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Liability Crisis? Lawyers Blame Physicians, Insurers |
As ISMS and ISMIE Mutual urge the U.S. Congress to pass the AMA-drafted HEALTH (Help Efficient Accessible, Low-cost, Timely Health Care) Act, better known as H.R. 4600, opponents of sensible tort reform are blaming the current medical malpractice crisis on the insurance industry and physicians. There have been allegations that the current medical malpractice liability
crisis stems from the “price wars ” of the 1990s, as
some insurers tried to expand into new markets by
low-balling premiums, offsetting underwriting losses
with investment returns.
Did the insurance industry really fall on its sword, like some consumer advocacy groups argue? Or, as plaintiff attorneys allege, are physicians committing more acts of malpractice? ISMIE Mutual and physicians everywhere know both arguments are flawed, because they ignore the havoc created by the “liability lottery ” on our healthcare system.
True, the medical profession got hit by the “perfect storm” in the late 1990s, when the number of lawsuits filed against physicians began to increase dramatically. That was accompanied by
a severe increase in jury verdict award amounts – from 1999-2000, jury verdict awards increased
43% nationwide. The number of new lawsuits filed has started to drop, but claims severity continues to climb.
While some insurance companies have gone out of business because of the spike in losses,
pegging the medical liability insurance crisis on a few companies doesn’t make sense. ISMIE Mutual has always adhered to strict underwriting principles, and because of that, we’re able to meet the demands of the tough market.
Nor can physicians be blamed for the sudden upsurge in claims severity. Without adequate
legislation to discourage frivolous lawsuits and huge “pain and suffering” damage awards, physicians are literally at the mercy of plaintiff ’s attorneys and juries that routinely hand down seven-figure verdict awards because they’ve been “immunized” by the “lottery mentality” that pervades our society. Nationally, the average jury verdict award is hovering near one million dollars.
The crisis that’s afflicting healthcare today has been generated by the lawsuit industry. While
ISMIE is in sound financial shape, the company is currently paying out $1.26 for every $1.00 in premium income. That extra twenty-six cents on every dollar of income is paid for through ISMIE’s financial reserves, which are the result of years of cautious underwriting and financial management.
ISMIE was able to retain its A- (“Excellent” ) rating from A .M . Best last year – despite the
fact that ISMIE’s ave rage indemnity payment is currently over half a million dollars. But
without some sort of tort reform legislation capping non-economic damages, ISMIE will be forced to raise premiums to keep up with sky rocketing jury verdict awards – there’s simply no
other choice.
That’s why ISMIE Mutual and ISMS support the national tort reform initiative, H.R. 4600. This sensible legislation would cap non-economic damages at $250,000 while protecting the rights of truly injured patients to seek financial compensation for lost earnings and future medical expenses. H.R. 4600 presents a chance for the federal government to enact the same common-sense tort reform legislation that ISMIE and ISMS have spent nearly three decades fighting for in Springfield, only to be stymied by the state Supreme Court. Congress must act now – before it’s too late.