Study Reveals Failure of Medical Malpractice Caps

In 2003, Texas embarked on an experiment; the state imposed medical malpractice damage caps on lawsuits against doctors. The legislation set a $250,000 limit on non-economic damages a patient could receive, and completely protected emergency room doctors from all liability except “willful and wonton” negligence.

Medical malpractice cases allow injured patients to file suit against, and receive compensation from, negligent health care providers. The proponents of malpractice caps argue that the great generator of out of control increases in health care costs is medical malpractice insurance premiums and unnecessary tests doctors request to protect themselves from potential malpractice lawsuits.

Doctors and the insurance industry lobby have long made this claim. If only they could be freed from the tyranny of frivolous lawsuits with astronomical (impliedly unjust) jury awards for plaintiffs, healthcare costs would stop increasing and a flood of new doctors would rush in to help underserved communities.

Failure of Malpractice Caps

The experience in Texas appears to undermine most of the claims made by damage cap advocates. This is documented in a recent study released by Public Citizen, ” A Failed Experiment: Health Care in Texas Has Worsened in Key Respects Since State Instituted Liability Caps in 2003.” The subtitle nicely sums up the conclusions of the report.

The study found that Medicare spending has increased faster in Texas than the national average, in spite of the “steep reduction” in litigation that followed 2003. Outpatient services costs covered by Medicare have also exceeded national averages. More Texans lack health insurance, the per capita number of doctors has not increased noticeably, and premiums for private health insurance have increased at a rate higher than the national average.

Despite the high-profile claims made by many politicians and presidential candidates, what has actually happened in Texas does not support this so-called tort reform.

The report notes the reality after eight years of malpractice caps:

“While litigation over malpractice in Texas has plummeted dramatically since the caps were imposed, residents of Texas (except for people with financial connections to liability insurance companies and, to a lesser extent, doctors) have realized few, if any, benefits. Instead, the health care picture in Texas has worsened significantly by almost any measure.”

The Real Story

A well-publicized narrative has been created by the insurance industry that implies many malpractice lawsuits are frivolous and juries unfairly award huge awards to victims.

This narrative is often “supported” by anecdotal evidence like the famous McDonald’s coffee spill case. Further examination of this story and statistically representative samples, however, tells the real story.

The McDonald’s case is a good example of outright fabrications told to discredit plaintiffs and their lawyers. Contrary to the legend that the McDonald’s plaintiff only suffered minor injuries due to her own fault, in actuality she suffered third-degree burns, required skin grafts and was permanently disfigured. The original $2.7 punitive damage award (reduced to $480,000) was equal to two days of McDonald’s coffee sales. It was partially based on the fact that McDonalds had been sued by over 700 persons over the years for burns from coffee, and had refused to lower the serving temperature.

The “out of control jury” giving huge awards to plaintiffs also appears to be largely a myth. A University of Michigan Law Review article, Doctors & Juries, authored by Philip G. Peters, Jr., examined malpractice cases and found that “Contrary to popular belief, the data show that juries consistently sympathize more with doctors who are sued than with patients who sue them.”

The bias is so strong that Peters reports that, “Physicians win roughly half of the cases that [their insurance company’s] expert reviewers believe physicians should lose and nearly all of the cases that experts feel physicians should win.”

Consequences of Malpractice Caps

When plaintiffs with real injuries fail to receive adequate compensation from the doctor who injured them, what happens? Their injuries don’t go away. These plaintiffs have genuine expenses and often need to turn to other forms of assistance. By artificially capping malpractice damage awards, the state of Texas has shifted the cost to the rest of us, away from the negligent doctor.

Malpractice Caps also eliminate the deterrent value of malpractice cases. When doctors are insulated from liability, they have less incentive to make the sometimes costly improvements necessary for patient safety.

New York and other states considering malpractice caps should look closely at Texas, and really consider if that is a path they want to follow in.