One of the prominent members of UTLA had a call this week from a judge’s wife. She had heard about the “crisis” in medical malpractice and was worried that she would no longer be able to get care from her Ob-Gyn doctor. Our valiant colleague spent a half-hour on the phone with her, but he is not sure he managed to assuage her fears.

Her fears were aroused by a national campaign orchestrated by the AMA and the American College of Obstetrics and Gynecology. In the last couple of months, they have made a national priority of publicizing rising medical malpractice premiums in the hope of convincing the public that medical care is in danger of disappearing unless legislative changes are made to “reform” the legal system. Personal injury lawyers are justifiably concerned about the effect this publicity has on other efforts at “tort reform” and on jurors asked to award large sums to a deserving plaintiff. But if you don’t practice in the medical-legal arena, you might not know how to answer someone who asks you about this “crisis.”

Leaving aside appeals to the sanctity of the jury process and arguments about the size of jury verdicts, here are some facts you can use to make a difference.

Insurance premiums rise for everyone when the business cycle enters a recession. There is no doubt that malpractice premiums have gone up drastically this year after several years of little or no increase. So have premiums for most other property/casualty insurance lines.[1],[2] Insurance companies depend on investment income to make their profits. When their investments are doing well, they expand their business lines in an effort to capture more premiums to invest and make more profit. When investments turn sour, as they do in a recession, insurers shed business lines that have become too competitive. The events of September 11 and the Enron debacle all played a part, as well.[3] After years of steady profit, insurers facing losses pulled out of marginal markets.

That is exactly what happened with medical malpractice insurance. Rate-cutting and competition had made a once-profitable line of insurance less attractive.[4] When the St. Paul Companies dropped its med mal business earlier this year, doctors nationwide were left scrambling to fill the gap. With the competitive pressure off, other insurers were free to raise rates that had been kept artificially low. This is a predictably cyclical phenomenon, but the public never seems to catch on to the insurer’s game. As recently as February 2001, the Utah Medical Insurance Association, which insures most Utah doctors, warned its physicians against switching to competing insurers just because they were offering lower rates, touting the UMIA’s own “rate stability.”[5] That claimed stability seems ironic in light of recent increases.

The problem with malpractice is not litigation, it is the rate of malpractice itself. The National Academy of Sciences’ Institute of Medicine published a book[6] in 1999 that received only fleeting attention in the press, but points to the real problem at the heart of the malpractice debate. According to the Institute of Medicine, medical errors kill as many as 98,000 Americans annually. Astoundingly, this accounts only for deaths occurring in hospitals, leaving aside all other places where medical error could be found: offices, pharmacies, outpatient surgical suites and nursing homes.

Medical error is the eighth leading cause of death in the U.S. and more than double the number of deaths from car accidents.[7] We have a National Highway Traffic Safety Administration with a budget of $406 million.[8] Thats nearly $10,000 per auto fatality for research and prevention. There is no similar national figure in health care, because there is little money or attention devoted to quality control throughout the health care industry.

Figures on medical error in Utah are comparable to the national figures. That should not be surprising; Utah was one of the two states on which the Institute of Medicine based its conclusions. According to the Utah Department of Health, 4,248 people suffered injury due to errors in hospital care between 1995 and 1999.[9] That’s more than two patients a day, and the bare statistic almost certainly understates the true incidence of injury.

Doctors are not disappearing from Utah or anywhere else. The scare tactic most favored by the medical/insurance/industrial complex is to play on the fears of the health consumer that medical care will disappear as doctors leave a state or leave practice altogether. While it is true that some doctors drop out of medicine or retire early, it is usually frustration with their jobs that causes a career change or retirement and not an economic reason such as rising malpractice rates.[10] Malpractice premiums have dropped as a percentage of a doctor’s incomes,[11] even as the number of active practitioners has risen faster than the increase in population.[12] When pressed, even the president of the Utah Medical Association will admit that “I don’t think doctors are leaving Utah yet.”[13] (Note the significant “yet”, giving the implication that doctors will be leaving in the near future.)

The arguments above are the three most important points you can make about the “malpractice crisis.” If you want to go on and haven’t bored your audience yet, here are some other facts and ideas to pass on.

You have a ready retort to the “runaway jury” notion. Just point out to your interlocutor that she and others just like her are the citizens evaluating the evidence in the jury room. Remind her that the next time an insurer blames the “runaway jury verdict”, the insurer is pointing the finger at the listener herself, calling her flagrantly irresponsible.

