Medical Liability Reform: The Good, The Bad and The Ugly

Regina Bailey, J.D., M.D., LL.M.
Emergency Medicine Resident
Baylor College of Medicine

Medical malpractice affects all medical specialties and the majority of physicians in the course of their careers.  Sixty percent of physicians age fifty-five years and older have been the subject of a medical lawsuit[1] Physicians can expect to spend $25,000 for every claim that is filed against them and up to $140,000 for cases that go to trial.[1]  But the majority of malpractice claims (sixty-four percent) are either withdrawn, dropped or dismissed without any payment to the plaintiff (in most cases because the doctor was not negligent). In one study of emergency department-based malpractice claims, only one percent of all claims ended in a verdict for the plaintiff.[2]  Clearly, the medical liability system in the US is broken.  So what is being done to solve this problem?

In an effort to curb lawsuits and cut skyrocketing medical liability insurance premiums, medical liability reform has been touted as a potential solution.  Currently, medical liability laws are established by individual states.  California was the first state to enact medical liability reform (tort reform) in 1975.  Since then, more than 30 states have established laws that cap damages in medical liability cases. [3] In 2003, Texas enacted laws to set a $250,000 cap on non-economic damages (pain and suffering, loss of consortium, mental anguish).[4-5] As a part of medical liability reform in Texas, in order to find a physician providing emergency medical services guilty of negligence, the claimant must show that the doctor acted with willful and wanton negligence. [6] Willful and wanton negligence is defined as gross negligence.[7]  This is extremely difficult to prove and is one of the primary reasons for the decrease in medical liability cases against emergency medicine physicians in Texas.  The Texas legislature also opined that the medical liability crisis was resulting in lack of access to medical care because many physicians changed their practice, left their practice, or left the state altogether.[8]

Since enactment of medical liability reform in Texas, medical liability lawsuits have declined by fifty percent.  In the three years after the passage of medical liability reform, more than 7,000 doctors moved to Texas.  The growth of newly licensed physicians in the two years after reform is fifty-nine percent higher than during the two years prior to reform.[9]  Thus, the medical liability reform-generated surge of physicians has helped relieve shortages in many areas.  In addition, liability premiums have risen more slowly than in the rest of the country and the rates of lawsuits has declined.[10]    “In states with damage caps, medical practitioners paid up to 25 percent less for their malpractice insurance premiums.”[11] Given that most lawsuits are dismissed or found that the physician caused no harm, reduction in the number of lawsuits can alleviate a significant amount of stress from a physician’s life.[11]

Over the years, there have been efforts in the past to make medical liability reform a national law.  Currently, the Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) Act of 2011 is up for debate.[12]  Similar to medical liability reform laws in California and Texas, this act will place caps of $250,000 on non-economic damages (pain and suffering) and cap punitive damages at $250,000, or twice the amount of economic damages.[13]  The provision also considers each party’s liability in direct portion to responsibility, limits attorney contingency fees, and sets the statute of limitations at 3 years after the date of injury manifestation or 1 year after the injury is discovered. [12]

Many physician groups believe that medical liability lawsuits increase health care costs, and by reducing lawsuits the government can help curb health care spending.  However, of the 2.3 trillion annually spent on health care in the US, medical liability accounts for approximately one percent, or $3.6 billion dollars. [13-14]  Broken into dollars per person, the direct estimated cost of jury awards is about $12 per person in the US. [13-14] However, the direct cost of medial liability is likely far smaller than the occult costs of practicing “defensive medicine” (i.e ordering tests that you ordinarily wouldn’t because of the underlying fear of being sued). Defensive medicine has been estimated to cost the country $70-126 billion dollars a year, or $233 - $420 annually per person in the US. [11]

While medical liability reform in Texas has shown obvious benefits for physicians, the belief that medical liability reform will help save patient’s money has not been proven. Since medical liability reform in Texas was enacted, health insurance premiums have increased ninety-one percent over the past decade, which translates into 4.6 times faster increase than earnings.  Concurrently, health insurance premiums have increased across the nation.  At this time it is too early to tell if medical liability reform will decrease costs to the patient.

The conclusions that can be drawn thus far are that in areas where medical liability reform has been enacted, it has decreased the numbers of malpractice cases and the cost of liability insurance. These are boons of physicians, and in states like Texas have lead to increased numbers of practicing physicians.  This is turn have helped relieve physician shortages, an obvious benefit to these previously underserved areas.    

[1] Medical Liability: Health Reform’s Next Step, (February 14, 2011).
[2] T. Brown, et. al. An Epidemiologic Study of Closed Emergency Department Malpractice Claims in a National Database of Physician Malpractice Insurers.  Academic Emergency Medicine, 17: 555-560 (2010).
[3] Lea Wienerman, Economists Find Mixed Results on Tort Reform, PBS Newshour, (September 25, 2009).
[4] Scott Hensley, Doctors Flock To Texas After Tort Reform, WSJ Blog, (May 17, 2008).
[5] The Medical Malpractice & Tort Reform Act of 2003, 78th Leg., ch. 204, 2003 Tex. Gen. Laws 847, 847-99
[6]  Tex. Civ. Prac. & Rem. Code § 74.153 (2010).  
[7]  Turner v. Franklin, 2010 Tex. App. LEXIS 6544 (Tex. App. Dallas Aug. 13 2010).
[9] Joseph Nixon, Why Doctors Are Heading for Texas,, (May 17, 2008).
[10] Ardis Dee Hoven, Medical Liability Reform: The Time for Action is Now, AMAnews, (February 28, 2011).
[11] Lea Wienerman, Economists Find Mixed Results on Tort Reform, PBS Newshour, (September 25, 2009).
[12] H.R. 5, Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) Act of 2011.
[13] Edward J. Kionka, SYMPOSIUM: MEDICAL MALPRACTICE: EMERGING ISSUES & THE EFFECT OF TORT REFORM: ARTICLE: Things To Do (or Not) To Address The Medical Malpractice Insurance Problem, 26 N. Ill. U. L. Rev. 469, 473 (Summer 2006).
[14] Daphne Eviatar, Tort Reform Unlikely to Cut Healthcare Costs, The Washington Independent, (August 19, 2009)



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