Rhode Island Medical Malpractice: There Is No “Crisis”
The Rhode Island Medical Society and the medical insurance industry have for years predicted a malpractice “crisis” brought on by a supposed avalanche of frivolous claims. They have tried to scare medical consumers into believing that this fake crisis will lead to an increase in malpractice insurance premiums, higher costs and lower quality of care. Their doomsday misinformation campaign has no basis in fact and has been thoroughly debunked by an independent consumer watchdog study by Public Citizen that analyzed the actual statistics from government agencies and reached two principal findings:
- The only real medical malpractice “crisis” faced by Rhode Islanders is the unreliable quality of medical care being delivered by a relatively small proportion of doctors.
- Increased medical malpractice premiums are not caused by the legal system.
Here are the key findings of the report:
The cost of medical negligence to Rhode Island patients and consumers is considerable, especially when measured against the cost of malpractice insurance to Rhode Island doctors. Extrapolating from Institute of Medicine (IOM) findings, there are 164 to 365 deaths in Rhode Island each year that are due to preventable medical errors. The costs resulting from preventable medical errors to Rhode Island residents, families and communities are estimated at $63 million to $108 million each year. But the cost of medical malpractice insurance to Rhode Island doctors is only $21.6 million a year.
There has been a decrease in the annual malpractice payouts by Rhode Island’s doctors when inflation is considered. According to the National Practitioner Data Bank (NPDB), the total value of malpractice payouts made to patients in Rhode Island in 2001 was $22.8 million, up from $21.1 million in 1992. This increase of $1.7 million represents a change of only 8 percent over nine years, or 0.9 percent a year. During this same period, costs of medical care increased 47 percent nationwide, an average of 5.2 percent a year.
There has been a significant decrease in the number of malpractice payouts made in Rhode Island. NPDB statistics contradict suggestions by Rhode Island doctors and their political allies that malpractice payouts have grown much more frequent. NPDB data show that the number of payouts actually declined 21 percent from 73 in 1997 to 58 in 2001 (the most recent five years for which statistics are complete).
Million-dollar malpractice payouts have remained flat. Proponents of legislation to impede the legal access of injured patients assert that “verdicts and settlements in medical malpractice actions exceeding $1 million have increased steadily over the past 20 years.” In fact, payouts reported to the National Practitioner Data Bank show that Rhode Island has experienced no such recent pattern. From 1992 through 2001, the average number of malpractice payouts of a million dollars or more was less than two per year, and never exceeded three in any of those years. In 2001, the total number of payouts of $1 million or more was three, the same as in 1992. Additionally, the number of malpractice payouts between $500,001 and $1 million showed no steady, upward trend during these years, averaging just over eight per year. In 2001, the total number of payouts in this range was 11, less than the 13 in 1992.
As a group, Rhode Island doctors have seen a decrease in their liability insurance premiums, when inflation is considered. According to data from the National Association of Insurance Commissioners (NAIC), the total amount that Rhode Island doctors paid in malpractice insurance premiums in 2001 was $21.6 million, compared with $19.5 million in 1996. This is an increase of only 11 percent during this period (the most recent five years for which data is complete). When adjusted for medical inflation, which was 19.8 percent during this same period, and the growing number of physicians in the state, this represents a significant decline in actual dollars.
Malpractice insurance premiums are lower in Rhode Island than in neighboring states. A comparison of medical malpractice premiums charged by one insurance group that serves Rhode Island, Connecticut and Massachusetts shows that Rhode Island doctors generally pay less – in some cases, much less – than their counterparts in neighboring states. And one of these two adjacent states, Massachusetts, imposes a $500,000 cap on malpractice awards. According to data from Medical Liability Monitor, rates for general surgeons ranged from 14 percent to 40 percent less in Rhode Island than in Connecticut or Massachusetts; rates for OB/GYNs ranged from 6 percent to 23 percent less in Rhode Island than in the other two states; and rates for internists ranged from 2 percent to 23 percent less in Rhode Island than in the other states.
Malpractice payouts are insignificant when compared with the state’s overall healthcare expenditures. Total spending on health care in Rhode Island was $4.5 billion in 1998. In that year, doctors’ malpractice payouts made to patients in Rhode Island totaled $14.5 million – the equivalent of only 0.32 percent of healthcare expenditures in the state.
There is no sign that doctors are abandoning Rhode Island. Rhode Island’s medical environment has attracted a steady increase in physicians. In 2002, there were 2,915 practicing physicians and osteopaths with Rhode Island addresses, compared with 2,623 in 1999, an increase of 11 percent. According to the American Medical Association, Rhode Island had 277 doctors per 100,000 residents in 1990. By 2001, that ratio had increased to 365 doctors per 100,000 residents. This is the seventh highest ratio in the nation.
Repeat-offender doctors are responsible for half of medical malpractice payouts. According to the NPDB, which covers malpractice judgments and settlements since September 1990, 4.8 percent of Rhode Island’s doctors have made 52.7 percent of all payouts. These repeat-offender doctors are responsible for two or more malpractice payouts to patients and they have paid out $104.7 million in damages. Even more disturbing, just 1.6 percent of Rhode Island’s doctors, each of whom has paid three or more malpractice claims, are responsible for nearly 26 percent of all payouts.
