Caps on damages protect insurers at the expense of those injured or killed by medical malpractice.

THE ISSUE  A patient’s neurosurgeon operates on the wrong side of his head, a young man is a quadriplegic because a neurosurgeon puts a screw in his spinal cord during surgery to remove a disc, a woman’s husband dies because a retractor is left in his abdomen during surgery, a young woman has a breast removed unnecessarily because someone writes the wrong name on the pathology slides in the lab, a man dies because he was sent a heart instead of a kidney for a transplant operation, and a baby is born severely brain damaged after being delivered too late after an anesthesiologist ignored pages while he was having sex with a nurse.

Insurers and other interest groups have used anecdotes, myths, and spin to argue that the rights of those harmed or killed by medical malpractice should be taken away. The claim is that the frequency and severity of medical malpractice lawsuits in recent years has increased, thereby causing high malpractice insurance premiums, which in turn has reduced access to healthcare. The claim is that if we take away the most important constitutional right of those harmed by medical malpractice, the right to full compensation, by setting an arbitrary cap on what a jury can award an injured patient, these problems will disappear. The facts do not support these claims.

In the last five years in Illinois, the number of medical malpractice lawsuits filed each year has been about the same.

In 2004, the total amount that ISMIE, the predominant malpractice insurer for doctors, paid to settle claims was 10 percent less than it paid in 2003. The average amount ISMIE paid on a claim in 2004 was 20 percent less than in 2003 and even less

than in 2002.

While claims have been decreasing, the total amount of premiums collected by ISMIE has been increasing rapidly. ISMIE raised its premiums about 35 percent in July, 2003, and another 7 percent in July, 2004. In 2004, the difference between the amount of

premium dollars taken in and the amount paid out in claims, including defense costs, was almost $200 million.

ISMIE insures about 14,000 doctors. At $150 million per year in total claims, it is paying approximately $10,000 per doctor it insures. But high risk specialists are paying as much as $250,000 for a year’s insurance. Does that make sense?

Illinois does not require insurers to make public the database of all closed malpractice claims, and ISMIE won’t voluntarily turn over its data. But in Texas, where such information is public, just before Texas took away the rights of its patients by passing caps, the data showed:

•           Large claims were roughly constant in frequency.

•           The percentage of claims with payments of more than $1 million remained steady at about 6 percent of all large claims.

•           The number of total paid claims per 100 practicing physicians per year fell to fewer than five in 2002 from greater than six in 1990-92.

•           Mean and median payouts per large paid claim were roughly constant.

•           Jury verdicts in favor of plaintiffs showed no trend over time.

•           The total cost of large malpractice claims was both stable and a small fraction (less than 1 percent) of total health care expenditures.

Various hospital organizations and their representatives have also been trying to create hysteria about their financial situation. In an op-ed in the Chicago Tribune on February 17, 2005, one hospital representative asserted that in 2004 there were two $30 million verdicts in Cook County involving only “non-economic” damages. In fact, one of those cases involved a baby who sustained serious brain damage requiring life-long care in which the jury awarded 60 percent of the total verdict for economic damages. The second verdict cited in that op-ed will never be paid because there was no insurance.

In the same op-ed, the author compared the hospitals’ insurance problems to an auto driver having a $50,000 deductible for his auto insurance. But if you got in an accident almost every day due to your own negligence, would you be surprised if you had

a really big insurance problem?

Medical malpractice is one of the leading causes of death and injury in this state. Until someone is hurt or killed by malpractice, there can be no malpractice lawsuit.

According to Tommy G. Thompson, former Secretary of the U.S. Department of Health and Human Services, the Institute of Medicine’s (IOM) landmark 1999 report, To Err is Human, alerted the nation to the patient safety challenge in ways that prior studies had not. The IOM estimated that between 44,000 and 98,000 Americans die each year as a result of medical errors, making them the eighth leading cause of death in the United States. More people die from medical errors than from automobile accidents, breast cancer, or AIDS. While there has been subsequent debate about the actual number of deaths, it is clear that the rate of medical errors is unacceptably high.

And recently the Journal of the American Medical Association (JAMA) stated that a truly national response to the IOM’s call to reduce preventable patient injuries by 90% requires that every health care board, executive, physician, and nurse make improving safety an absolutely top strategic priority—fully equal to the corporate priority of financial health. And JAMA said that at a national level, such a commitment has yet to emerge; indeed, it

is not in sight. “Five Years After To Err Is Human What Have we Learned?” JAMA Vol. 293, May, 18, 2005, pp. 2388- 2389.

And according to Newt Gingrich, “Healthcare is the only industry in America that can give you a disease and then charge you to cure the disease it gave you. Clearly this is an outrageously wrong principle . . . . . The enormous number of needless deaths from medical errors (44,000), hospital-induced infections (88,000), and medication errors (7,000) is not only unacceptable, it is un-American”.

