Tort Reform: Has it Helped the Medical Community?

Much has been made over the past couple of years nationally regarding individual state's various versions of tort reform. Many in the healthcare industry have probably asked whether it has done much to negate lawsuits, lower medical malpractice premiums and positively impact the medical environment. With the recent health care bill doing very little to help with tort reform and hence encouraging fewer lawsuits, individual state's tort reform legislation could be more important than ever.

The Rear View Mirror
Let's roll back the clock a little bit to the time of bell bottoms, discos and the Ford Pinto. The early 1970s was not only a horrible time for fashion but also for the medical malpractice environment. A rather large crisis was starting to brew during this decade. Many private insurers exited the market due to the rampant increase in malpractice claims and the inadequate premiums that had been charged in the past.

As in any industry, supply and demand rang true and the decrease in competition led to less and less availability of insurers and of course much higher premiums being charged as a whole.

Following this rapid increase in claims and in premiums, tort reform started to evolve from state to state in addition to other attempts to ease the rise in medical malpractice premiums and hopefully dissuade frivolous lawsuits. Some of these included more efficient communication between physicians and patients, improved peer review boards and increased diagnostic testing.

Almost every state in the past 30 plus years has passed some sort of tort reform. However in recent years some states have overturned their malpractice reform legislation. In fact, one state ruled that caps on pain and suffering were unconstitutional.

State Variations
Similar to how asset protection laws vary from state to state, variations in tort reform from state to state can positively or negatively influence the medical environment. Last decade, my home state of Texas passed a constitutional amendment which drastically improved the malpractice environment in the state. This brought many new specialists to the Lone Star State and rapidly increased the ratio of physicians to patients per capita and lowered malpractice premiums by as much as 10% in some areas.

Some Help, But Not a Resolution
Whether or not tort reform has helped the medical community is based on how one looks at it from a comprehensive standpoint. The general feeling from most people in the healthcare industry is the overall increase in the comfort of practicing medicine.

Quite possibly the biggest positive to tort reform has been the stabilization, or in some cases, the decrease in malpractice premiums depending upon geographical location of the practice and specialty of medicine. Some surveys of malpractice quotes have shown that medical malpractice premiums for various specialties are holding steady or dropping nationally as a whole.

While placing limits on the non-economic side of lawsuits (punitive damages) has been advantageous this really only limits one side of most medical claims. This side was probably the easiest to be blown out of proportion by plaintiffs and their attorneys, a rise in economic-based claims shows that most state tort reform bills have only helped half of the malpractice equation.

Another positive to tort reform is that the overall number of malpractice claims paid have dropped. Several factors impacting this decrease are:

• patient safety initiatives
• better risk management
• increasing costs of bringing a case to trial forcing attorneys to concentrate on cases with the greatest recovery potential
• increasing concern by the public regarding the litigiousness of our nation

Helping to Remedy the Situation
A variety of avenues are being explored or implemented in order to help remedy the malpractice arena and continue the decline of lawsuits; some examples from the Insurance Information Institute include:

• Sharing best practices: Some of the nation’s leading hospitals are forming alliances to focus on comprehensive plans to identify and implement the best practices and core processes of hospitals that have led to fewer claims over time.
• “Never events”: Many hospitals across the country are implementing policies that require them to forgo charges for treatment of “never events”, for instance, operating on the wrong person or the wrong area of the body.
• Emphasize risk management: In the past, some specialties and certain hospitals have experienced a tremendous decline in malpractice claims and awards, and hence a decline in malpractice premiums, by simply identifying the causes of the most claims and establishing standards to avoid them.
• Quick disclosure of medical errors: Lower litigation costs and attorney fees can be accomplished with quick disclosure of errors. Sometimes this can cut attorney costs by as much as 50%.

Moving Forward
Although tort reform has helped the medical environment on some fronts, the litigious environment encompassing medicine will probably not be changing drastically in the near future. Hospitals and private practices can both plan to launch proactive means to help continue to improve medicine as a whole, and lower costs.