TorteDeForm

Kia Franklin

Fox News Investigation Tells Truth About Tort “Reform”

This local Fox channel did an informative investigation into tort "reform" and medical malpractice in Texas. You can watch the video here. The report asks three important questions: 1) Was tort “reform” necessary? 2) Is it working? And 3) Are Texans benefiting?

The news segment starts off with a couple recalling their heart-wrenching experience losing their newborn son who was brain damaged from what they suspect was a medical error. Having no access to information about what went wrong, the couple wanted to sue. But four different lawyers told them it would take between $50,000 and $90,000 just to get into court, and with an arbitrary cap on non-economic damages preventing them from recovering any more than $250,000 for their child's death, they just couldn't get a lawyer. From the report:

In November 2003, voters approved prop 12. That put a cap on claims that do not involve economic loss, but instead involve pain and suffering, like the loss of a baby. Now, if you sue and win, the most you can collect from a doctor's insurance is $250,000.

Well, if people were getting those million dollar verdicts left and right, from those irrational, emotional juries, then this $250 cap might be reasonable, right? Wrong...

In 2003, when reformers cried crisis, if a Texan won a malpractice payout, it averaged $224,652 . Then national average that year was $290,730. Texas had the 37th lowest payout in the country.

But it still reduced doctors malpractice premiums, right? Well, not exactly. A first round of tort "reforms" by then-Governor George W. Bush required insurance companies to cut back doctor's insurance premiums for 5 years--something that would make sense if tort "reforms" are really targeted at helping doctors. But after the five years, the insurance companies just sent those premiums skyrocketing right back up:

"Another matter which is often not discussed was that Texas passed a series of reforms in 1995," Opelt said.

He was talking about the previous tort reforms, passed under then-Governor George Bush. A companion bill ordered five years insurance rate drops. The drops were significant. According to a Texas Department of Insurance (TDI) report , the cost of Medical Malpractice Insurance for doctors was 21% lower than regulated insurers wanted in 2000. For hospitals, the state ordered rates reduced by 24%.

Opelt said, “About the time the rollbacks were lifted was the time the rates really began to spike.”

...Tort reformers themselves admit prior tort reform was at least part of the reason that insurance rates spiked.

No matter that insurance companies had been undercharging doctors under the 1995 tort "reform" companion bill requirement, and then caught up for lost profits by milking doctors at high rates after the requisite time period ended. Tort "reformers" then used the skyrocketing rates as a reason to haul in more tort "reform" to make it even more difficult for patients with legitimate medical malpractice claims to pursue justice, and even more profitable to be in the insurance business:

Texas insurance companies definitely benefited from tort reform. After losing money for years, they started making money big time.

According to the National Association of Insurance Commissioners , companies selling medical malpractice insurance in Texas made $807,325,106 profit in the first three years following tort reform. In 2006, more than 50 cents of every dollar collected was profit.

More on this to come. In the mean time, check out this radio segment discussing the Fox report. Also visit the Fox Website for access to the various reports and studies referenced in this investigation.

Kia Franklin: Author Bio | Other Posts
Posted at 1:57 PM, May 19, 2008 in Medical Malpractice | Videos
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Comments

The article as you quoted states:

"Texas insurance companies definitely benefited from tort reform. After losing money for years, they started making money big time. "

So, even charging high rates the companies were losing money and now they are recooperating their loses. One thing I know in economics is that after a loss, you first have to recover.

You are quoted "According to a Texas Department of Insurance (TDI) report , the cost of Medical Malpractice Insurance for doctors was 21% lower than regulated insurers wanted in 2000. For hospitals, the state ordered rates reduced by 24%." the main poing is "regulated" and the "State ordered". By ordering the rates lowered, this meant that the covered medial provideres were responsible for more. Here is how it works. You have $750,000 worth of insurance. The state lowers the rates, so what happens. You now only have $250,000 worth of coverage and anything else comes right out of your pocket. Attorneys know that you can not take the risk of a huge jury verdict that will take everything and will now be more likely to settle even the most bogus of cases. Guess what, med mal cases went up.

I am always amazed that the term the "Insurance companies milked the doctors". Most of us are insured through mutuals, which means we are the insurance companies.

As to " In 2003, when reformers cried crisis, if a Texan won a malpractice payout, it averaged $224,652 . Then national average that year was $290,730. Texas had the 37th lowest payout in the country." Important data was intentionally left out. It is not the size of the payouts, rather it was the number of payouts for the reasons I just explained.

There is a great WSJ journal article that explains this better. http://online.wsj.com/article/SB121097874071799863.html?mod=opinion_main_commentaries

Posted by: throckmorton | May 19, 2008 10:07 PM

Expecting truthful reporting out of this trial lawyers front is expecting way too much

Posted by: Paul W Dennis | May 19, 2008 11:42 PM

Throckmorton contends that state suppresion of premiums caused providers in TX to incur more personal exposure on med mal claims. No evidence supports this. My research group studied doctors' personal contributions to malpractice payments in tried and settled cases and found they were vanishingly small. I know of no authority studying med mal cases in TX or any other state showing that doctors face much personal exposure. You can find my research group's studies at www.ssrn.com.

