On March 6, 2017, Republicans in the U.S. House of Representatives (House) introduced a bill designed to “repeal and replace the Patient Protection and Affordable Care Act [ACA].”1 The bill (less than 60 pages in length), entitled the American Health Care Act (AHCA), contained little discussion related to tort reform, which, as discussed in Part One of this series, was a common theme of many of the initial “repeal and replace” proposals offered by Republican members of the House.2 The AHCA was withdrawn prior to a scheduled vote in the House, and has been tabled for the near future. However, with the approval by the House Judiciary Committee of the “Protecting Access to Care Act of 2017,”3 which seeks to implement a non-economic damages cap of $250,000 for medical malpractice actions,4 Congress may still act on bills related to tort reform in the coming months, even if it is acted upon separate and apart from the AHCA.
As federal politicians consider tort reform, a consideration of the current medical malpractice environment may serve to place this political debate into context, including the prevalence of medical errors, the concentration of these lawsuits within the physician population, and tort reform efforts on the state level.5 This Health Capital Topics article is the second installment in a three-part series examining the current state of tort reform in the U.S., and briefly discusses the present environment of medical malpractice and legislative initiatives across the U.S. addressing tort reform.
Significant increases in the volume of procedures performed by physicians over the past half century have contributed, in part, to the increase in both the risk of harm to patients and the liability exposure for physicians through medical errors, i.e., deviations from the norms of clinical care.6 Since the 2000 Institute of Medicine (IOM) study that estimated that 44,000-98,000 patients die each year due to an adverse event,7 of which 58 percent were preventable, (i.e., directly tied to medical error),8 numerous studies have sought to refine this figure. For example, a 2011 study published in Health Affairs found that deaths stemming from adverse medical events could range as high as 400,000 per year.9 Additionally, a 2016 study published in BMJ by researchers from Johns Hopkins University estimated that 251,000 deaths occur annually due to medical errors, making medical error the third-leading cause of death in the U.S.10
Despite increased risk exposure, total indemnity payouts (i.e., damages awarded to injured parties from defendants) for instances of medical malpractice, as well as average premiums for medical malpractice insurance, have decreased since the early 2000s. According to National Practitioner Data Bank data analyzed by Diederich Healthcare, a professional liability insurer, the total amount of damages payouts in instances of medical malpractice in the U.S. fell nearly $1 billion over the past decade, from approximately $4.8 billion in 2003 to $3.84 billion in 2016.11 The 2016 data reflects a decrease of 2.54 percent from 2015 levels, and serves as the first decline in medical malpractice payouts since 2012, which, at approximately $3.6 billion, marked the figure’s lowest level since 2003.12 Additionally, average medical liability insurance premiums for physicians have decreased over a similar timeframe. Data compiled from Medical Liability Monitor’s Annual Rate Survey Issue demonstrates that average medical liability insurance premiums for the general surgery, internal medicine, and obstetrics and gynecology specialties have decreased each year from 2005 to 2014.13 This trend is continuing into 2017, as Michael Matray, the editor of Medical Liability Monitor, stated to Kaiser Health News that “[i]t’s a wonderful time for doctors looking for coverage and it’s never been better for insurers.”14
Studies examining trends in medical malpractice payouts have revealed that a small cohort of physicians often provide a disproportionate share of payouts in cases involving medical errors. A 2016 study in the Journal of Patient Safety found that, from 1990 to 2015, an outlier group of 1.8 percent of physicians were responsible for half of the $83 billion in medical malpractice payouts over that time period.15 Nearly three quarters of this outlier group faced multiple payouts, and 761 physicians (5 percent of the outliers) had 10 or more payouts.16 Similarly, a 2016 study published in the New England Journal of Medicine (NEJM) found that, from 2005 to 2014, an outlier group of approximately one percent of physicians accounted for 32 percent of all paid claims.17 The authors found an outlier group consisting of physicians with three or more paid claims, where 0.2 percent of all physicians accounted for 12 percent of all paid claims.18 While not the sole contributing factor, membership in this cohort may be influenced by physician specialty, as a separate study published in the NEJM found that five of the top eight high-risk physician types (i.e., neurosurgeons, orthopedic surgeons, general surgeons, plastic surgeons, and obstetrician-gynecologists) had twice the risk of having multiple payouts than other physician specialties.19 These studies concluded that identifying outlier physicians and developing tailored strategies to reduce the risk of medical errors within this cohort could help dissipate the high cost of medical malpractice actions.20
