Findings of AMSA's Medical Malpractice Primer

Reckless Financial Planning & Cash Flow Strategies

• As new insurance companies entered the market, they attracted new customers by undercutting the large insurers at unsustainable rates.
• By 2001, companies were losing money on the market; St. Paul's reported a $980 million loss and announced they would drop its malpractice coverage line
• After the St. Paul Companies left the business in 2001, 90 Las Vegas obstetricians stopped accepting new patients; those that remained saw rate increases of 100% to 400%

Ambiguous Evidence

• The median award in 2000 was $1,000,000 according to JVR
• The median award in 2001 was $135,941 according to the DHHS
• The average award in 2000 was $42,607 according to the CFA

Frivolous Law Suits

• The largest award in 2001 was $131,700,000, the largest in six years
• Malpractice suits included 7 of the top 20 awards in 2001-2 at a total cost of $3 billion.
• But the number of new malpractice claims actually declined 4% from 1995 to 2000
• Only 29.4% of cases from 1985 to 1999 were settled in favor of the plaintiff
• Only 6.7% of cases received verdicts in court
• Only 19.1% of court cases ruled in favor of the plaintiff

Error Reduction

• Between 44,000 and 98,000 people die annually from preventable medical errors
• Monetary loss from medical errors is estimated at $17 to $29 billion per year
• 5.1% of physicians account for 54.2% of the malpractice payouts.
• Of doctors with two or more malpractice payouts since 1990, only 7.6% have been disciplined; of those with five or more, only 13% have been disciplined.

The Art of Defensive Medicine

• 76% of physicians are concerned that malpractice hurts their ability to give quality care
• 79% claimed that they had ordered more tests than necessary to avoid litigation
• 41% of physicians claimed that they had prescribed unnecessary medications

Caps vs. No Caps

• States with caps of $350,000 or less had premium increases of only 12%, while states without caps had increases on average of 44%
• Reforms in California have lead to a 167% increase since 1975, compared to 505% nationally, but arguments remain over which reforms had greater impact

The Solution

• Broad reform targeting the litigation, insurance, and health care systems
• Nationwide insurance industry reforms similar to California's Proposition 103
• Expert committees could address and discount frivolous lawsuits
• Caps for exceptionally large jury awards such as those exceeding $10 million.
• Sanctioning repeat offender physicians
• Promotion of new programs to reduce medical errors