Runaway Verdicts or Runaway Insurance Profits

Most of America is badly misinformed about what is really happening in our Courts and hospitals. Is the nation experiencing a plethora of runaway verdicts or is there really a run on insurance profits? Are we losing doctors due to high insurance premiums caused by frivolous lawsuits or is the insurance industry fooling us all?

Surprisingly, the facts are clear. As a representative example, in Ohio, the 2000 United States Census placed the population of the State at 11,353,140. The official tabulation of the Ohio Supreme Court showed that there were only nine product liability lawsuits that went to trial in Ohio Courts in 2004. Since 1998 in Ohio there have only been five jury verdicts in product liability cases. The verdicts were: $0, $0, $0, $100,000.00, and $4,100,306.18.

Statistics from the Bush Administration show the number of Federal personal injury trials was down in 2005 nearly 80% since 1985. In 2004, the Bush Justice Department reported the number of personal injury cases filed in U.S. District Courts fell by 79% between 1985 and 2003. In 1985, 3,600 personal injury trials were decided by a judge or jury in U.S. District Courts. By 2003, that number had dropped to less than 800 as reported in the “Federal Tort Trials and Verdicts, 2002-2003, Bureau of Justice Statistics, August 17, 2005”.

As for State Courts, the decrease in trials was similar noting a 31.8% drop between 1992 and 2001 as cited in “Civil Trial Cases and Verdicts in Large Counties, 2001, Bureau of Justice Statistics, 4/04”.

With respect to medical malpractice claims, contrary to the propaganda espoused by the Chamber of Commerce, personal injury lawyers are not clogging the Courts with multi-million dollar lawsuits that threaten families access to life saving medical care. Payouts in medical malpractice claims dropped over the last several years. According to the 2005 study by “Public Citizen”, malpractice payouts have remained flat for more than a decade and have actually dropped over the last fifteen years as noted in “Medical Malpractice Payout Trends 1991-2004: Evidence Shows Lawsuits Haven’t Caused Doctor’s Insurance Woes, Public Citizen, May 2005”. The study also revealed the number of malpractice payments paid on behalf of doctors fell 13.6% between 2001 and 2004. Adjusted for inflation, malpractice payments on average showed an annual increase of only .8% between 1991 and 2004. Adjusted for inflation, the median payout from judgments grew from 125,000 in 1991 to 146,000 in 2004, at only a 1.2% average annual increase. The percentage of payments of over $1,000,000.00 dropped from 2.25% in 1991 to just 1% in 2004. Adjusted for inflation, this represents a 56% drop.

The American Medical Association (AMA) own statistics show the number of doctors in the United States is actually increasing, not decreasing due to malpractice lawsuits or verdicts. According to data from the AMA, the number of physicians in the United States is up more than 40% since 1990, from 615,421 to 884,974 in 2004 as reported in “Physicians Characteristics and Distribution in the U.S., American Medical Association, 2006 Edition”, page 312. Over the same time period the total U.S. population increased by only 18% from 248.7 million in 1990 to an estimated 293.9 million in 2004 as noted by the U.S. Census Bureau. The number of emergency room doctors has nearly doubled from 14,243 in 1990 to 27,864 in 2004 also noted in the “Physician Characteristics and Distribution” AMA article of 2006, page 312. The study went on to note the number of neurosurgeons and OB/GYN’s has also increased in the United States from 20 to 25%.

How then does America save on health care? Rather than providing immunity to doctors, capping jury awards and shielding insurance companies from paying what is due injured victims, which is the medical community and Chamber of Commerce answer, one common sense approach is to cut the number of medical negligence cases by reducing medical errors. Insurance companies want to continually increase the premiums paid in by medical providers but reduce the amount of claim paid out for medical mistakes that cause preventable injury and death. Reducing medical errors would reduce medical claims and resultant lawsuits thus eliminating or at least reducing claims paid by insurance companies. However insurance companies would then not have a basis in which to lead the fight against trial lawyers by perpetuating the myth new laws are needed to curtail nonexistent frivolous lawsuits and runaway verdicts.

To gain a clearer understanding of the myth propagated by the insurance industry and Chamber of Commerce who has since brainwashed the medical community, Tom Baker, a law professor at The University of Connecticut who studies insurance, showed the propaganda about medical malpractice suits is myth mixed with an occasional true story, supported by carefully chosen references to skewed academic studies in his book “The Medical Malpractice Myth” published in November, 2004. When synthesized, including legal fees, insurance costs and payouts, the cost of medical negligence lawsuits come to less than one half of 1% of health-care spending. So why the increase in medical malpractice insurance premiums?

Baker notes the most impressive and comprehensive study that form the basis of the statistics he compiled was conducted by the “Harvard Medical Practice”, released in 1990. The Harvard researchers took a huge sample of 31,000 medical records dating from the mid-1980s and had them evaluated by practicing doctors and nurses, the professionals most likely to be sympathetic to the demands of the doctor’s office and operating room. The records went through multiple rounds of evaluation and a finding of negligence was made only if two doctors, working independently, separately reached that conclusion. Even with this conservative methodology, the study found that doctors were injuring one out of every twenty-five patients, and that only 4% of these injured patients sued.

If there are no runaway verdicts nor a glut of lawsuits, what is the basis of the insurance companies push for lawsuit reform? In its simplest form, the answer is greed. One must only look to the bottom line. As an example, State Farm Mutual Automobile Insurance Company reported that its total assets in 2004 were $84,403,000,000.00 (Eighty-four billion, four hundred three million dollars)!! In Ohio, that is more than $7,400.00 for every man, woman and child in the State. State Farm’s net income for 2004 was $3,076,000,000.00 (Three billion seventy-six million dollars). That is $8,427,397.00 (Eight million, four hundred twenty-seven thousand, three hundred ninety-seven dollars) per day in profits.

When an injured person is forced to file a lawsuit because the insurance company will not pay the reasonable value of the losses, the injured party cannot even mention insurance during the trial. The jury is left to infer the person, company, doctor or hospital who committed the negligent act that lead to injury or death must personally pay the verdict thereby creating an atmosphere of misdirected sympathy and passion. In reality it is the insurance company who refuses to accept responsibility for their insured’s negligence and settle cases for a reasonable value forcing injured parties to file lawsuits in the first place. The insurance industry has been quite effective with its high paid lobbyists to make sure the public is not made aware of the fact the rich are getting richer. The man behind the black curtain is not the trial lawyer but the greedy CEO who seeks runaway insurance profits.