Visit the Press Room for more breaking news

Contact: Chris Mather
202-965-3500 x369
202-725-5252 (Cell)

Bush Needs To “Show Me’’ On His Call For Civil Justice Restrictions

Thursday, January 25, 2007 (Washington, DC)—President Bush is traveling to Missouri, the famed “Show Me State,’’ on Thursday where he should be challenged to “Show Me’’ and the rest of America why victims of medical negligence should face restrictions on holding wrongdoers accountable in the civil justice system. President Bush has rarely missed an opportunity to call for such restrictions.

The following is a statement by CEO Jon Haber of the American Association for Justice, formerly the Association of Trial Lawyers of America:

“President Bush has consistently misled the American people to scare them into thinking they should give up their rights and access to justice. To satisfy friends in the insurance industry and further pad their profits, the president is perpetrating a fraud that has serious health consequences for Americans.

“The president’s call for restrictions on victims using the civil justice system as a last resort would remove the ability of people injured by deadly drugs or medical negligence to hold corporate wrongdoers accountable.

“You’re in Missouri, Mr. President, you’ve got to ‘Show Me’.”

Here are the facts about medical negligence President Bush won’t show you today:

Medical Malpractice Cases Aren’t Threatening Health Care

· The Government Accountability Office: Malpractice Cases Have Not Widely Affected Access to Health Care. The Government Accountability Office (GAO, formerly the General Accounting Office) found that “many of the reported provider actions taken in response to malpractice pressures were not substantiated or did not widely affect access to health care … some reports of physicians relocating to other states, retiring, or closing practices were not accurate or involved relatively few physicians.” [“Medical Malpractice: Implications of Rising Premiums on Access to Health Care,” GAO, 9/29/03, www.gao.gov/cgi-bin/getrpt?GAO-03-836]

· The Congressional Budget Office: Malpractice Costs Amount to Less than 2 Percent of Health Care Spending. According to the Congressional Budget Office, malpractice costs amount to “less than 2 percent of overall health care spending. Thus, even a reduction of 25 percent to 30 percent in malpractice costs would lower health care costs by only about 0.4 percent to 0.5 percent, and the likely effect on health insurance premiums would be comparably small.” [“Limiting Tort Liability for Medical Malpractice,” Congressional Budget Office, 1/08/04]

· AMA Data: The Number of Physicians Up More than 40 Percent Since 1990. According to the most recent statistics from the American Medical Association, the number of physicians in the United States is increasing:

The Overall Number of Physicians in the United States has Increased. According to data from the American Medical Association, the number of physicians in the United States is up more than 40 percent since 1990 – from 615,421 to 884,974 in 2004. Over the same time period, the total U.S. population increased by only 18 percent – from 248.7 million in 1990 to an estimate of 293.9 million in 2004. [“Physician Characteristics and Distribution in the U.S.,” American Medical Association, 2006 edition, p.312; U.S. Census Bureau data: http://factfinder.census.gov/servlet/SAFFPopulation?_submenuId=population_0&_sse=on; http://factfinder.census.gov/servlet/DTTable?_bm=y&-geo_id=01000US&-
ds_name=PEP_2005_EST&-mt_name=PEP_2005_EST_G2005_T001]

The Number of Emergency Physicians in United States has Increased. The number of emergency room doctors has nearly doubled from 14,243 in 1990 to 27,864 in 2004. [“Physician Characteristics and Distribution in the U.S.,” American Medical Association, 2006 edition, p.312]

The Number of Neurosurgeons in United States has Increased. The number of neurosurgeons has increased by more than 20 percent – from 4,358 in 1990 to 5,288 in 2004. [“Physician Characteristics and Distribution in the U.S.,” American Medical Association, 2006 edition, p.312]

The Number of OB/GYNs has Increased in United States. The number of OB-GYNs has increased by nearly 25 percent – from 33,697 in 1990 to 42,059 in 2004. [“Physician Characteristics and Distribution in the U.S.,” American Medical Association, 2006 edition, p.312]

· Payouts in Medical Malpractice Cases Have Dropped Over Last Four Years; The Number of Payments Over $1 Million Has Dropped 56 Percent Since 1991. According to a 2005 study by Public Citizen, malpractice payouts have remained flat for more than a decade and have actually dropped over the last four years. Among the finding of the study, which looked medical malpractice payout trends between 1991 and 2004:

The number of malpractice payments paid on behalf of doctors fell 13.6 percent between 2001 and 2004.

Adjusted for inflation, malpractice payments saw an average annual increase of only 0.8 percent between 1991 and 2004.

Adjusted for inflation, the median payment from judgments grew from $125,000 in 1991 to $146,000 in 2004 – only a 1.2 percent average annual increase.

