Letter to Editor
Tort reform continues to be a hot topic and is always a buzz phrase of big business and the insurance industry. The goal of tort reformists is to place limitations on the rights of individuals injured by products or medical errors to seek compensation for their losses in a court of law. The recent medical malpractice insurance crisis has resulted in the latest attack on our civil justice system.
The myth is that limitations on damages recoverable by individuals injured by medical errors will result in a decrease in medical malpractice insurance premiums; but, even the American Insurance Association has said lawmakers who enact tort reform should not expect insurance rates to drop.
The problems lie in our health care system and not our legal system. There are at least two reasons why insurance rates will not drop in the wake of medical malpractice law reform. First, in 1999 the Institute of Medicine found that between 44,000 and 98,000 Americans die in hospitals each year due to preventable medical errors. These errors cost society $17 billion to $29 billion per year in health care costs, lost income, lost household production and other costs. A Harvard Medical Practice study found, however, that only one lawsuit is filed for every 7.6 hospital injuries. Information from the federal government's National Practitioner Data Bank shows that roughly 10% of all doctors have paid two or more malpractice awards to patients and that these doctors account for approximately half of all payments. Yet, these doctors often continue to practice without suspensions or other limitations.
A review of the types of errors routinely committed is startling. Medication errors are among the most common preventable mistakes. Experts have estimated that more than 1 million serious drug errors occur annually in hospitals.
Surgery performed on the wrong part of the body, to the wrong patient or performing the wrong procedure are all completely preventable. Yet, during 2001 in the State of Florida alone there were 54 surgeries on the wrong body part, 16 wrong surgeries preformed and 9 wrong patient surgeries.
According to the Centers for Disease Control, an estimated 2 million infections and 90,000 deaths are caused annually by infections patients pick up in hospitals. These numbers could be cut in half simply by proper hand washing.
Other problems resulting in medical errors include nursing shortages and overworked physicians.
In light of these well-documented facts, is it even necessary to debate whether health care problems should be "fixed" with tort reform?
The second reason why tort reform will not decrease medical malpractice insurance premiums is purely economic. For much of the 1990s, doctors benefited from artificially lower premiums. Insurance companies lowered their rates to attract premium-paying customers to increase cash flow when stock market investments were booming; but as the insurance industry experienced poor investment returns and heavy losses after September 11, 2001 and the accounting scandals the industry drastically increased premiums to cover its losses. Please note that individual investors have little or no means to recover their losses after the stock market collapse following the terrorist attacks on our Nation and the accounting scandal revelations.
According to the International Risk Management Institute, "What is happening to the market for medical malpractice insurance in 2001 is a direct result of trends and events present since the mid-to-late 1990s. Throughout the 1990s, and reaching a peak around 1997 and 1998, insurers were on a quest for market share, that is, they were driven more by the amount of premiums 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." The IRMI also noted: "Clearly a business cannot continue operating in that fashion indefinitely."
An Americans for Insurance Reform report prepared by Robert Hunter, one of the country's most knowledgeable insurance actuaries, has two major findings. First, over the last 30 years the amount medical malpractice insurance companies have paid in jury awards, settlements and defense costs directly tracks the rate of medical inflation. Not only has there been no explosion in medical malpractice payouts at any time during the last 30 years, but payments in inflation adjusted dollars have been extremely stable since the mid-1980s.
Second, the premiums charged by malpractice insurance companies do not track medical malpractice payouts. Instead, premiums rise and fall in concert with the state of the economy. The AIR demonstrates that since 1975, malpractice premiums have increased or decreased in direct relationship with the strength or weakness of the economy. When the economy is booming and investment returns are high, companies maintain premiums at modest levels, however, when the economy falters and interest rates fall, companies increase premiums in response.
The answers to the medical malpractice insurance "crisis" are simple. First, the staggering number of medical errors causing deaths and injuries need to be addressed. Second, we need to put public pressure on medical malpractice insurance carriers to be truthful with the general public and our elected officials when discussing their reasons for increasing premiums. Enacting federal medical malpractice laws restricting the rights of individuals injured by medical errors and preempting current state laws is not the answer.
Timothy J. Godwin