Recently, the Chicago Tribune, citing the National Practitioners Databank, reported that 5 percent of the doctors who have made malpractice payments over the last 15 years are responsible for almost one-third of the costs.

The same insurance companies and interest groups who want to take away patients’ rights have no suggestions about how to prevent medical malpractice. What is going to be done about the malpractice that understandably leads to lawsuits? Maybe someone could ask Jane Jackman, M.D., a member of the ISMIE Board of Directors who also serves on the State of Illinois Medical Licensing Board or Sandra F. Olson, M.D., another ISMIE Director who serves on the State of Illinois Medical Disciplinary Board.

The insurers claim that caps will lower malpractice premiums. But this claim holds no water. Malpractice premiums continued to rise in every state after caps were enacted. And many of those states are listed as in “crisis” by the American Medical Association. And some states without caps (like Iowa and Minnesota) have some of the lowest malpractice premiums in the country.

Missouri (the state all the Metro East doctors are supposedly fleeing to)

Cap passed in 1986, which was recently lowered. Between 2000 and 2003, premiums rose by 121%. This was despite the fact that new claims dropped by 14% in 2003 to a record low and payouts dropped by about 21%.

California

Since caps passed in 1975, insurers have continually asked for rate increases but some have been denied or reduced thanks to a tough law (Proposition 103) passed by the voters in 1988. In 2003, numerous companies requested rate increases, some asking

for up to a 96% rate increase.

Texas

Cap passed in 2003. The next year rate increases of 35% were denied by the Insurance commissioner. One insurer, after having its request turned down, used a legal loophole to raise rates by 10% without approval. Overall, since caps passed, there has been less than a 1.5% reduction in premiums and GE Medical Protective, the largest malpractice insurer in the U.S., stated in its filings that the total savings expected from the cap are only estimated at 1%.

Florida

Cap passed in 2002. The next year insurers requested rate increases for 2004 of 45%, 17.3%, and 8%.

Have you noticed that almost every day there is at least one large advertisement in a Chicago metropolitan newspaper by some hospital advertising its services? It is typical to see four different hospitals run large ads in the Sunday newspapers. At least two hospitals are regularly running TV commercials in Chicago.

Advertising costs a lot of money, as does a plasma screen TV in each patient’s room at a new children’s hospital in Chicago. Hospitals can afford all this advertising and expansion, but they can’t afford to fully compensate people who are harmed by their malpractice? And imagine how much less medical malpractice we would have if the hospitals channeled their advertising budgets into preventing medical malpractice?

It is claimed that Illinois is unique in having shortages of doctors, particularly specialists, and that somehow caps on damages are the “silver bullet” solution. But in 2001, the California Medical Association conducted a survey of 19,000 physicians who had

had the protection of caps for 26 years. The Association found that many physicians were leaving the practice. Lower reimbursement, managed care hassles, and government regulation were the greatest sources of dissatisfaction. 43 percent of surveyed physicians planned to leave medical practice in the next three years. 58 percent of physicians had experienced difficulty attracting other physicians to join a practice. More than 25 percent of physicians had difficulty in recruiting doctors in various counties in California. Primary care, neurology, orthopedic surgery, and neurosurgery led in specialty shortages. More than one-fourth of physicians would no longer choose medicine as a career if starting over today, and more than one-third of those who would still choose medicine would not choose to practice in California. The study includes letters from specialists, including OBs and neurosurgeons, predicting that there will be no specialists in many areas of California in the near future. So much for caps solving healthcare access problems in California.

Caps on damages are also unconstitutional. The Illinois Supreme Court has said “even assuming that a systemwide savings in costs were achieved by the cap, the prohibition against special legislation does not permit the entire burden of the anticipated cost savings to rest on one class of injured plaintiffs.”

The real problem with insurance premiums lies with the insurance industry. ISMIE gave a multimillion dollar golden parachute to a former executive who pleaded guilty to crimes of dishonesty in 2002, the year before the rate increase of 35 percent. And ISMIE has a neat plan to compensate at least one high level executive. Loan him hundreds of thousands of dollars, pay him a bonus to pay off the loan, and pay him a second bonus to pay the taxes on the first bonus. How many doctors’ malpractice premiums could have been paid with all those millions of dollars?

Illinois regulators have no authority to reject a rate increase in medical malpractice insurance. Therefore, in 30 years, no rate increase by a medical malpractice insurer has ever been rejected. Those laws need to change.

So does it make sense to pass a cap on the recovery of the most severely injured patients when it won’t solve the malpractice premium problem, and wait until after the cap is again declared unconstitutional to start looking at real solutions? Or does it make sense to pass laws now to reduce medical malpractice so there are less malpractice cases and to reduce doctors’ malpractice premiums by toughening insurance regulation and creating competition in the marketplace? The answer is obvious if you look at the facts.