by Patrick Appel

A reader writes:

For full disclosure, I am a Professional Liability Insurance Underwriter, specializing in Physician Malpractice. In other words, I study a physician's history, training, risk management techniques and pore over the medical records and court documents for any paid claims in their history to determine if they're good or bad docs. We're a very conservative company, so we don't touch the bad ones. And there definitely are some.
We're a large insurer, and we're a Mutual, so we're not-for-profit. We have no profit motive whatsoever, and any premiums collected in a given year that are not ultimately paid out (it takes 3-6 years on average for a suit to reach completion) are returned to the policyholders in the form of a dividend.  The majority of physicians in the country are insured by Mutuals (like TMLT in Texas).

Just so you know I'm not a complete shill, I'm a dyed-in-the-wool liberal, Obama voter, etc.  It just happens that I fell into the insurance industry about a decade ago and have spent the last seven years doing med mal. I drank the tort reform Flavor-Aid like all my liberal friends until I took this job. I deal with the nuts and bolts of this issue every single day, and I have had my political position completely turned upside down as a result.
As much as the trial lawyer lobby tries to dispute the facts, physicians did indeed flee Illinois in 2002 and 2003 after the judicial climate turned completely poisonous. There was a period in 2004 and 2005 where there were only 4 Neurosurgeons practicing in the entire state because several fled to Indiana, where there is an elaborate system of caps and state-funded malpractice insurance. The cost of malpractice insurance in Indiana is about 75% less than Illinois, and claims frequency and severity is a tiny fraction of Illinois'.
As for whether doctors in states with strong tort reform practice less defensive medicine, I'm afraid I have no stats on that, other than anecdotal evidence from my daily discussions with physicians. It's just too hard to quantify to get accurate numbers. Looking at overall expenditures is probably the closest you can get, but there are so many variables involved that it would be very difficult to adjust for them all.
I can say that for my company, after we initiated an elaborate Risk Management program a few years ago through which insureds could receive discounts for attending seminars, improving office procedures, electronic medical records, etc., claims frequency dropped by 28%. The program encourages fewer unnecessary tests and instead stresses improved record keeping, patient tracking, etc.  Most "failure to diagnose" claims (the most common type) are the result of poor record-keeping, not failure to run additional tests.
If there is one firmly anti-physician policy I would recommend, it would be to outlaw physician ownership of imaging centers, surgicenters, etc.  There is absolutely no doubt that a huge amount of waste is generated by physicians ordering unnecessary MRIs, etc., because they have a profit interest in the facility the patient is referred to. If this practice were ended, useless garbage procedures like virtual colonoscopies, 4-D ultrasound and full-body scans would be all but eliminated.

Another e-mail by the same reader responding to previous readers:

Easily disprovable lie #1: Texas malpractice insurance rates have declined every year since tort reform was enacted. Here's a link to TMLT, the largest insurer in Texas, with a press release about halfway down the page detailing the drastic reductions and dividends paid since enactment ($380M total). And they decreased immediately, not after some "Texas politicians" began to complain. 
#2: Your reader is correct on one point; there are already mechanisms to reduce frivolous lawsuits, one of which is the requirement of an Affadavit of Merit from an expert (a physician, in med mal cases) confirming that the case is meritorious. There has only been one change in Texas, California, Illinois, etc., to the filing requirements for medical malpractice lawsuits: the name of the physician filing the Affadavit of Merit must be disclosed, and their specialty of practice must be the same as that of the physician being sued. In the past, most Affadavits of Merit were submitted by a handful of non-practicing hired guns who remained anonymous and were ultimately found through discovery to have no relevant training on the subject of the suit.  Of course, by the time the baselessness of the suit was then discovered, thousands of dollars had already been spent on defense and countless hours of patient care lost by the physician being sued.
#3: Citing the inflation-adjusted decrease in overall indemnity payments is due precisely to tort reform, primarily in the country's largest economy, California, where MICRA was established in 1974. In non-tort reform states, indemnity payments have steadily increased.  In Illinois, which only adopted tort reform in 2007, the average (pdf, page 15) indemnity payment increased from $70,000 in 1980 to $630,000 in 2008.  If you adjust for inflation, those 1980 dollars would only be $182,943.81 in 2009. Clearly, this is not a decrease.
#4: The stats on percentages of physicians disciplined after suits speaks not to some nefarious physician-protecting cabal, but to the non-meritorious nature of the suits. Division of Professional Regulation complaints are prosecuted by professional prosecutors. They do not sit before a board, a la Bar Association reviews. And good physicians are more offended by bad medicine than the general public.
People need to understand that many cases result in payments because they are indefensible, but non-meritorious. Infant mortality is not exclusively due to malpractice; babies die. But a dead infant suit is nearly impossible to defend in most cases. Juries are not swayed by medical testimony, but they are swayed by a weeping mother grieving over the loss of her child. These cases are most often settled, as a jury trial generally results in a higher payment than a settlement.
#5: There are absolutely economic damages in cases involving dead infants.  The economic damages are based on the average life expectancy and lifetime income for the area in which the infant was born and would have been raised. Of course this cannot account for an infant who might have gone on to be either a millionaire or a pauper, but the median income of $35,000 over the average 45 year work period equals $1,575,000.  Reducing pain and suffering to $500K or $250K is hardly punitive.

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