In consideration of current trends related to medical errors, medical liability insurance premiums, claim payouts, as well as the concentration of claim payouts among a disproportionately small number of physicians, industry stakeholders have responded in myriad ways. State legislators and insurers have historically sought to resolve issues surrounding medical malpractice through tort reform measures, most notably by enacting a cap on payments for non-economic damages, e.g., payments for pain and suffering, loss of consortium, and emotional distress. Since California first modeled this approach in 1975 by passing the Medical Injury Compensation Reform Act (MICRA), which enacted a cap of $250,000 for awards based on non-economic damages,21 a majority of states have passed some form of cap on non-economic damages.22 Additionally, state legislators have enacted a variety of other laws related to tort reform, including:
Establishing statutes of limitations on claims made by plaintiffs;23
Enabling or enhancing the ability of defendants to countersue claimants who file frivolous lawsuits;24
Implementing compensation programs outside of the courts to handle malpractice cases;25
Increasing the standards for admission of expert witness testimony;26
Implementing reforms aimed at the healthcare delivery process in an attempt to reduce medical errors;27
Establishing honesty policies for full disclosure of errors through “apology laws
,” which “prohibit the use of a physician’s apology as an admission of fault
” when a court adjudicates a medical malpractice case.28
Despite their prevalence, non-economic damage caps have faced scrutiny from state judicial systems, forcing legislators to readdress the issue. In particular, state supreme courts have struck down caps on non-economic damages in at least eight states,29 with the Illinois Supreme Court striking down three separate statutes.30 Ohio and Oklahoma courts have specifically struck down damages caps in medical malpractice cases involving wrongful deaths, but allowed other caps.31 Additionally, five states have constitutional prohibitions on damage caps,32 and Texas was forced to pass a constitutional amendment in order to enact a medical malpractice damage cap.33 Missouri’s original cap on non-economic damages, passed in 2005, was struck down in 2012 by the Missouri Supreme Court due to concerns about the law limiting a person’s right to a trial by jury; in response, the legislature reenacted the cap in 2015, with the bill seeking to alleviate the concerns raised by the Court.34
Lawmakers often cite the need to curtail defensive medicine practices as a reason for tort reform.35 Defensive medicine is defined as “medical care provided to patients solely to reduce the threat of malpractice liability,” e.g., unneeded/redundant diagnostic testing and is often prevalent in high-risk specialties.36 Defensive medicine practices are often viewed as either “unnecessary” or a sign of “overuse,” raising questions as to the benefit to the patient of such practices.37 However, recent studies have scrutinized the link between tort reform laws and reductions in defensive medicine practices. Although a 2015 BMJ study concluded that increases in defensive medicine coincide with a statistically significant decrease in medical malpractice suits,38 physician utilization of defensive medicine practices generally do not decrease when states enact tort reform laws, and in some states, defensive medicine practices rose nearly four percent after the passage of tort reform measures.39
Despite disagreements regarding the practical utility and legality of tort reform measures, public deliberation on the issue may persist, and even expand, as the larger debate concerning the fate of the ACA and the ultimate path of healthcare reform continues. The third and final installment in this series will discuss the impact of the ACA on the medical malpractice environment, as well as examine the possibility of tort reform measures gaining traction at the federal level as part of healthcare reform deliberations.
“Budget Reconciliation Legislative Recommendations Relating to Repeal and Replace of the Patient Protection and Affordable Care Act” Committee on Energy and Commerce, U.S. House of Representatives, March 6, 2017, http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/documents/AmericanHealthCareAct.pdf (Accessed 3/6/17).
“Potential for Tort Reform Under Republican Rule (Part One of a Three-Part Series)” Health Capital Topics, Vol. 10, No. 2 (February 2017).
“Protecting Access to Care Act” H.R. 1215, 115th Congress, § 4(b) (2017).
