RiskProf

NEJM Study on Med Mal Claims

Here is an interesting study of med mal claims in this week’s New England Journal of Medicine (sub. req’d).

The abstract states (in part):

Results For 3 percent of the claims, there were no verifiable medical injuries, and 37 percent did not involve errors. Most of the claims that were not associated with errors (370 of 515 [72 percent]) or injuries (31 of 37 [84 percent]) did not result in compensation; most that involved injuries due to error did (653 of 889 [73 percent]). Payment of claims not involving errors occurred less frequently than did the converse form of inaccuracy — nonpayment of claims associated with errors. When claims not involving errors were compensated, payments were significantly lower on average than were payments for claims involving errors ($313,205 vs. $521,560, P=0.004). Overall, claims not involving errors accounted for 13 to 16 percent of the system's total monetary costs. For every dollar spent on compensation, 54 cents went to administrative expenses (including those involving lawyers, experts, and courts). Claims involving errors accounted for 78 percent of total administrative costs.

Conclusions Claims that lack evidence of error are not uncommon, but most are denied compensation. The vast majority of expenditures go toward litigation over errors and payment of them. The overhead costs of malpractice litigation are exorbitant.

emphasis added.

Here is a graphical representation of the study’s results.  While the authors note that claims involving error account for 78 percent of total administrative costs, that implies that 22 percent goes to no-error cases.  Using 2004 data (from the NAIC annual statement state page on defense costs) that would amount to almost $900 million of costs of claims without injuries.  What would be interesting is to see if those no-error cases are randomly distributed among the states or if there were particular states with a higher incidence of no-error claims.

(click on graphic for better view)

Do Poor "Studies" Hurt Debate?

Inquiring minds want to know.  See Ted Frank’s and my take on it here.

AIR Ball

I have a relatively long post over at Point of Law on the Americans for Insurance Reform (AIR) “study” which came out last week and both Ty and I noted it. (I think that’s the first time we both posted on the same subject more or less at the same time! Just to let you know I used fake data and Ty didn’t use any.  Which is more conclusive?)

I didn’t really go after the methodology as took one dimension of that on below, but I talked about the conclusion.  Is the med mal truly crisis over and was a tort reform a waste?  Read the post at Point of Law, but I’ll bet you might be able to guess the answer yourself.

Tort Reform Study? Not!

The Center for Justice and Democracy has a new eye-ball study.  (Take some states and see if they look the same.)  The claim being made is that tort reform was not needed because no one is raising rates anymore.  In fact, this is true no matter whether the states had damage caps.  I’ll comment more on this later, but just looking at 5 states with caps and 5 states without caps is not a study. With ten data points it is difficult to get statistical validation anyway. What is important is the relative size of the premium, the health of the market, whether other tort/liability reforms are in place and not just whether the states had premium increases.  I am always complaining about these studies because only one statistic is shown and one never knows what is really going on.  For example, here is an example using FAKE data which is consistent with the CJD’s result.  On the left hand axis I put premiums and on the horizontal axis is the year.  Note that both cap and no cap states had no price increases in 2005. 

However, we see that the no-caps state have lower premiums than the high cap states using my FAKE data.  Now just to make sure that I don’t get bombarded by people claiming my graph is fake—I admit it for the purpose of showing that one can come up with a story consistent with the story proposed by the CJD and the proponents of tort reform (note the warning graphic and the name of the jpeg file).  These one-statistic-explains-all stories are just poor research and remind me of someone else.

INSURANCE “CRISIS” OFFICIALLY OVER

A new study by Joanne Doroshow (Executive Director, Center for Justice & Democracy) & J. Robert Hunter, (Director of Insurance, Consumer Federation of America, former Texas Insurance Commissioner and former Federal Insurance Administrator) proclaims the medical malpractice crisis officially over.

The study is principally based on anecdotal evidence in the form of media quotes.  In that vein, here are some snippets from the study:

This phenomenon [the reduction in med mal insurance prices] is occurring whether or not states enacted restrictions on patients’ legal rights, such as “caps” on compensation.

These data are further proof that the insurance crisis for doctors was caused by the economic cycle of the insurance industry, and not a tort law cost explosion as the insurance industry and others had claimed.

Now that I piqued your interest, check out the Washington Monthly where the debate continues.

