Sunday, September 12, 2004

MALPRACTICE INSURANCE REFORM: A DIFFERENT APPROACH

While campaigning for re-election, President Bush has lambasted trial lawyers and reiterated the canard that "runaway jury awards" and "frivolous lawsuits" are responsible for skyrocketing medical malpractice premiums. His sole solution: a $250,000 cap on general damages in medical malpractice awards. However, Mr. Bush proposes no legislation that would reduce or even cap medical malpractice premiums, so the only winners under his proposal would be insurance companies who write the policies.

Astonishingly, the media has given President Bush a free pass on this issue by failing to ask him the most simple questions. (1) What were the total premiums collected by malpractice insurers last year? (2) What were the total payouts from jury verdicts last year? (3) What were the total costs of defending "frivolous" lawsuits- which I will define as a lawsuit which was meritless, the proof of which was the plaintiff recovered nothing and the case was dismissed before trial? (4) Although the President didn't mention it, what were the total dollars paid out in pretrial settlements to plaintiffs?

If the President is right, then the annual dollar totals from jury verdicts, settlements, and frivolous suits would approach or even exceed the total collected in premiums. Strangely, with all of the public posturing of the President and other Republican candidates for office, with numerous op-ed columns by columnists, physicians and insurance executives, I haven't been able to find any source where these figures are provided. Last Spring I offered to donate $1,000 to the charity of choice of a local physician who had just written an op-ed column decrying the malpractice crisis caused by "runaway jury awards." My offer was contingent on his producing figures from Georgia's insurance commissioner proving that his insurance company paid out in jury verdicts and pretrial settlements an amount more than 80% of what it collected in malpractice premiums last year. I knew that my money was safe, because I had taken the time to telephone Georgia's Insurance Commissioner's Office. I was somewhat surprised to find out that our Insurance Commissioner doesn't bother to collect that kind of information from insurance companies.

Meanwhile, Senators Kerry and Edwards can be expected to repeat the trial lawyers' mantra that President Bush's plan would be unfair to injured patients by preventing them from recovering complete compensation for their pain and suffering. The Democratic ticket has no new proposals to reform the system, and they are happy to leave it as is. Their argument is that it works to prevent medical errors while fairly compensating patients injured by medical negligence.

However, Mr. Kerry and Mr. Edwards aren't going to discuss the unpleasant fact that malpractice cases are so expensive to pursue, and negligence is frequently so difficult to prove, the great majority of injured patients or consumers receive no compensation. If a potential client's injuries aren't severe or medical negligence isn't apparent, the case just isn't worth taking.
The truth is that neither side is being honest and neither has a proposal that will fix the malpractice premium problems faced in the medical community. Although there is probably not a "crisis" from runaway jury awards or frivolous lawsuits, there is a very real malpractice premium problem. We all pay the price when doctors like ob-gyn's leave their specialty. There is no question that the costs of outrageous premiums paid by doctors, hospitals, and drug companies are being passed along to the consumers- including individual patients, their insurers, and governments.

My solution? Switch from the current tort system where negligence must be proved and expensive lawsuits are the norm, and instead utilize a no fault system funded by a one percent sales tax on all medical services and all medical products. All medical malpractice insurance premiums will be eliminated for doctors, nurses, and hospitals. In addition, all product liability insurance for drug companies would be eliminated. A trust fund will be created from the proceeds of the sales tax- at roughly $1.4 trillion in annual health care spending, that would create an annual fund of $14 billion.

By "no fault" I mean that any person injured during a medical procedure, including drug side effects, will recover some compensation on a set scale (somewhat similar to Workers Compensation, but with much higher dollar amounts) whether or not the doctor, hospital, or drug manufacturer was negligent. The injured patient would receive an award to be determined by a three person panel: one from the group of consumers; one from the medical community; and one from the judicial branch of government (including administrative law judges employed by the government and retired judges). Lawyers will be permitted in the process but not required, and procedures for collecting from the fund will be made simple enough for the average lay person to utilize. There will be no need for defense lawyers, because the recovery is "no fault" and it will come from the fund, not from the insurer for a medical provider.

You might think of it as being something like the flight insurance that used to be sold at airports- travelers would pay $1.00 for $100,000 in life insurance. If an insured's plane went down, his family collected a set amount without having to prove negligence on the part of the pilot, airline, or plane manufacturer.

The result? Doctors will no longer have to give up delivering babies or waste scarce resources practicing overly defensive medicine. Patients will know that if they are injured or worse as a result of a medical procedure or drug reaction, they or their families will recover without having to prove fault and without having to hire attorneys. Instead of a very few patients collecting a large amount of money (a third or more of which would go to their attorneys), all injured patients would recover something. Just as important, medical consumers, businesses that cover their employees' health insurance, and local, state and federal governments will all see enormous savings as total expenditures for health care fall sharply.

And in response to anyone who argues that our current system is needed to prevent doctors from making mistakes, I suggest that instead of relying on cumbersome, lengthy, expensive, and rare lawsuits to deter malpractice, we utilize a much more inexpensive method: posting on an Internet web site information on the injuries sustained by a doctor's patients (without disclosing the names of the patients) and the amount of the awards paid out for injured patients. That should be be incentive enough to prevent malpractice. This proposal would have the additional benefit of alerting the public to bad doctors whose negligent acts never see the light of day in today's tort system because the negligence goes undiscovered or the injuries aren't great enough to entice a lawyer to take on the case.

AUTHOR'S DISCLOSURE: This proposal comes from a plaintiff's trial lawyer with a currently pending medical malpractice lawsuit. If it were to become law, I would lose money. Defense law firms would lose money. Insurance companies would lose money. Everybody else- patients, doctors, hospitals, drug companies, businesses, and state and federal governments- would end up better off by tens of billions of dollars. Let me know what you think (jfinkelstein@earthlink.net)

JAMES FINKELSTEIN
Attorney at Law
Albany, Georgia


4 Comments:

Anonymous Kris Brtez said...

I think that you are definetly on the right track. I am in med school doing a report on medical malpractice, it seems like all there are is lawyer adds. It was nice to see some plain and clear things. Thank you. Medical malpractice should be more restrictive and if more people thought with their brains instead of their pockets I think that majority of people would be much better off in life, except maybe insurance providers!

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