“Legislative Actions of the Judiciary Committee” House of Representatives Judiciary Committee, 2017, https://judiciary.house.gov/legislative-action/115/passed-committee/ (Accessed 3/20/17).
“GOP Lawmakers See A Costly Malpractice Crisis — Experts Don't” By Chad Terhune, HealthLeaders Media, January 4, 2017, http://www.healthleadersmedia.com/leadership/gop-lawmakers-see-costly-malpractice-crisis-experts-dont# (Accessed 1/26/2017).
“Science and Social Work: A Critical Appraisal,” By Stuart A. Kirk, and William James Reid, New York: Columbia University Press, 2002, Chapter 1, p. 2-3.
“To Err is Human: Building a Safer Health System” Institute of Medicine, National Academy of Sciences, 2000, p. 31.
“’Global Trigger Tool’ Shows That Adverse Events In Hospitals May Be Ten Times Greater Than Previously Measured” By David Classen et al., Health Affairs Vol. 30, no. 4 (2011); “Medical error-the third leading cause of death in the US” By Martin A Makary and Michael Daniel, BJM 2016. p. 354. Number calculated by Makary through Cassen’s 1.13% lethal adverse event calculation for total US hospital admissions in 2013.
“Medical error-the third leading cause of death in the US” By Martin A Makary and Michael Daniel, BJM 2016. p. 354.
“2017 Medical Malpractice Payout Analysis” Diederich Healthcare, February 27, 2017, http://www.diederichhealthcare.com/the-standard/2017-medical-malpractice-payout-analysis/ (Accessed 3/21/17).
“Medical Malpractice and Tort Reform: Urgent Crisis or Red Herring” By Robert James Cimasi and Todd A. Zigrang, Boca Raton, FL: CRC Press, 2016, Chapter 11, p. 275; “Annual Rate Survey Issue” Medical Liability Monitor, Oak Park, IL (data compiled from Annual Rate Survey Issue for 1991 through 2014). Premium insurance cost amounts were calculating by averaging the reported rates in the Annual Rate Survey Issues. These rates were separated by the three reported practice types, states, and years. The chart represents the calculated average amount from all participating states for each of the years for each type of medical practice.
“Top Republicans Say There’s a Medical Malpractice Crisis. Experts Say There Isn’t.” By Chad Terhune, The Washington Post, December 30, 2016, https://www.washingtonpost.com/news/to-your-health/wp/2016/12/30/top-republicans-say-theres-a-medical-malpractice-crisis-experts-say-there-isnt/?utm_term=.c47463a958b1 (Accessed 3/21/17).
“The Detection, Analysis, and Significance of Physician Clustering in Medical Malpractice Lawsuit Payouts” By Robert E. Oshel, PhD and Philip Levitt, MD, Journal of Patient Safety, Published Ahead of Print. p. 2.
“Prevalence and Characteristics of Physicians Prone to Malpractice Claims” By David M. Studdert et. al., New England Journal of Medicine, Special Article, January 28, 2016. p. 356.
Ibid, p. 361; Robert E. Oshel, PhD and Philip Levitt, MD, Journal of Patient Safety, Published Ahead of Print. p. 4.
California Civil Code § 3333.2 (West 1975); “Voters Turn Down Proposition 46 to Lift Medical Malpractice Cap, Require Drug Tests for Doctors” CBS San Francisco, November 4, 2014, http://sanfrancisco.cbslocal.com/2014/11/04/proposition46doctorsdrugtestsresults/ (Accessed 12/10/14).
“Medical Malpractice Damages Caps: A State By State Comparison” By Michael Morgenstern, The Expert Institute, September 9, 2015, https://www.theexpertinstitute.com/medical-malpractice-damages-caps-a-state-by-state-comparison/ (Accessed 3/7/2017).
“The New Medical Malpractice Crisis,” By Michelle M. Mello, David M. Studdert, and Troyen A. Brennan, New England Journal of Medicine, Vol. 348, No. 23 (June 5, 2003), p. 2283.
“Docs return fire: countersuing in frivolous malpractice cases,” Modern Physician (September 2003), p. 6.
