The Current Medical Malpractice Crisis

September 2005

The Current Medical Malpractice Crisis September 2005 A Broken Medical Liability System

  • Physicians across America are all too familiar with the fact that the medical liability system is broken. Since the late 1990s, a dramatic increase in uncapped medical malpractice awards has lead to increased medical malpractice insurance premiums, the growth of defensive medicine, and a steep decline in patient access to critical medical care, including interventional pain medicine.
  • The Physician Insurers Association of America (PIAA) estimates that between 1997 and 2003, the median jury award in a medical malpractice case nearly doubled from $157,000 to $300,000. Similarly, during the same period, the PIAA estimates that the median settlement amount doubled from $100,000 to $200,000. A significant portion (30%-40%) of medical malpractice awards is usually paid to trial attorneys.
  • In a 2002 report, the Department of Health and Human Services noted a significant proportion of medical malpractice awards does not compensate patients for real economic losses (e.g., lost wages and health care costs) but is for intangible non-economic losses (e.g., pain and suffering, loss of consortium, and hedonic damages). In a 2003 report, the Government Accountability Office (GAO) found that increased losses on medical malpractice claims were the primary contributor to higher medical malpractice premium rates. Some pain physicians are now seeing malpractice premiums of over $100,000 per year. Premium increases are substantially higher in states without any limits on non-economic damages.
  • In addition to the direct cost of medical liability insurance, the dramatic rise in medical malpractice awards has caused many physicians to practice defensive medicine, ordering unnecessary drug and procedures lest they be accused of malpractice. In an award-winning 1996 study on defensive medicine, Stanford economists Daniel Kessler and Mark McClellan (now CMS Administrator) concluded that medical liability reform can curtail the defensive practice of medicine, resulting in a 5 to 9% reduction in annual medical expenditures – an estimated $60-108 billion in annual health care costs. 

A Rational Fix

  • California’s Medical Injury Compensation Reform Act (MICRA) of 1975 is the gold standard for medical liability reform. MICRA contained several pioneering reforms, including a $250,000 cap on non-economic damages, a provision for periodic payment of damages, and a reasonable limit on attorney fees.
  • Over the span of three decades, MICRA has stabilized medical malpractice premium rates in California, whereas in the rest of the nation, rates have increased at 3 times the pace in California.
  • Because physicians are exiting states that have not enacted medical liability reforms, access to quality medical care has become a function of geography. Consequently, federal medical liability reform is the best way to ensure all Americans have access to quality medical care.
  • President George W. Bush has made MICRA-style tort reform a top federal priority. Following the President’s lead, the House of Representatives has passed the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2005, which is modeled after MICRA.
  • In the prior two Congresses, the Senate failed to pass this critical legislation. Contact your Senators and ask them to support the HEALTH Act.