Frivolous Lawsuits

October 6, 2004 3:56 PM

This election year, four states have medical malpractice award limits on the ballot. Since I know there are doctors (and lawyers) on mefi, I was wondering if any of them know of any other solutions to the issue of "frivolous lawsuits" driving up insurance costs (more inside). Note: not looking for a debate on the ballot measures in question, just looking for alternative solutions.

I ask this question because I live in Oregon, one of the states that's voting on such a measure, and I am tired of seeing television ads sponsored by insurance companies implying this is the only way to reduce liability/malpractice insurance. On the other side, I see lawyers pushing the "no" vote under the guise of "calling for effective insurance reform", which is never actually discussed. It seems like something has to be done to minimize illegitimate malpractice suits and insurance from bankrupting doctors, but it also seems like the insurance companies have some unmitigated gall paying doctors to be in their ads saying that their insurance premiums are too high.

Are there other reasonable, less profit-based methods of weeding out these lawsuits?

posted by pikachulolita to law & government (19 comments total)

Not to get into the debate of the matter directly, but I can't help but think lawsuit limits will effectively put a price on a person's life -- at least in the eyes of the economists that work at big insurance firms.

I don't see how you can avoid that problem really. It's not a stretch to think that someday if the limit on a lawsuit is say, $1million, and a middle class person on XYZ health insurance needs $2million worth of surgery, it would be in XYZ's best interests to postpone or avoid the surgery, and if the person died and the family sued for wrongful death, they'd essentially save 50% by killing a client.
posted by mathowie at 4:24 PM on October 6, 2004

If you look at the 3 main times there have been sharp malpractice increases, they've correlated with US recessions: the 1970s, the 1980s, and now. Some have suggested that insurance companies ramp up malpractice costs in slow economies so they have something to show to their shareholders.

I sat in on a conference call on malpractice reform by a guy at Harvard--wish I could remember his name. Luckily, I just remembered I had to take notes on the conference call. Here we go (Paul Weiler's his name):

1.25 million injured
43 million go into hospitals per year
400,000 injuries due to negligence, bills ~ $100,000

American law institute tort reform:
1) need to have “damage award guidelines,” esp. for pain and suffering, punitive awards, which can be exorbitant in cost—do NOT want to have a damage cap, $250,000 like in Cali, never has been adjusted for inflation.
a. Need real guidelines that are not just imposing a limit on the most injured patients with most legitimate claims
b. We have largely uneducated and irrational juries—we should work out a very detailed system of damage guidelines
2) “alternative dispute resolution”—replacing one-time jurors with full-time administrative bodies that decide claims (made up of doctors, lawyers, scientists), would do a better job of determining true negligence
3) replace current malpractice system as a whole (one whose major benefactors are lawyers) – replace with “no fault medical liability,” modeled after worker’s comp system, only paid for the compensation that they need (lost wages, health care, etc.). This makes the malpractice system more accessible to lower-class & working-class people, and reduces stress on doctors
a. study done from American Law Institute project, looking at workplace injuries—worker’s compensation reduces incidence of workplace injures by 25-30%, but OSHA reduces workplace injuries by 2-3%.

For a good review article: "Fixing the Tail, The Place of Malpratice in Health Care Reform."

what portion of malpractice premiums actually go to paying for the injured patient? Tiny. 60-65% go to administrative costs—lawyers and costs of insurers… 35% ends up in patients pockets
posted by gramcracker at 4:30 PM on October 6, 2004

"...any other solutions to the issue of "frivolous lawsuits" driving up insurance costs..."

Why have you bought into this insurance-company-sponsored assumption? Insurance companies are in the business of making money. It is in their interest to raise rates as much as they can, point the finger at anyone they can (lawyers...), and keep raising rates. Yes we live in a grossly lawsuit-friendly society here in America, and I wish something could be done about that, but to say that lawsuits (frivolous or not) has anything more than a mere trickle of an effect of the rise of insurance premiums is shortsighted.

