TorteDeForm

Lee Tilson

Who profits?

Who profits?

What happens when the courthouse doors are closed to victims of medical injuries?

This may take a while to sink in, but, insurance companies and executives benefit. The medical malpractice insurance company ProAssurance has now "beat earnings expectation in seven of the past nine quarters and a recent acquisition should keep profit on the rise."

http://www.al.com/business/birminghamnews/index.ssf?/base/business/1159695210108450.xml&coll=2

So let's keep this in perspective, and let's keep it simple.

Tort Reform = (Less access to the courts for individuals) + (More profits for Insurance Companies)

What do you think? Is this fair?

If high insurance malpractice premiums are driving physicians out of your state, why not ask the insurance companies to operate just a little less profitably.

Lee Tilson: Author Bio | Other Posts
Posted at 3:13 PM, Oct 03, 2006 in
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Comments

Posted by: Ted | October 4, 2006 2:03 AM

For those who don't have the time to read Ted's link, he suggests that trial lawyers should form a medical malpractice insurer, and then they'll know what really drives rate increases.

Walking a mile in another's shoes is never a bad idea. So why don't you get your friends at AEI and ATRA to open a plaintiffs' firm? They'd have the opportunity to see "frivolous" lawsuits from the other side.

The downside, of course, is that being a plaintiff's lawyer means pay-for-performance. I wonder how many tort "reformers" would trade their guaranteed six-figure salaries for the uncertainty of representing the injured?

Posted by: Justinian Lane | October 4, 2006 11:23 AM

Ted

Your article suggests that ATLA establish an insurance company for medical malpractice.

While an interesting and clever concept, it would create a conflict of interest.

Some in the defense bar tried the same, with PIE in Cleveland associated with a defense malpractice firm. I don't know all the details, but it no longer exists.

How would you get around the inherent conflict of interest?

If making money is all that matters, why don't all of your tort reformers become the wealthy trial lawyers you criticize?

The fact is that you guys are making more money doing what you do, creating the illusion.

Are you telling us that Proassurance misreported its financials?

I rather doubt a misreport like that.

Before we drag a lot of irrelevant facts into the debate, let's stick with one topic.

Are the financials from ProAssurance accurate?

If they are accurate, then why won't you, and your fellow tort reformers who care so much about physicians and access to medical care take a position on whether these charges are too high?

Shouldn't their rates be lowered so doctors will not have to leave the states in which they practice?

Posted by: lee tilson | October 4, 2006 11:29 AM

Is this anyone's fault?

http://www.insurancejournal.com/news/west/2006/10/03/72974.htm

Would a medical malpractice insurer charge excessive rates for medical malpractice insurance?

According to the State of Washington Insurance Commissioner, would a medical malpractice insurer charge excessive rates for medical malpractice insurance?

Surely, all it would take to rectify any such problem is to call it to the attention of the company. Insurance companies insuring an important service like health care?

No that couldn't happen could it?

Take a wild guess.

Posted by: Anonymous | October 4, 2006 11:46 AM

LT writes: "While an interesting and clever concept, it would create a conflict of interest."

Only true if malpractice attorneys are funding the insurance firm. The attorneys at Milberg Weiss could start the firm.

Lee's and Justinian's comment asking reformers to become plaintiffs' attorneys are self-refuting. They can surely see why my becoming a plaintiffs' lawyer wouldn't stop other plaintiffs' lawyers from filing lawsuits that are bad for America. However, an insurance company that doesn't "gouge" and doesn't require caps would have a competitive advantage over insurance companies that do gouge (if insurance companies actually gouged): one could start an insurance company, improve the world, and be consistent with one's own internal beliefs--*IF* one actually believed that insurance companies are gouging. The fact that the plaintiffs' bar spends its money criticizing insurance companies' rates instead of competing with them is evidence that they don't believe their own propaganda.

Have ProAssurance's profits increased? Sure. But insurance profits aren't like manufacturing: profits aren't smooth from quarter to quarter, because payouts are discrete, and a single big settlement or judgment can interrupt the streak. ProAssurance has just been lucky for a few quarters in a row. Tilson shows no evidence that ProAssurance is gouging; they have to offer a competitive rate, or doctors will switch to other insurers. The vast majority of medical malpractice insurance in this country is written by non-profit mutual insurance companies run by doctors. One has to believe that the doctors are overcharging themselves to think that it's the insurance companies' fault. Funny how that fact is never mentioned by the anti-reformers. But, of course, it's only reformers who mislead by leaving out the critical and important facts, right?

