Malpractice Claims at Record Low, Not Driving Health Costs: Consumer Group

By | July 13, 2012

The consumer group Public Citizen says that medical malpractice payments in 2011 were at a record low and have fallen for eight straight years.

The groups says this data shows that malpractice payments are not to blame for the rising cost of health care.

The group’s report says that the number of medical payments and the inflation-adjusted value of such payments were at their lowest levels since 1991, the earliest full year for which such data is available.

In the report, “Malpractice Payments Sunk to Record Low in 2011,” Public Citizen analyzed data from the federal government’s National Practitioner Data Bank, which tracks malpractice payments on behalf of doctors.

Public Citizen is a national, nonprofit consumer advocacy organization.

“Contrary to the promises of policymakers and leaders of physician groups who have spent the past two decades championing efforts to restrict patients’ legal rights, there is no evidence that patients receive any benefits in exchange for ceding their legal remedies,” said Taylor Lincoln, research director of Public Citizen’s Congress Watch division and author of the report. “Instead, malpractice victims and ordinary patients end up absorbing significant costs for uncompensated medical errors.”

The Public Citizens report found that in 2011:

  • The number of malpractice payments on behalf of doctors (9,758 payments) was the lowest on record, having fallen for the eighth consecutive year;
  • The inflation-adjusted value of payments made on behalf of doctors ($3.2 billion) was the lowest on record. In actual dollars, payments have fallen for eight straight years and are at their lowest level since 1998;
  • The average size of medical malpractice payments (about $327,000) declined from previous years;
  • Four-fifths of medical malpractice awards compensated for death, catastrophic harm or serious permanent injuries – which Public Citizens says disproves the claim that medical malpractice litigation is “frivolous;”
  • Medical malpractice payments’ share of the nation’s health care cost was the lowest on record (just 0.12 percent of all national health care costs); and
  • Health care costs rose again amid the decline in medical malpractice litigation – debunking the claim that the litigation is tied to rising health care costs or that patients should expect dividends from reduced litigation.

The total costs for medical malpractice litigation for doctors and hospitals (as measured by liability insurance premiums paid) have fallen to their lowest level in two decades. They amounted to 0.36 percent of national health care expenditures in 2010, the most recent year for which such data is available, according to the report.

The report says there is no evidence that the decline in medical malpractice payments is due to safer medical care. Previous studies have concluded that there is a high prevalence of medical errors; for instance, the U.S. Department of Health and Human Services found that more than 700,000 Medicare patients suffer serious injuries from avoidable errors every year, with fatal outcomes for 80,000 of these people.

In contrast to the hundreds of thousands of injuries (and tens or hundreds of thousands of deaths) that major studies attribute annually to medical mistakes, fewer than 10,000 medical malpractice payments were made on behalf of doctors in 2011, demonstrating that the vast majority of patients injured by medical malpractice are not being compensated, the Public Citizen report says.

“When victims of malpractice do not receive compensation, their future medical costs must be borne by somebody: the victims themselves, their insurance companies or the taxpayers,” said Christine Hines, consumer and civil justice counsel with Public Citizen. “The juxtaposition of declining medical malpractice payments and skyrocketing medical costs exposes bogus claims that reducing patients’ access to legal remedies will reduce costs. The only sensible response is for policymakers and physicians to dedicate themselves to pursuing patient safety to prevent these injuries and deaths with the same vigor with which they have previously sought to restrict patients’ legal rights.”

According to a report in March from specialist healthcare insurer Hiscox, while frequency and overall cost of claims are down, large losses of $50 million and higher keep on getting larger with juries in the last two years alone awarding more than $1 billion in total damages for just seven medical liability cases.

According to a rate survey by Medical Liability Monitor released in October, 2011, base-rate premiums for medical professional liability insurance (MPLI) continued to go down for a sixth consecutive year in 2010. The survey said it will likely be a few more years before the market hardens.

This MPLI industry posted one of its best financial years in 2010, challenging the traditional definition of a soft market, according to the survey.

Insurance ratings agency A.M. Best also released a report on MPLI last October. It found MPLI writers showed strong operating earnings amid flat claim frequency rates and only modest increases in average claim severity. It said MPLI market continued to outperform the total U.S. property/casualty industry composite in key financial indicators.

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