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Medical Malpractice Insurance Crisis in Pennsylvania a Result of Economic Cycle, Doctors Who Err; Bush Administration Study Flawed

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Jan. 16, 2003

Medical Malpractice Insurance Crisis in Pennsylvania a Result of Economic Cycle, Doctors Who Err; Bush Administration Study Flawed

Public Citizen Issues Two Reports – One Detailing True Causes of Malpractice Crisis in Pennsylvania, Second Debunking Oft-Cited HHS Report

WASHINGTON – The medical malpractice insurance crisis in Pennsylvania is not caused by the legal system but is linked to cyclical economics. In fact, the real crisis in that state is the quality of medical care being given; 4.7 percent of doctors are responsible for 51.4 percent for all malpractice payments, according to a report from Public Citizen.*

Public Citizen issued a second report debunking an oft-cited Bush administration study on medical malpractice. Numerous statements made in that study, issued last year by the U.S. Department of Health and Human Services (HHS), are contradicted by other federal agencies.

The reports undercut Bush’s use of Pennsylvania as a backdrop for his campaign to limit the ability of patients to be fully compensated for their injuries. The reports also explain the disinformation campaign being waged throughout the country by the administration and the medical lobby.

“People need to understand that insurers are hiking malpractice rates for doctors because they have lost money on their investments,” said Public Citizen President Joan Claybrook. “Doctors who stage walkouts are falsely demonizing America’s legal system. Capping damages, which doctors are calling for, will only hurt those who have suffered the most. As the Council of Economic Advisors has said, the tort system promotes patient safety.”

Public Citizen’s report on the crisis in Pennsylvania shows that:

  • Repeat offender physicians are responsible for the bulk of medical malpractice costs.According to the federal government’s National Practitioner Data Bank (NPDB), which covers malpractice judgments and settlements since September 1990, 10.6 percent of the state’s doctors have paid two or more malpractice awards to patients. These repeat offender doctors are responsible for 84 percent of all payments. Even more surprising, only 4.7 percent of Pennsylvania ’s doctors (1,838), each of whom has paid three or more malpractice claims, are responsible for 51.4 percent of all payments.
  • Government data show that medical malpractice awards have increased at a much slower pace in Pennsylvania than claimed by the Pennsylvania Medical Society. According to the NPDB, the median medical malpractice payment by a physician to a patient rose 33 percent from 1997 to 2001, from $150,000 to $200,000, or 8 percent a year. By contrast, medical organizations in Pennsylvania quote data from Jury Verdict Research (JVR), a private research firm, indicating that verdicts rose almost 43 percent from 1997 to 2000, from $700,000 to $1 million, or 14 percent a year. The reason for the difference: JVR collects only jury verdict information that is reported to it by attorneys, court clerks and stringers. The NPDB includes both verdicts and settlements.
  • The number of large verdicts by Pennsylvania juries and the amount paid in medical malpractice cases decreased dramatically in recent years. From 2000 to 2002, the number of jury awards of $1 million or more dropped by 50 percent (from 44 to 22) while the overall amount of these awards decreased by over 75 percent (from $415 million to $93 million).

Public Citizen’s report on the HHS report shows it to be full of information that is incorrect, incomplete or misleading. Further, its conclusions are contradicted by four other government agencies:

  • The HHS report says that the malpractice crisis is threatening access to care. In fact, there is a greater likelihood of doctors withdrawing from their practice because of increases in office rent or payroll costs than malpractice insurance costs. According to Medical Economics, doctors spend 17 percent of their gross income on payroll costs, 5.8 percent on office rent and 3.2 percent on malpractice costs.
  • The HHS report claims that malpractice rates are jeopardizing patient safety. In fact, the Bush administration’s own Council of Economic Advisors says the tort system increases patient safety. In a document issued last year, the council said that “the ability of the individual to pursue a liability lawsuit in the event of an improper treatment, for example, provides an additional incentive for the physician to follow good medical practice.”
  • The HHS report says that the malpractice crisis is causing health care costs to increase. In fact, the Congressional Budget Office (CBO) says that limiting liability would have a negligible impact on health care costs. In evaluating the impact of legislation considered last year that would have severely limited the ability of patients to recover damages, the CBO said that the effect of the bill on overall health insurance premiums would be far smaller than the impact on medical malpractice insurance premiums. Malpractice costs account for a very small fraction of total health care spending; even a very large reduction in malpractice costs would have a relatively small effect on total health plan premiums.”
  • The HHS report claims that the legal system is causing insurance premiums to rise. In fact, there is no growth in the number of new medical malpractice claims. According to the National Association of Insurance Commissioners (NAIC), the number of new medical malpractice claims declined by about 4 percent between 1995 and 2000. There were 90,212 claims filed in 1995; 84,741 in 1996; 85,613 in 1997; 86,211 in 1998; 89,311 in 1999; and 86,480 in 2000.

Further, data show that medical malpractice awards have increased at a much slower pace than claimed by Jury Verdict Research, and no evidence exists to support claims that jury verdicts are random “jackpots.” In fact, the insurance industry’s own numbers demonstrate that awards are proportionate to injuries. And plaintiffs drop 10 times more claims than they pursue.

“The American Medical Association keeps touting this HHS report, but it just doesn’t hold up when compared to the facts,” said Frank Clemente, director of Public Citizen’s Congress Watch. “The doctors’ lobby is in league with the Bush administration to take away people’s legal rights. Patients should not have to pay for doctors’ mistakes because politicians decided to arbitrarily cap damages.”

Nationally, of the 35,000 doctors who have had two or more malpractice payouts since 1990, only 7.6 percent of them have been disciplined. And only 13 percent of doctors with five medical malpractice payouts have been disciplined. Between 44,000 and 98,000 people die in hospitals annually each year due to preventable medical errors, the Institute of Medicine found.

Solutions to the malpractice problem lie in reducing medical errors. Medical boards should discipline all bad doctors, sever links with state medical societies and be given more money and staff to investigate complaints. States should require hospitals and other health care providers to institute meaningful risk prevention programs. Doctors should be recertified based on a written exam and an audit of their patients’ medical records. Also, hospitals should implement measures to curb errors, such as using computers to order and track prescriptions (these can cut errors by 55 percent), requiring proper hand-washing to reduce infections, addressing the nursing shortage and reducing the long hours of medical residents.

Also, the insurance industry should rate doctors on performance when setting malpractice premiums and seek to decertify doctors with numerous malpractice claims. Risk should be spread, reducing the number of classifications of doctor specialties. Risk pools for some are too small and thus overly influenced by: 1) a few losses; and 2) the concentration in a few specialties of doctors handling the highest risk patients.

For more information and to view the report, click here.