The percentage of payments over $1 million dropped from 2.25 percent in 1991 to just 1 percent in 2004. Adjusted for inflation, this represents a 56 percent drop. [“Medical Malpractice Payout Trends 1991 - 2004: Evidence Shows Lawsuits Haven’t Caused Doctors’ Insurance Woes,” Public Citizen, May 2005, http://www.citizen.org/documents/Malpracticeanalysis_final.pdf]

· Insurance Claims Payments Have Been Virtually Flat, in Constant Dollars, Since the Mid 1980s. In 2002, Americans for Insurance Reform published a study reviewing insurance industry’s expenditures and income. Their conclusion: “Not only has there been no ‘explosion’ in medical malpractice payouts at any time during the past 30 years, but payments (in constant dollars) have been extremely stable and virtually flat since the mid-1980s.” They found that “premiums rise and fall in concert with the state of the economy…reflecting gains and losses experienced by the insurance industry's market investment ‘float’ (which occurs during the time between when premiums are paid into the insurer and losses paid out by the insurer) that doctors’ premiums provide them.” [“Medical Malpractice Insurance: Stable Losses/Unstable Rates,” Americans for Insurance Reform, 10/10/02, www.centerjd.org/air/ StableLosses.pdf]

· Malpractice Cases Aren’t Threatening Health Care…Medical Errors Are: As Many As 98,000 Patients Die Each Year as a Result of Preventable Medical Errors. According to a landmark report released by the Institute of Medicine, between 44,000 and 98,000 patients die each year as a result of preventable medical errors. As the Institute noted, “[e]ven using the lower estimate [44,000], preventable medical errors in hospitals exceed attributable deaths to such feared threats as motor-vehicle wrecks, breast cancer, and AIDS.” The Institute’s report also estimated that these medical errors cost between $17 billion and $29 billion per year, which includes expenses for additional care needed as a result of the errors, lost income and household productivity, and disability. [“Medical errors still claiming many lives,” USA Today, 5/18/05; “To Err is Human: Building a Safer Health System [summary],” Institute of Medicine, 11/99, http://www.iom.edu/Object.File/Master/4/117/ToErr-8pager.pdf]

So-Called “Defensive Medicine” is a Myth

· The Congressional Budget Office: Savings from Reducing “Defensive Medicine” Would be “Very Small.” According to the Congressional Budget Office (CBO) “… 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.” [“Medical Malpractice: Implications of Rising Premiums on Access to Health Care,” GAO, 9/29/03, www.gao.gov/cgi-bin/getrpt?GAO-03-836]

· The Methodology Used to Calculate the Cost of “Defensive Medicine” Has Been Debunked by CBO, GAO. Supporters of medical malpractice “reform” often refer to the cost of so-called “defensive medicine” – the additional tests and procedures that doctors supposedly order solely because of litigation concerns – to bolster their case for limiting access to the civil justice system. According to Congressional Quarterly Weekly, the statistics used to cite the cost of “defensive medicine” are “[b]ased on an estimate from the Department of Health and Human Services (HHS) in a report that extrapolated from a narrower study of the costs of treating Medicare heart patients before and after states approved certain caps on damages and other changes. The Congressional Budget Office tried to apply that study’s methodology to a broader set of ailments and reported no evidence that restrictions on tort liability reduced medical costs.” In 1999 the GAO wrote, “[b]ecause this study was focused on only one condition and on a hospital setting, it cannot be extrapolated to the larger practice of medicine. Given the limited evidence, reliable cost savings estimates cannot be developed.” [“Tort Reform Battle: A Simple Case of Complexity,” CQ Weekly, 1/31/05; “Medical Malpractice: Effects of Varying Laws in the District of Columbia, Maryland and Virginia,” GAO, 10/99, p.5]

Other key factors to note about the study include:

The study used by Department of Health and Human Services to determine the cost of “defensive medicine” was published in 1996 based on data from 1984, 1987 and 1990;

The study only looked at one type of heart procedure performed only on Medicare patients; and

The Department of Health and Human Services took the limited, out-dated data and extrapolated the results to the entire health care industry. [“Do Doctors Practice Defensive Medicine?” National Bureau of Economic Research, February 1996, http://papers.nber.org/papers/w5466]

· The Government Accountability Office: The “Prevalence” and “Costs” Associated with “Defensive Medicine” Have Not Been “Reliably Measured.” According to the Government Accountability Office, “[p]ysicians reportedly practice defensive medicine in certain clinical situations, thereby contributing to health care costs; however, the overall prevalence and costs of such practices have not been reliably measured. Studies designed to measure physicians’ defensive medicine practices examined physician behavior in specific clinical situations, such as treating elderly Medicare patients with certain heart conditions. Given their limited scope, the study results cannot be generalized to estimate the extent and cost of defensive medicine practices across the health care system. … Recent surveys of physicians indicate that many practice defensive medicine, but limitations to these surveys suggest caution in interpreting and generalizing the results.” [“Medical Malpractice: Implications of Rising Premiums on Access to Health Care,” GAO, 9/29/03, www.gao.gov/cgi-bin/getrpt?GAO-03-836]

Caps on Medical Malpractice Don’t Work

· Medical Malpractice Insurance Rates Increased in a Number of States With Caps. Medical malpractice premiums in number of states actually increased even after medical malpractice caps were enacted:

A Month After Passage of Malpractice Caps, South Carolina’s Two Largest Insurers Increased Rates by As Much As 22 Percent. In 2005, the Insurance Journal reported that “[d]espite a bill signed into law last month in South Carolina capping pain and suffering awards in medical malpractice lawsuits, two of the state's largest malpractice insurers have announced plans to increase doctor's premiums by as much as 22 percent in July. [B]oth [had also] increased their rates last year by 27 percent.” [“S.C. Malpractice Premiums Going Up 22 Percent in July,” Insurance Journal, 5/12/05]

After Texas Passed Rate Caps, Insurers Continued to Increase Rates. According to the Houston Chronicle, after Texas passed rate caps in 2003, the Joint Underwriting Association (JUA), a medical malpractice insurer of last resort in Texas covering 2,500 physicians, 29 hospitals, and 50 nursing homes, requested a 35 percent jump in premiums for physicians, surgeons and other noninstitutional health care providers and 68 percent increase for hospitals. In addition, GE Medical Protective, the nation’s largest medical malpractice insurer, told the Texas Insurance Commissioner that caps had a negligible impact on rates and announced a 19 percent increase in doctors’ premiums. After the company’s rate hike request was denied, they announced intentions to use a legal loophole, avoiding state regulation, and increased premiums 10 percent – without approval. Texas legislators were eventually forced to threaten the insurance companies with mandatory rate rollbacks if doctors didn’t see significant rate relief. [“Malpractice Insurer Fails in Bid for Rate Hike,” Houston Chronicle, 11/21/03; “Insurer Switching to Unregulated Product to Raise Premiums,” Associated Press, 4/10/04; “House members upset more doctors not getting relief,” Associated Press, 4/22/04]

· According to Insurance Industry Officials, Medical Malpractice “Reform” Bills Will Not Result in Lower Insurance Rates. A number of officials from the insurance industry, and their allies, have admitted that medical malpractice “reform” will not lead to lower insurance rates:

AIA Suggested Prices Will Continue to Rise, Even with Tort “Reform.” Dennis Kelly of the American Insurance Association has said, “We have not promised price reductions with tort reform.” In addition, an AIA press release stated: “Insurers never promised that tort reform would achieve specific premium savings...” [The Chicago Tribune, 1/3/05; American Insurance Association press release, 3/13/02]

President of the Physician Insurers Association of America & the General Counsel to the American Tort Reform Association: Premiums Increased, In Part, to Make Up for Lost Investments. Lawrence Smarr, president of the Physician Insurers Association of America, admitted to the Detroit News that premiums are in part rising to make up for lost investment income. Similarly, Victor Schwartz, general counsel to the American Tort Reform Association, suggested that premiums increased when the insurance companies’ investment income began to decline: “Insurance was cheaper in the 1990s because insurance companies knew that they could take a doctor’s premium and invest it, and $50,000 would be worth $200,000 five years later when the claim came in. An insurance company today can’t do that.” [The Detroit News, 7/8/05; The Honolulu Star-Bulletin, 3/20/03]

President of First Professional Insurance Company: “Responsible” Insurers Can’t Cut Rates After a Medical Malpractice “Reform” Bill Passed. According to Bob White, President of First Professional Insurance Company, the largest medical malpractice insurer in Florida, “[n]o responsible insurer can cut its rates after a [medical malpractice tort ‘reform’] bill passes.” [Palm Beach Post, 1/29/03]

Instead of Medical Malpractice “Reform,” Insurance Reform is Needed

· To Actually Reduce Malpractice Premiums, Insurance Reform – Not Tort “Reform” – Is Needed. Bonnie Bowles, the executive director of the Missouri Association of Osteopathic Physicians and Surgeons has stated that medical malpractice premiums for doctors will not drop significantly without insurance industry reform. “There is not enough accountability, and insurance companies can charge whatever the market can bear,” Bowles said. “Without insurance industry reform, we won't see a significant drop in premiums.” [The Kansas City Star, 7/8/05]

· Study Shows that Skyrocketing Premiums Are Actually the Result of Medical Malpractice Insurers Price-Gouging Doctors. A 2005 study conducted by former Missouri Insurance Commissioner Jay Angoff found that insurance companies have been price-gouging doctors by drastically raising their insurance premiums, even though claims payments have been flat, or in some cases decreasing. According to the annual statements of the 15 largest insurance companies, the amount malpractice insurers collected in premiums increased by 120.2 between 2000 and 2004, while their claims payouts rose by only 5.7 percent. Thus, they increased their premiums by 21 times the increase in their claims payments. [“Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry,” Jay Angoff, 7/05; http://www.centerjd.org/ANGOFFReport.pdf]

###

As the world's largest trial bar, AAJ (formerly known as the Association of Trial Lawyers of America) promotes justice and fairness for injured persons, defends the constitutional right to trial by jury, and strengthens the civil justice system through education and disclosure of information critical to public health and safety. Serving members worldwide, AAJ provides attorneys with the information and professional assistance they need to serve clients successfully and protect the democratic values of the civil justice system. Visit http://www.justice.org