WITH MEDICAL MALPRACTICE ON THE PRESIDENT'S AGENDA, WHAT KIND OF BILL SHOULD CONGRESS PASS?

By ANTHONY J. SEBOK


anthony.sebok@brooklaw.edu
----
Monday, Jan. 27, 2003

Here we go again. After a decade of relative quiet, the medical malpractice issue is back in the headlines. A few weeks ago, in a Scranton, Pennsylvania speech, President Bush announced that he would ask Congress to pass a federal medical malpractice tort reform bill - one similar to a bill rejected by the Senate last year.

That raises a number of important question: Why is the issue being raised now? What is wrong with the current medical malpractice system? And is Bush's medicine the right cure?

Why the Medical Malpractice Issue Is Coming to the Fore Now

Why is the president taking time out of his busy schedule--what with the war on terrorism, and the economy in the tank--to take on the issue of medical malpractice? One major reason is that after years of relative stability, medical malpractice premiums have resumed the steep upward climb that first brought this issue into prominence in the 1970's.

Why? Republicans like to claims it's the fault of high jury awards in medical malpractice cases, of the trial lawyers who take the cases, and by extension, of the Democrats. But with respect to recent increases, that's not the entire - indeed, perhaps not even the major - explanation.

The recent increases started almost contemporaneously with 9/11. Since then,
the entire insurance industry has been reeling from the double whammy of the decline of the stock market, and the increased risks posed by terrorism. The loss of investment income has hit the industry especially hard. As a result, premiums for all sorts of policies, including health and malpractice, have shot through the roof.

In sum, the evidence suggests that nonlegal forces are the culprits for much of
the rise in premiums. Nevertheless, the President and his handlers probably hope to use high-profile events such as the Pennsylvania crisis to make some political hay. That is not to say, however, that they are wrong about the system being in need of some reform. The question is, what reform?

What's Wrong with the Medical Malpractice System?

When Republicans want to demonstrate that the medical malpractice system is broken, they typically point to the fact that damage awards in medical malpractice suits have increased over the past few years at a rate that far exceeds inflation. One popular statistic, for example, provided by Jury Verdict Research (a private company) is that between 1999 and 2000 median malpractice awards rose 43%, from$700,000 to $1 million.

In response, defenders of the system, such as the Naderite organization Public Citizen, will reply that the numbers provided by Jury Verdict Research are biased in two ways. First, they reflect only verdicts that have been reported by the lawyers themselves (who may want to tout their wins, and ignore their losses).

Second, they do not reflect settlements, which may be much smaller than verdicts. And indeed, when you look at all verdicts and settlements combined, the numbers are much smaller (around $100,000 per case), and the rate of increase much smaller (though still twice to three times the rate of inflation).

Whether one looks to verdicts, settlements or both, however, there is a deeper problem with relying on the amounts awarded or agreed to. The problem is that we do not know how these amounts compare to what the plaintiffs who received the money deserved to receive based on their injuries and the treatment they received.

It's not an injustice if a plaintiff who suffered $1 million in damages gets $1 million. It's an injustice, though, if he only gets $100,000, or if he gets $3 million. And it's not an injustice if plaintiffs in 2000 get more money than those in 1999 if those 2000 dollars were deserved.

In short, to really see if the system is working, we need to look deeper - far beyond simple statistics about damages awarded. But that is exactly what the centerpiece of Bush's medical malpractice reform plan refuses to do.

Rather than making damages fairer, it simply aims to make them smaller - proposing a $250,000 cap on "pain and suffering" damages in any state medical malpractice award. (Bush also proposes and a similar cap on punitive damages, but I will not address it here, in part because such damages are very infrequently awarded in medical malpractice cases.)

"Pain and suffering" damages are often called "noneconomic" damages because they do not go to compensate for her medical bills or lost income. Currently, they make up about 50% of all damage awards.

Thus, if they are to be capped by a federal law, then the effect on tort law in the various states will be tremendous. The effect on insurance premiums may be substantial, too, but not necessarily; remember that damages awards are not the only, and perhaps not even the primary, cause of the current rise in premiums.

Damage caps are a very popular form of tort reform--about 24 states now have them. Some state supreme courts, however, have overturned such caps, for some state constitutions limit the state legislature's to deprive its citizens of the right to receive whatever damages a jury sees fit to award.

The caps proposed by Bush would replace the existing state caps and would be quite draconian. Moreover, they would not be able to be struck down as inconsistent with state constitutions, as the legislation would not have been passed by the state legislature.

