Malpractice (13): tort reform proposals

Within the last week, the Florida "Governor's Select Task Force on Healthcare Professional Liability Insurance" has released its report but has continued hearings. The entire report is here (2.1 Mb or 345 pages). The executive summary is here (15 page Word document).

Some other documents of interest:

AMA summary of common " tort reform" provisions of enacted at the state level

AMA & FMA talking points memo on malpractice reform

AMA links to state-by-state laws and tort reform efforts

"Fact and Fiction" regarding the malpractice crisis from FPIC (a point-by-point rebuttal of the Florida Trial Lawyers Association's presentation to the Select Task Force)

2003 Legislative Plan of "The Coalition to Heal Healthcare in Florida"

Help Efficient Accessible, Low-Cost, Timely Health Care "HEALTH" Act
of 2003 (US H.R. 5) and recent amendments

Let's examine some of these documents.

Some points on liability caps from "Fact and Fiction":

Caps make no difference.

Caps will make total payouts on claims more predictable. Losses that are predictable will bring about rate stability. States such as California that have established caps on non-economic damages awarded by juries have significantly lower professional liability insurance premiums. According to a recent study by the Pennsylvania Medical Society Health Services Research Institute, between 1995 to 1998, states that have enacted six tort reforms had an average general liability loss cost increase of 11.5 percent; states without any major liability reforms had an average general liability loss cost increase of 64 percent. That same study shows that between 1985-1998, states with six major medical professional liability reforms saw a 91 percent increase in loss costs, while states with only one reform had an increase of 252 percent.

This lumps together several states with rather dissimilar tort reform provisions. Caps may reduce insurer payouts 10-15% and this may reduce insurer costs. According to the Florida Department of Insurance closed claim data, a cap of $250,000 for non-economic damages would have saved 21 percent of the total payout between 1992-2001. However, such a cap did not lead to any reduction in premiums in California until Proposition 103 was passed, and led to windfall insurer profits in Texas until the Legislature passed laws mandating reduced premium charges.

MICRA hasn't worked.

The Medical Injury Compensation Reform Act (MICRA) that was enacted in California in 1975 was designed to eliminate the lottery aspect of medical liability litigation. It caps non-economic damages at $250,000 and also has a cap on attorney's fees based on a sliding scale. Although California has a 50 percent higher frequency of claims rate than the national average, premium rates have gone up only 167 percent in California since 1975 compared to the national average rate increase of 505 percent.

I a backhanded way, this points out the fallacy of caps. As I earlier pointed out, if lawyers are cut 10-15% per suit, then they will respond by filing more suits. The data in California support this exactly.

Caps will only hurt those who are harmed by medical liability.

The Task Force is only recommending a $250,000 cap on non-economic damages. There would be no cap on medical or economic losses. A recent Health and Human Services (HHS) study estimates that limiting unreasonable awards for non-economic damages could reduce healthcare costs by 5 to 9 percent without adversely affecting quality of care. This would save $60 billion to $108 billion in healthcare costs nationally each year.

The answer sidesteps the point of the question. Caps affect only those suits already tried and found in favor of the plaintiff. And, to quote TomPaine.com, "If discouraging "frivolous" lawsuits is the goal, why cap damages in successful suits, those that, by definition, are not frivolous?". I can argue that not all suits found in favor of the plaintiff are legitimate, but certainly, a larger proportion of these are actual cases of malpractice than when one considers all suits filed.

Insurance carriers will only make more money if a cap is implemented.

Insurance carriers in Florida can only make a 5 percent profit annually. A carrier cannot make any guarantees regarding rates if a cap of $250,000 on non-economic damages is implemented. ... California's $250,000 cap on non-economic damages never reduced premiums.

Here is the admission from the insurance industry itself, "tort reform" embraced by doctors will not affect their rates, the cause of the current agitation.

More from "Fact and Fiction":

Doctors are incompetent.

Statements from the likes of Ralph Nader who, citing a controversial Harvard Study, recently stated in a USA Today article (Jan. 17, 2003) that (President) Bush ignores the medical epidemic that Harvard physicians estimate takes 80,000 lives a year are malicious. Physicians do not "take" anyone's life. If a physician intentionally harms or murders a patient, that physician will go to jail. More than 95 percent of all medical liability cases are due to acts of omission rather than acts of commission. Most of the time it boils down to how good of notes the physician took and how well the physician does on the stand during trial. Egregious acts of commission are extremely rare. Unfortunately, people get sick, people get old, and people die. Physicians practice to ease people's pain and suffering, and to assist in prolonging life, not to harm, maim, or kill.

If we get rid of incompetent doctors, there would be no crisis.

Unfortunately in Florida, one out of every 18 physicians are sued yearly. If a Florida physician practices in a high-risk specialty such as neurosurgery or OB/Gyn, that number rises to nearly one in one. Does that mean every 16 th doctor in Florida is incompetent or that every neurosurgeon and OB/Gyn in Florida is incompetent? Of course not. If a Jacksonville physician traveled 30 miles north and practiced over the imaginary line called Georgia, that physician's rates would drop by 75 percent. Does that mean Georgia physicians are far superior to Florida physicians? Of course not. It simply means that Florida has a much more liberal court system.

Posted by Gordon at February 15, 2003 02:42 PM | E-mail Author | Back to main page