Medical Malpractice Crisis

The Medical Malpractice Crisis: The Product
of Insurance Companies and a Threat to
Women's Health
Melissa Patterson*
I. Introduction
A burning question currently exists as to whether a medical
malpractice liability insurance crisis is at hand; and if one is,
what the United States should do about it. From coast to coast,
U.S. doctors, lawyers, insurance companies, legislators, and patients are debating whether states should enact limitations on
jury awards in medical malpractice cases. Specifically, the debate
centers around whether states should enact non-economic damage caps or if states that currently provide for such limitations
should change their existing laws.1 This debate has been furthered by research conducted by the federal government and
professional organizations.
This impetus for change is due to an outcry from the medical field and the insurance industry that large jury awards are
driving insurance companies out of business and raising doctors'
malpractice premiums to unattainable levels. In addition, physicians and insurance companies agree with the sentiment expressed by Dr. Mark Olesnicky, president of the Medical Society
of New Jersey, who described the implementation of non-economic damage caps as "taking away [a trial attorney's] candy
store," blaming the increases of medical malpractice premiums
* J.D., Quinnipiac University School of Law (expected May 2005), B.A. Sociology,
American University (2000). Lead Notes and Comments Editor, Quinnipiac Health
Law Journal. I would like to thank Professor W. John Thomas and student editors
Meghan Kantor andJill Alward for their guidance and advice in the completion of this
paper. I would also like to thank my parents, Robert and Lynne, and my fianc~e,Josh,
for their patience, love and constant support.
I Non-economic damages attempt to compensate plaintiffs for "pain and suffering, emotional distress, loss of consortium or companionship, and other intangible injuries." American Tort Reform Association, Tort Reform Record 29, Dec. 31, 2003,
available at http://www.atra.org/files.cgi/7668_recordl2-03.pdf (last visited Aug. 12,
2004).
QUINNIPIAC HEALTH LAW
[Vol. 8:109
on attorneys' fees and court costs. 2 Physicians and insurance
companies also claim that high jury awards have disproportionately affected high-risk medical specialties such as obstetrics, a
field which saw a 20% increase in malpractice liability insurance
rates in 2003.'
Many states have listened to these arguments. In 2003,
thirty-four states reviewed their current tort systems and considered malpractice reforms.4 Of the thirty-four states, eleven
5
adopted various laws regarding damage liability.
On its face, an easy answer to this problem would seemingly
be to limit damage awards. Doing so, however, would require
that other data be ignored. This data directly conflicts with the
claims of many proponents of non-economic damage caps. In
fact, some evidence concludes that no medical malpractice insurance crisis exists at all. This data also indicates that if a crisis
does exist, it has been caused by physicians leaving the field due
to an increase in premium rates by insurance companies trying
to cover the huge losses they suffered from poor investments
and a bad economy.'
The purpose of this Note is to show that insurance companies are shifting the burden for their poor investments onto physicians, and ultimately onto patients, through premium increases
to make up for their investment activity losses. The increase of
malpractice premiums has given many physicians an excuse to
leave or reduce their practices. Moreover, this Note will show
that the current malpractice insurance rates, coupled with noneconomic damage caps, discriminate against women in their
ability to get adequate health care and recovery for damages in
malpractice suits.
2 Doctors Agree with Federal Study that Shows Lawsuit Caps Keep Doctors in States,
BESTAIRE, July 21, 2003.
3 Fred J. Hellinger, Ph.D. & William E. Encinosa, Ph.D., The Impact of State Laws
Limiting Malpractice Awards on the Geographic Distribution of Physicians, U.S. Dep't of
Health & Human Services, at 2 (2003) (including abstract), available at http://
ww.ahcpr.gov/research/tortcaps/tortcaps.pdf (last visited Aug. 4, 2004).
4 National Conference of State Legislatures, Health Policy Tracking Service Issue
Briefs Summary - Medical Malpractice: Tort Reform,
4 (2003), available at http://
www.ncsl.org/programs/health/hptsMedMal.htm (last visited Aug. 4, 2004).
5 Id.
6 See generally Daniel Eisenberg et al., The Doctor Won't See You Now,
2003, at 46.
TIME,
June 9,
2004]
THE MEDICAL MALPRACTICE CRISIS
Section II provides a brief history of the medical malpractice insurance crises of the 1970s and 1980s. These decades
share similar characteristics with the present-day malpractice insurance situation. The actions taken in the 197 0s and 1980s to
stabilize premiums have been proposed as solutions today.
Section III outlines the positions which certain states and
organizations have taken in response to the current "crisis."
This section shows what steps states have already been taken with
regard to non-economic damage caps. It also outlines the arguments that the American Medical Association, the American Bar
Association, the American College of Obstetricians and Gynecologists, and three studies conducted by the federal government
have asserted with respect to non-economic damage caps. In addition, a brief outline of California's longstanding limitation on
non-economic damages is included inasmuch as California has
become a model for those advocating damage caps.
Section IV shows that there is some credence to the data
claiming that no widespread crisis exists. This section will show
that there does appear to be an absolute strain on medical professionals to pay their increased premiums which, in turn, is affecting these professionals' ability to treat patients. Evidence
presented in this section will show that this is caused, in part, by
insurance companies wishing to remain competitive and maintain low premiums at a time when claims were rising and premiums should have been increased to reflect those changes. This
section will further show that damage caps adversely affect women's ability to obtain proper obstetrical care since obstetrics, as
a high-risk specialty, has been hit particularly hard by the increase in malpractice premiums. If non-economic damage caps
are in place, recovery for women will be far more restricted than
it would be for a male malpractice victim since women tend to
be awarded more non-economic damages than men.
In conclusion, this Note recommends finding alternatives to
damage caps due to the disproportionate effect damage caps
have on women and the lack of consensus regarding the cause of
the increase in malpractice premiums.
QUINNIPIAC HEALTH LAW
[Vol. 8:109
Il.
Medical Malpractice Crises of the 1970s and 1980s
The tort of medical malpractice has a history which extends
far beyond the system within which doctors and lawyers practice
in modern times. As far back as 2030 B.C., the code of King
Hammurabi stated, " [i] f the doctor has treated a gentleman with
a lancet of bronze and has caused the gentleman to die, or has
opened the abscess of the eye of a gentleman with a bronze lancet, and has caused the loss of the gentleman's eye, one shall cut
off his hand."7 Under this model, "only the result mattered, not
the doctor's conduct."'
This strict view of medical malpractice has changed drastically since that time. Today, the standard of care that a physician must maintain is "that degree of skill and learning
ordinarily possessed and exercised, under similar circumstances,
by the members of his profession in good standing, and to use
ordinary and reasonable care and diligence, and his best judgment, in the application of his skill to the case."9 A medical malpractice claim is comprised of the following elements:
"establish [ing] the existence of a physician-patient relationship
giving rise to a duty; [d]emonstrat[ing] that the applicable standard has been violated; [e]stablish[ing] injury or damage; and
[d]evelop[ing] a causal relationship between the violation and
the alleged harm."'" Despite the long world history of medical
mistakes, medical malpractice claims were not a significant part
of the American tort litigation system until the 1970s. 11 Thereafter, the U.S., in the 1970s and 1980s, suffered from separate
medical malpractice insurance crises due in part to the withdrawal of some insurance companies from the business of medical malpractice insurance coverage. 2 Essentially, during these
cycles, medical malpractice insurance was considered by some to
Melvin M, Belli, Sr., J.D., The Evolution of Medical MalpracticeLaw, in LEGAL As3 (J.R. Vevaina et al. eds., Springer Verlag 1989).
8 Id.
9 Herbert Dicker, J.D. & Jeffrey D. Robertson, J.D., The Defense of a Malpractice
Case, in LEGAL ASPECTS OF MEDICINE 17 (J.R. Vevaina et al. eds., Springer Verlag 1989).
10 J.D. LEE & BARRY A. LINDAHL, MODERN TORT LAW § 25:1 (2d ed. 2002).
I 1 Frank M. McClellan, MEDICAL MALPRACTICE: LAW, TACTICS AND ETHICS 79
(1994).
