In June, 2003, Weiss Ratings, Inc. published a study demonstrating that caps on non-economic damages in medical malpractice cases have failed to prevent sharp increases in medical malpractice insurance premiums for physicians.

Weiss Ratings is the nation’s leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks. Weiss issues safety ratings on more than 15,000 financial institutions, including HMO’s, life and health insurers, Blue Cross Blue Shield plans, property and casualty insurers, banks and brokers. (www.weissratings.com)

The comprehensive study performed by Weiss reviewed the impact that tort reform has had on medical malpractice premiums paid by doctors in three high risk specialties: internal medicine, general surgery, and OBGYN practice.

The Weiss Study demonstrated the following trends between 1991 and 2002:
Despite caps on damages, physicians’ med mal premiums rapidly increased.
The insurance companies enjoyed slowed increases in payout levels.

In 32 states without caps on damages, medical malpractice premiums actually rose more slowly than in the 19 states that had implemented caps during the 12 year period. In those 19 cap states premiums jumped 48.2% (from $20, 414 in 1991 to $30,246 in 2002). In the 32 non cap states, premiums only rose by 35.9% ($22,118 in 1991 to $30,056).

Martin D. Weiss, chairman of Weiss Ratings concludes “The escalating medical malpractice crisis will not be resolved until the industry and regulators address the other, apparently more powerful factors driving premiums higher.” The Weiss study identified six other factors driving the sharp increases in medical malpractice premiums:
Medical Inflation Rate:Medical costs have risen 75% since 1991.

The insurance business cycle: The insurance industry suffered a 12 year “soft” period through 1999, during which marketing goals superceded prudent underwriting practices. Moreover, decision makers relied too heavily on high investment income to make up for losing operations. To catch up, insurers have tightened underwriting standards and raised premiums.

Financial Safety- 34.4% of the nation’s med mal insurers are vulnerable to financial difficulties, compared to 23.9% of the property and casualty as a whole. To restore this financial health med mal insurers will remain under pressure to increase rates.

The need to shore up reserves: Since 1997, med mal insurers have consistently under-reserved in the amount of $4.6 billion. The only way to shore up reserves is to increase premiums.

Decline in investment income: Investment income declined by 23 percent in 2001 and another 2.5% in 2002. This is particularly critical for med mal since the duration of claims payouts span several years.

Supply and demand for coverage: the number of med mal carriers increased through 1997 to 274, but fell to 247 in 2002.

Weiss recommends that legislators should put all proposals for non-economic damage caps on hold until convincing evidence can be produced to demonstrated the true benefit to doctors in the form of reduced med mal premiums. He also states that insurance companies should not be allowed to let marketing divert or pervert prudent actuarial analysis and planning. Finally, he recommends that the medical profession must assume responsibility for policing itself.

In its June 30-July 7 issue, U.S. News and World Report discusses physician and insurers’ claims that malpractice awards are driving up the cost of physician malpractice premiums. According to this prestigious business magazine, “their diagnosis may be wrong.”

The article, written by author Christopher Schmitt, reports that there is “no explosion of cases that might drive up legal costs. The number filed each year has remained fairly steady during the past decade.” Moreover, the article correctly notes that two thirds of the cases that are filed, are dropped before ever making it to a jury. Of those that are tried, only a small fraction are in favor of the patient.

0.9 percent of 5,500 cases surveyed in the year 2002 were decided in favor of the patient or plaintiff. The overwhelming majority were decided in favor of the health care provider. According to the Physicians Insurers Association of America, the trade group for malpractice insurers which accounts for about 60% of the market, the 0.9 percent is down by half since the year 2000. Within that 0.9%, the article reports that the number of payments that doctors’ insurers make following jury verdicts has held steady in recent years, at around 400 annually.

The article also reports that doctors and insurers also complain about the size of medical malpractice awards. However, U.S. News found that in 2002, the median jury award was approximately $295,000, far below the $1million number that the American Medical Association and others often cite.

U.S. News also reports that in the 19 states that have medical malpractice caps, the premiums actually grew faster than in the nearly three dozen states without caps. Although it is not clear what is driving the costs of insurance higher, U.S. News reports that chief among the forces driving those costs is the usual business cycle of insurance. “Early in the cycle, competition or a desire to expand encourages low premiums. Later, losses clash with cheap rates, forcing premiums up. In addition, the number of malpractice insurers has declined, so there is less competition to keep rates low.”

