by George Wise, Esquire
Article originally published in the Summer 2016 ATLA Docket. Reposted with permission from the Arkansas Trial Lawyers Association.
Our clients, particularly the most vulnerable (the elderly, the stay-at-home mothers, the infants and children), face a serious and immediate threat to their rights. The nursing home industry is gathering signatures to place an initiated act on the ballot this fall. This act will place a $250,000.00 cap on noneconomic damages in medical malpractice cases. Arguments in favor of damage caps are based on myths and misinformation.
This article is written to summarize and rebut the misinformation your clients, neighbors and friends will read about and hear. The information in the article is a recap of more detailed information found in the excellent study published in June 2016 by the Center for Justice & Democracy (“CJ&D”): “BRIEFING BOOK, Medical Malpractice by the Numbers”, Emily Gottlieb and Joanne Doroshow.
The study can be found here: https://centerjd.org/content/briefing-book-medical-malpractice-numbers. Please visit this website and donate to or join the CJ&D. CJ&D is the country’s premier think tank on the right to a jury trial. “CJ&D: Fighting for civil justice; stopping so-called “tort reform.”’
Myth: Damage caps are needed to reduce frivolous lawsuits.
Fact: Tort reform and damage caps keep legitimate cases from being filed.
“Uncovering the Silent Victims of the American Medical Liability System,” Emory University Associate Law Professor Joanna Shepherd, 2014.
After conducting a national survey of attorneys to determine medical malpractice victims’ access to the civil justice system, Shepherd found “evidence confirming that many legitimate victims of medical malpractice have no meaningful access to the civil justice system.” Among Shepherd’s conclusions from the survey results and additional analysis of empirical studies are the following:
- “As a result of the high costs of medical malpractice investigation and litigation, many malpractice victims are left without legal remedy…. Unfortunately, most legislative reforms over the past several decades have only exacerbated the access-to-justice problem. Damage caps and other tort reforms that artificially reduce plaintiffs’ damage awards also reduce contingent fee attorneys’ expected recoveries. As a result, even fewer cases make economic sense for the attorneys to accept.”
- Private-industry claims data show that “95% of medical malpractice victims have extreme difficulty finding legal representation unless their damages are significantly larger than the typical damages for their types of injuries.”81
- “Data also suggest that the problem of access to justice is worsening; half as many victims with low damage awards recovered in 2010 as they did twenty-five years earlier. The economic realities of the medical liability system are silencing a growing number of victims.”82
- “Victims who cannot attain legal representation are effectively excluded from the civil justice system. Because of the complexity and expense of medical malpractice lawsuits, employing a lawyer is critical to a successful claim. Thus, without legal representation, most of these victims will not be compensated for the harm they suffer as a result of medical negligence. In turn, the medical liability system will fail to provide adequate precautionary incentives for healthcare providers.”83
- “Empirical evidence suggests that the lack of victim compensation has, in turn, reduced the liability system’s deterrent effect by blunting incentives for the medical community to improve care; most studies find that malpractice liability does not influence physician behavior.”84
Myth: Most malpractice lawsuits are frivolous.
Fact: Few people with a malpractice case pursue it.
Researchers found that a lawsuit was filed on behalf of the patient in 19.9 percent of harms. In other words, “approximately 1 in 5 patient harms resulted in a lawsuit.” As the authors explained, “This is similar to the Harvard Medical Practice Study, which reported an estimated ratio of adverse event to malpractice claim of 7.6:1. Other studies have estimated that as few as 2% to 3% of patients pursue litigation. These findings all suggest that the vast majority of patient harms never result in a lawsuit.” Medical Harm: Patient Perceptions and Follow-up Actions,” Johns Hopkins University School of Medicine Professor of Surgery Marty Makary, M.D., M.P.H. et al., 2014.
Ironic fact: “It is ‘rare or unusual’ for a plaintiff lawyer to bring a frivolous malpractice suit because they are too expensive to bring.” Victor Schwartz, General Counsel, American Tort Reform Association, 2011. Mark A. Hofmann, “White House open to medical liability changes,” Business Insurance, January 30, 2011.
Myth: Malpractice lawsuits are out of control.
Fact: The number and size of medical malpractice claims, lawsuits and inflation adjusted payouts are low and dropping.
Richard Anderson, CEO, The Doctors Company: The frequency of claims is flat and in fact, is at its lowest level in our history. This is the new normal. What’s surprising is that by 2016, we would have predicted an uptick in claims due to changes in the Affordable Care Act. But we are not seeing it. There has been no increase in claims and no novel claims. As to severity of claims, it is the same thing. Severity never falls. It always increases. But we see a more moderate increase than a decade ago. Only about 4 percent a year. “State of the Medical Professional Malpractice Liability Insurance Market,” A.M. Best Webinar, 2016.
