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An Rx for our ailing health care system: Caps on lawsuit awards

By David and Amy Ridenour
web posted December 8, 2003

Every once in a while, you hear a story you know you will remember for the rest of your life.

On July 5, 2002, Tony Dyess of Mississippi, a father of two, suffered head injuries in an auto accident. He was rushed to the hospital, but the only doctor able to relieve pressure on Tony's brain had been forced to quit just days before. Because of rising legal costs brought on by lawsuit abuse, the doctor's malpractice insurance carrier had stopped writing policies.

Tony was airlifted to another hospital, but it took six hours, during which time the damage continued.

Tony and his family had paid for good health insurance. They lived in an area with good hospitals. They did everything right. But Tony didn't get the help he needed because lawsuit abuse had driven the doctor away.

Today Tony is in a vegetative state. His wife is both Mom and Dad to their children.
Lawsuit abuse is taking a terrible toll.

Consider this quote about the doctor shortage brought on by lawsuit abuse:

OB-GYN Shelby Wilbourn wonders who will deliver the 500 babies born each week in Las Vegas and if there will be any OBs to take emergency calls like the one he recently answered. The patient was 34 weeks pregnant, in premature labor and hemorrhaging, and her baby's heartbeat was frighteningly low. Wilbourn arrived in minutes, and both mother and children made it successfully through childbirth. "If this were next year," he contends, "that baby would have died."

It's a year later now. That quote is from the July 1, 2002 U.S. News and World Report.

Senate Majority Leader Bill Frist (R-TN), a surgeon, says 12 states are in health care "crisis" because of lawsuit abuse while 30 others are in "near-crisis."

A Harris Interactive study says 76 percent of physicians believe liability concerns are hurting the quality of medical care.

$50 billion annually (and incalculable discomfort) is wasted on unnecessary tests to guard doctors and hospitals against lawsuits.

Unreasonable jury awards cost an estimated $70-126 billion extra in health care costs every year, says the U.S. Department of Health and Human Services.

"Medicine has suffered a kind of nervous breakdown," says author Philip K. Howard. Doctors see patients as potential plaintiffs and are unwilling to be frank, fearing that admission of uncertainty might be a basis of liability. They are reluctant to disclose mistakes, hampering the profession's ability to make improvements, and they are less willing to provide volunteer emergency medical care. And, Howard says, good doctors are retiring early.

Americans joke about stupid lawsuits. About people who sue McDonalds because they got fat. Or the passengers who sued Southwest Airlines because a flight attendant said "Eenie Meenie Minie Mo." Or the man who claimed a car accident made him homosexual, so he sued and won $225,000.

Americans joke about stupid lawsuits, but they are no joke when they undercut the quality of our health care system.

There is, however, a way to ease the crisis: placing reasonable caps on lawsuit awards for non-economic damages (such as punitive damages and pain and suffering). Texas recently capped lawsuit awards for pain and suffering at $250,000 for physicians, $250,000 for hospitals and $250,000 for nursing homes and other institutions for a maximum of $750,000 per claimant. California enacted similar caps years ago and now has some of the lowest malpractice insurance premium rates in the U.S.

An Employment Policy Foundation study found malpractice insurance costs significantly less in states with caps. Between 1976 and 2000, premiums nationwide increased 505 percent - 7.8 percent annually. In California, premiums increased 167 percent - a much more reasonable 4.2 percent annual growth rate. In 2001, the malpractice insurance premium range for obstetricians was $143,000-$203,000 per physician in Florida but just $23,000-$72,000 in California. For surgeons, the cost was $63,000-$159,000 in Florida compared to $14,000 to $42,000 in California.

On July 9, the U.S. Senate considered legislation, previously approved by the House, to limit pain and suffering awards to $250,000 and punitive damages to the greater of $250,000 or twice the amount of economic damages. Economic damages were not limited. Limits also were set on lawyers' fees.

The trial lawyers association, cited by the Center for Responsive Politics as America's fourth largest campaign contributor, vigorously opposed the measure. The bill, which was supported by 49 Senators and opposed by 48, was killed by filibuster.

Contact David and Amy Ridenour at legalbriefs@nationalcenter.org.

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