STABILITY, NOT CRISIS: MEDICAL MALPRACTICE CLAIM OUTCOMES IN TEXAS,

Transcription

1 STABILITY, NOT CRISIS: MEDICAL MALPRACTICE CLAIM OUTCOMES IN TEXAS, Bernard Black, University of Texas Charles Silver, University of Texas David A. Hyman, University of Illinois William M. Sage, Columbia University Available for Download: Published at: 2 Journal of Empirical Legal Studies (July 2005) (peer reviewed)

2 PROFESSIONAL INDEPENDENCE THE UNIVERSITY OF TEXAS SCHOOL OF LAW AND THE UNIVERSITY OF ILLINOIS COLLEGE OF LAW FUNDED OUR RESEARCH NO TRIAL LAWYERS, INSURANCE COMPANIES, OR POLITICAL PARTISANS GAVE US MONEY 2 OF US ARE DEMOCRATS; 2 ARE REPUBLICANS OUR RESEARCH WAS PEER-REVIEWED

3 WHY STUDY TEXAS? ITS THE DATA, STUPID! TDI HAS THE BEST CLOSED CLAIM DATASET ONLY TEXAS AND FLORIDA ALLOW PUBLIC ACCESS VIDMAR AND COAUTHORS STUDY FLORIDA, AND REACH CONCLUSIONS CONSISTENT WITH OURS ONE OF THE AMA S FIRST CRISIS STATES PREMIUMS SPIKED STARTING IN LATE nd LARGEST POPULATION, 3 rd IN MEDICAL SPENDING LARGEST POPULATION OF UNINSUREDS MIXES URBAN AND RURAL POPULATIONS VIEWED AS PLAINTIFF-FRIENDLY ADOPTED DAMAGES CAPS AND OTHER TORT REFORMS IN 2003

4 PREMIUMS FOR TX DOCS ROSE DRAMATICALLY Weighted average for 3 largest carriers = 110% (inflation adjusted) Texas Dept. of Insurance, Medical Malpractice Insurance: Overview and Discussion (2003)

5 THE $64,000 QUESTION: WHY DID PREMIUMS SPIKE? A. INCREASINGLY LITIGIOUS PATIENTS THE SPREAD OF THE SO-CALLED AMERICAN DISEASE B. SKYROCKETING SETTLEMENTS C. JURIES SPINNING OUT OF CONTROL D. NONE OF THE ABOVE

6 YOU LL FIND OUT THE ANSWER AFTER WADING THROUGH SOME BORING STUFF ABOUT OUR DATASET AND METHODS

7 THE TX CLOSED CLAIM DATABASE TDI HAS REQUIRED COMMERCIAL LINES INSURERS TO REPORT ALL CLOSED CLAIMS SINCE 1988 DETAILED INDIVIDUAL REPORTS FOR ALL MED MAL CLAIMS WITH PAYMENTS > $10,000. Tracks settlements, jury verdicts, defense costs, and many other matters Individual reports reliable audited and reliable since 1990 AGGREGATE ANNUAL REPORTS FOR SMALLER CLAIMS Aggregate reports under-counted zero-payment claims until 1995

8 STUDY CLOSED CLAIMS AND SEE THE WHOLE ICEBERG, NOT JUST THE TIP MOST STUDIES FOCUS ON JURY VERDICTS. BUT TRIALS ARE RARE AND UNREPRESENTATIVE. MOST CASES SETTLE, BUT SETTLEMENTS ARE HARD TO STUDY (USUALLY) BECAUSE THEY RE PRIVATE.

9 OUR METHODS WE ADJUSTED FOR GENERAL INFLATION (GASP!) WE CONTROLLED FOR POPULATION (GASP!!) WE CONTROLLED FOR HEALTH CARE UTILIZATION (GASP!!!)

10 HAS THE AMERICAN DISEASE WORSENED?

11 NUMBER OF LARGE PAID CLAIMS ADJUSTED FOR POPULATION GROWTH OR HEALTH CARE UTILIZATION 1000 Figure 3. Adjusted Number of Large Paid Claims (Over $25,000 in 1988 $) number of claims BRD adjusted for population growth BRD adjusted for change in number of physicians BRD adjusted for change in real health care spending Figures for 1988 & 1989 are unreliable due to under-reporting.