12 Alan Feigenbaurn, Note, SpecialJuries: DeterringSpurious Medical MalpracticeLitigation in State Courts, 24 CARDozo L. REv. 1361, 1363 (2003); see Donald M. Taylor et al.,
One State's Response to the MalpracticeInsurance Crisis:North Carolina'sObstetricalCareIncentive Program, 107 PuB. HEALTH REP. 523 (1992).
7
PECTS OF MEDICINE
2004]
THE MEDICAL MALPRACTICE CRISIS
be "technically available" but "functionally unavailable.' 1 3 In response, legislatures enacted tort reforms to combat these crises,
14
in part, to "chill" plaintiffs' interests to sue.
Reforms were created in the 1970s to address fears that the
number of medical malpractice claims would leave patients without necessary medical services. 5 Many physicians reacted to the
withdrawal of some medical malpractice insurers by creating
"physician-sponsored malpractice insurers."16
In contrast, the 1980s presented a different problem. Medical malpractice insurance was more readily available; however,
premiums had increased, affecting obstetrics in particular. 7 Additionally, the increased costs of liability insurance affected not
only the medical field, but also businesses and municipalities. 8
In response, in 1986, various state legislatures enacted non-economic damage limits ranging from $250,000 to $875,000.19
Despite insurance companies, corporations, and the Reagan
Administration defending these tort reforms in order to combat
the liability insurance crises, consumer advocates questioned
whether these reforms were only established to increase the insurance companies' profits.
2
1
In fact, the constitutionality of
such reforms was questioned. Common claims included violations of the constutitionally-protected rights of "due process,
equal protection and jury trial." 2' In deciding these cases, courts
have used either a rational basis test or substantial relationship
test.2
2
For example, in 1983, the Supreme Court used a rational
13 Sandy Martin, M.D., Note and Comment, NICA - FloridaBirth-RelatedNeurological
Injury Compensation Act: FourReasons Vhy This Malpractice Reform Must Be Eliminated, 26
NOVA L. REV. 609 (2002) (quoting Thomas R. Tedcastle & Marvin A. Dewar, Medical
Malpractice: A New Treatmentfor an Old Illness, 16 FLA. Sr. U. L. REV. 535, 547 n.90
(1988)).
14 David M. Studdert, LL.B, Sc.D., M.P.H. & Troyen A. Brennan, M.D., J.D.,
M.P.H., Toward a Workable Model of "No-Fault" Compensationfor Medical Injury in the United
States, 27 AM. J.L. & MED. 225 (2001).
15 Christopher T. Stidvent, Note, Tort Reform in Alaska: Much Ado About Nothing?, 16
AIsiKA L. REV. 61, 67 (1999).
16 Randall R. Bovbjerg & Frank A. Sloan, No-Faultfor Medical Injury: Theory & Evidence, 67 U. CIN. L. Rhv. 53, 61 (1998).
17 Donald M. Taylor et al., One State's Response to the Malpractice Insurance Crisis:
North Carolina'sObstetrical Care Incentive Program, 107 PuB. HEALTH RaE. 523 (1992).
18 Stidvent, supra note 15.
19 Id. at 70.
20 Id. at 68.
21 McClellan, supra note 11, at 82.
22 McClellan, supra note 11, at 83. "Under the rational relationship test, the
QUINNIPIAC HEALTH LAW
[Vol. 8:109
basis test in reviewing legislation created in 1981 in response to
the medical malpractice insurance crisis of the 1970s. 23 The
Court determined, under the rational basis test, that no medical
malpractice crisis existed to justify Rhode Island's medical malpractice tort reforms. 24 However, in reviewing reforms under
the rational basis test, most courts have found them to have a
"legitimate purpose .. .in ensuring an adequate health care
25
system.
Despite the numerous changes States have made in response to the crises of the 1970s and 1980s, a decade later the
United States has found itself in a similar situation again.
Ill. Are We Currently Facing a Medical MalpracticeInsurance
Crisis?
Today, many in the medical, insurance and legal communities have determined that the United States is suffering its third
wave of a medical malpractice insurance crisis.2" Conversely,
studies have shown that the "crisis" is not as widespread as some
organizations and professionals have claimed. 27 Further, there is
dispute as to what the cause of this crisis is and if it does in fact
exist. 2' The current debate can be summed up as follows:
Supporters .. .maintain that [non-economic damage caps]
reduce[ ] malpractice premiums and help[ ] insure an adequate supply of physicians. They also assert that escalating,
multi-million-dollar jury awards are driving malpractice pre[court] limits its analysis to whether the government classification has a rational relationship to a legitimate government interest." Cheryl A. C. Brown, Comment, Challenging the Challenge: Twelve Years After Batson, Courts are Still Struggling to Fill in the Gaps Left
by the Supreme Court, 28 U. BALT. L. REv. 379, 386 (1999). The second test requires "the
government classification . .. [to] have a substantial relationship to an important government interest." Id. at 388.
23 Boucher v. Sayeed, 459 A.2d 87 (R.I. 1983).
24 Id. at 93.
25 McClellan, supra note 11, at 83.
26 See generally The Medical Liability Crisis: Talking Points, AM. MED. ASS'N, Jan. 21,
2003 (on file with author); see also Press Release, The American College of Obstetricians
and Gynecologists, ACOG Response to GAO Report on Liability Crisis (Sept. 25, 2003)
available at http://www.acog.org/fromhome/publications/press_releases/nrO9-2503.cfm (last visited Aug. 6, 2004) [hereinafter ACOG Press Release].
27 See generally U.S. GENERA! ACCOUNTING OFFpcp: REPORT TO CONGRESSIONAL RE-
GAO-03-836, Aug. 2003, available at http://wwv.allhealth.org/recent/audio 09-29-03/gao%20malpractice.pdf (last visited Aug. 6, 2004).
28 Conn. Governor Proposes Caps on Med-Mal Awards, BEsTwiRE, Sept. 18, 2003.
QtIEsTERS,
2004]
THE MEDICAL MALPRACTICE CRISIS
115
mium increases and that capping damage awards for pain
and suffering helps restrain the rate of increase. Without
such law, it is asserted that the loss of affordable medical malpractice insurance for physicians could eventually lead to the
loss of affordable, accessible health care. Opponents of this
legislation [generally] maintain that insurance companies are
trying to compensate
for poor business decisions and fading
29
investment income.
A.
States' Evaluation of the MalpracticeInsurance Crisis
In 2003, eleven states made changes to their tort laws regarding liability for medical malpractice damages." Of those
states, four states, Florida, Idaho, Nevada, and Texas, enacted or
1
changed the laws governing non-economic damage caps.
Florida created a $500,000 non-economic damage cap per
individual physician in malpractice lawsuits."
Florida also
placed a freeze on medical malpractice insurance premiums sold
in that state from July 1, 2003 until January 1, 2004.?
Idaho reduced the non-economic damage award cap for
personal injury cases from $400,000 to $250,000, subject to
change by the Idaho Industrial Commission.
Nevada capped non-economic damages in medical malpractice cases at $350,000." 5 Additionally, Nevada law now requires
120 days notice before that malpractice insurer can withdraw
from the market when the withdrawal of a malpractice insurer
will affect a physician's access to malpractice coverage.3 6 Fur29 Hellinger & Encinosa, supra note 3, at 1.
3o These states were "Arkansas, Florida, Idaho, Montana, Nevada, New Hampshire,
New York, Ohio, Texas, Utah and West Virginia." National Conference of State Legislatures, supra note 4.
31 Id.
32 National Conference of State Legislatures, supra note 4, 1 5; see American Tort
Reform Association, Tort Reform Record 30, Dec. 31, 2003, available at http://
www.atra.org/files.cgi/7668_recordl2-03.pdf (last visited Aug. 12, 2004) [hereinafter
Tort Reform Record].
33 National Conference of State Legislatures, supranote 4, 5.
34 National Conference of State Legislatures, supra note 4, 6.
35 Tanya Albert, Nevada Enacts Bold Tort Reforms, AMEDNEWS.COM, August 26, 2002,
available at http://www.ama-assn.org/amednews/2002/08/26/gvl 10826.htm (last visited Aug. 8, 2004); see American Tort Reform Association, Tort Reform Record 32, Dec.
31, 2003, available at http://www.atra.org/files.cgi/7668-recordl2-03.pdf (last visited
Aug. 12, 2004).
