Only Caps Work to Lower Malpractice Awards, Premiums

Reforms other than caps don't make a dent in the cost of malpractice awards or premiums. That is among the findings of a study, "The U.S. Medical Liability System: Evidence for Legislative Reform," in the May/June issue of Annals of Family Medicine.

The article presents research on 44,913 malpractice claims gathered from all 50 states and the District of Columbia and reported to the National Practitioner Data Bank from 1999 through 2001. Principal investigator Janelle Guirguis-Blake, M.D., clinical faculty in the Tacoma Family Medicine Residency Program, Tacoma, Wash., and her co-authors, including staff members at AAFP's Robert Graham Center in Washington, D.C., looked at malpractice payments and physician premiums for malpractice coverage and studied the associations between payments, physician premiums and 10 state statutory tort reforms. Total caps (i.e., caps on the total amount of damages) and noneconomic damages caps were most often associated with lower payments and premiums.

"It became very clear that total caps had an overwhelming association with payouts," Guirguis-Blake said at a primary care forum sponsored by the Graham Center March 17 in Washington. The research is the first published study of medical liability reform legislation to make use of national data rather than states' or insurers' data, according to Guirguis-Blake.

The seven states with total damages caps had payouts that were 26 percent less than awards in other areas, according to the article. The average payment in states with total damages caps was $196,495, compared with $265,555 in other areas. The 20 states with noneconomic damages caps had malpractice payments that were 22 percent lower than awards in other areas. The average payment in areas with noneconomic damages caps was $219,226, compared with $279,850 in other areas.

The authors divided noneconomic damages caps (i.e., caps on awards for pain and suffering) into hard caps and soft caps. Hard caps have no exceptions; soft caps allow for exceptions, such as inflation adjustments and exceptions for certain injuries. The authors found that total caps and hard noneconomic damages caps "could yield lower premiums."

Legislative approaches, such as limiting attorneys' fees, creating excess coverage funds, or requiring mandatory arbitration or a certificate of merit, were not associated with any cost reductions, Guirguis-Blake said at the forum.

But financial findings relative to caps don’t reflect the whole picture, she warned. If the goal of medical liability reform is to improve the quality of care, then policy-makers may need to look at measures other than caps, such as a no-fault approach, she said.

“I want to underscore that we looked at cost, but that is only one issue that has driven the debate. It shouldn’t be the first and foremost thought for reform,” Guirguis-Blake said.

The article concludes, "The current medical liability tort system has failed clinicians and patients as a mechanism of rational compensation for injury and of improving the quality of care. The wide state-to-state variations in payments imply a lack of equitable compensation for injured patients. … the sizable financial savings associated with total and noneconomic damage caps accrue not only to physicians but also to insurers, employers and patients who ultimately bear these costs. Moving the current policy debates toward finding a broader solution to the inequities in our current liability system would mean that reform efforts would include strategies aimed at improving the quality and safety of the health system."