A Reputation Built By Success

Insurance Journal – Do Big Medical Malpractice Awards Really Increase Medical Costs?


A jury in one of New York’s most conservative counties recently returned a $130 million verdict in a medical malpractice case, the second-largest in the state’s history. Lawyers for the losing hospital decried a “jury out of control” and called for more tort reform. Before the case went to trial, their offer of an $8 million settlement was turned down.

What the defense lawyers seemed not to realize is that tort reform hasn’t worked for 25 years. And large verdicts may be the most effective drivers in making health care safer.

The case, Reilly v. St. Charles Hospital, centered on the birth of Shannon Reilly in 2002. The jury determined that the Long Island hospital and the obstetric nurse had failed to properly monitor the pregnant mother and her fetus, missed important signs that the baby was in distress, and then failed to take corrective action. When interviewed, jury members said that they agreed with plaintiff’s attorney Thomas Moore that the child – who was born with severe brain injury and has a form of cerebral palsy – is a “prisoner in her own body” and that the medical errors were avoidable.

New York doesn’t have a cap on pain-and-suffering awards, as 29 other states do. The state does limit fees for winning lawyers at 10 percent of awards more than $1.25 million. Half of all states also have shorter statutes of limitations for medical malpractice than for property damage.

Tort reformers’ goals in working for such laws may have been laudable. Who could be against keeping frivolous cases out of court, controlling health-care costs and reducing doctors’ malpractice-insurance premiums? In reality, though, their legislative successes have made things worse.


For example, shortening the statute of limitations – the amount of time injured parties have to bring a case – has resulted in more doctors being sued, not fewer. In New York, injured parties have just 2 1/2 years from the time of the medical procedure to bring an action.

To stop the clock and preserve their rights, plaintiffs file suits that name every doctor who could conceivably be liable in the case. After investigation, many of the defendants are often dropped. But in the meantime, the named doctors suffer the indignity and anxiety of being sued.

Tort reformers blame the prospect of malpractice suits for the proliferation of “defensive medicine” and thus higher health-care costs in general. Doctors, they argue, prescribe costly tests that patients don’t need in order to protect themselves against suits. However, extensive research – including some done by the Robert Wood Johnson Foundation, the Congressional Budget Office and the Government Accountability Office – has shown that tort reform has had no influence on health-care costs. Doctors practice defensive medicine simply because it generates extra income.

The effect that lawsuits have had on doctors’ malpractice insurance rates has also been negligible. Insurance premiums have still increased in states with extensive tort-reform measures, researchers at the Robert Wood Johnson Foundation concluded after reviewing 11 major studies. Rates in those states rates have gone up 6 percent – compared with 13 percent in non-tort-reform states.

One medical specialty, however, has experienced huge reductions in malpractice-insurance premiums: anesthesiology. These savings have nothing to do with tort reform. Instead, they have resulted from anesthesiologists getting fed up with being sued and losing huge cases.


In the 1970s and ’80s, anesthesiologists were paying some of the highest malpractice premiums in medicine. Problems were frequent, serious and directly attributable to anesthesia. It was estimated that 1 in 6,000 administrations of anesthesia resulted in death. Serious brain injuries were even more frequent.

In 1982, after a spate of bad publicity triggered by large malpractice verdicts – several won by Moore – the American Society of Anesthesiologists conducted a comprehensive assessment of what had been injuring patients. They then revamped their procedures, established mandatory monitoring, improved training, limited the number of hours anesthesiologists could work without rest, redesigned machines and outfitted others with safety devices.

Within 10 years, the mortality rate from anesthesia dropped to 1 in 200,000 administrations. And anesthesiologists’ malpractice insurance rates fell to among the lowest of any specialty.

Unfortunately, other medical specialties – in particular, obstetrics and gynecology – have resisted taking similar steps. Some individual hospitals, however, have instituted sweeping reforms to make obstetrics safer. After a seven-year effort at NewYork-Presbyterian Hospital, so-called sentinel events – unforeseen problems that cause death or serious injury to patients – dropped to zero in 2008 and 2009 from 1.04 per 1,000 deliveries in 2000. And malpractice awards fell to $250,000 annually from $50 million.

Patient safety is a very serious concern in the U.S. Every year, hospitals see 100,000 to 1 million avoidable deaths – and a far greater number of serious injuries. How many more $130 million verdicts will it take before all specialties take action?