36 National Conference of State Legislatures, supra note 4, 8.
QUINNIPIAC HEALTH LAW
[Vol. 8:109
ther, the state may require that the insurer wait an additional
sixty days before withdrawing from the state.3 7 Nevada also specifically "prohibit[ed] insurers from increasing malpractice insurance premium rates because of investment losses.""
Texas enacted a law which would limit non-economic damages to $250,000 as to individual medical providers in malpractice cases. 39 A great incentive for such legislation came, in part,
from the Texas Liability Trust ("TLT").40 TLT promised to reduce doctors' malpractice insurance rates by 12% for their insured, which make up one-third of those doctors practicing in
Texas.4 1
Prior to 2003, several other states had enacted legislation to
limit non-economic damage caps. In 1975, California adopted a
non-economic damage cap in medical malpractice cases in the
amount of $250,000,42 a limit which other states have subse-
quently adopted. 43 Also in 1975, Indiana set a total damage cap
for medical malpractice cases at $750,000, but reduced the
health care provider liability to no more than $250,000." 4 Utah
and West Virginia both provide for an increase in the $250,000
limit based on inflation, but West Virginia does not allow the
increase to rise above $375,000.15
In 1986, Hawaii adopted a
non-economic damage cap of $375,000.46
Several states with non-economic damage caps have increased their stated cap or have provided that their non-economic damage cap is adjustable for inflation. For example,
37 Id.
Id.
39 Id. 13; see American Tort Reform Association, Tort Reform Record 33, Dec.
31, 2003, available at http://www.atra.org/files.cgi/7668_recordl2-03.pdf (last visited
Aug. 12, 2004).
40 The TLT was created in 1979 as a nonprofit "health care liability claim trust
owned by its Texas physician policyholders" to "offer a source of affordable and stable
medical liability insurance" for their physicians. Texas Medical Liability Trust, About
TMLT,at http://www.tmlt.org/overview/history (last visited November 2, 2004)
41 National Conference of State Legislatures, supra note 4,
14.
42 Cal. Civ. Code § 3333.2 (Deering 2003).
43 Other states that have adopted such a limit include the following: Colorado,
Indiana, Kansas, Montana, Utah and West Virginia. ADvocAcyv REs. CTR., AM. MED.
Ass'N, State Laws Chart L-Liability Reforms, June 17, 2003, (on file with author) [hereinafter State Chart 1].
38
44 I.
45 Id. Utah first enacted its legislation in 1986 and later in 2001, whereas West
Virginia did not enact its legislation until 2003. Id.
46
d.
2004]
THE MEDICAL MALPRACTICE CRISIS
Wisconsin adopted a non-economic damage cap of $350,000,
which is adjustable for inflation.4 7 Michigan's original non-economic damage cap of $280,000 was increased for inflation to
$349,700 in 2002.48 Although Missouri's non-economic damage
cap was set at $350,000 in 1986, that state increased its cap to
$557,000 as of February 1, 2003.19 Despite its original adoption
of a $250,000 limit in 1986, Colorado has increased its damage
amount to $300,000, effective July 1, 2003.50 Nebraska, New
Mexico, South Dakota, Virginia, and Louisiana have also placed
limitations on total or general damages.5"
Other states with non-economic damage caps have limited
the caps to certain specialities or set up other creative systems to
limit caps without setting an actual dollar amount. For example,
Oklahoma limited its non-economic damage cap of $300,000 to
apply only to obstetrical and emergency room care. 52 Ohio created a formula for determining non-economic damage caps
which is either $250,000 or three times the amount of the economic damages, whichever is greater, up to the amount of
$350,000." Alaska allows an award for non-economic damages
in the amount of either $400,000 or $8,000 times the victim's life
expectancy, whichever is greater.5 4 Maine has adopted a noneconomic damage limit of $400,000, which only applies to
wrongful death cases.5 5 Massachusetts, Mississippi, and North
Dakota have each adopted non-economic damage caps in the
amount of $500,000.56 Massachusetts and Mississippi legislation
indicates there are cases where this limit would not apply. Of
47 State Chart 1,supra note 43; see American Tort Reform Association, Tort Reform
Record 34, Dec. 31, 2003, http://www.atra.org/files.cgi/7668_recordl2-03.pdf (last visited Aug. 12, 2004). Wisconsin enacted tort reform legislation starting in 1979, while
making changes to it through the 1990s. State Chart I, supra note 44.
48 State Chart ,supra note 43.
49 Id.
50 Id.; see American Tort Reform Association, Tort Reform Record 29, Dec. 31,
2003, http://www.atra.org/files.cgi/7668 recordl2-03.pdf (last visited Aug. 12, 2004).
"p1 State Chart 1,supra note 43.
52 American Tort Reform Association, Tort Reform Record 33, Dec. 31, 2003,
available at http://www.atra.org/files.cgi/7668_Recordl2-03.pdf (last visited Aug. 12,
2004).
53 State Chart I, supra note 43.
54 Id.; see American Tort Reform Association, Tort Reform Record 29, Dec. 31,
2003, available at http://www.atra.org/files.cgi/7668_recordl2-03.pdf (last visited Aug.
12, 2004).
55 State Chart I, supra note 43.
56 d.
QUINNIPIAC HEALTH LAW
[Vol. 8:109
the two states, however, only Mississippi allows for an adjustment
for inflation." Maryland caps its non-economic damages for
wrongful death at $500,000 and provides for inflation adjustment in the amount of $15,000 per year." Thus, by October 1,
2002, Maryland's damage cap was $620,000. 59
Despite the number of states that have adopted caps or are
contemplating them, several states have found that non-economic damage caps are unconstitutional or have provisions in
their state constitutions which specifically prohibit them.6"
States have been, in part, swayed by individual physician activism on this subject. Doctors from New Jersey, Pennsylvania,
New York, Illinois, Connecticut, and West Virginia have been
staging walkouts and rallies with regards to the state of present
malpractice premiums." The famous ten-day closure of a
trauma center in Las Vegas, Nevada, which services 11,000 people a year, was the poster child for the Nevada medical malpractice reform.6 2 The closure, however, resulted from insured
medical professionals walking out on the trauma center to protest medical malpractice insurance increases as a means to have
legislators sit up and take notice.6 3 Finally, the general perception of states enacting these reforms is that "too much is being
spent both on the injured parties... and on getting compensation to the parties."6' 4
i.
The California Model
It is vitally important to look at what changes California has
made in the last thirty years to reform medical malpractice in a
discussion of non-economic damage caps because many states
contemplating reform cite California's Medical Injury Compensation Reform Act of 1975 ("MICRA") as a model.6" The use of
57 id.
58 Id.
59 Id.
60 State Chart I, supra note 43. These states are Arizona, Oregon, Pennsylvania, and
Washington.
61 Joan R. Rose, Liability Premiums Send PhysiciansMarching; focus on Practice, MED.
ECON., June 6, 2003.
62 Garry Boulard, The Doctors'BigSqueeze, ST. LEGISLATURES MAG., Dec. 2002, available at http://www.ncsl.org/programs/pubs/1202doc.htm (last visited Aug. 6, 2004).
63 Id.
64 FRANK A. SLOAN ET AL., SUING FOR MEDICAL MALPRACICE 3 (1993).
65 Hellinger & Encinosa, supra note 3, at 3.
2004]
THE MEDICAL MALPRACTICE CRISIS
the California model is not without merit. Between 1975 and
2000, medical malpractice insurance rates in California grew
only 167%, while rates in the rest of the country grew 505%.66
During the 1970s, insurance premiums increased by over
400% in two years in California.17 The California legislature responded to this increase by enacting MICRA.68 MICRA dealt
with the "procedural aspects of professional negligence actions
against physicians and other health care providers"6 9 by, inter
alia, limiting non-economic damages in medical malpractice
cases in the amount of $250,000.0
The provision of MICRA limiting non-economic damages in
medical malpractice cases was upheld in 1985 in Fein v.
PermanenteMedical Group.7" In Fein, Mr. Fein claimed that were it
not for a late diagnosis by certain physicians, his resulting heart
attack could have been prevented or lessened in its residual effects. 72 The jury awarded Mr. Fein $500,000 in non-economic
damages, which was later reduced to $250,000 by the trial court
based on MICRA.7 3 On appeal, Fein raised several constitutional
objections, including violations of his due process and equal protection rights."
