Medical Malpractice Insurance Premiums Research Articles

Do noneconomic damage caps reduce medical malpractice insurance premiums? Evidence from North Carolina

AbstractThe impact of medical malpractice reforms, especially caps on noneconomic damages, is of special interest to policymakers and physicians. Adopting such caps has become rare during the past decade, and most existing analyses study state reforms occurring during periods of dramatic rises in malpractice insurance rates. This study contributes to the literature by examining how caps implemented in noncrisis periods affect malpractice premiums. It examines the effect of the 2011 North Carolina's adoption of a noneconomic damages cap by comparing county‐level malpractice premiums for three specialties between North Carolina and states without caps both before and after the reform. It finds little evidence of pre‐existing trends, followed by a lagged but significant reduction in premiums for each of the studied specialties in North Carolina. The timing and size of the effects are comparable to findings from the literature studying malpractice reforms passed during times of more dramatic liability trends.

Association Between State Medical Malpractice Environment and Postoperative Outcomes in the United States

The US medical malpractice system assumes that the threat of liability should deter negligence, but it is unclear whether malpractice environment affects health care quality. We sought to explore the association between state malpractice environment and postoperative complication rates. This observational study included Medicare fee-for-service beneficiaries undergoing one of the following operations in 2010: colorectal, lung, esophageal, or pancreatic resection, total knee arthroplasty, craniotomy, gastric bypass, abdominal aortic aneurysm repair, coronary artery bypass grafting, or cystectomy. The state-specific malpractice environment was measured by 2010 medical malpractice insurance premiums, state average award size, paid malpractice claims/100 physicians, and a composite malpractice measure. Outcomes of interest included 30-day readmission, mortality, and postoperative complications (eg sepsis, myocardial infarction [MI], pneumonia). Using Medicare administrative claims data, associations between malpractice environment and postoperative outcomes were estimated using hierarchical logistic regression models with hospital random-intercepts. Measures of malpractice environment did not have significant, consistent associations with postoperative outcomes. No individual tort reform law was consistently associated with improved postoperative outcomes. Higher-risk state malpractice environment, based on the composite measure, was associated with higher likelihood of sepsis (odds ratio [OR] 1.22; 95% CI 1.07 to 1.39), MI (OR 1.14; 95% CI 1.06 to 1.23), pneumonia (OR 1.09; 95% CI 1.03 to 1.16), acute renal failure (OR 1.15; 95% CI 1.08 to 1.22), deep vein thrombosis/pulmonary embolism (OR 1.22; 95% CI 1.13 to 1.32), and gastrointestinal bleed (OR 1.18; 95% CI 1.08 to 1.30). Higher risk malpractice environments were not consistently associated with a lower likelihood of surgical postoperative complications, bringing into question the ability of malpractice lawsuits to promote health care quality.

Tipping the scales: educating surgeons about medical malpractice

BackgroundIn Pennsylvania, medical malpractice premiums are a major cost to surgeons. Yet surgeons often have little if any education in the basics of tort litigation or how to manage their risk. This work describes one approach for educating academic faculty surgeons on current concepts of medical malpractice and provide some guidance on how to “tip the scales of justice”; or minimize the risks of being named in a malpractice claim. Materials and MethodsThe course had five parts: the basics of medical malpractice, the cost of malpractice insurance, current departmental claims experience, strategies for decreasing the risk of being named in a claim, and an overview of malpractice reforms. An anonymous seven question survey was cast in a five-point Likert scale format. A weighted average of 4.5 or above was considered satisfactory. Two free text questions asked about positive and negative aspects of the course. ResultsEighty of 95 (84%) faculty attended either in person or by reviewing a web-based video. Quantitatively, five of seven questions had a weighted average of more than 4.5 (n = 48, response rate = 60%). Qualitatively, the course was reviewed very favorably. ConclusionsThe high percentage of participation and overall survey results suggest that the course was successful. This course was one facet of an approach to decrease the risk of malpractice claims. Unique aspects of this course include an emphasis on state law, department-specific data, and strategies to minimize risk of future claims. Given the state-specific nature of malpractice claims and litigation, individual departments must particularize similar presentations.

