Center for America

Speaker's Resource: 4. Healthcare Crisis, p 3



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Key Reference Citations (KRC)


Unnecessary Procedures

  • “Physicians who continue practicing have adjusted their behavior to minimize risk.  Nearly 80% of doctors say they order unnecessary tests and 74% say they make unnecessary referrals to specialists. The price tag: an estimated $60 billion to $108 billion a year in unnecessary health-care costs.”  (KRC: Manhattan Institute, Trial Lawyers, Inc., p. 13 citing HHS Report, "Confronting ...")

  • In a survey of medical professionals, physicians reported that because of liability concerns:

    • 79 percent have ordered more tests than are medically necessary;

    • 74 percent have referred patients to specialists more often than they believed was medically necessary;

    • 51 percent have recommended invasive procedures such as biopsies to confirm diagnosis more often than they believed was medically necessary; and,

    • 41 percent reported prescribing more medications than they would have ordered based only on their professional judgment.   (KRC:  HHS Report, "Confronting ...", pgs. 4-5)

  • In a survey conducted by independent researchers of 824 Pennsylvania doctors with high liability specialties to determine whether concerns about the cost and availability of liability insurance influenced how they practice medicine, more than 92% reported that they engage in defensive medicine, which may include the avoidance of certain procedures and patients, referring patients to doctors for additional consultations, or ordering unnecessary tests or procedures.  (Journal of American Medicine, Vol. 293, No. 21, June 1, 2005)

  • Limits on medical-malpractice damages lessen liability pressures on physicians and lead to reduced medical expenditures.  This is supported by a report by Daniel Kessler and Mark McClellan, which found that direct malpractice reforms limiting awards reduce “defensive medicine” procedures.  Kessler and McClellen found that these reforms led to a reduction of 5 to 9 percent in medical expenditures without significant effects on mortality or medical complications.  Limits on damage awards are the most direct way to reduce medical-malpractice awards.  (Daniel P. Kessler and Mark McClellan, “Do Doctors Practice Defensive Medicine?” Quarterly Journal of Economics III, no. 2 (1996), pp. 353-390) 

  • Such limitations ultimately reduce medical-malpractice litigation by eliminating old cases, thus lowering legal costs for physicians.  David Studdert et al. also found that such limitations cut medical costs.  The researchers found that among Pennsylvania physicians, the practice of “defensive medicine” was highly prevalent among doctors who paid the most for liability insurance.  Nearly all the doctors they asked admitted to avoiding certain procedures and patients perceived to have higher litigation rates in order to reduce their insurance costs.  By restricting eligible cases, limitations reduce legal and insurance expenses and reduce the need for costly defensive medicine.  (David M. Studdert, Michelle M. Mello, William M. Sage, Catherine M. DesRoches, Jordon Peugh, Kinga Zapert, and Troyen A. Brennan, “Defensive Medicine among High-Risk Specialist Physicians in a Volatile Malpractice Environment,” Journal of the American Medical Association 293, no.21 (2005), pp. 2609-2617)


Quality of Care

  • “Excessive litigation is impeding efforts to improve quality of care. Hospitals and doctors are reluctant to report problems and participate in joint efforts to improve care because they fear being dragged into lawsuits, even if they did nothing wrong”.  (KRC:  HHS Report, "Confronting ...", p. 1)

  • “Physicians’ understandable fear of unwarranted litigation threatens patient safety in another way. It impedes efforts of physicians and researchers to improve the quality of care. As medical care becomes increasingly complex, there are many opportunities for improving the quality and safety of medical care, and reducing its costs, through better medical practices. According to some experts, these quality improvement opportunities hold the promise of not only significant improvements in patient health outcomes, but also reductions in medical costs of as much as 30%”.  (KRC:  HHS Report, "Confronting ...", p. 5)

  • “According to many experts, the “#1 barrier” to more effective quality improvement systems in health care organizations is fear of creating new avenues of liability by conducting earnest analyses of how health care can be improved. Without protection, quality discussions to improve health care provide fodder for litigants to find ways to assert that the status quo is deficient. Doctors are busy, and they face many pressures. They will be reluctant to engage in health care improvement efforts if they think that reports they make and recommendations they make will be thrown back at them or others in litigation. Quality improvement efforts must be protected if we are to obtain the full benefit of doctors’ experience in improving the quality of health care”.  (KRC:  HHS Report, "Confronting ...", p. 6)

  • According to Carlos Muhletaler, executive director of Florida Stop Lawsuit Abuse, “Due to the high liability surrounding childbirth, many physicians have opted to practice gynecology exclusively and walk away from obstetrics,” and fewer medical students are considering obstetrics as a career. OB-GYNs pay $300,000 on average for medical malpractice insurance in Florida, while internal medicine practitioners pay about $70,000.50  (Carlos Muhletaler, Opinion, High Liability Rates Forcing OB-GYNS to Leave Florida, Palm Beach Post, May 10, 2008, at 11A, at 2008 WLNR 8865169)

