THE PHONY "MEDICAL MALPRACTICE LAWSUIT CRISIS”

I was recently assailed by a doctor friend of mine, who was screaming about the high cost of his malpractice insurance.

“If it weren’t for those darn (actually, he used another word, but this is, after all, an article for readers of all sensibilities) lawyers, I wouldn’t have to lose an arm and a leg in premiums,” he said. “It’s those frivolous lawsuits that are causing all of those payouts from the insurance companies. That gets reflected in my malpractice insurance premiums, and I’m going broke. You know, it’s driving good doctors out of business. They just can’t afford to pay the insurance, so they get out.”

This is not a new complaint, of course. Every few years, doctors and their insurance companies push for “tort reform,” which will set up special rules for medical malpractice claims, limit the amount of damages that can be recovered, cap the amount of attorney’s fees in medical malpractice cases, and set up all sorts of procedural roadblocks – all in the name of doing away with those “frivolous lawsuits” that are causing your medical costs to skyrocket.

From what I’ve been able to ascertain, the so-called “malpractice lawsuit crisis” is a lie from start to finish. It’s a red herring, manufactured by the insurance industry to deflect the blame for bad investment decisions on trial lawyers and their clients – the victims of medical malpractice.

I have some experience to draw on here. During my over 20 years of legal practice, I have represented both doctors and patients in medical malpractice cases.  I have never represented a medical malpractice plaintiff whose claims I thought to be absolutely meritless.  I don’t think there are a lot of lawyers who do. (Now, I don’t discount the idea that there are shysters out there, even in the medical malpractice field … I know some of them by name … I’m just saying that things are not as bad as the insurance lobby would make things out to be). Here's why. Medical malpractice claims are expensive to bring. They require a good deal of medical knowledge on the part of the lawyer, an investment in finding and paying for medical experts who are willing to testify, and a commitment to taking a case all the way to trial. A medical malpractice lawyer knows at the outset that his case will be hard-fought by the doctor's insurance company, and that propaganda from insurers that plaintiffs are the cause of ever-increasing medical costs will not put a jury on the side of the injured patient. A medical malpractice lawyer simply can't afford to waste his time and money on a completely "frivolous" lawsuit. To the contrary, there's more money for a trial lawyer in pursuing easier, less costly types of cases, such as automobile accidents or even products liability cases.

A couple of examples should suffice. These are the types of cases I have handled. Each was hard fought by the doctor's insurance company. Each was subject to various defenses and claims that my clients were trying to get rich at the expense of an innocent doctor. Believe me, though -- none was "frivolous":

-The patient who went into the hospital one morning for a CT scan of his sore back and, due to the administration of the wrong contrast medium into his spine, died a painful death seven hours later. This was followed by an attempt by the hospital to cover up the negligence;

-The patient who went into the emergency room with a headache and emerged 10 hours later with a permanently disfigured and nerve-damaged arm, due to a misadministration of contrast medium into his forearm;

-The patient who underwent a routine laparoscopic gall bladder removal who ended up on life support for nearly two months with Adult Respiratory Distress Syndrome after her surgeon, who, unknown to the patient, was suffering from multiple sclerosis at the time, nicked her bowel during the procedure.

The list goes on and on. Were these claims a part of some "lawsuit lottery?" Did compensating these patients for their injuries add to the cost of your health care? The answer to both questions is no. The motivation behind medical malpractice lawsuits is to seek remedies for medical malpractice, plain and simple. Studies from the medical profession itself rates malpractice as one of the leading causes of death among patients.

So, what's the truth about malpractice verdicts and ever-increasing medical costs? Insurance companies would have you believe that runaway juries, sympathetic to anyone who can hobble into the courtroom with a legal complaint in one hand and a cane in the other, will award millions at the drop of a hat. My experience is different. Due to various protections in the litigation system itself, the fact of the matter is that very few medical malpractice claims ever get to court. If they don't have merit, they are generally dismissed in a summary proceeding long before a jury could ever get a peek at them, and if, by some fluke, an outrageous award were to be given by a jury, a judge or an appellate court can always overturn such an award.

That leads to the inevitable question – why, then, are medical malpractice premiums going up, and what can be done about it? The answer to the first is not complicated, but it has been the subject of a good deal of negative propaganda from both the insurance industry and the current administration. When one looks hard at the numbers, a few surprising facts become clear. First, the number of malpractice claims has actually gone down over the past few years. There simply is no "litigation explosion" in malpractice claims. Second, insurance company investments have tanked in many instances, leaving reserves lower and insurance company profits lower. Insurers must make up the difference somewhere. Raising malpractice insurance premiums is one (although not the only) way that is accomplished. 

Surprisingly, in the vast majority of states that have adopted draconian regulations on medical malpractice claims, malpractice premiums have actually increased, not decreased as promised by insurance companies. See, for example, “Medical Malpractice Caps Fail to Prevent Premium Increases, According to Weiss Ratings Study,” (subhead “Physicians in States with Caps Suffer 48% Increase in Median Annual Premiums Even While Insurers Enjoy Slowdown in Payouts”). The study itself can be found here.  See also “GE: Malpractice Caps Don’t Work”, and “Rising Doctors Premiums Not Due to Lawsuit Awards” Similarly, the studies show that it is doctors, not patients, who are at an advantage when a lawsuit actually gets to court.  See, for example, See, e.g., http://www.law.com/jsp/article.jsp?id=1177405469149 , "Malpractice Juries Tend to Side More With Doctors, Researcher Finds".  See also "That Malpractice 'Epidemic'? Legal Analysis Finds That Patients Fare Poorly In Court".

Meanwhile, despite the fact that fewer malpractice actions are being brought as regulations force patients to simply forego their legal rights, malpractice itself rages on unabated. The "fix" doesn’t work. “Tort reform” ultimately ends up as “tort deform” – a way to deprive victims of their rights while the insurance companies laugh all the way to the bank.

So, after all of this has been said, the question remains:  Isn’t the so-called “medical malpractice crisis” causing massive trauma among medical professionals?

The answer to that is not as easy as it may seem.  For most of the doctors I have represented, the biggest threat to their assets is not runaway malpractice lawsuits – although there are a lot of “asset protection hustlers” out there that would get doctors’ blood boiling about how they’ve got to stick their money with the hustler to protect themselves against an out-of-control tort system. 

Instead, the majority of asset protection issues I’ve seen that involve physicians stem from matters that they have complete control over. They arise generally out of three things:

First, a partnership or other medical business arrangement gone bad – usually with other doctors, by the way;

Second, a marriage gone bad; and

Third, some other business (non-medical) gone bad.

Doctors – like anyone else – can and should seek good, competent advice long before they get involved in any of these transactions (presuming marriage to be a "transaction," which puts it into a rather cold-blooded context), but they generally don't. Instead, they tend to get worked up about either the so-called "medical malpractice crisis" or the general "tort crisis." And while I certainly don't discount those concerns, they usually aren't the main culprits when it comes to putting a doc's assets at risk.

When it comes to protecting both doctors and their patients, the answer is not so-called “medical malpractice reform” – which doesn’t work, at least not for long.  In fact, to the degree that doctors want to confront that “crisis,” they might want to start by pushing for insurance company reform.  Be that as it may, I believe that real asset protection for doctors is usually more a matter of each doctor taking control over their business (and marital) decisions.

Randall K. Edwards practices law in Nevada, Utah, California and Arizona, with his primary office located in Salt Lake City.