Posted by: Ted | October 4, 2006 12:19 PM

Ted:

Now I see the light, your light.

The newspaper report that a state insurance commissioner ordered refunds for excessive premiums, repeatedly, well let's just ignore that.

And those nasty Klick articles we like to claim support our position, but don't. We will ignore those also.

Hmm, instead of citing evidence this time, we will just say that the other side's position is "self-refuting."

And those contradictions we are mired in, well, ahem, so what?

Why not all of us, tort reformers, trial lawyers, doctors and insurance companies, all of us, work together to make use of the tort system for medical malpractice irrelevant by eliminating medical negligence and injuries?

Maybe we agree on nothing else.

Ted, can you agree that it would be a good and desirable thing to eliminate medical errors that kill hundreds of thousands of Americans a year?

Would that be a good thing?

Will you work on it with me?

Lee

Posted by: lee tilson | October 4, 2006 1:32 PM

Lee, if my memory is correct, Ted stated he preferred to work to increase the efficiency of the medical system before working to reduce malpractice injuries.

If I'm misstating your position, Ted, it's entirely unintentional. If I am correctly stating it, can you explain why its more important to improve efficiency ahead of safety?

Posted by: Justinian Lane | October 4, 2006 2:10 PM

"Ted stated he preferred to work to increase the efficiency of the medical system before working to reduce malpractice injuries."

No, I didn't. I said I wanted to maximize health-care outcomes, and that minimizing malpractice injuries was not consistent with maximizing health-care outcomes. It's easy to minimize malpractice injuries: ban the practice of medicine, and there won't be any medical malpractice. That's clearly an inferior result to the status quo, so one's goal should be something other than minimizing malpractice injuries. What anti-reformers aren't recognizing is that a legal system with unbounded non-economic damages deters more medical practice than medical malpractice, and hurts health-care results.

I note further that this comment thread has been typical: a poster makes a bogus claim, the claim is refuted in the comment thread, and the co-bloggers gang up to change the subject rather than address what was actually said.

Posted by: Ted | October 4, 2006 2:58 PM

Here's some additional evidence that Ted routinely resorts to deception.

The fact that the plaintiffs' bar spends its money criticizing insurance companies' rates instead of competing with them is evidence that they don't believe their own propaganda.

Ted's suggestion that the plaintiffs' bar should start their own insurer has one fatal flaw, which Ted reveals:

LT writes: "While an interesting and clever concept, it would create a conflict of interest."

Only true if malpractice attorneys are funding the insurance firm.

So, according to Ted, the fact that plaintiffs' attorneys don't create a fraudulent insurer is proof that plaintiffs' attorneys don't think insurers gouge.

He also suggests, "The attorneys at Milberg Weiss could start the firm."

Ted, such a venture would no doubt be very costly. Do you think you could get AEI to fund it with some of the money it took from Enron and Ken Lay?

Posted by: Justinian Lane | October 4, 2006 7:43 PM

Ted claims the post here is bogus.

"I note further that this comment thread has been typical: a poster makes a bogus claim, the claim is refuted in the comment thread, and the co-bloggers gang up to change the subject rather than address what was actually said."

Here is the evidence that started this thread:

http://www.al.com/business/birminghamnews/index.ssf?/base/business/1159695210108450.xml&coll=2

http://www.insurancejournal.com/news/west/2006/10/03/72974.htm

Are you claiming these news stories are incorrect?

Medical malpractice insurers charge more than they need to charge, in the second link it appears that a state insurance commissioner repeatedly had to issue orders.

Could you kindly explain how you have refuted this post in this thread?

Posted by: Anonymous | October 4, 2006 8:57 PM

Justinian: you have a serious gap in your reading comprehension. I'm not the one who's claiming that insurance companies are making super-profits. Why would I want to create one? I've already put my money where my mouth is by not creating a malpractice insurance company, because I think doing so would be a money-losing proposition.

