Medical Malpractice Payments and Values in Decline

July 18, 2012
By Parker Scheer LLP on July 18, 2012 2:43 PM |

On July 12, the group, Public Citizen, published a study stating that for the eighth consecutive year, the number and total value of malpractice payments made on behalf of physicians declined in 2011. Information for the study was provided by the National Practitioner Data Bank, (NPDB), a federal clearinghouse for medical malpractice payments. Public Citizen said that the downward trend in payments discredits the argument made by organized medicine and Republican politicians that "medical malpractice litigation is responsible for rising healthcare costs." Also discredited is the push by GOP members of Congress to enact tort reform measures, such as a cap on non-economic damages, which Public Citizen says is an unnecessary restriction on patients' legal rights. As a result, tort reform advocates say the annual Public Citizen data is misleading because malpractice payments on behalf of physicians frequently go unreported.

In 2011, the total value of payments was roughly $3.2 billion dollars. The payments, which made up .12% of total healthcare costs, were an all-time low. According to Public Citizen, the trends do not support the notion that physicians widely practice defensive medicine to avoid malpractice litigation. When the risk of litigation is in decline, "such a conclusion does not stand to reason". Eighty percent of total medical malpractice payments were made for death, a major or significant permanent injury, quadriplegia, brain damage, or other conditions requiring life-long care, "disproving the claim that medical malpractice litigation is frivolous," said Public Citizen.

Arguing against these reports, critics of Public Citizen have long called the National Practitioner Data Base a poor source of information about malpractice litigation because payments made on behalf of hospitals do not have to be reported to the NPDB. Many payments on behalf of physicians never make it into the system due to the fact that when someone sues both a hospital and a physician, often times the physician is dropped as a defendant before a final settlement or jury award, making the hospital the only responsible party.

The president and CEO of the Physician Insurers Association of America (PIAA), Brian Atchinson, said that that this kind of under-reporting is increasing as more and more physicians become hospital employees. He claims that by relying on NPDB data, Public Citizen is ignoring a large area of malpractice claims. The suits filed against physicians represent the majority of all claims and "can cost $150,000 or more to successfully defend. There is obviously a significant monetary cost associated with these merit-less claims -- not to mention the significant time and emotional toll they take on healthcare practitioners."

Conversely, Tom Baker, a law professor and medical liability expert at the University of Pennsylvania in Philadelphia, feels that the NPDB has "the best information there is." He believes that citing unreported payments is an unfair public policy argument.
"It's a violation of law not to report claims paid on behalf of doctors," Baker told Medscape Medical News. "If you're doing that, shame on you."

Baker also said he agreed with Public Citizen on calling the campaign for tough tort reforms "an effort to shift responsibility away from people who injure [others] and pretend there's an easy fix to the cost of healthcare." Both Baker and Michael Matray, editor of the Medical Liability Monitor newsletter, agree that state tort-reform laws are "having a noticeable impact on claims frequency," which are at all-time lows.