Healthcare Liability/Damages

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Our nation's healthcare system is in crisis. An increase in the number of lawsuits filed and a rise in jury awards against healthcare professionals and organizations in the past decade have sent malpractice insurance premiums and overall healthcare costs soaring.

Medical malpractice tort costs is the largest area of growth among U.S. tort costs, totaling $28.7 billion in 2004 and rising an average of 11.7 percent annually since 1975 (compared to a 9 percent increase for all other tort costs).

While frequently the outrageous cost impacts of medical malpractice lawsuits are the focus of attention, another cause for concern is the questionable nature of many of these claims. A study from the Harvard School of Public Health found that as many as 40 percent of medical malpractice lawsuits they reviewed were groundless, meaning the study found no evidence that a medical error was committed or that the patient suffered any injury.

A System in Crisis

Higher costs and lawsuit fears are making it more difficult for healthcare providers to practice medicine. Many doctors, particularly those performing high-risk procedures such as obstetrics and neurology, have been forced to quit or limit their practices. Many cities and towns have seen their medical facilities close or stop providing high-risk services. In some areas, people have to drive hours to visit a doctor or receive a certain medical procedure.

In addition, numerous doctors have to practice “defensive medicine,” ordering more tests and treatments than may be medically required, solely to help avoid lawsuits. These additional, unnecessary procedures are estimated to cost $70 - $126 billion per year.

Cost to Consumers

Abuses to our healthcare system have compromised the quality and affordability of medical care and threatened patients’ access to medical procedures and medicines. The American Medical Association has identified 17 states that are experiencing a healthcare crisis ( View the AMA’s Medical Liability State Crisis Map ).

Businesses also feel the impact of medical malpractice lawsuits, with companies paying more for employee benefits due to rising healthcare costs.

Fixing a Broken System
Many states, and even the U.S. Congress, have debated legislative solutions to the healthcare lawsuit crisis. In 1975, California passed the Medical Injury Compensation Reform Act (MICRA) , which placed a $250,000 cap on non-economic damages in medical malpractice lawsuits and limits on attorney contingency fees. Since its passage, MICRA has helped speed claims handling and ensure that a greater share of money is going to injured patients. Claims in California are settled in one-third less time than in states without caps on non-economic damages, and MICRA has helped decrease opportunistic plaintiffs’ attorney fees by 60 percent.

Many states have passed reforms modeled after MICRA, perhaps most notably the state of Texas. Facing an extreme shortage of physicians and medical facilities and soaring medical liability costs, Governor Rick Perry signed into law sweeping medical liability reforms in 2003 that placed a $250,000 limit on non-economic damages against doctors and healthcare providers and an overall cap of $500,000 against healthcare facilities ( Read the full text of the 2003 Texas legislation ). Since Texas passed the reforms, lawsuits against hospitals have decreased by more than two-thirds, and the state added more than 80 practicing obstetricians in one year.

Nearly 30 states have passed some form of legislation placing limits on medical malpractice awards, including:

• Alabama, Michigan, Alaska, Minnesota
• Colorado, Missouri, Delaware, Montana
• Florida, Nebraska, Hawaii, New Hampshire
• Idaho, New Mexico, Illinois, North Dakota
• Indiana, Ohio, Kansas, Oklahoma
• Louisiana, Oregon, Maryland, South Dakota
• Utah, Massachusetts, Virginia, West Virginia
• Washington

The U.S. Congress has also considered legislation that would limit medical malpractice awards against doctors, the HEALTH Act (Help Efficient Accessible, Low-Cost, Timely Health Care) , as well as legislation that would limit awards against OB-GYNs, the Healthy Mothers and Healthy Babies Act).

While many states have acted in some manner to help curb medical malpractice lawsuits, the crisis is not over. Lawsuits continue to affect healthcare costs and access to physicians and treatments for many Americans.

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