Mature Product Line: Medical Malpractice
AN UNHEALTHY SYSTEM
Doctors flee as skyrocketing malpractice claims drive up insurance costs.
Among Trial Lawyers, Inc.’s most mature markets is that for medical malpractice. Today, soaring jury verdicts are producing outstand-ing returns for the lawsuit industry even as they drive up insurance costs and make it difficult for patients in some areas to find doctors or hospital care. Hard-pressed to pay skyrocketing premiums or even to find coverage, doctors are abandoning risky procedures, retiring early, and moving out of tort-friendly states. A major challenge facing Trial Lawyers, Inc. in the future will be how to maintain this lucrative market as these avoidance tactics spread. But for the moment, business couldn’t be better.
Exploding Malpractice Costs
In 2000, the median jury award for malpractice rose 43%, to $1 million. By 2001, 52% of all awards ex-ceeded $1 million. Urban juries in particular are prone to grant mega-awards, and judges, increasingly hard to shock, are less inclined these days to reduce them. In 2002, three of the top ten verdicts in the nation—$94.5 million, $91 million, and $80 million—were returned in malpractice lawsuits. All involved lawsuits in plaintiff-friendly New York City or the suburbs of nearby Long Island.
No doctor is safe from Trial Lawyers, Inc. A 2002 Medical Economics survey of 1,800 physicians found that 58% had been the target of a lawsuit. In some areas of the country, such as the border counties of south Texas, predatory attorneys have swarmed in and recruited impoverished im-migrants as claimants. Doctors and hospitals in Hidalgo County got hit with 750 claims between 2000 and 2001, compared with 131 in 1999.
Nearly 80% of doctors say they order unnecessary tests and 74% say they make unnecessary referrals to specialists due to fear of being sued.
The majority of all malpractice suits are weak or bogus, but the huge awards and the millions of dollars required to defend even spurious actions have driven up malpractice insurance rates beyond what many doctors can afford. Between 2000 and 2002, rates typically rose between 30% and 75%, with even larger increases in some crisis states.
Trial Lawyers, Inc. tries to blame these rising rates on the insurance companies. But a January 2003 study by Brown Brothers Harriman, which tracked investment returns in malpractice insurance over 25 years based on the lawsuit industry allies’ own data, refutes that assertion, finding that what has precipitated the crisis is the huge growth in awards and settlements and inadequate premi-ums to cover them (see graphs).
A Health-Care Crisis
As a result of Trial Lawyers, Inc.’s relentless assault on the medical industry, insurers are abandoning plaintiff havens, leaving thousands of doctors and hospitals scrambling to find coverage. The country’s biggest malpractice insurer, the St. Paul Companies, last year exited the business entirely after incurring nearly $1 billion in losses. In Pennsylvania, one of 18 states with out-of-control rates, only two malpractice insurers remain, down from ten only five years ago. In Mississippi, at least 15 insurers have left the market since 1997.
Obstetricians and neurosurgeons—high-risk specialties—bear the brunt of Trial Lawyers, Inc.’s skyrocketing verdicts. A child born with cerebral palsy after a difficult birth can command tens of millions of dollars for care over a lifetime; and juries tend to grant such awards even though medical science shows that delivering doctors are almost never to blame. The upshot is that many obstetricians are limiting their prac-tices to gynecology, forcing women in some areas to travel hours for prenatal care and delivery. In West Virginia, some community hospitals have shuttered maternity units because local obstetricians can’t afford or find coverage. Neurosurgeons are also abandoning malpractice war zones like West Virginia; stroke patients and head- and spinal-trauma victims who need urgent treatment are helicoptered to Pittsburgh, 70 miles away.
Other high-risk specialists also are finding themselves in the crosshairs of the lawsuit industry. In October 2001, a group of 18 physicians, who performed about 80% of the orthopedic surgeries in Delaware County outside Philadelphia, announced that they would stop doing surgery and answering trauma calls. To protest rising insurance costs driven by predatory lawsuits, surgeons at the University of Nevada Medical Center in Las Vegas quit for ten days last summer, forcing a temporary closing of the medical center’s trauma center.
