WASHING THEIR HANDS OF ILLINOIS

Doctors flee the state to escape its med-mal mess.

In October 2005, a story that would have been a minor item in most newspapers made the front page of the Belleville, Illinois, News Democrat.[47] There were new doctors in town—and in Belleville, that’s a big story.

Why? Because it meant that there would finally be enough orthopedic surgeons to cover emergencies at St. Elizabeth’s Hospital—which had been scraping by with only one. Belleville, you see, was in a swath of Illinois that had long been in the grip of the plaintiffs’ bar, and skyrocketing rates for malpractice insurance had driven doctors away.[48] The insurance-rate spike was caused by a decade-long onslaught of malpractice suits that had not only chased away doctors but shut down obstetric wards and forced patients to travel hundreds of miles in search of care. New doctors in Belleville, then, were good news for Illinois as a whole—a sign that the state’s salutary new tort-reform law was already having an effect.

Illinois’ comprehensive medical-liability reform, enacted in August 2005, imposes caps on “noneconomic” awards—for example, damages for pain and suffering or emotional distress—in malpractice litigation. It also allows doctors to apologize to patients without having their apologies used against them in court, and it raises qualification standards for the expert witnesses whom trial lawyers hire to testify in their cases.[49]

That’s the good news. The bad news is that the malpractice insurers that fled the state’s runaway litigation and outsize verdicts have yet to return, and liability premiums, while dropping 5.2 percent in the past year, are still sky-high.[50] Insurers’ slow reaction is understandable, since Illinois’ activist supreme court struck down as unconstitutional two previous reform efforts in 1975 and 1995.[51] So rather than risk another court intervention, insurers will wait to see if the new caps on noneconomic damages withstand the trial bar’s inevitable higher-court appeal.

The Unhealthy Costs of Illinois Jackpot Justice

Still, that the reform was passed at all by the Democrat-controlled Illinois legislature and that a firmly antireform Democratic governor signed it into law signal a developing backlash against Illinois jackpot justice. It’s increasingly difficult to ignore the manner in which out-ofcontrol malpractice lawsuits have inflicted real damage on health-care delivery in Illinois.

From 2000 through 2003, for example, more than half of the 950 licensed practitioners in Madison and St. Clair Counties were sued individually or through their practices.[52] On any given day, as many as a third of them would be subject to a suit—putting the lie to the trial bar’s claim that it only targets “bad” doctors.[53] All told, more than 400 medical-malpractice cases were brought in Madison and St. Clair Counties from 2000 through 2003, against 1,082 different defendants—including both counties’ hospitals, which were hauled into court 220 times.[54]

Most of these suits were weak or groundless—85 percent of med-mal claims in St. Clair County and 71 percent in Madison County were resolved with no payout from the defendant—but they still ate up millions of dollars in court and lawyer fees.[55] Illinois’ largest malpractice insurer, ISMIE Mutual Insurance Company, spent $150 million between 2000 and 2005 defending claims that resulted in no payment to plaintiffs.[56]

To understand how so many meritless claims can be filed in the first place, consider the staggering payouts that successful claims net lawyers who hit the jackpot. In plaintiff-friendly Cook County, the average jury award in 2003 was $4.45 million, up an astounding 314 percent since 1998.[57] Pain-and-suffering awards averaged $3.12 million, 247 percent more than in 1998.[58] From August 2003 to August 2004, Cook County juries handed out $161 million to plaintiffs in 30 malpractice cases, including seven verdicts in excess of $10 million and two in excess of $30 million.[59] Add nearly half a billion dollars for 191 reported settlements at an average of $2.4 million each,[60] and the tab in Cook County for 200 cases of alleged malpractice climbs to over $600 million.

Because of such costs, malpractice premiums in Illinois are now two to three times those of other states, and unaffordable for many physicians. Shouldering most of the burden are valuable specialists—obstetricians, orthopedists, and neurosurgeons—whose high-risk patients and procedures make them especially vulnerable to lawsuits. In Cook County in 2004, the average obstetrician paid $230,428 for malpracticecoverage, up 67 percent from 2003 and nearly 12 times what he would pay in nearby Minnesota.[61] Illinois neurosurgeons paid $246,196, more than three times the $73,105 average in next-door Indiana.[62] Orthopedists—even those avoiding high-risk spinal work—paid $135,584, while Wisconsin orthopedists paid only $23,012.[63]

Some Illinois doctors can’t find a company to insure them even at these off-the-scale rates. In 2002, malpractice insurers in Illinois paid out $1.47 in claims for every dollar they collected in premiums, making them among the biggest malpractice losers in the nation.[64] No wonder that of the 17 malpractice insurers that did business in the Prairie State in 2001, 12 have since headed for the hills.[65] The five that remain have limited the issuance of new policies and restricted the parts of the state and the specialties that they’ll insure.[66]

Cook County's average jury award in 2003 was $4.45 million, up an astounding 314 percent since 1998.

Trial lawyers blame the cost of malpractice insurance not on runaway malpractice judgments but on “price gouging” by insurers. But that claim rings hollow, since over two-thirds of Illinois’ insurers have left the state in the last five years, and ISMIE, by far the state’s largest med-mal insurer, is doctor-owned.[67] To buy the trial bar’s propaganda, you’d have to believe that doctors price-gouge themselves; that supposedly rapacious insurers would flee a great price-gouging opportunity; and, most absurdly, that price-gouging insurers are losing 47 cents on every dollar.

