Medical Malpractice Insurance: Defensive Medicine, Lower Liability Premiums, Fewer Lawsuits
Defensive Medicine
One of the consequences of tort law is that courts can find a physician liable for a host of things. The problem with the U.S. justice system is that, despite a doctor's ethical actions based on science or the best of diagnostic procedures determined by a panel of doctors, a physician can be held liable for what the court deems an error. A jury can view something as a medical error even if the professional medical community does not. There are no caps on malpractice lawsuits. This creates an atmosphere of what is referred to as "defensive medicine."
2024 Law Affects Cost of Medical Care
Some Florida physicians are now required to carry professional liability insurance under a new law. This law aims to improve safety during gluteal fat grafting procedures, commonly known as Brazilian butt lifts. Governor Ron DeSantis signed the bill into law recently.
BBLs involve two steps:
- The liposuction of fat from the abdomen or back
- The injection of the purified fat into the subcutaneous layer of the buttocks, below the skin but above the gluteal muscle
Some people may wonder why this is worth mentioning. How can requiring liability insurance hurt me? Let's delve into it a bit.
Those who are a bit skeptical of liability law point out that the increase in a physician's out-of-pocket cost for this particular surgery can affect the cost of surgery in general. Do we know how many of the butt surgeries are done and how that is related to the price increase, as price will be passed along? So far, I haven't been able to determine this. And as can be seen, during inflation, insurance rates tend to rise faster than other things. The timing of this is questionable.
Another point of interest is that this was pushed by Governor Ron DeSantis of Florida, a conservative Republican. It is worth noting that reforming tort law has typically been an issue supported by conservatives. That change takes the form of lowering insurance liability in general. This issue seems a bit counter intuitive. We will have to see what the overall effects of the measure bring to the fore.
Legal Concerns Prompt Unneeded Procedures
Though hard to put a figure on, the generally accepted estimate of the annual cost for ordering unnecessary lab tests, images, or prescription medicine in an attempt to avoid a lawsuit is somewhere between 100 and 200 billion dollars annually. An extension of defensive medicine is the practice of limiting high-risk patients and high-risk procedures.
An example of the desire to protect oneself from the remote possibility of lawsuit is requirements for accepting lab tests at different medical facilities. A person can have more than month-old imaging results involving bone and be required to have all the same lab procedures done again before treating.
In many cases, defensive medicine policies preclude the possibility of the patient waiving the right to sue. In case after case, this re-imaging or lab testing is not medically necessary. This creates a huge expense for the healthcare system.
Doctors, dentists, and nurses commonly take out malpractice insurance to pay for lawsuits. The trend has extended to hairdressers, accountants, vets, sports umpires, members of the clergy, all fearful of being sued wrongful action or advice.
— Gavin Esler
Congress and Our Healthcare Crisis
When Congress discusses the healthcare crisis, defensive medicine is a topic avoided. Defensive medicine is something that doctors have to deal with daily. Those of you who have required many diagnostic tests in or out of a hospital know that duplicating lab tests can easily run thousands of dollars!
In addition, we have become used to seeing outrageous bills for medical service, not remotely like any other service we seek. Require a listing of all procedures and their cost—I have caught many errors where lab tests not performed were charged. We must be vigilant to do our part in lowering healthcare costs. In addition, look for charges for things that simply could not have been provided.
Legal Share of Medical Expenses
Studies have shown that 60% of the expense of medical treatment comes from lawyers' fees, administration (paperwork to avoid malpractice lawsuits), and insurance. Even considering the lowest figures related to percentage of cost of healthcare from lawyers and administrative costs at 1-2%, we are talking about 20 billion dollars.
"A billion here, a billion there and before you know it you're talking some real money!" said Everett Dirksen, former senator from Illinois.
Premium Growth in 2023
In 2023, the premium growth for medical professional liability (MPL) insurance moderated to 3.6%. Despite market softness and complex industry dynamics, overall financial results were bolstered by favorable net investment income.
However, rather than ameliorating effects of cost to the individual due to good investment returns, in a down market for equities, insurance companies will look for other ways to increase revenue and profit.
With inflation running high on things like food, housing, and gasoline, 3.6% may reflect slightly above average inflation, but it creeps up on the individual premium holder. There is an argument for minimizing laws increasing medical and professional liability.
At the risk of sounding trite, there is no free lunch.
Tort Reform
Tort is a system compensating wrongs and harm done by one party to another's person, property, or other protected interests. Accusations of medical wrongs are evaluated by judge and jury.
One suggestion has been to have "health courts" or "medical courts." With malpractice suits, this special court would be made up of judges who are trained in medicine. It is believed that these health courts would lower settlements due to the fact that they would rule on cases based on accepted medical practice and ethics, and be less influenced by emotion than juries of citizens.
