In 2006, the American Medical Association designated North Carolina as a state in “medical liability crisis.” Escalating medical liability insurance rates have created difficult financial pressures for many doctors and medical facilities. The burden is especially heavy for doctors who serve minority and other low-income communities. In addition, the fear of liability lawsuits has fostered a climate of “defensive medicine” in which doctors prescribe tests and services that may not be medically necessary but will reduce the chances of a lawsuit.
A 2004 report by the Pew Charitable Trusts Project found that liability concerns among doctors were higher in states that had neglected to pass medical malpractice reform. In assessing Pennsylvania’s medical malpractice climate, researchers found that the state’s medical liability laws were negatively impacting the quality of care received by patients. “Physicians are obviously unhappy about the medical malpractice situation, but I think we showed that the current crisis in Pennsylvania is having a palpable impact on the psyche of physicians practicing there,” stated study coauthor Michelle Melo. As summarized by the journal Health Affairs (2004), the study’s authors also noted: “that a growing body of research has identified links between physician satisfaction and high-quality care. For example studies have shown that patients of physicians with higher levels of job satisfaction are more likely to adhere to medical treatments, and satisfied physicians tend to be more attentive to patients.”
Some commonsense reforms in North Carolina could enhance the quality of healthcare while saving millions for both providers and consumers:
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Excessive Malpractice Suits Limit Patient Access |
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According to the Congressional Budget Office, malpractice premiums for medical internists climbed by 50 percent from 1993 to 2002, and by a third from 2000 to 2002 alone. Hospitals, nursing homes and clinics have also seen an explosion in their medical-liability premiums. |
Rein in trial lawyers
Capping malpractice awards for non-economic damages and allowable attorney’s fees will significantly lower insurance rates. An added benefit of medical malpractice reform is that it could improve patient care by expanding doctor access and also reduce incentives to practice defensive medicine. Twenty-four states – including Florida, Georgia and South Carolina – cap non-economic damages. South Carolina, for example, enacted a law in 2005 that establishes a cap of $350,000 on non-economic damages against a single healthcare provider or institution.
Require nonbinding arbitration so as to reduce court costs for malpractice suits
Settling malpractice cases through arbitration rather than in the courtroom can also lead to a reduction in healthcare costs. The American Bar Association reports that up to 95 percent of the costs of a lawsuit can be saved through the use of an arbitration settlement. In North Carolina, arbitration must be offered as an option for malpractice cases (cf. S.L. 2007-541). This reform should be taken one step further so as to require nonbinding arbitration as a prerequisite to filing a lawsuit.
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Malpractice Reform Saves Money for Consumers and Providers |
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Texas imposed a limit of $250,000 on non-economic malpractice damages in 2003. Since then, malpractice suits have dropped by half, and the state’s five largest insurers have cut rates – generating some $50 million in annual savings for doctors and hospitals. In 2005, Illinois signed into law a $500,000 cap on non-economic damages. In response, the state’s largest malpractice insurers have lowered their premiums. According to the American Medical Association (AMA), one Illinois company “rolled back 2007 rates by an average of 32 percent.” Similarly, a 2003 Ohio law capped non-economic damages in liability cases at $350,000 per plaintiff. Subsequently, found the AMA, “The state’s largest liability insurer, Medical Assurance, reported that premiums remained flat for 2006 and decreased 19.7 percent in 2007 (increase for 2001-2004 was 101 percent).” Likewise, California was one of the first states to cap medical malpractice awards, which it did in 1975. Since then, the state’s average medical malpractice premiums have increased 245 percent – compared to a 750 percent increase nationwide. Require nonbinding arbitration so as to reduce court costs for malpractice suits. Settling malpractice cases through arbitration rather than in the courtroom can also lead to a reduction in healthcare costs. The American Bar Association reports that up to 95 percent of the costs of a lawsuit can be saved through the use of an arbitration settlement. In North Carolina, arbitration must be offered as an option for malpractice cases (cf. S.L. 2007-541). This reform should be taken one step further so as to require nonbinding arbitration as a prerequisite to filing a lawsuit. |