Myth: Doctors are held accountable by their profession and medical boards.
Fact: A small number of doctors are responsible for most malpractice payouts; even the most incompetent physicians are rarely held accountable by medical boards.
“What You Don’t Know About Your Doctor Could Hurt You,” Consumer Reports, 2016
- “A very small percentage of doctors have accounted for most of the country’s medical malpractice payouts over the last quarter century. That’s according to an analysis done for Consumer Reports of the National Practitioner Data Bank, a federal repository that has collected disciplinary actions and medical malpractice payouts since 1990.
- “[L]ess than 2 percent of the nation’s doctors have been responsible for half of the total payouts since the government began collecting malpractice information.”51
- “Thousands of doctors across the U.S. are on medical probation for reasons including drug abuse, sexual misconduct, and making careless – sometimes deadly – mistakes. But they’re still out there practicing. And good luck figuring out who they are.”52
Myth: Malpractice cases clog the courts.
Fact: Juries resolve few cases and strong cases settle.
“2014 Civil Caseloads – Trial Courts: 2014 Medical Malpractice Jury Trials and Rates,” National Center for State Courts, 2016.
In 2014, the percentage of med mal cases resolved through jury trial was low in 12 of 13 states reporting. More specifically,
- The med mal jury trial rate totaled less than 3 percent in two states reporting.
• The med mal jury trial rate totaled from 3 to 6 percent in six states reporting.
• The med mal jury trial rate totaled between 6 and 9 percent in four states reporting.
• Only one state reported a med mal jury trial rate above 9 percent.
• These rates are consistent with NCSC data from the previous two years.
Myth: Tort reforms improve the quality of healthcare
Fact: The best way to reduce malpractice litigation is to reduce the amount of malpractice
A study published in the American Journal of Medical Quality linked quality of care improvements with a reduction in medical malpractice claims. Researchers discovered that a “drop in malpractice claims corresponded with an increase in hospitals’ quality scores,” with the decrease in claims showing a “statistically significant correlation with the increase in quality scores based on 22 Medicare measures….” As one of the report’s co-authors explained, “Clearly, the evidence shows that if you do high quality care, it is well received by patients and decreases your medicolegal costs….” Kenneth D. Illingworth et al., “The Impact of Tort Reform and Quality Improvements on Medical Liability Claims: A Tale of 2 States,” 30 AJMQ 263 (May/June 2015).
Myth: Damage caps reduce insurance rates.
Fact: Strong regulatory laws are the only way to control insurance rates for doctors and hospitals.
From the insurance industry:
- American Insurance Association: “[T]he insurance industry never promised that tort reform would achieve specific premium savings.”
- Sherman Joyce, President, American Tort Reform Association: “We wouldn’t tell you or anyone that the reason to pass tort reform would be to reduce insurance rates.”
- Victor Schwartz, General Counsel, American Tort Reform Association: “[M]any tort reform advocates do not contend that restricting litigation will lower insurance rates, and ‘I’ve never said that in 30 years.’”
- State Farm Insurance Company (Kansas): “[W]e believe the effect of tort reform on our book of business would be small…. [T]he loss savings resulting from the non-economic cap will not exceed 1% of our total indemnity losses….”
- Aetna Casualty and Surety Co. (Florida): After Florida enacted what Aetna Casualty and Surety Co. characterized as “full-fledged tort reform,” including a $450,000 cap on non-economic damages, Aetna did a study of cases it had recently closed and concluded that Florida’s tort reforms would not affect Aetna’s rates. Aetna explained that “the review of the actual data submitted on these cases indicated no reduction of cost.”
- Allstate Insurance Company (Washington State): In asking for a 22% rate increase following passage of tort reform in Washington State, including a cap on all damage awards, the company said, “[O]ur proposed rate would not be measurably affected by the tort reform legislation.”
- Great American West Insurance Company (Washington State): After the 1986 Washington tort reforms, the Great American West Insurance Company said that on the basis of its own study, “it does not appear that the ‘tort reform’ law will serve to decrease our losses, but instead it potentially could increase our liability. We elect at this point, however, not to make an upward adjustment in the indications to reflect the impact of the ‘tort reform’ law.”
- Vanderbilt University: A regression analysis conducted by Vanderbilt University Economics Professor Frank Sloan found that caps on economic damages enacted after the mid 1970’s insurance crisis had no effect on insurance premiums.
In 1975, California enacted a severe $250,000 cap on non-economic damages, the first in the nation. This cap has greatly reduced the number of genuine malpractice cases brought in California.