The inspiration for this kind of court comes from many aspects of litigation. One aspect that people are familiar with is the practice of lawyers getting 30% of the settlement or award in malpractice suits. By setting such a standard, there is an incentive for the lawyer to fight for every "conceivable" (trivial) point that could possibly lend itself to a bigger payout.
By deduction that means the introduction of as many reasons as possible physicians or hospitals committed error. These discoveries can be trivial and result in lengthy court trials, costing the taxpayer and medical community millions of dollars and this figures in when determining health care insurance premiums. Other countries, most notably the European Union, consider this practice unethical.
Many experts feel that requiring the loser of a trial to pay defendant and plaintiff expenses (also known as the English Rule) would discourage a large number of trivial malpractice cases, which would lower physicians' insurance rates, which in turn should lower fees.
The United States has no caps on medical lawsuit damages. In Texas, where in 2003, medical caps were placed on medical malpractice insurance, premiums decreased 23%. These experiments have shown the same results in other states who have ruled to institute malpractice caps. I believe that such state experiments would prove the efficacy of "health courts," also.
We Need a McCain Moment
In my opinion, the last serious debate about tort reform was in 2005. At that time Senator John McCain came out forcefully for a number of facets of tort reform. The following summarizes his position.
- Sponsored the Class Action Fairness Act of 2005 which sought to curb lawsuits by shifting suits from state to federal courts, by requiring judges to review all coupon settlements, and by limiting attorneys' fees in non-cash settlements
- Voted for a bill that would bar lawsuits against manufacturers, distributors, dealers and importers of firearms
- Voted for a bill that would place caps on damage awards in medical malpractice suits against obstetricians and gynecologists
- Voted for a motion to proceed to a bill that would cap non-economic and punitive damages in medical malpractice suits
Congress then as now did not act. In this writer's opinion, the problem has only grown worse.
New Nursing Home Liability Law
A new 2024 bill in Louisiana aims to reduce financial threats from lawsuits for nursing homes. The state senate is set to consider this legislation.
The impetus for this is the rising cost of nursing care for individuals, not to mention that fact that many nursing homes are forced to close for many financial reasons, including escalating insurance premiums.
The Louisiana Nursing Home Association supports the bill, believing it would protect nursing homes from expensive combinations of multimillion-dollar lawsuits.
Changes Are Needed
Americans spend 2.5 trillion dollars annually on healthcare. Clearly, eliminating many of the abusive legal situations the medical field encounters will not solve our problem with health-related bills. But taken as a significant piece of the puzzle— along with the importation of foreign pharmaceuticals, incentives for foreign doctors who can pass our medical boards, a health corps made up of volunteers similar to military medical service, increasing the number of medical students admitted to medical schools, ending free medical care for illegal aliens, perhaps an elimination of the AMA suggested fee schedule, a more vibrant questioning of common practices in charging, and a host of other things—we could easily increase the chances of 46 million uninsured American citizens to afford health insurance.
The problem has become solely a political one. Both political parties have elbow benders influencing their decisions.
Accepted estimates of defensive medicine costs is 46 billion dollars. Three percent of that is claimed by most academics to be all that would be saved if it could be eliminated. Three percent is $1,380,000,000! It is my opinion that structural changes would lead to even bigger savings. Note that despite increased licensing requirements at all levels (which increases cost) have not changed the amount of malfeasance that occurs in the system. In 2016, it was estimated that medical errors were the third highest cause of death in the United States.
Do you believe U.S. malpractice liability law is responsible for high medical costs?
- 100% Yes
- 0% No
- 0% Not sure
Sources
- Henrickson, Josh. May 9, 2024. Lawmakers Tussle Over Nation's First Bill Capping Payouts Over Nursing Home Administrator's Liability. McKnight's Long-Term Care News.
- Sexton, Christine Jordan. May 11, 2024. Florida Politics. Some Florida Doctors' Offices Will Have to Carry Liability Insurance Under New Law.
- Auraullo, Kenneth. May 2, 2024. Medical Professional Liability, How Did It Fare?
- Tortsprof. February 16, 2008. McCain's Position on Tort Reform.
- Eighteen references, Wikipedia. Tort reform.
- Sam Batkins and Jacqueline Varas. October 17, 2016. Tort Reforms Impact on Health Care Costs.
- Brian Lubin, MD, MPH (January 23, 2016). The Hospitalist retrieved from
- Daniel P. Kessler (2011). Evaluation the Medical Malpractice System and Options for Reform.
- Marc Thiessen. December 21, 2020. Dems bow to the trial lawyer lobby.
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