The Liability Crisis Reform is our only option

by M. Dwain McDonald, MD TMA Committee on Professional Liability

It’s about money. It is seriously threatening our patients’ access to care.

According to Jury Verdict Research, the median jury awards for malpractice nationwide increased from $454,000 in 1996 to $750,000 in 1998, and to $800,000 in 1999. Jury awards of $1 million or more were 39 percent of the awards in 1997–1998 and increased to 45 percent in 1998–1999.

What about Texas? The situation clearly is worse in some geographical areas than in others, but the bad news is that there is no good news. This year, 25 percent of Texas physicians will face a claim or a lawsuit. Eighty-six percent of these claims are closed without any indemnity paid—they are without merit or are frivolous. But these frivolous claims cost millions of dollars to investigate and defend. In 1999, Texas Medical Liability Trust spent $16 million defending meritless claims. In 2000, it spent $26 million.

For the plaintiff’s attorneys, the odds of a payoff are far greater than the lottery. And there are no consequences to pay. A plaintiff attorney can allege anything in a lawsuit in open court, and when it is disproved, a physician has no recourse against an attorney. Texas has no frivolous-lawsuit law. Physicians cannot countersue a plaintiff for court costs, legal fees, or damage to their reputations. It is not surprising that attorneys are filing lawsuits against physicians in record-breaking numbers.

Industry experts say that liability insurance carriers are scrambling to avoid collapse. Phico, one of the largest companies that sells insurance nationally, but is concentrated in New Jersey and Pennsylvania, was taken over in August by regulators in Pennsylvania because the claims threatened to exceed the company’s ability to pay. Frontier Insurance Group in Rock Hills, NY, was taken over by New York regulators.

In Texas, the Department of Insurance reported that all regulated carriers in Texas lost $103.5 million in 1999 and $229 million in 2000. Several large, national carriers have left Texas, and others are refusing to renew coverage on Texas physicians. Some carriers refuse to cover physicians in certain areas, especially in the Valley.

Premiums for Texas physicians have been increasing at an unprecedented rate. Doctors in the Valley have difficulty recruiting new doctors because of the liability crisis.

Is there a solution? The increasing cost of insurance ultimately can force physicians to give up medicine because the profession becomes unaffordable. Physicians who take care of the most critically ill patients run greater liability exposure. Some physicians are considering early retirement, while others are leaving their practices to work in nonclinical environments, all of which ultimately affects patients’ access to care.

Evidence exists that liability reform legislation can protect both physicians and patients. The “gold standard” of this type of legislation is the Medical Injury Compensation Reform Act of California enacted in 1975. It includes a $250,000 cap on noneconomic damages and limits on attorney contingency fees (so, more of any award goes to the patient). Consequently, in 1998, malpractice cases in Philadelphia generated more payout than malpractice cases in the entire state of California. Thanks to MICRA, California physicians pay substantially lower liability premiums—as much as 50 percent less.

Liability reform perhaps is our only option. To continue the present course is not an option. The Texas Medical Association and TMLT are organizing a coalition of healthcare-related organizations to address the crisis during the 2003 Texas legislative session. The well-funded plaintiff attorneys will vigorously oppose any change to their gold mine. It will not be a pleasant experience. But if we are to lead the fight for our patients’ future access to care, we and our patients must be intricately involved with the reform process.

Fort Worth physician M. Dwain McDonald, MD, chairs the TMA Committee on Professional Liability.
Reprinted with permission from the Tarrant County Physician, December 2001, pages 28-29.