Under Fein's claim for due process rights violations, the
court first reiterated the well settled law that "a plaintiff has no
vested property right in a particular measure of damages."7 5 Further, the court maintained that the "[1legislature retains broad
66 Id. Examples of the strong effect the California model has had on state legislatures can be seen from coast-to-coast. Before leaving office in July of 2004, the former
governor of Connecticut, John Rowland, endorsed a non-economic damage limit for
medical malpractice cases in the amount of $250,000 to combat a large increase in
medical malpractice insurance that was expected to occur in October, 2003. Conn. GovernorProposes Caps on Med-Mal Awards, supranote 28; CT: Rowland AgainstFederal Takeover
of Child Services Office, THE BULL.'s FRONTRUNNER, Sept. 17, 2003, at 1. In Nevada, the
president of the Physician Insurance Association of America was disappointed with the
new law which limited non-economic damages to $350,000, claiming that it fell "short
of MICRA... Albert, supra note 35.
67 Boulard, supra note 62.
68 3-31 CAL. TORTS §31.02[1] (Matthew Bender & Co. 2003).
69 Id.
70
Fein v. Perrnanente Med. Group, 695 P.2d 665, 679 n.13 (1985).
71 Id.
Id. at 670.
Id. at 670-71.
74 Id. at 679, 682.
75 Fein, 695 P.2d at 679 (citing Am. Bank & Trust Co. v. Cmty. Hosp. of Los GatosSaratoga, Inc., 683 P.2d 670 (1984)) (italics omitted).
72
73
QUINNIPIAC HEALTH LAW
[Vol. 8:109
control over the measure ...[and] timing, of damages that... a
plaintiff is entitled to receive, and ... [it] may expand or limit
recoverable damages so long as its action is rationally related to a
legitimate state interest."76 Under a rational basis analysis, the
appellate court noted that the legitimate state interest was the
increased cost of medical malpractice insurance and the "real
possibility" that it would affect medical care by either doctors
leaving their fields or practicing without insurance.7 7 The court
held that the legislation was rationally related to this state interest because this could leave "patients who might be injured by
such doctors with the prospect of uncollectible judgments."7
The appellate court also held that a cap on non-economic damages was rationally related to the interest of reducing the cost of
medical malpractice insurance itself.7"
Mr. Fein also made a claim that the non-economic damage
cap violated his equal protection rights because the section pertained only to victims of medical malpractice and not other tort
victims."0 The appellate court, in dismissing this claim, cited its
previous discussion of the due process violation claim and,
again, held that the legislature was "responding to an insurance
'crisis' in that particular area and that the statute . . . [was] ra-
tionally related to the legislative purpose."81 In addition, the
court and the legislature identified the problem of "unpredictability of the size of large [non-economic] damage awards, resulting from the inherent difficulties in valuing such damages
and the great disparity in the price tag which different juries
place on such losses. 8s2 Therefore, the appellate court held that
"[t]he [1legislature could reasonably have determined that an
a more stable base on
across-the-board limit would provide
83
which to calculate insurance rates."
Since Fein, the California courts have applied the $250,000
limit on "each separate and independent claim based on a negli76
Id. (italics omitted).
77 Id.
78
Id. (italics omitted).
79 Id. (italics omitted).
80 Fein, 695 P.2d at 682 (italics omitted).
81 Id. (italics omitted).
82 Id. at 682 (italics omitted).
83 Id. at 683 (italics omitted).
2004]
THE MEDICAL MALPRACTICE CRISIS
gent act."8 4 In Colburn v. United States,8 5 the court held that
86
$250,000 was the maximum recovery for one plaintiff. In that
case, Mr. and Mrs. Colburn each sued on various claims for the
death of their twin children which occurred a few hours after the
twins' birth.87 The court concluded that "MICRA provides a
88
$250,000 maximum aggregate recovery for a single plaintiff."
Therefore, Mr. and Mrs. Colburn, together, could only recover a
maximum of $500,000.89
The California model may not justify its severe restrictions
on medical malpractice victims. In 2000 "the average .
.
. pre-
mium per doctor in California was only 8.2 percent below that of
the nation."9 In addition, the amount which malpractice victims may now recover is significantly less than that of malpractice
victims in 1975 because the $250,000 cap set in 1975 would equal
$780,000 today if adjusted for inflation.9 1 Despite this data and
the harm these caps can have on malpractice victims, states prefer a bright line test, such as California's cap, for limiting damages rather than one which takes into consideration the fact that
this limitation more harshly affects the cases of more severe
medical malpractice or other facts and circumstances.
B.
American Medical Association's Evaluation of the
Malpractice Insurance Crisis
The American Medical Association ("AMA") has cited the
following twelve states as suffering a medical malpractice crisis:
Florida, Georgia, Mississippi, Nevada, New Jersey, New York,
Ohio, Oregon, Pennsylvania, Texas, Washington and West Virginia." In addition, the AMA claims thirty other states are on
84 3-31 CAL. TORTS § 31.50[2] [a] (Matthew Bender & Co. 2003).
Colburn v. United States, 45 F. Supp. 2d 787 (1998).
86 Id. at 793.
87 Id. at 788-789.
88 Id. at 793.
85
89 Id.
9o National Conference of State Legislatures, State Health Care Containment Ideas,
July 2003, http://www.ncsl.org/programs/health/HealthCostsrpt.htm#med (last visited Aug. 8, 2004).
91 Douglas Waller, Why Nothing Gets Fixed; A Frustrated Lawmaker, TIME, June 9,
2003, at 46.
92 The Medical Liability Crisis: Talking Points, AM. MED. Ass'N, Jan. 21, 2003 (on file
with author).
QUINNIPIAC HEALTH LAW
[Vol. 8:109
the verge of such a crisis. 3
The AMA suggests that these problems are the result of
high jury awards9 4 and increasing liability insurance rates which
are forcing "physicians to limit services, retire early, or move to a
state with reforms where premiums are more stable."9 As such,
the AMA supports the adoption of non-economic damage limitations in order to stabilize "the liability insurance market by
prohibiting excessive damage awards."9 6 The AMA cites to California as a model for non-economic damage9 7 cap legislation and
as proof that these limitations are effective.
C.
American Bar Association's Evaluation of the Malpractice
Insurance Crisis
On the other hand, the American Bar Association ("ABA")
has stated that the current wave of medical malpractice liability
insurance problems have stemmed from losses due to insurance
companies' bad investments which are subsequently passed on
to the insured. According to ABA President Alfred P. Carlton,
Jr., "a 50-year review of the investment cycle indicates that every
time investment returns decline, insurance premiums increase."96 Carlton goes on to deny there is any "credible evidence available to demonstrate any variable other than
investment returns that affects insurance premiums."9" Carlton
states that " [f]rom West Virginia to Louisiana to Missouri, caps
on jury awards have failed to lower malpractice insurance premiums in states across the country."' 0 0
Based on this evidence, the ABA offers options to states
other than non-economic damage caps including: providing
state courts flexibility in overturning outrageous awards; disciplining attorneys who bring frivolous claims; and adopting a
93 Id.
94 ADvoCAcy RESOURCE CiR., AM. MED. Ass'N, Liability Reform: Common Provisions of State Tort Reform Laws, March 2002, available at http://www.ama-assn.org/
ama/pub/catcgory/7470.html (last visited Aug. 6, 2004).
95 Id.
96
Id.
97
d.
98 Press Release, American Bar Association, Medical Malpractice Liability: A Case
for Real Reform, (July 2003), available at http://xww.abanet.org/media/jul03/
july-oped.html (last visited Aug. 6, 2004) [hereinafter ABA Press Release].
99 Id.
100 Id.
THE MEDICAL MALPRACTICE CRISIS
2004]
"'clear and convincing' evidence standard for punitive damages
in all personal injury cases, including medical malpractice
cases."1 0 ' Finally, the ABA calls for the legal and medical communities to work together to find a solution to the medical malpractice problem.' 1 2 As Carlton has characterized it, "the
problem with medical malpractice is not the tort system; the
10 3
problem with medical malpractice is medical malpractice.
More of the focus should be on the damage medical malpractice
is causing the patient rather than on the damage awards patients
receive.
