WITH TORT DAMAGES REFORMED WHO WINS AND WHO LOSES?

Today is the end of May 2009 and I thought it appropriate to end Tort Reform month by focusing on the winners and losers when society artificially limits tort damages with caps. It’s been fun this month writing about a topic that strikes so many as emotional. I’ve tried to analyze medical tort reforms from an economic view. I’ve probably succeeded in some respects and in other respects failed miserably. But like always our theme at Lombardi Law Firm has been to tell you what you need to know not necessarily what you want to hear. If you’ve enjoyed it or even if you’ve disagreed with my conclusions, let us know. Drop us a line or a telephone call; I take them from all over the country. I hope the patients and the doctors are better prepared for the road ahead. I wish you both the best of luck. Now, back to the winners and the losers of medical tort reform.

WINNER - Doctors who make the biggest medical mistakes – They get the most from capping the patients’ ability to recover compensatory damages, either economic or non-economic, after a medical mistake. They pay lower malpractice premiums (even though they make the worst mistakes) and by doing so get to take home more income. Their lifestyles will not be affected, but if they are affected, it will be towards improvement economically and socially. The general public will not be made aware of the medical mistakes these doctors cause, because their will be fewer lawsuits that make those mistakes public. Also bolstered by their success at hiding mistakes information will become more difficult to find. They control what goes into paper medical records that have no time or date stamp; a trail for detecting changes; and these doctors will get away with more and more medical mistakes. Patients who suffer the consequences will not have their day in court thus allowing the medical community to continue to sweep evidence of mistakes under the rug.

WINNER - Medical Malpractice Insurance Companies – Insurance companies have a win-win situation because they still get to collect premiums from those doctors making the worst mistakes and with each of those loss events, the losses will be kept artificially low. These insurers get their cake and eat it too. They are clear winners.

WINNER - Politicians – The politicians win because with capping damages they’ve created a steady stream of corporations and individuals willing to annually contribute to their campaigns. Those for and those against laws that artificially cap medical damage mistakes, will contribute to their next campaign effort on an annual basis. Patients, who for the most part haven’t yet understood what this law means economically to them, will not demand political accountability. At least at this point the politicians are clear winners.

LOSER - Health Insurance – With artificial damage caps these companies lose out all the way around. Patients injured by a medical mistake will file all medical expenses with their health insurance. Due to artificial caps on recovery lawyers will take fewer and fewer cases that would have resulted in subrogation recovery from liability insurance carriers. If there is no medical malpractice claim brought or with limited recovery available it is not likely health insurers will be able to recover any medical expense paid for that care made necessary by medical errors. After the initial care the health insurers will continue to lose out by increased payouts on future medical care. With medical malpractice claims being as imperfect as they are, patients even with an award will run out of money and health insurers will to some extent be forced to pick up the tab for medical claims.  

TEMPORARY WINNER/LOSER - Hospital Systems – They win and they lose. They win with paying lower malpractice premiums, for the doctors they employ, but then hand it right back with picking up the bill through lower reimbursement rates from Medicare and Medicaid government programs. Patients that run out of money will soon file for coverage under these governmental programs. Those that continue to have health insurance will increase the burden on health insurance carriers that will in turn negotiate lower and lower reimbursement rates with hospital systems.

BIG LOSER - The United States Government – A clear loser under capped damage laws.  While mistake ridden doctors will continue to practice paying high income taxes; the citizen patients who are injured will end up on Medicare and Medicaid programs along with the Social Security Disability program thereby increasing the payouts and pinching an already shrinking federal budget that is being consumed by entitlement programs.

BIGGER LOSER - States, counties, cities and towns that provide medical care for the poor and uninsured – Clear losers under capped damage laws. When patients run out of cash from lower awards or they are without awards because lawyers refuse to take their cases, state and county hospitals will treat more and more no-pay patients. Many will end up institutionalized in government institutions. This will increase the demands for paying more medical expenses of the needy on an already straining budget.  