The solution to your question? There isn't one. You need to ask the right question first. How about, how do we make insurance preimums more affordable while still protecting us when trouble strikes?
posted by pwb503 at 4:42 PM on October 6, 2004

John Edwards outlined the Kerry/Edwards solution to the problem during the VP debate, which roughly involved requiring attorneys to pre-judge the worthiness of a suit and to bear some financial burden should it later prove "frivolous." I'm sure you can find more details of their plan online.
posted by rushmc at 4:48 PM on October 6, 2004

pwb: I am definitely inclined to agree that insurance companies are the source of these allegations, but since insurance companies are pushing this so hard (many states, like California, already have caps on awards), it seems like finding an alternative "solution" to the "problem" would be advantageous for everyone involved.

rushmc: from the sketchy details Edwards outlined, it sounds like a good idea, but I'm unsure how the executive branch could have anything to do with it since it seems like a state issue (Oregon would have to amend its constitution in order to adopt this because of the "In all civil cases the right of Trial by Jury shall remain inviolate" clause). I wonder if the Kerry-Edwards plan would override those settlement caps or if a claimant would just have to jump through more hoops to get a deserved settlement.
posted by pikachulolita at 5:04 PM on October 6, 2004

Oops - I meant to say "if a claimant would just have to jump through more hoops to get a capped settlement" - sorry.
posted by pikachulolita at 5:12 PM on October 6, 2004

I wish I could catch some Oregon TV. Political commercials are always doozies. 30-second infomercials, if you will. Fortunately, California has no shortage of those.

Of course frivilous lawsuits are bad. However, shouldn't judges, and not voters, or corporations, be the ones who determine what is and is not frivilous? Your lawyer shouldn't tell you what meds to take and your insurance company shouldn't tell you whether or not you were the victim of malpractice.

Lawyers make for easy targets -- and it's not always unjustified. But it's interesting to note that corporations love lawyers and love law suits -- provided the're the ones filing the action. Recently it's been noted that US businesses file four times as many lawsuits as private citizens do. Yet, they're the ones pushing for tort reform.

W/R/T to Matt's point, economic decisions similar to the one Matt hypothesized have already been made -- isn't that kinda what happened with the Ford Pinto in the '70s. Ford thought it'd be cheaper to settle the individual injuries than to redesign the entire car?
posted by herc at 5:12 PM on October 6, 2004

Here in New Zealand we have abolished the ability to sue in negligence for medical misadventure or personal injury by accident since the early 70s. Instead, there is a state monopoly insurer (the Accident Compensation Corporation) who deducts a small premium from your wages (about 1 cent in the dollar, from memory) and levies employers (different rates depending on the industry accident stats). If you succeed in an ACC claim, you will receive regular payments up to the level of your former income, depending on the degree of your disability.

(You can still sue for exemplary and punitive damages, but the negligent behaviour needs to be pretty outrageous to succeed).

It's not a perfect system either, but it has kept us out of the whole spiralling malpractise claim problem. And there is the added advantage that it pays out whether or not there is a specific party to blame, and whether or not that part can pay. It has been successful enough that criticism largely consists of arguments about whether accident insurance should be a state monopoly or open to competition. Nobody wants to go back to taking your chances in court to get a payout.

If you guys could get over your socialism phobia you would find there are viable alternatives to the look-for-someone-to-sue model.
posted by i_am_joe's_spleen at 5:39 PM on October 6, 2004

You have to understand that this isn't about "frivolous lawsuits" as much as it's about insurance costs. Basically the crisis is that doctors have to pay ridiculously high premiums for liability insurance, which some people believe can be lowered if tort reform impliments a lack of incentive to file as many lawsuits.

I used to work for a New Jersey legislator; in that state the demand for "malpractice reform" included forcing a limit to damages to $250,000. The problem is that the average punitive damage award in New Jersey is about $300,000.

It's unavoidable to address this without "debate" since you're basically asking for the views on the case. But that's the facts I was made aware of during my research.

