The Truth About Medical Negligence
From Trial Magazine, December 1992
My client, the specialists said, was mentally retarded. They believed that this baby boy would be doomed to a life of loneliness, locked up in his own world with no way to reach out to the rest of us.
The specialists were wrong. Bobby does have disabilities. He will never walk. He will never talk. He will never laugh. But his disabilities cloak a bright, active intellect. Bobby has cerebral palsy, inflicted at birth by a negligent doctor.
The critics of our civil justice system would deny Bobby the chance to right the wrong done to him. Without evidence, they claim that the tort system needs to be changed because medical negligence claims have sent the cost of health care into the stratosphere. They are absolutely wrong.
Several studies support our contention that the cause of medical negligence lawsuits is medical negligence. For example, a 1990 study of New York hospitals conducted by researchers at Harvard University Medical School found that in 1984, negligence by doctors and hospital staff may have contributed to almost 7,000 deaths and more than 20,000 injuries. The study also showed that only one in eight negligence victims ever filed a lawsuit.
The real cost of medical negligence represents only a tiny fraction of national expenditures on health care. The American Medical Association (AMA) has estimated the cost of all liability insurance at $5.6 billion in 1989. Premiums, then, are a minuscule part of our health care budget-less than 1 percent. The nation’s cost for health care in 1989, according to the Health Care Finance Administration, was $604 billion.
A look at insurance industry profitability is also revealing. In 1989, Michael Hatch, then commerce and insurance commissioner of Minnesota, studied the medical negligence insurance industry in Minnesota, North Dakota, and South Dakota. Hatch found that the St. Paul Companies, the nation’s largest medical liability insurer, was substantially overcharging its policyholders. There was no increase in claim frequency, loss payments, or expenses, but premiums tripled from 1982 to 1987. The results of Hatch’s study led to a $1.5 million refund to Minnesota physicians.
According to A.M. Best-an independent organization that gathers objective insurance data for the industry-over the past 11 years insurers have paid out an average of 28 to 55 percent of premiums collected. The rest has gone into reserves to earn investment income until claims are paid or for overhead or profit. Insurers often show an underwriting loss, but only by ignoring the significant sums put in reserves waiting for claims that never come. It is more than a little strange that medical negligence “reforms” arc being debated when there is no apparent insurance crisis.
Because healthy insurance trends and increasing profits belie the medical community’s contentions, proponents of tort “reform” have changed their tune. The new catch phrase is “defensive medicine.” Doctors allegedly are ordering tests and procedures that offer no benefit to the patient but are only performed because the doctor fears liability.
The AMA estimated that in 1989 defensive medicine cost consumers more than $20 billion. Even if that were true -and it’s not- defensive medicine would account for only 3 percent of the $604 billion spent that year on health care.
No organization has tried to weigh a physician’s competing motivations in ordering tests or procedures. Studies have shown that doctors with ownership interests in diagnostic laboratories order from 34 to 96 percent more tests than those with no financial interest. Many doctors apparently have other reasons for ordering tests than simply to avoid lawsuits.
Similarly, no one has assessed the benefits that these diagnostic measures have for patients. It is hard to believe that they never reveal the true source of an illness or a previously undiscovered problem If the patient is someone I love, I want those tests performed.
Where our critics have succeeded in “reforming” the tort system, the changes have not brought the intended results. In California and Indiana, which enacted drastic “reforms,” health care costs are rising as fist as in states that have not adopted changes. Hospitals in Arkansas and South Carolina, which have no caps on damages, paid $551 and $847 per bed, respectively, for liability insurance in 1987-88. California has caps-and hospitals there paid $5,075 per bed. Oregon has caps-and the cost there is $3,131 per bed.
Our critics also ignore the benefits of medical negligence lawsuits. How many lives are saved when an addicted doctor is forced into treatment by exposure through civil litigation? What costs are avoided when an unqualified doctor stops performing procedures he isn’t trained to do? These kinds of savings are incalculable-and very real.
Our liability system is too vital to be destroyed by myths. For children like Bobby, it offers the only hope fur a productive life after suffering a devastating injury due to someone else’s negligence. The law gives us a way to make a difference in these children’s lives.
Bobby is 10 years old now. He can’t walk or talk, but with the special equipment and training paid for by a settlement fund, he has learned to use a computer to communicate. Now his future holds some promise. Now he doesn’t have to feel so alone.