Jan. 27, 2003
Medical Malpractice Insurance Premium Spikes in Arkansas a Result of Economic Cycle, “Repeat Offender” Doctors, Study Finds
Arkansas Malpractice Premiums Are Among Lowest in Nation; Large Payouts to Patients Are the Exception, Public Citizen Report Shows
LITTLE ROCK, Ark. – The short-term medical malpractice insurance premium spikes in Arkansas are not caused by the legal system but by cyclical economics and investment losses in the insurance industry, according to a Public Citizen report released today. Contrary to the alarmist rhetoric being spread by the state’s medical and business lobbies, malpractice premiums in Arkansas are among the lowest in the nation, and large malpractice payments to injured patients are rare and declining.
The state’s real malpractice crisis – preventable deaths and injuries – is linked to unreliable medical care and a lack of doctor oversight and discipline, Public Citizen found. Between September 1990 and September 2002, 2.6 percent of Arkansas’ doctors made two or more malpractice payouts worth a total of $48.9 million in damages. These represented 43.7 percent of all payments made, according to information obtained from the federal government’s National Practitioner Data Bank.
Further, doctors who have paid three or more malpractice claims represent less than 1 percent of Arkansas’ doctors but are responsible for 20.3 percent of all payments. However, the state has done little to discipline these repeat offenders. Only 14 percent of the doctors who made three or more malpractice payments had been disciplined as of September 2002, the data show. Public Citizen released the report a day before Public Citizen President Joan Claybrook was scheduled to testify before state lawmakers on the issue.
“The short-term insurance rate increases have nothing to do with the civil justice system and everything to do with insurance industry economics,” Claybrook said. “The long-term problem is a crisis of medical negligence. If the state medical board remains unwilling or unable to seriously discipline doctors with multiple malpractice payouts, then the terrible human and financial costs will continue to cause preventable deaths and injuries. Limiting patients’ legal rights will hurt those who have been most injured by doctor errors. Those who favor caps are falsely demonizing America’s legal system rather than saving tens of thousands of lives and litigation costs by preventing careless or unnecessary medical errors, such as operating on the wrong part of the body.”
According to Public Citizen’s report, Medical Misdiagnosis in Arkansas: Challenging the Medical Malpractice Claims of the Doctors’ Lobby:
- Medical errors cause 418 to 931 preventable deaths in Arkansas each year. Those errors cost Arkansas’ families and communities an estimated $161 million to $275 million annually in lost wages, lost productivity and increased health care costs. But the cost of medical malpractice insurance to Arkansas’ doctors is only $40 million a year.
- The number of Arkansas malpractice lawsuits filed in 2002 was less than in the preceding years. In each of the past two years, which was the height of the so-called insurance “crisis,” the number of malpractice lawsuits filed in the state decreased. In 2002, 371 malpractice cases were filed in Arkansas, compared with 383 in 2001 and 413 in 2000. Overall, this represented a 10 percent decrease in lawsuits filed. Obviously, premium rates are not based on litigation costs.
- Malpractice insurance premiums in Arkansas are some of the lowest in all 50 states and the District of Columbia. The median premium for a general surgeon practicing in Arkansas in 2002 was $16,400 – about the same amount paid by general surgeons in North Dakota or South Dakota, and higher than those in only four other states.
- Larger malpractice payments have been the exception in Arkansas. Arkansas had only two multimillion-dollar awards against physicians between 1998 and 2001. The number of larger malpractice payouts in Arkansas ($100,000 and over) declined between 1998 and 2001.
- Repeat offender doctors suffer few consequences in Arkansas. According to the National Practitioner Data Bank and Public Citizen’s analysis of NPDB data, of the 153 physicians in Arkansas who have made two or more payments to patients for malpractice since 1990, only 15 had been disciplined by the Arkansas State Board of Medicine as of September 2002 – fewer than one in 10.
- The median amount of malpractice awards has increased slowly but has not kept pace with medical inflation (the cost associated with delivering medical care). According to information in the National Practitioner Data Bank, the median medical malpractice payment by an Arkansas physician to a patient rose less than 5 percent a year between 1992 and 2002. Medical inflation nationally increased 53.7 percent, or 5.4 percent a year in the same period. Between 1999 and 2002, the amount of the median payment dropped more than 10 percent.
- The number of doctors in Arkansas has been increasing. Despite gloomy forecasts issued by those declaring a malpractice “crisis” in the state, the number of licensed doctors in Arkansas increased by 209 between 1998 and 2002.
- Underpriced premiums, reckless cash-flow policies and involvement with Enron and asbestos subsidiaries forced St. Paul Companies, which once covered 41 percent of the state’s doctors, to stop offering malpractice insurance.
Solutions to malpractice insurance increases lie not in restricting victims’ legal rights but in reducing medical errors, Claybrook said. In addition to effective doctor discipline, states should require hospitals and other health care providers to institute meaningful risk prevention programs. 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, insurance regulation should not allow large premium spikes. Insurance 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. To view the report, click here.