Doctor Exodus Threatens Access to Care

Many Illinois doctors, hard-pressed to find affordable liability insurance—required for admitting patients to a hospital—have simply pulled in their shingles. In 2003, an estimated 131 physicians in Madison and St. Clair Counties retired, moved to other states, or gave up doing highrisk procedures that could land them in court.[68]

The ultimate losers, of course, are Illinois patients. Unchecked malpractice lawsuits are not just costly and inconvenient, but literally lifethreatening. Until early 2005, when Memorial Hospital in Carbondale managed to recruit a neurosurgeon from St. Louis,[69] southern Illinois had gone two years without one. Accident victims had to be transported 115 miles to St. Louis for treatment—often to St. Louis University Hospital, where the number of trauma patients from Illinois more than doubled between 2002 and 2004.[70]

OB-GYNs, too, had been running for the border—at least until the recent reform bill passed. One such obstetrician, Dr. Mark Edelstein, had never been sued, but his malpractice premiums jumped from $36,000 to $110,000 anyway.[71] In 2003, he moved from Alton, in Madison County, to Syracuse, New York, where he pays $35,000 a year.[72] Alton also lost three orthopedic surgeons, a gastroenterologist, four internists, and a neurologist.[73]

Hospitals fare no better than doctors. Between 2001 and 2003, Illinois hospitals’ average annual insurance costs jumped from $1.5 million to $2.8 million.[74] Provena Health, which operates six hospitals in Illinois, has lost nine obstetricians and four neurosurgeons.[75] Reeling from doctor flight and fearing potential suits over inevitable birth defects, some hospitals have stopped delivering babies entirely.[76]

Will Reforms Turn the Tide?

Whether last year’s medical-liability reforms can stanch the flow of physicians and insurers out of Illinois and restore critical services to the state’s beleaguered hospitals remains to be seen. It could take years of moving old cases through the pipeline before we see the reform’s full impact; ISMIE still has 5,300 cases waiting to be tried or settled under the old law.[77]

But if other states are any guide, the newly enacted caps on noneconomic damages, once upheld, will lower insurance premiums for doctors by reducing extreme jury payouts. Medical-liability premiums have fallen 29.5 percent in Texas over the four years since it passed a reform including a constitutional amendment,[78] and malpractice premiums have dropped 30 percent over the three years since comprehensive reform passed in Mississippi.[79] Predictably, doctors are coming back: Texas is granting licenses to 400 more new physicians per year than it was before the reforms, and the state is estimating a record 4,100 applications for medical licenses in 2006, a 38 percent increase.[80]

Since noneconomic damages were 91 percent of the average Illinois jury verdict in 2002, it’s not surprising that new Cook County filings are down 25 percent in the last year.[81] If the supreme court upholds the caps this time, Trial Lawyers, Inc. will lose a healthy source of revenue, and Prairie Staters will be far better off as a result. Cook County's average jury award in 2003 was $4.45 million, up an astounding 314 percent since 1998.

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47. Mike Fitzgerald, Belleville, O’Fallon get new doctors, Belleville News-Democrat, Oct. 14, 2005, at 1A.
48. See American Medical Association, America’s Liability Crisis Backgrounder (March 4, 2004).
49. See 2005 Ill. Laws 667.
50. See Colias, supra note 16.
51. Best v. Taylor Machine Works, 689 N.E.2d 1057 (Ill. 1997); Bernier v. Burris, 497 N.E.2d 763 (Ill. 1986).
52. See Dirty Little Secrets, supra note 27, at 5.
53. See Hale, supra note 33.
54. See Dirty Little Secrets, supra note 27, at 4-5.
55. See id. at 6.
56. See IllinoIs State Medical Society & Ismie Mutual Insurance Company, The Medical Litigation Crisis 5 (2005) [hereinafter Litigation Crisis] (citing Cook Counyy Verdict Rep.).
57. See id. at 3.
58. See id.
59. See Hale, supra note 33.
60. See Illinois’ Largest Verdicts and Settlements in 2004, Crain’s Chicago Bus. (Feb. 28, 2005).
61. See Albert, supra note 33.
62. See Litigation Crisis, supra note 56, at 4.
63. See id.
64. See Kevin McDermott & Trisha Howard, System Is Sick, but Diagnosis Is Elusive, St. LouiIs Post-Dispatch, Feb. 15, 2004, at C1.
65. See Alan J. Ortbals, Medical Malpractice Crisis Drives a Dozen Insurance Carriers Out of Illinois, Ill. Bus. J., May 17, 2004.
66. See Litigation Crisis, supra note 56, at 5.
67. Id. at 1.
68. See Dave Whaley, Delegation Takes Case for Malpractice Reform to Springfield, Telegraph (Alton, Ill.), March 24, 2004.
69. See Caleb Hale, Brain Surgery Returning to Carbondale Hospital, S. Illinoisan, Feb. 25, 2005.
70. See Litigation Crisis, supra note 56, at 8.
71. See Shawn Clubb, Another Doctor Leaving Alton, Telegraph (Alton, Ill.), Oct. 4, 2003.
72. See id.
73. See id.
74. See Illinois Hospital Association, Medical Liability Crisis—Fact Sheet (2005).
75. See Litigation Crisis, supra note 56, at 7.
76. See id.
77. See Abdon M. Pallasch, How Caps Could Affect Jury Awards, Chi. Sun-Times, May 27, 2005, at 10.
78. See TMLT Reduces Rates, Declares Dividend, Austin Bus. J., Sept. 13, 2006.
79. See Physicians’ Insurer Cuts Rates; Barbour Credits Tort Reform, Hattiesburg Am., Sept. 13, 2006.
80. See Texas Medical Malpractice Reforms Result in Landmark Wins for Physicians and Patients, States PIAA, Bus. Wire, Sept. 12, 2006.
81. See David Ziemer, Med Mal Cap Debate Moves to Senate, Wisc. L.J., Nov. 2, 2005; Colias, supra note 16.