D. American College of Obstetriciansand Gynecologists'
Evaluation of the MalpracticeInsurance Crisis
The American College of Obstetricians and Gynecologists
("ACOG") has cited the following states as being embroiled in a
medical malpractice insurance crisis: Florida, Georgia, Mississippi, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas, Virginia and Washington. ' °4 Those states with a
crisis "brewing" are: Alabama, Connecticut, Illinois, Kentucky,
Missouri and Utah.10 5 The ACOG used the following factors to
come to this conclusion:
the lack of available professional liability coverage for ob-gyns
in the state; the number of carriers currently writing policies
in the state, as well as the number leaving the medical liability
insurance market; the combination of geographical, economic, and other conditions exacerbating an already existing
shortage of ob-gyns and other physicians; the state's tort reform history, and whether tort reforms have been passed by
future and
the state legislature - or are likely to be in 1 the
6
subsequently upheld by the state high
court. 0
The ACOG believes that tort reform is required to combat
the increasing number of doctors that are leaving the profession;
fight the proposed insurance rate increase of 125% startingJanuary 1, 2004; and solve the problem of only a small number of
11] Id.
102 Id.
103 ABA Press Release, supra note 98.
104 ACOG Press Release, supra note 26.
105 Id.
106
Id.
QUINNIPIAC HEALTH LAW
[Vol. 8:109
medical students choosing to become ob-gyn residents.' 1 7 The
ACOG points to a survey it conducted of its members in 2003 in
which 27% of those surveyed stated to have cut back on their
obstetrical practices.'
The survey also found that 12% of those
obstetricians cut back on their surgical practices because of what
they have determined to be a "liability crisis."'0 9
While certain studies have pointed to the absence of a medical malpractice insurance crisis, the ACOG challenges this assertion by claiming that the measure for whether a crisis exists
depends on if women "have timely, meaningful access to quality
health care." ' The ACOG posits that the increase in liability
insurance has adversely affected a woman's ability to obtain quality obstetrical and gynecological care, thereby creating a medical
malpractice liability insurance crisis.
E. The Federal Government's Evaluation of the Malpractice
Insurance Crisis
The federal government has released three reports of note
which address whether a medical malpractice insurance crisis exists and the possible causes for such a crisis. The United States
Department of Health and Human Services ("HHS") issued two
of the reports. The United States General Accounting Office
("GAO") issued the third report. The HHS reports concluded
that non-economic damages caps have either been beneficial to
the insurance crisis or, at least, have had a positive effect on the
amount of doctors practicing in states with non-economic damage caps.111 Conversely, the GAO report found that a medical
1 12
malpractice insurance crisis does not exist.
Id.
108 Id.
109 ACOG Press Release, supra note 26.
110 Id.
107
111 OFFICE OF THE ASSISTANT SEC'Y FOR PLANNING & EVALUATION, U.S. DEP'T OF
HEALTH & HuMAN SERVICES, Addressing the New Health Care Crisis: Reforming the
Medical Litigation System to Improve the Quality of Health Care, March 3, 2003, http:/
/www.aspe.hhs.gov/daltcp/reports/medliab.pdf (last visited Aug. 6, 2004); Hellinger &
Encinosa, supra note 3, at 1.
112 U.S. GENERAL AccouNTING OFFICE, supra note 27, at 5.
THE MEDICAL MALPRACTICE CRISIS
2004]
i.
Addressing the New Health Care Crisis: Reforming the
Medical Litigation System to Improve the Quality of
13
Health Care
The HHS report concluded that "[h]igher costs for defending claims, larger judgments, particularly for subjective non-economic damages in states that have not introduced reasonable
limits on non-economic damages, and settlements that reflect
the trend of jury awards are raising insurers' costs" thereby decreasing the access to quality health care.' 14
A recent survey, conducted by Harris Interactive, found that
76% of physicians questioned were "concerned" about their capability to provide quality health care due to malpractice
cases."-' Moreover, a vast majority of the physicians surveyed
said they order more medical tests for patients than medically
necessary.' 16 Ninety-one percent of those surveyed stated that
they believed other doctors order more tests than medically necessary.117 In addition, a vast majority of those physicians surveyed have been referring patients to specialists more than is
medically necessary, "recommend [ing] more invasive procedures . . . to confirm diagnoses," and finding that other physicians are over-prescribing medications." 8
The study reported that from 2001 to 2002 states without
"[m]eaningful caps" had seen premium increases for certain
specialists including "internal medicine, general surgery or obstetrics-gynecology[,]" ranging from 36 to 113%.119 On the
other hand, the report does not explain why, in 2002, the state
of Washington, which did not have a non-economic damage cap,
had malpractice liability rates for ob-gyns which were lower than
those offered in Montana, a state with a non-economic damage
cap of $250,000.121 In addition, the report did not explain why
Hawaii, a state with a non-economic damage cap of $350,000,
113 OFFICE OF THE AssisTANT SEC'Y FOR PLANNING & EVALUATION, supra note
111.
114 Id. at 36.
115 Id. at 7.
116 Id.
117 Id.
118 OFFICE OF THE ASSISTANT SEC'Y FOR PLANNING
& EVALUATION, supra note 111.
119 Id.
120 Id. at Table 7. The lowest liability insurance rate in Washington was $30,900
and the highest rate was $51,900. The lowest liability insurance rate in Montana was
$33,900 and the highest rate was $52,200. Id.
QUINNIPIAC HEALTH LAW
[Vol. 8:109
had lower insurance rates for ob-gyns than Utah, a state with a
$250,000 non-economic damage cap.121
ii.
The Impact of State Laws Limiting MalpracticeAwards on
1 22
the Geographic Distributionof Physicians
This report by the HHS concluded that states which established non-economic damages caps saw a larger increase of doctors from 1975 to 2000 than states without non-economic
damages caps.1 2 1 Specifically, on average, states with non-economic damages caps had twenty-four more physicians per
100,000 people than in states without non-economic damage
caps. 12 Therefore, "[s] tates with caps on noneconomic damage
awards or caps on total damage awards benefit from about 12
percent more physicians per capita than [s]tates without such
laws."" 25 The report also cited to previous research which concluded that the more directly a tort reform law affects the actual
malpractice damage award, the more of a direct impact there
2 6
will be on malpractice premiums.1
iii.
Medical Malpractice:Implications of Rising Premiums on
Access to Health Care'2 '
The GAO studied nine states, five of which the AMA determined to be in a medical malpractice insurance crisis, and concluded that "[a] ctions taken by health care providers in response
to rising malpractice premiums have contributed to localized
health care access.
. .
however.., many of the reported provider
actions were not substantial or did not affect access to health
t 28
care on a widespread basis.'
Other studies, such as those HHS completed, 129 determined
medical malpractice insurance rates in states without non-economic damages caps grew more quickly than those states with
121 Id. The liability insurance rate in Hawaii was $42,900. The lowest liability rate
was $46,900 for Utah and the highest rate was $60,000. Id.
122 Hellinger & Encinosa, supra note 3.
123 Id. at 1.
124 Id.
125 Id. at 13.
126 Id. at 13-14.
127 U.S. GENERAL ACCOUNTING OFFICE, supra note 27.
128 Id. at 1.
129 OFFICE OF THE ASSISTANT SEC'Y FOR PLANNING & EVALUATION, supra note 111, at
25 tbl.7.
THE MEDICAL MALPRACTICE CRISIS
2004]
such caps. However, the GAO could not conclude these differences "were caused by tort reform laws or other factors that in13
such as "state laws regulating the
fluence such differences,""
premium rate-setting process[ ] and certain market forces, inand including the level of market competition among insurers
131
terest rates that affect insurers' investment returns.
The GAO study did find that certain parts of the U.S. had
experienced a decrease in medical care. 13 2 An example used in
the GAO study was an area of rural Mississippi, where pregnant
women must drive an hour to deliver their babies because the
closest hospital is located sixty-five miles away. 13' Additionally,
the study found that some physicians did reduce their services in
affecting
response to malpractice insurance increases, thereby
13 4
services such as emergency surgery and obstetrics.
