Hedge Funds Financing Medical Malpractice Claims

side note: This is an interesting article that illuminates a new trend relatively few in the healthcare community are familiar with. There’s a trend in some states where hedge funds will finance medical malpractice lawsuits in exchange for a percentage of any judgment. The fund will review a case, and if it believes the lawsuit has merit, will provide the money necessary to finance the action to the plaintiffs attorneys. The article notes that when a similar system was initiated in Australia, the volume of litigation rose by 16.5 percent! What kind of effect would a similar spike in malpractice claims do to our nation’s medical malpractice insurance premiums?

Is this a system we want in the United States? Or should we lobby Congress to nip the trend in the bud?

Investors are always looking to earn an easy profit, particularly from well-managed companies. But when the profit is from a hedge fund that finances medical malpractice lawsuits aimed at driving doctors out of the profession, Wall Street may have gone too far.

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