Medical Misdiagnosis:
Challenging the Malpractice Claims
of the Doctors' Lobby

Executive Summary
January 9, 2003

The major findings in this report are the following:

Doctors’ Attacks on the Tort System Are a Misdiagnosis that Diverts Attention from an Epidemic of Medical Errors and Unsafe Practices

• Between 44,000 to 98,000 Americans die in hospitals each year due to preventable medical errors, according to the Institute of Medicine (IOM). By comparison, the annual death toll is 43,000 from automobile accidents, 42,000 from breast cancer, and 15,000 from AIDS.

• The costs of doctor negligence and the medical liability system is much greater for patients than doctors. The IOM estimates the annual costs to society for medical errors in hospitals at $17 billion to $29 billion. These costs include disability and health care costs, lost income, lost household production and the personal costs of care. They do not include medical malpractice occurring outside the hospital setting. By contrast, the National Association of Insurance Commissioners reports that the total amount spent on medical malpractice insurance in 2000 was $6.4 billion – at least three to five times less than the costs of malpractice to society.

Rather than Facing "Runaway Litigation," Doctors Benefit from a Claims Gap

• The landmark Harvard Medical Practice Study and other studies have found that only a small percentage of medical errors result in lawsuits. Twelve years ago, Harvard researchers found that only one in eight medical errors committed in hospitals results in a malpractice claim. Researchers replicating this study made similar findings in Utah and Colorado. From 1996 through 1999, Florida hospitals reported 19,885 incidents but only 3,177 medical malpractice claims. In other words, for every 6 medical errors only 1 claim is filed.

• Malpractice insurance costs amount to only 3.2 percent of the average physician's revenues. According to experts at the Medicare Payment Advisory Commission (MedPAC), liability insurance premiums make up just a tiny part of a physician’s expenses and have increased by only 4.4 percent over the past year.    The increase in this expense is noticeable primarily because of the decreases in reimbursements that doctors are receiving from HMOs and government health programs.

Increases in Medical Malpractice Premiums and Payments Track — And Do Not Exceed — Increased Costs of Injuries

• Malpractice insurance costs have risen at half the rate of medical inflation, debunking the myth of "out-of-control juries." While medical costs have increased by 113 percent since 1987, the total amount spent on medical malpractice insurance has increased by just 52 percent over that time—less than half of medical services inflation.

• Government data shows that medical malpractice awards have increased at a much slower pace than claimed by Jury Verdict Research. According to the federal government’s National Practitioner Data Bank (NPDB), the median medical malpractice payment by a physician to a patient rose 35 percent from 1997 to 2001, from $100,000 to $135,000. By contrast, data from Jury Verdict Research (JVR), a private research firm, shows that awards rose 100 percent from 1997 to 2000, from $503,000 to $1 million. The reasons for the huge difference: JVR only collects jury verdict information that is reported to it by attorneys, court clerks and stringers. The NPDB is the most comprehensive source of information that exists because it includes both verdicts and settlements. Ninety-six percent of all medical malpractice cases are settled, as opposed to decided by a jury, and settlements result in much lower awards than jury verdicts.

• Government data shows that medical malpractice awards have increased at a slower pace than health insurance premiums. According to the federal government’s National Practitioner Data Bank, the median medical malpractice payment by a physician to a patient rose 35 percent from 1997 to 2000, from $100,000 to $135,000. But during the same time, the average premium for single health insurance coverage has increased by 39 percent. [See Figure, "Growth in Health Insurance Costs and Malpractice Awards Compared."] Payments for health care costs, which directly affect health insurance premiums, make up the lion’s share of most medical malpractice awards.

The Spike in Medical Liability Premiums Was Caused by the Insurance Cycle, Not By New Claims or "Skyrocketing" Jury Verdicts

• For much of the 1990s, doctors benefited from artificially lower premiums. According to the International Risk Management Institute (IRMI), one of the leading analysts of commercial insurance issues, "What is happening to the market for medical malpractice insurance in 2001 is a direct result of trends and events present since the mid to late 1990s. Throughout the 1990s, and reaching a peak around 1997 and 1998, insurers were on a quest for market share, that is, they were driven more by the amount of premium they could book rather than the adequacy of premiums to pay losses. In large part this emphasis on market share was driven by a desire to accumulate large amounts of capital with which to turn into investment income." IRMI also noted: "Clearly a business cannot continue operating in that fashion indefinitely."

• One major insurer appears to have triggered a "crisis" in at least four states studied. Case studies on Mississippi, Nevada, Pennsylvania, and West Virginia in this briefing book show that the "crisis" in at least these four states was triggered after a leading company, The St. Paul Companies, Inc., withdrew from the medical liability marketplace in December 2001. That decision had more to do with St. Paul’s reckless cash flow policies than it did with malpractice claims or jury awards.
  
• Medical liability premiums track investment results. J. Robert Hunter, one of the country’s most knowledgeable insurance actuaries and director of insurance for Consumer Federation of America, recently analyzed the growth in medical liability premiums. He found that premiums charged do not track losses paid, but instead rise and fall in concert with the state of the economy. When the economy is booming and investment returns are high, companies maintain premiums at modest levels; however, when the economy falters and interest rates fall, companies increase premiums in response.
  
• There is no growth in the number of new medical malpractice claims. According to the National Association of Insurance Commissioners (NAIC), the number of new medical malpractice claims declined by about four percent between 1995 and 2000. There were 90,212 claims filed in 1995; 84,741 in 1996; 85,613 in 1997; 86,211 in 1998; 89,311 in 1999; and 86,480 in 2000.

