Wednesday, July 30, 2003
Copyright © Las Vegas Review-Journal

EDITORIAL: Insurers aren't to blame

Report: lawsuits driving malpractice crisis

During the heated debate over medical malpractice reform we've experienced over the past few years, trial lawyers have argued that insurance companies were to blame for physician premiums going sky-high. Insurers, the plaintiff's bar claimed, raised their rates to make up for investments that lost money as the stock market declined.

A report recently issued by the General Accounting Office -- the investigators who work for Congress -- should go far to dispel that myth.

After surveying seven states, including Nevada, the GAO concluded that "falling investment income and rising reinsurance costs have contributed to recent increases in premium rates ... . However, GAO found that losses on medical malpractice claims -- which make up the largest part of insurers' costs -- appear to be the primary driver of rate increases in the long run."

This conclusion should vindicate physicians who have argued that frivolous lawsuits and exorbitant jury awards, particularly for "noneconomic damages" (aka pain and suffering), were behind the crisis.

The researchers found two states that saw base premium rates actually drop from 1998 to 2002: California and Minnesota. California -- which has a hard, $250,000 limit on noneconomic damage awards, limits attorney fees and imposes a tight statute of limitations -- has the nation's most extensive malpractice tort reform policies in place.

Minnesota, by contrast, has no damage caps in place but does limit joint and several liability. The state also forces a plaintiff at filing to hire an expert to certify that the physician charged "deviated from the applicable standard of care" ... and have that certification endorsed by an independent "trial expert."

In Clark County, by contrast, the premium base rate for obstetricians increased from $95,000 per year to $142,000. Since then, the Legislature attempted to implement malpractice reform, but portions of that legislation were designed as a sop to Democrats and their trial lawyer allies. For instance, the $350,000 "cap" on noneconomic damages enacted last year is riddled with loopholes, and there are no limits on joint and several liability, meaning a doctor found to be 1 percent responsible for a mistake could end up liable for 100 percent of the damages.

While the ever-cautious GAO was true to form in one sense -- rather than recommending specific legislation, it suggested that insurance commissioners might want to gather more information -- the report's findings clearly indicated that moves to rein in excessive jury awards and to limit joint and several liability should significantly slow the rise in malpractice insurance premiums.

Whether state or federal lawmakers are courageous enough to take on the powerful plaintiff's bar and make the necessary changes that would moderate those rates is another matter altogether.