The myths of tort reform

Tort reform does little to prevent the increase of health care costs

With regularity, especially during election years, politicians may bring up the topic of tort reform. The asserted problem is that the American judicial system is supposed to be awash with "frivolous" medical malpractice cases, which burden the courts, cause doctors to stop practicing medicine and lead to rising medical costs due the increased insurance premiums.

The sad irony is that there is practically no evidence of any of these things actually occurring and much of the empirical evidence suggests just the opposite. However, these arguments have been successfully marketed by doctors, the medical-healthcare industry, their insurance providers and their very well-paid political lobbyists.

In most states, "tort reform" comes down to the legislature capping non-economic damages in medical malpractice cases. New Mexico has such a damage cap, enacted in 1992. Has this damage cap reduced the cost of healthcare in New Mexico? The honest answer is that it would be almost impossible to know.

While in some states, insurance premiums paid by doctors may be slightly reduced for a short time, the cost of health care to most patients remains unaffected, as there are many more volatile forces at work that far overshadow the cost of these premiums.

For instance, a report from 2011 presented to the New Mexico legislature on the prospect of raising the damage cap to better account for inflation found that the average premium for doctors would increase by $604 per year. It concluded that this would not have any effect on the number of doctors within the state or their practicing an increased amount of "defensive medicine."

Given that the average physician in New Mexico earns about $240,000 in 2015, it is easy to understand why that a change of a few hundred dollars has little real effect on the operation of their medical practice.

The occasional large verdict in a medical malpractice case often attracts a great deal of media coverage, but it is only because they are so rare that the merit this attention. The reality is that medical malpractice cases make up a very small percentage of civil lawsuits.

To understand how small a percentage that is, a recent study analyzing the makeup of civil cases is helpful. The study examined cases from a select set of state courts in 2012 and 2013, with 152 courts generating 925,355 cases.

Out of that number, only 357 cases had damage awards that exceeded $500,000, and only 0.1 percent (165) had verdicts greater than $1,000,000. And these cases include commercial law matters that are not medical malpractice cases. A prior report from 1992 noted that only 7 percent of all civil cases filed in state courts at that time were tort cases.

Medical malpractice cases are rare because they are complex, expensive and time-consuming. There are very few "frivolous" cases because the expense of bringing such cases would quickly put an attorney or law firm out of business.