  • The regulation of attorney fees in medical-malpractice lawsuits increases the supply of physicians in regulated states.  This is the conclusion of Daniel P. Kessler et al., who found that the adoption of tort reforms including attorney-fee limits increased the supply of physicians by 3.3 percent after three years, controlling for other factors.  (Daniel P. Kessler, William M. Sage, and David J. Becker, “Impact of Malpractice Reforms on the Supply of Physician Services,” Journal of the American Medical Association 293, no. 21 (2005), pp. 2618-2625)

Pharmaceutical Companies

  • In fact, of the 18 mass torts certified in New Jersey courts, 16 of them are pharmaceutical-based torts, and a recent study of those mass claims found that 93 percent of them have been filed by plaintiffs who live in other states.  Pharmaceutical companies should be prepared for high awards.  In fact, Atlantic County has attracted litigants from as far away as England and Wales seeking such favorable outcomes.  (Kate Coscarelli, Tort: Law and Reorder; The Debate on Tort Reform Has Reached New Jersey’s Courtrooms, Star-Ledger, Sept. 5, 2008, at 37)

  • This year an appellate court voided $9 million of a $15.7 million award out of Atlantic County against Merck & Co. in which it was alleged that the company failed to warn of Vioxx’s cardiac risks. The appellate court struck the entire punitive damages portion of the award, finding that New Jersey law did not permit courts to punish defendants for pharmaceutical products preapproved by the Food & Drug Administration.  (McDarby V. Merck & Co., 949 A.2d 223 (N.J. Super. Ct., App. Div. 2008))

  • In another rebuke to the Rio Grande Valley’s trial courts, a Texas mid-level appellate court ordered a new trial in a Vioxx case heard in Starr County where the plaintiff had won a $32 million verdict.  The appellate court found that a juror had been receiving interest free loans from the plaintiff totaling $12,700, and had made repeated phone calls to the plaintiff in the days following his jury summons and leading up to the trial.  (Merck & Co., Inc. v. Garza, No. 04-07-00234-CV, 2008 WL 5169577 at *1 (Tex. Ct. App. May14, 2008), Mary Robbins, Texas Appeals Court Does About-Face in Vioxx Case, Texas Lawyer, Dec. 12, 2008)

  • While some state high courts succeeded in extending liability (see Dishonorable Mentions, p. 26), Maryland’s Court of Appeals held the line, recognizing that pharmaceutical manufacturers may owe a responsibility for adverse reactions to those who take their medications but owe no such a responsibility to those who haven’t taken those medications.  The court’s decision provides an example for other courts addressing the outer limits of products liability.  (Gourdine v. Crews, 955 A2d 769 (Md. 2008))

  • Caps on non-economic damages lower insurance costs and reduce filing rates.  This is confirmed by a report by W. Kip Viscusi and Patricia H. Born that found that caps on non-economic damages reduce insurance losses, especially where a state had previously encountered relatively high losses.  (W. Kip Viscusi and Patricia Born, “Damage Caps, Insurability, and the Performance of Medical Malpractice Insurance,” Journal of Risk & Insurance, Vol. 72, No. 1 (2005), pp. 22-43)

  • Caps on punitive damages reduce excessive awards, thus lowering insurance rates and looses passed on to businesses.  This is demonstrated in a report by Albert Yoon, who found that such caps reduced the average medical-malpractice recover by $20,000 in Alabama.  (Albert Yoon, “Damage Caps and Civil Litigation: An Empirical Study of Medical Malpractice in the South,” American Law and Economics Review, Vol. 3, No. 2 (2001), pp. 199-227)

  • Limits on medical-malpractice damages lessen liability pressures on physicians and lead to reduced medical expenditures.  This is supported by a report by Daniel Kessler and Mark McClellan, who found that direct malpractice reforms limiting the amount of awards reduce reliance on “defensive medicine” procedures such as ordering unnecessary test or referrals.  (Daniel Kessler and Mark McClellan, “Do Doctors Practice Defensive Medicine?” Quarterly Journal of Economics, Vol. III, No. 2 (1996), pp. 353-390)

  • Damage caps also lower premiums for medical-malpractice insurance.  Meredith L. Kilgore, Michael a. Morrisey, and Leonard J. Nelson looked at the effect of new state damage caps on physician malpractice-insurance premiums from 1991 through 2004.  The researchers found that a new damage cap reduced malpractice premiums for internal medicine, general surgery, and obstetrics/gynecology by 17.3 percent, 20.7 percent, and 25.5 percent, respectively.  Lowering damage caps by $100,000 reduced premiums by 4 percent.  (Meredith L. Kilgore, Michael A. Morrisey, and Leonard J. Nelson, “Tort Law and Medical Malpractice Insurance Premiums,” Inquiry, Vol. 43, No. 3 (Fall 2006), pp. 255-270)



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