27 May 2004 –·– Issue 04-03
ContentsMalpractice Litigation |
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Are We in the Midst of a Malpractice Litigation Crisis?Last month, over 2,000 physicians, staff members and supporters rallied on the steps of the Capitol Building in Springfield, Illinois. They met with legislators and voiced their concerns for the health of medical care in the state. What was their concern? That the rising cost of malpractice insurance is forcing doctors to leave the state. The Chicago Tribune, in a March 12, 2004, article by Gayle Worland, states that many medical specialties have been hit hard, including neurology, anesthesiology and orthopedics. But doctors who deliver babies say that they've taken the biggest blow because of the relatively lower reimbursement rates for their services. The Tribune article interviews Dr. Susan Hagnell who grew up in Chicago, went to medical school in Illinois and had delivered more than 700 babies at hospitals in the northwest suburbs. But when her malpractice insurance bill soared from $71,848 to $118,742 last summer, Hagnell decided to jump the border. Now she delivers babies in Wisconsin. In an article in Frontiers of Health Services Management, October 1, 2003, by Karen Ignagni, the President of American Association of Health Plans (AAHP), Ignagni states "We are coming to recognize that we really cannot sue our way to better healthcare. If the nation's goal is to stretch our finite healthcare dollars by improving the transparency, accountability and overall effectiveness of the healthcare system, malpractice liability reform clearly has to be part of the foundation on which we build in the years ahead." Ignagni writes that there is no evidence that malpractice litigation results in better care and that there is much evidence to the contrary. She documents the fact that we are in the midst of a malpractice litigation crisis. In demonstrating that malpractice litigation has increased in recent years, Ignagni cites information from the American Medical Association that states that the number of actions initiated each year has risen from 78 lawsuits per 100 physicians in 1990 to nearly 99 per 100 in 2003 (IMNG 2003). And, more importantly, there has been an increase in the size of settlements and jury awards. Currently about one in 12 claims paid is for $1 million or more, compared to one in 50 in 1993 (Smarr 2003). This represents a 400 percent increase in ten years. Ignagni notes that the median jury award in 2001, at approximately $1 million, was more than double the $475,500 median award in 1996 (Jury Verdict Research 2003). As far back as 2002—the National Governor's Association (NGA) realized that there was a potential for a health care crisis. In a December 2002 brief, the NGA Center for Best Practices stated, "In some states, medical liability insurance carriers are getting out of the market, leaving either a few carriers with extremely high rates or no carriers at all. The insurance carriers that remain are quoting physician's rates double or triple those of the previous year. There is little consensus between major interest groups on the nature of the malpractice problem, its severity, its solutions, or the proper role of government, state or federal, to solve it. The loss of affordable medical malpractice insurance for providers could eventually turn into a loss of affordable, accessible healthcare, especially for high risk medical specialties such as obstetrics and neurosurgery, or in communities that are considered medically underserved. States have several options open to them to address the medical malpractice insurance problem:
Most states will benefit from a careful analysis of the market forces and an analysis of the depth of the crisis. Recommendations for conducting an assessment of the medical malpractice insurance climate include examining the state-specific insurance climate, the past attempts to institute tort reforms, and gauging provider need." The NGA brief went on to describe tort reform—the tort system is the main vehicle through which medical negligence is resolved. In theory, the tort system is designed to compensate those who have been injured and to prevent future injuries to others. However, whether the tort system does either is arguable. In reality, medical malpractice claims are expensive to pursue, can take years to resolve, and can result in the injured party receiving little of the settlement. Tort reforms for the purpose of medical malpractice are geared towards either reducing the size of awards or reducing the number of suits. In theory this should bring more predictability for insurers to the system. However, in a St. Louis Post-Dispatch article by Kevin McDermott, published on May 2, 2004, Gov. Rod Blagojevich berated that kind of "so-called tort reform" and hinted that he believes the problem of costly malpractice insurance stems from greedy insurance companies rather than