The alternative is reducing statues of limitations on medical procedures performed on a patient- for exampe in NJ you could sue an obstetrician up to 18 years of age... that means an OB-GYN who delivered a baby at 70 and then retired the next week could feasibly be sued at the age of 88... the medical insurance premiums are far too high.
posted by XQUZYPHYR at 5:41 PM on October 6, 2004

Like I say, if you move to a no-fault regime, the whole problem goes away.
posted by i_am_joe's_spleen at 6:26 PM on October 6, 2004

IANAL/IANAD. I only sort of know what I am talking about here. I read an interesting bookabout malpractice by two doctors recently [Internal Bleeding: The Truth Behind America’s Terrifying Epidemic of Medical Mistakes]. They suggested having doctors pay into a risk pool of sorts that would be run by an independent overseer board. Claims would be made against this risk pool instead of individual doctors and could basically be decided at two levels.

Level one: you have a claim, we can fix it by paying you, here is some money [like car insurance]
Level two: you have a severe and serious claim, NOW you can sue the doctor or hospital

Frivolous lawsuits get dealt with at level one. This is a lot like what i_a_j_s describes above. Their argument wasn't that frivolous lawsuits were a problem, but that a small percentage of doctors were responsible for a large amount of payouts. Plus, some doctors in high-risk fields [like neonatal surgery for example] have such a high risk factor to what they do, lawsuits or claims against them are practically expected. This is part of the changing landscape of medicine, formerly these babies would all die, now some of them die and some live, but doctors get in the middle liability-wise. The authors advocated a more stringent approach to licensing where doctors who had negligence claims that were found to have merit would have some sort of actual penalties imposed, not just a slap on the wrist. There would be some sort of centralized database for looking up a doctor's malpractice/negligence record so that they couldn't just go from hospital to hospital.
posted by jessamyn at 6:32 PM on October 6, 2004

Binding arbitration.
posted by Kwantsar at 7:01 PM on October 6, 2004

They suggested having doctors pay into a risk pool of sorts that would be run by an independent overseer board. Claims would be made against this risk pool instead of individual doctors and could basically be decided at two levels.

Wow... kinda like... malpractice insurance!
posted by kindall at 8:18 PM on October 6, 2004

as a practising lawyer, who has taught law students, i feel that the first step toward fixing this very real problem is at the law school level.

1) refuse more applicants
2) accept fewer students who have never done anything except go to college
3) teach them when not to accept clients, how to evaluate a case not only on its own merits, but on its effect on the Law, on other cases, on other industries
4) teach that them that even when someone has actually suffered a harm, there may not be a person who truly owes them compensation for it (basically, that shit happens and if money can't make you whole, maybe you don't actually deserve the money)
5) accept fewer lawyers to the bar

then, require continuing legal education in the practical impact to society of lawsuits for practising lawyers: teach practicioners how to evaluate when winning a case will cause a societal deficit which outweighs their own compensation and that of the plaintiff.

then, eliminate juries, or create professional ones (a solution not without problems of its own)--a judge may be just as irrational as the average juror, but when she's looking at the 200th pain and suffering claim in three months, she's less moved to overcompensate and overpunish; more inclined to save it for when someone is truly practising medicine/serving coffee/building pickup trucks in a wantonly dangerous manner.

lather, rinse, repeat

(oh, and the kerry/edwards solution--although i like the idea of limiting attorney compensation and certainly punishing them financially for egregious cases--of allowing a judge to pre-rule on the merits is dangerous, dangerous, dangerous, and bad. the reason that summary judgment motions do not get heard until sufficient evidence has been presented is because you cannot make that sort of judgment without information. ruling on the merits is dead final. you cannot do it peremptorarily without trampling all over the system. that's why attorneys need to learn when not to take a case; that's not a ruling on the merits which effectively ends all recourse--having a judge do it is)
posted by crush-onastick at 7:25 AM on October 7, 2004

Another question you need to ask is "does tort reform help?" The tort-reform law passed here in Texas does cap damage awards, but does not cap the amount that insurers can charge to doctors (it also covers all kinds of damages, not just medical malpractice). So it's a big fat gift to the insurance lobby.
posted by adamrice at 7:58 AM on October 7, 2004

I have a solution I've advocated for a long time, but I haven't heard many others talking about it. I believe I've seen a website of some politician somewhere who also advocated it, but haven't heard much beyond that.

