Medical malpractice: the growing crisis

Transcription

1 Medical malpractice: the growing crisis The Law I Milan Korcok 11 A ccording to the Association of Trial Lawyers of America (ATLA), the "medical industry" in the United States is crying wolf about a medical malpractice crisis that doesn't exist. Thomas Goddard, an executive with ATLA, said that doctors' higher insurance premiums don't reflect a crisis. A problem, perhaps, but not a crisis. American medicine does not see the phenomenal increase in malpractice actions, awards and insurance premiums as just a problem and, importantly, a growing number of state and federal legislators don't see it that way either. In state capitals and in Washington, DC, physicians and politicians are forming alliances to fight what they believe is a crisis. By legislating caps on awards, restricting lawyers' contingency fees, spacing out awards over time and instituting peer review and risk management procedures, physicians and legislators are hoping that they can neutralize or restrain the public's growing fascination with litigation. According to the American Medical Association (AMA), physicians' premiums have increased Mr. Korcok is a freelance medical writer living in Fort Lauderdale, Florida. an average of 44.8% in the last 2 years and 236% in the last decade. As of Jan. 1, 1986, obstetricians, neurosurgeons and orthopedic surgeons in parts of southeast Florida pay premiums of up to $ annually for $1.5 million in coverage double what they paid last year. In the remainder of the state, the rates for these specialties average $ Across the United States, even the low-risk specialties have been hit hard. General practitioners" and internal medicine specialists' premiums have increased an average of 32% in the last 2 years Ȧccording to AMA, the average annual malpractice insurance Across the United States, even the low-risk specialties have been hit hard. General practitioners' and internal medicine specialists' premiums have increased an average of 32% in the last 2 years. 641

2 premium for all physicians in 1984 was $8400 (7.7% of their pretax net income). Surgical specialists paid an average of $ in premiums (8.8% of pretax net income) and obstetricians/ gynecologists paid an average of $ in premiums (16.2% of their pretax net income). These figures include only nonfederally employed, patient care physicians; they do not include residents ȦMA estimates that when all indirect and direct premiums are added up - including joint underwriting associations, patient compensation funds, unregulated offshore reinsurance companies (syndicates that underwrite the policies of insurance carriers), the large reserves held by self-insured hospitals and the liability coverage for paramedical and nonmedical personnel - American physicians pay "in the vicinity of $4 billion" per year for professional liability coverage. While this sounds like a potential windfall for the insurance industry, it is not. More than one half of the liability insurance market is physician-owned or is sponsored by nonprofit companies whose primary goal is to keep the premiums as low as is possible. Only 2% of the commercial insurance industry has remained in the medical professional liability business. In 1984, physician-owned insurance companies, which operate in at least 36 states, experienced an aggregate underwriting loss of $385 million. For every dollar earned in 1983 and 1984, companies incurred losses of $1.40 to $1.50. In several states, firms providing malpractice insurance have been pulling out, leaving doctors without access to coverage. Recently, the New Mexico Physicians Mutual Liability Company announced that it was pulling out of Wyoming, leaving half of the state's doctors without coverage as of February Some obstetric and gynecologic groups have considered closing their doors. According to Medical Liability Monitor, a malpractice issues newsletter, Lloyd's of London (the world's key source of reinsurance for many medical insurance carriers) said that it will leave the US market unless significant changes are made in the present system of resolving claims. Lloyd's suffered its greatest underwriting losses in nearly 3 centuries in If medical malpractice affected nothing more than doctors' insurance premiums, politicians would not be worried. But the high premiums generate a ripple effect. Advocates for liability insurance reform believe that high premiums encourage defensive medicine, which is costly for patients and insurers, and discourage physicians from doing highrisk procedures. Statistics appear to support them. AMA's Center for Health Policy Research estimates defensive medicine costs $15 billion. Other medical economists estimate that figure to be two or three times higher. These costs include the premiums doctors must pay and the additional precautions they take to protect themselves against legal action. A 1983 AMA survey showed that 41% of physicians polled said that they prescribed additional diagnostic tests and 27% provided additional treatment procedures to protect against potential malpractice. Many others, rather than pay one third or more of their gross incomes for liability premiums, simply do not provide high-risk services. (One California survey found that 32% of all obstetricians in the state are restricting the number of deliveries they do, and 46% are reducing their high-risk caseload.) To growing numbers of specialists, the possibility that they will be sued is not an abstract theory. In some specialties, more physicians will be sued than will not. According to surveys by the American College of Obstetricians and Gynecologists, six out In 1984, physician-owned insurance companies, which operate in at least 36 states, experienced an aggregate underwriting loss of $385 million. For every dollar earned in 1983 and 1984, companies incurred losses of $1.40 and $