runaway lawsuits. McDermott stated that in the strongest sign yet that Blagojevich is siding with the lawyers in their battle against the state's medical and insurance lobbies. The governor, a Democrat, suggested solutions that include stricter oversight of insurance companies, better regulation of doctors and even state subsidies to help pay doctors' skyrocketing malpractice insurance premiums. "We need to do something to help our doctors...in this (legislative) session," said Blagojevich, who bluntly declared the situation "a crisis." He added, "Many of the reforms that are being discussed...look at long-term ways to bring down insurance rates that are oppressing doctors." McDermott added that in comments with reporters in his Statehouse office, Blagojevich indirectly slammed the central solution being touted by as many as 1,000 doctors and others rallying around the Capitol on Wednesday: dollar limits on "pain and suffering" awards in medical malpractice lawsuits, which critics say are driving up insurance rates and driving doctors out of the state. In behind-the-scenes negotiations in Springfield this year, McDermott reported that Democrats, Republicans and representatives of doctors, lawyers and insurance companies have been trying to fashion compromise legislative proposals to address what everyone appears to agree is an alarming loss of doctors from Illinois. In addition to the caps sought by Republicans, ideas include state subsidies to help pay insurance premiums for doctors; tighter state regulation of insurance rate hikes; tighter restrictions on how new lawsuits are accepted into the court system; and the suggestion of a special separate court system that would deal solely with malpractice cases. International Medical News Group (IMNG). 2003. "Is the Insurance Cycle Responsible for Rising Malpractice Premiums?" Family Practice News, March 1. –·– My Opinionby Dr. Michael Perry, E to E Editorial Board Member As I'm sure you already know, expensive medical malpractice premiums and the cost of covering jury awards from malpractice suits are contributing to the rising cost of health care. Today for FHN, the average cost of malpractice insurance per insured patient contact is $27.00. At one point in our state's history, malpractice insurance was sold by several dozen companies, with premiums varying by region, city, doctor and medical specialty. However Illinois now has only four companies left. Costs began increasing in 2000 after several years of competitive cost-cutting left some premiums lagging behind inflation. Then the tragedy of September 11th increased liability rates across the board. And as the U.S. economy slumps, insurers are not able to use stock market gains to subsidize low malpractice premium rates. Costly malpractice insurance reduces doctors' and hospitals' earnings, earnings already diminished by Medicaid and the cost of treating uninsured and managed care patients. Costs are also increased because doctors order extra tests or choose procedures, such as Caesarian sections, to limit risks. Jury awards have a significant impact on the cost of malpractice insurance. The number of malpractice insurance cases nationwide has remained steady, but the awards have increased. The median jury award in 2002 was $1,010,858, slightly higher than the $1 million reported in 2001 and 2000. However, malpractice awards skyrocketed in the late 1990s, when the median compensatory damage award went from $500,000 in 1997 to $712,500 in 1999, and then to the $1-million mark in 2000. On June 9, 2003, the Chicago Sun-Times stated that we are penalizing all doctors and increasing the costs for all by over-rewarding a few. However, most people are surprised to learn that the lawyers are the ones receiving the rewards, not the patients. On average, only 38 cents of every dollar awarded goes to the plaintiff—legal fees consume the rest. In Illinois, many communities are losing physicians because of the high cost of doing business in a state that does not limit awards. Some people in Southern Illinois have to travel several hours in order to see a specialist physician. The surrounding states of Indiana, Wisconsin and Iowa have put some limits in place and Illinois physicians are moving to those states. In my opinion, tort reform is the best way to curtail the rising costs of malpractice insurance. Tort reform would limit non-economic awards for pain and suffering to patients who are pursuing malpractice claims, and it would not limit actual cost of care or loss of income. To learn more about Illinois legislation and tort reform issues, go to: The "My Opinion" column states the opinion of one of the members of the E to E Editorial Board and does not necessarily reflect the opinion of the other members of the board or of the Northern Illinois Health Plan. –·– Useful Links for EmployersA Statewide Survey of Registered Voters: Illinois Tort Reform American Medical Association on Liability Reform |