Who benefits from tort reform?
November 24, 2004 2:31 PM   Subscribe

Caps on non-economic damages in medical malpractice suits have become very popular policy in America. Proponents of caps claim that huge settlements are to blame for skyrocketing med mal premiums, forcing doctors out of business. You may remember Bush's oft-mocked statement that "our OB-GYNs are unable to practice their love" because of these opportunistic suits brought by ambulance-chasing trial lawyers. After insurance companies poured millions into referenda across the nation to convince voters that a cap on damages would effectively lower med mal premiums and protect health care availability for the end user, now the second-largest med mal insurer in America, GE Medical Protective, is trying to convince the Texas Department of Insurance that they are unable to reduce their premiums because tort reform only saves them 3% of their total losses.
posted by pikachulolita (34 comments total) 1 user marked this as a favorite
The Foundation for Taxpayer & Consumer Rights says:
"When the largest malpractice insurer in the nation tells a regulator that caps on damages don't work, every legislator, regulator and voter in the nation should listen," said FTCR's Executive Director Douglas Heller. "Medical Protective's rate increase and this smoking gun document prove that the insurance industry cannot be trusted on the issue of malpractice caps."
posted by pikachulolita at 2:33 PM on November 24, 2004

and what, you expect people to remember this? or look at facts???

this is just the sort of thing those dirty trial lawyers want you to believe. That facts matter.

People have been crying this since the beginning "caps won't work"...and california was cited as an example in many A discussion I had regarding the subject. All of course, blown off with "well, california..you know, they are weird"..

The fact is, caps are going to go in place, AND premiums will rise.
posted by das_2099 at 2:45 PM on November 24, 2004

Interesting talk about tort reform that went around the blogsphere a few months ago, via Wampum, here and here.

Snarky comment: if you follow much law, you start to see, consistently, Republicans generally propose things that will protect the insurance industry. Tort reform is not just Grover Norquist try to "get the other team," but rather is just another tactic in a long, and consistent, line.
posted by pabanks46 at 2:46 PM on November 24, 2004

Uh, wait a minute. Wouldn't a malpractice insurer have a vested interest in tort reform failing? I mean, if this passes won't doctors need less malpractice insurance?

Is there a similar report from an entity that doesn't have a self-interest in knocking tort reform?
posted by wicked sprite at 2:50 PM on November 24, 2004

Erin Brockovich (the real Erin Brockovich, not Julia Roberts) appeared in a commercial opposing a tort reform ballot measure in Oregon this year. She predicted tort reform wouldn't do anything to lower premiums. Apparently that prediction proved to be dead accurate in Texas. Fortunately, Oregon defeated the measure but only by 50.79% to 49.21%.

C'est la vie. I'm reasonably certain that by the time the average baby boomer is 75 the medical industry will be all but unrecognizable.
posted by mullingitover at 2:58 PM on November 24, 2004

das_2099: yeah, MICRAS has been the model legislation followed by many states, thankfully not including my beloved Oregon.

"and what, you expect people to remember this? or look at facts???"
well, i think alerting the good people of metafilter of a leaked document proving that these caps don't work- and that insurance companies don't even believe they work - is a good start toward getting some attention for an important story that hasn't been touched by the media.
posted by pikachulolita at 3:01 PM on November 24, 2004

wicked sprite: no; tort reform = limits on jury awards. because insurance companies have to pay those awards, they have self-interest in seeing that they're as low as they can be.
posted by pikachulolita at 3:03 PM on November 24, 2004

wicked sprite has a point in that while they have an interest in paying less in awards, if awards are only 3%, then if there is a drastic decrease in the amount purchased by tort-reform-shielded doctors, there could be a problem for the insurance companies. That is, if premiums are not tied to awards, but purchasing insurance is, then a distinct drop in the perceived need for insurance could in fact hurt the industry.
posted by pabanks46 at 3:13 PM on November 24, 2004

interesting links pabanks46 ..this one comes from one of them

My first thought was, "if frivolous lawsuits are so rare that they have to lie, then why is there such a vociferous tort-reform movement?" But then an answer suggested itself: the issue is probably not so much the awards themselves as the actions that prospective awards deter. For example, action X may not be profitable if there's a 1 in 100 chance of getting caught and having to pay $5 million. But if the cap is $250 thousand (with the same 1/100 chance of getting caught) then action X may be profitable. (X represents things like poluting or not testing for safety.)

