Corp Reform - Not Tort Reform

Wisconsin Supreme Court Gets It Right

From Business Insurance:  (Their news alerts are awesome.)

In its decision Thursday in Matthew Ferdon vs. Wisconsin Patients Compensation Fund, a divided court ruled that the state's cap, currently $445,775, violated the equal protection guarantees of the state constitution.

While this eliminates the cap in only certain cases, it's a start.  If anyone has a copy of the decision, please send it my way.

Doctor Refuses To Treat Patient That Doesn't Support Tort Reform

This article has made the rounds, but I wanted to comment on it:

"RICHLAND, Wash. - A doctor in Washington state has dropped a patient because she refused to sign an initiative to limit malpractice awards."

I believe that people should have the right to decide who they do business with on just about any grounds.  But I wonder where doctors like this will draw the line?  Will they refuse to treat Democrats?  Or Libertarians?  Or Ralph Nader?

Personally, I wouldn't want to be treated by a physician who is that terrified of being sued for malpractice.  Kind of sends the wrong message about his competence, doesn't it?

Connecticut Doctors Sue Insurers and Lose

Business Insurance reports that a group of 7,000 doctors has turned to trial lawyers seven times in their quest to make insurers treat them fairly.

"The lawsuits, which were filed by the 7,000-member Connecticut State Medical Society, alleged that the health plans violated the state’s unfair trade practices law by denying, reducing and delaying claims payments to doctors."

These doctors have it right: Insurers are the problem.  Unfortunately, the doctors lost this suit, which was their seventh.

The cynic in me is forced to wonder if these doctors are considered "vexatious plaintiffs," filing "frivolous lawsuits."  After all, they've lost four out of seven lawsuits so far.  And, I'm also constrained to point out that doctors, like everyone else, have no problem hiring "greedy trial lawyers" when they have a problem.

A Response to Defensive Medicine Comments

I had previously written about defensive medicine, and there have been some good comments.  I'm double-posting this response in our Google Group because I'd like to continue this discussion.

The first point I'll respond to is my purportedly "shaky" argument that an increase in demand for MRI's will lead to a cost reduction in MRI's. 

This article sums it up:

"The proliferation of MRI has dropped the cost of a scan here from the $800 to $1,200 range typical in the early years to the current $500 to $650 price range.

However, in some states with an overabundance of MRI sites, such as Florida and California, competitive pressures have given rise to imaging brokers who contract with underutilized sites to deliver customers for discount scans, with reimbursement often pegged as low as $300."

So, due to the increase in demand for MRI's, prices dropped between 40 and 75 percent over a period of ten years.  But let's not quibble about supply and demand with respect to prices of procedures.

Instead, I'll focus on this quote from the second anonymous commenter:

"Sure, insurance companies do interfere greatly with patient care, making decisions on allowable procedures and therapies instead of leaving critical decisions to physicians."

Shouldn't doctors lobby for laws that make insurers pay for more treatments instead of lobbying for laws that will let insurers pay for fewer treatments? 

I guess what I really don't understand is this: Doctors get screwed by malpractice insurers that gouge them with out of control premiums.  Then they get screwed by health insurers that won't pay the doctors fair prices for the services they perform.  But the only kind of laws doctors want to get passed are those that screw the patient to benefit the insurers! 

Another insurer admits that tort reform doesn't lower rates

The good guys at Consumerwatchdog revealed that the largest medical malpractice insurer in the country admits that noneconomic damages are about 1% of their losses:

"According to the Medical Protective filing: "Non-economic damages are a small percentage of total losses paid. Capping non-economic damages will show loss savings of 1.0%."

If the malpractice insurers are telling regulatory agencies that tort reform doesn't work, why should we believe them when they tell the press that it does? 

What About Defensive Medicine?

Lately, there has been a lot of talk about doctors practicing "defensive medicine" as a result of the "litigation crisis" in America. But, like many aspects of tort reform, many people don't know what defensive medicine is.

