of 0.55%.

7. Far more costly than malpractice lawsuits are the costs of medical errors. Total national costs of negligence in hospitals are already estimated to be between $17 billion and $29 billion each year.” CJD study at p. 14.

8. The groundbreaking study by the National Academy of Science’s Institute of Medicine “To Err is Human,” Academy Press 1999, found that preventable medical errors were at least the eighth leading cause of death in America, and perhaps the third leading cause! “More people die in a given year as a result of medical errors than from motor vehicle accidents, breast cancer, or AIDS.  Yet silence surrounds this issue. For the most part, consumers believe they are protected. Media coverage has been limited to reporting of anecdotal cases…. Licensing and accreditation processes have focused only limited attention on the issue, and even these minimal efforts have confronted some resistance from health care organizations and providers.  The status quo is not acceptable and cannot be tolerated any longer.  Healthcare is a decade or more behind other high-risk industries in its attention to insuring basic safety.” See Executive Summary, “To Err is Human.”

9. According to a study released in October 2003 by the Pennsylvania Health Care Cost Containment Council, medical complications, often preventable ones, added significant cost to the health care system in Pennsylvania last year. According to the Council, infections and other complications which were often preventable added over $560 million dollars in health care cost and caused over 16,000 patients to be re-admitted to the hospital.

10. “Some so-called defensive medicine may be motivated less by liability concerns than by the income it generates for physicians or by the positive (albeit small) benefits to patients.  On the basis of existing studies and its own research, CBO believes that savings from reducing defensive medicine would be very small.” Congressional Budget Office, “Limiting Tort Liability for Malpractice,” January 8, 2004.

VI. Passing so-called tort “reform” will not reduce insurance rates.

1. “According to the Congressional Budget Office, malpractice costs were [only] an estimated 1.5% of the total [health care spending] in 2002. Moreover, several studies have concluded that capping malpractice-lawsuit awards would have a negligible impact on health-care costs.” Time, October 18, 2004.

2. “In a study published this week, Weiss Ratings found that in states without caps on noneconomic damages, median annual premiums for standard malpractice coverage rose 36% between 1991 and 2002. But in states with caps, premiums rose even more – 48%. In the two groups of states, median 2002 premiums were about the same.” Time, June 9, 2003.

3. Four of the top five most expensive states for malpractice premiums have caps in place. Those four states are Florida, Michigan, Texas and West Virginia. Source: Medical Liability Monitor, Premiums are average combined premiums for OB/GYNs, internists and general surgeons.

4. While doctors and hospitals often cite California’s MICRA as an example of how damage caps can reduce malpractice premiums, the reality is that premiums actually increased for the first several years after MICRA was passed, and the premiums did not start to go down until the state passed mandatory insurance reforms. “California, it is often noted, has some of the lowest malpractice rates in the country, but that may be due less to its cap on awards than to a 1988 insurance reform law that made it much harder for insurers to raise rates.” Money Magazine, May 2003.

5. “There is little evidence that a $250,000 federal cap on pain and suffering awards will be a cure-all for medical malpractice woes…. That is because a big part of the increase in the cost of claims by insurers is due to growth and economic damages, medical bills, lost wages and other tangible losses.”

“Medical costs are going up 15-20% per year, and they tend to drive up medical malpractice awards and settlements,’ says Jerry Slaughter, Executive Director of the Kansas Medical Society.” USA Today, March 4, 2003.

6. “Insurers have never lowered rates as a consequence of tort reform because such measures are based on an untrue premise that the legal system, rather than the underwriting practices of the insurance industry is responsible for gyrations in the costs and availability of insurance.” CJD study at p. 18.

7. “Tort reform do not have much influence on the payments made as a result of the verdicts.” Bhat text.

8. Insurance industry representatives acknowledge that tort reforms will not lead to lower premiums.

• “Insurers never promised that tort reform would achieve specific savings.”

American Insurance Association Press Release, March 13, 2002.

• “We would not tell you or anyone else that the reason to pass tort reform would be to reduce insurance rates.” Liability Week, July 19, 1999, statement of Sherman

Joyce, President of the American Tort Reform Association.

VIII. A few bad doctors commit most of the malpractice.

1 Since 1991, 5.9% of US doctors were responsible for 57.8% of malpractice payments, and 2.3% of doctors were responsible for 32.8% of all payments. “The Great Medical Malpractice Hoax,” Public Citizen, January 2007.

