Malpractice Awards
Legal Issues in Healthcare Delivery HC260
Instructor: Brent Gilje
July 20, 2012
“Capping Malpractice Awards, Will it help lower physician malpractice premiums?”
INTRODUCTION Researchers at the Agency for Healthcare Research and Quality (AHRQ) have examined the impact of different kinds of State laws in a number of studies. The studies examined the impact of State legislation that caps damage awards in malpractice cases on decisions of physicians about where to practice medicine. Twenty-four States have laws that limit damage payments in malpractice cases. Most of these laws limit the amounts paid for noneconomic damages (e.g., pain and suffering) but a few limit both economic (e.g., medical expenses and lost wages) and noneconomic damages. Supporters of legislation to cap damages in malpractice cases maintain that it reduces malpractice premiums and helps insure an adequate supply of physicians. They also assert that escalating, multi-million-dollar jury awards are driving malpractice premium increases and that capping damage awards for pain and suffering helps restrain the rate of increase. Without such a law, it is asserted that the loss of affordable medical malpractice insurance for physicians could eventually lead to the loss of affordable, accessible health care. Opponents of this legislation maintain that insurance companies are trying to compensate for poor business decisions and fading investment income. Although there is some evidence demonstrating that physicians in States with tort reform laws capping malpractice awards enjoy lower malpractice premiums, there is no evidence about the impact of malpractice cap legislation on decisions by physicians regarding geographic location. A simple comparison of the supply of physicians per capita between States that did and did not adopt a cap revealed that States with caps experienced a more rapid increase in their supply of physicians. In 1970, before any States had a law capping
Instructor: Brent Gilje
July 20, 2012
“Capping Malpractice Awards, Will it help lower physician malpractice premiums?”
INTRODUCTION Researchers at the Agency for Healthcare Research and Quality (AHRQ) have examined the impact of different kinds of State laws in a number of studies. The studies examined the impact of State legislation that caps damage awards in malpractice cases on decisions of physicians about where to practice medicine. Twenty-four States have laws that limit damage payments in malpractice cases. Most of these laws limit the amounts paid for noneconomic damages (e.g., pain and suffering) but a few limit both economic (e.g., medical expenses and lost wages) and noneconomic damages. Supporters of legislation to cap damages in malpractice cases maintain that it reduces malpractice premiums and helps insure an adequate supply of physicians. They also assert that escalating, multi-million-dollar jury awards are driving malpractice premium increases and that capping damage awards for pain and suffering helps restrain the rate of increase. Without such a law, it is asserted that the loss of affordable medical malpractice insurance for physicians could eventually lead to the loss of affordable, accessible health care. Opponents of this legislation maintain that insurance companies are trying to compensate for poor business decisions and fading investment income. Although there is some evidence demonstrating that physicians in States with tort reform laws capping malpractice awards enjoy lower malpractice premiums, there is no evidence about the impact of malpractice cap legislation on decisions by physicians regarding geographic location. A simple comparison of the supply of physicians per capita between States that did and did not adopt a cap revealed that States with caps experienced a more rapid increase in their supply of physicians. In 1970, before any States had a law capping
References: 1. Richard J. Hillman and Lawrence Cluff, Risk Retention Groups, Common Regulatory Standards and Greater Member Protections Are Needed, U.S. Government Accountability Office, GAO-05-536, August 2005, http://www.gao.gov/new.items/d05536.pdf. 2. Dennis H. Pillsbury, “Where Do You Turn If One of Your Physician Insured’s Has Claims Problems?” Rough Notes, March 1995, p. 50. 3. Perry Beider and Stuart Hagen, Limiting Tort Liability for Medical Malpractice, Congressional Budget Office Economic and Budget Issue Brief, 2004, http://www.cbo.gov/ftpdocs/49xx/doc4968/01-08 MedicalMalpractice.pdf. 4. Patricia M. Danzon, “Liability for Medical Malpractice,” in Handbook of Health Economics, ed. A. J. Culyer and J. P. Newhouse (Amsterdam, The Netherlands: Elsevier Science, 2000).