UCONN Insurance Law Expert: Medical Malpractice Crisis Not Due to Jury Verdicts; Study Points to Decrease in Investment Earnings 1/16/2003
From: Patrick Kinney, 860-225-7526, for the Connecticut Trial Lawyers Association HARTFORD, Conn., Jan. 16 -- Professor Tom Baker, director, Insurance Law Center, University of Connecticut School of Law issued a report today examining the trends in medical malpractice liability insurance premiums in Connecticut. "The claims that recent increases in medical malpractice liability insurance premiums in Connecticut are attributable to overly generous jury verdicts are unfounded. The more likely explanation for the sudden rise in rates is the decrease in investment earnings of the medical malpractice insurers," said Baker. The most significant findings of the report are: -- The recent sudden increases in medical malpractice liability insurance rates result from a turn in the liability insurance underwriting cycle, not from an increase in medical malpractice litigation -- The empirical research does not support the assertion that damages caps will reduce medical malpractice insurance premiums -- Medical malpractice damages caps would not reduce the costs of medical malpractice; instead, they would require victims to bear more of those costs -- Caps on non-economic damages have a disproportionate impact on women Investment earnings are important in the malpractice area because there is a long delay between the time that insurers collect premiums and the time that claims are paid. With the decline in interest rates and stock valuations over the past two years, insurers were not able to rely on investment earnings to maintain profit margins and are now choosing to increase premiums. The study found that throughout the boom stock market cycle of the 1990's vigorous competition for investment dollars kept premiums low. Recent dramatic premium increases came as a shock to doctors around the country and in Connecticut. This is not the first time that medical malpractice insurance rates have risen drastically. "The pattern we are seeing is consistent with the medical malpractice underwriting cycle of the past thirty years," Baker said. "A similar situation in the 1980's and subsequent tort reform measures resulted in higher profits for insurance companies but no cuts in doctors' premiums. Restricting injured patients' rights to collect damages won't help this time either, because that action doesn't address the cause of the problem," added Baker. The report examined numerous, independent studies of medical malpractice and patient claiming conducted over the past fifteen years. All of the studies found a high rate of medical malpractice and a low rate of medical malpractice claiming. It was prepared at the request of the Connecticut Trial Lawyers Association. The research demonstrates that the vast majority of the victims of medical malpractice do not bring malpractice insurance claims. This means that most of the costs of medical malpractice are not in fact borne buy either health care providers or their liability insurance companies. Instead, most of the costs of medical malpractice are borne by the victims themselves. Caps on noneconomic damages hurt women more than men because the largest part of noneconomic damages in many tort claims is lost wages, and women earn on average less money than men. Also, the most significant effect of many medical injuries inflicted on women is harm to reproductive capacity which does not entitle them to receive significant economic damages. Professor Tom Baker is the Connecticut Mutual Professor of Law, director, Insurance Law Center, University of Connecticut School of Law. Professor Baker teaches and conducts research in the areas of tort and insurance law. This report does not represent the position of any of the organizations with which he is associated. It was an explicit condition of preparing this report that he have complete independence. The Connecticut Trial Lawyers Association honored that request. This report reflects Professor Baker's independent views, based on the research and analysis summarized in the report "Research on Medical Malpractice: Implications for Tort Reform in Connecticut". He received compensation for preparing this report on the same terms for which he has prepared reports at the request of insurance companies in the past. --- Research on Medical Malpractice: Implications for Tort Reform in Connecticut Tom Baker January 2, 2003 Executive Summary This report addresses claims that recent increases in medical malpractice liability insurance premiums in Connecticut are attributable to overly generous jury verdicts. The report concludes that these claims are unfounded. Moreover, enacting caps on the damages recoverable for medical malpractice would harm the most seriously injured victims of medical malpractice, without reducing significantly medical malpractice insurance premiums. The research on medical malpractice in the United States demonstrates that the public policy problem is too much medical malpractice, not too much medical malpractice litigation: -- There is a high rate of medical malpractice. -- Medical malpractice is one of the leading causes of injuries in the United States. -- Most patients who are injured by medical malpractice do not sue their doctors. -- There is no evidence that juries are biased in favor of malpractice victims; the evidence suggests that juries favor medical malpractice defendants. -- Jury damage awards are positively correlated with injury severity and are consistent with both expert and judicial evaluations. -- The costs of the overwhelming majority of medical malpractice incidents are borne by injured patients, and to a lesser degree their health insurers, not by medical care providers or liability insurance companies. -- Medical malpractice damages caps would not reduce the costs of medical malpractice; instead, they would require victims to bear more of those costs. -- Reducing the costs of medical malpractice requires reducing the amount of medical malpractice; damage caps cannot accomplish that goal. Damage caps are more likely to increase the amount of malpractice. -- Caps on non-economic damages have a disproportionate impact on women. -- The recent sudden increases in medical malpractice liability insurance rates result from a turn in the liability insurance underwriting cycle, not from an increase in either medical malpractice or medical malpractice litigation. -- The empirical research does not support the assertion that damages caps will reduce medical malpractice insurance premiums. --- Editors: For copies of complete report contact Tom Baker, 860-570-5288 |