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Medical Malpractice and Your Insurance Dollar: Another Perspective

by Linda Fermoyle Rice, Esq.

Contrary to popular mythology, much of which originates with the insurance industry and the medical establishment, neither the number of medical malpractice claims nor jury verdicts against health care providers have "exploded" during the past 20 years. Although there was an increase in such claims during the 1970's, data since 1980 suggests that the number of malpractice claims has stabilized or decreased since that time.

Furthermore, numerous independent studies have concluded that a very small percentage of those patients who are actually injured as a result of medical malpractice ever make a claim for their injuries and only a fraction of those who do receive compensation.

In 1974 the California Medical Insurance Feasibility Study found 4.65 injuries per 100 hospitalizations, of which 17% were due to medical negligence, and that about one in ten patients who were injured because of medical malpractice ever made a claim for their injuries. A study published by the RAND Institute for Civil Justice reached the same conclusion in 1995. That study also pointed out that, while most of the public discourse was about an "explosion" in personal injury claims, such claims constituted just 1.5% of all civil lawsuits filed in 1993. The "explosion" in civil litigation was largely the result of increased family law filings and business litigation. That certainly is not the impression one would get from the nature of the political debate, of course, which has focused primarily on consumer lawsuits.

Between 1989 and 1993, the Harvard Medical Practice Study undertook comprehensive research in an effort to establish the number of patients who were injured during hospitalization; the percentage of injuries which occurred because of medical malpractice; and the percentage of injuries which resulted in claims or lawsuits. The study examined more than 30,000 charts from New York hospitals in 1984. It found that approximately 1% of all hospitalized patients suffered an identifiable medical injury caused by a health care provider's negligence and 20% of those suffered permanent disability or death. The likelihood that a patient with an identifiable negligent injury would file a claim was only 1 in 50.

This is not intended to be an exhaustive review of the Harvard study, which is lengthy, complex and reaches a variety of conclusions based on its data. However, it is useful to note that it concluded the legal system does a good job in weeding out meritorious claims from those that are not. Claimants whose injuries likely were the result of something other than medical negligence generally received little or nothing as a result of their claim. On the other hand, it is clear that many patients who were disabled or died as a result of such negligence also received nothing because no claim was ever made by them or on their behalf--often because the cause of injury was never disclosed to the patient.

There is no evidence, at least in California, that the number or size of malpractice claims is a serious component in the increasing cost of health care. In 1990, when the cost of medical insurance premiums nationwide was expected to soar by 26.9%, the Wall Street Journal reported that the cost of malpractice insurance and doctors' use of "unnecessary" testing and treatment thought to be motivated by a concern about malpractice claims accounted for the smallest fraction of the total increase - just 1.4%. Fully 29.5% of the total increase was caused by hospitals and doctors submitting inflated billings to traditional health care plans to offset cutbacks in payments from Medicare and managed care plans.

Assertions that malpractice claims or jury verdicts are on the rise or that they are contributing to the cost of overall health care in California are particularly disturbing. What most people do not appreciate until they or someone they love is injured by medical negligence is that a $250,000 cap on non-economic damages has been in effect and not increased since 1975. No matter what the jury's verdict, a plaintiff in a medical malpractice lawsuit will never receive more than $250,000.00 in such damages and the value of such an award has been eroded more than 60% by inflation during the past 25 years. Not surprisingly, during that time insurance company profits have soared.

The child who suffers permanent and severe brain damage because of the demonstrated negligence of a doctor or nurse cannot recover more than $250,000 to compensate him or her for the loss of quality of life which flows from such an injury. The cost of proving up such a case, not including attorneys' fees, can be $75,000.00 or more, much of which is paid to the medical and other experts whose testimony is necessary to establish negligence as the cause of injury. Once those costs have been deducted and attorneys' fees paid, the recovery to a brain-injured child is often less than the actual cost of providing care to him or her.

By the way, attorneys are not bleeding victims of malpractice dry as the media might have you believe. There is also a cap on attorneys' fees which, considering the investment of time, expertise and money necessary to bring such cases to settlement or trial, makes recovery to the attorney relatively modest - especially on the "big" cases. An attorney who settles a $2 million malpractice case is not going pocket a million dollars. Attorneys' fees on such a case would be approximately 18.5%. While that is not an insignificant sum, it certainly is not out of proportion to the resources the experienced medical malpractice attorney generally brings to such a case.

Those of us who routinely handle these cases cannot afford to sign up "frivolous" lawsuits and then invest hundreds of hours and tens of thousands of dollars in them. Particularly now, when much of the public is convinced that most personal injury claims are frivolous and, thus, often constitute a hostile pool from which we must choose our juries, lawyers in this field are cautious to an extreme. Based on my own experience, there are many more people with legitimate malpractice claims of limited value who are denied legal representation because of the economics of the practice than there are frivolous lawsuits filed.

The next time you hear that medical malpractice lawsuits are contributing to the cost of your health care or insurance premiums, I hope you will keep such claims in perspective. Of course, I also hope that you might also be appalled to discover that the insurance industry, supported by the medical establishment, has been successfully reducing its potential exposure for legitimate malpractice claims for 25 years. It has done so by making it politically impossible for legislators to increase the cap on non-economic damages.