Medical Malpractice Award Trends:
Believe Government Sources, Not Doctors

The American Medical Association (AMA) likes to claim that medical malpractice awards are "skyrocketing" because of "jackpot justice." It is easy to be confused by the medical lobby’s claims because of the different types of data cited. Less rhetoric and a few facts are in order.

  • Government data shows that medical malpractice awards have increased at a much slower pace than claimed by Jury Verdict Research. According to the federal government’s National Practitioner Data Bank (NPDB), the median medical malpractice payment by a physician to a patient rose 35 percent from 1997 to 2001, from $100,000 to $135,000. By contrast, data from Jury Verdict Research (JVR), a private research firm, shows that awards rose 100 percent from 1997 to 2000, from $503,000 to $1 million. The reason for the huge difference, which is explained in more detail below: JVR collects only jury verdict information that is reported to it by attorneys, court clerks and stringers. The NPDB is the most comprehensive source of information that exists because it includes both verdicts and settlements. Ninety-six percent of all medical malpractice cases are settled, as opposed to decided by a jury, and settlements result in much lower awards than jury verdicts.
  • Government data show that medical malpractice awards have increased at a slower pace than health insurance premiums. While NPDB data show that the median medical malpractice payment rose 35 percent from 1997 to 2001 (an average of 8.5 percent a year), the average premium for single health insurance coverage increased 39 percent over that time period (9.5 percent a year). Payments for health care costs, which directly affect health insurance premiums, make up the lion’s share of most medical malpractice awards.

Understanding Medical Malpractice Award Statistics

There are three principal sources of information on medical malpractice verdicts and awards: National Practitioner Data Bank, Physician Insurer Association of America (PIAA), and Jury Verdict Research. Each source has advantages and disadvantages.

National Practitioner Data Bank (NPDB): Federal law mandates reporting of all payments in settlement of malpractice claims to the NPDB, which is maintained by the Department of Health and Human Services. NPDB, therefore, is the most comprehensive source of information. NPDB files contain information on the state in which cases arose, allowing comparison of award amount and frequency among different jurisdictions.

Physician Insurer Association of America (PIAA) Data Sharing Project. PIAA, a trade association, collects detailed claim information from some of its member companies. It is not comprehensive – only 12 percent of awards reported to NPDB get reported to PIAA. But it contains information on claims that are not ultimately paid, giving a broader picture of the claiming process than NPDB. PIAA also presents data correlating awards with injury severity, specialty of defendant, and type of malpractice.

Jury Verdict Research (JVR). JVR collects information on jury verdicts only, which are reported to it by plaintiffs attorneys, court clerks, and stringers. According to PIAA, jury verdicts represent only 6.75 percent of all claims. However, verdicts in favor of plaintiffs, the pool from which JVR collects award statistics, are only 4.1 percent of all payments made to plaintiffs. As a result, JVR reports are skewed significantly upwards for two reasons. First, attorneys who win large verdicts are more likely to report their victories to JVR. For example, 34 percent of the verdicts reported to JVR are plaintiff wins, 15 percent higher than the national average reported by PIAA. Second, jury verdicts are higher than the average settlement because cases involving severe injuries are more likely to go to trial, and the defendant has usually rejected a settlement offer for a much smaller amount.

Different Numbers from Different Sources: 2000 Median Malpractice Awards

Source

Jury Verdict Research

PIAA

NPDB

Median

 

 


$1,000,000 (verdict)

$150,000 (all)

$125,000 (all)

$125,000 (settlement)

$235,000 (judgment)

Coverage

Less than 5%

12%

100%

Sources: Medical Malpractice: Verdicts, Settlements and Statistical Analysis, Jennifer E. Shannon and David Boxold, Jury Verdict Research, 2002; Physician Insurer Association of America, Claim Trend Analysis, 2001 Edition; National Practitioner Database 2000 Annual Report.

For example, JVR reported that the median verdict in a malpractice trial in 2000 was $1 million. It also reported that the median final demand from a plaintiff to settle a case was $562,000 in 2000 – about half the final verdict. Even more noteworthy, the median final settlement offer from doctors was only $80,000; way below what a jury thought the case was worth to the injured plaintiff. Doctors lose about 20 percent of cases. Thus, many insurance companies make a conscious decision to risk a much higher jury verdict.

According to NPDB records, the median payment in a settlement in 2000 was only $125,000, same as the median for all payments; but the median payment for a judgment was $235,000. This amount is much lower than the JVR jury verdict figure ($1 million) because the ultimate payment received by a plaintiff reflects judges’ discretionary reductions in jury awards (so-called remittiturs) and discounts agreed to by plaintiffs in order to avert appeals.

January 14, 2003