Tort Reform is Not the Way to Lower Health Care Costs
Current statistics do not support the claim that medical malpractice litigation is responsible for driving up the costs of health care and decreasing patient care.

February 06, 2010 /24-7PressRelease/ -- Tort Reform is Not the Way to Lower Health Care Costs

One of the central debates in health care reform is whether or not tort reform must be an essential element of health care reform. Physicians, insurance companies, their lobbyists and those on the right-side of the political spectrum generally argue that tort reform is not just an essential factor, but a necessary one, to lower health care costs.

The erroneous belief behind tort reform typically is anchored on arguments of rising insurance premiums, the practice of defense medicine and frivolous lawsuits. Proponents of such reform argue medical malpractice litigation is increasing the costs of health care by requiring doctors to practice defensive medicine and by increasing insurance premiums. Physicians argue they are forced to order unnecessary and costly tests because of the threat of legal action. They also argue that frivolous lawsuits and large jury awards in medical malpractice cases have vastly increased their medical malpractice insurance premiums, which in turn has run some doctors out of business, or at least out of states with high medical malpractice insurance premiums, thereby decreasing public access to health care.

But how much truth is there to these claims?

Rising Insurance Premiums

The true driving force behind rising medical malpractice insurance premiums is insurance companies, not the legal system. Currently, the vast majority of states have enacted some form of "tort reform" legislation that limits the amount of damages and/or attorney's fees that can be recovered in medical malpractice actions. However, physicians in these states have not experienced the anticipated decrease in insurance premiums.

Instead, a study conducted by the National Association of Insurance Commissioners has shown a 24% increase in profits among malpractice insurers in states with tort reform legislation. In 2008, insurers in tort reform states raked in 3.5 times more in premiums than what they paid out in claims. Significantly, in the states that do not have laws capping damages and/or attorney's fees in medical malpractice cases, the insurers took in only two times as much in premiums as they paid out in claims.

Practice of Defensive Medicine

A recent report issued by the Congressional Budget Office (CBO) found that the incidence of defensive medicine has been greatly overstated. According to the report, no evidence of defensive medicine was found in private managed care systems. However, the practice was found to occur in the Medicare system. The difference largely has been attributed to private managed care systems refusing to pay for tests that do not have proven effectiveness, limiting the financial incentive among physicians and hospitals to order tests that will not be reimbursed.

Frivolous Lawsuits & Large Jury Verdicts

The media is full of reports about widespread frivolous medical malpractice lawsuits and large jury awards. In North Carolina, however, this is not true.

First, Rule 9(j) of the North Carolina Rules of Civil Procedure require that a qualified physician review a medical malpractice allegation, determine it has merit and agree to testify in court to that fact before the claim can be filed in court. This alone greatly limits the ability of a meritless claim to enter the court system. Furthermore, only a fraction of civil cases filed in North Carolina courts are medical malpractice claims. In its review of medical malpractice lawsuits in North Carolina from 1998-2008, the North Carolina Administrative Office of Courts found that medical malpractice lawsuits constituted a mere .26% of civil cases filed during that period.

Second, because medical malpractice cases are time-consuming and very expensive to litigate, attorneys have a vested interest in only pursuing claims with merit. If their client does not succeed via a settlement or trial then their attorneys do not get paid. Recent figures put the average amount of expenses during a medical negligence claim in excess of $50,000. With the amount of time, resources and money attorneys must invest in these types of cases, they have no incentive to bring claims that are not legitimate or likely to succeed.

Third, it is a well-known fact that juries, especially in North Carolina, tend to be conservative in medical malpractice cases and favor doctors. Statistics collected by the North Carolina Administrative Office of Courts looking at medical malpractice cases from 1998-2008 revealed that only 4% went to trial and the remaining 96% were either dismissed or settled. Of those medical negligence claims which were tried, plaintiffs were successful in less than 25% of the cases and the median jury award was $373,750. Conversely, defendants had a 84% probability of winning at trial.

Total Savings from Tort Reform

According to the CBO, if the federal government were to enact sweeping tort reform laws, the total savings in terms of insurance premiums, defensive medicine practices and litigation would be around $11 billion for a total of a .5% savings. While figures vary, it is estimated that the total cost of medical malpractice liability on the national health care system accounts for only 2% of total health care expenditures.

Comparatively, the Institute of Medicine estimates that the annual cost of medical errors is between $17 and $29 billion each year, costing upwards of 98,000 lives. In North Carolina alone, 2,800 people die and another 18,000 are injured each year due to medical errors. The CBO report also stated that tort reform could have a negative impact on patient care and result in a .2% increase in the overall number of deaths from preventable medical errors each year. In North Carolina, this would mean an additional 50+ lives would be lost each year.

Conclusion

The objectives of a medical malpractice claim are to protect those who have been the victims of medical negligence and protect others from suffering a similar fate. While the majority of physicians are competent and capable of providing patients with the care they deserve, there are others who are not; further, even competent physicians can make mistakes. State medical boards, including the one in North Carolina, sometimes fail to adequately sanction these doctors and prevent them from harming others.

For many victims of medical malpractice, the legal system is their only option for recourse against those who wronged them. Limiting or eliminating this option will be a great disservice to patients and decrease the quality of patient care. Even with the threat of litigation, health care providers at hospitals, nursing homes and other facilities around the country continue to make unnecessary errors that result in catastrophic injuries and the loss of life. Just imagine what it would be like if this threat was removed entirely.

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