- Despite the reduction of legitimate cases, between 1975 and 1988, doctors’ premiums in California increased by 450 percent, rising faster than the national average.392
- As a result of the cap, California’s medical malpractice insurance industry became so bloated that “as little as 2 or 3 percent of premiums are used to pay claims” and “the state’s biggest medical malpractice insurer, Napa-based The Doctors Company, spent only 10 percent of the $179 million collected in premiums on claims in 2009.” Insurance Commissioner Dave Jones said that “insurers should reduce rates paid by doctors, surgeons, clinics and health providers while his staff scrutinizes the numbers.”393
Insurance regulation: In 1988, California voters passed a stringent insurance regulatory law, Proposition 103 (Prop. 103), which ordered a 20% rate rollback, forced companies to open their books and get approval for any rate change before it takes effect, and allowed the public to intervene and challenge excessive rate increases.
- In the twelve years after Prop. 103 (1988-2000), malpractice premiums dropped 8 percent in California, while nationally they were up 25 percent.394
- During the period when every other state was experiencing skyrocketing medical malpractice rate hikes in the mid-2000s, California’s regulatory law led to public hearings on rate requests by medical malpractice insurers in California, which resulted in rate hikes being lowered three times in two years,395 saving doctors $66 million.
- 103 has allowed the state Insurance Commissioner to take action and lower excessive insurance rates for doctors. According to an October 2012 news release issued by the California Department of Insurance,
“Insurance Commissioner Dave Jones today announced the second medical malpractice rate reduction this year for NORCAL Mutual Insurance Company’s physician and surgeon program. The company’s 6.9 percent reduction saves primarily Southern California doctors approximately $8.5 million annually. This company initiated rate reduction follows a Department ordered 7.1 percent decrease in March for an overall savings of $18 million this year alone for physicians and surgeons insured by NORCAL Mutual.”
“Last year Commissioner Jones ordered the top six medical malpractice insurance companies in California to submit rate filings to the Department of Insurance to justify their current rates. After a thorough review of those filings, Commissioner Jones called for rate reductions. As a result of the Commissioner’s rejection of excessive rates, all six companies lowered their medical malpractice rates,” amounting to “a total savings to medical providers of $52 million….”
“‘I’m pleased the medical malpractice rates are continuing to be decreased under the Department’s rate review process and authority,’ said Commissioner Jones. ‘These medical malpractice rate reductions show the important role that Proposition 103, which authorizes the insurance Commissioner to reject excessive rate hikes for property and casualty insurance, including medical malpractice insurance, has played in curbing medical malpractice rates since it was passed in 1988.’”
Myth: Medical Errors are rare.
Fact: Medical errors are the third leading cause of death.
- “Analyzing medical death rate data over an eight-year period, Johns Hopkins patient safety experts have calculated that more than 250,000 deaths per year are due to medical error in the U.S. Their figure…surpasses the U.S. Centers for Disease Control and Prevention’s (CDC’s) third leading cause of death – respiratory disease, which kills close to 150,000 people per year.”
- “10 percent of all U.S. deaths are now due to medical error.”
- “Medical errors are an under-recognized cause of death.”
Martin A. Makary and Michael Daniel, “Medical error – the third leading cause of death in the US,” BMJ, May 3, 2016
Myth: Doctors practice defensive medicine out of fear of being sued.
Fact: Defensive medicine is insurance fraud.
A doctor who bills Medicare or Medicaid for tests and procedures done for a personal purpose – e.g., possible lawsuit protection – as opposed to what is medically necessary for a patient, is committing fraud under federal and state Medicare/Medicaid programs.
- The Medicare law states: “It shall be the obligation of any health care practitioner and any other person…who provides health care services for which payment may be made (in whole or in part) under this Act, to assure, to the extent of his authority that services or items ordered or provided by such practitioner or person to beneficiaries and recipients under this Act…will be provided economically and only when, and to the extent, medically necessary.”224 “[N]o payment may be made under part A or part B for any expenses incurred for items or services…which…are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.”225
- Providers cannot be paid and/or participate in the Medicare program unless they comply with these provisions, and they impliedly certify compliance with these provisions when they file claims. Thus, if they are not in compliance, the certifications and the claims are false. Providers who do not comply and/or file false claims can be excluded from the Medicare program.226
- Perhaps more importantly, the Medicare claim form (Form 1500) requires providers to expressly certify that “the services shown on the form were medically indicated and necessary for the health of the patient.”227 If the services are, to the doctor’s knowledge, not medically necessary, the claim is false.
Our call to action.
“People over profits.” That is the ethical way our civil justice system operates. Nursing homes want to know how much it will costs to injure or kill a patient. That is immoral. Caps on damages are immoral. It is up to us to protect the right to a jury trial. Take the facts from this article (and from CJ&D’s larger study) into your community. Educate your clients, neighbors and friends. Talk to your legislators. Through education we will protect our clients’ right to a jury trial.
