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Tort Reform: Has it Helped the Medical Community?

Kasey Gahler, for HealthLeaders Media, April 26, 2010

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.


Kasey Gahler, CFP, is owner and financial advisor at Gahler Financial. He is a registered representative offering securities through Cambridge Investment Research, Inc.,a broker/dealer, member FINRA/SIPC and an investment advisor representative for Cambridge Investment Research Advisors, Inc., a registered investment advisor. Cambridge and Gahler Financial are not affiliated. He can be reached at kasey@gahler-financial.com.
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