Two Sides of Medical Malpractice


Two Sides of Medical Malpractice

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courtroomMaking Insurance Affordable

The following is from interviews with Tom Packer of Gordon and Rees, LLP, in San Francisco, chairman of the Defense Research Institute’s Medical Liability and Health Care Law Committee, and Michael D. Shalhoub of New York City’s Heidell, Pittoni, Murphy and Bach, LLP, the committee’s vice-chair.

Is there a crisis in the area of med mal insurance that needs to be addressed legislatively?

Shalhoub – Yes. Nationally the trend is toward increasing indemnity payments because of increases in values of cases. When we see carriers like St. Paul pulling out of the med mal market and others such as MIIX Insurance Group shutting down, it makes the answer fairly obvious. There needs to be a cap on damages for pain and suffering. Also, if you could take the neurologically-impaired infants out of the system through some no-fault that would also go a long way.

Packer – In certain states there is a problem, but in ones with tort reform, insurance rates seem to be remaining relatively affordable. The Wall Street Journal ran an editorial about doctors fleeing Mississippi, which has no damage caps. The amount of the large verdicts we see publicly are higher than ever. There are huge awards over $100 million which we were not seeing ten years ago.

What will be the benefit of capping med mal damages?

Shalhoub – The benefit is the overall value of cases going down. If the purpose of the system is to take care of people who have been hurt, then the economic side can deal with that and each individual state can make a political judgment as to what that state is willing to allow for pain and suffering. Without that, companies have a difficult time evaluating what their potential exposure is in individual cases and across the business.

Are the award sizes growing?

Shalhoub – In NY absolutely. In the past year there have been a couple over $100 million and a few $90 million verdicts. The appellate courts just tripled the value of cases a couple months ago. They decided to take the value of cases like that from the ballpark of $8-9 million up to $30-50 million when the court ultimately sustained a $49 million verdict. It will eventually turn settlement discussions and case values upside down.

Is the number of med mal cases filed increasing?

Packer – It varies state by state in direct relation to whether they have enacted tort reform or not. In states with tort reform the number of filings is stable. In ones without reform it is rising. In addition, filings against nursing homes are rising in all states. The patients’ attorneys are increasingly adding non-traditional causes of action against nursing homes – not just med mal, but also elder abuse, unfair business practices and other statutory violations. These may fall outside tort reform practices.

Other than capping non-economic damages, what other reforms do you feel are needed?

Shalhoub – Several years ago, there was discussion in Congress and at some state levels about no-fault for neurologically impaired infants. A system like that makes sense. It would take care of the needs of those children of all parents, not just parents whose lawyer was able to raise enough questions about the charts that they are able to receive millions and millions of dollars.

We also need to change the joint and several liability rule so that when the jury finds that the defendant is responsible for a certain percentage of the damages, they only pay that percentage of the award, not the whole thing.

Packer – The California model of tort reform, MICRA, is a working model not only for capping non-economic damages, but also gives clear guidance to courts on damage limitations issues. It places limits on the percentage of recovery for patients’ attorneys. One business reform would be if more healthcare providers used binding arbitration. That would both speed the recovery by patients with claims of merit and at the same time reduce litigation costs and avoid runaway verdicts.

Why is $250,000 a proper limit for non-economic damages?

Packer – Whether it should be raised or not is a hotly debated issue. The most recent position is that there should be some provisions for it increasing along with some index such as the Cost of Living Index. It’s hard to put a value on pain and suffering, but we might as well put some figure on it.

$250,000 is still a lot of money, but it allows health care providers to go on without fear of runaway verdicts. Providers can’t just raise their charges to patients to compensate for the increase in insurance costs because what the doctor gets paid is determined by the fee schedule of the patient’s HMO or insurance company. Capping damages makes insurance affordable.

Preserving Patients’ Rights

An interview with Carlton Carl, Director of Media Relations for the Association of Trial Lawyers of America.

Is there a crisis in the area of med mal insurance that needs to be addressed legislatively?

There is a crisis in insurance companies gouging doctors and every other policy holder in America that should be addressed by insurance reforms.

What is happening in terms of insurance rates right now has happened at least twice before: in the 1970s and mid-80s both times of economic downturns when the insurance industry had reduced profits because of poor investments in the stock and bond markets. In each of those previous situations, like the current one, the insurance industry to make up for its losses has increased premiums.

Each time the insurance companies started with increasing med mal premiums and then gradually progressed through every other line of insurance. But the insurance industry started with doctors to frighten Americans into thinking that their access to health care might be jeopardized. It’s a very cynical and dangerous thing that the insurance industry has done solely to recover profits lost due to bad business decisions.

How much are the med mal insurance rates rising currently?

Clearly insurance rates are going up, just as legal malpractice insurance rates are going up for attorneys. We are just now collecting information from the few available sources for rates through 2000. Part of the problem is that the insurance industry which has manufactured this crisis does not make rates generally available to the public. Only when reported by the National Association of Insurance Commissioners or A.M. Best or another source are they generally available.

What percentage of med mal insurance premiums goes to paying for the cost of legal settlements/jury awards?

I don’t know. Insurance companies are not required in most states to publicly provide closed claims surveys or information and in most states are not even required to file justifications for increases in premiums. One insurance reform would be to require closed claims surveys and to require advanced approval and rationale for insurance rate changes.

Has there been an increase/decrease in the number of med mal filings?

The number of med mal cases has remained constant over the last decade or two.

Are the award sizes growing?

They have increased somewhat, but it’s not unrealistic considering that over the last decade healthcare inflation has been 75 percent. The vast majority of med mal verdicts are for medical care – the costs of somebody being in the hospital, prescription medicine and additional operations. All of those elements of health care have increased in cost, so of course the verdicts have gone up.

How much of the increase is attributable to non-economic damages?

I don’t know the answer to that. Non-economic damages are awarded only in the case of the most severe injuries, where there is permanent loss or death. These verdicts are reached by juries which have heard all the evidence on all sides and make a judgment. For a legislature to say that a jury can’t award more than a certain amount is to say that we don’t trust juries.

What is the harm caused by capping med mal damages?

Capping med mal damages punishes the people who are most severely injured and the most vulnerable people in our society and results in no premium savings for doctors. It merely increases profits for insurance companies which have repeatedly said that capping damages will not result in any insurance premium savings.

Capping non-economic damages means that a legislature is telling a mother who has just had her baby die as a result of a botched delivery that her child’s life is worth no more than $250,000. It’s telling a person whose mother was abused in a nursing home and possibly starved to death that that life was only worth $250,000. It’s telling someone who is paralyzed that they are not worth more than $250,000.

What is the real problem in the area of med mal?

The real problem is that it occurs far too frequently. The National Academy of Sciences Institute of Medicine report To Err Is Human [] states that there are upwards of 98,000 hospital deaths as a result of preventable medical errors every year.

That is a huge problem and the medical community needs to address that problem. They also need to address the problems of the doctors who over and over again are responsible for med mal. The vast majority of doctors are not bad doctors, but as a result of the failure of the medical community to police itself and take appropriate action against bad doctors, good doctors are paying for the mistakes of bad doctors.

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