The Truth About Malpractice Lawsuits: They're no big deal.

One of the most common arguments for the causes of high cost in healthcare is that of malpractice lawsuits. The argument? That Healthcare providers and professionals have had to hike up the costs of medical care due to the costs of lawsuits and their financial impact.

Just how factual is this?

The Truth About Malpractice Lawsuits in America

A 2010 study revealed that the cost of malpractice lawsuits amounted to only 2.4% of the nation's total healthcare expenditure.

What about medical malpractice insurance? That's got to be high right? Well, no not really, comparatively. The cost of Medical Malpractice Insurance ranges from between $4000 to $20000 annually. Compare this to the average annual healthcare cost for every American of $10,345 and this is expected to increase to $14,944 by 2023. Considering the kind of profit made from servicing the American population, the healthcare industry makes well beyond costs.

To put it in another perspective, in 2016 the total revenue of the life and health insurance industry was $851.9 billion. In constrast defensive costs for malpractice lawsuits in 2010 amounted to $44.6 billion. It's a fraction of the revenue alone generated and this excludes the malpractice insurances that cover these costs incurred toward doctors and medical institutes.

How often are damages awarded in Malpractice lawsuits?

Not very often and in some states they even have caps on how much in damages can be awarded. Some states for example would have a cap of $500,000 as the maximum for how much in damages could be awared. California has a $250,000 cap on non-economic damages.

The trend

It's on the down for paid medical malpractice claims - down by 56%.

The rate of paid medical malpractice claims in the United States has declined significantly, dropping nearly 56 percent between 1992 and 2014, researchers report.

At the same time, the average payout for successful malpractice claims rose about 23 percent — topping $353,000 in 2009-2014, up from about $287,000 during the 1992-1996 period, the study found.

These two trends could reflect the influence of tort reform on malpractice lawsuits, said lead author Dr. Adam Schaffer, an instructor at Harvard Medical School.

It's looking mighty fine for the medical industry:



So what's the motive behind pushing the costly malpractice lawsuit narrative?

In my personal view there are a combination of motives depending on who it is behind making the argument.

For many it's political. The argument that malpractice lawsuits are among the major drivers of healthcare costs works well for the rightwing leaning 'free market' position. That is, government is often far to involved in these matters and are giving plaintiffs an in to claim big bucks.

For medical professionals who may argue this, it's financial. Doesn't matter if it's a minimal cost in comparison to profits, every penny saved is a penny worthwhile.

For Healthcare insurers it's profit driven as well. They get to market their insurance products to the medical industry by emphasing on the cost and risk of medical malpractice lawsuits.

Whatever it is, the stats show otherwise. I'd love fellow ATSers to put in their 2 cents. It all seems pretty conclusive to me, it's not so much of an issue as it's made out to be.

originally posted by: Southern Guardian
One of the most common arguments for the causes of high cost in healthcare is that of malpractice lawsuits. The argument? That Healthcare providers and professionals have had to hike up the costs of medical care due to the costs of lawsuits and their financial impact.

Just how factual is this?

The Truth About Malpractice Lawsuits in America

A 2010 study revealed that the cost of malpractice lawsuits amounted to only 2.4% of the nation's total healthcare expenditure.

What about medical malpractice insurance? That's got to be high right? Well, no not really, comparatively. The cost of Medical Malpractice Insurance ranges from between $4000 to $20000 annually. Compare this to the average annual healthcare cost for every American of $10,345 and this is expected to increase to $14,944 by 2023. Considering the kind of profit made from servicing the American population, the healthcare industry makes well beyond costs.

To put it in another perspective, in 2016 the total revenue of the life and health insurance industry was $851.9 billion. In constrast defensive costs for malpractice lawsuits in 2010 amounted to $44.6 billion. It's a fraction of the revenue alone generated and this excludes the malpractice insurances that cover these costs incurred toward doctors and medical institutes.

How often are damages awarded in Malpractice lawsuits?

Not very often and in some states they even have caps on how much in damages can be awarded. Some states for example would have a cap of $500,000 as the maximum for how much in damages could be awared. California has a $250,000 cap on non-economic damages.

The trend

It's on the down for paid medical malpractice claims - down by 56%.

The rate of paid medical malpractice claims in the United States has declined significantly, dropping nearly 56 percent between 1992 and 2014, researchers report.

At the same time, the average payout for successful malpractice claims rose about 23 percent — topping $353,000 in 2009-2014, up from about $287,000 during the 1992-1996 period, the study found.

These two trends could reflect the influence of tort reform on malpractice lawsuits, said lead author Dr. Adam Schaffer, an instructor at Harvard Medical School.

It's looking mighty fine for the medical industry:

So what's the motive behind pushing the costly malpractice lawsuit narrative?

In my personal view there are a combination of motives depending on who it is behind making the argument.