The Current Medical MalpracticeDilemma and its Damaging
Effects
IV
Although some in the medical and legal fields disagree as to
the existence or extent of the medical malpractice crisis and
what the cause of the crisis may be, it is clear that there have
been increases in liability insurance for physicians, especially in
the high risk fields of obstetrics. Proponents of limitations on
non-economic damages cite to California as an example of how
these reforms can work. They argue that since California has
imposed these caps it has seen an increase of 167% in malpractice insurance premiums while the rest of the country has seen
an increase of 505%.135 Opponents of caps cite the insurance
reforms instituted in California starting in 1988 which regulate
how high insurance premiums can be raised in the state as the
slow increase of malpracreal driving force behind California's
136
tice insurance premiums.
In determining the existence of a medical malpractice crisis,
one might question whether the crisis is related to a large
130
131
132
133
U.S. GENERAL ACCOUNTING OFFICE, supra note 27, at 1.
Id. at 6.
Id. at 5.
Id.
134 Id.
135 Hellinger & Encinosa, supra note 3, at 2.
136 OFFICE OF THE ASSISTANT SEC'Y FOR PLANNING
35.
&
EVALUATION,
Supra note 111, at
QUINNIPIAC HEALTH LAW
[Vol. 8:109
amount of litigation. This, however, is not the case. Seventy percent of the claims in medical malpractice cases are either dismissed or end with no payment made on the claim. 137 In
addition, the Harvard Medical Practice Survey found that "only
1.53% of patients injured by medical negligence filed malpractice claims.
' 138
The Harvard Survey suggested that legislatures
should focus on the inaccessiblility of the malpractice system to
injured parties. 13 9 Studies from the past fifteen years show that
"the public policy problem is too much medical malpractice, not
too much medical malpractice litigation.' 14 0
Assuming, arguendo, that a medical malpractice liability insurance crisis exists, the follow-up question should be whether
the crisis was created by large jury awards. Initial research has
indicated that compensation for victims of medical malpractice
"does not increase the costs of medical malpractice [because]
liability-based compensation shifts already existing costs from innocent victims (and their health insurers) to the party that
caused the harm.' 1 4 1 This research concludes that general mal-
practice compensation is already being built into the malpractice liability system and, therefore, jury awards do not cause the
drastic increases in malpractice insurance premiums.
Conversely, other research has found that jury awards have
been growing faster than the rate of inflation over the past ten
years. 142 In support of this assertion, insurance companies claim
that huge losses caused by increasing jury awards have affected
their ability to continue to cover medical malpractice insurance.
St. Paul Companies, which insured approximately ten percent of
medical providers on a national level, claimed "hundreds of millions" in losses, thereby justifying their withdrawal from the medical malpractice market in December 2001.143 To the contrary,
research indicates that "the amount insurers have paid out, inBoulard, supra note 62.
Ken Marcus Gatter, The Continued Existence and Benefit of Medicine's Autonomous
Law in Today's Health Care System, 24 DAYrON L. REv. 215, 249 (1999).
139 Tom Baker, Research on Medical Malpractice:Implicationsfor Tort Reform in Connecticut 2 (January 2, 2003) (on file with the author).
137
138
140
Id. at 1.
Id. at 6-7.
Boulard, supra note 62 (providing that jury awards have grown by 7% per annum while the rate of inflation is only 4% per annum).
143 Id.
141
142
2004]
THE MEDICAL MALPRACTICE CRISIS
cluding all jury awards and settlements, has risen no faster than
medical inflation for thirty years." '44
From 1997 until 2001, the number of malpractice cases have
remained the same. Although the median jury award during
this time has increased two-fold, to $1 million, this result only
counted for "1% of lawsuits that are won by plaintiffs."14 Research indicates that despite these jury awards, damage limitations "do not in any way reflect the damages incurred in
particular cases and only affect the high-loss cases where undercompensation tends to be greatest."' 4 6 In addition, "[s]ince
1990, one-third of malpractice awards and settlements have resulted from just 5% of doctors making such payouts."14' 7 Further,
according to a report by Jury Verdict Research, from 1996 to
2002, 8the majority of plaintiffs lost their cases that went to a
jury.14
In addition, juries are not as emotion-driven and irrational
as some damage limitation proponents assert.14 Research indicates that juries are very skeptical as to plaintiffs' cases in civil
court.1 5 ° Expert witnesses do not overwhelm juries with their testimony and independent medical experts and juries tend to
agree as to the outcome of the case. 15 1 Where jury verdicts are
not consistent with the law or the evidence, judges or a settlement between the parties will reduce the award "for a fraction of
the verdict." 152
A complaint of the opponents of non-economic damage
caps is that rather than reduce the amount of malpractice in the
U.S., caps only assist in "reducing the penalties and immunizing
physicians from liability.
144
'1 5 3
Caps shift the burden onto other
To Amend? Proposition 12; Insurers Share Blame for Rise in MalpracticeRates, Some
Say, Hous. CHRON., August 27, 2003 [hereinafter 7o Amend?].
145 Eisenberg, supra note 6, at 46.
Sloan, supra note 64.
147 Eisenberg, supra note 6, at 46; see Robert Ward Shaw, Comment: Punitive Damages in Medical Malpractice:An Economic Evaluation, 81 N.C. L. REV. 2371, 2372 (2003).
148 Press Release, Jury Verdict Research, Jury Verdict Releases Verdict Survey,
(April 1, 2004), available at http://ww.juryverdictresearch.com/PressRoom/
Press _Releases/verdict survey/verdict.survey8.htrnl (last visited Aug. 8, 2004).
149 See generally Baker, supra note 139.
150 Id. at 6.
151 Id.
146
152 Id.
153 HARVEY F. WACHSMAN & STEVEN ALSCHULER, LETHAL MEDICINE: THE EPIDEMIC OF
MEDICAL MALPRACTICE IN AMERICA
175 (1993).
QUINNIPIAC HEALTH LAW
[Vol. 8:109
sources, such as Medicaid, to adequately compensate the victim."' In addition, only twenty-eight cents for every malpractice
insurance premium dollar is allocated to patients while seventy155
Maltwo cents on the dollar is used for administrative costs.
practice victims are further burdened by the fact that because of
the increase of malpractice insurance rates, some physicians
have refused to continue to carry the insurance where state law
allows.15 6 Therefore, if medical malpractice claims are not adequately compensating victims and not "effectively deter [ring] fuonly serve as a
ture injuries" non-economic damage caps will
1 57
further collateral harm to malpractice
Victims.
To further complicate the matter, recent studies point to a
correlation between the medical school a doctor attends and his
or her chance of being sued for medical malpractice. 5 The
British Medical Association concluded from the 30,000 U.S. doctors surveyed, a doctor's medical school was a "clear indicator" of
the doctor's chances of being sued for malpractice. 5 9 The University of Tennessee Health Science Center in Memphis concluded in their study of 30,000 doctors that 11 % of the doctors
practicing in Florida, Maryland and Louisiana were involved in a
lawsuit during the eight years the study was conducted."' This
study also concluded graduates of certain schools who were sued
would continue to be sued for medical malpractice, while those
graduates who did not get sued would generally continue to escape being sued over time.1 6 '
A.
Insurance Companies as the Root of the Medical Malpractice
Crisis
Although little consensus exists as to the cause of this crisis,
what can not be disputed is the fact that medical liability insurance rates are increasing every year and insurance companies
are reporting losses every year. For example, ISMIE Mutual Insurance Company, Illinois' largest medical malpractice insurer,
154 Id. at 181.
155 Hellinger & Encinosa, supra note 3, at 1.
156 U.S. GENERAL ACCOUNTING OFFICE, supra note
157 Gatter, supra note 138, at 251.
27, at 25.
158 New Study: Education Tied to Medical Malpractice Risk, BsTrWnRE, Oct. 10. 2003.
159 Id.
16o Id.
161
Id.
2004]
THE MEDICAL MALPRACTICE CRISIS
projected an increase in premiums by an "average annual baserate" of 35.2% beginning in late 2003.162
When insurance companies are not increasing their rates,
they have stopped selling coverage in certain states or have totally withdrawn from the market. In 2001, the United States'
largest malpractice carrier, St. Paul Companies, completely withdrew from selling medical malpractice coverage. 163 While this
left 9% of doctors without coverage, the market was hit harder
with the loss of other companies such as PHICO, Frontier Insurance, and Doctor's Insurance Reciprocal."' Other companies
such as MIXX restricted their business to include malpractice
165
coverage in only certain states.