Defensive medicine is when a doctor, afraid of being sued, leaves no stone unturned to diagnose, treat, or cure a patient. The most common example cited is when a doctor "knows" that a patient has illness X, but runs a test to check for illness Y, just on the incredibly rare chance that the patient has illness Y. A wide variety of statistics are available to show just how much money is spent on these unnecessary tests and procedures. However, there is one statistic I'd like to see but haven't: How many lives have been saved because an "unnecessary" test diagnosed a fatal illness early?

Somehow, tort reformers argue, that because a doctor in Duluth orders an "unnecesary" MRI, patients in Los Angeles will pay more for their needed MRI's. Proponents of the defensive medicine theory therefore argue that the traditional economic principal that as supplies increase, prices decrease, somehow does not apply to medicine.

Finally, ask yourself who defensive medicine really hurts. It doesn't hurt the doctor that charges for the procedure or test. It doesn't hurt the pharmaceutical that supplies drugs for the procedure or test. It certainly doesn't hurt the patient to have an extremely thorough doctor. And if the patient is footing the bill, he or she can certainly choose whether or not to have the procedure or test done.

The only other party that defensive medicine could possibly hurt would be insurance companies.  But the problem with that theory is that insurance companies have very strict policies about what procedures and tests they'll pay for.  It's all too common for a patient to develop a serious medical condition because their insurer wouldn't pay for a test or procedure that would have diagnosed the condition before it became serious.

So defensive medicine puts money in the pockets of doctors, hospitals, and pharmaceuticals.  Insurance companies won't pay for defensive medicine, so it doesn't raise anyone's health insurance premiums.  From time to time, defensive medicine saves lives.  It would therefore appear that "defensive medicine" is just another sham used to scare people into supporting tort reform.

To Doctors for Medical Liability Reform: Have You No Sense of Decency?

A group of doctors filmed patients in the hospital without their consent, and have been running the footage in commercials trying to garner support for tort reform. One man saw the footage of his elderly mother's emergency room visit on TV.

This is disgusting. Doctors are supposed to be held to a higher standard than ordinary people, and that means they aren't supposed to breach their clients' privacy for political gains. I would think this film footage would be protected by the HIPPA act; if it is, Federal charges should be filed.

And finally, I'm irritated that a hospital would allow this. Can I go into a hospital with a film crew and video patients for my own personal gains?

It's been said that the love of money is the root of all evil, and that's certainly true in this case. To hell with every one of the greedy bastards behind this.

Tell the nice people behind the video at http://www.protectpatientsnow.org/ how you feel about this sort of breach of the doctor-patient confidentiality.

Medical Errors - Sixth Leading Cause of Death

Yahoo released this article about the grim stastics of medical malpractice. Healthgrades, Inc. studied medical malpractice statistics and found the following:

"Of the total 323,993 deaths among Medicare patients in those years who developed one or more patient-safety incidents, 263,864, or 81 percent, of these deaths were directly attributable to the incidents," it added.

"One in every four Medicare patients who were hospitalized from 2000 to 2002 and experienced a patient-safety incident died."

As scary as those statistics are, how about this:

"If the Centers for Disease Control and Prevention's annual list of leading causes of death included medical errors, it would show up as number six, ahead of diabetes, pneumonia, Alzheimer's disease and renal disease," Collier said."

And yet the only medical malpractice laws that are ever proposed are those that limit the rights of malpractice victims. How about some laws to make patients safer?

A New Rand Group Study About Medical Malpractice & Tort Reform

This article details some of the findings of a new Rand Group study of medical malpractice jury awards in California.

In California, medical malpractice suits are capped at $250,000. That figure seems to be the magic number that most tort reformers aim for. But this study shows that few lawsuits end in verdicts that would be reduced by a $250,000 cap. For example:

42% of death cases didn't receive verdicts of $250,000 or more. Of those that did, the average reduction was 49%, meaning that in most cases where someone died due to medical malpractice, juries didn't even award $500,000.

And this is in "liberal California," the home of the "runaway jury."