Trial lawyers, on the other hand, claim that malpractice insurers are gouging and making super-profits. The question, if they believe their own claims, isn't how they can afford to start a legitimate insurance company, but how can they afford to pass up such a money-making opportunity that would prove tort reformers wrong *and* benefit the patients who are subject to caps that the trial bar pretends to care about. The answer is that the trial lawyers know that they're lying about insurers. Pay attention to the actions, not the words.

Quit complaining and put your money where your mouth is: if you are correct and the problem is that insurers are making "too much profit" and that caps won't reduce insurance rates, then you don't need a legislature to fix the problem, because you can fix it yourself by creating a legitimate insurance company that (1) offers lower rates, (2) doesn't make patients accede to caps, and (3) makes you profit. The reason no one does this is because you aren't correct.

Milberg Weiss has paid more money for lying about expert witnesses than Enron ever gave to AEI.

Posted by: Ted | October 5, 2006 9:29 AM

Okay Ted, let me try one more time.

Are you saying these stories are incorrect?

http://www.al.com/business/birminghamnews/index.ssf?/base/business/1159695210108450.xml&coll=2

http://www.insurancejournal.com/news/west/2006/10/03/72974.htm

Are you claiming these news stories are incorrect?

Let's set aside how bad you think I am, and how bad some of us may think you are.

Are the stories inaccurate?

If they were accurate, would that be a problem.

Posted by: lee tilson | October 5, 2006 10:08 AM

Three quick points:

1:As you yourself said, trial lawyers can't start a malpractice insurer without it being a conflict of interest. Even if they could, have you ever considered that maybe trial lawyers want to be trial lawyers? The converse side to your argument is to ask "why don't insurance companies start PI law firms?"

2: I'd love to "put my money where my mouth is" and start a malpractice insurer. Again, can you get AEI to spread some love my way?

3: OK, Ted... Just how much money did AEI get from Enron, Ken Lay, and any other convicted felons I failed to list?

Posted by: Justinian Lane | October 5, 2006 11:14 AM

Lee: Why do you continue to repeatedly ask what I'm saying? I'm saying what I'm saying: malpractice insurers aren't gouging. It's pretty clear, you and Justinian just refuse to respond to it. ProAssurance's quarterly profits are one-seventh the total verdict issued by a Florida jury just this week against a doctor insured by ProAssurance in a case covered in detail on Overlawyered.

Justinian: ignoring your ad hominems, I'll repeat the point that you refuse to respond to. Trial lawyers can solve the problem of insurance gouging by competing with insurance gougers; insurance companies cannot solve the problem of meritless litigation by starting a PI firm. Your question answers itself, and that you repeat it when it's so irrelevant on its face if you thought about it for five seconds makes me wonder if you're interested in real discussion.

Trial lawyers own fast-food franchises and real-estate ventures and jet airplanes and politicians while continuing to practice trial law; there's no reason that same money can't be invested in a brand-new insurer. ATLA could take all the money it's spending on political advertising and create a new insurer, and then use the profits on future campaign advertising.

Plus, it's not just trial lawyers: you bloggers could do it. That's the nice thing about capitalism: Wall Street investment bankers just want to make money, and don't particularly care if doing so will help trial lawyers. Draw up a business plan explaining how you're going to make a profit by selling malpractice insurance at a lower rate than "gouging" insurers while waiving caps (thus encouraging patients to see your insured doctors) because caps don't have anything to do with insurance rates. With the money you make, you could fund a whole new think tank, and you get to say "Ted was wrong and I made millions proving it!"

I don't think such a venture would make money; I think you, and anyone who invested in such an insurance company, would lose their shirt, because your arguments are false. But if you believe your arguments, why spend time trying to convince voters and legislators and blog-readers? Instead of wasting time writing blog posts, you have a sure-fire way to make money and help people if you spend that time writing a persuasive business plan instead. All you have to do is convince one hedge-fund investor to spot you a few million in start-up costs for a share in the company, and you could solve the problem all by yourself, and become rich in the process.

Fine: many trial lawyers would rather spend time being trial lawyers; many bloggers would rather spend time being bloggers. But all it takes is ONE anti-reformer persuading one rich person to invest, and the problem is solved--assuming that your argument is correct.

