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Read Making a Killing

home / healthcare / in the media

Rochester Democrat and Chronicle
May 27, 2003

by Stephen G. Schwarz

Reduce medical errors to cut malpractice insurance rates

In a recent Speaking Out essay, Drs. Steven Hanks and Derek tenHoopen alleged that medical malpractice suits are draining the life out of health care in this state. They make a variety of statements that require a response because these statements are unsupported by the facts.

Drs. Hanks and tenHoopen allege that up to half of the dollars awarded in liability cases in New York state wind up in the hands of trial attorneys rather than in the pockets of the injured.

The doctors do not cite a source for this statistic. In truth, the fees charged by trial attorneys in malpractice cases are by law actually significantly lower than the amount that can be charged for any other type of injury case. New York Judiciary Law mandates a sliding scale beginning at 30
percent and dropping to 10 percent as the recovery increases. No attorney who receives anything close to a 50 percent fee in a medical malpractice case could retain his license to practice law in New York.

Drs. Hanks and tenHoopen further allege that the impact of lawsuits and insurance rates on physicians has been enormous. However, several reports have questioned this allegation. A six-week study by USA Today (March 5, 2003) found that premiums are rapidly rising - but no more so than medical expenses in general. Moreover, USA Today found that doctors typically paid more in rent than they did for malpractice insurance and that most physicians were minimally affected.

Drs. Hanks and tenHoopen argue that pain-and-suffering damage caps are theanswer to the crisis. They point to California as proof that pain-and-suffering caps hold down premiums. However, according to a recent report by The Foundation for Taxpayer and Consumer Rights (Feb. 10, 2003) it was not tort reform but insurance reform that helped doctors' wallets in California. California passed medical malpractice reform legislation, including its $250,000 cap on pain and suffering, in 1975. Twelve years after the cap was passed, California passed
Proposition 103, which caused an overhaul of the insurance industry. Within three years of the passing of Proposition 103, California doctors' malpractice premiums were reduced by 20 percent. The industry was forced to refund $135 million to policyholders.

More than 20 states have followed California and passed similar caps since 1975. However, according to Business Week magazine (March 3, 2003) these laws have not been proved to reduce premiums. In fact, according to Business Week, in both 1999 and 2000, malpractice premiums rose faster in states with caps than in states without them.

What the doctors neglect to mention is that medical malpractice is a real problem.

Three years ago the National Institute of Medicine estimated that 44,000 to 98,000 patients die each year because of medical mistakes.

One of the major problems with the current system is the failure of the medical malpractice insurance industry and state agencies charged with disciplining doctors to react to multiple successful claims against the same individual or institution. Most physicians' insurance companies are physician-owned mutual companies which, according to Business Week, traditionally have been loathe to sanction colleagues by denying them insurance.

So repeat offenders typically pay the same premiums as those who have never had a valid claim filed against them.

Nevada, a state particularly hard hit by the present crisis, found that two doctors were responsible for $14 million out of a total of $22 million paid out in a recent year, according to Business Week. Both doctors are still practicing. Similarly, a recent (March, 2003) report by Public Citizen, a nonprofit consumer advocacy group, documented that only 7 percent of New York's licensed doctors are responsible for 68 percent of all medical malpractice payouts.

Until doctors are willing to hold their repeatedly negligent colleagues accountable, either by raising their rates or denying them insurance altogether, the majority of physicians will continue to pay for these mistakes equally with the minority of wrongdoers, and the wrongdoers will have little incentive to improve.

The Public Citizen report also documented that only 10 percent of doctors who have made three or more malpractice payouts have ever been disciplined by New York state, and of those who made 10 or more payouts, only 28 percent have been disciplined.

If doctors spent as much time lobbying their insurers and state agencies to hold negligent doctors accountable as they spend trying to limit victims' rights, both doctors and patients would benefit.
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Schwarz is a Rochester lawyer specializing in medical malpractice litigation.

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