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Caps on Damage Awards Harm Seriously Injured Patients

New Studies Again Find No Link Between Increased Doctors' Insurance Rates and Medical Malpractice Lawsuits

WASHINGTON, D.C. -- June 10, 2005 -- Recent studies once again show that medical malpractice lawsuits are not the cause of increases in doctors' insurance premiums. The average payment to patients grew by only 4% per year between 1991 and 2003, according to an article in the medical journal Health Affairs (Health Affairs, 2005 May 31). This increase was consistent with increases in health care costs, the researchers found, and did not cause the spikes in insurance premiums. Also, the growth of the top 10% of payments was smaller than that of the average payment. Therefore, large jury awards have not been the major factor in medical malpractice growth, the study suggests.

The American Medical Association (AMA) has drawn attention to trends in jury verdicts. However, according to the study, settlements account for 96% of all payments to patients, while trial judgments account for only 4%. Because focusing on verdicts could overstate the size of individual payments, the study used data from the National Practitioner Data Bank (NPDB). The NPDB includes data on medical malpractice payments, including both settlements and verdicts, in which a physician is a party.

The researchers considered 250,137 medical malpractice payments in 50 states from September, 1990 through the end of 2003. They used a subset of 184,506 payments made between January 1991 and the end of December 2003 to derive their conclusions. They found that those states in which medical malpractice payments grew the most were not the states in which doctors' insurance premiums grew most rapidly.

Another study, funded by the Kaiser Family Foundation, used both NPBD statistics and data from the Physician Insurers Association of America to examine medical malpractice payment trends (Medical Malpractice Law in the United States, May 2005 ). Both sets of data indicated that there has been "at most a modest increase in the number of paid claims over the last decade."

"The tendency has been to focus on total dollar payments going up and total claims going up and to ignore the fact that there are a lot more doctors out there now," commented Dr. Peter Budetti, a professor at the University of Oklahoma College of Public Health and the study's lead author (Los Angeles Time, June 1, 2005). "For most doctors, there is a perception of a serious problem," he said,"...but the likelihood of having a claim paid on your behalf over the years has diminished."

A Small Number of Doctors Account for Most Malpractice Payments

In April, the consumer advocacy group, Public Citizen, also reported that medical malpractice premium increases were not caused by medical liability claims. In addition, the group found that from 1990 to 2004, only 5.5% of doctors accounted for over half of all medical malpractice payments.

"The hard, factual evidence cannot be any clearer: We have no medical malpractice lawsuit crisis in America," said Joan Claybrook, president of Public Citizen. "Insurance companies may be padding their bottom lines by jacking up rates on doctors, but it is not because of patients seeking relief for bad medical care through our courts."

Amitabh Chandra, the lead author of the Health Affairs study commented on the real reasons for increased medical malpractice premiums. "It's not [medical malpractice] payments that's causing this," he said. "The simple explanation that comes to mind is the underwriting cycle. If they're making less money from the investment side of things, it's going to cause [insurance companies] to raise rates" (Boston Globe, June 1, 2005).

Current Medical Malpractice Legislation

Despite the lack of connection between medical liability claims and rising insurance premiums, the AMA and other physician groups have lobbied to cap medical malpractice awards. The Bush administration and many Republicans favor a $250,000 cap on damages for pain, suffering, and emotional distress. Rep. Brian Baird (D-WA) has proposed legislation to cap damage awards at almost $900,000 (Houston Chronicle, June 4, 2005).

However, the California experience shows that caps on damages do not decrease insurance premiums. During the thirteen-year period after the passage of a California law capping at $250,000 the amount a patient can recover for non-economic damages, medical malpractice premiums increased rather than decreased. In 2001, the average California premium was $27,570, eight percent higher than the average of all states that had no caps on non-economic damages. Premiums decreased only after insurance regulation was passed (Medical Malpractice, CAOC).

Brayton Purcell is convinced that caps on damage awards greatly harm injured patients and their families, while doing nothing to control insurance premiums. We have fought against federal legislation that promotes limits on damages, and will continue our news reports about the status of medical malpractice legislation. If you would like further information about a potential medical malpractice case, please feel free to contact us. We have almost 20 years of experience in the medical malpractice field, and work tirelessly to protect the rights of our clients.

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