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Malpractice payouts aren’t the only factor to look at in determining where to practice in the United States. Ob/gyns should also take into account the status of tort reform and the cost of premiums and taxes in the states they are considering.
By Adam S. Levine, MD, JD
Dr. Levine is Adjunct Professor of Law, Stetson University College of Law, Gulfport, Florida, and Adjunct Professor of Law, Western Michigan University Cooley School of Law, Tampa, Florida.
Ob/gyns are sued more frequently and pay more for less professional liability coverage than physicians in virtually all other medical specialties except neurosurgery.1 “Malpractice climate and premiums” were the sixth most important factor in deciding where to practice for physicians surveyed by Medscape in 20132 (Table 1). But ob/gyns likely ranked professional liability concerns much higher on their list because ob/gyns pay more for less coverage, because they are sued more frequently, and because the specialty is fraught with stories alleging tremendous payouts from lawsuits.
The fear of catastrophic losses-along with extended statues of limitations in some states and the knowledge that liability premiums are becoming cost-prohibitive for all but the most busy practice-are the reasons some ob/gyns are opting out of obstetric practice and many medical students are choosing not to enter obstetric practice at all. The American College of Obstetrics and Gynecology (ACOG) underscored this trend with its prediction of a shortage of between 9,000 and 14,000 obstetricians in the United States over the next 20 years.1 Those numbers are likely the result of a combination of factors, including the burden of a call schedule, the cost of professional liability insurance, and the fear of being sued.1 Because being named a defendant in a medical malpractice lawsuit “can be one of life’s most stressful experiences,”3 77.3% of ACOG fellows have been sued,3 and a career choice may be dependent on the fear of medical malpractice liability,4 one critical issue in determining where, and presumably whether, to practice ob/gyn is the local medical malpractice climate.
With few exceptions, medical malpractice laws are created by state statutes. “Each state’s medical liability system represents a delicate and convoluted interplay between [third party insurers], physicians, lawmakers, and patients,” according to Greg Roslund, MD, author of the website The Medical Malpractice Rundown: A State-by State Report Card. He notes that with regard to tort reform intended to reduce the risk of incurring a frivolous lawsuit:
The best states [to practice obstetrics from a perspective limited to professional liability] are California, Colorado, Kansas, and Texas. All four of these states have enacted a reasonable cap ($250k–$300k) on non-economic damages. Litigation in these states has markedly decreased over time and annual malpractice premiums for physicians remain low. Following close behind are Indiana (which long ago implemented a $1.25 million cap on total damages and a pre-litigation screening panel process) and Alaska, North Carolina, North Dakota, and South Dakota (which have all implemented caps on non-economic damages of $500k or lower). The majority of these states have some of the lowest medical malpractice payouts per capita.
The worst states include Illinois and a cluster of states on the East Coast: New York, DC, Pennsylvania, New Jersey, and Delaware. In all of these states, litigation is frequent and malpractice premiums for physicians are debilitating (OBGYNs and surgeons in New York City and Philadelphia pay north of $100,000 per year). These states all have some of the highest malpractice payouts per capita and meaningful tort reform is non-existent.
In states with significant tort reform, such as Florida, ob/gyns are at even greater risk. By statue in Florida, the period during which physicians can be sued for malpractice is relatively short but it is automatically extended for children younger than age 8. In the absence of intentional fraud, a lawsuit can be filed against a physician in Florida for up to 2 years after a plaintiff knew or should have known about the alleged malpractice, and generally no more than 4 years after the incident. (This extension is referred to as a statute of repose.) In the case of a child younger than age 8, however, the statute of limitations does not begin until that child reaches age 8. So, every Florida obstetrician potentially remains at risk of a professional liability claim until after each child he or she delivers passes age 12 years. And, in the case of intentional fraud, the statute of limitations and repose are extended an additional 7 years.
Medical malpractice tort reform data generally support the efficacy of a hard cap on non-economic damages. In some cases, however, such as in Florida, non-economic damage caps actually failed to result in a decrease in professional liability premiums,5 and were recently found unconstitutional because they violated equal protection.6 In Florida, institution of a rigorous pre-suit process resulted in significant limitations on physician expert witness testimony and patient access to court.
When considering data that support the efficacy of hard caps on non-economic damages, it is important to understand that professional liability premiums are not necessarily dependent on growth in malpractice payments.7 Chandra et al evaluated data submitted to the United States National Practitioner Data Bank between 1991 and 2003 with regard to total payments for settlement (96% of payments) or judgment (4% of payments) related to professional liability. They found that the rate of growth in payments-52% between 1991 and 2003-increased proportionate with healthcare spending.7
Notably, Chandra’s data show that obstetrics was the specialty with the highest of all payments, which rose 40% between 1991 and 2003. And obstetrics accounted for 14% of all medical malpractice payments between 2001 and 2003-the fourth-highest category (Table 2). But if the payments remain proportionate to healthcare spending, what drives progressively higher professional liability premiums?
Interestingly, Roslund addresses rising professional liability premiums by referencing state culture and litigiousness and by comparing states such as Minnesota, where there is no tort reform and where people are “nice” and sue less often, and Florida, where there is significant tort reform but people may not be as nice and may sue more frequently.5 Ultimately, it is difficult to base a determination on where to practice based strictly on medical malpractice liability when other factors may be just as important.
States with lower state tax burdens may be more friendly to ob/gyn practices than those with higher tax burdens. While Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming all have no state income tax, California (13.3%), Hawaii (10%), Oregon (9.9%), Minnesota (9.85%), Iowa (8.98%), Washington DC (8.95%), and New York (8.82%) have some of the highest state income taxes.8 And, given the arctic chill that crept through the United States this past winter, states with favorable climates are likely more in demand than other less fortunate states.
Other factors critical to our decision process that are more difficult to evaluate on a state-by-state basis include payer mix, reimbursement rates, physician density and competition, state department of health oversight, and the effects of the Affordable Care Act. In summary, choosing where to live and practice primarily based on professional liability payout data may seem reasonable at first blush, but payout data are not the only factor that requires consideration because one must earn enough to pay the premiums.
1. Anderson RE. Ob/gyn shortage is going to get worse (op-ed). http://www.livescience.com/37824-obgyn-shortage-looming.html. Accessed March 10, 2015.
2. Reese S. Best and worst places to practice: 2013. http://www.medscape.com/features/slideshow/best-places-to-practice-2013#1. Accessed March 10, 2015.
3. Committee on Professional Liability, American College of Obstetrics and Gynecology Committee Opinion Number 551, January 2013: Coping with the stress of professional liability litigation.
4. Deutsch A, McCarthy J, Murray K, Sayer R. Why are fewer medical students in Florida choosing obstetrics and gynecology? South Med J. 2007;100(11):1095–1098.
5. Roslund G. The medical malpractice rundown: a state-by-state report card. http://www.epmonthly.com/departments/subspecialties/medico-legal/the-medical-malpractice-rundown-a-state-by-state-report-card/?print=1&tmpl=component. Accessed March 10, 2015.
6. Estate of McCall v. United States, 134 So. 3d 894 (Fla. 2014).
7. Chandra A, Nundy S, Seabury SA. The growth of physician medical malpractice payments: evidence from the national practitioner data bank. http://www.ibabuzz.com/politics/files/2009/08/ha_physicianmalpracticenatlpractitionerdata_20051.pdf. Accessed March 10, 2015.
8. Stone L, Henchman J, Borean R. Top state income tax rates in 2014. http://taxfoundation.org/blog/top-state-income-tax-rates-2014. Accessed March 10, 2015.