TCS Daily

Bad Medicine

By Sydney Smith - June 26, 2003 12:00 AM

There's no shortage of finger-pointing in the current medical malpractice crisis. Some say it's the fault of the doctors. If only they would police themselves better, there would be no malpractice -- and no lawsuits. Others blame an out of control tort system that encourages aggressive trial lawyers to pursue the most questionable of cases in the hopes of reaping large rewards. If we cap those punitive jury awards, we'd reduce the greed factor in the current crisis. And then, there are those who blame the insurance companies. If they invested more wisely, and curbed their own corporate greed, they wouldn't have to increase their premiums beyond affordability, putting doctors out of business and depriving ordinary people of medical care in the process.

The latter view has received prominent play in the media lately. Last month, Time magazine published a cover story on the crisis that gave credence to a report by the widely respected Weiss Ratings, Inc., a company that issues safety ratings on insurance companies, banks, and brokerage firms. The report claimed, among other things, that caps on non-economic damages result in lower payouts by insurance companies, but they don't result in lower malpractice insurance premiums. In fact, they have just the opposite effect:

In states with caps, the median annual premium went up by 48.2%, but, surprisingly, in states without caps, the median annual premium increased at a slower clip: by 35.9%.

Among the states with caps, only 10.5% experienced flat or declining med mal premiums. In contrast, among the states without caps, the record was actually better: 18.7% experienced flat or declining premiums. (emphasis in the original)

It would appear that insurance company greed, and not trial lawyer greed is closing obstetrical practices and emergency rooms from Pennsylvania to Nevada. But, there's a problem with this analysis. As well-respected as the Weiss firm may be when it comes to rating the financial safety of companies, its analysis of tort reform leaves much to be desired.

As blogger Kevin Drum has pointed out, the Weiss report compares the median values of malpractice premiums from state to state, rather than the more representative
values. You may well ask, what's the difference? They're both indicative of trends. But using the median ignores the effect of very large or very low values. And in the current malpractice crisis, it's the very large values that are causing the problem.

For malpractice premium rates are not the same from specialty to specialty, nor even from region to region within a state. Practicing obstetrics in or near Philadelphia, Pennsylvania, means much higher malpractice insurance premiums than practicing internal medicine in Altoona. So, for that matter, does practicing obstetrics in Los Angeles, California, even though California has a history of successful tort reform. In fact, using the same source that the Weiss Report used, but looking at mean values instead of median values, it's apparent that malpractice rates are increasing at higher rates in states without non-economic damage caps. Even more startlingly, the Weiss Report showed the same trend -- rates in California increased by 49.5% from 1991 to 2002, while those in crisis-torn Pennsylvania increased by 523%. They diluted the result by combining median rates for every state in the union. But not every state in the union without damage caps has a malpractice crisis, for not every state in the union has the same number of malpractice attorneys.

This is an important consideration. At least one study has found a direct correlation between the number of lawyers in an area and the number of malpractice lawsuits filed. This is why stories about the malpractice crisis in Pennsylvania always center on the eastern part of the state rather than the middle regions. It's the doctors within striking distance of densely populated Philadelphia lawyers who have seen the highest rate increases. And might it not be the case that a higher proportion of states without malpractice caps are states with a sparser population of malpractice attorneys? After all, if there's no crisis, there's no need for reform.

The Weiss Report touts itself as "not driven by a political ideology or industry-driven self-interest," but as "an objective, data-driven analysis." Yet, obviously, the data have not been objectively analyzed, but spun. And why were they spun? The reason becomes clear in the report's conclusion:

The medical profession must assume more responsibility for policing itself, while states must be more pro-active in reviewing the licenses of individual practitioners. And consumers must not relinquish their right to sue for non-economic damages until the medical profession and/or state and federal governments provide more adequate supervision and regulation of doctors, hospitals, and other health care providers.

A curious conclusion for a report that did not deal at all with the correlation between doctors who practice badly and the cost of medical malpractice. It would appear that Weiss Ratings had an agenda after all -- to direct the blame for the current malpractice insurance crisis away from the tort system toward physicians and insurers. It's just one more finger in the medmal blame game.

The author is a family physician who has been in private practice since 1991. She is board certified by the American Board of Family Practice, and is a Fellow of the American Academy of Family Practice. She is the publisher of MedPundit.

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