“Special Report: Hype outraces facts in malpractice debate; Degree of crisis varies among specialties and from state to state,” By Peter Eisler, Julie Appleby, and Martin Kasindorf, USA Today, 3/5/03, p. A.01.
“State Medical Liability Laws Table,” National Conference of State Legislatures, October 16, 2002, http://www.ncsl.org/programs/insur/medliability.pdf (Accessed 10/3/03).
“A New ‘Malpractice Crisis’? Why Premiums Are Soaring Again,” By Mark Crane, Medical Economics Magazine, (July 9, 2001), http://medicaleconomics.modernmedicine.com/medical-economics/content/new-malpractice-crisis-why-premiums-are-soaring-again (Accessed 3/5/15).
“Efficacy of a Physician’s Words of Empathy: An Overview of State Apology Laws,” By Nicole Saitta, MA, & Samuel D. Hodge, Jr., J.D., Journal of the American Osteopathic Association, Vol. 112, No. 5 (May 2012), p. 302.
In Alabama, Florida, Georgia, Illinois, Louisiana, New Hampshire, Oregon, and Washington, state supreme courts have invalidated relevant state statutes that imposed caps on noneconomic damages. For example, see McCall v. U.S., No. SC11-1148 (Fla. Mar. 13, 2014).
“Rethinking the storyline for defensive medicine and medical liability: Causes, effects, and remedies” By David Hyman, Anupam Jena, and Michael Morrisey, American Enterprise Institute, Panel Event, December 2, 2015, https://www.aei.org/events/rethinking-the-storyline-for-defensive-medicine-and-medical-liability-causes-effects-and-remedies/ (Accessed 3/7/2017), imbedded video.
Michael Morgenstern, September 9, 2015.
“Malpractice Suits Capped At $750,000 In Texas Vote” By Ralph Blumenthal, The New York Times, September 15, 2003, http://www.nytimes.com/2003/09/15/us/malpractice-suits-capped-at-750000-in-texas-vote.html (Accessed 3/7/2017).
“Missouri Tort Reform Reformed Again: Medical Malpractice Damage Caps Reinstated” By Greg Minana and Ashley Rothe, Husch Blackwell, May 11, 2015, http://www.healthcarelawinsights.com/2015/05/missouri-tort-reform-reformed-again-medical-malpractice-damage-caps-reinstated/ (Accessed 3/24/17).
“Modernizing America’s Health Care: A Conversation With Speaker Paul Ryan (R-Wi) And The Speaker’s Task Force On Health Care Reform” American Enterprise Institute, Meeting, Washington D.C., June 22, 2016, https://www.aei.org/wp-content/uploads/2016/06/160622-AEI-Modernizing-Americas-Health-Care.pdf (Accessed 1/26/2017) p. 7.
“Physician spending and subsequent risk of malpractice claims: observational study” By Anupam Jena, et al., BMJ Vol. 351, (2015) p. h5516.
“The Defensive Medicine Balancing Act” By Judy Packer-Tursman, Medical Economics, January 9, 2015, http://medicaleconomics.modernmedicine.com/medical-economics/news/defensive-medicine-balancing-act?page=full (Accessed 3/21/17).
“Physician spending and subsequent risk of malpractice claims: observational study” By Anupam Jena, et al., BMJ Vol. 351, (2015) p. h5520.
“Damage caps and defensive medicine, revisited” By Myungho Paik et al., Journal of Health Economics, Vol. 51 (2017), p. 84; “Rethinking the storyline for defensive medicine and medical liability: Causes, effects, and remedies” By David Hyman, Anupam Jena, and Michael Morrisey, American Enterprise Institute, Panel Event, December 2, 2015, https://www.aei.org/events/rethinking-the-storyline-for-defensive-medicine-and-medical-liability-causes-effects-and-remedies/ (Accessed 3/7/2017), imbedded video. Anupam Jena’s speech; “Replacing ObamaCare: Sorry, Republicans, ‘med-mal’ reforms don’t lower costs” By Dean Clancy, The Hill, January 4, 2017, http://thehill.com/blogs/congressblog/healthcare/312599replacingobamacaresorryrepublicansmedmalreformsdont (Accessed 3/7/2017).