Study finds reduction in rate of paid medical liability claims

A new study indicates that there has been a sharp reduction in the rate of paid medical liability claims and flat or declining levels in compensation payments and liability insurance costs over the last 7 to 10 years, according to an article appearing in JAMA.

For many physicians, the prospect of being sued for medical malpractice is a disturbing aspect of modern clinical practice. At both the state and federal levels, policy makers have experienced pressure from organized medicine to act to change the volatility in malpractice insurance prices. The prospect that reforms might reduce defensive medicine, offsetting growing health care costs, has added further incentive for action, according to background information in the article.

Michelle M. Mello, J.D., Ph.D., M.Phil., of the Stanford Law School, Stanford, Calif., and colleagues conducted a study to determine recent national trends in medical liability claims and insurance costs and examined nontraditional liability reform approaches. Data from the National Practitioner Data Bank and the American Medical Association's Physician Masterfile were combined to determine trends in the rate of paid claims against doctors of medicine (MDs) and doctors of osteopathy (DOs) between 1994 and 2013. To examine trends in liability insurance premiums, data from the Medical Liability Monitor's Annual Rate Survey were used and average annual premiums charged over the period 2004 through 2013 in five geographic areas were analyzed: Los Angeles, Orange, Kern, and Ventura counties, California; Nassau and Suffolk counties, New York; Cook, Madison, St. Clair, and Will counties, Illinois; and the states of Tennessee and Colorado.

The researchers found that rates of paid claims against physicians have decreased since the early 2000s. For MDs, the rate decreased from 18.6 to 9.9 paid claims per 1,000 physicians between 2002 and 2013, with an estimated annual average decrease of 6.3 percent for MDs and 5.3 percent for DOs over this period.

The median indemnity amount among paid claims increased by 63 percent in 2013 adjusted dollars between 1994 ($133,799) and 2007 ($218,400), an average annual increase of 5 percent per year. Since 2007, median indemnity has declined slightly, reaching $195,000 in 2013, an average annual decrease of 1.1 percent.

Trends in liability insurance premiums in the five locations examined presented a mixed picture. In California, Illinois, and Tennessee, premiums charged by each state's largest medical malpractice insurer to internists and obstetrician-gynecologists decreased by 36 percent from 2004-2013, and premiums charged to general surgeons decreased by 30 percent. In Colorado, there were decreases for internists (20 percent), but modest increases for general surgeons (13 percent) and obstetrician-gynecologists (11 percent). In Nassau and Suffolk counties, New York, where insurance carriers report some of the highest rates in the country, the largest insurer increased rates by 12 percent for obstetrician-gynecologists, 16 percent for internists, and 35 percent for general surgeons.

Nontraditional Liability Reform Approaches

The authors write that traditional medical liability reforms do not address problems with the malpractice system's two core functions - compensating negligently injured patients and deterring substandard care. In this article, the authors discuss early findings of demonstration projects and tests of several nontraditional reform approaches - communication-and-resolution programs; pre-suit notification and apology laws; safe harbor legislation; judge-directed negotiation; and administrative compensation systems.

"These models appear promising because they address the underlying problems in the liability system: barriers to filing claims, expensive battles of the experts, the protracted litigation process, and the chilling effects that a highly adversarial and stigmatizing process has on medical error transparency. Nontraditional approaches are also more politically and ethically appealing because they stand to benefit not just physicians and insurers but also patients," the researchers write. "These nontraditional reforms have considerable promise for addressing some of the system's most challenging issues, including high costs and barriers to accessing compensation."

"During malpractice crises, interest in liability reform intensifies, but one lesson of the last 40 years is that an atmosphere of crisis is not conducive to thoughtful and enduring solutions. Action now to reduce the amplitude of the next medical liability cycle is both prudent and feasible. Further testing of nontraditional reforms, followed by wider implementation of those that work, holds the most promise. Prospects for permanent improvement in the medical liability climate depend on it," the authors conclude.

Editorial: Medical Malpractice Reform

"Approaches that accelerate the recognition of errors and the resolution of disputes are likely to further both monetary and nonmonetary goals of malpractice reform," writes William M. Sage, M.D., J.D., of the University of Texas at Austin School of Law, in an accompanying editorial.

"Conventional litigation thrives on delay, producing a host of ill effects. Patients and families are denied critical information and assistance. Timely feedback for safety improvement is impossible. Administrative costs mount. Compensation is withheld but emotional pain and adversarial stress are not. Over the longer term, delay exacerbates actuarial uncertainty for liability insurers and increases the vulnerability of insurance markets. A major advantage of communication-and-resolution programs and most of the other liability reforms evaluated by Mello and colleagues, therefore, is that they save time."