Pretty much makes sense..if one can predict the outcome of getting caught wrongdoing (for instance $250K) a lot of frauds, previously too risky,become much less risky which makes them more attractive.

And everybody here who worked some day in their lifes know how much anal can some people be about "cost cutting" at any expense, expecially if they're the ones not paying the expenses (privatization of profit, socialization of costs)
posted by elpapacito at 3:42 PM on November 24, 2004

Another lie that Bush got away with. . .
posted by Danf at 3:48 PM on November 24, 2004

elpapacito: that reasoning makes a lot of sense, especially since the HEALTH Act, which passed the house and is currently stalled in the Senate, includes a provision exempting FDA-approved drugs from consideration in malpractice suits.
posted by pikachulolita at 3:56 PM on November 24, 2004

Just a quick clarification so everyone is on the same page...

The caps are applied to non-economic damages, i.e. things like "pain and suffering, loss of spousal companionship, etc." No caps on actual medical expenses, lost wages, or things of that nature.

However, medical malpractice suits (and most other personal injury claims) are brought by plaintiff's attorneys who receive their only compensation as a percentage of the award. This way, it costs you nothing unless you win your suit, which means that your attorney won't pursue a baseless lawsuit. The bad side, if noneconomic damages get capped, is that the attorney's percentage will have to come from somewhere, which may mean that it will come out of the part of the award meant for the client's medical bills.

What does that mean? Fewer attorneys taking claims, and fewer clients bringing them. Fewer claims is good for insurers, bad for patients.

There are always some wackos that bring baseless claims, and I feel sorry for doctors who have to fend them off. But that is no reason to punish people who have legitimate claims...
posted by MrZero at 4:05 PM on November 24, 2004

In Canada, these sorts of "non-economic damages" are very rarely awarded, and already capped at relatively small numbers; your tort awards tend to dwarf ours.

Kerry mentioned a very similar statistic to this 3% in the debates, noting that even if tort reform was successful, the money saved would be a small fraction of the US' spending on healthcare. I still think that even a few % is significant, and that these non-economic damages are usually spurious and/or decadent. Of course, when it comes to the many many things the United States needs to do to fix their health care system, this is fairly far down the list.

Finally, I think none of us are particularly surprised by the non-significance of the "trial lawyer crisis"... wasn't this just a John Edwards smear campaign?
posted by mek at 4:32 PM on November 24, 2004

In the recent campaign about non-economic award caps here in Oregon, I was at first undecided about the matter. I know that malpractice insurance is a huge burden on all sorts of medical professionals and I would love to see them worry about providing good care instead of worrying about insurance. On the other hand, I knew the measure was backed by the insurance industry and I have an inherent suspicion of them. They kept saying that these caps would reduce premiums but I kept noting that these same companies already had amazing profit margins and were neting billions per year.

I finally made up my mind to vote against the caps after I read a brilliantly succinct piece of logic: If the insurance companies were so worried about stopping the rise in premiums, wouldn't the measure also include caps on rate increases as well as jury awards?

If you want to keep premiums in check, look to regulate the insurance industry when you are also looking at the legal system.
posted by afflatus at 4:41 PM on November 24, 2004

I had heard the savings were as low as 1%.
posted by expriest at 5:05 PM on November 24, 2004


Fuck the sick and injured. They're just a drain on our resources. They should just shut up and suck it up.

Fuck the poor, working or otherwise. We all know the poor are only in their position because they lack vision and drive.

