The Malpractice Crisis

Have you been watching the tv news or the tv news magazine shows lately about the sharp increase in medical malpractice insurance premiums and agitated physicians walking off their jobs in some states? If you have, didn’t they leave you with the impression that lawsuits against bad doctors were the cause? And these poor old insurance companies being forced to raise those premiums, 30%, 40%, 70% all of a sudden!

Propaganda and slanting the news are going hand in hand these days, choreographed by the hidden persuaders hired by the American Medical Association together with the behind-the-scenes lobbyists of the gouging insurance companies.

Why in the world would some physicians be willing tools of the insurance companies who are gouging them regardless of whether they are competent, caring doctors or the negligent, incompetent few who account for most of the claims by injured patients? Part of the answer is that the insurance companies are scaring many doctors with spectres of litigation volume that simply does not exist.

Malpractice cases filed and actual payments in constant dollars have been level for many years; about nine of ten malpractice harms do not result in any law suits being filed, according to various studies. Yet the human toll is deadly. A Harvard study estimated that gross malpractice just in hospitals takes 80,000 American lives a year plus causing hundreds of thousands of serious injuries.

Good physicians should delve deeper into the way medical malpractice insurers do their accounting, their reserving, and their actual practices. If physicians would total the entire amount of premiums they paid last year and divide it evenly by all the physicians practicing in the United States, the average premium is less than $10,000 per doctor per year. Very manageable.

So why are some doctors paying $50,000 or $100,000 a year to their malpractice insurers? Because the companies have learned in the past thirty years to over-classify their risk pools, thereby reducing their number to specific specialties like obstetrics or orthopedic surgery in order to charge much more. In addition, by not surcharging the few bad physicians in these specialties (known as experience loss rating), the good specialists pay as much as incompetent ones with a large number of payouts to their wounded patients.

There is another political benefit for this kind of over-classification. When obstetricians are gouged, they scream loudly, threaten not to deliver babies or actually go on strike. This makes perfect visuals for television ‘ crying babies, physicians in their garb blaming trial lawyers, who after all still have to persuade juries and judges (the latter being mostly former business lawyers). Meanwhile, the insurance companies are laughing all the way to the bank.

There are no visuals for the slowly dying and other human casualties who receive neither justice nor compassion nor compensation. Nor do people like Donald J. Zuk get any television time. Mr. Zuk, chief executive of SCPIE Holdings Inc., a leading malpractice insurer in the west, told the Wall Street Journal (June 24, 2002) in a very revealing analysis, “I don’t like to hear insurance company executives say it’s the tort injury-law system ‘ it’s self-inflicted.”

Neither organized medicine nor the insurance companies are really going after bad doctoring. The AMA’s web site does not report any data about incompetent or crooked physicians who give medicine a bad name. And loss prevention is something the insurance companies leave to professors of insurance to talk about.

Instead both lobbies are funding and pressing legislators to enact laws that politicize the courts, tie the hands of judges and juries ‘ the only ones who see, hear and evaluate the evidence before them ‘ and make it harder for innocent men, women and children to bring tragic cases to court and obtain an adequate award.

A favorite way to achieve this callous goal is to put a $250,000 lifetime cap on pain and suffering. Apart from the fact that some insurance executives make that much in one week, every week, from your premium insurance dollars, consider how such a cap wrecks the innocent in California.

Two year old Steve Olson, now twelve, became blind and brain-damaged because the hospital refused to give him a CAT scan that would have detected a growing brain mass. His mother left her job to take care of her son. A jury awarded Steven $7.1 million in non-economic compensation for his life of darkness, pain, and around-the-clock supervision. But the judge was forced by a California law, that these lobbies now want Congress to enact nationwide, to reduce the amount to $250,000.

Don’t think for a moment that restricting your court rights will reduce malpractice premiums for physicians. Not only have past restrictions not done so, but insurance industry and company spokespeople have openly said they will not do so and in some cases have raised premiums right after a state enacted restrictions.

There is an obligation for the many good doctors to speak out. Just a few weeks ago, nine of the doctors who walked out of Wheeling Hospital in West Virginia, had cost their insurers at least $6.3 million in malpractice claims. Among the damage they caused , wrote the Charleston Gazette, was operating on the wrong knee, causing the need for a liver transplant by leaving a surgical clip on an artery, and causing a massive and fatal infection by inadvertently slicing into a patient’s stomach.”

The whole malpractice insurance premium business amounts to about what this country spends on dog food and is one half of one percent of health care costs in this country. Isn’t it about time to focus on malpractice prevention first and foremost, instead of pounding on the rights of hundreds of thousands of Americans who leave their doctors far worse than when they greeted them?

If you want to find out more about “questionable doctors” in your area and how little the state medical licensing boards are doing to protect you, log on to

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Ralph Nader is a consumer advocate, lawyer and author of Only the Super-Rich Can Save Us!