So there are two possibilities:

1) Out of all the millions of trial lawyers and anti-reformers, though they can raise millions of dollars for political campaigns and anti-reform blogs and anti-reform "public interest" organizations, and persuade juries to turn over billions of dollars a year, not a single trial lawyer is persuasive enough to convince a wealthy man to start a surefire profit-making insurance company that would end the problem of malpractice insurance gouging, end all pressure for medical-malpractice tort-reform, and prove reformers were wrong.

2) The trial lawyers and anti-reformers are wrong, and the malpractice crisis isn't caused by insurers.

I vote #2. The fact that the trial lawyers are spending their money on Cyrus Dugger and politicians instead of on something that would solve the problem if they believed what Dugger and his co-bloggers say suggests that deep down inside they believe #2, too. What say you?

Posted by: Ted | October 5, 2006 3:14 PM

ProAssurance's Profits: First, whatever the amount of a Florida's jury verdict was this month is not germane to a discussion of how profitable ProAssurance has been for the past 2 years. Moreover, you know as well as I know that the large verdict will be reduced or overturned entirely upon appeal.

Justinian's Med-mal insurance Co. Perhaps you and your fellow bloggers at Overpaid know hedge fund investors with a few million to spare... but I don't. My only involvement with hedge funds was when a Swiss Bank canceled my contract some years ago after they blew $600+ million in a bad hedge fund investment.

You talk of false dichotomies, and then say that either trial lawyers should start a malpractice insurer, or insurers aren't gouging/causing a crisis. Why the game-playing? Do you get that angry when someone accuses insurers of gouging? Even when, according to insurance commisioners, the insurer in question WAS gouging?

I could sit here and come up with a littany of reasons why your suggestion that trial lawyers start a malpractice insurer is foolish, but I'm not going to waste my time on it. Quite frankly, I'm disappointed that this is your response to news articles about an insurer getting fined for excessive fees.

Posted by: Justinian Lane | October 5, 2006 3:47 PM

the reason I ask what you are saying is that you repeatedly claim to have debunked / disproven the original post, yet you refuse to address it.

You launch into a diatribe against positions that we have not taken.

Then you make personal attacks against us for pointing it out.

The Institute of Medicine itself announced the real malpractice crisis, the avalance of medical errors killing and injuring so many of us every year.

Some of us are working hard on trying to solve that problem.

Meanwhile, you are attacking us for failing to start an insurance company.

HUH?

Can you give us some guidance on how to do this? Personally, I have no desire to do so, but surely that would be an easy task for someone like you.

How would I go about doing that?

In the meantime, what should be done about the glut of medical errors reported in all the medical literature?

Posted by: lee tilson | October 5, 2006 4:16 PM

"ProAssurance's Profits: First, whatever the amount of a Florida's jury verdict was this month is not germane to a discussion of how profitable ProAssurance has been for the past 2 years. Moreover, you know as well as I know that the large verdict will be reduced or overturned entirely upon appeal."

No, I don't know that at all. It's far from certain that it will be reduced or overturned entirely, and even if it's reduced 85%, that's a full quarter of profits down the drain. And it's perfectly germane: ProAssurance reports its results quarterly, but insurance company losses come more sporadically than quarterly. It's the long-term profitability that's relevant. Do the widows who have ProAssurance stock in their investment accounts get no consideration in this question? Are they not allowed to earn money on their investment if it's an insurance company? If so, then who's going to invest in insurance companies? That's a way to make insurance more, not less, expensive, by deterring entry and competition.

He also misses the point: he doesn't have to know any hedge fund investors to make an investment pitch to a hedge fund investor, he just needs a stamp and an envelope. That's the nice thing about capitalism. Lane also misses the point when he tries to turn the tables: has he forgotten that he's the one who's arguing that malpractice insurance companies are super-profitable and I'm the one who thinks they're a money pit?

This is not a false dichotomy: this is the laws of the free market. Insurers can't gouge in the long run, because competitors will seek out excess profits and compete them away. That one insurer in one state failed to dot i's and cross t's of a particular state regulation doesn't change that economic fact.

Lane once again attacks with an ad hominem: I wrote for Overlawyered or Point of Law on a volunteer basis for years before I became a fellow. If I announced I was quitting both blogs so I could instead have time to write an additional law review article a year, my superiors would probably be happier than not, and it certainly wouldn't adversely affect my salary.

