Caps won't cut costs

by John J. Hopkins |
Oct. 30, 2004, 10:49pm

John J. Hopkins

In the 10/25/04 edition of the Madison County Record, Dr. Morris Kugler, long time advocate for ever-increasing special treatment for the medical profession, in response to the question, - “What is the solution to the medical malpractice crisis?” - gave the stock, blind-eye, answer, “Caps.”

Allergic to facts, alien to logic, and antagonistic to reason, the so called tort reformers cling to the notion of imposed arbitrary limits on the rights of citizens, but not corporations, to seek redress from the courts as a panacea to a hysterical, self-generated medical malpractice crisis.

But as recent developments illustrate, caps cannot, will not, and do not work, a fact admitted by those in the power to know.

The smoking gun in this on-going debate is the release of mandatory, regulatory filings by the nation’s largest medical malpractice insurer, GE Medical Protective, with the Texas Department of Insurance, obtained by the Foundation for Taxpayer and Consumer Rights (FTCR). The entire release can be downloaded here.

According to the Medical Protective filing: “Non-economic damages are a small percentage of total losses paid.” Capping non-economic damages will only show savings of 1.0%.

The company also noted that the provision in Texas law which permitted periodic payments of awards, a provision similar to the one contained in the State of Illinois, would only provide additional savings of 1.1%.

“When the largest medical insurer in the nation tells a regulator that caps on damages don’t work, every legislator, regulator and voter in the nation should listen,” said FTCR’s Executive Director Douglas Heller. “Medical Protective’s rate increase and this smoking gun document prove that the insurance industry cannot be trusted on the issue of malpractice caps.”

This is not the first time that the industry has admitted that caps will fail.

In 1986, after insureds and doctors lobbied, and the Florida lawmakers caved in, a cap on non-economic damages for medical malpractice claims was implemented. Insurers Aetna and St. Paul increased doctor’s premiums, arguing that despite earlier promises malpractice did not actually lead to savings for doctors.

According to a St. Paul Insurance Company study, provided for the Department of Insurance at the time, “The conclusion of the study is that the non-economic cap of $450,000, joint and several liability on the non-economic damages, and mandatory structured settlements on losses above $250,000 will produce little or no savings to the tort system as it pertains to medical malpractice.”

Furthermore, according to the third quarter survey of market conditions by the Council of
Insurance Agents and Brokers, commercial insurance rates are dropping significantly. Even medical malpractice insurance, which has been skyrocketing for some doctors over the last two years, has now slowed to the point that medical malpractice rate hikes (6%) are nearly as low as medical inflation (current at 4.4%).

A “hard” insurance market is characterized by higher rates, less competition and limited coverage. This is the result of the cyclical nature of the insurance business.

Prior to the “hard market” of the last two years, the last such “hard market” occurred in the 1980's. The up and down nature of the market dictates the periodic increase in premiums.

On a local note, a Madison County urologist, known only as John Doe, M.D., after having his rates increased from $28,000 to $105,000, despite a lack of significant claim experience, has now filed a Freedom of Information request with the Director of the Division of Insurance seeking information from the four major medical malpractice insurance carriers in the State of Illinois, including the biggest, Illinois State Mutual Insurance Exchange, for 01/01/94 to date.

Naturally, this request has been vigorously opposed by the insurance industry.

On a more local note, it is well to remember that the vast majority of medical malpractice cases brought in Madison County which go all the way to jury trial result in a defense verdict.

Of the more than 350 cases filed since 1996, only four resulted in a plaintiff’s verdict, hardly an indication of an out-of-control system.

At a time when the organized credentialing organizations of the medical profession are going to great lengths to retaliate, penalize and strip credentials of physicians courageous enough to stand up on behalf of injured victims, it is perhaps well to take heed of the words of Dr. Dan Mongiardo, Democratic candidate for United States Senate in the State of Kentucky.

Dr. Mongiardo states, in his campaign literature, “The issue isn’t about doctors or lawyers . . . caps or not caps . . . it’s about improving patient safety. Caps do nothing to address the real causes of medical malpractice. But reducing medical errors - NOT imposing caps - can reduce lawsuits and improve patient safety.”

He goes on to state that the reasoning is quite simple: “[w]hile frivolous lawsuits are a problem that must be addressed, we must not ignore the underlying fact that tens of thousands of patients each year are victims of costly and preventable medical errors.

Cap or not cap, if we don’t act now, medical errors will prevail at an alarming rate. This result is both an economic disaster for providers and a potentially life-threatening climate for our patients.”

Almost three years ago Linda McDougal of St. Paul, Minnesota, had a bilateral mastectomy
under the belief that she had an aggressive form of breast cancer. After having both of her breasts surgically removed, Mrs. McDougal was then told that the pathologist had made a mistake and she in fact never had cancer.

Since she is an accountant, her devastating physical deformity, as a result of a physician mistake resulted in little or no economic loss. Surely, under the circumstances, she should be happy with a cap of $250,000 for her pain and suffering for the next 20 to 30 years.

Wouldn’t you?

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