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13 March 2015

Tort Reform: Is It Effective In The Healthcare Industry?

When it comes to medical malpractice litigation, the topic of tort reform is one of much controversy and debate. Those in favor of tort reform argue that it will lower costs in the healthcare industry, ultimately benefiting both doctors and patients. However, those against tort reform argue that it will have little to no economic impact on healthcare costs, and will only result in a reduction of safety and protection for patients.

In this post, we will look at both sides of this debate and discuss the results of recent research into the effectiveness of tort reform with regard to medical malpractice litigation.

The Basics of Tort Litigation

Before diving into the topic of tort reform, it is important to understand the basics of tort litigation. A “tort” as defined in common law, is a civil wrong committed by one party (whether intentional or unintentional) which causes another party to suffer physical, emotional or financial damages.

In tort litigation, the party damaged by the tort can often sue the party who committed the tortious act in a personal injury or medical malpractice lawsuit. In a tort case, the plaintiff may be able to recover compensation from the defendant for any pain, suffering, medical bills or other damages incurred as a result of the tort.

What Is Tort Reform?

Tort reform then, is a term that refers to the proposal and implementation of changes in the common law surrounding tort litigation. Specifically, tort reform aims to reduce the amount of frivolous lawsuits by limiting the ability to file claims and limiting the amount of compensation a victim of injury can receive. While the general concept of tort reform has been heavily debated for decades, its application to medical malpractice litigation has been especially controversial in recent years.

The Main Arguments For Tort Reform

One of the objectives of tort reform, as it relates to medical malpractice litigation, is to lower costs in the healthcare industry. The following are a few of the main reasons that proponents of tort reform give for their position:

Expensive Awards & Compensation Lead to Higher Insurance Premiums

Many advocates of tort reform argue that medical malpractice litigation is largely responsible for the high costs in the healthcare industry. More specifically, they argue that high costs in the healthcare industry are due to excessive compensation awarded to victims of serious injuries or damages caused by medical malpractice. In turn, the theory proposes that the legal fees and compensation associated with medical malpractice litigation contribute to high insurance premiums for doctors and health care facilities.

Defensive Medicine Is Costly

In addition to litigation costs, the argument for tort reform suggests that doctors now practice what is referred to as “defensive medicine” to avoid medical malpractice lawsuits. In other words, doctors prescribe unnecessary and often costly tests or procedures in an effort to avoid being sued. It is argued that the risk of being sued results in healthcare providers acting overly cautious by administering these procedures which have little benefit to patients, but end up costing lots of money.

Loss of Quality Doctors

Additionally, a common argument for tort reform is that quality doctors will leave the states in which little or no reform has been implemented, or will leave the industry altogether as a result of excessive medical malpractice lawsuits. By doing so, many argue that patients throughout the US would suffer a decline in the quality of health care that they receive.

Proposed Benefits of Tort Reform

The solution, according to subscribers of tort reform, is to reduce the costs of medical malpractice litigation by limiting or capping med mal compensation, reducing or implementing statute of limitations on lawsuits and restricting eligibility for bringing a case.

Research & Data Shows Tort Reform Is Ineffective

While many of the arguments for tort litigation may be logical in theory, research has found that they are without merit. In fact, recent research into the effectiveness of tort reform has shown that none of the major claims mentioned above are true.

Defensive Medicine Has Been Disproved

A study recently published in the New England Journal of Medicine disproved the theory of defensive medicine due to legal risks. Specifically, the study (conducted by doctors and health experts) looked at three states which had implemented certain tort reform measures designed to protect doctors from medical malpractice lawsuits. After analyzing the data, it was found that there was no reduction in the amount of tests or procedures prescribed by doctors in the states where tort reform measures attempted to do so.

Breaking Down The Insurance Premiums Argument

While many argue that rising insurance premiums for medical malpractice coverage have significantly contributed to rising health care costs, research and data say otherwise. In fact, a report entitled “The Fallacies of Medical Malpractice Tort Reform”, points out that from 1995 to 2011, insurance premium rates for medical malpractice coverage increased less than the consumer price index and medical care inflation rate over the same time period.

Doctors Are Not Leaving The State

In New York, many believe that doctors are leaving the State to avoid high insurance premiums for medical malpractice coverage and to also avoid being sued for medical errors, however this is a myth. In fact, data shows that the amount of physicians in the State of New York has been steadily increasing for well over a decade. Additionally, the ratio between physicians and population increased by 7% between 2000 and 2010.

The Negative Affects of Tort Reform

By implementing tort reform, many victims of medical malpractice are denied adequate compensation for the damages that they suffer from medical errors. Additionally, a capping of tort reform removes any incentive for doctors to practice safe health care. Put differently, if doctors are immune from being sued and medical malpractice claims are capped at a certain dollar amount, there is no incentive for the practice of safe treatment.

What Is The Solution?

The rising cost of health care in the U.S. is a serious issue today. However, the idea that tort reform is the solution to rising health care costs is groundless and has been proved to be false through data-backed research. In fact, according to the Congressional Budget Office (CBO), costs associated with medical malpractice litigation account for less than 2% of total spending in the healthcare industry!

We need to take a step back and consider the fact that medical error may be the problem in the first place. With safer practices, patients would receive better care and much litigation could be avoided.