Less than a third of doctors with four or more malpractice payouts have been disciplined. According to the National Practitioner Data Bank and Public Citizen’s analysis of NPDB data, 19 Rhode Island physicians have made four or more malpractice payouts, but only 31.6 percent of those doctors have been disciplined by the Rhode Island State Board of Medical Licensure and Discipline.
The medical board is among the nation’s less stringent when it comes to disciplining doctors. Rhode Island ranks 35th among all states and the District of Columbia when its diligence in taking disciplinary actions against doctors is measured. In 2002, the state Board of Medical Licensure and Discipline levied serious sanctions against only 10 doctors for incompetence, misprescribing drugs, sexual misconduct, criminal convictions, ethical lapses or other offenses, according to an ongoing Public Citizen project that tracks “Questionable Doctors” nationwide. Nationally in 2002, there were 3.6 serious actions taken for every 1,000 physicians. The rate of serious actions by the Rhode Island Board of Medical Licensure and Discipline–2.6 per 1,000 physicians–was roughly one-fifth the rate in Wyoming, which is the top-ranked state with 11.9 serious actions per 1,000 physicians.
Five years after a disclosure law was adopted, consumers still can’t get vital data. Rhode Island has yet to fully implement a 1997 law that called for public disclosure of profiles containing information about individual physicians. Although some profiles are available online, they omit two crucial categories: malpractice information and criminal convictions. The system is scheduled for an update, but the profiles still will not contain data on doctors’ malpractice payouts.
The spike in medical liability premiums is caused by the insurance cycle, not by skyrocketing ”malpractice awards. J.RobertHunter, one of the country’s most knowledgeable insurance actuaries and director of insurance for the Consumer Federation of America, recently analyzed the growth in medical liability premiums. He found that amounts charged for premiums do not track losses paid, but instead rise and fall in concert with the state of the economy. When the economy booms and investment returns are high, companies maintain premiums at modest levels; however,when the economy falters and interest rates fall, companies increase premiums.
Rhode Island doctors have endured insurance cycles for 28 years. Recently the Rhode Island Medical Society’s board of directors acknowledged that the state had witnessed up-and-down cycles in the medical liability insurance industry since the mid-1970s. In an advisory to members, the board recounted major problems that occurred with medical liability insurers in 1975, when coverage became largely unavailable; for a number of years beginning in 1987, when nine different “risk retention groups” began going bankrupt; and again in 1993, when a large, unrated carrier, PremierAlliance, became insolvent. The primary cause for these problems, the board concluded, has been “under-reserving” of funds by the insurance companies.
Insurance companies and their lobbyists admit caps on damages won’t lower malpractice premiums. Caps on “non-economic damages” are not part of Rhode Island’s legislative proposal, but they are included in a federal bill that the state’s U.S.senators and representatives have considered. These caps, which limit compensation for pain and suffering resulting from severe injuries such as brain damage, paralysis, loss of a limb, loss of reproductive capacity, disfigurement, blindness or deafness, significantly reduce awards paid to catastrophically injured patients. But, because such truly severe cases comprise a small percentage of medical malpractice claims and because the portion that pays for defense lawyer fees dwarfs the portion of the insurance premiums that pay for compensation, caps do not lead to lower premiums. Insurance companies and their lobbyists understand this, and have said so on numerous public occasions.
So-called “non-economic” damages are real and not awarded randomly. “Non-economic” damages aren’t as easy to quantify as lost wages or medical bills, but they compensate for the pain and suffering that accompany any loss of normal functions (e.g. blindness, paralysis, sexual dysfunction, lost bowel and bladder control, loss of a limb) and inability to engage in daily activities or to pursue hobbies, such as hunting and fishing. This category also encompasses damages for disfigurement and loss of fertility. According to the PIAA, the average total payout between 1985 and 2001 for a “grave injury,” which encompasses paralysis, was only $454,454.
Malpractice insurance costs amount to only 3.2 percent of the average physician’s revenues. According to experts at the Medicare Payment Advisory Commission (MedPAC), liability insurance premiums make up just a tiny part of a physician’s expenses and have increased by only 4.4 percent over the past year. The increase in this expense is noticeable primarily because of the decreases in reimbursements that doctors are receiving from HMOs and government health programs.
The small number of claims pursued to a defense verdict are not frivolous. Researchers at the American Society of Anesthesiologists arranged for pairs of doctors to review 103 randomly selected medical negligence claims files. The doctors were asked to judge whether the anesthesiologist in question had acted reasonably and prudently. The doctors only agreed on the appropriateness of care in 62 percent of the cases; they disagreed in 38 percent of cases. The researchers concluded, “These observations indicate that neutral experts (the reviews were conducted in a situation that did not involve advocacy or financial compensation) commonly disagree in their assessments when using the accepted standard of reasonable and prudent care.”
No evidence supports the claim that jury verdicts are random “jackpots.” Studies conducted in California, Florida, North Carolina, New York and Ohio have found that jury verdicts bear a reasonable relationship to the severity of the harm suffered. In total the studies examined more than 3,500 medical malpractice jury verdicts and found a consistent relationship between the severity of the injury and the size of the verdict. Uniformly the authors concluded that their findings did not support the contention that jury verdicts are frequently unpredictable and irrational.