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THE HIGH COST OF MEDICAL LAWSUIT ABUSE
According to the U.S. Department of Health and Human Services, “The excesses of the litigation system raise the cost of health care for everyone, threaten Americans’ access to care, and impede efforts to improve the quality of care.”1 The problem starts with personal injury lawyers who file too many meritless claims, push for lottery-sized verdicts, and keep the lion’s share of awards and settlements.
With no caps on non-economic damages, jury awards are soaring.
- More than half (52 percent) of jury awards in medical liability cases exceed $1 million and the average award is $4.7 million.2 The number of mega-awards has skyrocketed, especially in states with no limits on non-economic damages. In the past several years, juries have awarded verdicts of $80, $90, even $100 million.3
- A study of data from Texas and Florida showed that over two-thirds of claims payments went to cover non-economic damages – damages that have nothing to do with compensating plaintiffs for lost wages or medical costs.4
The chance for lottery-sized verdicts encourages personal injury lawyers to file meritless claims.
- Neurosurgeons practicing in the U.S. today can expect to be sued every two years.5 Nearly three out of five OB-GYNs have been sued at least twice.6 And about one-third of U.S. orthopaedists, obstetricians, trauma surgeons, emergency room doctors and plastic surgeons can expect to be sued in a given year.7
- Yet most cases are meritless. In 2004, for example, more than seven out of ten medical liability claims resulted in no payment to the plaintiffs and only 1.1 percent of claims resulted in a plaintiff’s verdict.8
Defending against any lawsuit – even a meritless one – is very expensive.
- In cases where the jury ruled for the defendant, the average cost of defense was $87,720 per claim. In cases where the claim resulted in no payment to the plaintiff (over 70 percent of claims) the average defense cost was nearly $25,000.9
Where does the money go? Ask the lawyers.
- Plaintiffs in medical liability cases receive less than 28 cents out of every dollar spent on the medical liability system. The rest goes to personal injury lawyers and to cover administrative fees.10
Rising lawsuit costs lead to rising medical liability premiums and overall medical liability costs.
- A recent study by Blue Cross/Blue Shield in “crisis” states found that huge jury verdicts were the primary driver of higher medical liability premiums.11 Average medical liability premiums rose 18 percent in 2003 alone – more than twice the rate of overall health care spending per person.12 By 2003, medical liability costs reached $26 billion – a 2,000 percent increase over 1975.13
- Medical liability costs are rising far more rapidly than overall medical costs. From 1975 to 2000, medical costs rose 449 percent; medical liability costs rose by 1,642 percent.14 Since 1975, medical liability costs have risen at four times the rate of inflation and twice the rate of medical care inflation.15
Medical liability reform – with reasonable caps on non-economic damages – works.
- Since 1976, when California capped non-economic damages at $250,000, liability premiums for California physicians have risen 283 percent, compared to 925 percent for the rest of America.16
1 U.S. Department of Health and Human Services, “Addressing the New Health Crisis: Reforming the Medical Litigation System to Improve the Quality of Health Care,” March 3, 2003.
2 Manhattan Institute, “Malpractice Maladies: Doctors continue to flee states with out-of-control medical-injury verdicts,” 2005.
3 U.S. Department of Health and Human Services, “Addressing the New Health Crisis: Reforming the Medical Litigation System to Improve the Quality of Health Care,” March 3, 2003
4 Contingencies, “The Evidence Is In” by Richard S. Biondi and Arthur Gurevitch, December 2003.
5 Yale Journal of Health Policy, Law, and Ethics, “Effective Legal Reform and the Malpractice Insurance Crisis” by Richard E. Anderson M.D., December 2004.
6 Manhattan Institute, “Malpractice Maladies: Doctors continue to flee states with out-of-control medical-injury verdicts,” 2005.
7 Archives of Internal Medicine, “Defending the Practice of Medicine” by Richard E. Anderson, M.D., June 2004.
8 Physicians Insurance Association of America Data Sharing Project, April 2004; cited in “Federal Medical Liability Reform,” Alliance of Specialty Medicine, July 2005
9 Physicians Insurance Association of America; cited in “Federal Medical Liability Reform,” Alliance of Specialty Medicine, July 2005.
10 The Heritage Foundation, Backgrounder No. 1908, January 17, 2006.
11 Blue Cross/Blue Shield Association, “The Malpractice Insurance Crisis: the Impact on Healthcare Cost and Access,” 2003.
12 Manhattan Institute, “Malpractice Maladies: Doctors continue to flee states with out-of-control medical-injury verdicts,” 2005.
13 Manhattan Institute, “Malpractice Maladies: Doctors continue to flee states with out-of-control medical-injury verdicts,” 2005.
14 Insurance Information Institute, “Trends in Medical malpractice Insurance: Behind the Chaos,” April 2003.
15 Manhattan Institute, “Malpractice Maladies: Doctors continue to flee states with out-of-control medical-injury verdicts,” 2005.
16 NAIC Profitability By Line By State, 2004; cited in “Federal Medical Liability Reform,” Alliance of Specialty Medicine, July 2005
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