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Harborview Medical Center Seattle, WA 98104
It is with great interest that all of us in medicine and radiology read Dr. Berlin's article regarding medical malpractice as it relates in particular to mammography [1]. Although all of us in medicine support caps on the punitive damages awarded to plaintiffs, no one should believe that malpractice lawsuits will go away as a result of these caps, nor should we be mislead into believing that substantial reductions in malpractice premiums will ensue. The problem with malpractice is much greater than punitive damages.
In fact, most states such as California that have punitive damage limits in place have seen no reduction in the number of cases filed, and only a 12% drop in malpractice premiums has resulted. As we all know, the tort system, as it is currently practiced, both fails to protect patients from malpractice, which is the real purpose of tort law, and fails to protect physicians from frivolous lawsuits.
I have a reasonably large medicolegal practice, and I have consulted often on malpractice cases around the country in the last several years. I almost always defend radiologists from the poor decisions made by clinical colleagues. One time when I was defending a radiologist, it was discovered that the gynecologist involved in the case, who was also being sued, had in fact been sued in eight other states and had lied about it on his applications. This is the type of physician that the public needs to be protected from, and in this case, he lost his license to practice at least in the state where the suit was filed. Because he had no assets and as it turned out, no insurance, the plaintiffs, who would have been very entitled to economic damages, received nothing
On one rare occasion when I testified on behalf of the plaintiff, a patient suffered a complication from a medical procedure that left her in a vegetative state, and her husband was growing broke paying for her care. Whereas malpractice per se may not have really occurred in this case, the husband was forced to file a lawsuit, even though he really did not want to do so, to get economic damages from the insurance company to pay for his wife's long-term care. Often, patients are forced to file malpractice suits to recover economic damages from injuries that have resulted from medical care when insurance companies have refused to cover this.
Is there anyone whose auto or home insurance has not risen dramatically in the last few years? Why is this occurring? Because insurance companies are paying out so much in lost lawsuits? Nonsense. Successful lawsuits that involve multimillion dollar jury awards are exceedingly rare, and usually these cases end up in appeal despite the massive publicity the settlement usually receives. The reason insurance rates continue to escalate is because the mutual funds and stocks in which insurance companies invest using our premium money have not really risen in the last few years. No surprise to any of us hoping to retire someday. Unlike us, however, they can simply raise the cost of their rates to generate profit, and indeed, insurance companies along with pharmaceutical companies are at the top in earnings that last few years.
So we need to be careful when discussing malpractice reform that we address the real issues such as expert witness credentialing, defining a national standard of care, and ensuring that physicians are protected from frivolous suits while ensuring that patients who are harmed substantially from medical care and their families are not driven into poverty trying to pay for health care [2]. Although all of us support punitive damage caps, they are not a panacea. We have to realize that it is the insurance companies, not us, that will really benefit from punitive damage caps.
Is it right to hold out on passing this legislation in the hopes that a more comprehensive malpractice reform will be enacted? Probably not, but the proposal to form arbitration panels in each state and county to review malpractice claims before they can proceed to juries is actually more important in the long run for meaningful malpractice reform.
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1 Evanston Northwestern Healthcare—Northwestern University Feinberg
Medical School Evanston, IL
2 Rush North Shore Medical Center Skokie, lL Rush Medical College Chicago,
lL
We thank Dr. Dubinsky for his commentary regarding our two independently written articles [1, 2]. He is correct in pointing out that the current legal system does not meet its stated goals of punishing truly negligent acts and deterring future negligence. Additionally, we are in absolute agreement that malpractice insurance premiums have been increasing, contributing to decreased access to subspecialty care. However, we respectfully disagree with his assertion that poor investing habits by insurance companies have been the primary cause of the recent dramatic rise in premium rates.
Contrary to Dubinsky's contention, insurance company investments are highly regulated [3] and do not consist primarily of stocks and mutual funds. According to the testimony of Lawrence Smarr, president of the Physician Insurer's Association of America (PIAA), to the U.S. Senate Judiciary Committee on February 11, 2003 [4], approximately 80% of the assets of the member insurance company portfolios of the PIAA were in investment-grade bonds from 1995 to 2001, including risk-free U.S. Treasury bonds. Additionally, according to Mr. Smarr, in the same period, stocks averaged only 11% of cash and invested assets of the PIAA. Certainly, although it is true that declining interest rates in the last several years have decreased the investment income of insurance companies, losses in the stock market have not been the dominant factor in the medical malpractice insurance liability crisis.
According to the report, "Liability for Medical Malpractice: Issues and Evidence" put forth by the Joint Economic Committee of the U.S. Congress in May 2003 [5], the median damage award in medical malpractice cases increased 176% between 1994 and 2001, rising from $362,000 to above $1 million. Although it is true that most (61%) medical malpractice cases are dropped or dismissed [5], the cost borne by insurance companies to defend all medical malpractice cases, even those that are dropped, had increased to over $28,000 per case by 2001.
Increasing jury awards and corresponding expenses to defend malpractice lawsuits does indeed appear to represent the dominant force causing malpractice premiums to rise. A report by the U.S. General Accounting Office in June 2003 examined many of the factors that have led to the double-digit increases in malpractice premiums, and concluded [6]:
Multiple factors, including failing investment income and rising reinsurance costs, have contributed to recent increases in premium rates.... However, GAO found that losses on medical malpractice claims—which make up the largest part of insurers' costs—appear to be the primary driver of rate increases in the long run.
The private research and consulting company, Conning, agrees with the sentiments of the GAO, stating in its 2003 report [7]:
In the national media debate, poor investment returns are regularly cited as the reason for rapidly rising medical malpractice prices. We disagree. While we find a lower level of investment income, we cannot envision the conditions required for investment income to offset the staggering level of underwriting losses. The root cause of today's crisis can be found in severity (i.e., the higher level of loss per claim).
We also respectfully disagree with Dubinsky's claim that premiums in California have decreased only 12% since the Medical Injury Compensation Reform Act was passed in 1975 [8]. According to Richard Anderson, president of the Doctor's Insurance Company, from 1976 to 2001 insurance premiums charged by his company have decreased by 40% in real, not nominal, dollars [3]. Although we agree with Dubinsky's belief that caps on noneconomic damages (not punitive damages as he contends, which are prohibited in medical malpractice cases in many states and which come into play in only 2% of medical malpractice cases nationwide [3]) are not a panacea, certainly they do have some impact in decreasing liability premiums for physicians.
Finally, although we sympathize with the families alluded to in Dubinsky's letter that are "forced" into filing malpractice lawsuits to cover medical expenses, we cannot help but wonder if this is not evidence of how far our legal system has come from its original aims of compensating claimants truly injured by negligence and deterring future breaches of the standard of medical care. We certainly agree with Dubinsky that a true and lasting solution to the malpractice crisis is needed. However, casting the blame solely on insurance companies seems an expedient but somewhat misguided sentiment.
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