Physicians who continue practicing have adjusted their behavior to minimize risk. Nearly 80% of doctors say they order unnecessary tests and 74% say they make unnecessary referrals to specialists. The price tag: an estimated $60 billion to $108 billion a year in unnecessary health-care costs. In the meantime, millions go uninsured for lack of affordable health care.
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88. See HHS REPORT, supra note 16, at 1.
89. See id. at 1-3.
90. See JENNIFER E. SHANNON AND DAVID BOXOLD, MEDICAL MALPRACTICE: VERDICTS, SETTLEMENTS AND STATISTICAL ANALYSIS 1 (Jury Verdict Research 2002); Press Release, Jury Verdict Research, Medical Malpractice Verdict and Settlement Study Released (Mar. 22, 2002), available at http://www.juryverdictresearch.com/Press_Room/Press_releases/medmal_01/medmal_01.html.
91. See id.
92. Tanya Albert, Malpractice Awards Hit the Jury Jackpot, AMEDNEWS.COM, Feb. 3, 2003, http://www.ama-assn.org/sci-pubs/amnews/pick_03/prsc0203.htm.
93. See Berkeley Rice, Where Doctors Get Sued the Most, MED. ECON., Feb. 27, 1995, at 98.
94. Berkeley Rice, The Team That Triggered a Malpractice Shoot-Out, MED. ECON., Oct. 22, 2001, at 18.
95. See, e.g., Soaring Rates Force Doctors to Self-Insure, COLUMBIA DAILY TRIB. (June 7, 2003), available at http://www.showmenews.com/2003/Jun/20030607News014.asp.
96. See, e.g., CENTER FOR JUST. & DEMOCRACY, A SHORT GUIDE TO UNDERSTANDING TO-DAY’S MEDICAL MALPRACTICE INSURANCE “CRISIS” (AND USEFUL QUESTIONS TO ASK) 7-9 (Sept. 25, 2002), available at http://www.centerjd.org/MediaGuide.pdf.
97. See Raghu Ramachandran, Did Investments Affect Medical Malpractice Premi-ums?, INS. INVESTMENT RES. (Brown Bros. Harriman, Jan. 2003).
98. See HHS REPORT, supra note 16, at 14.
99. See Press Release, St. Paul Ins. Co., The St. Paul Announces Fourth-Quarter Actions to Improve Profitability and Business Positioning (Dec. 12, 2001), available at http://www2.stpaul.com/spc/corp/spcnews.nsf.
100. See HHS REPORT, supra note 16, at 14.
101. See id. at 3.
102. See id.
103. See New Jersey Hospital Association, Medical Malpractice: The Crisis Deepens, Vol. 11, No. 2, LEADING OPINION 1, May 2002, available at http://www.njha.com/publications/LOP/LOPv11n2.pdf.
104. See Christopher Guadagnino, Raising the Malpractice Crisis Ante, PHYSICIAN’S NEWS DIG., Dec. 2001, available at http://www.physiciansnews.com/spotlight/1201wp.html.
105. See Deborah Amos, Pushed Out of Business, ABCNEWS.COM, July 27, 2002, http://abcnews.go.com/sections/nightline/DailyNews/LVegas_malpractice020725.html.
106. See HHS REPORT, supra note 16, at 4-5; Humphrey Taylor, Most Doctors Re-port Fear of Malpractice Liability Has Harmed Ability to Provide Quality Care: Caused Them to Order Unnecessary Tests, Provide Unnecessary Treatment and Make Unnecessary Referrals, No. 22 THE HARRIS POLL, May 8, 2002, available at http://www.harrisinteractive.com/harris_poll/index.asp.
107. See HHS REPORT, supra note 16, at 7.