Standard & Poors, a financial services industry research firm says malpractice insurers’ loss ratio has been improving since 1998, and the industry should soon return to profitability and strengthening reserves. According to U.S. News, J. Robert Hunter, insurance director of the Consumer Federation of America has explained: “Doctors and insurance companies are all saying it’s the dastardly lawyers, [but] nobody who really studies it seriously thinks it’s a bunch of million-dollar verdicts exploding that’s causing this.”

U.S. News points out that 17 years ago, during an earlier malpractice crisis, florida legislators enacted rules like those being pushed today.One malpractice insurer, St. Paul Fire and Marine Insurance Company, told regulators that the changes would mean no savings in payouts and hence no rollback of premiums.

U.S. News quotes J. Robert Hunter “Caps don’t work to cut costs, and if they do, the money just goes to insurance company profits.”

In its 2002 comprehensive report titled: “Medical Malpractice: Verdicts, Settlements and Statistical Analysis, Jury Verdict Research details nationwide statistics regarding medical malpractice cases.

Jury Verdict Research (JVR), maintains a nationwide database of verdicts from plaintiff and defense attorneys. JVR is supplied with data from every state in the nation. JVR was founded in 1961.

JVR reports that between 1994 and 2000, the most frequently claimed injury in a medical malpractice case was death (23%), followed by brain damage (9%), genital injuries (7%), leg injuries (5%), Cancer, spinal nerve and eye injuries (each at 4%), paralysis, amputations, intestinal tract and foot injuries (each at 3%). All other injuries accounted for 3%.

JVR also reported on the probability of a plaintiff verdict for medical malpractice with regard to specific type of theories alleged. For instance, the probability of a successful plaintiff case involving an alleged diagnosis error was 37% in 2000, down from a high of 39% in 1994. Similarly, the probability of a plaintiff verdict in a negligent surgery case was reported as 48% in 2000, up from the 1999 figure of 32%. In childbirth cases, the probability of a plaintiff verdict was 38%, down from a high of 46% in 1995 and 44% and 43% respectively for the years 1998 and 1999. The lowest probability of success were claims involving an allegation of lack of informed consent. In these cases, JVR reported that plaintiffs prevailed only 26% of the time.

Another reported statistic by JVR was the probability of a plaintiff’s verdict broken down by defendant type. For instance, between 1994 and 2000, hospital malpractice claims were won by plaintiffs 50% of the time as compared to only a 30% success rate for physician malpractice claims. When the case involved claims against both a hospital and a physician, plaintiffs’ probability of success was 35%.

In terms of dollars recovered through settlement of medical malpractice claims, JVR reported a settlement median for physician malpractice was $375,000, and for hospital malpractice $300,000, between 1994 and 2000

In 1990, The Harvard Medical Practice Study was published. This report, titled, “Patients, Doctors, and Lawyers: Medical Injury, Malpractice Litigation and Patient Compensation in New York,” was conducted to estimate medical malpractice and the injuries caused by medical malpractice in New York.The study utilized physician reviewers of records and consultants who were New York specialists.

According to the study, “adverse events” occurred in 3.7% of the total hospitalizations. 27.6% of those adverse events were due to negligence. 13.6% of the adverse events led to death. Almost half of the adverse events were associated with surgical procedures.The Harvard study also found that 75% of the negligence was a result of errors in diagnosing the patients while 18% resulted from negligence with drug complications.

As part of the Harvard study, records of the sample were matched with statewide data on medical malpractice claims in an attempt to discover the number of documented malpractice claims relative to the documented acts of negligence. Of the 280 persons who had documented adverse events caused by medical negligence only 8 people filed medical malpractice claims. This represents an astonishing 2% of the documented medical malpractice claims.

The Harvard study concluded: “Med mal litigation infrequently compensates patients injured by med negligence and rarely identifies and holds providers accountable for substandard care. Med Mal claims are rarely made after patients are injured negligently.”

The study also estimated that only 6.5 of 1000 physicians will be sued in a given year. However, physicians perceive that number to be three times higher. When asked in a randomly mailed survey about the number of new cases each year, physicians estimated that 19.5 out of every 1000 physicians would be sued in a given year. This data suggests that although physicians perception of the risk of being sued might serve as a potential deterrent to negligent conduct, that deterrence is based on misperception of risk.

In 1999, the Institute of Medicine (IOM) issued a report titled “To Err is Human,” in which it reported that as many as 98,000 Americans die each year and another 1,000,000 are injured as a result of preventable medical errors.

On July 27, 2004, HealthGrades, Inc., the leading independent healthcare quality company which provides ratings information and advisory services to healthcare providers and insurance companies, issued its own study in which it reported that on average, 195,000 people die each year from potentially preventable, in-hospital medical errors. This data was compiled for each of the years 2000, 2001, and 2002. The report studied 37 million Medicare patient records during this period.

