New Health Threat: Litigation

Published April 1, 2002

Nothing should ever come between a patient and a doctor … and especially not a lawyer. Yet today’s out-of-control legal environment is doing just that, denying patients the care they deserve.

Spurred by soaring malpractice awards, runaway insurance rates are forcing doctors to cut back. They have less money to invest in new medical equipment, are forced to close smaller branch offices, and must trim office staff. As a result, fewer health care services are available, and they are of a lower quality than would have been the case in a less-litigious environment.

According to a survey recently conducted by the Pennsylvania Medical Society, 72 percent of doctors have deferred buying new medical equipment or hiring new staff because of sudden increases in liability insurance.

To lower their risk and insurance premiums, doctors who normally would take on high-risk medical procedures are opting not to do so.

For example, scores of obstetrician/gynecologists have stopped delivering babies, because virtually every medical liability insurance carrier has increased their rates. Between January 1997 and September 2001, major liability insurance carriers writing in Pennsylvania increased their overall rates between 80.7 percent and 147.8 percent.

The Market Reacts

Some medical liability insurers are simply not writing policies. Most recently, the St. Paul Cos. announced it would stop selling medical liability insurance products. In addition, several carriers have gone out of business, while others refuse to sell insurance in a state with a reputation for abuse of the medical liability system.

Of 1,098 high-risk specialists polled between December 10 and 17, 2001, 31 percent had been dropped by their insurer.

Driving premiums through the roof are excessive sums awarded in malpractice lawsuits. According to data from the National Practitioner Databank, medical malpractice payments for physicians in 2000 reached $3.9 billion: $3,908,113,303, to be exact.

New York had the highest payouts at $632,996,221. Pennsylvania is second; during fiscal year 2000, combined judgments and settlements in Pennsylvania totaled $352 million—nearly 10 percent of the national total. Florida, Illinois, Ohio, and Texas also experienced payouts of more than $200 million.

The Consumer Loses

To make matters worse, the Physician Insurers Association of America (PIAA) reports nearly 70 percent of all medical malpractice claims made against doctors do not result in a payment to the plaintiff. Only 1.3 percent of all claims made against a doctor result in a jury award to the plaintiff.

It costs money to defend doctors against medical malpractice claims—even those that find the doctor not guilty. According to the PIAA, in 2000 it cost $66,767 on average to dispose of a claim that goes to a jury finding the defendant not guilty.

This all adds up to bad news for the public … and for the business community, which pays for its employees’ health insurance. To fend off litigation and cope with steep liability premiums, doctors ultimately are being forced to practice defensive medicine. Research reported in the Quarterly Journal of Economics found defensive medicine adds $50 billion to the cost of health care every year.

Reasonable laws that protect patients should be in place. But abuse of the system must stop. Frivolous lawsuits and unreasonable jury verdicts have financially strained the U.S. health care system. Now is the time to act to re-establish the doctor-patient relationship: a uniquely American relationship that provides attentive, quality health care for all.

Roger F. Mecum is executive vice president of the Pennsylvania Medical Society. His email address is [email protected].