3 of 10 obstetricians have had claims filed against them at some time, and 25% can expect to have claims filed against them this year. Before 1980, malpractice claims were filed at an average of three per 100 physicians annually. Between 1980 and 1984, physicians experienced 8.6 claims per 100. Among surgical specialties, the number of claims has gone from 4.4 per 100 physicians before 1980 to 13.9 between 1980 and Often, the consequences of malpractice are seen only in economic terms. One Chicago-area survey of physicians sued between 1977 and 1981 found that more than one third were depressed after the action and considered early retirement, 19% suffered "loss of nerve" in clinical situations and 42% began to avoid certain high-risk patients. (In 1975 the average verdict in a malpractice court action was $94 947; in 1984, it was $ ) According to Jury Verdict Research, an Ohio-based research firm that issues data on jury actions, the 1984 average amount awarded for damage involving injury to an infant was $1.45 million; for failure to diagnose or misdiagnosis, $ ; for improper treatment and improper medication, $ ; for surgical error, $ ; and for injury to the mother, $ However, an encouraging side to the malpractice story has appeared, and it is the way physicians have pushed tort reform measures in state legislatures and, more recently, in the federal legislature. According to Medical Liability Monitor, in 1985 at least 126 tort reform bills were introduced in state legislative sessions; this figure is not considered all-inclusive. Of those, 41 bills passed successfully and some of the remaining ones have not yet been dealt with fully. Although these bills varied from state to state, certain common characteristics appeared in many of them. * A "collateral source rule" would prevent the double recovery that sometimes occurs when a plaintiff receives an award from one source, such as an insurer or employer, and another from a defendant. Such payments would offset each other under this proposed ruling. * Some forms of control on attorneys' fees have been adopted in almost half the states, and these include court review to determine reasonability, set fixed limits on the percentages that may be claimed and a sliding scale in terms of percentage of the award. In Delaware, for example, the attorney may not charge more than 35% of the first $ , 25% of the next $ and 10% of the balance over $ As a deterrent to frivolous actions, some states demand that the loser must pay the winner "reasonable" fees and costs if the loser didn't appear to have a "reasonable" chance of winning. (In New York, the court can levy a $ fine on lawyers or clients bringing "frivolous" actions.) * Various screening panels that review malpractice claims before trial have been established; but, in some states, the courts have ruled that such panels stand in the way of due process. * While the establishment of caps on pain and suffering awards have provoked a lot of controversy and have gone down to several major defeats, there have been notable victories in Illinois, Kansas and California. The US Supreme Court recently upheld California's constitutional right to maintain a $ cap on pain and suffering awards. * Statutory caps on awards against physicians are seen as particularly effective ways to reduce award sizes. Such caps are usually tied to patient compensation funds in which physicians may participate. For example, a physician or physicians' insurer is liable for damages up to, say, Before 1980, malpractice claims were filed at an average of three per 100 physicians annually. Between 1980 and 1984, physicians experienced 8.6 claims per 100. Among surgical specialties, the number of claims has gone from 4.4 per 100 physicians before 1980 to 13.9 between 1980 and CAN MED ASSOC J, VOL. 134, MARCH 15,

4 Brief Prescribing Information GEL (Heparin sodium - Zinc sulfate) Symptomatic treatment of Herpes Simplex 1 (cold sores) ACTION Lipactin is composed of heparin sodium and zinc sulfate for topical application. Topical application of heparin sodium produces accumulation of the heparin molecules in the corium of the skin while insignificant amounts are absorbed through the skin. Oral administration of heparin sodium is associated with negligible anticoagulant effect as heparin is immediately metabolized in the gastrointestinal tract and not absorbed from aqueous solution. Absorption of zinc sulfate through broken skin when applied in the concentrations used in Lipactin does not produce significant increases in serum and tissue concentrations of zinc. Clinical studies have indicated that Lipactin significantly reduces the duration of pain associated with HSV 1 infections when compared with placebo. There is also a statistically significant increase in the rate of healing of perioral and lip lesions when compared to placebo preparation. INDICATIONS For the relief and management of symptoms due to lip and perioral infections of Herpes Simplex Virus type 1. This includes Herpes labialis, Herpes febrilis, fever blisters and "cold sores" Early initiation of therapy, within 3 days of the onset of signs and symptoms of infection or reinfection, has been found to produce faster healing than treatment commenced after 3 days of symptoms. Treatment should be continued until healing is complete or to a maximum of 14 days, whichever comes first. CONTRAINDICATIONS Lipactin (heparin sodium - zinc sulfate) is contraindicated in individuals who are hypersensitive to any of its components. WARNINGS FOR EXTERNAL USE ONLY Lipactin Gel is NOT for ophthalmic use. Not recommended for use in children or in pregnant women unless on the advice of a physician. PRECAUTIONS If the symptoms of the infection persist or become more severe or wide-spread with Lipactin treatment, use of the medication should be discontinued and a physician consulted. ADVERSE REACTIONS In a few cases, a mild transient burning sensation has been experienced at the site of application. DOSAGE AND ADMINISTRATION Apply Lipactin to the affected area(s) 3 to 6 times a day. A sufficient quantity of the gel should be applied to adequately cover all lesions and a margin of healthy skin surrounding them. Therapy should be initiated as early as possible following the onset of signs and/or symptoms, i.e. tingling, burning, vesiculation etc. and may continue for up to 14 days. AVAILABILITY Each gram of gel contains: heparin sodium 160 USP units and zinc sulfate 5 mg. Tubes of 3 grams. Product monograph available on request. $ and the patient compensation fund is liable for the amount beyond that; but, in no case, more than the predetermined cap of perhaps $ In some states, the remainder must be paid by the physician; in others, such as Illinois or Indiana, there is an absolute limit on physician liability. * Limiting the length of time an individual has to file a suit after injury is the most common tort reform. Such modifications have been adopted in 40 states, and 23 states have modified statutes of limitations on claims by minors. Claims on behalf of minors, which have such a long period of redress, are cited as a particularly serious problem in setting rates and premiums. * Replacement of the "joint and several" rule under which a plaintiff can recover all damages from one of the charged parties if the others can't pay. Revision of this rule would make defendants liable only for their degree of responsibility in the action. * Periodic payment of damages. According to an AMA task force report issued in mid-1985, 17 states up to that time had passed statutes which require or permit courts to award damage payments to be made periodically rather than in one lump sum. This precludes the need to speculate on future costs. Under the lump sum provision, some heirs have been known to reap quite a windfall when plaintiffs died earlier than predicted. A California law requires such periodic payments for all awards of $ or more. 0 Patients and doctors may now enter into voluntary arbitration agreements in lieu of court action in at least 30 states. Most provide for a certain period of time in which the patient may reject the arbitration agreement and press for trial by jury. No states have yet been able to enact tort reform packages with all of these restraints in place. And predicting just how tightly the costs of medical malpractice might be controlled is pure speculation, but there are encouraging signs. Indiana, which implemented the nation's first really comprehensive medical liability tort reform package in 1975, established pretrial medical review panels, shortened the statute of limitations, capped physicians' liability at $ per claim, established a patients' compensation fund to cover awards of more than $ (but no more than $ ) and limited attorneys' fees to 15% of any award from the compensation fund. Despite several court challenges, the package has remained intact and the results are remarkable. Limiting the length of time an individual has to file a suit after injury is the most common tort reform. Such modifications have been adopted in 40 states... CIBA-GEIGY SELF MEDICATION PRODUCTS CIBA-GEIGY CANADA LTD. IPAAB Mississauga, Ontario 644 CAN MED ASSOC J, VOL. 134, MARCH 15, 1986

