Some Ominous Statistics
UNITED STATES MALPRACTICE CLAIMS COSTS: Average payouts for malpractice claims are rising, as are the expenses of defending against them.
Between 1988 and 2002, average legal expenses paid by physician-owned liability insurance companies for cases that doctors settled or lost increased from $2K to $48K and average payments to plaintiffs made by physician-owned liability insurers for settled or lost claims almost tripled from $110K to $300K.
Source: Physicians Insurers Association of America (PIAA)
According to Jury Verdict Research, (http://www.juryverdictresearch.com 800-341-7874):
$4.9 billion = medical malpractice claims paid by insurance companies in 2003.
$1,010,858 = median compensatory jury award for medical malpractice cases. This steadily climbed by more than 100% between 1996 and 2000, but leveled off between 1999 and 2002. ($0.713 million in 1999, $1 million in both 2000 and 2001 and $1,010,858 in 2002)
52% = percentage of $1 million or more medical malpractice verdicts between 1999 and 2002.
42% = the overall medical malpractice plaintiff recovery rate (i.e. the ratio of plaintiff verdicts to total verdicts) in 2002.
Between 1998 and 2002, the following increases in plaintiffs recovery rates occurred:
Medical Malpractice Overall: 33% to 42%
Diagnosis Negligence: 33% to 43%
Surgical Negligence: 30% to 41%
Childbirth Negligence: 43% to 60%
COMMON CLAIMS:
According to Jury Verdict Research, from 1996 to 2002, the following median awards were made for the five most common injury claims in medical malpractice cases.
Brain damage = $5.3 million
Cancer = $1.3 million
Death = $1 million
Leg injuries = $670,000
Genital injuries = $300,000
According to the Physician Insurers Association of America, (PIAA; http://www.thepiaa.org), a trade association of more than 60 malpractice insurers:
65% = percentage of malpractice suits filed in 2002 that were dropped or dismissed.
$16,000 = the average expense to a malpractice insurer for dropped or dismissed suits
24% = percentage of malpractice suits filed in 2002 that were settled out of court.*
1% = percentage of malpractice suits filed in 2002 that were tried and decided in favor of the plaintiffs.
60% = percentage of any settlement or jury award consumed by lawyer and witness fees and court costs.
WHERE TORT COSTS GO:
Awards for noneconomic loss = 24%
Awards for economic loss = 22%
Administration = 21%
Claimant's attorney fees = 19%
Defense costs = 14%
A "tort", which from Law French, literally means "a wrong" is a civil wrong for which the law provides a remedy. In 2002, total costs for all tort case types in the United States were $233 billion. This represented 2.23% of the Gross Domestic Product or $809 per capita and increased from $205 billion or $721 per capita in 2001. Medical malpractice tort costs have steadily been growing at a faster pace than all other tort costs since 1975. In 2002, according to Tillinghast-Towers Perrin (TTP), a New York-based insurance industry consulting firm, they were $24.5 billion, or 10.5 percent of total tort costs.
Aggregate medical malpractice premiums have more than doubled in less than 10 years. Direct written premiums reached $4.2 billion in 2003, up from $1.9 billion in 1995, with the biggest spike occurring in 2002 when premiums jumped to $4 billion, up from $3.1 billion the previous year.
During the same period, insurers' net income plummeted from 23 percent in 1995 to -2 percent in 2003. Profits hit a low in 2002 at -11 percent.
A key indicator from A.M. Best, which rates insurers, reflects easing financial pressure on the industry. The so-called "combined ratio," a measurement of the amount insurers spend on claims for every premium dollar they take in, dropped to an estimated 1.35 in 2003, from 1.53 in 2002, the Rockville, Md.-based PIAA reports. That means carriers' losses declined last year to 35 cents for every premium dollar collected, from 53 cents the previous year.
The rating agency predicts a further drop in the 2004 ratio, to 1.28, says Lawrence Smarr, president of PIAA. The break-even point is 1.14, he adds, so while the business climate is improving, insurers are "not out of the woods yet."
Source: Data compiled for the Physician Insurers Association of America (PIAA)from Tillinghast-Towers Perrin (Physicians Financial News: July 15 and Aug 15, 2004).
*Many doctors believe they are pressured to settle a malpractice claim even when they are in the right, thus saving the insurance company the legal costs of contesting the suit. Because of this, plaintiff’s lawyers often file “shotgun” suits aimed at any doctor whose name shows up on a patient’s chart, even if the doctor had absolutely no effect on the medical outcome.