HealthGrades vice president of medical affairs, Dr. Samantha Collier, stated: “The HealthGrades study shows that the IOM report may have underestimated the number of deaths due to medical errors, and, moreover, that there is little evidence that patient safety has improved in the last five years.”

The study reported that approximately 1.14 million total patient safety incidents occurred among the 37 million hospitalizations in the Medicare population from 2000-2002. The HealthGrades study also found that one in four Medicare patients who were hospitalized from 2000-2002 who experienced a patient-safety incident died.

Failure to diagnose and timely treat patients and unexpected deaths in low risk hospitalizations accounted for almost 75% of all mortality attributable to patient safety incidents. Decubitus Ulcers, Post-operative Pulmonary Embolism or Deep Vein Thrombosis and Post Operative Respiratory failure accounted for the other 25% of the deaths related to patient safety incidents.
Failure to diagnose and timely treat patients occurred at a rate of 155 patient safety incidents per 1,000 at risk hospitalizations. The next highest incidence of occurrences was in the category for Decubitus Ulcers with 30 patient safety incidents for every 1,000 at risk hospitalizations.

To put these staggering numbers into perspective the HealthGrades report notes that the provable reported deaths from in-hospital medical errors equates to three fully loaded jumbo jets crashing every other day for the last five years. It further states “The United States loses more American lives to patient safety incidents every six months that it did in the entire Vietnam War.”

According to a new study published in the New England Journal of Medicine, patients receive the appropriate recommended care from health care providers only 54.9 percent of the time.

The study utilized telephone surveys in 12 metropolitan areas to identify willing participants who would provide a health history and listing of their health care providers. Those who agreed signed written consent forms so that their medical records could be reviewed.

The initial sample included 20,028 adults. Medical records were then reviewed for acute and chronic conditions that represented the leading causes of death and illness. Physicians then reviewed national guidelines and medical literature and applied that to the review of each patient’s chart.

The average age of the patients in the survey was 44.7 years. Women had higher rates of visits and whites had higher visit rates than blacks. In terms of adherence to quality indicators according to condition, coronary artery disease recommended care was received only 68% of the time. Moreover, only 45% of persons presenting with a myocardial infarction (heart attack), received beta-blockers, which reduce the risk of death by 13% during the first week of treatment and 23 % over the long term.

Cerebrovascular disease patients received recommended care only 59.1% of the time and colon cancer patients received the recommended care only 53.9% of the time. Among elderly patients, only 64% had received or been offered a pneumonia vaccine when nearly 10,000 preventable deaths from pneumonia annually occur.

The study notes that only 24% of participants in the study with diabetes received three or more blood sugar tests over a two year period. This routine monitoring is essential to the assessment of the treatment and identification of complications of this disease at an early stage.

Persons with hypertension (high blood pressure) received the recommended care only 64.7% of the time. Poor blood pressure control contributes to more than 68,000 preventable deaths annually.

The authors of the study say their report is the largest and most comprehensive examination of the quality of health care in the United States. The lead author, Elizabeth McGlynn says that the study demonstrates that Americans cannot take for granted that they are getting good care.

The report’s conclusion is that “These deficits, which pose serious threats to the health of the American public, persist despite initiatives by both the federal government and private health care delivery systems to improve care.” The authors suggest that a key component of the potential solution will be to make information on performance available at all levels. “Making such information available will require a major overhaul of our current health information systems, with a focus on automating the entry and retrieval of key data for clinical decision making and for the measurement and reporting of quality

On January 8, 2004, the Congressional Budget Office, the CBO, issued a report relating to the limitation of tort liability for medical malpractice. In this report, the CBO establishes that tort reform will do little to decrease overall healthcare costs.

The CBO report notes that cyclical patterns in the insurance market and lower investment income have played major roles in the recent rise in malpractice insurance premiums. “Insurance companies’ investment yields have been lower for the past few years, putting pressure on premiums to make up the difference. According to the General Accounting Office (GAO), annual investment returns for the nation’s 15 largest malpractice insurers dropped by an average of 1.6 percentage points from 2000-2002.”

The report goes on to note that in the late 1980′s premiums rose sharply because insurers’ expectations of future claims proved to be too high. Moreover, in some states malpractice premiums have been sharply affected when major insurance companies have decided to withdraw from the market. In such instances, a reduction in the supply of malpractice insurance drives up premiums in the short run.

The CBO report also suggests that the available evidents demonstrates that very few medical injuries ever become the subject of tort claims. It cites a 1984 study out of New York that showed only 1.5% of negligence led to a claim.
The CBO also reports that it found no “statistically significant difference in per capita health care spending between states with and without limits on malpractice torts.” In fact, the CBO found that malpractice costs only amount to less than 2% of overall health care spending.

