Medical Malpractice Insurance – Problems That Transcend Time and Place

Today’s insurance crisis for doctors is only a small part of a much larger insurance problem that is affecting homeowners, motorists and all kinds of policyholders, including consumers in other countries, all at the same time.

We are hearing more about doctors’ and hospitals’ insurance problems today for several reasons. When insurance companies impose arbitrary rate hikes on certain doctors and hospitals that are so high, or in some cases make insurance unavailable at any price, these doctors and hospitals cannot function, a situation that can reduce access to health care.

Unlike homeowners or motorists, the well-organized and well-funded American Medical
Association (AMA) has moved quickly to take political advantage of the insurance situation, devoting $15 million to it this year. The AMA and associated medical lobbies are not pushing for insurance reform, however. They are primarily lobbying for organized medicine’s longstanding priority – lawsuit restrictions – even though such limits will not solve the current insurance crisis.

Doctors’ current insurance problems are no different from those affecting:

Other lines of insurance. Skyrocketing premiums and cancellations of homeowners’ policies are at crisis proportions in many states. In Texas, where insurance rates are going up 500 percent for some, Governor Rick Perry called the top three writers in his state (Allstate, Farmers and State Farm) “an insurance cartel” taking action “to bring the state to its knees.” He has sued Farmers Insurance for deceptive trade practices leading to these astronomical rate hikes. Auto insurance, liability policies for small businesses and commercial properties and even health insurance policies are starting to experience steep increases as well.

Other countries. Over the past year, industry publications like Best Wire and Best’s Insurance News have reported repeatedly on a similar insurance crises that exists in Australia, and on price hikes that Canadian policyholders are starting to experience. In fact, CJ&D and AIR representatives have been in demand by Australian programs like 60 Minutes Australia as well as the Australian Broadcasting Network to discuss parallels between the U.S. and Australia’s current insurance problems. See., e.g.,

Other times. Volcanic eruptions in insurance premiums have occurred three times in the last 30 years – in the mid 1970s, again in the mid-1980s, and now today. In the mid-1980s, news reports reminiscent of today included: “Doctors are threatening to quit practicing some specialties or move out of the state while South Florida hospitals and trauma centers have threatened to shut down or have curtailed services,” (St. Petersburg Times), May 7, 1987; “Doctors and hospitals in [West Virginia] have been saying for weeks that they would have to close their doors at the end of this month when three major insurance companies planned to cancel malpractice insurance coverage” (Washington Post, May 24, 1986) In the 1980s, lawmakers in some 46 states passed “tort reforms” after being told by insurance companies and others that this was the only way to reduce high insurance rates. Evidently, it didn’t work.

QUESTION: How can restrictions on U.S. jury awards in medical malpractice cases solve an insurance crisis that affects many other lines of insurance, including homeowners’, auto and health policies, and even insurance in other countries?

QUESTION: In the mid-1970s and mid-1980s, lawmakers around the country enacted extensive “tort reforms” after being told by insurance companies and others that this was the only way to reduce skyrocketing insurance rates. If this were the solution, why are we faced with an identical insurance crisis today?

Source: Center for Justice & Democracy, “A Short Guide to Understanding Today’s Medical Malpractice Insurance ‘Crisis'” September 25, 2002. For more information, please visit

Myths About Litigation, Defensive Medicine and Costs

Medical malpractice litigation in this country is far from frivolous. In a major study released in 1999, the National Academy of Sciences Institute of Medicine found that up to 98,000 people are killed each year by medical errors in hospitals -far more than die from car accidents, breast cancer or AIDS. (These figures vastly underestimate the magnitude of the problem since hospital patients represent only a small percentage of the total population at risk). Yet eight times as many patients are injured by medical malpractice as ever file a claim; 16 times as many suffer injuries as receive any compensation. Moreover, according to the National Center for State Courts, there has been no change in the volume of medical malpractice cases in the last five years.

Medical malpractice costs make up only a tiny fraction of total health care costs. According to a study by the Consumer Federation of America, medical malpractice costs, as a percentage of health care costs, are at an all time low, 0.55 percent. Report author J. Robert Hunter, former Texas Insurance Commissioner and Federal Insurance Administrator, said, “Medical malpractice insurance is amazing value, considering that it covers all medical injuries for about one-half of one percent of health system costs!” Memo from Joanne Doroshow to Interested Persons with attached spreadsheet prepared by J. Robert Hunter, Director of Insurance, Consumer Federation of America, November 14, 2001.

Far more costly than malpractice lawsuits are the costs of medical errors. Total national costs (lost income, lost household production, disability and health care costs) of negligence in hospitals are already estimated to be between $17 billion and $29 billion each year, of which health care costs represent over one-half. Moreover, these figures vastly underestimate the magnitude of the problem since hospital patients represent only a small percentage of the total population at risk, and direct hospital costs are only a fraction of the total costs. Kohn, Corrigan, Donaldson, Eds., To Err is Human; Building a Safer Health System, Institute of Medicine, National Academy Press: Washington, DC (1999).

