No cap, but no hike in payouts

Malpractice – Damage awards in Oregon remain lower than in all but seven other states, study finds


Payouts for medical malpractice claims remain lower in Oregon than in all but seven other states, despite the loss of a cap on damage awards in 1999.

The findings come from one of the first studies that attempts to gauge the effects of various malpractice reforms that states have adopted, mostly to cut costs. Researchers were surprised by how little difference the reforms made on the size and frequency of malpractice damage awards.

“The overall effect is not as large as you would expect,” said lead researcher Teresa Waters, an associate professor at the University of Tennessee Health Science Center. “With some of these types of laws, we were unable to see any effect.”

In Oregon, limits on malpractice damage awards have received the most attention in the malpractice debate. The state Supreme Court in 1999 revoked a cap on damages for non-economic losses, such as pain and suffering. Doctors and insurance companies spent $5.2 million in 2004 trying to reinstate a limit on medical malpractice awards with a ballot measure. Voters rejected it.

The study found that caps on non-economic damages may reduce malpractice costs and the frequency of claims against doctors. But the impact was much less than other types of reform.

In fact, according to the study, some states with caps on damages still had higher-than-average costs from claims. Conversely, some states, including Oregon, retained comparatively low payout rates even without the caps.

Expert witness standards made the most difference in number and size of payouts.

Some states require expert witnesses to practice or to have training in the type of medicine under scrutiny in the lawsuit. These laws had about three times to four times the effect of caps on damage awards, researchers concluded.

Oregon does not have expert witness requirements, but eight of the 15 states with the lowest malpractice payments had such requirements. Only two of the 15 high-cost states had expert witness standards. Time limits

Limiting the time available for patients to sue emerged as the second most influential reform. Oregon’s statute of limitations gives patients two years from the date of discovery of an injury and five years from the date of the treatment. States with the lowest malpractice awards all had such time limits, researchers found, while the most expensive states either had no time limits or gave patients five years or more to sue.

Jim Dorigan, chief executive officer of Northwest Physicians Insurance Co., one of the state’s largest malpractice carriers, said the study may have underestimated the cost and frequency of malpractice claims in Oregon.

Dorigan said that in his company’s experience, the number of claims per physician is about twice the rate reported in the study, and the average payment is about 50 percent greater, for 1999-2003.

Dorigan also questioned the study’s findings about the impact of damage caps.

“We supported the cap on non-economic damages,” he said. “We felt that was probably the most measurable reform that we have seen.”

But efforts by Oregon doctors and insurers to impose limits of any kind on malpractice awards have stalled since the failed ballot measure in 2004.

“I think there is some minor things you can do that can pass constitutional muster,” said Scott Gallant, associate executive director of the Oregon Medical Association, the state’s largest doctors group.

The OMA is backing a bill that would require both sides in malpractice cases to disclose who their expert witnesses will be. The association believes the measure could encourage earlier settlements and limit frivolous lawsuits.

The malpractice issue has lost urgency in part because insurance costs are falling for many doctors.

From 2000 to 2004, malpractice insurers raised prices by 30 percent or more a year. But in 2005, Northwest Physicians Insurance lowered average rates for Oregon doctors by 8.3 percent and in January, the company reduced its average rate by 10 percent.

Dorigan said the number of claims has been falling — for reasons that remain unclear. The trend, he said, has cut the costs of paying claims and allowed the company to reduce premiums.

Oregon internists pay $6,000 to $12,000 a year for coverage — less than one-fourth the average price in the five most expensive states. Ob-gyn doctors pay $41,000 to $75,000, or about a third the price in the most expensive states, according to the latest survey by Medical Liability Monitor, an industry newsletter.

After paying for malpractice insurance and other expenses, the average internist now nets about $160,000 and the average ob-gyn about $240,000.
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