Med Mal Reform Likely To Mean Compromise On Insurers Part

It was no surprise that insurers gave President George W. Bush a standing ovation following his calls in the State of the Union address for medical malpractice reforms. However, the industry should also be aware that a chorus of boos greeted the presidents initiatives from those skeptical of the industrys claims and motives.

Before this debate is over, the boos from patient advocates have a good chance of drowning out the cheers of insurers and the medical community unless insurers can persuasively make the case that it is indeed an out-of-control litigation system, and not their own quirky underwriting and investment cycles, that require reform.

However, even conceding that unsustainable litigation trends are indeed the culprit prompting malpractice premiums to soar and doctors to walk off their jobs in protest, insurers are going to find stiff resistance to one of the major points in all reform proposals–capping non-economic damages. Insurers insist such limits are required to restore some predictability to the system and to contain runaway costs.

Still, arbitrarily capping non-economic damages inevitably raises issues of fairness and justice, given the physical harm and emotional distress that a physicians mistake or outright incompetence could cause.

The insurance industry is always ready with anecdotes about preposterous jury awards all out of proportion to the relative harm done. Such awards do much to undermine the entire health care system–prompting doctors to avoid or leave riskier specialties, or add to costs by forcing them to practice unnecessarily cautious defensive medicine.

However, the patients rights advocates have their anecdotes lined up as well–of doctors who were grossly negligent or incompetent, leaving victims with a lifetime of pain and trauma, if they survived at all.

Is a compromise possible that would satisfy both sides in the debate over arbitrary caps vs. unlimited damages? Perhaps.

Those who oppose caps note that in many situations, an unreasonably high jury award can be and is often overturned by the presiding judge or as part of the appeal process.

What if non-economic damages were capped at $250,000 (with adjustments over time for inflation), but the cap was soft, rather than absolute? What if a jury could request in cases of gross negligence or egregious incompetence that a judge consider granting a higher award beyond the cap, perhaps even within certain higher limits (say, $1 million)?

That might satisfy those who say punitive damages should never be absolutely predictable, while also placating those who insist they cannot be absolutely unpredictable. It might also satisfy those who say juries should be given some discretion to punish clearly incompetent doctors, within reason, while limiting that discretion.

Whether or not the industry would ever agree to go along with such a compromise, the point is that insurers and doctors must be prepared to do something to address the concerns of those who want negligence deterred and incompetent doctors punished, while giving fair compensation for any harm caused. Otherwise, the reform effort might just be dismissed as bad medicine for a self-serving crowd.


Reproduced from National Underwriter Edition, February 17, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.