The plaintiff does not often win a malpractice suit. In fact, in Utah in 2000, the UMIA boasts that it won every one of the five suits it took to trial.[14] Nationwide, malpractice plaintiffs win their suits about 25% of the time, the lowest rate for any type of personal injury suit.[15]

Malpractice suits are not driving up the cost of health care.[16] The average settlement of a malpractice suit has increased less than 10% in the past decade, from $39,000 in 1990 to $43,600 in 2000. The cost of malpractice comprises about one-half percent of the national health care budget.[17] Most victims of medical negligence never file suit.[18] Only one in eight patients who could file suit ever do so. Malpractice suits comprise less than 8% of the civil suits in American courts.[19]

So the next time (or the first time), a frightened and aggrieved citizen confronts you with the “facts” propagated by the medical/insurance/industrial complex on television and in the newspapers, be prepared with some facts of your own. Reassure her that medical care is not disappearing and neither is the system that tries to compensate those whom medical care injures.

[1] According to insurance industry executives, one of the major factors contributing to increasing auto insurance premium cost is that State Farm Mutual Auto Ins had been keeping its rates artificially low to gain market share, forcing competitors to follow suit. Wall Street Journal, Christopher Oster, 04/24/2002.

[2] "The Perfect Storm" as it called by health analysts, is the rising cost of insurance premiums in shaky American economy. Workers & retirees face not only more costs, but some are w/o ins. Argues health insurance will raise nat'l rates 13-15%; in TX costs are expected 25%. Austin American-Statesman, Larry Lipman, 05/27/2002.

[3] Property/casualty insurers reported losses of $7.0 billion in 2001, the first time they have ever reported a calendar-year loss. They reported profits of $20.6 billion in 2000.Their 2001 losses from the Sept. 11 terrorist attacks totaled $10 billion, but they are expected to post additional losses from those attacks in 2002. Other reasons for the drop were the economic downturn, underpricing, catastrophe losses, medical cost inflation, Enron and legal costs. Liability & Insurance Week, April 22, 2002

[4] In 1999, malpractice lines garnered a 14.2% profit, nearly double the 8.2% profit of property/casualty lines in general. National Association of Insurance commissioners, Profitability by Line By State in 1999 (published 2001.)

[5] “Quarterly Exchange”, Utah medical Insurance Association, Volume MMXXVIX, 1st Quarter 2001 at http://www.umia.com/news1.htm (5/31/02)

[6] To Err Is Human, National Academy of Sciences Institute of Medicine, 2000. Available online at http://books.nap.edu/books/0309068371/html/index.html

[7] 41,821 fatalities in 2000, http://www-nrd.nhtsa.dot.gov/pdf/nrd-30/NCSA/TSFAnn/TSF2000.pdf.

[8] http://www.nhtsa.dot.gov/nhtsa/whatis/bb/2003/overview.htm#3table

[9] Adverse Events Related to Medical Care Utah: 1995-99, Health Data committee, utah Department of health, june 2001 at http://hlunix.hl.state.ut.us/hda/Reports/adverse_events.pdf.

[10] Josh Goldstein, “Recent Census of Doctors Show No Flight from Pennsylvania,” Philadelphia Inquirer, Oct. 2, 2001; Martha Leonard, “State Has Seen Sharp Increase in Number of Doctors,” West Virginia Sunday Gazette-Mail, Feb. 25,2001.

[11] From 1985 to 1997, the cost of malpractice insurance as a percentage of physician’s income declined from 9.4% to 7.1%. 2000 Statistical Abstract of the United States, page 125 cited at http://www.atla.org/private/factsheets/medmal/truth.pdf

[12] Number of physicians per capita rose 43.6% from 1980 to 1998. Cited at http://www.nypirg.org/health/malpractice_facts.html [13] John C. Nelson on KSL news, Friday evening, may 24, 2001, report by Keith McCord.

[14] “Quarterly Exchange”, Utah medical Insurance Association, Volume MMXXVIX, 1st Quarter 2001 at http://www.umia.com/news1.htm (5/31/02)

[15] Brian Ostrom & Neal Kauder, Examining the Work of State Courts, 1998, 30 (National Center for State Courts, 1998).

[16] Joint survey by Kaiser Family Foundation and Health Research & Educational Trust, as reported in The Washington Post 26 September 2000 (page A17). The factors reported were: 67% higher spending for drugs; 59% higher spending for hospitals; 48% higher spending for physicians; 44% higher insurance company profits; 23% better medical technology; 16% richer benefits packages. Cited at http://www.atla.org/private/factsheets/medmal/inflate.pdf

[17] Malpractice Suits Not Driving Medical Costs Up, Says Group, THE NEW ORLEANS TIMES-PICAYUNE, May 5, 1999, at E3.

[18] Harvard Medical Practice Study Group, Patients, Doctors, and Lawyers: Medical Injury, Malpractice Litigation, and Patient Compensation in New York (Harvard University, 1990).

[19] 1. Brian Ostrom & Neal Kauder, Examining the Work of State Courts, 1998, 30 (National Center for State Courts, 1998).

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