For many it's political. The argument that malpractice lawsuits are among the major drivers of healthcare costs works well for the rightwing leaning 'free market' position. That is, government is often far to involved in these matters and are giving plaintiffs an in to claim big bucks.

For medical professionals who may argue this, it's financial. Doesn't matter if it's a minimal cost in comparison to profits, every penny saved is a penny worthwhile.

For Healthcare insurers it's profit driven as well. They get to market their insurance products to the medical industry by emphasing on the cost and risk of medical malpractice lawsuits.

Whatever it is, the stats show otherwise. I'd love fellow ATSers to put in their 2 cents. It all seems pretty conclusive to me, it's not so much of an issue as it's made out to be.

It is a factor or component that contributes to high costs. I don't think anyone has argued that malpractice insurance or tort reform is the majority driver or only driver of high medical costs. It is simply a factor.

Just even think about it rationally. I know businesses that can't even stay open due to insurance costs. I'm not even talking about medical, but just regular businesses where the cost of insurance is high because of the threat of lawsuits. Think skate parks, bmx tracks, race tracks, drag strips, etc or other activities where someone might get hurt and turn around and sue the owner.

You should see the bill for my policy on my sawmill.

It would probably be cheaper to be a blind sword swallower that lights himself on fire.

a reply to: Southern Guardian

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this is something ive noticed as a whole over my lifetime. each individual regulation is not a big deal but when u keep stacking on reg after reg after reg, then costs suddenly start skyrocketing. its the whole straw that broke the camels back. id love to just see a study of the avg regs and req's for a business from 1980 compared to today. id bet u the costs of everything today are many times the cost that they were back then. i know just in my industry in the past 10 years the new regs have increased costs dramatically for much of what i do. in many cases a 50% increase for the big jobs i have to do. that takes a job that used to cost 7-8 grand to around 10-12 grand simply due to one reg being put on me in 2012

originally posted by: Southern Guardian
Compare this to the average annual healthcare cost for every American of $10,345 and this is expected to increase to $14,944 by 2023.

Can you provide another link for this?

originally posted by: Southern Guardian
One of the most common arguments for the causes of high cost in healthcare is that of malpractice lawsuits. The argument? That Healthcare providers and professionals have had to hike up the costs of medical care due to the costs of lawsuits and their financial impact.

Just how factual is this?

The Truth About Malpractice Lawsuits in America

A 2010 study revealed that the cost of malpractice lawsuits amounted to only 2.4% of the nation's total healthcare expenditure.

What about medical malpractice insurance? That's got to be high right? Well, no not really, comparatively. The cost of Medical Malpractice Insurance ranges from between $4000 to $20000 annually. Compare this to the average annual healthcare cost for every American of $10,345 and this is expected to increase to $14,944 by 2023. Considering the kind of profit made from servicing the American population, the healthcare industry makes well beyond costs.

To put it in another perspective, in 2016 the total revenue of the life and health insurance industry was $851.9 billion. In constrast defensive costs for malpractice lawsuits in 2010 amounted to $44.6 billion. It's a fraction of the revenue alone generated and this excludes the malpractice insurances that cover these costs incurred toward doctors and medical institutes.

.

Nope.

The risk of lawsuits, which the PAYOUTS, as you have pointed out, cost comparatively little, is nothing compared to the cost of litigation itself in health care, which is frequent. So people try to sue all the damn time and only a fraction of those go to court. Most are settled out of court, which is not reflected in your numbers. Not to mention, the cost of litigation itself, which is largely what malpractice insurance is for.

Regarding malpractice insurance, I would like to know which companies are only charging $4000.00 or even $20,000.00 a year because, our hospital pays closer to $4000.00 a month, PER PROVIDER. So with 2 providers that's a minimum of $96,000.00 a year. And that's just general practice, high risk (for lawsuit) specialties such as obstetrics are considerably higher. This is passed onto the patient. Your numbers on this are absolutely bogus. Check your sources, and it's hard to find a good one, because most companies outside of healthcare report ridiculously low numbers because the real cost, makes people's butt's pucker. It's insane.

Now lets talk about defensive medicine, which has been going for better than 20 years. Because of the fear of lawsuit (again, because so many people sue), most health care facilities and providers practice defensive medicine. This is where unnecessary tests are performed, even if they don't clinically need the test because there is a .001% chance that there actually is something wrong, and if they don't check for it (not even find it, just check for it) they will be sued. In radiology, for example, they often perform exams that won't be reimbursed by insurance (due to a lack of medical necessity) just to avoid a law suit. This cost has to be made up somewhere.

