The Myth of the Malpractice Crisis

Medical errors are the fifth-leading cause of deaths in the US, with up to 98,000 deaths occurring annually. That is according a 1999 study of the Journal of the American Medical Association (JAMA) which concluded deaths due to medical error should be considered a “national epidemic.” Those findings were followed by a study in 2004 by HealthGrades, the healthcare quality company. It found that 195,000 people in the U.S. died in each year from 2000 – 2002 due to preventable in-hospital medical errors.

Nevertheless, the notion that the country is overrun by frivolous medical malpractice cases and greedy trial lawyers continues to be perpetuated to this day. That is despite the fact these “myths” have been disproven time and time again, even by medical professions own investigations. Don’t take it from me, read the medical literature. For example, a study published by the esteemed New England Journal of Medicine in 2005 found the instances of frivolous lawsuits where a healthy patient successfully sued a doctor were “exceedingly rare” and were “far outnumbered by cases where a patient truly injured by medical error went uncompensated.” The study found that the majority of payments from insurance companies did in fact go to people who had been harmed by medical errors, not to people with baseless claims.

Or go to the United States Governments own facts and figures. A 2003 report of the United States Government Accounting Office (GAO) concluded there was no medical malpractice crisis. Interestingly, this report was commissioned and requested by the American Medical Association who wanted it to buttress their case for “tort reform.” In the end this independent study actually undercut it. "Although some reports have received extensive media coverage, in each of the five states we found that actual numbers of physician departures were sometimes inaccurate or involved relatively few physicians." After the report came out, the AMA then wanted the GAO to withhold its release so it could provide better information. But these were the very groups that had supplied much of the data that the GAO used as the basis for many of its findings.

Current statistics show for every $1000 of medical care in this country approximately $10 is spent for malpractice payments. That amounts to 1% of the amount spent on health care. Some put the figure at 2%. Either way, hardly evidence of an excessive, out of control system overrun with frivolous lawsuits.

The idea that the country is awash in runaway jury verdicts and out of control filings of malpractice cases are likewise myths. Only some 5% of all money paid in malpractice payments comes from jury verdicts. The vast majority of money in malpractice payments comes from settlements, not jury verdicts. Those were the findings of a 2005 study by a Dartmouth health economist. Here in Michigan according to figures reported by the Insurance Commissioner and the Michigan Supreme Court the number of malpractice cases filed has fallen dramatically over the last 20 years – some 75 percent since 1986 – from 3,629 to just 931 cases in 2006.

Yet another myth is the idea that the so-called malpractice crisis is driving up the cost of health care. In reality from 1991 to 2003 the size of medical malpractice payments grew a paltry 3.4%. Think about how much the cost of health care grew during that same time frame. Obviously, the astronomical increases in health care have not been attributable to runaway jury verdicts or huge increases in the number of malpractice cases filed.

So what is wrong with this picture? Contrary to the idea that malpractice is driving up the cost of health care and driving doctors out of practice, statistics show that the amount of payments in medical malpractice cases in Michigan have fallen 75% since 1994, the year that significant limits or “caps” on damages were imposed by the legislature. Those findings were made by the Michigan Insurance Federation.

Sadly, most citizens of this state have no idea that these limits or “damage caps” are in place. Perhaps even more amazing – in making a decision, the jury in a malpractice case is not even allowed to be told about the law and the arbitrary limits. They might truly believe that a medical error causing horrendous life long pain and suffering, disability or death is well deserving of millions of dollars in compensation. They could go on to award it believing it represented just compensation, never knowing after their verdict a judge would be required by law to take it away and reduce it to the annually adjusted limit, currently $394,500.

So where does the problem lie? If there is no crisis, no runaway jury verdicts, if there are damage caps limiting recoveries and all sorts of “tort reforms” that I have not even begun to address? The short answer is to “follow the money.” Here that trail leads directly back to the malpractice insurance industry and their price gouging of doctors and consumers. Indeed, a 2005 study published by the Attorney Generals of two states – Connecticut and Missouri – and the Insurance Commissioner for the State of Michigan found just that. The study concluded with disturbing findings regarding the malpractice insurance companies who have been dramatically raising insurance rates for doctors – under the guise of the so-called malpractice crisis – while the number of claims and payouts in malpractice cases has fallen significantly.

As Joanne Doroshow, Executive Director of the Center for Justice & Democracy, which commissioned the report, stated, “To put it bluntly… the facts are very simple: medical malpractice payouts are down yet insurance companies have significantly increased premiums. The entire campaign to limit liability for doctors over the last several years by capping compensation to injured patients has been a fraud, and that based on these data, insurers must know that it has been a fraud.”

The study found that ProNational Insurance Company, one of the largest malpractice insurance carriers in Michigan increased its premiums by $87 million, or 79%, while its claims payments fell by $43 million, or 63%. As a result, in 2004 it paid out only 13 cents in claims for each premium dollar it collected. Clearly, the only winner in this equation is the insurance industry, making obscene profits at the expense of physicians and their patients, having convinced the public of a malpractice crisis that simply does not exist.

The next time someone spouts off about frivolous malpractice lawsuits tell them to get the facts, not the myths.