Written by attorney Paul D Friedman

Ethical Issues in Tort Reform and Medical Malpractice

Definition of Tort Reform:


A physician owes a fiduciary duty to the patient. This is the duty which is necessary to institute the legal duty which is the precursor to filing a legal claim against the medical provider.

Fiduciary The term is derived from the Roman law, and means (as a noun) a person holding the character of a trustee, or a character analogous to that of a trustee, in respect to the trust and confidence involved in it and the scrupulous good faith and candor which it requires. A person having duty, created by his undertaking, to act primarily for another’s benefit in matters connected with such undertaking. As an adjective it means of the nature of a trust; having the characteristics of a trust; analogous to a trust; relating to or founded upon a trust or confidence. [3]


Errors Medical errors are the basis for medical malpractice lawsuits:

Ø The Institute of Medicine reports that as many as 98,000 Americans die each year and another 1,000,000 are injured as a result of preventable medical errors that cost the nation an estimated $29 billion. In its study, the Institute of Medicine reports that some estimate that the 98,000 annual number likely underestimates the occurrence of preventable errors because: 1) it only considered hospital errors and not errors in other medical settings; 2) it only considered certain more serious injury cases; and 3) the study imposed a very high threshold to determine whether an error occurred. [5]

Ø Medication related errors in the hospital setting costs $2 billion annually. [6]

Ø Medical errors kill more people per year than AIDS, breast cancer or motor vehicle accidents. [7]

Ø Medical Malpractice is the third leading cause of death in the United States outranked only by heart disease and cancer. [8]

Ø 225,000 people are killed due to preventable mistakes in the following categories [9]:

§ 12,000 deaths per year from unnecessary surgery.

§ 7,000 deaths per year from medication errors in hospitals.

§ 20,000 deaths per year from errors in hospitals.

§ 80,000 deaths per year from hospital acquired infections.

§ 106,000 deaths per year from adverse effects of meds.

Lawsuits Statistics are as follows:

Ø The median payout for patients who received any money in a medical malpractice case is $125,000. [10]

Ø The median of all jury verdicts in the United States fell dramatically from 2000 to 2002 where it was $30,000. [11]

Ø Jury Awards for medical malpractice cases rose fractionally and essentially steadied from 2000 through 2002 where it was $1,010,858. [12]

Ø 5% of physicians are responsible for 54% of all malpractice. [13]

§ Only 17% of physicians who have paid out 5 or more claims have been disciplined by their state medical board.

Ø American businesses file four times as many lawsuits as individuals in the United States. [14]

Ø Health Care Providers were successful in dismissing or receiving a verdict 66% of the time before 2000 and 62% of the time after 2000. [15]

Ø Only .65% of physicians will be sued in any given year. [16]

Ø The number of actual medical malpractice lawsuits has not increased in the last decade. [17]

§ State civil lawsuits decreased by 1% from 1989 to 1998. [18]

§ State civil lawsuits decreased by 16% from 1996 to 1998. [19]

§ The rate of Federal lawsuits has not increased since 1790. [20]

§ The total number of malpractice claims decreased by 4% from 1995 through 2000. [21]

Ø Tort claims amount to only 5% of all civil lawsuits filed in the United States. [22]

Ø Only 1 out of 8 patients who have been the victim of medical malpractice sues. [23]

Ø Punitive Damages are awarded in less than 1% of all malpractice verdicts. [24]

Insurance Insurance Companies Play A Role In Rising Costs Of Malpractice As Follows:

Ø A Price War Led Insurers To Sell Malpractice Premiums At Inadequate Rates. [25]

§ St. Paul was one of the largest malpractice insurers in 2001 with a market share of 20%.

§ St. Paul set aside too much money in malpractice reserves and released $1.1 billion in the mid 1990s which appeared to the other carriers as large profits.

§ All carriers slashed prices in the mid 1990s to attract clients and underestimated the amount to cover claims.

§ This led to malpractice insurers which were underfunded and had no alternative but to go into receivership.

Ø The Stock Market Decline Led To Increased Malpractice Premiums. [26]

§ Throughout the 1990s, malpractice insurers were able to maintain high profitability due to high stock market gains.

§ When the market stalled in 2000, insurers were unable to cover inadequate premiums with high stock market gains.

Ø Reinsurers’ Rates Increased From Payouts Due To September 11, 2001. [27]

§ Lloyd’s of London paid $8 billion in claims.

§ Reinsurers raised premiums which increased malpractice rates.

Ø The Congressional Budget Office Determined That Lower Investments Played A Major Role In The Rise Of Malpractice Rates. [28]

Caps Capping Medical Malpractice Jury Awards Has Not Been Shown To Decrease Premiums According To Weiss Ratings, Inc. [29]

Ø In states with caps, the median payout between 1991 and 2002 was 15.7% lower than the median in states without caps, despite the fact that many states did not impose the caps until late in the 12 year period.