Fuck the workers. They don't really contribute anything; they should be grateful they have jobs. Besides, the company takes all the risk and deserves all the rewards. And don't let them organize, because unions are Communist.

Fuck science, reason, and critical discourse because, well, they all challenge my worldview and make my head hurt.

Fuck gays, just because.

But, by all means, please lay off the poor, misunderstood mega-corporations. They are just trying their best to eke out a living in this dog-eat-dog world. Just because they say and do one thing on Monday, and then say and do the exact opposite on Wednesday, doesn't mean they are lying. It's just evidence of efficient pro-active marketing, not a display of unchecked and unprecedented power, greed, and self-interest.

Let us pray.

posted by Benny Andajetz at 5:23 PM on November 24, 2004

Guess what else is bad for patient?

Well, traveling 100 miles for an OB when you are pregnant.
Not having a neurosurgeon available unless you lifeflight your five year old to the nearest city after he falls out of a tree.
Your family doctor finally gets fed up with the threat of a lawsuit over and above his coverage limit and moves out of state.

Reading this thread, what strikes me is that the issue has been poisoned by the fact that Republicans seem aligned behind it, and insurers support it. Here in Oregon, this measure lost by a slim margin but had bipartisan support, from what I can tell. It was championed by the doctors as well as the primary insurer - a physician owned insurer that returns it's unused capital to the docs or keeps premiums low depending on it's year to year profits/losses.

In southern Oregon multimillion dollar "pain and suffering" awards have driven large OB practices to shut their doors. Here in the capitol getting OB priveleges is nearly impossible unless you join an established group.

I suppose what I am asking (and I voted for JK) is to look past the rhetoric at the fact that every day physicians head in to take care of people in the best ways they know how. And things are going to go wrong that are not anyone's fault. But expecting a doctor to continue to work when there is no ceiling on a malpractice award (and realize the higher they go, the more sequential jury awards are llikely to be based on "precedent") other than the emotions of a jury is absurd.

I could give a shit what insurers say. There is value in caps for reasons otther than whether or not it saves money on premiums. The next step, as other states have done, is to simply stop. Stop OB care, stop neurosurgical and ER, until the legislature passes reform as they have done in a multitude of other states.

Idealism and virtue is only so good. If I have to wonder if I'm going to be financially ruined by the efforts of a warped patient, and a jury that thinks five million dollars is a modest sum that is pulled out of someone's ass at the insurance agency, then I need only travel a few hundred miles north or south and set up shop elsewhere, but meanwhile three thousand people will need to find a new doctor, and good luck, because no newly minted MD in their right mind will come near this place.
posted by docpops at 5:32 PM on November 24, 2004

a "warped patient" probably wouldn't make it past the hearing stage. and if it would, maybe these decisions shouldn't be made by juries at all, but by panels with medical experts, lawyers, and maybe a couple of laymen for balance.

also, just to clarify, the "3%" number i referenced isn't referring to reductions in overall health care costs - that figure is less than 1% - but on the percentage of losses incurred by the insurance company itself. if the saved percentage of costs is higher for physician-owned insurers, i'd love to see that figure - i assumed that if claims constituted a larger percentage of their costs than those of a regular insurance company, they would have started using that statistic long ago.

another long-needed fix is full accountablity for insurance companies. the Government Accountability Office just did a huge report on this issue and was unable to make any recommendations for action because they didn't have nearly enough information on insurance company finances (i.e. they didn't have the numbers to figure out what a good solution would even be).
posted by pikachulolita at 5:50 PM on November 24, 2004

The caps are applied to non-economic damages, i.e. things like "pain and suffering, loss of spousal companionship, etc." No caps on actual medical expenses, lost wages, or things of that nature.

Yes, and Med Mal policies these days are typically $1 Million per incident. Let's do some math. A 40 year old man has terrible medical accident occur. Death or absolute total disability ensues. He will not receive any more income, ever. Looking at the chart of median incomes, lets say for the sake of argument that he made $45K annually, was never going to get another raise, and was going to retire at 65. That's $45K times 25 more working years == $1,125,000. The real damages have exceeded the limit the Med Mal insurance will pay and we haven't even talked about waiving his medical bills.