Why the Medical Malpractice Crisis Persists Even When Malpractice Insurance Premiums Fall

Concerns that medical malpractice premiums continue to grow unabated has led to numerous proposals to change liability rules and reform tort laws. Not only would proposed legislation make lawsuits more difficult for plaintiffs, but the bills do not address the real source of the problems they intend to solve. Premiums are not rising as claimed and even if they were, other factors are contributing to the plight of physicians. But in fact, the claim that malpractice premiums are an unbearable burden for most physicians is myth, not fact.The first section of this article will examine how this myth began and the proposed legislative remedies it spawned. It will show that junk data has been used to support legislation and it will then introduce more reliable data bearing on these issues. Next, this article will describe other factors that are rarely mentioned but that have important effects on the cost of medical practice and physician income. If doctors are truly closing up shop, it’s not because of malpractice insurance premiums. This article will then examine one AMA-declared “crisis state” to see if there are indeed crises in some selected states, even if there is no crisis nationally. As will be explained, there are not. The study of individual states reveals that there are premium cycles, that recent premium increases reflect these cycles, and that rates will probably fall as they have in the past following an increase. Finally, this article will offer insight into why physicians continue to perceive a crisis despite the data presented and what the future may hold for reform.

Lochnerian Values, Mandatory Compensatory Damage Caps, and Lessons from the Sixth Amendment Jury Trial Clause

The Court’s recent punitive damage award jurisprudence finds its origin in Lochner v. New York’s guarantee of substantive due process protection for economic rights. This jurisprudence (1) establishes a reasonable review for punitive damage awards and (2) sets the disparity between punitive awards and compensatory awards for economic and noneconomic damage as the one of the starting points for determining whether the punitive award is reasonable. In so doing, the Court explicitly presumes the plaintiff has received full compensation for actual and concrete losses. This presumption is false as it applies to States that have imposed caps against compensatory damage awards in personal injury cases. Most caps were initially intended to reign in “excessive” civil jury verdicts, which had allegedly caused “skyrocketing” medical malpractice insurance premiums and litigation costs. But no cap is triggered by a preliminary finding of excessiveness. Moreover, trial judges are stripped of authority to determine whether application of the cap is just or fair to the (often) severely injury plaintiff. Unlike most works on this subject, this Article investigates the impact of compensatory damage caps on the Court’s reasonable review of punitive damage awards. This Article discusses state laws that mandate fixed or capped damage awards in medical malpractice and other tort cases. This Article also discusses the State Supreme Court split on whether compensatory damages caps encroach upon state civil jury trial rights, which like their federal counterpart find their interpretative basis in the English common law. All States recognize the historic origin of the civil jury trial right. Yet even among States with identical civil jury trial clauses an analysis of State Supreme Court jurisprudence leads to a stalemate about the nature and scope of the right to a civil jury. State Supreme Courts also conflict on whether legislative authority exists to alter a jury’s determination of the value of an injury in common law cases. This Article offers a novel approach to compensatory damage caps by turning to the Sixth Amendment Criminal Jury Trial Clause, which has recently questioned whether legislative authority exists to remove the jury from the sentencing process. This jurisprudence offers three lessons about jury trial rights: first, modern procedures cannot significantly alter certain common law characteristics of the jury trial right; second, mandatory removal of the jury as the primary fact-finder was not authorized in common law cases; and third, a common law jury’s factual determinations were fully enforceable unless exceptional circumstances were presented. This Article concludes by applying these lessons to compensatory damage caps. This Article urges adoption of cap alternatives that encourage individual review upon necessity. Such alternatives should also advance the States’ dual interests to protect both civilly liable defendants from unreasonably high awards and severely injured plaintiffs from unreasonably low awards.

