Malpractice Payments Still Declining, Says Disputed Study

Robert Lowes

May 27, 2011 — A continuing decline in the number and total value of malpractice payments made on behalf of physicians argues against the need for laws that would cap noneconomic damages in such cases, according to the watchdog group Public Citizen.

Supporters of tort reform, including the American Medical Association (AMA), counter that Public Citizen bases its conclusions on what they call skewed information from a federal clearinghouse called the National Practitioner Data Bank (NPDB). Any organization that pays a malpractice claim on behalf of a physician, such as a malpractice insurer, is required to report it to the NPDB.

A Public Citizen study released this week states that the number of malpractice payments — jury awards and settlements alike — declined for the seventh consecutive year in 2010, based on its analysis of newly released NPDB data. That number of payments (10,195) also is the lowest since 1991, the first full year for which NPDB tracked these payments.

The total dollar value of payments also declined for the seventh straight year, decreasing to $3.35 billion in 2010. After adjusting for inflation, that total is the lowest in the history of the NPDB, according to Public Citizen. The average malpractice payment rose 1.6% in 2010 to $328,303. However, it represents the lowest average payment since 2002 when the figures are adjusted for inflation.

The Public Citizen analysis asserts that malpractice litigation is not the cost-driver in healthcare that some political conservatives depict it to be. Between 2000 and 2010, malpractice payments fell 11.9%, whereas healthcare spending rose 90% (both in terms of unadjusted dollars), according to the study. Such payments amounted to only 0.13% of healthcare costs in 2010, which is the lowest percentage in the NPDB's history.

Likewise, the numbers run contrary to the notion that medical malpractice suits are largely frivolous, according to Public Citizen. Of the 10,195 payments in 2010, almost 75% were for either death or some sort of significant or major injury, including quadriplegia, as opposed to insignificant or minor injuries or emotional injuries only.

Reduce Medical Errors, Not Plaintiffs' Rights, Says Group

Although the signs of malpractice litigation point sharply downward, medical errors do not appear to be headed in the same direction, according to the Public Citizen study. In a separate press release, the group contends that society should focus on making hospitals safer and on disciplining errant physicians, instead of trying to limit what malpractice plaintiffs can collect for their injuries.

The watchdog group made explicit reference to a bill pending in the House called the Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) Act, which would cap noneconomic (pain and suffering) damages in malpractice cases at $250,000 and impose other restrictions on plaintiffs. House Republicans, as well as organized medicine, claim that such a measure, which is already in effect in states such as California and Texas, would discourage frivolous malpractice suits and reduce healthcare costs.

"The premise on which this bill is based is bogus," said David Arkush, director of Public Citizens' Congress Watch division, in a press release.

Alleged Underreporting of Malpractice Payments

The Public Citizen study is not changing the minds of 2 supporters of the HEALTH Act, the AMA and the Physician Insurers Association of America (PIAA), which claim that NPDB data are unreliable — "inherently flawed," in the words of a written statement from the AMA — because of the program's longstanding problem with unreported malpractice payments and disciplinary actions.

These critics point to a study in 2000 by the former US General Accounting Office, now the US Government Accountability Office, stating that "NPDB information may not be as accurate, complete, or timely as it should be." According to the Government Accountability Office, some payments triggered by medical malpractice do not get reported because of a "corporate shield" loophole. That happens when someone sues both a hospital and a physician and then drops the physician from the claim as part of a settlement, making the hospital the only responsible party. Malpractice payments made on behalf of hospitals do not have to be reported to the NPDB.

This pattern of physicians disappearing from lawsuits has persisted into 2011 and may be intensifying because more and more physicians are becoming hospital employees, said Lawrence Smarr, the president and chief executive officer of the PIAA. "We know that the number of claims reported will drop simply because of that factor," said Smarr, who represents the PIAA on the NPDB's executive committee. In some cases, he said, plaintiffs' attorneys refrain from naming a physician as a defendant when the codefendant is the hospital that employs him or her.

"It's no secret," Smarr told Medscape Medical News. "There is a massive amount of underreporting of payments to the databank."

Taylor Lincoln, research director for Public Citizen's Congress Watch division and the study's author, said his group needs "clarification" on the matter of physicians being removed from malpractice settlements so they will not be reported to the NPDB. However, even if this is true, Lincoln said, "we would still certainly be at an all-time low" for the number of malpractice payments, because far more payments are made on behalf of physicians than hospitals anyway.

State laws capping noneconomic damages, he added, help explain why both the number and value of malpractice payments have declined. Another factor may be that cases are harder to win because malpractice insurers are mounting more vigorous legal defenses of physicians.

Smarr said that focusing solely on malpractice payments is a mistake because most malpractice lawsuits result in no money changing hands, yet tie up physicians in litigation for several years. Tort reform is needed, he said, to reduce the number of meritless claims.