And that is just one reason why capping non-economic damages is a red herring.
posted by ilsa at 6:12 PM on November 24, 2004

At the risk of oversimplifying - some things to consider:

1. Doctors are not run out of business by large awards, they are run out of business by large insurance premiums.

2. Insurance companies, in most states, are allowed a minimum profit. They can raise premiums almost at their whim to achieve said profit. They have no real incentive to cut costs, nor are they constrained to charging only what the market will bear. Insurance commisioners very rarely challenge hikes.

3. Insurance companies are as much in the investment business as in the insurance business. They complain loudly about the claims they pay out , but they don't exactly crow about their rapidly appreciating investment and real estate holdings (except in the annual report).

4. Alot of the information needed to make informed decisions about malpractice insurance is simply not available to the public, due to medical record disclosure laws and the negotiated sealing of award verdicts.

Again, the above are very simplified , but the fact is that we are required to take insurance companies at their word for alot .
posted by Benny Andajetz at 6:21 PM on November 24, 2004

Most people that actually have a medical error don't sue; only 1 in 10 do, or a similarly low number.

Also, in the US, people are more likely to sue, because we don't have any guaranteed health insurance in this country, and we're the only place in the world that has "pre-existing conditions." If the parent of a child with a syndrome or disease loses his or her health insurance, the child loses coverage, too.
posted by gramcracker at 7:00 PM on November 24, 2004


I disagree that capping n-e damages is not a virtuous goal. Economic damages are a potentially objective calculus. The non-e., or pain-and suffering, is a nebulous construct rarely informed by reality and moreso by the visceral response a jury has to the sight of a medically unexpected outcome. The classic example, is, or course, the obstetric complication, which is, no matter the circumstances, going to evoke a strong emotional response from jurors, typically resulting in multi-million dollar awards.

Benny, you may be right in your first assertion. But a doctor facing escalating insurance premiums can and will charge a surcharge or other means test in their practice to offset this. A doctor who has spent five or more years with a lawsuit dragging on, who has lost income and months of sleep and sanity knowing their livelihood is in the hands of people who may not even have high school educations, is a doctor who is going to be damaged.

Ultimately, the current tort system will make millionaires out of a few people but will cost the public in tangible and intangible ways. Ask yourself why you are geting a chest xray and bloodwork the next time you come in for a cold. The CT scan your doctor orders because of your gas pains is, because of it's amazing clarity, going to find benign cysts on your kidney. The radiologist will recommend an ultrasound which your doctor is now bound to honor. If the ultrasound isn't 100% clear, well, guess what? Time for a needle biopsy. This is not an exaggeration, but the way conscientious physicians practice medicine nowadays, the same way you would likely be doing yuor jobs if you could be sued out of your estate as well.
posted by docpops at 7:58 PM on November 24, 2004


Guess what else is bad for patient[s]?
... Your family doctor finally gets fed up with the threat of a lawsuit over and above his coverage limit and moves out of state.... meanwhile three thousand people will need to find a new doctor, and good luck, because no newly minted MD in their right mind will come near this place.

With all due respect to the newly minted MD, I would tell him to buck up and deal with it. I would be sensitive to your concern that this issue is "poisoned" by association with republicans, if there were any evidence in this thread that that was the case.

But in fact there's quite a specific focus on the near total lack of impact on premiums that these tort reform measures seem to have. Figures between 1% and 3% are being bandied about; whatever you think's most accurate, it's nothing like the majority of premium increases, or even near half. So if your doctor's acting rationally, they would look to another cause for for the premium increases.

To really believe your case, our hypothetical doctor would have to ignore the elephant in the middle of the room, that being the miserable return on equities on average over the past 4 years (yes, I know the market is up this year). As has been pointed out previously on this page, an insurance company is as much about investment as it is insurance -- they collect money at a time when you have no claims, and hold on to it until you have a claim; there's quite a bit of rent to be sought in the meantime.