Ø Moreover, in states with caps, the payouts increased by 83.3% from 1991 to 2002, while the rate of increase in states without caps was 127.9%.

Ø In states with caps, the median annual premium went up by 48.2%, but, surprisingly, in states without caps, the median annual premium increased at a slower clip – by 35.9%.

Ø Among the states with caps, only 10.5% experienced flat or declining medical malpractice premiums. In contrast, among the states without caps, the record was actually better: 18.7% experienced flat or declining premiums.

MICRA These Are The Facts About California’s Malpractice Caps:

Ø Non-Economic damages are limited to $250,000 but the actual premium is 8% higher than the average of all states without caps. [30]

Ø Malpractice premiums rose 190% during the first 12 years of MICRA (1975-1987) until Proposition 103[Insurance Reform] helped lower and stabilize malpractice premium rates. [31]

§ Proposition 103 which was enacted in 1988 mandated a 20% rollback in malpractice premiums.

Ø 1997 Poll on MICRA revealed: [32]

§ 74% approved removing MICRA’s limit on non-economic damages in certain cases.

§ 66% believe MICRA caps should be eliminated for physicians who cause harm to children.

§ 58% believe MICRA caps should be eliminated for doctors who cause death to patients.

[3] Black’s Law Dictionary 5d (West 1979).

[4] U.S. Department of Health and Human Services Office of the Assistant

Secretary for Planning and Evaluation (July 25, 2002)

[5] Institute of Medicine, 2000; Thomas et al., 2000 Thomas, E.J., D.M. Studdert, H.R. Burstin, E.J. Orav, T. Zeena, E.J. Williams, K.M. Howard, P.C. Weiler, and T.A. Brennan. 2000. Incidence and Types of Adverse Events and Negligent Care in Utah and Colorado.[Comment]. Medical Care 38 (3):261-71.

[6] Institute of Medicine, 2000; Bates et al., 1997; Bates, D.W., N. Spell, D.J. Cullen, E. Burdick, N. Laird, L.A. Petersen, S.D. Small, B.J. Sweitzer, and L.L. Leape. 1997. The costs of adverse drug events in hospitalized patients. Adverse Drug Events Prevention Study Group. JAMA 277 (4):307-11.

[7] Institute of Medicine, 2000; Centers for Disease Control and Prevention; National Center for Health Statistics: Preliminary Data for 1998 & 1999 Centers for Disease Control and Prevention (National Center for Health Statistics). Births and Deaths: Preliminary Data for 1998. 1999. National Vital Statistics Reports. Washington, D.C.: Department of Health and Human Services.

[8] Starfield, B., “Is US Health Really the Best in the World?"; Journal of the American Medical Association, July 26, 2000; 284(4): 483-5.

[9] Starfield, B., “Is US Health Really the Best in the World?"; Journal of the

American Medical Association, July 26, 2000; 284(4): 483-5.

[10] National Practitioner Databank (2000).

[11] Jury Verdict Research® Current Award Trends in Personal Injury 43rd Edition, LRP


[12] Jury Verdict Research® Current Award Trends in Personal Injury 43rd Edition, LRP Publications.

[13] National Practitioner Databank (September 30, 2002).

[14] U.S. Businesses File Four Times More Lawsuits Than Private Citizens And Are Sanctioned Much More Often for Frivolous Suits, Public Citizen October 4, 2004.

[15] Jury Verdict Research® Current Award Trends in Personal Injury 43rd Edition, LRP Publications.

[16] Harvard Medical Practice Study (1990).

[17] “Doctors and insurers say malpractice awards must be capped. Their diagnosis

may be wrong", U.S. News & World Report, June 30, 2003.

[18] National Center For State Courts, Examining the Work of State Courts, 1998 (1999).

[19] Id.

[20] Frank J. Murray, 'Jackpot justice' gets best defense, Wash. Times, July 17, 2000,

at A1

[21] National Association of Insurance Commissioners

[22] National Center for State Courts, Examining the Work of State Courts, 1994


[23] “Patients, Doctors, and Lawyers: Medical Injury, Malpractice Litigation, and

Patient Compensation in New York" (Harvard University, 1990).

[24] United States Department of Justice-Bureau of Justice Statistics (1996).

[25] “Insurers’ Missteps Helped Provoke Malpractice Crisis", Wall Street Journal, June

24, 2002.

[26] Id.

[27] "Lloyd's Plans To Alter How It Finances Insurance," New York Times, July 19, 2002.

[28] “Limiting Tort Liability For Medical Malpractice", Congressional Budget Office

Report dated January 8, 2004.

[29] Testimony before the Florida Senate Workshop on Medical Malpractice in June


[30] Medical Liability Monitor (2001).

[31] Proposition 103 Enforcement Project Study (1995).

[32] Fairbank, Maslin, Maulin & Associates California Statewide Poll (1997).

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