The effect of medical malpractice liability on rate of referrals received by specialist physicians

Using nationally representative data from the United States, this paper analyzed the effect of a state’s medical malpractice environment on referral visits received by specialist physicians. The analytic sample included 12,839 ambulatory visits to specialist care doctors in office-based settings in the United States during 2003–2007. Whether the patient was referred for the visit was examined for its association with the state’s malpractice environment, assessed by the frequency and severity of paid medical malpractice claims, medical malpractice insurance premiums and an indicator for whether the state had a cap on non-economic damages. After accounting for potential confounders such as economic or professional incentives within practices, the analysis showed that statutory caps on non-economic damages of $250,000 were significantly associated with lower likelihood of a specialist receiving referrals, suggesting a potential impact of a state’s medical malpractice environment on physicians’ referral behavior.

How Tort Reform Affects Insurance Markets

The impact of a statute that is currently in effect depends on expectations about its future constitutionality. We investigate the effect of tort reform by segmenting reforms into those that are eventually declared unconstitutional (temporary) and those that are unchallenged or upheld (permanent). We find permanent tort reforms lower medical malpractice insurance losses and premiums and increase insurer profitability. In contrast, the effects of temporary reforms are never statistically significant. Measures that combine temporary and permanent reforms, the norm in the literature, significantly misestimate the impact of tort reform. Our results suggest that examining the effect of a current law without accounting for its future treatment produces misleading results. (JEL K13, K4, H7, G22) The Author 2012. Published by Oxford University Press on behalf of Yale University. All rights reserved. For Permissions, please email: journals.permissions@oup.com, Oxford University Press.

Evolving Medicolegal Concepts: Editorial Comment

Evolving Medicolegal Concepts: Editorial Comment

Do Damages Caps Reduce Medical Malpractice Insurance Premiums?: A Meta-Analysis of the Empirical Literature

Do Damages Caps Reduce Medical Malpractice Insurance Premiums?: A Meta-Analysis of the Empirical Literature

Do Damages Caps Reduce Medical Malpractice Insurance Premiums?: A Meta-Analysis of the Empirical Literature

Do Damages Caps Reduce Medical Malpractice Insurance Premiums?: A Meta-Analysis of the Empirical Literature

Physician liability insurance reform

Summary Rapidly rising medical malpractice insurance costs are causing reduced access to health care services. Physicians and other health care professionals are limiting or discontinuing high-risk procedures and services to reduce their malpractice insurance cost and potential liability; patients are forced to travel greater distances to obtain these health care services. The cause of the rapid rise in medical malpractice premiums and the effects of the tort system upon these increases continue to be debated among stakeholders. Nevertheless, studies have demonstrated that the current tort system fails in its goals to compensate victims of medical negligence and as deterrence to the occurrence of medical errors. A broad-based approach that includes insurance reform, enhancements to the physician peer review system, a protected system of reporting medical errors, and federally funded studies to determine alternate methods of resolving medical malpractice claims are required to restructure the current medical liability system.

Malpractice Risk and Cost Are Significantly Reduced after Tort Reform

Rising medical malpractice premiums have reached a crisis point in many areas of the United States. In 2003 the Texas legislature passed a comprehensive package of tort reform laws that included a cap at $250,000 on noneconomic damages in most medical malpractice cases. We hypothesized that tort reform laws significantly reduce the risk of malpractice lawsuit in an academic medical center. We compared malpractice prevalence, incidence, and liability costs before and after comprehensive state tort reform measures were implemented. Two prospectively maintained institutional databases were used to calculate and characterize malpractice risk: a surgical operation database and a risk management and malpractice database. Risk groups were divided into pretort reform (1992 to 2004) and post-tort reform groups (2004 to the present). Operative procedures were included for elective, urgent, and emergency general surgery procedures. During the study period, 98,513 general surgical procedures were performed. A total of 28 lawsuits (25 pre-reform, 3 postreform) were filed, naming general surgery faculty or residents. The prevalence of lawsuits filed/100,000 procedures performed is as follows: before reform, 40 lawsuits/100,000 procedures, and after reform, 8 lawsuits/100,000 procedures (p < 0.01, relative risk 0.21 [95% CI 0.063 to 0.62]). Virtually all of the liability and defense cost was in the pretort reform period: $595,000/year versus $515/year in the postreform group (p < 0.01). Implementation of comprehensive tort reform in Texas was associated with a significant decrease in the prevalence and cost of surgical malpractice lawsuits at one academic medical center.

