Bloated insurance coffers, not malpractice suits, are the problem


Like many of the issues batted around in Tennessee’s General Assembly, it is all about money —and who gets the edge in pocketing the most. Two professions with high ideals — healing and justice — are right in there in the mix with loan sharks, liquor dealers and used-car sellers.

The annual battle between trial lawyers on one side and physicians, hospitals and insurance companies on the other is now under way. Lawyers say it’s about medical malpractice. Health-care professionals say it’s tort reform. (A tort is a wrong inflicted on someone).

Doctors claim greedy trial lawyers and their clients are flooding the courts with frivolous litigation, sending insurance premiums skyrocketing and forcing physicians out of practice or out of state. They use terms such as “crisis,” “jackpot” and “lottery” for malpractice awards.

Lawyers respond that lawsuits are the only way for grievously injured ordinary
citizens to be compensated for careless or incompetent medical care that can ruin a

Both sides pour tens of thousands of dollars into legislative campaigns, and, yes, it is partisan. While there are some exceptions, Republicans — who now control the
Senate — are on the doctors’ side; Democrats — who still control the House — side with the lawyers.

It’s easy to shrug off the complexities of a doctor-lawyer, Democrat-Republican shouting match. But something fundamental is at stake: citizen access to the courts, one of the oldest of democratic principles.

For years, the centerpiece of tort reform — both in Tennessee and nationally — has been a cap on punitive damages. Those are the legal awards on top of actual damages, such as medicine and hospital bills, doled out as punishment for reckless behavior. In Tennessee, the suggested cap has been $250,000.

The problem is that no one is sure that caps will solve the problem and reduce insurance premiums and lawsuits.

Or, in fact, that a problem exists in the first place.

Three years ago, the legislature instructed state officials to start keeping track of the relevant statistics.

During 2004, there were 2,360 medical malpractice lawsuits in Tennessee. There were only six that resulted in final court verdicts, for $6.7 million in damages, and 444 claims were settled out of court.

In 2005, there were only five final judgments totaling $6 million. Of 2,366 lawsuits filed, 83 percent resulted in no payment of damages.

Tennessee doesn’t really regulate insurance companies. The emerging figures suggest maybe it should.

The largest medical malpractice insurance company in Tennessee is owned by doctors and covers about 11,000 of the 14,000 practicing physicians in the state. It has been so successful it has branched out to six other states.

During 2004, insurance companies collected $327 million in premiums and paid out $116 million in claims and expenses in the state. Company reserves stood at $730 million.

In 2005, companies collected $341 million in premiums and paid out $186 million. Reserves increased to $822 million.

In other words, insurance companies are collecting tens of millions more in premiums than they pay out in the “jackpot justice” system, enabling them to fatten reserves by more than $100 million a year, even after hefty salaries for executives and defense lawyers. Those numbers are hard to come by, along with the dividends the physician-owned insurance company returns to its members.

Clearly, there is a lot of money in the system, but it isn’t being doled out from the jury box. Doctors may well be paying high premiums, but they need to look at their insurance company for explanations.

Sponsors of the tort reform legislation seem to be on the verge of dumping the idea of a cap on malpractice awards. Instead, they are working toward a compromise that would penalize lawyers who file frivolous lawsuits. Someone also needs to look at frivolous insurance premiums as part of any agreement.
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