The reason for the withdrawal of insurance companies can
be explained by the statistics. "In 2001 medical-malpractice insurers paid out $1.53 in claims and expenses for each $1 in premiums they collected. The industry has lost a combined $8
billion since 1995, and its reserves for estimated fiture claims
are underfunded by about $4.6 billion."16 6
What these statistics do not explain is what is causing the
malpractice premiums to increase. A report from the HHS
states "the industry wide allocation of assets into equities has
been relatively constant. Medical malpractice insurers' investments in equities as a percentage of total assets ... has been 11%
or less."' 167 This report relied, in part, on Brown Brothers Harriman & Company's research which found that "the performance
of the economy and interest rates [did] not determine medical
malpractice premiums."16'
On the contrary, research has concluded that insurance
companies have been the true cause of their own market losses
by makng poor investments and by trying to undercut their competitors' premium rates in spite of falling profits.' 69 Weiss Rat162 Midwest, MOD. HEALTHCARE, May 19, 2003.
163 OFFICE OF THE ASSISTANT SEC'Y FOR PLANNING & EVALUATION, supTra note
111, at
21.
164 Id.
165 Id.
166 Eisenberg, supra note 6, at 46.
167 OFFICE OF THE ASSISTANT SEC'Y FOR PLANNING & EVALUATION,
33.
168 Id. at 34.
169 Eisenberg, supra note 6, at 46.
supra note
111,
at
QUINNIPIAC HEALTH LAW
[Vol. 8:109
ings completed a study that concludes that the current medical
malpractice insurance crisis was caused by insurers failing to
raise their premium rates in the 1990s although claims increased.17 0 The study found that between 1991 and 2002, medical malpractice premiums had a median increase of 36%
whereas states with damage limitations experienced premium increases of 48%.171 The study also found that claims rose 38% in
states with damage caps while claims in states without caps rose
71%.172 Thus, "[b]y raising premiums, insurers have improved
their ratio of claims to premiums, a key measure of profitability,
from 110% in 2000 to 89% in 2002."' 73
Prior to and during the 1990s, an intense competition existed among medical malpractice insurance carriers. 1 74 Because
of this competitive market and the profitable investment returns
during this time period, insurance companies continued to
charge the same premium amounts despite the increase in mediclaims.1 75 The insurance industry calls this a
cal malpractice
"soft cycle. ' 176 In fact, between 1992 and 1998, despite an in177
crease in losses, insurance rates remained relatively constant.
Insurers tend to rely on their investments, making approximately "20% of their investment income from stocks."17 When
the economy began to suffer, the premiums that the malpractice
insurers had purposely kept low in order to be competitive, were
insufficient to cover the companies' losses. 179 This resulted in
what insurers call a "hard cycle."' 80 At that point, with interest
rates and the stock market down, "insurers were forced to raise
rates."1 8 '
To keep their premium rates low, normally insurers make
investments "about 80 percent of which are usually some combi170 Id.
171 Id.
172 Id.
173 Id.
174 To Amend?, supranote 144.
175 Eisenberg, supra note 6, at 46.
176 To Amend?, supra note 144.
177 Id,
178
Jyoti Thottam, He Sets Your Doctor'sBill; A ChastenedInsurer, TIME, June 9, 2003, at
50.
179
To Amend?, supra note 144.
180 Id.
181 Id.
THE MEDICAL MALPRACTICE CRISIS
2004]
nation of U.S. Treasury, municipal and corporate bonds." '8 2
When the insurance companies were forced to increase their
premiums due to their poor investment returns, they begged for
relief in the form of non-economic damage caps.' 8 3 Whereas the
insurance companies were blaming this hard cycle on malpractice jury awards, hard and soft cycles are considered common in
the insurance industry. 18 4 Further, some have claimed, including a former Texas Insurance Commissioner, that these same
hard and soft cycles were present during the medical malpractice crises of the 1970s and 1980s. 8t ' The research shows that
insurance companies were losing money during this time, but
these losses were not, however, the result of malpractice claims,
but rather were the result of the companies' poor investment
choices and common industry cycles.
While some states do not regulate insurance rates, other
states, such as California, require insurers to obtain the state's
approval before changing their rates. 8 6 In addition, many states
restrict how much an insurance company may invest in stocks.18 7
These restrictions may also prove to be an important variable in
determining whether a state has low malpractice insurance liability rates because of non-economic damage caps, or rather, because the state regulates these rates.
Further, insurance companies have a great incentive to litigate medical malpractice claims because litigation "increases the
time between the collection of premiums and the payment of
claims, thereby increasing the investment income liability insurers can earn on their reserves."1 88
Another interesting fact is that physicians own approximately 60% to 70% of the companies insuring physicians for
malpractice.' 8 9 Not only are physicians taking part in the decision to raise rates for malpractice insurance, but they also play a
182 Id.
183
Baker, supra note 139 at 6.
184 Id.
185 To Amend?, supra note 144.
186 U.S. GENERAL ACCOUNTING OFFICE, supra note 27, at 37.
187 OFFICE OF THE ASSISTANT SEC'Y FOR PLANNING & EVALUATION, supra note
111, at
33.
Baker, supra note 139, at 7.
Amid Ongoing Medical-Malpractice Crisis, Farmers Drops Line, BEsTwIRE, Sept. 25,
2003, at 1.
188
189
QUINNIPIAC HEALTH LAW
[Vol. 8:109
part in lobbying states to limit malpractice victim awards in addition to being part of the group that is responsible for malpractice in the first place.
B.
Effects of Non-Economic Damage Caps on Women's Health
The obstetrical field has been placed under a strain due in
part to the increase of malpractice insurance. On average, obgyns pay $56,546 per year in malpractice insurance and experienced an average increase of 19.6% in malpractice insurance
premiums from 2001 to 2002.190 As stated previously, the ACOG
found that a portion of their obstetric Fellows have reduced
their practices allegedly in response to their malpractice premium increases.' 9 1 In addition, although the GAO found that a
widespread medical malpractice crisis did not exist, evidence
shows that pregnant women residing in some rural areas had to
travel farther distances than previously for their obstetrical care
because obstetricians either reduced or closed their practices.' 9 2
On the local level, New Jersey State Senator Joseph Vitale
commissioned a study that concluded the insurance crisis was
not as widespread as once perceived in that state.19 The study
found that 7.4% of the 17,533 medical providers questioned
found their malpractice insurance increased by more than thirty
percent in the first nine months of 2002. On the other hand,
21% of the obstetricians surveyed experienced increases of more
than 30% of their insurance premiums.'" Rather than follow
suggested state subsidies for docthe California model, the study
19 5
tors in these high-risk fields.
Moreover, some insurance companies are posing incentives
to obstetricians to increase their patient load in order to bring in
more fees. Nevada Mutual Company engaged in a tiered pricing
system with obstetricians by reducing their malpractice insurance rates by up to 33% based on a delivery rate over 124 babies
each year.' 96 Nevada Mutual seemingly placed itself in a posi190 Eisenberg, supra note 6, at 46.
191 ACOG Press Release, supra note 26.
192 U.S. GENERAL AccouNTING OFFICE, supra note 27, at 5.
193 New Jersey: Study Examines Malpractice Insurance Crisis, Am.HEALTH LINE, Jan. 23,
2003.
194 Id.
195 Id.
196 Joelle Babula, 'Veiy, Very, Very Good News. Ob/Gyns Hail New InsuranceRules, LAs
2004]
THE MEDICAL MALPRACTICE CRISIS
tion where it could demand obstetricians see a certain number
of patients, thereby increasing the possibility of a medical mistake, while lobbying legislators to cap the amount of damages
that a victim can recover based on these medical mistakes. Subsequently, the Nevada Insurance Division banned such tiered
1 97
pricing schemes with regard to deliveries.