Direct Regulation of Medical Malpractice Premiums: The Least Dangerous Reform

Medical malpractice is a wrong that society tries to prevent, in part, through its tort system. Like all tort awards, medical malpractice verdicts serve two societal goals: deterrence and victim compensation. Unlike other torts, however, medical malpractice operates in the arena of health care and is therefore the subject of tremendous scrutiny. In response to a perception that medical malpractice lawsuits have an adverse effect on both health care access and health care cost, lawmakers across the country have set their attention on reforming the medical malpractice system. Common reforms change the tort litigation landscape by affecting the ability of plaintiffs to (1) initiate litigation (e.g., reducing the statute of limitations or requiring plaintiffs to obtain certification from experts that their claims have merit); or, (2) litigate the issues (e.g., changing expert testimony requirements); or, most commonly, (3) be compensated upon a verdict or settlement in their favor (e.g. capping damages, limiting joint and several liability, capping attorneys’ fees). Many of these reforms—most notably, damage caps—retard the traditional tort goals of victim compensation and deterrence and impose a substantial cost on the state. This note argues for an alternative reform: direct regulation of malpractice insurance companies and the premiums they charge.

Low Costs Of Defensive Medicine, Small Savings From Tort Reform

In this paper we present the costs of defensive medicine in thirty-five clinical specialties to determine whether malpractice liability reforms would greatly reduce health care costs. Defensive medicine includes tests and procedures ordered by physicians principally to reduce perceived threats of medical malpractice liability. The practice is commonly assumed to increase health care costs. The results of studies of the costs of defensive medicine have been inconsistent. We found that estimated savings resulting from a 10 percent decline in medical malpractice premiums would be less than 1 percent of total medical care costs in every specialty. These savings are lower than most previous estimates, and they suggest that the presumed impact of tort reform on health care costs may be overstated.

The Anti-Patient Psychology of Health Courts: Prescriptions from a Lawyer-Physician

Critics of the current medical malpractice tort system claim that adjudication of malpractice claims before generalist judges and lay juries contributes to rising costs of medical malpractice insurance premiums and medical care. They claim that properly deciding issues in this realm requires specialized knowledge of medicine and medical technology that juries, and even judges of general jurisdiction, do not possess. One lobbying group alleges there is a continuing medical malpractice litigation crisis in the United States, evidenced by increasing medical costs, deaths from needless medical errors, departure of physicians from the practice of medicine due to increasing medical malpractice insurance premiums, and random medical justice in medical malpractice cases. Whether there is a direct, causal correlation between the increasing cost of medical malpractice insurance premiums and medical malpractice litigation is debatable.

Dialogue With A Neurosurgeon: Toward A Dépeçage Approach To Achieve Tort Reform And Preserve Corrective Justice In Medical Malpractice Cases

Doctors are taking their frustrations about the costs of medical malpractice insurance premiums to the street; striking and even leaving certain states where premiums are higher have been staples of the news in the last year. Politicians are responding by shifting the blame to the “tort” system, which they characterize as dominated by “greedy” trial lawyers (with the implicit accusation that the lawyers are bringing unfounded claims against “good” doctors) and “runaway” juries (with the implicit assertion that juries render plaintiffs’ verdicts in unfounded cases and give away the insurer’s money with abandon through unjustifiably generous damages awards). The “bad actor” in the shared visions of many doctors and politicians is the civil legal system itself—and the “reforms” that are being touted (such as damages caps) are blunt instruments designed, it seems, to disable the ability of the legal system to adjudicate medical malpractice claims. To the extent that the civil legal system is a contributing factor to medical malpractice insurance premiums (an important topic beyond our ken here), the problem cannot be addressed in so sweeping a fashion. There are other key interests involved—principles of law, in the sense described by Ronald Dworkin, upon which the rules of medical malpractice litigation are based. Those principles of law, including the principle of corrective justice, will be sacrificed if such heavy handed measures are adopted. The real problem, however, can be viewed as a much more subtle one, requiring finer tools of analysis to diagnose and repair. The level of subtlety is deep—as deep as the elements of the traditional prima facie case of medical malpractice, and the standard of care in particular—and requires more sophisticated analytic constructs to understand, analyze, and ultimately reform. I hope to develop some of those analytic tools in this article.