The CBO report concludes: “the evidence available to date does not make a strong case that restricting malpractice liability would have a significant effect, either positive or negative, on economic efficiency. Thus, choices about specific proposals may hinge more on their implications for equity–in particular, on their effects on health care providers, patients injured through malpractice, and users of the healthcare system in general”

In 1999, Congress requested that the Institute of Medicine (IOM), conduct a study to assess disparities in the kinds and quality of healthcare received by racial and ethnic minorities and non minorities.

The stated purpose of this study was to assess the extent of racial and ethnic differences in health care that are not otherwise attributable to ability to pay or insurance coverage and to evaluate potential sources of racial and ethnic disparities including the role of bias, discrimination and stereotyping. The IOM reported its findings in the 2002 report titled “Unequal Treatment: Confronting Racial and Ethnic Disparities in Healthcare.”

According to the report, some of the strongest and most consistent evidence of racial and ethnic disparities in care is found in studies of cardiovascular care. The study reports that African-American men and women were treated significantly less than whites with coronary artery bypass graft surgery. African-American patients were also one third less likely to receive cardiovascular services as whites. Moreover, white patients were 50% more likely to receive thrombolytics than black patients. Black patients also waited longer than white patients for their first EKG.

In a study of racial disparities in cancer care, the charts of 7,781 women treated for breast cancer in 107 hospitals were reviewed. This study showed that African-American women were less likely than white women to receive a prognostic test, were less likely to receive radiation therapy in combination with radical/modified mastectomy, and were less likely to receive rehabilitation support services following mastectomy.

In another larger study of 20,000 colorectal cancer patients, it was found that African-Americans were 41% less likely than whites to receive a major procedure fro treatment of colorectal cancer.

In the area of kidney transplants, several studies were consistent in finding that African-American patients are less likely to be judged as appropriate for transplantation, are less likely to appear on transplantation waiting lists, and are less likely to undergo transplantation procedures, even after patients’ insurance status and other factors are considered.

African-Americans with HIV infection are less likely to receive antiretroviral therapy, less likely to receive prophylaxis for pneumocystic pneumonia, and are less likely to receive protease inhibitors than non-minorities with HIV.

Many other areas of medicine revealed similar disparities. In a study of racial differences in total knee arthroplasty among older adult patients, a study concluded that African-Americans were less likely than whites to receive total knee arthroplasty(1.5-2.0 for women and 3.0 to 5.1 for men). Similar disparities were found in the areas of cerebrovascular disease, prenatal and child delivery and lumbar spine treatment.

The study concludes that the healthcare workforce and its ability to deliver quality care for racial and ethnic minorities can be improved substantially by increasing the proportion of underrepresented racial and ethnic minorities among health professionals. In addition, both patients and healthcare providers could benefit from education. Cross cultural curricula should be integrated early into the training of future healthcare providers

According to Jury Verdict Research, in the year 2000, health care providers won approximately 62% of the cases that were tried by a jury. That means that the patients only prevailed in approximately 38% of all the jury trial cases in this country.

In cases involving the allegation of misdiagnosis in a medical malpractice case, patients only won 37% of the jury trials against the defendant health care providers. These lopsided statistics demonstrate that the jury system in this country is not using sympathy to give run away verdicts to patients of medical malpractice.

Jury Verdict Research bases these statistics from its nationwide database of 193,500 personal-injury verdicts and settlements.

The 2000 statistics are slightly higher than in the previous years, but the six year average demonstrates that patients only won 34% of the time and health care providers won 66% of the jury trials.

It is hard to argue that jury awards to plaintiffs in medical malpractice cases is a valid basis to limit a patient’s recovery in these cases. From 1995 to 1996 the percentage of jury trials won by plaintiffs actually went down by 6%. That trend continued between 1997 to 1998 when verdicts decreased from 35% to 33% of jury cases won by the plaintiff.

Critics of these statistics argue that the median award increased by approximately $250,000 between 1999 and 2000. However, what is not mentioned is the fact that the overall costs of pursuing these cases and the low chance of prevailing at a jury trial has had a chilling effect on filing these cases. Thus, only the most clear cut high damage cases are worth pursing. Those cases are worth more and thus drive the statistical average award higher.

In other words, without more zero and low dollar verdicts driving the average award lower, the median award will appear higher. This simply means that all of the past tort reform has worked to eliminate the frivolous cases from being pursued in favor of the really obvious cases of malpractice that have the most devastating consequences for the patients.