2. Of the 4,019 physicians nationwide who had between five and ten malpractice payments, less than 20% of them had ever been disciplined by a state medical board. “The Great Medical Malpractice Hoax,” Public Citizen, January 2007.

3. An expert panel retained by the Bush Administration concluded that better disciplining of doctors was necessary to reduce medical mistakes and costs generated by lawsuits.  According to the law professor who supervised the study, Josephine Gittler, “If you had more aggressive policing of incompetent physicians and more effective disciplining of doctors who engage in substandard practice, that could decrease the type of negligence that leads to malpractice.” New York Times, January 4, 2005.

4. “Two percent (2%) of the doctors in Pennsylvania historically have accounted for 40% of the payments by the Medical CAT Fund.” Comments of John Reed, former Director of the Pennsylvania Medical CAT Fund.

5. “Thirteen physicians in Pennsylvania have made between 4-15 malpractice payouts totaling more than $5 million per doctor, but have not been disciplined…. Collectively, these physicians have been responsible for 94 medical malpractice payments to patients totaling $86 million.” Public Citizen, “The Facts About Medical Malpractice in Pennsylvania,” March 2004.

6. According to Ralph Nader’s consumer group, Public Citizen, Pennsylvania has the highest rate in the nation of doctors who have repeatedly settled or lost malpractice suits. According to their study, 50% of all of the money awarded in Pennsylvania malpractice cases was paid on behalf of doctors who had three or more claims that required payments to patients. “That is pretty shocking, said Public Citizen counsel Jackson Williams.  If you stop those doctors, you will have eliminated half of all the malpractice payoffs in the state, which presumably would reduce insurance premiums.” Associated Press, January 17, 2003.

7. Public Citizen says it is equally true nationally that a small group of physicians account for the majority of the malpractice payments. “Just 5% of American doctors are responsible for half the malpractice in the United States.”  “The medical community alleges that medical liability litigation constitutes a giant ‘lottery’ in which lawsuits bear no relationship to the care given by a physician,” “In reality, a small percentage of doctors are responsible for the bulk of malpractice in the United States, and only better oversight by state medical boards, not draconian limits on patients’ legal rights can reduce the tens of thousands of deaths and injuries they cause.” Public Citizen President, Joan Clabrook, September 2002.

8. “Since 1990, one-third (1/3) of malpractice awards and settlements have resulted from just 5% of doctors making such payouts … yet doctors and hospitals too often fail to discipline repeat offenders … by the end of 2001, 55% of all non-federal hospitals … had not reported a single disciplinary action against a doctor.” Time, June 9, 2003.

9. Not a single doctor in Pennsylvania has been disciplined for poor medical care by the state Licensing Board in at least the past three years and perhaps longer!

IX. “Tort Reform” Movement Is Politically Motivated.

1. “It is preposterous to blame [the premium increases] as the AMA is trying to do on the litigation system. The ‘tort reform’ movement is a political movement. The corporate right wing wants ‘tort reform’ whether it reduces insurance rates or not. So ‘tort reform’ proponents love the idea of ginning up the doctors, getting them excited about ‘tort reform’ and aligning them with insurers and business against lawyers and consumers. The ‘tort reform’ movement is a Republican fund raising tool. They are going to try to use that tool for as long as possible.” J. Angoff, former Insurance Commissioner, State of Missouri. Published remarks, May 2004.

2. Commenting on the recent state of doctor “strikes,” an article in the Washington Monthly Magazine observed the following:

“The doctors’ protests are not about good policy. They are about good politics. Although the malpractice strikes look like a natural outgrowth of physician frustration, they are, in fact, the product of a sophisticated lobbying campaign coordinated by Republican operatives and underwritten by business groups with little interest in the practice of medicine…. By linking rising health care costs to frivolous medical lawsuits, Republicans can use doctors as a cudgel against trial lawyers, the Democratic party’s second largest funding base and one which could be paralyzed by lawsuit caps. Once bills to restrict malpractice lawsuits are on the table — in Congress and in the state legislatures — Republicans can slip in much broader legal relief for corporations under the guise of bringing down health care costs….” Washington Monthly Magazine, October 2003.

If you believe that you or a family member has suffered injury as the result of medical, hospital or nursing home carelessness, call and speak to one of our lawyers at Liever, Hyman, & Potter who have been representing victims in reading, PA, Pottsville, PA, Berks County, PA and Schuylkill County, PA since 1959.

-From the desk of attorney John R. Badal.

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