The problem with damage caps is, though, that they arbitrarily punish a particular set of victims of medical malpractice - a set that likely includes those who have suffered the most. Again, fairness is ignored.

Plaintiffs with modest claims (under $250,000) who suffer negligence would get 100% of their damages. In contrast, plaintiffs with truly horrific claims--those who suffered severely, and at the hands of a physician adjudged by the jury to have acted recklessly or callously--would receive only a fraction of their damages back.

Do "Junk Lawsuits" Really Make Damage Caps Necessary?

Why, then, do proponents still support caps, despite their injustice? Some do so because they argue that, in any event, it is very hard to tell who really is a deserving and undeserving plaintiff in a medical malpractice suit, so that the attempt to ensure fairness is doomed at the start.

Pain and suffering, they say, are very subjective things. Moreover, while we cannot know the true nature of a particular plaintiff's pain and suffering, we can know that some plaintiffs exaggerate their pain and suffering, or claim negligence where there was none, in order to get a higher award.

In truth, I suspect that, given what we know about the tort system, the proportion of junk lawsuits is higher at the low end of the damage awards, and thus damage caps will do less than proponents think to cut off such claims. But I'll grant they will at least have some effect. By making it less attractive to be a plaintiff in a medical malpractice suit, caps will reduce the amount of money going to people who have fake claims.

But that leads to another question: How serious a problem are fake claims? And are there other problems - such as overly high rates of malpractice - that also deserve attention? Because if they are, then reform efforts should have a very different focus. Among other things, they should ask how we can get doctors to provide less negligent care.

Why Fake Claims Are Far From the Only Issue

A handful of studies have tried to determine how often, in fact, the tort system "fails" patients who have suffered at the hands of negligent physicians. The 1990 Harvard Medical Practice Study ("HMPS"), is the most famous, but its basic findings have been reproduced elsewhere.

The HMPS considered the medical histories of 30,000 New York City patients who had had "adverse events" during the course of their treatment, meaning that something had gone wrong. Many of the adverse events were minor, but may were serious--with results as horrible as death and permanent disability. In each event, HMPS tried, to the best of its ability, to reconstruct what happened and make the judgment whether malpractice ha occurred.

The study concluded that about 1% of the adverse events were avoidable--in other words, they were the result of malpractice. That figure has struck many as shockingly high, and, in itself, evidence of why we need an unfettered tort system. No one expects success every time, but malpractice, critics say, should not be the culprit in 1 out of every 100 medical failures.

But here is the figure that is truly shocking: of that 1% who suffered adverse events related to malpractice, only one in eight filed any sort of claim. Close to 88% of negligent physicians were never sued at all.

Meanwhile, of the 99% of patients who suffered adverse events not related to malpractice, and who thus had no basis for suit, some sued anyway. These are Bush's "junk lawsuits" - though the term carries an unfair stigma, since most of the patients probably suspected there was negligence even though experts later judged there had been none.

In the end, 83% of those in the HMPS study who sued had not suffered malpractice. Only 17% of those who sued had.

Medical Malpractice Reform Should Have Three Goals, Not Just One

The Harvard study thus isolates three problems: A too-high rate of malpractice, a too-low rate of worthy suits being brought, and a too-high rate of unworthy suits being brought. Sadly, the Bush plan targets only the third problem.

Yet consider how serious the other two problems are. The too-high malpractice rate means patients suffer and die even though it could have been prevented. The too-low rate of worthy suits means that patients who urgently deserve and need compensation do not get it. After all, those who do not sue, don't get anything - despite being victims of malpractice, they suffer lost income and pay medical bills themselves.

The President is right that plaintiffs' lawyers waiting rooms are probably
crowded with many who were not malpracticed (though they think they were). We already have a solution for that: The insurance company can argue to the jury that what the doctor did was not malpractice. We have no solution to the problem of those who are missing from those waiting rooms, and ought to be there, or to the fates of those who suffer and die unnecessarily due to a malpractice rate that better training might reduce.

Until the Republicans show as much concern for the many victims of medical malpractice who are not getting compensated, it is hard to accept their current proposal. It solves only one aspect of the "problem," and one that is about insurance companies paying too much, not about people suffering too much and going without compensation for that suffering.


Anthony J. Sebok, a FindLaw columnist, is a Professor of Law at Brooklyn Law School, where he teaches Torts, among other subjects.

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