Medical Malpractice Reform and Employer‐Sponsored Health Insurance Premiums

Tort reform may affect health insurance premiums both by reducing medical malpractice premiums and by reducing the extent of defensive medicine. The objective of this study is to estimate the effects of noneconomic damage caps on the premiums for employer-sponsored health insurance. Employer premium data and plan/establishment characteristics were obtained from the 1999 through 2004 Kaiser/HRET Employer Health Insurance Surveys. Damage caps were obtained and dated based on state annotated codes, statutes, and judicial decisions. Fixed effects regression models were run to estimate the effects of the size of inflation-adjusted damage caps on the weighted average single premiums. State tort reform laws were identified using Westlaw, LEXIS, and statutory compilations. Legislative repeal and amendment of statutes and court decisions resulting in the overturning or repealing state statutes were also identified using LEXIS. Using a variety of empirical specifications, there was no statistically significant evidence that noneconomic damage caps exerted any meaningful influence on the cost of employer-sponsored health insurance. The findings suggest that tort reforms have not translated into insurance savings.

Medical Malpractice: Trends in Litigation

We live in a litigious society, and the medical community has felt the impact of this reality. This impact is acute among medical service providers, who pay increasingly high medical malpractice premiums. Medical services consumers have also felt the impact, as they face increased medical care costs resulting from providers passing on their increasing costs. To address this medical malpractice “crisis,” we must strike a delicate balance between holding providers accountable for medical errors and maintaining a medical care system that makes medical services available and affordable for everyone. Many states are attempting to strike this balance through tort reforms, which take many forms, including a limit on the amount of money a patient may receive for “pain and suffering.” This article considers the current landscape of medical malpractice litigation and the role of tort reform in addressing the medical malpractice crisis.

Tort Law and Medical Malpractice Insurance Premiums

This paper estimated the effects of tort law and insurer investment returns on physician malpractice insurance premiums. Data were collected on tort law from 1991 through 2004, and multivariate regression models, including fixed effects for state and year, were used to estimate the effect of changes in tort law on medical malpractice premiums. The premium consequences of national policy changes were simulated. The analysis found that the introduction of a new damage cap lowered malpractice premiums for internal medicine, general surgery, and obstetrics/gynecology by 17.3%, 20.7%, and 25.5%, respectively. Lowering damage caps by dollar 100,000 reduced premiums by 4%. Statutes of repose also resulted in lower premiums. No other tort law changes had the effect of lowering premiums. Simulation results indicate that a national cap of dollar 250,000 on awards for noneconomic damages in all states would imply premium savings of dollar 16.9 billion. Extending a dollar 250,000 cap to all states that do not currently have them would save dollar 1.4 billion annually, or about 8% of the total. A negative effect on malpractice premiums was found for the Dow Jones industrial average, but not for bond prices; effects of the Nasdaq index were not significant for internal medicine, but were marginally significant for surgery and obstetrics premiums.

The Perinatal Patient Safety Nurse: A New Role to Promote Safe Care for Mothers and Babies

Medical malpractice premiums and costs of obstetric claims, settlements, and jury awards are at an all-time high. This article describes one professional liability company's initiative to promote safer perinatal care and decrease costs of claims, including the development of the perinatal patient safety nurse role. The primary responsibility of the perinatal patient safety nurse is to promote safe care for mothers and babies by keeping patient safety as a focus of all unit operations and clinical practices.