The Case for Healthcare Tort Reform

For decades, the medical community has argued that serious action must be taken to mitigate the litigious environment in which they operate.  The New England Journal of Medicine reports that one in 14 physicians are sued for malpractice each year.  This figure virtually ensures that almost all physicians will face a malpractice suit at some point in an extended career.  While attorneys argue that they are merely protecting their clients from negligent medical professionals, the rampant litigation against virtually the entire medical industry suggests that there are an enormous number of baseless claims. There are a number of parties that benefit from the enormous number of malpractice claims.  The most obvious, of course, are the attorneys that bring these cases on behalf of patients and families.  In 2013, the total payouts in response to medical negligence claims totaled more than $3.7 billion.  Of the almost 12,142 settlements or awards related to malpractice claims, almost 48% occurred in New York, Pennsylvania, California, New Jersey and Florida. An attorney may earn from 15 to 50 percent of a judgment. The other major beneficiary is the insurers who offer medical malpractice policies.   In 2003, the nationwide payouts for malpractice claims reached $5 billion, while in 2013, the total was only $3.7 billion. However, premiums continue to rise regardless of exposure to claims. The average premium grew by 80 percent between 2001 and 2009. While there should be some logical relationship between the premiums and the amount paid to claimants, there is no evidence that is the case. This is most evident in states like Texas, California and Illinois which introduced caps of malpractice awards and still experienced significant premium hikes. About 45 percent of malpractice premiums is pure profit for insurers, while only about 13 percent of health insurance premiums is profit. The parties that suffer most from the outrageous insurance premiums and frivolous lawsuits are medical organizations and, ultimately, the patients.  In many states like Florida where judgments can be millions of dollars, the insurance premiums are high enough as to price out some physicians.  These physicians may limit their practices to certain low risk procedures.  In fact, some specialties like obstetrics and neurosurgery are losing physicians due to the heightened risk of malpractice claims. The most important consequence of numerous malpractice suits is the financial costs that the medical community and patients incur.  The vast majority of physicians in the U.S.—regardless of specialty or geographic region—must now practice some form of defensive medicine. This typically involves unnecessary tests, operations and therapies that physicians KNOW are unrequired or, in fact, detrimental but must be performed to meet the “common standard of medical care.” The Congressional Budget Office reports that almost 30 percent of health care expenditure is for these irrelevant medical services. For those who vociferously support tort reform, there are some realities to consider.  To date, 38 states have passed some type of tort reform laws, most commonly caps on punitive judgments.  The sad fact is that in many of these states, the insurance companies have continued to raise premiums despite a drop in payouts. Finally, some consideration must also be given to genuine cases of medical error.  While the exact number of deaths due to medical errors annually is unknown, credible estimates of up to 400,000 per year have been made. Only a fraction of these legitimate cases sees a courtroom, but there is a compelling need to offer justice to those who have needlessly suffered and died, as well as impose a legal penalty for medical incompetence.

Written by:  Robert Moghim, M.D., CEO- Moghim Medical Consulting Inc.

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