The cost of liability
Fam Pract Manag. 2003 Mar;10(3):18.
To the Editor:
I read with interest the article by Dr. Richard Roberts, “Understanding the Physician Liability Insurance Crisis” [October 2002, page 47], particularly since I practice in Washington, one of the states most affected by the current situation. I also recently listened to a presentation by Dr. Richard Corlin, immediate past president of the AMA [Audio-Digest Family Practice. 2002;50(38)]. Dr. Corlin presented a somewhat different picture than Dr. Roberts.
Dr. Corlin stated that capping noneconomic damages, such as for pain and suffering, is the only way to control upward-spiraling awards since the greatest increases are being noted in those areas, but Dr. Roberts suggests that the cost of health care is creating the greatest burden. Dr. Corlin quoted annual liability insurance costs 300 to 400 percent greater in some states that do not have the Medical Injury Compensation Reform Act (MICRA), yet Dr. Roberts estimated that MICRA enactment would only decrease premiums by 15 to 18 percent. I’d be interested in Dr. Roberts’ comments.
My point was that medical care costs rose faster than malpractice premiums during the 1990s. Professional liability is a very complex issue; tort reform is just one solution to a multi-factorial problem. Educating patients on reasonable expectations, providing better legal defense and improving patient safety are also key elements.
Placing a cap on noneconomic damages can moderate premium increases. Danzon concluded that limiting total awards reduces the size of awards by about 23 percent (The frequency and severity of medical malpractice claims: new evidence. Law Contemp Probl. 1986;49(2): 57–84). Zuckerman and colleagues found that capping physician liability reduced premiums by 13 percent in the year following enactment of the reform and by 34 percent over the long term (Effects of tort reforms and other factors on medical malpractice insurance premiums. Inquiry. 1990;27:167–182). It is important to note the following: 1) these studies looked at all caps, not just those for noneconomic damages; 2) MICRA included other reforms (periodic payments, collateral source, etc.) in addition to a $250,000 cap on noneconomic damages; 3) reductions in awards may not translate directly into a similar premium reduction.
Since MICRA was adopted in 1975, medical malpractice premiums have risen 187 percent in California compared to 515 percent for the rest of the nation. However, even for states that have MICRA reforms in place, there can be wide variances in premiums. For example, premiums rose 400 percent faster in California last year (20 percent) than in Iowa (5 percent).
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