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January 14, 2005

Does Medical Malpractice Law Go Far Enough?

Tony Soltero

The complex issue of medical malpractice has increasingly forced its way into the national news spotlight in recent years, and the media maelstrom has now arrived upon our state.

The current hot topic is the malpractice reform bill just passed by the Maryland General Assembly, which is an attempt to ease the increasingly untenable burdens foisted upon doctors by the insurance industry, burdens that are causing more and more doctors to consider suspending their practices, as their premiums spin out of control.

Some blame runaway jury awards for this current state of crisis. Some blame predatory lawyers, hunting for that one big payoff. Some blame price-gouging insurance companies. Some blame the government. Some blame overly litigious patients. It's a veritable merry-go-round of finger-pointing.

The bill Gov. Robert Ehrlich vetoed on Monday carries several attempts to deal with the problem, among them caps on jury awards for pain and suffering and wrongful death. The argument for these measures is the one put forth by the politically powerful insurance industry, which cites these awards as the reason behind its recent dramatic rate increases.

But do caps on jury awards really put the brakes on malpractice premiums?

Fortunately, this is a very researchable question. Over the last decade a number of states have imposed these kinds of award caps. If these caps are effective in controlling insurance premiums, one would expect malpractice premiums to have settled down into more manageable levels and afforded medical professionals in those states some much-needed relief.

But a check of the numbers doesn't suggest that this has been the case. A study by Weiss Ratings, Inc., published about a year and a half ago found that malpractice insurance rates have galloped HIGHER in states with award caps than in states without award caps.

Between 1991 and 2002, according to this study, the median malpractice premium in no-cap states rose by an average amount of 36%. Sounds high, doesn't it? Well, the median premium in states WITH damage caps surged by a resounding 48% - 12 percentage points higher.

The study did show that the caps did accomplish what the insurance companies wanted they decisively reduced payouts in cap states. But these caps didn't do anything for either doctors or patients.

Obviously, this study by itself doesn't prove that caps cause malpractice premiums to rise. What it DOES suggest, though, is that the cause of these runaway insurance premiums is probably something other than overly-generous jury awards for pain and suffering, and is probably more inherent in the way insurance companies do business.

So, are we applying the wrong solution to a very real problem? It certainly seems that way, doesn't it? It appears that Maryland's stabs at malpractice reform seem to focus on limiting jury awards and letting insurance companies almost completely off the hook. As we can see in states that have taken this step, it doesn't look like that's going to accomplish much in the way of protecting doctors.

I say "almost" because the General Assembly bill does, in fact, feature a provision to levy a small tax on HMO premiums in order to help cover Medicaid outlays and create a fund for the subsidy of malpractice insurance premiums.

Not surprisingly, this is the part the Governor most strenuously objected to, seeing that it combines two of his least favorite things corporate taxes and corporate accountability. (Hmmm...Would the Governor drop his objection if the General Assembly called it a "fee" rather than a "tax"?)

The bill features a few other provisions, such as defining what constitutes acceptable court testimony. In essence the bill offers a diverse and multi-pronged attempt to deal with the malpractice insurance issue, and while it is obviously not perfect, it has got enough breadth to satisfy the medical community, which has endorsed it and called for its passage. Who knows, maybe the award caps might work where they've failed elsewhere if they're imposed in conjunction with some measures holding insurers accountable.

Too bad this bill was vetoed. However, that veto was overridden by the General Assembly on Tuesday evening. Still, it again demonstrated a continuing problem with having ideologues as leaders; they fail to recognize that the perfect is the enemy of the good.

Politics is the art of the possible, the practice of compromise and give-and-take. Our General Assembly has produced a bill that might not be satisfactory to ideological purists, but which is nonetheless an honest attempt to deal with a crippling problem, a product of the pragmatism and deal-brokering that characterizes government action. More importantly, it is a bill that's supported by those it is meant to benefit.

Without insurance-industry accountability, the bill will do more harm than good; with no bill at all, our physicians will get no relief. Maryland deserves better than blind all-or-nothing dogmatism from the State House.

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