"Repeat Offender" Physicians Are Responsible for the Bulk of Medical Malpractice Costs

• Five percent of doctors are responsible for 54 percent of malpractice in the U.S. Public Citizen’s analysis of the National Practitioner Data Bank, which covers malpractice judgments and settlements since September 1990, found that 5.1 percent of doctors (35,009) have paid two or more malpractice awards to patients. These doctors are responsible for 54 percent of all payouts reported to the Data Bank. Of these, only 7.6 percent have ever been disciplined by state medical boards. Even physicians who have made 5 payouts have been disciplined at only a 13.3 percent rate.

Few, If Any, Malpractice Lawsuits Are "Frivolous"

• Plaintiffs drop ten times more claims than they pursue. Based on Physician Insurer Association of America (PIAA) figures, Public Citizen estimates that about 54 percent of claims are being abandoned by patients. Attorneys often may send a statutorily required notice of intent to claim or file a lawsuit in order to meet the requirements of the statute of limitations but, after collecting medical records and consulting with experts, decide not to pursue the claim. We estimate that the number of cases withdrawn voluntarily by plaintiffs was 92,621, ten times the number of cases that were taken to trial and lost during that period (9,293). The percentage of claims pursued by plaintiffs to final rejection by a jury is only five percent.

• The small number of claims pursued to a defense verdict are not frivolous. Researchers at the American Society of Anesthesiologists arranged for pairs of doctors to review 103 randomly selected medical negligence claims files. The doctors were asked to judge whether the anesthesiologist in question had acted reasonably and prudently. The doctors only agreed on the appropriateness of care in 62 percent of the cases; they disagreed in 38 percent of cases. The researchers concluded, "These observations indicate that neutral experts (the reviews were conducted in a situation that did not involve advocacy or financial compensation) commonly disagree in their assessments when using the accepted standard of reasonable and prudent care."

So-called "Non-Economic" Damages Are Real and Not Awarded Randomly

• "Non-economic" damages aren’t as easy to quantify as lost wages or medical bills, but they compensate real injuries. So-called "non-economic" damages are awarded for the pain and suffering that accompany any loss of normal functions (e.g. blindness, paralysis, sexual dysfunction, lost bowel and bladder control) and inability to engage in daily activities or to pursue hobbies, such as hunting and fishing. This category also encompasses damages for disfigurement and loss of fertility. According to PIAA, the average payment between 1985 and 2001 for a "grave injury," which encompasses paralysis, was only $454,454.

• No evidence supports the claim that jury verdicts are random "jackpots." Studies conducted in California, Florida, North Carolina, New York, and Ohio have found that jury verdicts bear a reasonable relationship to the severity of the harm suffered. In total the studies examined more than 3,500 medical malpractice jury verdicts and found a consistent relationship between the severity of the injury and the size of the verdict. Uniformly the authors concluded that their findings did not support the contention that jury verdicts are frequently unpredictable and irrational.

Empirical Evidence Does not Confirm the Existence of "Defensive Medicine" — Patient Injuries Refute It

• The Congressional Budget Office has rejected the defensive medicine theory. CBO was asked to quantify the savings from reduced "defensive medicine" if Congress passed H.R. 4600. This bill, which passed the House in 2002, contained very stringent restrictions on a patient’s ability to recover damages. CBO declined, saying that any such "estimates are speculative in nature, relying, for the most part, on surveys of physicians' responses to hypothetical clinical situations, and clinical studies of the effectiveness of certain intensive treatments. Compounding the uncertainty about the magnitude of spending for defensive medicine, there is little empirical evidence on the effect of medical malpractice tort controls on spending for defensive medicine and, more generally, on overall health care spending. Using broader measures of spending, CBO’s initial analysis could find no statistically significant connection between malpractice tort limits and overall health care spending."

Solutions to Reduce Medical Errors and Long-term Insurance Rates

• Implement patient safety measures proposed by the Institute of Medicine. The "systems approach" to patient safety advocated by the Institute of Medicine shows promise. Some three years after the release of its report little has been done to establish mandatory nationwide error reporting systems, identify unsafe practices, or raise performance standards. Although experts using the systems approach have identified a number of promising strategies to reduce malpractice, few have been implemented.

• Open the National Practitioner Data Bank. Information about doctor discipline, including state sanctions, hospital disciplinary actions and medical malpractice awards is now contained in the National Practitioner Data Bank. HMOs, hospitals and medical boards can look at the National Practitioner Data Bank but consumers cannot, because the names of physicians in the database are kept secret from the public. Congress should lift the veil of secrecy and allow the people who have the most to lose from questionable doctors to get the information they need to protect themselves and their families.

• Improve oversight of physicians. Less than one-half of one percent of the nation’s doctors face any serious state sanctions each year. 2,708 total serious disciplinary actions a year, the number state medical boards took in 2001, are a pittance given estimates that between 44,000 and 98,000 deaths of hospitalized patients are caused by medical errors annually. State medical boards should be strengthened and more doctors should be disciplined for incompetence.

• Limit physicians’ workweek to reduce hazards created by fatigue. American medical residents work among the highest—if not the highest—number of hours in the professional world. They work up to 120 hours a week, including 36-hour shifts for several weeks at a time. After 24 hours of wakefulness, cognitive function deteriorates to a level equivalent to having a 0.10% blood alcohol level. In other words, doctors who would be considered too unsafe to drive may still treat patients for 12 more hours. Residents should be limited to an 80-hour workweek.

CLICK HERE TO VIEW THE BRIEFING BOOK

Click Here for Public Citizen's Press Release on
the Medical Malpractice Briefing Book

Click Here to read Joan Claybrook's Statement

Click Here to read Dr. Sydney Wolfe's Statement

Click Here to read a related statement by Arthur A. Levin, MPH,
Director of the Center for Medical Consumers

Click Here for information on Public Citizen's Rebuttal to the HHS Recommendations for the Medical Malpractice Insurance "Crisis"

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