Top Ten Reasons Insurance Lobbyists Are Wrong About Medical Negligence in Washington, D.C.

Top 10 Reasons Insurance Lobbyists Are Wrong About Medical Negligence in Washington, DC



America's Health Insurance Plans (AHIP) asserts that medical liability costs D.C. residents $250 million a year. The solution to this "crisis," they say, is to take away the rights of injured patients to sue, and put an arbitrary limit on what juries can decide is fair compensation for the most severely injured victims.

In a terribly deceptive ad campaign, AHIP says "With the money DC residents will spend this year on the medical liability crisis, the District could hire 4,728 new teachers."

Here are the facts:

1.       Last year, total malpractice payments to victims in the District amounted to $10.5 million, according to the National Practitioners Database.

2.       Malpractice suits in the district are actually declining. The number of cases is declining, the number of large awards is declining, and the total amount paid to victims is declining.

a.       The total number of malpractice payments has dropped 35.6 percent from 2001 to 2004, from 73 to 47.

b.       Since 1991, the total value of medical malpractice payments has dropped 52.5%, from $22.1 million to an inflation adjusted $10.5 million in 2004.

c.        The number of malpractice payments of $1 million or more, adjusted for inflation, has fallen from a high of seven in both 1998 and 2001 to zero in 2004.1

3.       This decline is in line with national trends, which show that total malpractice payouts have actually fallen an average of 4 percent per year since 2001, when adjusted for medical inflation.2

4.       D.C. Mayor Anthony Williams' claim that "out-of-control" jury awards are driving up premiums is demonstrably untrue. Look to the insurance industry. Premiums may be rising, but there's no evidence that these increases are the result of lawsuits. Instead, multiple state attorneys general and insurance commissioners argue insurance rate increases are the result of price-gouging by the unregulated insurance industry.

recent study shows the 15 leading malpractice insurers more than doubled premiums charged to doctors over a five year period in which claims paid remained flat.3

5.       Both the General Accounting Office and Congressional Budget Office debunk the belief that defensive medicine is driving health costs:

"… some so-called defensive medicine may be motivated less by liability concerns than by the income it generates for physicians or by the positive (albeit small) benefits to patients. On the basis of existing studies and its own research, CBO believes that savings from reducing defensive medicine would be very small."4

The General Accounting Office (GAO) says the evidence that defensive medicine occurs is "weak and inconclusive."5

6.       Malpractice lawsuits don't "cost" taxpayers anything. But making it harder for victims to recover damages could increase the burden on taxpayers, leaving less money for teachers and police.

It's absurd to consider what the "cost" of malpractice lawsuits (actually $10.5 million) could buy in terms of teachers or police, as AHIP does in its misleading ads. That money is not public in the first place. And it's not a real "cost" to society as a whole, rather it's a transfer payment from wrongdoers to victims.

When medical negligence occurs, the cost of the injury exists whether there is a lawsuit or not. By penalizing the patients most seriously injured by medical negligence, AHIP will reduce the liability of the insurance executives it represents, but the taxpayer, the victim, or private charities will have to pick up the burden and bear the real costs of injuries and deaths caused by medical negligence. So the AHIP proposal will actually increase the burden on DC taxpayers.

7.       How could AHIP get the numbers so wrong? They cite a study by Tillinghast-Towers Perrin (TTP) that has been widely discredited.

0.       TTP is a paid consultant to the insurance industry.

1.       TTP includes the cost of the insurance industry—multimillion dollar salaries for insurance CEOs, rent on office buildings, and administration overhead in the "cost" of lawsuits.

2.       Russ Sutter, primary researcher for the TTP report, admitted that tort-reform advocates use the data "in a way that's probably misleading."6

3.       Business Week blasted the figure as a "wild exaggeration."

4.       The 'litigation tax' … that the anti-plaintiffs'-lawyer lobby says is imposed on the economy is in fact a number that includes everything from payouts for fender-benders to the salaries of insurance industry CEOs. It's a wild exaggeration."7

5.       A study by economist Lawrence Chimerine and Economic Policy Institute vice president Ross Eisenbrey, entitled Frivolous Case for Tort Law Change, concludes that TTP's cost estimates are one-sided, inflate the impact of the tort system and ignore its benefits, and that corroboration supporting their numbers is weak or nonexistent.

8.       This isn't the first time AHIP has been caught running misleading advertising. Last April, the group falsely claimed that malpractice lawsuits costs Americans $1,200 per person—something that is absurd and untrue. For a full debunking, see America's Health Insurance Plans (AHIP) Ad Campaign is Madison Avenue Malpractice.

9.       There's no evidence a cap on non-economic damages—the proposed "solution"—will lower rates. Premiums in states without caps are actually 9.8% lower than those with caps. After Mississippi, Nevada, Ohio, Oklahoma, and Texas recently passed caps, insurers in those states continued to raise rates.

Malpractice premiums in California increased by 450% during the first 13 years following enactment of its $250,000 non-economic damages cap in 1975. The cap was part of a controversial law to limit legal rights known as MICRA. It was not until voters approved insurance reforms (Proposition 103) that the insurance industry's anti-trust exemption was removed and rates began to level off.8

And Dennis Kelly of the American Insurance Association has admitted to the Chicago Tribune, "We have not promised price reductions with tort reform."

10.    It's unseemly that the DC Medical Society, working with AHIP, has produced brochures for doctors to place in their offices asking patients to give up their rights.

This line from the brochure is especially egregious: "Frivolous lawsuits with huge 'pain and suffering' awards are forcing good doctors to limit services, retire early, or move to another state with lower insurance costs, leaving patients with fewer health care choices." That's an insult to every victim of medical negligence, everyone who might be, and everyone who has ever served on a jury in DC.

Proponents of capping non-economic, or pain and suffering, damages have been challenged to come up with one case in which a jury provided compensation more than their proposed $250,000 cap that is excessive or frivolous. They have been unable to do so.

August 2005


1.       District of Columbia Medical Malpractice Payout Trends 1991 - 2004: Evidence Shows Lawsuits Haven't Caused Doctors' Insurance Woes, Analysis of Data from NPDB by Public Citizen, May 2005

2.       Medical Malpractice Law in the United States, Kaiser Family Foundation, May 2005

3.       Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry, Center for Justice & Democracy, July 2005

4.       Limiting Tort Liability for Medical Malpractice, Congressional Budget Office, 1/08/04

5.       Medical Malpractice: Implications of Rising Premiums on Access to Health Care, GAO-03-836, 8/29/03

6.       "Tort issue creates a tussle," Kansas City Star, 5/18/05

7.       "How Partisanship Puts Big Solutions Out Of Reach," Business Week Editorial, 3/14/05

8.       How Insurance Reform Lowered Doctor's Medical Malpractice Rates In California...And How Malpractice Caps Failed, Foundation for Taxpayer and Consumer Rights, March 200