An efficiently run company (as they all must be in the end) will re-invest those market returns to lower premiums and get more business. It's only sensible. But when the market return is poor, that's not possible. There's no buffer any more, and premiums have to rise. And then our precious doctor gets up in arms, because it takes a huge bite out of his paycheck. And then a friend of his gets sued for med-mal. And maybe it's even baseless; god knows enough lawsuits are. And so doctor-friend gets screwed, and doctor latches onto it and says "ah ha! This! This is why my premiums are so high!" and harumphs off to a jurisdiction where people are making "tort reform" noises. Where, I'm sure, it happens all over again. Hope he has fun practicing in a third world state with a poorly developed legal system, which is the inevitable destination of his flight from med-mal claims.

So no, I don't feel to awful sorry for the MDs. If they want to learn how the insurance industry works, they can be my collective guest. While they're at it, they might want to check out some of the research that suggests up to half of med-mal damages are paid by under 5% of doctors. I know that's only 1 source, but you can google as well as I can.

So until I hear doctors making noises about reforming their OWN profession, and daring to discipline the pathetic twentieth of it that gives the whole a bad name, I consider torts to be an excellent mechanism for internalizing the external damages done by these terrible doctors to the communities around them. As it stands, doctors have made the decision to spread those externalities among themselves via higher premiums rather than bringing a halt to them by kicking out the crappy doctors. Trying to push the expense back onto the aggrieved patients instead of admitting a problem within the profession is just a pathetic, cowardly way for doctors to behave.
posted by rkent at 8:02 PM on November 24, 2004

docpops -

"chest xray and bloodwork ... for a cold ... CT scan ... ultrasound ... needle biopsy"

I do not doubt that this happens in some, perhaps even many, cases. However, speaking as a poor person, nothing like this has ever, ever, ever, ever, remotely come close to happening to me. I have, however, been left strapped down for hours screaming in pain with no one coming to check to see why.

Just saying.
posted by kyrademon at 8:48 PM on November 24, 2004

California has had a non-economic damages cap for nearly 30 years and you don't notice a lack of plaintiff's lawyers in the phone book.

Non-economic damages in medical malpractice are, as previous posters suggested, incredibly subjective, and subject to whims and biases of juries and degrees of sympathy of the plaintiff and the defendant, creating an overall legal lottery scenario, and perverse incentives to bring all kinds of cases of limited inherent merit.

For better or worse, the gatekeepers of medical malpractice litigation aren't regulators, doctors, courts, or even insurers. The gatekeepers are the plaintiff's lawyers, who turn away several cases for every one case they accept. The sole criteria on which they take cases is likely settlement value with some allowance for a grand slam at trial. I'd much prefer these gatekeepers, acting in their self-interest, to pick the doctors who've caused the worst actual economic damages, because they're the doctors whom society most needs to see checked.
posted by MattD at 9:07 PM on November 24, 2004

Why is there such a big difference between Canada and the U.S. in damages?
posted by srboisvert at 9:14 PM on November 24, 2004

One of the problems is that those additional awards are often what makes the prospective case appear profitable enough for a personal injury lawyer to take it on and bring suit in the first place. Lower awards = fewer lawyers willing to work on spec, and fewer cases filed to begin with, justified or not. The Nation had an article in a recent print edition (sorry, can't find it on their website) that provided some anecdotal evidence to suggest that worthwhile cases in which people had been wronged were not being brought to court in the first place, because the lawyers would have been unable to recoup.

This has got to be bad news for people who've been injured by a doctor, and great news for those who insure the doctors.
posted by Devils Rancher at 9:20 PM on November 24, 2004

You know what bothers me about tort reform laws? The same thing that bothers me about mandatory minimum sentencing.

I'm not prepared to admit that juries and judges aren't trustworthy.

Seriesouly, folks, we trust a group of our random "peers" (yeah, right. If they're dumb enough to be stuck in jury duty...) to correctly decide the outcome of a murder trial, but not to decide non-economic damages?

