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California Medical Malpractice Caps Do Not Keep Cost of Care Low

For almost 40 years, California has had a cap on non-economic damages in medical malpractice cases. The cap is reflective of tort reform efforts. A California injury lawyer cites recent data to invalidate one of the most common arguments in favor of tort reform: that medical malpractice caps keep the cost of healthcare low. 


Tort Reform and Medical Malpractice Laws


California’s cap on non-economic damages is set at $250,000; these damages include all non-financial losses, such as pain and suffering and emotional distress. This means that victims of a doctor or healthcare provider’s negligence may recover only $250,000 or less in non-financial compensation. 


“California is one of many states that have a cap on medical malpractice damages,” said the California injury lawyer, “and such caps are part of broader tort reform efforts that limit the rights of injured plaintiffs to take action against doctors who harm them.”


Advocates of tort reform justify caps on damages with the argument that high medical malpractice awards and settlements are driving up healthcare expenses. They argue that when large verdicts are awarded to those injured by medical negligence medical malpractice insurance premiums increase. As a result, the cost of operating a medical practice becomes more expensive and the expense is passed onto the consumer. 


A new study casts doubt on this argument. Johns Hopkins researchers conducted a review of medical malpractice insurance claims to determine the impact of malpractice payouts on medical costs.  Researchers determined that large payouts for malpractice were relatively rare and limited only to the most egregious of medical mistakes. Further, the costs associated with malpractice payouts were found to account for only a small percentage of national medical expenditures. 


A Review of Medical Malpractice Claims


Johns Hopkins researchers conducted their study using the National Practitioner Data Bank, which is an electronic repository of all medical malpractice settlements or judgments that have occurred since 1986. The researchers narrowed the focus of their data to the period of time from 2004 to 2010 because 2004 is the first year when data on patient age, patient gender and injury severity was available. 


During the relevant period, there were a total of 77,721 paid claims including 6,130 catastrophic claims. The catastrophic cases, which are claims in which payments of $1 million or more are made, accounted for just 7.9 percent of total claims over the course of the six-year period. 


Researchers found that payouts of catastrophic claims accounted for just $1.4 billion in annual costs. This is less than one percent of national medical expenditures. 


“With these payouts representing such a small percentage of the cost of healthcare expenses in the United States, it is clear that they are not a driving force behind high healthcare costs,” remarked the California injury lawyer. 


The leader of the study also debunked the myth that there are lots of huge claims such as $100 million payouts for injured victims from sympathetic juries. This is a routinely cited justification for damage caps by those in favor of tort reform, but the associate professor of surgery and health policy at Johns Hopkins who lead the study indicated that this is untrue and that large payouts are generally very limited. Furthermore, a review of claims data revealed that payouts over $1 million are paid only when victims suffer serious injury, such as when a child under the age of one develops quadriplegia or brain damage from a medical mistake. 


Instead of medical malpractice payouts bankrupting the system, as tort reform advocates often argue, the real problem driving up costs may be the fear of malpractice claims. In fact, researchers involved in the study indicated that too many test and procedures are performed as a result of defensive medicine. Doctors fear being sued and thus order medical tests in order to protect themselves from a potential misdiagnosis claim. 


Additional information on medical malpractice and the civil claims process is available to the public free of charge through our office.


If you would like to request a free book or article, or to discuss a specific legal matter with a California injury lawyer, feel free to call 866-981-5596. 

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