Capitol Priorities

Medical Liability: The Perfect Storm

By Dennis Agliano, M.D., Florida Medical Association Secretary

In the eye of the storm are the physicians; everyone wants a piece of them, but for different reasons.

The attorneys, the managed care plans, and the insurers are looking for financial gain, while the patients want access, quality, and choice, which are now at risk. Simply stated, the medical liability crisis has occurred because professional liability insurance is either unavailable or unaffordable for many physicians and as time goes on it will continue to worsen. If physicians were able to raise fees when their expenses went up, as do all other businesses, there would be no problem. However, managed care, Medicare, Medicaid, etc., have fixed physicians fees eliminating that as an option.

This in turn causes the physicians to get squeezed in the middle with an increasing overhead and a fixed income. In a democratic economy, when the risks of ruin far outweigh the reward, and the cost of doing business is greater than the fee, then the choice is obvious—quit, retire, move to a better environment or curtail risky services.

That's exactly what is happening now.
 

1	One in five Florida physicians are sued every year, compared to the national average of one in twelve.	In determining possible solutions, one must first look at the causes. Let's see what the different groups are saying. The attorneys say it's the "bad doctors" and the "greedy insurers." The insurers say it's an under-priced market that is now righting itself, the Wall Street collapse after 9/11, and a jury system that doles out senseless awards based, in part, on a lotto "get rich quick" mentality. Adding to the doctors' dilemma is managed care (which continues to justify capping physicians' fees at less than reasonable costs for treating patients), and patients being led to believe that anything less than an optimum outcome is malpractice.
2	Seventy percent of malpractice cases filed are settled without an award.
3	Only 30-35% of the malpractice award reaches the patient, while 65-70% goes to the trial attorneys and administrative costs.
4	The average jury award in 1995 was about $500,000, while in 2000 it doubled to $1,000,000, in spite of the number of cases remaining about the same.
5	Neurosurgeons in California pay $50,000 in professional liability insurance, but if they move to south Florida they will pay $200,000 for the same amount of coverage.

Just as there are some bad lawyers, there are some bad doctors. Florida has one of the most active systems in the country for dealing with those bad doctors, through the state's Board of Medicine. The doctors of Florida are among the most regulated and disciplined in the nation. When a physician is sued two lawsuits are initiated: one for civil damages and the other against his/her license.

Given the rigors of this system, it's unlikely that many "bad doctors" fall through the cracks.

As for those "greedy insurers," there are only five carriers in the state today. In 1995 there were more than thirty. It doesn't seem plausible that they would leave if it were so profitable.

The Florida Medical Association and the physicians of Florida are here to protect patients. Perhaps it's time that the medical liability system is analyzed as thoroughly as the healthcare providers are. Is the system cost effective, is it timely, does it improve quality care, is it predictable, and who benefits most—the injured party or the attorneys? How does it affect the patient in regards to cost, access, and safety? Can we afford unlimited non-economic damages?

Let's examine how the threat of malpractice to the physician affects you.

Americans spend far more per person on the costs of litigation than any other country in the world. Senseless multimillion-dollar verdicts encourage physicians to practice defensive medicine, which increases national health care costs by approximately $60-108 billion dollars per year. Litigation is paid for by all Americans through increased premiums, higher out-of-pocket payments, and taxes. If reasonable limits were placed on non-economic damages to reduce costs of defensive medicine, it would save the federal government $25.3 to 44.3 billion per year—enough to fund a prescription drug benefit program for Medicare and help uninsured Americans through refundable health credits.

The medical liability system is slow, unpredictable, largely random, and standardless, traumatic to both the physician and the patient.

Approximately 70% of filed claims result in no payment to the patient, meaning they were dropped or frivolous. Yet these baseless claims still cost the insurer an average of $25,000 to defend against, and two to four times that much if the case makes it to trial. Of the few cases that go to trial (about 10% of all claims) only 2% result in a decision for the plaintiff—an expensive system for which the rest of us pay.

Even successful claims take, on average, five years for recovery and longer if the claims go to trial.

Where does the money go?

It's estimated that only 28% of what doctors and hospitals pay for liability insurance goes to patients, while 72% goes for legal (i.e., plaintiff and defense trial attorneys), administrative, and related costs.

 

1	Cap non-economic "pain and suffering" damages at $250,000. Florida and other states without these caps are losing physicians to retirement, relocation to other states, or the curtailing of services.	There are a few reasonable solutions (see "Four solutions" at left) to protect patients and ensure that access to quality care remains available—solutions that have been enacted in several states to head off the kind of crisis that Florida is facing now. Capping damages and attorney fees, empowering the Board of Medicine to administer discipline, and disclosing damage amounts—these would all be steps in the right direction.
2	Set a reasonable sliding scale on the attorneys' contingency fees, so that the injured patient gets the bulk of the award, not the attorney.
3	Make the courtroom medical experts accountable, and allow the Florida Board of Medicine to discipline as needed.
4	Disclose to the jury all monies paid to the injured party, to eliminate monies being paid twice.

Our goal must be to protect patients who have been injured because of negligence, while keeping a viable medical delivery system in Florida. We cannot jeopardize the health care of 16 million Floridians just to give outlandish awards every year to a few hundred patients and their attorneys through this legal lottery system.

We need a system that is fair, pays injured patients on a timely basis, is predictable, and maintains certain injury-type compensation standards. Perhaps we need alternative methods to compensate patients injured through negligence, other than through the courtroom—such as early offers and non-advocate medical review boards. If a settlement is not reached by this method then a lawsuit can be initiated.

If you have your health, the saying goes, you have everything. It's not worth losing access to our health, our doctors, and our quality of care just so a few lawyers can become buy bigger boats.

Jacksonville Medicine / November-December 2002
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