For every case that sees a frivolous award, there's another in which a crooked doc carves his intials in a woman's stomach. Is 250,000 an appropriate amount of money for that?
posted by Yelling At Nothing at 10:00 PM on November 24, 2004

this is terrible news for OB-GYNs and their derelict love lives, pikachulolita
posted by matteo at 1:41 AM on November 25, 2004

You know what bothers me about tort reform laws? The same thing that bothers me about mandatory minimum sentencing.

That is a very good point. I would also like to mention that the reason health care costs are skyrocketing probably has little to do with fringe things like malpractice suits, and much more to do with the fact that:
  1. Everyone involved in the health care industry is in it to maximize the amount of money they make (naturally enough),
  2. health care and it's supporting industries are apparently not subject to the same market forces as other goods and services are.
On the second point; people seem to regard adequate health care (rightly or wrongly) as a right rather than a good or service. Furthermore, people seem to be willing to go to extreme lenghts to ensure good health. As such, it seems that what the market has learned is that they are free to price things more expensively over time at a rate greater than general inflation. This will continue until a breaking point is reached.

In the meantime, I would be very interested in any statistics that show that the living standards of health care professionals and others folks associated with the industry (insurance and pharmaceutical salesmen, hospital administrative staff, etc.) are somehow suffering as a result.
posted by moonbiter at 6:09 AM on November 26, 2004

Will everyone please stop bad mouthing the poor, underpaid and undervalued lawyers. Their selfless devotion to their clients is often mistaken for greed when in fact they are really gold hearted social workers. It's the medics who should be persecuted to extinction.
posted by Cancergiggles at 8:16 AM on November 26, 2004


I happened to come back to this thread out of curiosity, and maybe I read the intent of your comment wrong, but "people seem to be willing to go to extreme lengths to ensure good health", I assume, means, Americans are by and large lazy, overfed toddlers who expect to live each day like their health was invincible and then have the medical system fix all the shit they got themselves into. That is what you meant, right? Because I estimate that about ten percent of my practice lead lives that are conscientously aware of the health consequences of their actions. I see them once a year for physicals and periodic screening. The rest come in for disease management, and in there are the periodic successes that listen to our advice and stop smoking and overeating, etc. But most malpractice cases I have witnessed have had, at their nucleus, an outcome that could not have been avoided simply because a patient with years of self-inflicted damage expected a team of specialists, usually led by their FP or internist, to fix them, and they simply couldn't. Now the litigators pull out the retrospectascope and, voila, look at all the egregious errors.

Most rural physicians net less than 100K a year, which may not seem so bad, but in general they are on call most nights, work twelve hours a day or more, and have little or no back-up, after seven years or more of post graduate training. An FP used to pay about 10K a year for a 1M/3M policy, and now often pays 25K or more, without any guarantee that the "pain and suffering" award will even be less than the 3M limit, so they better hope the plaintiff's attorney doesn't some after their estate.

Limiting non-economic med-mal damages may not improve health care costs, even though I can absolutely attest to the fact that in numerous state by state cases it has, but it may do something to improve accountability within the patient and litigator realm, and it will certainly keep good doctors from leaving medicine.
posted by docpops at 10:13 AM on November 26, 2004

One major factor that plaintiff's attorneys weigh when deciding whether to take on a client: how sympathetic ithe victim is. Are juries likely to take pity on them and award huge damages?

Most (speaking anecdotally) jury members are not particularly well-educated, and often in med-mal cases, it comes down to dueling experts. When both experts seem (to the lay public) equally credible, then juries figure that, well, somebody's got to take care of the injured victim, and it's just some faceless corporation that's going to pay.
posted by etherist at 4:18 PM on November 26, 2004

Lawyers, doctors and insurance companies. Want to guess who the 'pivot' man is in that circle jerk?

You and me.

posted by UseyurBrain at 8:29 PM on November 27, 2004

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