Malpractice Suits in America; The Numbers.

October 26, 2004 in Medical Legal by RangelMD

(Via PointofLaw). Doctor Richard E. Anderson, chairman and CEO of The Doctor’s Company (a physician owned medical malpractice insurer) recently wrote “Defending the Practice of Medicine” for the Archives of Internal Medicine. It’s a good read that brings to light the true costs and extent of the medical malpractice tort industry in this country. The numbers are disturbing and do a great deal to help illuminate the reasons why medical malpractice insurance is becoming prohibitively expensive. I’ll sum up some of the initial data.

  • “On any given day” there are 120,000+ malpractice claims pending against physicians.
  • 1/6th of all physicians are sued every year.
  • Half of all neurosurgeons are sued every year.
  • Over 30% of ER physicians, OBGYN, orthopedists, trauma and plastic surgeons are sued every year.
This is incredible! Does this mean that the quality of our health care system is going down the tubes and our physicians are more incompetent then ever? I think not. Prior to 1970, medical malpractice suits were rare but the number of suits grew to such an extent that both the 1970s and the 1980s both had their own crises in soring medical malpractice suits that lead to increased insurance rates. The reasons for these increased rates in the numbers of medical malpractice suits are numerous but there is no evidence that it had anything to do with a fall in the quality of health care in this country.One cause was that there were various changes in tort law that were adopted over several decades (the rule of res ipsa loquitur and no longer exempting public charity hospitals from litigation as two examples) that made suing the medical establishment much easier. But the real reason for the increased numbers of suits was that of changing attitudes and expectations among the general public based on the advancement of medical science. For example; Prior to 1970 there were few treatments for a patient who presented with a heart attack. Often they were prescribed “bed rest” (this is almost always a physician’s way of saying, “I have nothing more to offer you in the form of treatment”). However, these days we have numerous treatments to offer patients including cardiac catheterization, bypass surgery, “clot busting drugs”, lifestyle modifications, and numerous other drugs that would reduce the likelihood of a second heart attack.

However, many of these treatments come with significant risks even though there is still a positive risk-benefit ratio. Invasive procedures have inherent risks no matter how skilled the physician and drugs have side effects and interactions that may be difficult to predict, monitor, and prevent. But because of these medical advancements, most Americans have become convinced that advanced medical care should be 100% successful if performed correctly and that any poor outcomes must be the result of malpractice. The health care industry has become a victim if it’s own success. This is best illustrated by the heart attack example. Prior to 1970 when we sent a heart attack victim home for “bed rest” and he/she died would we expect the family to sue?

Another reason is the fact that starting in the 1970s there was a sudden realization that medical care is far from perfect and that patients do die as a direct result of iatrogenic causes either from the side effects of medications or complications from invasive procedures or the fact that despite advancements in medical science, patients can still be misdiagnosed. But iatrogenic deaths and missed diagnosis do not necessarily imply negligence. This is the problem with any study that tries to show that thousands of patients are killed each year as a result of medical “errors”. The health care system is complex and imperfect but it is highly debatable that any significant number of these injuries that occur as a result of medical care are the result of negligence. And the medical community has responded with patient safety initiatives that along with improving technology have had a dramatic impact on iatrogenic deaths in fields such as anesthesiology. Yet, there has been no change in the over-all number of suits.

A third reason for the rise in malpractice suits is related to the over-all rise in the litigious nature of Americans in the last few decades. Studies have found that the majority of medical malpractice suits have nothing to do with any actual malpractice or injury. Another study found that one of the most important reasons that a family member or patient sues their physician is because they did not have a good relationship with the physician rather then any legitimate allegations of negligence and despite the fact that bad “bed-side manner” has never been shown to correlate with bad medical practice. This is consistent with the amazing fact that 70% of all malpractice claims do not result in any payment to the defendant (either they are closed prior to trial or they result in a jury verdict for the defendant). Yet, even though most of these suits do not result in payouts they still have enormous cost implications. In addition, even though the frequency of lawsuits has remained stable for the last several years, the severity of the jury awards have increased dramatically.

  • Each lawsuit whether successful or not costs an average of almost $23 thousand to defend.
  • Between 1997 and 2000 the median medical malpractice verdict doubled to one million!
Combine these numbers with the fact that 120,000 suits are going on at any one time and it’s no wonder medical malpractice insurance rates are going up! Imagine what would happen to your auto insurance if you had a major accident with claims in the tens to hundreds of thousands of dollars every 2-5 years? What do you think would happen to the homeowners insurance industry if 1/6th of their client’s houses burned to the ground each year?Doctor Anderson also addresses the claim from the trial lawyer lobby and patient care advocate groups that the increases in medical malpractice insurance rates are due primarily because insurance companies are trying to make up for losses incurred in the stock market downturn of the late 1990s. He states the fact that most insurance companies have less than 10% of their investments in the high-risk stock markets and as a whole the insurance industry averaged a positive investment return from 1991 to 2000.

It is also clear from his article that over 60% of physicians are insured by mutual insurance companies (owned by the policyholders) and that these companies tended to use investment returns to, in effect, subsidize premiums and keep costs down. This worked well during the boom markets of the 90’s. However, in 2000 the market bubble burst, investment returns fell, and yet the frequency of malpractice suits remained unchanged. To make matters worse, the number of massive jury awards dramatically increased in the late 90’s. The number of awards over a million dollars doubled to 8% and these made up more then 30% of total award amounts. Given these factors it’s no wonder that premium rates went up. Given this context the lawyers and consumer groups are partly right when they blame the stock market for the rise in malpractice premiums but the irony is that the boom markets were helping to keep rates down for much of the 90s and may be a significant reason why we had malpractice insurance crises in the 1970s and 80s but not the 90s. Rates were allowed to be artificially low out of sheer luck from the dramatic economic growth of the 1990s.

Are there solutions to this problem? Sure, but the situation is complex and there are numerous different tort reforms that have been enacted over the years . Studies cited by this New England Journal article showed a very mixed success rate in helping to reduce liability premiums in the 1970s and 80s however, more recent data from the 90s (cited by Dr. Anderson and backed up by AMA data) show much more success in limiting the rise in malpractice insurance costs, particularly in states like California with long-standing tort reform measures.

The take-home point here (and I hate that phrase) is that the prohibitive rise in malpractice insurance costs cannot be realistically attributed to investment loses and is certainly not the result of worsening medical care. It is the malfunctioning and out of control malpractice lawsuit industry that is to blame, for it is responsible for suing hundreds of thousands of physicians each year even though actual negligence is not able to be proven in the vast majority of cases. We cannot reasonably expect the current high rates of malpractice suits and ever increasing jury awards to continue without significant harm to the health care industry and this means possible worsening of health care quality and access for the vast majority of Americans.

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