Could it be that the so-called medical malpractice “crisis” that led our fearless state lawmakers to enact sweeping tort reform changes last session was actually a sham? Or that the reason medi-mal insurance rates have continued to skyrocket – rising a whopping 135% from 1999 to 2003 – has more to do with insurance company profits and less to do with any increase in claims, civil litigation, or those dastardly “frivolous” lawsuits? Hold your hat because, according to the results of a groundbreaking study released last week, it just may be that the crisis you thought was out there was really no crisis at all. Indeed, in the new study, a team of four legal scholars from three major universities – including two UT law professors – conclude that the rise in medi-mal insurance rates has more to do with the nature of the insurance business, and economics in general, than it does with the civil litigation system.
“We find no evidence of the medical malpractice crisis that produced headlines over the last several years and led to legal reform in Texas and other states,” researchers Bernard Black and Charles Silver from UT, along with David Hyman of the University of Illinois and William Sage from Columbia University write in the new study. “The rapid changes in insurance premiums that sparked the crisis appear to reflect insurance market dynamics, largely disconnected from claim outcomes.”
The researchers analyzed 15 years worth of closed-claim data maintained by the Texas Dep-artment of Insurance, which show that – contrary to the claims of the American Medical Association and certain Chicken Little legislators – the number of claims, value of claims, and rate of claims per physician have “all remained constant or declined over the last decade.” Indeed, the researchers determined that the number of large claims (those more than $25,000) remained constant between 1991 and 2002, while the number of small claims dropped. Moreover, the amount of money paid out on claims, or awarded by jury, also remained constant and in some cases dropped, and the rate of claims per 100 Texas physicians dropped from 6.4 (during 1990-92) to 4.6 (during 2000-02). Additionally, the report concludes that malpractice claims accounted for just 0.6% of all health care spending in 2002. Ironically, the researchers note that because Texas lawmakers “enacted only limited medical malpractice reforms” during the 15 years studied, the state offers a “good laboratory to study an ‘unreformed’ jurisdiction.”
Unreformed no more, thanks to last session’s tort reform package, which reduced access to and capped awards from the civil justice system based largely on the claim that plaintiffs and their greedy lawyers had somehow hamstrung the insurance industry’s ability to provide reasonable coverage for doctors. While litigation spending did rise modestly over the 15 years studied, the researchers concluded that the rise was driven primarily by an annual 4.4% increase in defense costs. In short, the researchers conclude, tort limits are “unlikely to prevent future insurance crises.” The study, titled “Stability, Not Crisis: Medical Malpractice Claim Outcomes in Texas, 1988-2002” will be published in the July issue of the Journal of Empirical Legal Studies.
This article appears in March 18 • 2005.