Defensive Medicine. At most, a very small portion of health care costs result from” defensive medicine.” In 1994, the Office of Technology Assessment (OTA) was asked initially by proponents of sweeping malpractice tort restrictions to study the issue. OTA found, among other things, that only “a relatively small proportion of all diagnostic procedures – certainly less than 8 percent – is likely to be caused primarily by conscious concern about malpractice liability risk.” OTA found that “Most physicians who order “aggressive diagnostic procedures … do so primarily because they believe such procedures are medically indicated, not primarily because of concerns about liability.” The effects of traditional tort reforms – particularly caps on damages and amendments to the collateral source rule – on defensive medicine “are likely to be small.”

In 1995, Dr. Wayne Cohen, who was then medical director of Bronx Municipal Hospital, said, “The city was spending so much money defending obstetrics suits, they just made a decision that it would be cheaper to hire people who knew what they were doing.” Dean Baquet and Jane Fritsch, “New York’s Public Hospitals Fail, and Babies Are the Victims,” New York Times, March 5, 1995.

QUESTION: If the cost of medical errors is far greater than the costs of medical malpractice lawsuits brought by the small number of injured patients who actually file cases, how can reducing the number of lawsuits – lessening the financial incentives for hospitals and HMOs to operate safely – lower the system’s costs?

Source: Center for Justice & Democracy, “A Short Guide to Understanding Today’s Medical Malpractice Insurance ‘Crisis'” September 25, 2002. For more information, please visit

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Does Car Sharing Reduce Your Driving?

A spirited debate broke out a few weeks back on the Car-free Living listserv run by Livable City about the merits of car sharing. Does it reduce driving and car ownership or increase the impetus to drive among the car-free? One poster who didn’t own his own car called car-sharing a gateway drug that encouraged him to increase the number of times he uses a vehicle for all manner of trips, while others argued that VMT is reduced when fewer people own their own cars and share more.

Electric Car Information

Back in 2008, global crude oil prices reached its historical peak. The event has created a lot of havoc on the world transportation system. Since gasoline is directly derived from crude oil, gas prices also shot through the roof during that period. Many car owners were finding it difficult to make end meets. Some has no other choice but to abandon their car at home and use the public transportation. How can we shield ourselves from future energy cost increase? One solution is to utilize renewable energy such as electricity to power our vehicle.

Man admits reckless driving in fatal accident

A Royersford man has admitted that he acted recklessly or negligently in connection with a March 2008 car wreck that killed a 16-year-old girl who was a passenger in his car.

Patrick John Sullivan, 20, of the 200 block of Union Street, pleaded guilty in Montgomery County Court to a misdemeanor charge of involuntary manslaughter in connection with the 8 p.m. March 10 one-vehicle crash that claimed the life of Ashley Bouher, a sophomore at Perkiomen Valley High School.

“When he first began driving the car he floored the accelerator, taking off in a jack-rabbit start, which is unsafe in any location, but even more so in the particular surroundings he was in,” alleged Assistant District Attorney Bradford Richman. “He continued to drive at an excessive speed until, as a result, his car made contact with a storage trailer on the side of the road.”

Sullivan, who purchased the car earlier in the day, was traveling approximately 35 miles over the 25 mph posted speed limit, authorities alleged. Prosecutors alleged Sullivan lost control of the car and that it was his inability to maneuver the car at the high speed that caused the car to crash into the storage trailer.

The roadway at the site of the crash was plagued with potholes, investigators said. The area also was home to railroad tracks and the parked storage trailers.

There was no evidence that Sullivan was under the influence of drugs or alcohol at the time of the crash, according to the investigation.

Man charged in drunk-driving crash

A city man was arrested and charged with drunken driving after his car sideswiped another at Saratoga and Fern streets early Sunday morning, police said.

Advice on driving in snow and ice

• Keep an eye on the local and national weather forecasts before heading out on the roads

• Allow extra time before and during your journey

• Beware of black ice, taking extra care in shaded areas

• Use major roads for journeys rather than smaller, quieter roads

• Keep warm clothes or a blanket in the car

• Ensure tyres are in good condition and have adequate (and legal) tread depth (1.6mm) to ensure maximum traction on wet or slippery roads

• Once caught in deep snow, do not rev or ‘gun’ the engine, as this will cause the wheels to dig deeper into the snow. Instead, put the car into as high a gear as possible and slowly manoeuvre the car lightly forwards and backwards to gently creep out of the snow

• If you are stuck fast in snow, stay in the car, unless help is visible within 100 yards

• Keep moving to maintain body circulation, but avoid over-exertion as cold weather puts added strain on the heart. Shovelling snow or pushing a car in deep snow should be avoided

Dan Robinson, Head of Green Flag comments, “During this snap of extreme weather, we’d advise motorists to avoid any travelling that isn’t essential.

Driving in icy and snowy conditions is hazardous and is never easy. In these sorts of conditions it is really important to take your time on the roads, keep your distance from the car in front, avoid rushing and give more warning than usual to other drivers when turning, stopping or changing lanes even if the roads are gritted.”

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