5 In a national comparison of premiums charged by physicianowned or medical society-created liability insurance companies, Indiana's 1984 premiums were the lowest - ranging from $630 to $5046 per year and averaging $1200 Ṫhough most medical malpractice reform must occur at the state level, observers are watching Washington, where influential Senator Orrin Hatch (R-Utah) has introduced a bill that encourages states to reform tort laws and to strengthen the peer review system. The Hatch bill, which was originally developed by AMA, would provide federal incentive grants to states to adopt certain administrative and tort reforms. Among those reforms are the elimination of the collateral source rule, which allows double payments for certain damages; use of periodic rather than lump sum payments on awards exceeding $ ; capping noneconomic (pain and suffering) awards at $250000; limiting attorneys' contingency fees (one third of the first $ , 25% of the next $ and 10% of the balance); strengthening disciplinary procedures for health care workers; and requiring the establishment of risk management programs for hospitals, doctors and other health care workers. The bill requires all hospitals to have risk management systems in place, and it also requires insurance companies to establish risk management programs for physicians in which they must participate at least once in any 3-year period. These could be educational seminars that look at how physicians practise, how they keep their records, how they communicate with patients and how they delegate responsibility; in short, how well they minimize the risks inherent in practising medicine. In a letter to his senate colleagues, Hatch (who is chairman of the Committee on Labor and Human Resources) wrote: "No one wants to protect incompetent health care providers", and he said that the best way to prevent malpractice was to revoke or suspend the licences of incompetent or careless health providers. Unfortunately, licensing agencies are, as a rule, so understaffed and poorly funded that they can't really go after all the incompetents. The Hatch bill would require states receiving federal grants to dedicate a portion of the licensing fees to the state agency responsible for disciplining incompetents. AMA has already started lobbying in support of the Hatch bill, calling it "another milestone in the efforts of organized medicine to develop an equitable solution to the problem [of professional liability insurance]". However successful the Hatch bill proves to be, it will certainly focus a lot of national attention on abuses in the existing system of settling malpractice actions. Despite this, the saddest truths are hardly ever reported, such as that the great majority of injured persons never receive adequate or any compensation for the damages; that defendants in negligence claims are exposed to erratic and grossly disproportionate awards; that less than 304 out of every insurance premium dollar paid for patient injury ends up with the injured patient; and that it takes an average of 4 years under the current system for malpractice lawsuits to be decided.u Logie Medical Ethics Essay Prize Deadline: May 16,1986 Once again, CMAJ is sponsoring the Logie Medical Ethics Essay Prize for medical students. The awards this year are $500 for the winning essay and $250 each for second and third place. The judges, consisting of a board of editors of CMAJ's scientific and news and features departments, will select the winners based on content, writing style and presentation of manuscripts. All entries must be typed, double spaced and not more than 12 pages. The best three papers will appear in a fall issue of CMAJ. Send submissions to: News and Features Editor CMAJ PO Box 8650 Ottawa, Ontario KlG OG8 645