The Standard of Care Was Breached

I read this article at Yahoo about a woman who had a 6.7 inch pair of scissors left in her abdomen after surgery, and it provided yet another concrete example of how flawed the current system is for bringing a medical malpractice suit.

If this had happened in Texas, this woman would have had to have hired a physician as an expert witness, and that physician's report would have had to establish the following in order for her to recover any money:

1: That the acceptable standard of care in her operation does not allow scissors to be left in a patient.

2: That by leaving scissors in the woman, her doctor breached the standard of care.

3: That the breach of the standard of care is the proximate cause of her injuries.

Every year, legislatures pass laws that make it harder and harder to bring successful malpractice suits. While those laws help weed out suits without merit, they also raise the costs necessary to sue a doctor who leaves scissors in your stomach.

This incident was in Australia, and I don't know what the med mal laws are there. I would say that the severity of the laws there is in inverse proportion to how much money the insurance industry contributes to Australian politicians. Read the article if for no other reason than to see the X-ray and wonder just how any doctor missed this.

Frank Cornelius, and the Iowa Citizen Action Network

The following article, entitled "Crushed by My Own Reform" is the story of Frank Cornelius, an insurance lobbyist who got royally screwed by the tort reform he helped enact. The article appeared originally in the New York Times on October 7th, 1994.

Crushed By My Own Reform By Frank Cornelius

In 1975, I helped persuade the Indiana Legislature to pass what was acclaimed as a pioneering reform of the medical malpractice laws: a $500,000 cap on damage awards, and elimination of all damages for pain and suffering. I argued successfully that such limits would reduce health care costs and encourage physicians to stay in Indiana – the same sort of arguments that not underpin the medical industry’s call for national malpractice reform.

Today, from my wheelchair, I rue that that accomplishment. Here is my story.

On February 22, 1989, I underwent routine arthroscopic surgery after injuring my left knee in a fall. The day I left the hospital, I experienced a great deal of pain and called the surgeon several times. He called back the next day and told my wife to get me a bedpan. He then left on a skiing trip. I sought out another surgeon, who immediately diagnosed my condition as a reflex sympathetic dystrophy – a degenerative nervous disorder brought on by trauma or infection, often during surgery.

A few months later, when a physical therapist improperly red the instructions on a medical device, I received a tremendous current of electricity through my left leg. This seriously complicated my condition.

In August 1990, another physician proposed a medical procedure, but used the wrong instrument; that left me with several holes in the vena cava, the main vein from the legs to the heart. I would have to bled to death in my room if my wife had not come to see me that evening and called for help. As another physician tried to save my life, he punctured my left lung.

The cost of this cascading series of medical debacles is painful to tally:

I am confined to a wheelchair and need a respirator to keep breathing. I have not been able to work.
I have a continuous physical pain in my legs and feet, prompting my doctor to hook me up to an apparatus that drips morphine. My pain used to rate a 10 on a scale of 1 to 10. Now it’s about a 4.
Twice, I have received last rites from my church.

My marriage is ending, and the emotional fallout on our five children has been difficult to witness, to say the least.

At the age of 49, I am told that I have less than two years to live.

My medical expenses and lost wages, projected to retirement if I should live that long, come to more than $5 million. Claims against the hospital and physical therapist have been settled for a total of $500,000 – the limit on damages for a single incident of malpractice. The Legislature has raised that cap to $750,000, and I may be able to college some extra damages if I can sue those responsible for the August 1990 incident the nearly killed me. But apparently because of bureaucratic inertia, the state medical panel that certifies such claims has yet to act on mine.

The kicker, of course, is that I fought to enact the very law that limits my compensation. All my suffering might have been worthwhile, on some cosmic scale, if the law had accomplished its stated purpose. But it hasn’t. (Emphasis added.)

Indiana’s health care costs increased 139.4 percent from 1980 to 1990 – just about the national average. The state ranked 32nd in per capita health spending in 1990 – the same as in 1980.

