It is common knowledge that health care in the United States is extremely expensive. Consumers know of the lofty expense of maintaining personal health insurance, but many laypersons are unaware of the soaring premiums physicians must pay for medical malpractice insurance.
Insurance companies offering medical malpractice coverage are being driven from the market by high jury awards. The price of medical malpractice insurance is becoming so high that the cost is beginning to affect the practice of medicine and threaten the availability of affordable health care. As a result of this emerging crisis, some states have enacted tort reform measures to implement limits on medical malpractice awards.
InjuryBoard has composed this article to help you make sense of tort reform and medical malpractice caps. This article will explain what tort reforms are, how they operate, and the effects of the medical malpractice caps on doctors, insurance companies, and consumers. By reading this article, you will gain a better understanding of tort reform and how it may affect your medical malpractice law suit.
What is Tort Reform and Why Does it Exist?
In response to the soaring physician insurance premiums, many state legislatures have enacted limits on non-economic damages. (Non-economic damages include intangible harms such as pain and suffering and punitive damages.) The legislators in these states believed that many juries awarded claimants far too much money for their medical malpractice claims. These excessive jury awards, they reasoned, drove up the price of insurance for physicians. The legislators inferred that they could combat the emerging medical malpractice insurance crisis by imposing caps on awards. Federal legislators have entertained this idea, proposing a $250,000 nationwide medical malpractice cap.
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What States Have Done about Tort Reform
As of 2006, most states had enacted some type of tort reform. In total, thirty-two states have established some type of medical malpractice award cap. The amounts and applications of these caps vary by state. Some of these damage caps are rigid, while others can be adjusted for inflation or severity of the damage.
For example, four states (Alaska, Florida, Ohio, and Massachusetts) have caps that can be waived or increased in severe cases. The caps in Oregon and Maine apply only to wrongful death cases. Four states have a $250,000 general award cap, four states have a total damages cap, eighteen states have non-economic damages caps between $250,000 and $500,000 , and four states have damages caps that exceed $500,000.
The Robert Wood Johnson Foundation, a private foundation whose aim is to improve healthcare for Americans, offers an in-depth report of medical malpractice information and a chart listing medical malpractice damage caps by state.
The Results of Tort Reform Legislation
While it is clear that legislative intent in enacting tort reform is valid, the effects of medical malpractice caps are mixed. Although the articulated goal of tort reform is to reduce the need for high insurance premiums, recent research has shown that in some cases, the “reforms” have produced the opposite effect.
Positive Aspects of Tort Reform
The goal of tort reform is to reduce jury awards for medical malpractice law suits. This reduction of excessive jury award would, in turn, allow medical malpractice insurance companies to reduce their excessive premiums. This logic is based on the theory that insurance companies would pay less money on doctors’ insurance claims because juries would award plaintiffs less money. Then, the lower insurance premiums would lead to a larger quantity of good doctors entering the health field, no longer fearing extreme insurance premiums.
To an extent, this logic may be true. According to a recent article in the New York Times, physicians are flooding into Texas because of the state’s recent approval of a constitutional amendment limiting medical malpractice awards. Further, physicians noticed that the state of Texas experienced an average 21.3% decrease in medical malpractice insurance premiums during the four years following the tort reform legislation.
According to the article, the number of medical license applications in Texas has increased 18% in the four years since the state legislature enacted the caps. Many doctors cite the friendly malpractice climate as the reason for their move to Texas. Those physicians agree that Texas laws make it easier for doctors to care for patients with complex illnesses without fear of a frivolous law suit.
CLICK HERE - to read the full New York Times article
CLICK HERE - to learn more about what the AMA says about Tort Reform
Negative Aspects of Tort Reform
Although it might appear to work well in some states, many consumers and experts agree that tort reforms create more harm than good. Consumers complain that medical malpractice caps prevent injured patients from getting their day in court. As described in InjuryBoard’s Medical Malpractice and the Legal Process article, most attorneys are unable to take on cases that are not financially viable. Although medical malpractice caps vary by state, with caps in place, claimants in many states can recover only $250,000 in a law suit. After the costs of the case are deducted from this award, many injured parties are left with almost nothing to compensate their injuries or pay their medical bills. As a result, many lawyers refuse to take these cases knowing that the injured party will have gone through the hardships of a trial only to receive little or nothing for that effort.
In effect, caps to medical damages often mean that injured patients are denied their day in court.
Another argument against tort “reforms” revolves around the reduced litigation caused by medical malpractice caps. Many people believe that allowing lawsuits actually provides motivation for healthcare professionals to work harder to protect their patients and therefore improves overall care. According to this logic, physicians fearing lawsuits will actually provide better patient care than those with none of the accountability that comes from litigation. Some experts suggest that fewer medical malpractice lawsuits may actually cause some physicians to become more complacent with their care of patients.
Other research indicates that although medical malpractice caps reduce the burden on insurers, they do not alleviate the growing problem of skyrocketing insurance premiums. One report reveals that limitations on medical malpractice awards produced payout averages 15.7% lower than those of states without caps between 1991 and 2002. This statistic is true despite the fact that many of the states did not institute the limitations until near the end of the reporting period. Meanwhile, the median annual premium in states with caps increased an alarming 48.2%. Surprisingly, the median annual premium in states without caps increased more slowly: by 35.9%. In other words, the median medical malpractice insurance premiums were actually higher in states with caps. This is contrary to the goal of the limitations on medical malpractice awards.
Physicians, especially those in high-risk specialties, often receive yearly insurance renewal notifications declaring premium 100% or even 200% increases over the preceding year. In other cases, insurance companies simply drop doctors from coverage, leaving the physician to scramble to find alternative medical malpractice coverage, or worse – practice without any coverage at all.
Read the first article: How to Stay Safe and Avoid Medical Malpractice