Does Texas Really Have More Doctors as a Result of Medical Malpractice Reform?
By ANTHONY J. SEBOK
|Tuesday, Oct. 09, 2007
Last week, the New York Times published a story that breathlessly announced that there are now more doctors in Texas, as a result of medical malpractice tort reform in 2003. The article was a rare bit of good news for tort reformers, as the recent decline in the fortunes of the Republican Party has put tort reform on the back burner, at both the federal and state level.
The New York Times--whose editorial page opposed federal medical malpractice tort reform when it was proposed in Congress before the 2006 elections--deserves credit for bringing the issue up on its first page. However, as I will argue below, the article is seriously misleading on many levels.
The Facts: What Actually Happened in Texas
First, the facts. In 2003, Texas voters approved a referendum that amended the state's constitution to allow legislative caps on pain and suffering awards in medical malpractice suits. Pain and suffering damages--known also as "non-economic damages" because they do not include lost wages or medical expenses--are often the reason that certain medical malpractice tort awards reach stratospheric levels. In cases involving an injury caused during a baby's delivery, juries have been known to award upwards of $40 million to compensate for the plaintiff's expected lifetime of suffering.
The New York Times reported that, since 2003, the state has been flooded with applicants to the Texas Medical Board for licenses to practice in the Lone Star State. The paper reported the increase at somewhere between 18%-30% since the referendum. A spokesperson for the "Texas Alliance for Patient Access" is quoted as saying that medical malpractice insurance premiums have dropped "an average of 21.3%," thus providing the explanation for the influx of applicants--insurance now no longer costs too much.
After the article was published, defenders of the tort system--public interest groups associated with the plaintiffs' bar and with consumers' groups--pointed out that the article also mentions that, since 2003, complaints against doctors have increased by 25% and disciplinary actions against doctors have also increased. Moreover, on the New York Personal Injury Law Blog, Eric Turkewitz argues that the New York Times article understated the jump in the number of complaints lodged against doctors in Texas since 2003, and that the increase is really quite shocking.
Why Both the Article and Responses to It Are Misleading
The New York Times article and the response to it from the defenders of the tort system are both misleading. The article is misleading because it assumes that medical malpractice premiums change in response to tort reforms. The response by the defenders of the tort system is misleading because it assumes that doctors are more likely to be negligent when tort damages are capped. Neither claim is supported by available evidence, and both assume a relationship between the civil litigation system and the behavior of doctors that exists only in the fantasy worlds of Law & Economics professors.
To begin, there are a number of reasons to be skeptical of the claim that medical malpractice insurance premiums can be significantly affected by changes in the tort system. First, as a group of professors at the University of Texas pointed out in an article published in 2005, once adjusted for factors such as inflation, population growth, etc., medical malpractice awards did not grow in real terms at all between 1988 and 2002 in Texas--exactly the period of time when there was an "explosive" growth of medical malpractice insurance premiums, thus driving doctors out of Texas.
Second, as Tom Baker of the University of Connecticut School of Law, an insurance law expert, has exhaustively argued, medical malpractice insurance premiums go up and down based on a variety of factors quite independent of the litigation system. Some of these factors include the business cycle, and decisions made years earlier by insurance executives about how large a reserve they should create to pay off future claims, and hence, how much to discount the cost of premiums.
There are a number of reasons to be equally skeptical of the claims that tort reform has attracted bad doctors to Texas, or that the existence of caps has made doctors in Texas less careful. Research by public health scholars has shown that doctors generally view medical malpractice litigation fatalistically: They do not believe that whether they are sued is rationally connected to what they do in the examining room or the surgery theater.
Interestingly, the statistics bear out doctors' views. While it is true that, on average, a doctor will be sued at least once during her career, the more important statistic to consider is that, on average, very few victims of malpractice sue. Furthermore, it is not clear that most malpractice is the result of the sort of individual decision-making that can be affected by a conscious decision to invest in safety. Critics of tort reform in Texas often cite the example of a doctor who committed malpractice while addicted to a narcotic cough syrup. However, this kind of malpractice is not typical of the sort of malpractice that kills or injures 100,000 patients a year in America.
What Is the Real Explanation for the Influx of Texas Doctors?
So why are doctors seeking to practice in Texas in greater numbers? Of course, the New York Times article would have been more informative if it had provided comparative figures, such as whether there is an increase in doctors nationally (there has been, since 1990), and whether there has been a decrease in medical malpractice premiums nationally since 2003 (there has been). But let us assume, for the purposes of argument, that Texas has done better than other states without tort reform, in that it attracts more doctors and its premiums are lower. Why might this be?
There are two possible answers that the article did not canvas. First, it may be the case that, whether or not tort reform drives insurance premiums down, it may still drive down the number of people suing doctors. This is for a very simple reason: non-economic damages are the engine that drives plaintiffs' attorney's work. That is to say, in a contingency fee system, the prospect of non-economic damages increases the award to the point where the one-third taken by the lawyer covers her costs and rewards her for the risk she takes in shouldering the burden of paying for experts, depositions, medical examinations, and so on, in a case where the plaintiff pays nothing until a settlement is reached or a verdict rendered.
In a very interesting study in the 2006/07 volume of the New York Law School Law Review, Stephen Daniel and Joanne Martin reported the results of two surveys they took of Texas plaintiffs' lawyers. In 2003, before the referendum, they asked lawyers about whether they would take certain hypothetical cases. Then, in 2006, they went back and asked again. The results were stunning: The number of respondents who said that they would take a hypothetical personal injury case involving a car accident did not change between 2003 and 2006. But between 2003 and 2006, the number of respondents who said they would take a medical malpractice case dropped by almost half. What was the difference? The 2003 referendum capped non-economic damages in medical malpractice litigation, not car accidents.
The second reason is even simpler. As some of the interviewees in the New York Times story themselves reported, the 2003 referendum's passage signaled to them that Texas was now a friendly place for doctors. Moreover, that perception matters - whether or not it accurate reflected realities regarding the behavior of Texas courts or the relationship of litigation and malpractice premiums.
As many scholars have pointed out, there never was a relationship, in reality, between the claim that there was a medical malpractice insurance crisis and the actual behavior of the tort system. Thus, in one sense, the myth of a solution to the tort crisis may have been all doctors needed to feel good about Texas again. After all, the only reason they had soured on Texas in the first place, was that they had been sold a story about a mythic torts crisis that never really existed.