For example, a mother brings her infant in because the child fell down and hit their head. The Dr. performs a neurological check, that comes out good. Kid is almost certainly fine. The Dr. then tells the mother "We are going to check for these signs and symptoms over the next 12 hours." And the mother says "What?! You're not going to do a head CT?! What if there is brain damage?!"" So the Dr. does a head CT on an infant, even if it is not clinically indicated because this mother, by her demeanor is likely to sue if that infinitesimal chance turns out to be the case. This cost is either paid by insurance which increases insurance rates for everyone as insurance is now covering tests that aren't really medically necessary, or it is not paid by insurance and that cost goes directly to the patient (who is surprisingly unlikely to pay it when she finds out that head CT cost $600.00), or this test does not get reimbursed and the hospital has to make up costs elsewhere.

So yes, you are correct the payouts themselves aren't that much, not even compared to the avalanche of all of those other associated costs. It's malpractice insurance (again, your numbers are flat bullsh##), all of the constant litigation costs, settled out of courts, and defensive medicine that increases health care costs.

I also know that I am shouting into the storm. No one will listen. They want someone to blame and the hospital handing them the bill is the easy, even intuitive target. No one likes to think that they are part of the problem. Regarding lawsuits and malpractice insurance, litigious patients are part (but only part) of the problem.

All of this: lawsuit payouts, litigation, settled out of courts, malpractice insurance, defensive medicine is nothing compared to the cost of government involvement in health care, Big Pharma raping an often vulnerable and desperate consumer, and a little known culprit, medical equipment manufacturers and suppliers. These are the things that are really driving up the cost of your health care.

Everyone always cries for tort reform. But the tort reform that most are speaking of already exists. It is not part of legislated law, it is within the rules of court. The rules of court state, that the victor of any civil case can get an order from the court to recover all reasonable costs by filing an order to the court containing the demand. That means if doctors spend $200k to defend against your lawsuit, then they can obtain an order from the court to have you cover the costs. Now the only problem with this is, lawyers will take on a case like that knowing damn well the plaintiff can't pay the costs of the victor. IMO, that probably is a tort against the plaintiffs lawyer in itself, but the only reform that is really needed is to make the plaintiffs lawyer liable for costs in the case that the real plaintiff cannot cover them.
Most lawyers will never mention this rule of court, because it would very likely dry up their civil case load. Settling out of court and just paying the lawyers would pretty much be a rarity.
Legislation has set the bar for malpractice pretty high these days, most frivolous suites are dismissed for not meeting the requirements.

a reply to: Southern Guardian

There is not much doubt that there is a cost to malpractice. The question is who is going to pay that cost, the person committing the negligence or the victim of that negligence. Medical errors are the third leading cause of death in the US, following heart disease and cancer. Malpractice kills 250,000 people a year in the US. We don't let airlines operate without insurance, nor do we allow trucking companies to earn their profits without liability insurance. Health care providers don't deserve special treatment. They want to privatize their profits and socialize the costs. Instead of being responsible for their own mistakes, they want to pass the costs on the society. They are too greedy to make the effort to practice better medicine.

I used to do paralegal for one of the top ten malpractice/wrongful death lawyers on the plaintiff's side here in california. you are absolutely correct.

frankly people would be surprised how many doctors out there have been sued (rightfully so) for malpractice and wrongful death, the cause nearly always negligence. you'd be surprised how many top cosmetic surgeons in Beverly hills have been sued successfully for wrongful death. their insurance covers it like its nothing. they go to Bali afterwards on vacation and then come right back to performing surgery on the unwitting. it's usually done through arbitration so if you search the doctor before hand you aren't going to find anything about the people they've killed.

usually it's the elderly already retired with kids over 18 who get killed so there's no economic damages. and even then when there are economic damages it's not much. I know of a working mom of 3 who went into cosmetic surgery in BH. dies through complete negligence and the family got less than 3 million.

it's disturbing how the medical insurance industry operates here in the usa.

on a side note the job as a paralegal (which I was good at) was so depressing on a daily basis having to see the ins and outs of how good people get screwed by the medical industry that it put me off from doing that kind of work ever again.

No. It is the rising cost of medication. One by one each and every pharmaceutical company is being corrupted. Not by its own employees no. But by wall street. Do not forget that valeant bought out several pill companies and raised the cost to purchase the pills to extortionate prices beyond all reason. Life saving drugs that used to cost a couple of dollars a pill have risen well beyond %800 of their original cost. And because there are no regulations on these pills they can charge what ever they want.

So who has to pay for the pills? First and foremost it is the insurance companies footing the bill. Then the client has to pay the remainder.

But in the beginning these pills were not that costly. But over time so much money has been taken out that it is not recoverable. So they passed on the cost directly to the clients now. So pills like syprene now have to be bought out of pocket.

Each and every pill has done this once valeant purchased them. But how much of the money was taken from the insurance companies? That number still remains a mystery as we only know how much valeant takes in as revenue, and the number of people taking the pills have dwindled or died.

I say the high cost of these drugs does play a part in this.

a reply to: Southern Guardian

comparing the cost of malpractice to the total revenue of an industry = utterly pointless