Statistical Sleight of Hand by Center For Justice & Democracy Misrepresents Medical Malpractice Premium Growth

6/27/2002

From: Lisa Cole of Physician Insurers Association of America, 301-947-9000, e-mail: lcole@thepiaa.org

ROCKVILLE, Md., June 27 -- In yet another attempt to influence the debate over the current medical malpractice insurance crisis, a second grossly misleading report has been authored by J. Robert Hunter and distributed by the so called Center for Justice & Democracy (CJ&D). This second report follows an earlier and similarly inaccurate report that attempted to tell the American public that the average claim payment in 2000 was $8,066. The PIAA Data Sharing Project shows that payments made on behalf of individual defendants in 2000 averaged $328,396.

This latest report attempts to measure the growth in the malpractice premiums doctors pay in California (which has well-established tort reform laws) as compared to those nationwide. The report tries to demonstrate that average malpractice premiums paid by California doctors do not vary greatly from other areas around the country. Unfortunately, Hunter, an actuary by training, has once again misused data to reach erroneous conclusions -- conclusions which most who review his work will readily see to be fallacious.

The CJ&D analysis cites that "the 2000 average premium per doctor in California was only 8.2 percent below that of the nation ($7,200.61 vs. $7,843.75)." These averages are derived by dividing the TOTAL malpractice premiums earned in California and the Nation by the TOTAL number of doctors listed for each in the Statistical Abstract of the United States and reportedly published by the California Department of Consumer Affairs. If Hunter understood the data, he would know that it cannot produce the averages that he claims. First, the numerator (total medical liability premiums as reported to the NAIC) contains premiums paid by all types of health providers -- not just doctors. Because the number includes premiums paid by hospitals, nursing homes, clinics, nurses, and all other health care providers, it cannot be used to produce any average per doctor. Second, the denominator (total number of doctors) vastly overstates the number of doctors who actually purchase liability insurance. There are thousands of doctors who have no need for any liability insurance (e.g. doctors who work in medical research, those teaching, those who produce or manufacture medical products and/or devices, those serving in the military, those working in the state or federal government and those who are retired.) So once again, the total number of doctors as listed in the Statistical Abstract of the U.S. cannot be used to compute an average national medical liability premium per doctor.

By using NAIC data appropriately, one can readily calculate the growth in total malpractice premiums over a set period in various parts of the country, which the PIAA has done and has published on its Web site (http://www.thepiaa.org). From this analysis, we can see that total malpractice premiums grew by 167 percent in California during the stated period as compared to a growth of 505 percent for the rest of the country. By continually publishing inaccurate and misleading information, Hunter and the Center for Justice & Democracy continue to deceive the American public and perpetuate the trial lawyer's lotto.

For a complete copy of the PIAA analysis, or for more information, please contact the PIAA office at 301-947-9000, or visit http://www.thepiaa.org. The PIAA is a trade association of over 50 physician- and dentist-owned and/or operated medical professional liability insurance companies and reinsurers. Collectively, PIAA members insure more than 242,000 physicians, 35,000 dentists, and 450 hospitals in the United States. For more information about programs and services of the PIAA, contact Lisa Cole, 301-947-9000, visit our Web site at http://www.thepiaa.org, or email lcole@thepiaa.org.