Total, noneconomic caps one way to prevent next medical malpractice crisis

Caps on total and noneconomic medical malpractice damages, along with other measures, may help limit the number of malpractice lawsuits neurosurgeons face each year, according to results of a recently presented study.

“The million dollar question is what actually causes the malpractice crisis? There is no real hard data on this, but the theories are frequency of claims. It stands to reason that if more claims are filed, the premiums will go up. Secondly, juries award more money per claim then premiums will go up. And third is, investment return, and this is not given enough attention...,” Jacob R. Lepard, MD, said. “Obviously, insurance companies make money off of our premiums, but they also make money on investing our premiums. When they have good return on those investments, they can afford to charge less on those premiums next year. Conversely, in years when they have a poor return on investment, they have to make that expense up and charge more for premiums.”

Between 2001 and 2003, medical malpractice insurance premiums rose to the point where physicians were less willing to provide high-risk care because they were afraid of costly lawsuits, he noted.

To analyze malpractice suits and damage caps from 2000 to 2014, Lepard and colleagues conducted a study that involved multiple online databases, such as PubMed, Scopus, EMBASE and JSTOR. They screened 96 abstracts for the inclusion and exclusion criteria.

The U.S. tort reform for the past 15 years showed states that passed total and noneconomic damage caps saw a trend toward a decrease in claims frequency compared with states without caps, Lepard explained.

“The direct effect of the caps is to lower the frequency of claims, as well as indemnity (amount awarded by juries), however this only helps the insurance companies,” Lepard told Spine Surgery Today. “The real question is whether or not damage caps are capable of reducing insurance premiums and thereby reducing the burden on practicing physicians,” he said.

Lepard and colleagues found three studies showed evidence that damage caps are the only form of tort reform that have been shown to successfully reduce insurance premiums.

Lepard discussed what happened in the 1970s when California passed a noneconomic damage cap of $250,000. He said it successfully lowered the frequency of claims in the state and ever since, this has been the model nationwide tort reform has followed.

There is some evidence the caps work in individual states to help decrease claims, Lepard said, but there may be other factors at play.

“What does the evidence show? I think you can say the caps do help, but the better question is: Is this a silver bullet or a band aid? You know, as I said, I think they help with several of the factors, but at the same time there is enough evidence to show there are factors that are not affected by these laws that do influence whether or not premiums do go up, namely the investment market,” he said.

Safe harbor laws may eventually help reduce the number of malpractice claims and health care courts can help improve the situation, according to Lepard.

A shift in the medical culture can help, as well. He said it is important to move away from defensive medicine and collaboration. Medical and professional societies also need to work together to develop the kind of legislation that will reduce claims, and that should help in the future, Lepard said. – by Robert Linnehan

Reference:
Lepard JR, et al. Paper #827. Presented at: American Association of Neurological Surgeons Annual Meeting; May 2-6, 2015; Washington, D.C.

For more information:
Jacob R. Lepard, MD, can be reached at Department of Neurosurgery, The University of Alabama at Birmingham, FOT1057, 510 20th St. South, Birmingham, AL 35294; email: jlepard@uabmc.edu.

Disclosure: Lepard reports no relevant financial disclosures.