Malpractice Premiums Reach ‘Crisis’ Levels in 12 States, AMA Report Finds

The cost of medical malpractice insurance has reached "crisis proportions" in 12 states and is approaching such levels in 30 additional states, "forcing" many OB/GYNs and other physicians to abandon their practices, according to a report released yesterday by the American Medical Association, Reuters/Philadelphia Inquirer reports. The AMA analyzed the status of the medical liability industry in each state using survey responses from state medical associations, legal reviews of state statutes, and other data from independent research. The organization found that annual malpractice costs in many states reached as high as $200,000 or more for physicians in certain high-risk specialties such as obstetrics and surgery. Pamela Popp, a lawyer with the consulting firm Decision-Quest, said that much of the crisis has been caused by juries "falling victim to a 'lottery mentality'" when awarding damages to plaintiffs in malpractice lawsuits. According to the AMA, jury awards in medical malpractice cases increased by 43% between 1999 and 2000, from an average of $700,000 to about $1 million. Popp added that hospitals are often "too willing" to settle medical liability suits out of court because they do not want to attract any bad publicity (Reuters/Philadelphia Inquirer, 6/18).

According to the AMA report, the only states that have "escaped the current crisis" of rising malpractice premiums are California, Colorado, Indiana, Louisiana, New Mexico and Wisconsin -- all of which enacted laws in the 1970s and 1980s limiting the amount that can be awarded by juries for "pain and suffering" as well as the rates that lawyers may charge in contingency fees (Reuters Health, 6/17). Physicians and provider advocates in several states are asking state legislatures to take similar action to curtail lawsuits and limit monetary damages. Approximately 3,000 physicians and their supporters rallied last week at the New Jersey State House in protest of rising premiums, and a similar rally was held last week in Cleveland. AMA President Dr. Richard Corlin said that if the states or the federal government do not take action soon, physicians will be "forced to limit services, leave their practice, or relocate -- all of which seriously impede patient access to high-quality health care." The AMA has lent its support to the Health Act of 2002, a federal bill based on California's MICRA medical malpractice insurance law. The bill would allow juries to award unlimited damages for economic losses such as lost wages, medical expenses and rehabilitation, but it would place a $250,000 cap on non-economic damages such as pain and suffering and mental anguish. The bill would also limit the amount of punitive damages that may be imposed and would establish a sliding scale for attorney fees (Reuters/Philadelphia Inquirer, 6/18).