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More Facts About Tort Reform

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With a new wave of tort reform initiatives sweeping the country this year, I keep hearing about “Texas size” reforms. Of course, Texas is suppose to be the model for tort reform, however, it has done nothing more than abrogate the rights of injured persons. Here is an article I found that further illustrates that neither claims nor jury verdicts account for spike in malpractice insurance. The following is the link to the article as it is below: Tort Reform

March 10, 2005
AUSTIN, Texas – Recent spikes in medical malpractice premiums in Texas were not caused by rising payouts on claims or rising jury verdicts, according to a study released today (March 10) by the Center on Lawyers, Civil Justice and the Media at The University of Texas at Austin School of Law.

The study, “Stability, Not Crisis: Medical Malpractice Claim Outcomes in Texas, 1988-2002,” was authored by Professors Bernard S. Black (The University of Texas at Austin), Charles Silver (The University of Texas at Austin), David A. Hyman (The University of Illinois) and William M. Sage (Columbia University).

Using a unique, comprehensive dataset maintained by the Texas Department of Insurance that includes all insured closed medical malpractice claims for 1988-2002, the authors found that, adjusted for general inflation and population, the number of large paid claims (more than $25,000 in 1988 dollars), payout per large claim, total payout per year on all large paid claims, and jury verdicts all showed no time trend. Only defense costs per large paid claim rose significantly, by 4.4 percent per year, adjusted for inflation, leading to a 1 percent per year increase in the total cost to insurers (payout plus defense cost) per large paid claim. Their findings, with these adjustments, are as follows.

  • The number of large paid claims (less than $25,000 in 1988 dollars) per year was roughly constant.
  • The number of small paid claims (higher than $25,000 in 1988 dollars) declined sharply.
  • Mean and median payout per large paid claim was roughly constant over time
  • Mean and median payouts per large paid claim in 2002 were $528,000 and $200,000, respectively, in
    2002 dollars.
  • Roughly 6 percent of large paid claims involved payouts over $1 million in 1988 dollars, with little time
    trend in this percentage.
  • The number of paid claims per 100 practicing physicians per year declined from an average of 6.4 in
    1990-1992 to 4.6 in 2000-2002.
  • The total number of closed claim files averaged 25 per 100 practicing Texas physicians per year in
    2000-2002. Of these, about 80 percent involved no payout.
  • In 2002, payouts to patients were about $515 million (in 2002 dollars), while Texas health care
    pending was about $93 billion, so payouts on insured claims equaled 0.6 percent of health care
    spending.
  • In 2002, mean and median jury verdicts in trials won by patients were $889,951 and $300,593,
    respectively (in 2002 dollars) and showed no significant time trend.
  • The sum of payouts and defense cost rose by about 1 percent per year. Defense costs, which grew
    4.4 percent annually, drove this increase.

Because litigation outcomes were reasonably stable, other forces must account for most of the steep medical malpractice insurance premium increases seen after 1998, most likely insurance market dynamics.