Liability Labs
Hospitals & Health Networks
May 2010 Issue

By 2005, Montgomery County outside of Philadelphia had reached a malpractice stalemate of sorts, with none of the parties involved particularly satisfied.
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To date, one common step by state legislators has been to institute a ceiling on malpractice damages, most commonly those that are considered noneconomic, such as pain and suffering. Lost wages and medical bills typically fall under economic damages. At least two-thirds of states have approved some type of limit, most frequently from $250,000 to $500,000, according to an analysis last fall by the National Conference of State Legislatures

Advocates for malpractice caps argue that they will limit outsized verdicts and hikes in malpractice premiums, a point that's hotly debated by some. A report released last summer by the Americans for Insurance Reform, a coalition of consumer groups, found that spikes in physician malpractice premiums weren't tied to claims, but to the economic cycle of insurers, including investment income. A 2004 Congressional Budget Office report makes a similar point, although it also cites the increasing size of malpractice awards. In regard to total health care spending, malpractice costs account for less than 2 percent, the report found.

Protections, including appeals and a judge's intervention, are already built into the system to guard against outrageous verdicts, says Bob Hunter, director of insurance for the Consumer Federation of America. Hunter is not a fan of caps of any kind. "What happens if you knock a school bus off a cliff with kids inside?" he asks. "You can always devise a hypothetical that would make a cap look outrageous."
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For a copy of the complete article, contact AIR.