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Quick Facts on Medical Malpractice Issues

Costs of Medical Negligence to Patients

• Between 44,000 to 98,000 Americans die in hospitals each year due to preventable medical errors. (Institute of Medicine, To Err Is Human: Building a Safer Health System, 2000.)

• The annual costs to society for medical errors in hospitals at $17 billion to $29 billion. (Institute of Medicine, To Err Is Human: Building a Safer Health System, 2000.)

• The total amount spent on medical malpractice insurance in 2000 was $6.4 billion – at least three to five times less than the Institute of Medicine’s estimate of the costs of malpractice to society. (National Association of Insurance Commissioners, Statistical Compilation of Annual Statement Information for Property/Casualty Insurance Companies in 2000, (2001).)

Frequency of Medical Malpractice Claims

• Only one in eight preventable medical errors committed in hospitals results in a malpractice claim. (Harvard Medical Practice Study Group, Patients, Doctors and Lawyers: Medical Injury, Malpractice Litigation, and Patient Compensation in New York, 1990.)

• From 1996 through 1999, Florida hospitals reported 19,885 incidents but only 3,177 medical malpractice claims. In other words, for every 6 medical errors only 1 claim is filed. (The Agency for Health Care Administration; Division of Health Quality Assurance. Reported malpractice claims by district compared to reported adverse incidents 1996, 1997, 1998, 1999.)

• The number of new medical malpractice claims declined by about four percent between 1995 and 2000. There were 90,212 claims filed in 1995 and 86,480 claims filed in 2000. (National Association of Insurance Commissioners, Statistical Compilation of Annual Statement Information for Property/Casualty Insurance Companies in 2000, 2001.)

• Punitive Damages are awarded in less than 1 percent of medical malpractice cases. (Bureau of Justice Statistics, 1996.)

Physicians’ Costs of Medical Malpractice Insurance

• Malpractice insurance costs amount to only 3.2 percent of the average physician's revenues. (Official Transcript, Medicare Payment Advisory Commission, Public Meeting, December 12, 2002.)

• While medical costs have increased by 113 percent since 1987, the total amount spent on medical malpractice insurance has increased by just 52 percent over that time, less than half of medical services inflation. (Bureau of Labor Statistics – Medical Services CPI; Best’s Aggregates and Averages.)

• The median medical malpractice payout by a physician to a patient rose 35 percent from 1997 to 2000, from $100,000 to $135,000. (National Practitioner Data Bank Annual Reports, 1997 through 2001.) But during the same time, the average premium for single health insurance coverage has increased by 39 percent. (Kaiser Family Foundation and Health Research and Educational Trust, Employer Health Benefits Surveys, 1998-2002; National Practitioner Data Bank Annual Reports, 1997 through 2001.)

Medical Malpractice Award Trends

• The size of damage awards has been steady since 1991. The mean payout was $135,941 in 2001, up 8.7 percent from $125,000 in 2000. Over ten years, malpractice payouts have grown an average of 6.2 percent per year. That’s almost exactly the rate of medical inflation: an average of 6.7 percent between 1990 and 2001. (National Practitioner Data Bank and the Journal of Health Affairs, as quoted by Lorraine Woellert, Commentary: A Second Opinion on the Malpractice Plague, Business Week, March 3, 2003.)

• Malpractice payouts by physicians and their insurers were a mere $4.5 billion in 2001 – less than 1 percent of the country’s overall health care costs of $1.4 trillion. (National Practitioner Data Bank, as quoted in Business Week, March 3, 2003.)

• In 2001, only 895 out of 16,676 payouts, or about 5 percent, topped $1 million. (National Practitioner Data Bank, as quoted in Business Week, March 3, 2003.)

Insurance Industry Economics Have Caused the Premium Price Spike

• "For several years, insurers kept prices artificially low while competing for market share and new revenue to invest in a booming stock market. As the bull market surged, investments by these historically conservative insurers rose to 10.6% in 1999, up from a more typical 3% in 1992. With the market now in a slump, the insurers can no longer use investment gains to subsidize low rates." (American Medical Association Report 35 of the Board of Trustees (A-02), available at:
http://www.ama-assn.org/ama1/upload/mm/annual02/bot35a02.rtf.)

• Premiums charged do not track losses paid, but instead rise and fall in concert with the state of the economy. When the economy is booming and investment returns are high, companies maintain premiums at modest levels; however, when the economy falters and interest rates fall, companies increase premiums in response. (J. Robert Hunter, Americans for Insurance Reform, "Medical Malpractice Insurance: Stable Losses/Unstable Rates," October 10, 2002. See also: http://www.insurance-reform.org/StableLosses.pdf.)

Small Number of Dangerous Doctors Commit Most Malpractice

• Only 5 percent of doctors (1 out of 20) are responsible for 54 percent of malpractice payouts. (National Practitioner Data Bank, Sept. 1, 1990 – Sept. 30, 2002.)

• Only 8 percent of doctors (1 out of 12) with 2 or more malpractice payouts have been disciplined by their state medical board. (National Practitioner Data Bank, Sept. 1, 1990 – Sept. 30, 2002.)

• Only 17 percent of doctors (1 out of 6) who have made 5 or more malpractice payouts have been disciplined by their state medical board. (National Practitioner Data Bank, Sept. 1, 1990 – Sept. 30, 2002.)