It's directed not specifically at malpractice suits, but more at 1) frivolous lawsuits and 2) huge awards way beyond what a legitimate lawsuit should result in. (Whether these contribute significantly to the cost of malpractice insurance is a question I don't know the answer to.)

Lawsuit awards are made up of compensatory damages (which, in theory, provides for whatever loss, etc., the plaintiff has suffered) and punitive damages (which serve to punish the defendant, and serve as a deterrent).

So why should the plaintiff receive the punitive damages? The plaintiff should get the compensatory damages plus possibly reasonable court costs and attorney's fees. Punitive damages should go to the state (county, federal government, whatever level the case is being heard at). Knowing that they won't see the punitive damages reduces the incentive to try to go for outrageous awards when they're not warranted.

I also have an idea on the rising costs of insurance (not specifically malpractice insurance): why aren't there insurance co-ops? Something that is to a traditional insurance company as a credit union is to a bank?
posted by DevilsAdvocate at 8:34 AM on October 7, 2004

Sure - get out of practicing medicine and go into research, or pharma, or Wall Street. A number of my brightest colleagues - not the people who trained in Karachi; I'm talking about Ivy grads here - have done this. Presto - no more malpractice worries.
posted by ikkyu2 at 10:02 AM on October 7, 2004

I appreciate all the input here. Some people seem to think that I am not aware of the insurance company payoff in all of this - I most certainly am aware of it, it appears to be the only benefit anyone gets out of settlement cap proposals, and I think it's reprehensible. It drives me crazy to see doctors on tv claiming that malpractice suits are responsible for their high insurance rates as sponsored by ... those same insurance companies that are gouging these "high-risk specialty doctors" out of business.

My question was more about potential alternate solutions because, at least in Oregon, everybody is talking about it like it's a problem. Even the "No on 35" ad campaign is "discussing" the issue as if, without some reform, the trial lawyers* are all going to go out and buy a new yacht for each well-meaning humanitarian doctor that they drive out of practice. So my question was formulated that way because that seems to be the way the question has been framed to Oregon's political community. In order to have meaningful discussions about this issue with people, I've had to try to convince them that the culpability for high insurance rates lies with the insurance companies rather than with lawyers. People are generally willing to accept that, but they also want to see some give and take - "Well, what would you do about these frivolous lawsuits?"

Basically, the insurance companies have done such a good job convincing people that the world is full of lawyers trying to take advantage of doctors that, at least in the limited scope of trying to convince people to vote against this particular ballot measure, telling people "well, the insurance companies are flat-out lying to you" isn't working and, since I'm generally so anti-corporate anyway, they are dismissing my arguments as "more of the same". So I figured that maybe if I could argue a different solution in the short-term, maybe people could be convinced that, if there is indeed a problem, there are better ways to address it than giving insurance companies a blank check.

*I don't mean to use "trial lawyer" in the pejorative sense; it just seems like everywhere I look these days some damn "trial lawyer" is preventing OB-GYNs from "practicing their love".
posted by pikachulolita at 11:38 AM on October 7, 2004

p-lolita: i think you're right that damage caps are meaningless without some sort of insurance premium or insurance coverage cap to go along with it. i don't think you can say that the fault lies entirely with insurance companies or entirely with lawyers or even with only insurance companies AND lawyers.

i think it's a problem that can only be solved by change in a lot of things and one of those things is changing the average american's attitude toward the purpose and expected outcome of a suit in tort. i believe that that, as i noted above, comes from changing how we educate attorneys in this country. right now, suing someone when something doesn't go well/as expected/in your favor is taken as a given. i think that's an attitude which desperately needs to be changed. i think it's also a sick attitude that is most evident in modern tort suits (though it's apparent in other areas of the law as well). of course, a legislative mandate is not a good way to change legal education for the better.
posted by crush-onastick at 11:58 AM on October 7, 2004