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Planting Seeds of Mistruth: Medical Malpractice Payments, Medical Professional Insurance Premiums, & High Health Care Costs

By Jacob Regar

In the fields of politics and justice, lobbyists and special interest groups are the cultivators of ideas. They know the secret to growing fertile ideas begins with planting viable seeds in properly conditioned growing media.

Planted decades ago by the insurance industry, the seed of blame for rising medical malpractice premiums was introduced into the minds of the American public amidst fear of rising medical malpractice insurance premiums and health care costs. Following a successful germination, the idea that personal injury and medical malpractice attorneys were largely culpable for higher medical malpractice premiums took root and grew to redwood proportions.

The most ardent supporters of anti-consumer medical malpractice laws are members of the insurance industry. Amid weak economic cycles in America, professional liability insurers turned profits. Their continued success is tied to a smart business model: sell policies, collect premiums, limit payments; and, at all times, support the propagation of tort reform doctrine.

Tort reform is a powerful phrase, waved around by conservative politicians and special interest groups, intended to rally the public to cut their support for negligence victims having the right to sue responsible parties for their damages. While actual access to the courts to protect ones' legal rights remains relatively undisturbed, in practice, prosecuting certain types of valid injury claims proves unfeasible for many injury plaintiffs.

In no other group can the squeezing effects of tort reform policies be felt quite as hard as with California medical malpractice plaintiffs. In 1975, under the believed threat of rising medical malpractice insurance premiums, the California Legislature enacted the Medical Injury Compensation Reform Act (MICRA), which placed a stiff barrier on the amount of recoverable pain and suffering damages for medical malpractice plaintiffs. The most well-known portion of that law limits pain and suffering damages in medical malpractice cases to $250,000.

Is the law unfair? You can decide. If a spouse loses their better half or a parent loses their child because of the proven negligence of a health care professional, the law requires compensation for the rightful heir(s) of the decedent. The law even provides for pain and suffering damages. It's just that those damages are capped at $250,000. California believed that amount was sufficient in 1975 when MICRA became law. 37-years later, the statutory cap is out-of-touch with modern economics and as such, unjust. The value of $250,000 today is over $1,000,000.

One of the things you hear people mention when they talk about medical malpractice lawsuits is the perceived economic effect of medical malpractice litigation. It's typical for a proponent of tort reform to say "medical malpractice lawsuits raise the cost of health care. When doctors get sued they pass the costs down to their patients and then we all pay more for health care."

For starters, most doctors are never sued for malpractice. Since 1990, "the vast majority of doctors – 82 % – have never had a medical malpractice payment… Just 5.9 % of doctors have been responsible for 57.8 % of all malpractice payments since 1991." Center for Justice & Democracy, Medical Malpractice: By the Numbers (October 2012 Update).

Would anyone with a straight face say that health care costs are dropping? Do you think people might find it interesting that medical professional insurance premiums have declined since 2006 and are currently at a low? Center for Justice & Democracy, supra.

So, if the majority of doctors have never had to make a malpractice payment, medical professional insurance premiums are at a low but health care costs are sky high, what gives? Answer: medical malpractice lawsuits do not raise the cost of health care. In fact, Consumer Attorneys of California's website says, "in 2010, less than 25 cents of every dollar paid in medical malpractice insurance premiums in California went to those harmed by malpractice."

Still, doctors want further reduction in liability insurance premiums. But is tort reform the answer? Specifically, maintaining stifling statutory caps on pain and suffering damages? Insurance industry insiders say "no."

The American Insurance Association has said "the insurance industry never promised that tort reform would achieve specific premium savings." The American Tort Reform Association has said "we wouldn't tell you or anyone that the reason to pass tort reform would be to reduce insurance rates." And State Farm Insurance Company (Kansas) has said, "we believe the effect of tort reform on our book of business would be small. … The loss savings resulting from the non-economic [pain and suffering] cap will not exceed 1% of our total indemnity losses.…." Center for Justice & Democracy, supra.

If the insurance industry, themselves, do not believe tort reform lowers medical malpractice premiums, and lower insurance premiums do not reduce the cost of health care, who benefits (we know who suffers—hint: You) from tort reform in the medical malpractice sphere? The insurance industry does.

In the 2010 movie, Inception, Leonardo Dicaprio's character Dominic Cobb asked, "what is the most resilient parasite? Bacteria? A virus? An intestinal worm? An idea. Resilient... highly contagious. Once an idea has taken hold of the brain it's almost impossible to eradicate."

As a medical malpractice attorney serving the communities of the San Fernando Valley and the Coachella Valley, it is my mission to learn and share the truth about the harmful effects of tort reform.

The idea that medical malpractice lawsuits increase medical malpractice insurance premiums is not true. California's noneconomic damage cap of $250,000 is a bad idea. And patients who have suffered harm because of negligent medical care deserve justice.