For months, there has been much written and reported on the medical malpractice crisis in Pennsylvania and across the nation. Doctors in several states have staged temporary work stoppages to protest the high cost of medical malpractice insurance. In Pennsylvania, the Rendell administration has established a cabinet level position to address the medical malpractice crisis. On a national level, the Bush Administration has announced a plan that tracks Pennsylvania Congressman James Greenwood’s bill to cap medical malpractice jury awards as an attempt to reduce the amount of money insurance companies have to pay on claims, thus in theory reducing insurance premiums.
What is medical malpractice and why is there a crisis?
Simply put, malpractice occurs when a doctor breaches his duty to treat his patient in the way that a reasonably prudent doctor would and should, and harm to the patient results. Doctors, like most professionals, carry malpractice insurance to protect themselves in the event claims are filed against them.
In recent years, doctors’ malpractice premiums have increased by as much as 100%. The increased premiums eat directly into doctors’ profits. Regions with high premiums risk losing their pools of doctors to regions with lower premiums, or doctors choose to stop practicing all together; we have experienced this in Pennsylvania.
What has caused the sudden increase in premiums? The reasons vary depending on who is talking.
The insurance industry, doctors and many politicians put the blame on the trial lawyers and “irresponsible” juries.
It is the perception of many that lawyers institute too many lawsuits, and that some are frivolous and fueled by attorneys preying on the emotions of patients and patients’ families at times when they are most vulnerable. While some suits are frivolous, many are meritorious. Either way, the litigation forces insurance companies to defend claims and pay judgments when they lose. The increased costs for insurance companies are passed along the to doctors in the form of increased premiums.
Others point to juries whose verdicts have become unreasonable, and there have been some massively excessive verdicts, often involving punitive damages. What is not so well publicized as the excessive verdicts is that trial judges have the authority to and often reduce them substantially.
The current crisis is not the result solely of frivolous lawsuits and excessive verdicts, however. Those have always existed. Trial lawyers and other politicians maintain that it is the reckless policies of the insurance industry and the ineptitude of doctors and hospitals which have caused the crises.
Insurance companies are required to invest premiums to maintain a pool of reserves for medical malpractice liability. A bad economy and poor investments by some insurance companies have forced many insurance companies to rely much too heavily on premiums instead of reserves to pay claims. Companies have raised premiums because their liability reserves have dwindled, and some have gone so far as to discontinue providing this insurance; this reduces competition for coverage and leads to increased premiums from insurance companies that continue to provide service.
Some maintain that the problems are due to there not being a disciplinary system in place which tracks and publicizes the records of doctors who have made repeated mistakes. Patients have no way of knowing if they have chosen a doctor who repeatedly errs. Consequently, some doctors are able to continue to practice despite the fact they continue to make mistakes. When the insurance companies continue to defend inferior doctors, premiums increase for the doctors who do not make mistakes.
How to solve this crisis?
Caps. Recently the most discussed solution has been to place upper limits on non-monetary damages awards. Proponents of this plan claim that by reducing the excessive awards in medical malpractice cases the incentive to file lawsuits is reduced. The idea is that fewer lawsuits and smaller judgments will equal lower premiums for doctors. Opponents, however, note that a 1975 California law, similar to that being proposed, established caps on non-monetary medical malpractice awards but has had little effect on insurance premiums. They contend that fixed limits on medical malpractice awards take rights away from patients who are truly injured as a result of medical malpractice. Opponents argue that caps will not get to the root of the medical malpractice crisis.
Holding Insurance Companies Accountable. Critics of the insurance industry feel that there should be greater government oversight of the insurance companies. These critics argue that if insurance companies are forced to maintain malpractice reserves in safe and stable investments there will be no need for steep increases in premiums because the reserve fund will not fluctuate with the markets and economy. Insurance companies point out that there are already insurance watchdogs and regulations in place. They contend that more regulation will lead to fewer insurance companies to choose from for doctors, and higher premiums will result.
Holding Doctors Accountable. Some argue that if doctors are held accountable in a public manner, the patient will be able to make a more informed decision before choosing a doctor or procedure. Doctors with sub-par performance ratings will either improve their skills or stop performing procedures that they do not do well. Medical facilities and practices will know when hiring any doctor what to expect. Finally insurance premiums could be pegged to the type of rating each doctor has. Doctors protest that this would be an invasion of privacy. They point out that lawsuits are already public knowledge, and another public accounting is not necessary. Doctors note that those who have had claims paid out against them already pay higher premiums than doctors who do not.
The medical malpractice insurance crisis is complicated with no easy solution. In varying degrees all those involved have contributed to the problem, and the large question facing us is whether legislation can lead to a resolution of the issues. What is clear is that if something is not done quickly, finding a doctor will be increasingly more difficult. We will keep you informed on the Rendell and Bush administrations’ efforts to resolve this problem here in Pennsylvania and across the nation.
— J. Ken Butera