In addition to the effects of increases in medical malpractice rates, ob-gyns are no strangers to the courtroom for medical
malpractice cases. During an ob-gyn's career, he or she will be
sued on average 2.5 times.19 One-quarter of ob-gyns are sued
during residency.19 9 Further, "[tihe median award for medical
liability in childbirth cases ... is the highest for all types of medical liability cases. '2 0 Despite the claims of a widespread exodus
of ob-gyns from obstetrics due to their alleged inability to stay in
practice, the American Medical Group Association found that
the mean compensation of an ob-gyn physician was approximately $256,000 in 2002.201
Notwithstanding the large recoveries in some obstetrics malpractice cases, evidence shows that plaintiffs are overall winning
fewer cases. 20 2 Additionally, where damages have been awarded,
non-economic damage caps severely harm the victim's ability to
recover and discriminates against female victims.
Though plaintiff recovery in childbirth negligence cases
dropped from 45% in 1999 to 34% in 2000, it has increased to
60% in 2002.203 There is no guarantee, however, that this recovery percentage level will be maintained since, as Jury Verdict Research has described the situation, "[i] t's safe to say the trend is
no trend, according to [the] latest figures. '204 In addition, economic loss is rarely recovered where the victims have been inREv.J., Jan. 23, 2003, http://www.revicwjournal.com/lvrj-home/2003/Jan-23Thu-2003/news/20533375.html (last visited Aug. 8, 2004).
VEGAs
197 Id.
198 Joan R. Rose, The Medmal Crisis Casts a Shadow Over the Sunshine State... While
More States Face an OB Crisis, MED. ECON., July 11, 2003, at 24
199 Id.
Id.
201 AIS Health, 2002 Was Mixed Year for MD Pay as Income Fell in Seven Key Specialties, AMGA Says (Sept. 2003) (on file with author).
202 Jury Verdict Releases Verdict Survey, supra note 148.
200
203 Id.
204
Id.
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[Vol. 8:109
jured at birth,2"' so the plaintiff's only chance for recovery might
be non-economic damages. 20
6
Moreover, "birth-related injuries
permanent, expensive to treat, and disruptive to
tend to be
207
families.
In addition to women winning fewer of these cases, limitations on damage awards affect women more harshly because as a
group they consistently recover more in non-economic damages
total damage
than male plaintiffs,"0 ' even though male2 plaintiffs'
9
awards are larger than female plaintiffs.
There are two reasons for this phenomenon. "First, the
largest part of the economic damages in many tort claims is lost
2 10
wages[ ] and women earn on average less money than men.
In fact, the U.S. Department of Labor found that in 2002 women
earned 78% of what men earned that same year.2 1 1 "Second, the
most significant effect of many medical and other injuries inflicted on women is harm to reproductive capacity... [which]
does not entitle women to receive significant economic damages." 212 Additionally, "in cases where women are sexually as-
saulted, including by health-care providers, more than 90% of
the average tort awards were for non-economic loss. A cap
would amount to a virtual ceiling on recovery. "213
In effect, a limit on economic damages would affect highincome wage earners, a group which generally does not include
women and minorities. 214 Women and minorities generally earn
less and, as such, would "receive lesser amounts of economic-loss
compensation than more economically well-off white men. "215
Where this form of institutional discrimination becomes even
more pronounced is in the case of low-income women.
205 SLOAN, supra note 64, at 225.
206 Id.
207 Id. at 6.
208 Baker, supra
note 139, at 10; see also Caps on Non-Economic Loss Damages Would
Adversely Impact Women, Elderly, WOMEN'S HEALTH WKLv., August 14, 2003 [hereinafter
Caps on Non-Economic Damages].
209 Caps on Non-Economic Loss Damages, supra note 208, at 38.
210 Baker, supra note 139, at 10.
211
Women's Earnings 78 percent of Men's in 2002, MoNr,-iLY LABOR REVIEw: Ti1E EDI
(U.S. Dep't of Labor, Washington, D.C.), Oct. 16, 2003, available at http://
www.bls.gov/opub/ted/2003/oct/wk2/artO3.htm (last visited Aug. 6, 2004).
212 Baker, supra note 139, at 10.
213 Caps on Non-Economic Loss Damages, supra note 208, at 38.
TOR'S DESK
214 Id.
215 Id.
2004]
THE MEDICAL MALPRACTICE CRISIS
Women on Medicaid "are only slightly more likely than uninsured women to receive early [prenatal] care. '2 "6 The danger
of this situation is that low-income women are "more likely to be
medically at-risk, to experience higher rates of infant mortality,
and to have low-birthweight babies than more affluent" women." 7 This is generally caused by poor nutrition, poor health
care, and poverty.2"' These complications, coupled with the fact
that fewer doctors are willing to take pregnant women with
Medicaid, leave these women with high-risk pregnancies and few
doctors to help them.2" 9
Not only will non-economic damage caps severely affect lowincome women, but of the few doctors who will take them as
patients, even fewer doctors will be willing to do so since they
cannot pass on the increase in malpractice premiums to them.220
This can deeply influence any state, but it especially influences
states such as West Virginia where the "per capita rate is among
the lowest in the nation." 221 In West Virginia, many people are
on public assistance and doctors are experiencing increased malpractice premiums. 2
22
These doctors have only few avenues to
pass those increases on. 22 ' Therefore, because of the increase in
malpractice premiums which are the impetus for non-economic
damage caps, the current state of health care reform will disproportionately affect women's ability to recover in a malpractice
suit and may leave other women without prenatal care and little
ability to recover in a malpractice suit.
216 Dana Hughes et al., Obstetrical Carefor Low-Income Women: The Effects of Medical
Malpracticeon Community Health Centers, in MEDICAL PROFESSIONAL LIABILITY AND THE DELIVERY OF OBSTETRICAL CARE: AN INTERDISCIPLINARY REVIEW VOLUME II 60 (Victoria P.
Rostow & RogerJ. Bulger eds., 1989).
217 Deborah Lewis-Idema, M.Sc., Medical ProfessionalLiability and Access to Obstetrical
Care: Is there a Crisis?, in MEDICAL PROFESSIONAL LIABILITY AND THE DELIVERY OF OBSTETRICAL CARE: AN INTERDISCIPLINARY REVIEW VOLUME II 78 (Victoria P. Rostow & RogerJ.
Bulger eds., 1989).
218 Hughes, supra note 216, at 61.
219 Id. at 60.
220 Id. at 61.
221 Boulard, supra note 62.
222 Id.
223 Id.
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V.
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Conclusion
The difficulty with a problem such as non-economic damage caps in medical malpractices cases is that little consensus exists as to the root of the problem. What is known is that
insurance rates are rising to the point where many in the medical field are either leaving their specialties or are speculating on
the number of doctors who will leave if such rates continue to
rise. With the economy on a downturn, practitioners are not
able to pass these costs on to their patients.
It is arguably irresponsible for states to limit the amount of
non-economic damages for medical malpractice without having
a consensus as to whether high non-economic damage awards
are actually the cause of malpractice insurance premiums. It is
also irresponsible because these caps result in discrimination
against women. Rather, states should look to reforms other than
non-economic damage caps to combat this crisis rather than taking damage awards away from victims who receive only "28% of
what [doctors'] pay for insurance coverage . . . [while] 72% is
spent on legal, administrative, and related costs."22' 4 In addition,
these caps do nothing to alleviate the real problem which is actual medical malpractice itself. Further, these caps do nothing
to change the fact that doctors fail to report approximately 95%
of "adverse events. ' 22 5 The research clearly points to the detriment these caps have on victims of medical malpractice, despite
the mixed conclusions on the effect these caps have on liability
insurance rates.
Although there are mixed conclusions on the effect these
caps have on liability insurance rates, the fact remains that research points to the detriment these caps have on victims of
medical malpractice. Patients must endure limited access to
doctors, treatment by physicians who may have foregone malpractice insurance, and limited awards if they are victims of medical malpractice. Throughout all of the legislation and debate
surrounding this subject, the patients are the clear losers no matter how states have legislated to alleviate the problem.
224 OFFICE OF THE ASSISTANT SEC'V FOR PLANNING
16.
225
Id. at 10.
&
EVALUATION,
supra note 111, at
2004]
THE MEDICAL MALPRACTICE CRISIS
139
The first reaction of states and the federal government
should not be to limit a victim's recovery without a true determination that it is these awards which are the cause of this malpractice problem. It is for this reason that a more exhaustive study is
needed to detail the existence, cause, and effects of a medical
malpractice crisis before states take away part of the damage
awards for victims of medical malpractice.