Posted by: Charles Silver | May 21, 2008 9:13 AM

MR. Silver:

I would very much like to look at your research. The link you provided does not give access to it. As you know the problem with social science is the elimination and control of variables and as a result MONOVA analysis is the result. Further, conclusions can only be made from the data set chosen and relationships between variables are still illdefined. Because the data sets are often incomplete, they may not represent the whole population.

Please place a link to your peer reviewed and statisically confirmed reseach so that the data sets can methodology can be scrutinized.

The specific questions that we hope the study will answer to a p of 0.05 of less are: if a physicans medmal coverage/occurence is less will they or their insurance provider be more likely to settle? Secondly, if this is the case has it resulted in an increase in total suits filed?

Posted by: throckmorton | May 21, 2008 11:20 AM

One of my articles appears here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=981192. Another appears here: http://ssrn.com/abstract=983199. Both were published in peer-reviewed journals, respectively, the Journal of Legal Studies and the Geneva Papers on Risk and Insurance. We did not examine the frequency of settlement as a function of policy size, and I doubt you could get a handle on this using this dataset, which contains only claims that closed with payments. However, one can quantify the frequency of personal contributions by physicians and their size. Personal contributions are more likely when policies are smaller, but even then they are rare. The dataset we used is publicly available at the website maintained by the Texas Dept. of Insurance.

Posted by: Charles Silver | May 21, 2008 12:47 PM

Thank you so much for posting the links to the papers. I agree with you that the data set used is limited as it highly under represents physicians who did not have claims against them. Further, the data only allows observations of trends within it. True correlation between individual variables can not be assessed as they can not be isolated. Although you did mention changes in tort law during the time of the study which you limited to 1988-1999 rather than the implied 2003 as in the abstract, other variables such as the economic changes in the practice of medicine where not included. Despite this, you did show that there was a trend with a high predictive value of increased personal contributions by physicians as policy limits decreased. You also show very well that there are major spikes in settlement amouts at the level of the policy limits.

I hope that the next few years allow us to have more date with which to draw better conclusions. Til then, our tort system remains "deal or no deal" and how much can you risk. Or better yet, your insurance amount or your house!

Posted by: throckmorton | May 21, 2008 10:50 PM

Whom should we believe? The "throckmorton" or the law professor from the University of Texas who supports his argument with actual facts, studies and evidence? To throcky, using big words, subterfuge, mischaracterizations, and indecipherable sentences does not hide the fact that you have nothing to support your opinions. However, it does show your arrogance, irrational thinking, intellectual dishonesty and insecurity which seems to be a common thread among the right wing/reactionary/Bush/O'Reilly folks. In other words, your argument is complete b.s. P.S., in Texas, there is something called a homestead exemption. Look it up.

Posted by: Al | May 29, 2008 7:27 PM

I was extremely interested in this article. What I feel is not being told is what happens to the average person who experiences medical malpractice. In my case I was paralyzed and put in harms way from a bone spur operation. Here was what I experienced. I went to a specialists after I was getting worse after surgery. He told me that I would become a quadroplegic within a year due to my previous Drs. surgery. He had not witnessed such blantant incompetence in his career. (Do you know how hard it is to get one Dr. to say this about another) I presented my case to 4 different law firms before I was able to find representation. I truly believe no one who has not gone through this process knows how expensive and labor intensive getting a med mal suit going is. Hard for me to believe there are very many frivolous law suits filed. In order to have a lawsuit you have to prove a physician goes "outside of standard medical care" Out of 5 life threatening mistakes he made on me, only 1 did not meet this standard. Even though I could have died or been even more injured by the other four mistakes. Drs. standard of care are very lenient. The Dr. had 4 other lawsuits pending against him. He was reprimaded by the Tx Med Board 8 years later on these lawsuits(mine being one of them) He is still practicing neurosurgery in another city on people who have not a clue his past record. Thats another thing try looking for stats on Drs. malpractice history. The insurance Cos. are the only ones who are able to view this due to Drs. privacy act. The experience opened my eyes to what attorneys have to pay for to compile a med mal suit. It is extremely expensive and time consuming. With the state putting a 250,000.00 cap on medical malractice suits not one of these 5 people would have been able to file a lawsuit and this physician would have gone undetected by the Tx. Medical Board unless one are more of use knew about filing a complaint to the medical board. This is something the average citizen knows nothing about. When you are going through a catostrophic health issue and having to fight your way through the health insurance world to get the proper care you need, you don't always know what or to whom to ask the right questions to. If it had not been for this specialist a) I would have died or been totally paralyzed within a year and b) I would have never known what this Dr. had done. I was one of the lucky ones. Now you know why it is so frustrating to hear the spin that is put on tort reform. All I can think of is how many victims will get no compensation for Drs. incompetence and how many incompetent Drs. will continue to go on injuring and killing unsuspecting patients.

Posted by: martha Miller | August 19, 2009 1:19 PM