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Increasing litigation plagues health care

A recent boom in medical malpractice insurance that many fear is creating a national health-care crisis has forced experts to look for solutions, even at the Duke University Health System and other institutions that remain relatively unaffected and do not plan on shutting down any services.

The consensus among doctors is that soaring jury awards in malpractice cases are driving the sudden increases in insurance costs, as the median award doubled to about $1 million over a three-year period from 1997 to 2000, according to Jury Verdict Research.

"There's no question that rising jury awards are the root cause of the problem," said Phil Israel, a general surgeon at Kennestone Hospital in Marietta, Ga., and a board member at the MAG Mutual insurance company. "The basic mindset today is, 'Let's try to sue. I might hit the lottery.'"

Peter Kussin, an associate clinical professor of pulmonary medicine at the Medical Center, is approached to testify in malpractice suits about once a week. He agrees that excessive awards are creating an atmosphere of profiteering by lawyers and patients.

"Judging by the number of cases [I get], there has been an explosion in litigation over the past year," he said. "Lawyers push their case even if it's totally groundless.... I testify in absolutely meritless cases where I defend the doctors."

Of the cases Kussin takes, only one in 10 go to trial. "The plaintiff and prosecutors will push a case until the hospital or physician will settle," he said. "It's very rare for a case to actually go to trial."

Rising malpractice costs are also a function of subtle changes in medicine and a public that pays greater attention to medical errors.

Juries rule in favor of the plaintiff in only a third of all cases that go to trial, but successful suits can cost millions of dollars, amounts that are "over and above what is necessary," said Robert Seligson, chief executive officer of the North Carolina Medical Society, the state branch of the American Medical Association.

Physicians and health care experts are now demanding limits on the potential awards in malpractice cases, and the American Medical Association is vigorously campaigning for national legislation capping pain and suffering damages at $250,000, which the U.S. House of Representatives passed Sept. 26.

"The real, long-term plan is a variety of initiatives like tort reform, the ability to limit the amount of punitive damages to something that is reasonable," said Kenneth Morris, DUHS chief financial officer. "It consists of having a national system for compensating people."

Although North Carolina has not seen as dramatic a spike in insurance costs compared to other states, warning signs point to an impending emergency. "It's getting to a level where [North Carolina doctors] are very concerned, and our attitude is, 'Why should we wait before it reaches an epidemic level?'" Seligson said. "The system needs to be fair and reasonable for everyone concerned."

NCMS is campaigning for the state legislature to place caps on punitive and non-economic damages, and to pass collateral source rules that prevent malpractice victims from collecting from multiple insurance companies for the same injury.

Trial lawyers, however, argue that capping malpractice awards cannot be justified. "It's supposed to be the jury who decides [what the award is]," said Judy Sing, a Raleigh lawyer who tries malpractice cases. "There needs to be a way to fairly recoup damages from the negligence of a health care provider."

Sing also bristles at the suggestion that lawyers are unfairly driving the malpractice process. "We see it as fighting for the little people," she said. "We don't take it very lightly. I would never take a case that I don't believe in."

Health-care providers respond that laws need to strike a balance between protecting victims and ensuring that health care can be provided.

"As a human being, you want people to be taken care of, but when the result is that you have to start making decisions about what amount of health care you can provide, you need to start making tough decisions," Morris said.

Yet rising malpractice awards may not be the sole cause of rising insurance costs.

"What's happening is this: The stock market goes down and suddenly we have a malpractice insurance crisis," said Burton Craige, a Raleigh lawyer who has been trying malpractice cases for 18 years. Rather than a boom in cases, he said, "My sense has been that there's been a gradual increase in jury awards in the past few years."

Frank Sloan, director of Duke's Center for Health Policy, Law and Management, explained that most insurance companies make their money from investments, not premiums.

Sloan claimed that insurance companies were underpricing premiums in order to obtain a greater market share, but the economic downturn caused huge profit losses, forcing a sudden spike in premium costs. To remedy that problem, he recommended a national "reinsurance" program in which the government would protect insurance firms facing catastrophic losses, essentially insuring the insurer.

Thomas Metzloff, a professor at the School of Law and an expert on malpractice litigation, agreed with Sloan's analysis. "The investment market has been so bad they have to raise premiums. It's the only way to get money," he said. "It's not like these companies are conspiring. They're just doing what they need to do to balance the books."


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