Doctors found migrating to states with caps on damages

Studies debated whether rising liability premiums led to defensive medicine and lower physician supply or simply mirrored growth in overall health care costs.

By Mike Norbut — Posted June 20, 2005

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Physicians have gravitated more toward states that have caps on noneconomic damages in medical liability lawsuits than states that do not, say recently published studies.

The reports, in the June 1 issue of the Journal of the American Medical Association and online May 31 in Health Affairs, found that while states generally saw an increase in doctors over the past decades, those that enacted reforms that limit physician liability had a higher growth rate.

According to the JAMA study, states with direct reforms saw physician supply grow 2.4% more than in those without reforms. The Health Affairs study concluded that caps meant an additional five physicians per 100,000 people three years after reforms were enacted.

The studies show that tort reform is working to protect patients' access to care, especially among high-risk specialties such as obstetrics and neurosurgery, said AMA Immediate Past President Donald J. Palmisano, MD.

Patients "want a doctor in their hour of need," Dr. Palmisano said. "Attorneys are so protective of their contingency fees, but it's all about access to care."

According to the Health Affairs study, the lower the cap, the more it positively affected physician supply, especially among some specialties. Rural counties in states with a $250,000 cap reported 5.4% more ob-gyns and 5.5% more surgeons than rural regions in states without the same liability protection.

"Thus, a federal cap set at $250,000 for noneconomic damages could have a beneficial impact on the supply of surgeons and ob-gyns in rural areas," the study concluded.

William M. Sage, MD, a Columbia University Law School professor and a co-author of the JAMA study, said the recent collection of empirical evidence makes it easier to gauge the current liability system and the effects of tort reform. The evidence should signal an end to the political reaction stage, and the focus should now be on how to make the health care system better, he said.

"The malpractice system is a dismal failure," he said. "The system has failed doctors and patients."

Five studies on liability

The corroborating studies were two of five that were published in the last few weeks dealing with medical liability issues.

A second study in the June 1 issue of JAMA,co-authored by Dr. Sage, found that more than 90% of high-risk specialists surveyed in Pennsylvania practiced defensive medicine.

Another study, conducted by researchers at the University of Michigan Health System and published in the June issue of Obstetrics & Gynecology, said the supply of ob-gyns in the 10 states with the highest liability premiums lagged well behind the supply in the 10 states with the lowest premiums, adding to the fear that physicians are choosing their specialty and practice location based on their liability rates.

But a second Health Affairs study published online May 31 concluded that liability insurance premiums between 1991 and 2003 grew only 4% per year, a rate consistent with overall health care costs. Excessively high jury verdicts did not drive the increases, the authors said.

"We're not disputing the claim that premiums have exploded," said Amitabh Chandra, lead author of the study and an assistant professor of economics and community medicine at Dartmouth College and Dartmouth Medical School in Hanover, N.H. "Our point is, people say the primary mechanism driving the increases are juries out of control and jackpot awards. We didn't find that."

Dr. Palmisano criticized the study, especially the fact that it was based on data from the "inherently flawed" National Practitioner Data Bank, which he said includes incomplete and inaccurate information.

Instead, Dr. Palmisano pointed to a host of other studies, including a 2003 report by the then U.S. General Accounting Office, which pinpointed losses on claims as a main factor in increasing insurance premiums.

Saying excessive losses on claims is not a primary driver of premiums is "akin to saying we saw Elvis Presley yesterday," Dr. Palmisano said.

The threat of expensive verdicts, at least in states that do not have caps on noneconomic damages, forces doctors to practice defensive medicine, physician groups said. William W. Lander, MD, president of the Pennsylvania Medical Society, said doctors are compelled by the fear of a frivolous lawsuit to order extra and sometimes unnecessary tests, which naturally drives up the cost of health care. The JAMA study results are similar to a 2001 survey conducted by the medical society, which reported that 89% of physicians practice defensive medicine, Dr. Lander said.

"Now, independent groups have confirmed what doctors and patients have been saying for a long time," Dr. Lander said. "Patients are losing access to care due to a complex and broken liability system."

A representative of the Assn. of Trial Lawyers of America did not return calls for comment.

Physicians said the tort reform debate is often shaped by doctors' reactions to their environment, whether it's leaving a state because of high insurance premiums or ordering an extra test due to the fear of a frivolous lawsuit.

"A lot is a matter of a doctor's perception," Dr. Sage said. "Their perceptions are very powerful."

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