12 TOTAL CLAIMS PER 100 TX DOCS: HIGH BUT DECLINING* 45 10, Number of claims 8,000 6,000 4,000 2,000 Total claims Total claims per 100 physicians Claims /100 physicians *Findings reported for because of underreporting of zero- and small-payment claims

13 PAID CLAIMS PER 100 TX DOCS ALSO DECLINED Figure 14. Paid Claims per 100 Physicians claims /100 physicians Large Paid Claims (>= $25K, real) paid claims (MED, w/ duplic) Sharp decline in smaller paid claims (under $25,000) These claims are getting squeezed out of the med mal system

14 ARE SETTLEMENT PAYMENTS SKYROCKETING?

15 AVERAGE PAYMENT PER LARGE PAID CLAIM (Real 1988 $, adjusted for general inflation) Figure 6: Median and Mean Payout per Large Paid Claim $ thousands (1988 $) BRD median BRD mean Estimated real annual increase: 0.1%-0.5%.

16 PERCENTAGE OF PAID CLAIMS WITH 40.0% 30.0% 20.0% 10.0% 0.0% PAYMENTS > $1 MILLION* (Real 1988 $) Figure 5. Distribution of BRD 10k Claims by Payout Size BRD 25k-100k BRD 1m * Payouts over $1M were about 6% of payouts over $10k.

17 TOTAL ANNUAL PAYMENTS (Real 1988$; adjusted for population and general inflation) $ millions (1988 dollars) Total payout, adjusted for population Total payout, adjusted for number of physicians Total payout, adjusted for Texas GSP *Figures for 1988 & 1989 are unreliable due to under-reporting.

18 ARE JURIES SPINNING OUT OF CONTROL?

19 POSSIBLE TREND IN JURY AWARDS* (Real 1988 $) Figure 12. Mean and Median Jury Verdicts $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $ Mean Verdict Median Verdict * Estimated increase % per year, but not reliably significant.

20 DEVELOPING STORY: PLAINTIFFS WHO WIN AT TRIAL USUALLY COLLECT LESS THAN JURIES AWARD A STUDY NOW IN PROGRESS COMPARES JURY VERDICTS AND ACTUAL PAYMENTS PRELIMINARY RESULTS INDICATE A SIZEABLE HAIRCUT EFFECT IN THE AGGREGATE, MED MAL PLAINTIFFS WHO WON AT TRIAL RECEIVED HALF THE DOLLARS JURIES AWARDED THE HAIRCUT WAS LARGEST IN CASES WITH THE HIGHEST JURY AWARDS THIS WILL BE THE LARGEST AND MOST ROBUST COMPARISON OF JURY VERDICTS AND ACTUAL PAYMENTS TO DATE.

21 THE $64,000 QUESTION: WHY DID PREMIUMS SPIKE? A. INCREASINGLY LITIGIOUS PATIENTS THE SPREAD OF THE SO-CALLED AMERICAN DISEASE B. SKYROCKETING SETTLEMENTS C. JURIES SPINNING OUT OF CONTROL D. NONE OF THE ABOVE

22 WHAT CHANGES DID WE FIND? DEFENSE COSTS ROSE AT OVER 4.5% PER YEAR. TOTAL COSTS INCREASED ABOUT 1% PER YEAR, DRIVEN BY RISING DEFENSE COSTS.

23 LIMITATIONS OF THE STUDY We study closed claim reports, not lawsuits We lack data on open claims We study insured claims: including captive insurers but excluding self-insured entities (such as UT hospital system) We study only Texas We lack data on defense costs for zero and small payout claims We don t study why med mal premiums rose; we merely show that some common explanations are incorrect, at least in Texas We don t study county-level trends We lack data on claims by physician specialty We don't study how well the malpractice system does at deterring error or compensating injured patients We don't study liability caps

24 CONCLUSIONS No time trend in large paid claims (adjusted for population) No time trend in payout per large claim (adjusted for inflation) Possible trend in jury verdicts (adjusted for inflation) Defense costs rose (but remain a fraction of insurers' total costs) No strong trend in total cost per year (adjusted for population, inflation, and estimated defense costs) Something else (besides malpractice claims) must be contributing to insurance premium spikes. To understand the medical malpractice system, one needs good data.