June 13, 2004:
Between 1988 and 2002, average legal expenses paid by physician-owned liability insurance companies for cases that doctors settled or lost increased from $2K to $48K and average payments to plaintiffs made by physician-owned liability insurers for settled or lost claims almost tripled from $110K to $300K.
Source: Physicians Insurers Association of America (PIAA)
According to Jury Verdict Research, (http://www.juryverdictresearch.com 800-341-7874):
$4.9 billion = medical malpractice claims paid by insurance companies in 2003.
$1,010,858 = median compensatory jury award for medical malpractice cases. This steadily climbed by more than 100% between 1996 and 2000, but leveled off between 1999 and 2002. ($0.713 million in 1999, $1 million in both 2000 and 2001 and $1,010,858 in 2002)
52% = percentage of $1 million or more medical malpractice verdicts between 1999 and 2002.
42% = the overall medical malpractice plaintiff recovery rate (i.e. the ratio of plaintiff verdicts to total verdicts) in 2002.
Between 1998 and 2002, the following increases in plaintiffs recovery rates occurred:
Medical Malpractice Overall: 33% to 42%
Diagnosis Negligence: 33% to 43%
Surgical Negligence: 30% to 41%
Childbirth Negligence: 43% to 60%
COMMON CLAIMS:
According to Jury Verdict Research, from 1996 to 2002, the following median awards were made for the five most common injury claims in medical malpractice cases.
Brain damage = $5.3 million
Cancer = $1.3 million
Death = $1 million
Leg injuries = $670,000
Genital injuries = $300,000
According to the Physician Insurers Association of America, (PIAA; http://www.thepiaa.org), a trade association of more than 60 malpractice insurers:
65% = percentage of malpractice suits filed in 2002 that were dropped or dismissed.
$16,000 = the average expense to a malpractice insurer for dropped or dismissed suits
24% = percentage of malpractice suits filed in 2002 that were settled out of court.*
1% = percentage of malpractice suits filed in 2002 that were tried and decided in favor of the plaintiffs.
60% = percentage of any settlement or jury award consumed by lawyer and witness fees and court costs.
WHERE TORT COSTS GO:
Awards for noneconomic loss = 24%
Awards for economic loss = 22%
Administration = 21%
Claimant's attorney fees = 19%
Defense costs = 14%
A "tort", which from Law French, literally means "a wrong" is a civil wrong for which the law provides a remedy. In 2002, total costs for all tort case types in the United States were $233 billion. This represented 2.23% of the Gross Domestic Product or $809 per capita and increased from $205 billion or $721 per capita in 2001. Medical malpractice tort costs have steadily been growing at a faster pace than all other tort costs since 1975. In 2002, according to Tillinghast-Towers Perrin (TTP), a New York-based insurance industry consulting firm, they were $24.5 billion, or 10.5 percent of total tort costs.
Aggregate medical malpractice premiums have more than doubled in less than 10 years. Direct written premiums reached $4.2 billion in 2003, up from $1.9 billion in 1995, with the biggest spike occurring in 2002 when premiums jumped to $4 billion, up from $3.1 billion the previous year.
During the same period, insurers' net income plummeted from 23 percent in 1995 to -2 percent in 2003. Profits hit a low in 2002 at -11 percent.
A key indicator from A.M. Best, which rates insurers, reflects easing financial pressure on the industry. The so-called "combined ratio," a measurement of the amount insurers spend on claims for every premium dollar they take in, dropped to an estimated 1.35 in 2003, from 1.53 in 2002, the Rockville, Md.-based PIAA reports. That means carriers' losses declined last year to 35 cents for every premium dollar collected, from 53 cents the previous year.
The rating agency predicts a further drop in the 2004 ratio, to 1.28, says Lawrence Smarr, president of PIAA. The break-even point is 1.14, he adds, so while the business climate is improving, insurers are "not out of the woods yet."
Source: Data compiled for the Physician Insurers Association of America (PIAA)from Tillinghast-Towers Perrin (Physicians Financial News: July 15 and Aug 15, 2004).
*Many doctors believe they are pressured to settle a malpractice claim even when they are in the right, thus saving the insurance company the legal costs of contesting the suit. Because of this, plaintiff’s lawyers often file “shotgun” suits aimed at any doctor whose name shows up on a patient’s chart, even if the doctor had absolutely no effect on the medical outcome.
June 13, 2004:
posted by Bob Coli, MD at 3:11 PM
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