It is understandable that the damage cap has done nothing to curb health care spending; the two have almost nothing to do with each other. In 1992, the Congressional Budget Office reported that medical malpractice litigation accounted for less than 1 percent of total healthcare spending. I doubt that the percentage in Indiana is much different.

Make no mistake; damage caps are arbitrary, wholly disregarding the nature of the injury and the pain experience by the plaintiff. They make it harder to seek and recover compensation for medical injuries; extend unwarranted special protection to the medical industry; and remove the only effective deterrent to negligent medical care, since the medical profession has never done an effective job of disciplining negligent doctors.

Medical negligence cannot be reduced simply by restricting consumers’ legal rights. That will happen only when the medical industry begins to effectively police its own. I don’t expect to see that day. (Emphasis added.)

Sadly, Frank did not live to see that day and passed away. To me, the most telling part of this article is that tort reform legislation did nothing to to decrease healthcare costs in the state of Indiana.

I've seen this article in numerous places, but was reminded again of it while reading the Iowa Citizen Action Network's webpage, which has a lot of good information for everyone - not just Iowa citizens.

Here is a good article from their site on how to lobby your politicians. Check them out.

Damage Caps Unfair to Women, Minorities, Children

Senator Ted Kennedy sent a letter to President Bush in July of 2002, and it has some interesting points about why capping noneconomic damages is unfair to women, minorities, and children:

Caps discriminate against younger victims. A young person with a severe injury such as paralysis must endure it for many more years than an older person with the same injury. Yet, that young person is prohibited from receiving greater compensation for the many more years he will be disabled. Is that fair?

Caps on noneconomic damages discriminate against women, children, minorities, and low income workers. These groups do not receive large economic damages attributable to lost earning capacity. Thus, noneconomic damages are particularly important to these vulnerable populations.

Women who are homemakers and caregivers for their families sustain no lost wages when they are injured, so they only receive minimal economic damages. Ignoring the value of the work they do within the home violates the most basic family values.

Read the complete letter here.

Average Medical Malpractice Payout? Under $30k

Quick Facts About Medical Malpractice Payouts:

Over the last decade, the average medical malpractice payout has been $28,524.

The average claim is $107,587.

Insurers pay nothing in 77% of those claims.

Only one in eight malpractice victims file claims.

This information comes from this article on the Insurance Reform website.

The actuary who performed this study forAmericans for Insurance Reform, J. Robert Hunter, has some pretty impressive credentials: He's a former Texas Insurance Commissioner, and worked for a couple of US Presidents as a Federal Insurance Administrator.

Senator Hollings on Medical Malpractice

Fritz Hollings, the Senator from South Carolina, always has some pointed things to say about tort reform and medical malpractice. His July 8th, 2003 floor speech to the Senate made some good points:

58,000 people died in the ten years we were in Vietnam. 100,000 people die every year due to medical malpractice.

In West Virginia, just forty doctors cause 25% of the state's malpractice claims.

Florida, Michigan, Texas, and West Virginia - all states with damage caps - have the highest malpractice insurance premium rates.

2/3rds of Medical Malpractice cases are dropped or dismissed with the plaintiff taking nothing.

Just .9 percent of malpractice plaintiffs are awarded money by a jury.

For the past ten years, the number of malpractice suits has remained steady.

Since 2000, the average malpractice jury award has gone down by 50%.

I don't know too much about Senator Hollings' positions on other issues, but I strongly agree with his position regarding the medical malpractice "crisis".

Medical Malpactice Costs - They're Lower Than You Think

There's a supposed healthcare crisis with regard to medical malpractice costs. However, the facts don't seem to support the idea of a crisis. For example, total healthcare expenditures in 2001 were $1.42 Trillion dollars. Medical Malpractice expenditures were $7.3 billion - less than one half of one percent of medical expenditures. (From 2001 US Census) That one half of one percent figure doesn't sound like a crisis to me. But, let's assume that it is. How would we fix it?

