Tort Crisis - Will the Real Culprits Please Stand Up
Edward R. Kennett, Esquire
It is impossible to avoid the onslaught regarding the need
for tort reform. Business groups, health care professionals,
and insurance lobbyists have bombarded the media with endless
horror stories of runaway juries and frivolous lawsuits.
The current furor is a continuation of efforts that began
in the mid-1970s. The difference now, however, is that those
advocating tort reform are better organized. And jury pools,
which were already packed with people prejudiced against
plaintiffs, have been tainted by the blitz.
Unfortunately, half-truths form the basis for the recent legislative flurry of action making it more difficult for a victim of another’s negligence to be compensated fairly. Despite the recent changes to medical malpractice law (The Medical Care Liability and Reduction of Error Act) and the severe curtailment of joint and several liability, tort reformers are clamoring for more. Physicians and hospitals continue to blame their circumstances on the lawyers pursing compensation for victims of medical negligence instead of on the real culprits, the insurance industry and the failure of the medical community to police itself. Jurors and plaintiff lawyers, however, make convenient targets.
With claims that physicians are leaving the state and hospitals are being forced to cut services, the public is legitimately concerned. But is it true? A recent study by the Pennsylvania Medical Professional Liability Catastrophe Loss Fund (CAT fund), the state agency which provided secondary insurance coverage for doctors and hospitals, revealed that the number of Pennsylvania doctors actually increased by 13.5% between 1990 and 2000, a period during which the population of the state grew just 3.4%.(i) John H. Reed, the head of the CAT fund, reported not only that there was no evidence of “any major departure of physicians from the state” but also that Pennsylvania had “more doctors in 2001 than we did five years ago or ten years ago.”(ii) In fact, during the height of the “crisis” the number of physicians in Pennsylvania actually increased. Data from The Pennsylvania State Medical Board, the agency charged with issuing medical licenses to physicians, reveals that the board issued 39,921 licenses in 2002 - a 7.5 percent increase over the number of licensed and practicing physicians in 2001.
The current crisis is no different than that faced in the 1980s, during which a study performed by the Pennsylvania Insurance Commissioner and the Pennsylvania House of Representatives concluded the crisis was not caused by the legal system but rather by the insurance cycle and mismanaged underwriting by the insurance industry.(iii) The current crisis is not a result of jurors and plaintiff lawyers. Rather, it is a result of insurance mismanagement. Throughout the 1990s, the insurers made up for underpriced premiums through investment income.(iv) One insurance expert recently explained:
“What is happening to the market for medical malpractice insurance...is a direct result of trends and event present since the mid to late 1990s. Throughout the 1990s and reaching a peak around 1997 and 1998, insurers were driven more by the amount of the premium they could book rather than the adequacy of premiums to pay losses. In large part this emphasis on market share was driven by a desire to accumulate large amounts of capital with which to turn into investment income.”(v)
Donald J. Zuk, a chief executive of a leading malpractice insurer, said: “I don’t like to hear insurance company executives say it(s the tort system – it’s self-inflicted. A decade of short-sighted price slashing led to industry losses.”(vi) With the investment markets on a consistent downward trend, the insurance industry finds it more convenient to blame lawyers and unreasonable jurors than to admit its own pricing errors.
Tort reform will not reduce insurance premiums. Tort law limits do not lower insurance rates; states with little or no tort law restrictions have experienced the same increases in insurance rates as those states which have enacted restrictions on victim’s rights.(vii) Even major insurance industry trade groups have admitted that lawmakers who enact tort reform should not expect insurance rates to drop.(viii)
In California, a state touted by tort reformers because of its $250,000.00 cap on liability for non-economic damages, is losing physicians, not because of irrational jurors or plaintiff lawyers, but because “of low reimbursements” from health insurers.(ix) The problem, again, is the insurance companies.
To make matters worse, physicians have failed to hold themselves accountable. While Pennsylvania has 5.3% of the doctors in the United States, Pennsylvania doctors make up 18.5% of the doctors nationwide with five or more malpractice payments. Even more astonishing is the fact that one Pennsylvania doctor responsible for 24 acts of malpractice between 1993 and 2001 (one was for operating on the wrong side of the body; another for leaving a foreign object in a patient) has never been disciplined by the governmental licensing agency or the medical society. Moreover, of the 512 Pennsylvania doctors who have made payments in malpractice suits five or more times, only 5% have been disciplined.(x) Pennsylvania doctors’ failure to hold their colleagues accountable has allowed poor medical care to flourish. Pennsylvania doctors have no one but themselves and insurance mismanagement to blame for the current rise in premiums. And now, doctors and insurance groups seek to place the burden of their past failures on the victims of medical negligence.
Limiting patients’ rights is not the right way to ensure patient safety or to provide relief for escalating insurance premiums. Medical negligence is a real problem which affects real people. The National Academy of Sciences Learned that 98,000 people are killed each year by medical errors in hospitals – far more than those who die from car accidents (43,458), breast cancer (42,297) or AIDS (16,516).(xi) And that study did not include victims of negligence outside the hospital setting. Even so, only one out of eight patients victimized by medical malpractice ever file a claim.xii And there has been no change in the volume of medical malpractice claims in the last five years.(xiii)
The current insurance “crisis” is not a result of the legal system. It is a short-term problem caused by the cyclical nature of the insurance industry and the continued failure of physicians to police themselves. The more significant “crisis” faced by Pennsylvanians is the effort to steal people’s right to have a jury decide the value of a claim. Limiting the ability of a victim of medical negligence to collect will only decrease deterrence and reduce the quality of care. Despite the fact that a criminal jury is competent to decide whether someone will live or die, those clamoring for tort reform claim a civil jury is unable to reasonably decide the value of the loss suffered by an innocent victim of a doctor’s negligence. This inconsistency makes no sense.
________________
_____