ANOTHER BIG LOSER - The Taxpayers – Taxpayers clearly lose. They get to pay higher and higher taxes for the cost of the biggest and worst medical mistakes. The cost of medical mistakes is not being eliminated; that cost is simply being shifted from those that made the mistakes to the tax payers. As demands increase on government entities to provide for the poor patients who never recovered or had reduced recovery through litigation, the economic burden will increase. Taxes to pay for these programs will have to increase. As patients the taxpayer gets a double bill. See immediately below.

BIGGEST LOSER - The Patients – Are the biggest losers under capped damage laws. As a patient they have little information to make an informed decision about which doctors and hospital systems put them at the greatest risk of a medical mistake. Without economic pressure being put on those doctors and hospitals that make the biggest mistakes systematic changes will not take place thereby increasing the number and severity of medical mistakes. In other words you’ll get more severe medical mistakes with greater and greater risks to patients who can ill afford the costs being shifted to them.

Can the patients look to the legal system for help? No. Patients lose again with the legal system that will not be able to take on the patients’ medical mistake cases due to risk-benefit economic analysis. In other words the limited recovery will not make the case economically feasible to pursue. Lawyers who have developed expertise in this area will practice another area of the law, making those lawyers willing to take such cases harder and harder to find.  This will force higher contingent fee percentages; a simple supply and demand economic issue.  When you do find a lawyer you may still not find satisfaction. Lawyers and law firms will not advance thousands of dollars in litigation expenses when the recovery is artificially pre-capped. Those cases that are taken will see a higher contingent fee percentage to compensate for high litigation costs and the risk of taking on tough liability cases with lower damage (recovery) rewards and to offset those cases that produced little or no recovery.  This problem will not be readily apparent, but as the legal market adjusts the problem will become clear after you, the patient suffer the consequences of a medical mistake. The problem is the patient (and taxpayer) will be the last to know and will have the hardest time changing the system to force doctors to pay for their own mistakes.

When faced with hospitalization or the need for immediate medical attention, including surgery, the patient gets little information. What it there is difficult to search and when a major medical mistake occurs they have little chance of recovering compensatory damages sufficient to pay those that line up at the recovery end. After a limited recovery, those asking for payment or reimbursement will include the insurance companies enforcing subrogation clauses, medical service providers with unpaid or uncovered medical expenses, the litigation expenses and the lawyer with his contingent fee. Whatever money is left over after the recovery pays the aforementioned will soon go to future medical expenses and living expenses. The awards will be inadequate for any long term planning; a fact quickly realized by the patients and their families. These patients will have few choices but to go on government medical and disability programs. For the most part they will be forced to divorce and the children to work instead of attending colleges and universities. For most of them life will be a spiraling downward economic cycle towards the poverty line. They will find insurance companies of all kinds (life, medical, disability, etc.) unwilling to insure them leaving them no choice for what the government offers them. Employers viewing them as a medical expense that can’t be controlled will find excuses not to hire them. At that point they will begin to fully appreciate the nature of how artificially capping damages has affected them.

THE SYSTEM REMAINS BROKEN, CAPS DO NOTHING TO FIX IT – GAMBLING THROUGH BLIND FAITH

The current medical system buries medical mistakes and the risks for contracting infections through laws that protect information secrecy. While doctors are disciplined for serious malfeasance, once the medical community determines the need for action they do not make that information ready available for patients to search and review. For instance Texas, like Iowa allows you to research one doctor at a time and then only to see information that has been made public. The patients are forced to search in all 50 state medical board web sites before knowing if the doctor they’ve chosen or intend to choose has a record of making mistakes. Patients have little time to do this kind of research and are forced to consent on blind faith. It’s impossible to go to one web site and search by a doctor’s name. With hospital systems it’s even more difficult to find any information about infection rates and employee mistakes. As an example, try to find out how many wrong-site surgeries have occurred in any one institution, hospital system or any one physician. Good luck, because you can’t.

 

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