Well, not by enacting tort reform; just ask the VP of State Farm:

"[W]e believe the effect of tort reform on our book of business would be small. ... [T]he loss savings resulting from the non-economic cap will not exceed 1% of our total indemnity losses." - Robert J. Nagel, Assistant VP State Farm

State Farm isn't alone, either. In Florida, a $450,000.00 cap on noneconomic damages was put into effect. Aetna then analyzed their previous malpractice payouts to determine whether the new cap would be able to lower their costs. Here's what Aetna had to say: "[T]he review of actual data submitted on these cases indicated no reduction of cost."

OK, so State Farm and Aetna don't think that tort reform lowers costs or premiums. Let's keep looking to see if any insurance company does.

In the eighties, Washington state enacted some of the most draconian tort reform ever in an attempt to lower malpractice premium rates. Did it work? Not according to General Accident Insurance Company (GAI), one of the largest malpractice carriers in Washington state. GAI said this immediately after the legislation they lobbied for took effect:"Given that liability losses constitute such a low proportion of business owners' losses, GA feels it is prudent to continue with its original proposal of a 10 percent increase in base rates."

Just in case you missed it. GAI raised insurance rates right after tort reform took effect because liability lossed constituted such a "low proportion" of their costs. Allstate was even worse: "[O]ur proposed rate would not be measurably affected by the tort reform legislation." Allstate then wanted to raise rates by a whopping 22%! Thankfully, the Washington Supreme Court ruled the tort reform laws to be unconstitutional in 1987.

Will tort reform lower malpractice caps? No. Ask the insurance carriers - they'll tell you! And so will their trade groups:

"We wouldn't tell you or anyone that the reason to pass tort reform would be to reduce insurance rates." - Sherman Joyce, President of the American Tort Reform Association.

The only sure way to lower malpractice premiums is to regulate the insurance industry to cap premiums.

Why Treat The Symptoms?

Medical Malpractice insurance rates are the hot button in tort reform today. Doctors complain loudly and vehemently that they are being forced out of practice by high premiums. We're told that unless we do something to curb the wave of "frivolous lawsuits" against doctors, we won't have anymore doctors to go to. Doctors lobby very strongly to limit their ability to be sued.

It seems to me that attempting to lower malpractice insurance rates by capping damages of the catastrophically injured is treating the symptoms, and not the illness. The illness is high insurance rates; why not place a cap on malpractice premium rates?

Doctors who have no history of malpractice claims could have a cap in place of 1% or 2% of their gross income, with a maximum dollar cap of $10,000.00 per month. Doctors who have had malpractice claims could pay a higher percentage.

It puzzles me why doctors, an educated group of people, think that the cure for their high premiums is to try and cap damages on lawsuits. After all, premium rates aren't based solely on lawsuits. Malpractice premiums, like auto insurance premiums, take into consideration the locale of the doctor. Now, is a doctor in Duluth less likely to commit malpractice than a doctor in Miami? While the Miami doctor may see more patients than the Duluth doctor, he or she may not. After all, in some small towns, doctors are kept far busier than their big city counterparts because there aren't as many doctors per capita. Yet, in general, a big city practitioner will pay more in premiums than a small town practitioner. Why?

Because insurance companies charge what the market will bear. But instead of attacking the predatory pricing scheme of the insurance cartel, doctors get whipped into an anti-lawyer, anti-patient frenzy and become convinced that every patient is itching to file a malpractice lawsuit. So the doctors focus their efforts on getting laws passed that make it harder and less attractive to file malpractice lawsuits.

Wouldn't doctors be better served by lobbying for strict regulation of their premiums? Capping damages may or may not lower premiums - most insurance companies admit it will not lower premiums - but a regulatory board that prevents doctors from being gouged certainly would lower premiums.

Some may argue that it would be unconstitutional to tell a business what they may or may not charge for their product. If this is so, then wouldn't it also be unconstitutional to tell a judge or jury how much they may award a plaintiff in a lawsuit?

The truth is that until insurance reform is put into place, doctors will always be subject to the capricious whims of malpractice insurance carriers.