Frivolous Lawsuits
Frivolous Lawsuits
As the 2008 election cycle nears, the American public will undoubtedly begin hearing about the legal boogeyman – frivolous medical malpractice lawsuits. Texas Republicans famously (and deceitfully) distributed
The argument goes that frivolous lawsuits are increasing medical malpractice insurance premiums, which in turn makes the practice of medicine prohibitively high. This argument has two main parts: (1) that there are a lot of frivolous lawsuits; (2) increased pay-outs for claims (by settlement or court judgment) increase insurance premiums. Research has shown that both of these claims are false.
First, most claims are not frivolous. Hospitals self-report injuries that occur due to doctor malpractice. There is an extreme difference between the number of cases reported by hospitals and the number of claims actually filed (
an estimated 1,000,000 injuries per year versus 85,000 lawsuits). This statistical gap leads to two conclusions. Most injured patients do not pursue a claim against the responsible doctor(s). Also, the system filters claims – preventing the frivolous from coming to court.
No doubt the greatest signal barrier to reducing the number of frivolous claims is the plaintiffs’ lawyer. Because plaintiffs’ lawyers frequently work under a contingency fee arrangement, there is a strong economic incentive to pursue only those claims that have a high likelihood of recovery and a high potential recovery value. Professor Herbert Kritzer of the University of Wisconsin surveyed plaintiffs’ attorneys in Wisconsin regarding acceptance rates of medical malpractice cases. Professor Kritzer found that 80% of all medical malpractice cases were declined at the initial contact with attorneys. Another study looked at how particular attorneys handled such inquiries. The lawyers’ office received calls from 730 people over 10 randomly selected days. Only 1 in 30 calls resulted in litigation – lawyers rejected 97% of potential plaintiffs. Greenberg & Bederman has accepted only 5% of medical malpractice inquiries in 2007. Additionally, cases that are initially accepted by lawyers are dropped because they turn out to be weak. In short, lawyers must screen potential cases because:
the contingency fee economic model requires that lawyers select only those cases that have a high likelihood of succeeding.
the costs of pursuing a claim are extremely high – court costs, discovery costs, expert fees, etc.
medical malpractice claims take longer to resolve than other types of civil cases.
provider-defendants win at least 73% of all cases taken to trial
These facts create an incentive system for lawyers to only select the most meritorious claims.
Second, there has not been an increase in the amount of medical malpractice pay-outs. As stated before, when insurance premiums spike the go-to explanation is an increase in claim pay-outs. A Texas study from 1988 to 2002 found that no sudden changes in the number or amount of pay-outs occurred during the period of dramatic premium spikes in late 1999. A Florida study from 1990 to 2003 found that pay-outs per 100 doctors dropped from 3.98 in 1990 to 3.33 in 2003. These studies (and others) have lead researchers to claim that "factors outside the medical malpractice system were responsible for the premium spikes." One can only speculate then as to what those outside factors might be. Personally, I favor two explanations:
1.
insurance companies are corporate entities and thus seek to maximize profits. Increasing premiums will effectuate this goal. The negative publicity this generates can be safely passed on as the work of legal boogeymen
1.
insurance companies need to compensate for poor corporate investment strategies (sub-prime markets, dot-coms, Enron, etc.)
Either way, doctors should not look to plaintiffs’ lawyers as the cause of premium increases. Instead, the AMA should require insurance providers to explain the need for premium increases based on actual statistics rather than rhetoric. And, voters should ask politicians to find real problems on which to base campaigns.
Citations:
Prof. Herb Kritzer's article is Risks, Reputations, and Rewards: Contingency Fee Legal Practice in the United States (Stanford University Press, 2004).
Suggested Reading:
David A. Hyman and Charles Silver, Medical Malpractice Litigation and Tort Reform: It's the Incentives, Stupid, 59 Vand. L. Rev. 1085 (May 2006).
Jason Fernandez
For more information on medical malpractice issues, please see our website at G&B Website, and click on the medical malpractice tab.
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