"you are attacking us for failing to start an insurance company."

No, I'm attacking you for writing a post that falsely implies that the malpractice problem is an insurance problem rather than a lawyer problem. Lawyers don't really believe that, because if they did, it's within their power to make money fixing the problem instead of spending money to complain about it and persuade legislatures to take money away from legitimate investors and doctors and patients and give it to attorneys.

I've written and spoken about the IOM study and its meaning elsewhere; if you don't care enough about the subject to know what your opponents are saying, I don't see why it's worth discussing with you here, since I don't see you saying anything new or original about it.

Posted by: Ted | October 6, 2006 4:36 AM

P.S. Justinian, you seem to think that the way to respond to a criticism of you is to play a schoolyard game of "I'm rubber and you're glue." I pointed out the false dichotomies in your analysis in other comments, and you respond by repeating the accusation. Before you accuse me of a false dichotomy, you have to show the third possibility that I omitted, and you haven't done that. Nor can you, since both possibilities are fully accounted for: if ATLA and CJD are telling the truth, it would be extraordinarily profitable for them to start an insurer, period. ATLA used to run an insurance company, so it's no excuse to say that their job isn't running insurance companies. (Though it's awfully fun to look up how ATLA's insurance company did and what happened to its policyholders.)

Posted by: Ted | October 6, 2006 4:41 AM

Ted does not challenge the accuracy of the news reports of excess or rather large profits of the malpractice insurance companies.

I don't know what he believes about that issue.

He prefers to discuss what "the" problem is, assuming that there is only one problem. My view is that most of our complicated problems have many causes, and high insurance premiums may be one of those problems.

Ted, in the case that insurance companies charge rates that lead state insurance commissioners to order refunds because they are excessive, and the insurance company complies, on more than one occasion, would that be evidence of insurance company "gouging" that you seem to want to say is my position, though not expressed?

I don't intend to go on a wild goose chase here. What are you, and your cohorts at AEI, willing to do, if anything to reduce the glut of medical errors?

What do you think should be done to prevent carcinogenic exposures of ground zero workers to dust known to be dangerous?

What do you think should be done to prevent the injuries that end up in the tort system you seem to despise?

What can we do to make the tort system irrelevant by eliminating the need to use it in the first place, by eliminating the injuries?

Posted by: lee tilson | October 6, 2006 11:37 AM

"I pointed out the false dichotomies in your analysis in other comments, and you respond by repeating the accusation. Before you accuse me of a false dichotomy, you have to show the third possibility that I omitted, and you haven't done that. Nor can you..."

Oh really? I can't do that? How about when I said, "Even if they could, have you ever considered that maybe trial lawyers want to be trial lawyers?"

I'll repeat the question once more. Have you ever considered that trial lawyers became trial lawyers because they want to be trial lawyers? And maybe they went to law school instead of insurance school because they wanted to be lawyers and not insurers? There. I pointed out a third possibility you omitted, and my accusation is therefore true.

"...if ATLA and CJD are telling the truth, it would be extraordinarily profitable for them to start an insurer, period. ATLA used to run an insurance company, so it's no excuse to say that their job isn't running insurance companies."

I guess you better quit your job, Ted, as you were happy to point out you took a 70% pay cut to leave your last job for the one you have now. If you're telling the truth, it's extraordinarily more profitable for you to practice law, period.

Or could it be you took the pay cut because of reasons other than pay? If that's the case, you should be open to the possibility that trial lawyers turn down more profitable jobs because of the other benefits of being a trial lawyer.

That the ATLA couldn't manage a company that provided legal malpractice insurance has nothing to do with whether medical malpractice insurers are profitable or gouging. Congratulations, Ted. You managed to use a non sequitur and an ad hominem attack in the same argument. Since they were both directed at the ATLA, I think that qualifies you for a triple word score.

"That one insurer in one state failed to dot i's and cross t's of a particular state regulation doesn't change that economic fact."

Are you THAT beholden to insurance companies that you can't even admit this insurer gouged doctors and broke the law? The company admitted it overcharged thousands of doctors thousands of dollars. That's far more serious than failing to dot some i's or cross some t's.

Posted by: Justinian Lane | October 6, 2006 1:20 PM