Light Posting

I know that we professors have tons of vacation time and hardly see any students, so in between golf, long lunches at the faculty club where we chat incessantly about our golf scores and our next BMW, and posting on our blogs we actually have little to do….. 

I have been creating a dataset on insurers entry and exit from cat markets for a paper we are presenting at the NBER Insurance Project next month.  We need to have the paper done by Friday so that’s what I have been doing in all my free time.

However there are two items to note.  The first is that according to one of my former Ph.D students I was on C-Span II last weekend discussing a book by UCONN’s Tom Baker on the Malpractice Crisis at the AEI  last month.  However, I can not find it on the public schedule.  I must have been a super secret showing.  So if you just have to see it now … you can watch it at the AEI’s site in streaming video.

Second, there is a new blog called TortsProf (part of the LawProf network) edited by William Childs at Western New England School of Law.  He has postings on potential Katrina juries as well even more on that ubiquitous shrimp case.

Diet Coke Made Me Fat ... Really

Craig Newmark makes a great point about the plaintiff's theory, as stated by Illinois Supreme Court in the Phillip-Morris low tar case, which essentially states that low tar cigarettes were "fraudulent" because people felt safer and, thus, smoked more. (See David Koppel's post at the VC for more info) ....

...[I]f the theory were widely accepted the plaintiff's bar would have more work than they could handle until the end of the world. Economists have good evidence that seatbelts change drivers' behavior a little for the worse. So should any devices--padded dashes, anti-lock brakes, airbags--that make drivers safer.  "Child-proof" caps on medicines also seem to have made people less careful in storing drugs. And Kopel notes that the theory seems tailor-made to sue makers of low-calorie foods. If this theory of harm were accepted, all those companies and more--many more--would, I assume, be liable.

Med Mal at the AEI

Tomorrow I will be speaking at a session organized by the AEI's Liability project on Tom Baker's new book “The Myth of Medical Malpractice.”  Get your copy at Amazon.

Judicial Hellhole (TM) Encore

The ATRA has its yearly list of Judicial Hellholes(TM) out.  In the spirit of the season, they have a new “Watch List” which includes  California, Eastern Kentucky, Eastern Alabama, Philadelphia, Pennsylvania, New Mexico, Delaware, Oklahoma, Orleans Parish, Louisiana, and Washington, D.C..  What is interesting is that even after numerous rounds of tort reform in Texas, there are still a couple of recalcitrant jurisdictions.

Where Have all the Trials Gone?

Today’s WSJ ($) has an article reminiscent of Monday’s post on the effect of tort reform on the number of personal injury lawyers.  Large law firms are trying to get their junior associates time in front of judges and juries, but there just aren’t any trials to be had. So law firms are volunteering their associates to do pro bono work for prisoners (who are without counsel.) who have an upcoming trial.  Here is the litany of reasons given for the dearth of trials….

Courtroom trials have been steadily declining since the 1980s. There were only 5,500 federal civil trials across the U.S. last year, down sharply from 14,300 in 1984. State civil jury trials dropped 34% between 1976 and 2003, even as the volume of civil cases disposed of during the period rose 165%. In criminal court, meanwhile, federal sentencing guidelines are so stiff that more than 95% of all criminal defendants opt for plea deals that offer leniency rather than risk going to trial.

There are plenty of reasons behind the falloff. Scared off by huge jury verdicts, such as the $253 million awarded this year to the widow of a man who died after taking Merck & Co.'s Vioxx drug, more civil litigants are arbitrating or settling the majority of disputes, legal experts say.

The cost of litigation, which often drags on for years, has scared off some plaintiffs. Changes in the law have also had a dampening effect on trials: Judges can now more easily dismiss cases that rely on junk science. "It's like you prepare for a big game and then it gets canceled, so you have to negotiate a final score," says James Winton, a partner with Cleveland-based Baker & Hostetler.

Furthermore, lawyers say fewer marginal or low-damage cases are being filed now that some state legislatures have imposed caps on jury verdicts.

Is the litigation bubble coming to an end? See also David Giacalone and Walter Olson discussing the Saintly Chamberlain family’s reluctance to sue Macy’s, New York City, New York State, the balloon handlers, the balloon makers, the manufacturer of the light pole, the manufacturer of the light, the installer of the light pole, the maintainer of the light pole, the balloon tether manufacturer, Mars Incorp. (because it was an m&m (TM) balloon), the National Weather Service for failing to predict the wind, and the State of New Jersey (because it is close to New York).