Sign Out: Tort reform: A modest proposal

September 1, 2007

The current tort system has all the makings of a perfect storm. As long as we physicians frame our arguments in terms of the burden we bear to pay premiums, and demand caps on non-economic damages as a necessary condition for any systematic reforms, we will continue to fail to transform the system.

IN MANY WAYS the present problem is a failure to communicate. Physicians think the issue is caps on non-economic damages; lawyers think that has nothing to do with increasing liability premiums. Lawyers claim to be concerned that legitimately injured patients get proper compensation, physicians see the lion's share of premiums going to the insurance companies and lawyers, and not to patients.

As long as we physicians frame our arguments in terms of the burden we bear to pay premiums, and demand caps on non-economic damages as a necessary condition for any systematic reforms, we will continue to fail to transform the system. Requiring structured settlements rather than lump sum payments could have a beneficial effect on premiums without significant impact on the amount paid to truly injured patients. Still, unless we pick an astronomically high number on caps, in the millions of dollars, we are unlikely to succeed on that front.

Are expert opinions really impartial?

When physicians talk about their dissatisfaction with the current system, one frequent complaint is professional plaintiff's witnesses, who will "say anything." Plaintiff attorneys probably think the same about individuals they perceive as chronic defense experts.

THE PROBLEM IS THAT the attorneys hire the experts, so the economic interest of the experts lies in supporting the position of their employers. I advise some defense attorneys that their cases are shaky, the care provided suboptimal, and that their best strategy would be to settle the case. I hope this honesty is appreciated, although in some cases it probably reduces the amount of repeat business I see. (Full disclosure: I accept an average of no more than a half dozen cases a year from all sources, am not part of any referral services, and derive far less than 5% of my income from legal consultations.)

Statistics on the outcomes of liability claims suggest that there is significant opportunity for savings. In obstetrics, about 2/3 of cases are dropped in discovery at an average defense cost of about $17,000. Most of the rest are settled before trial at an average defense cost of about $40,000. Of those few going to trial, about 5/6 return a defense verdict (average defense cost $85,000), and only about 1% of the total filed result in a plaintiff verdict with an average defense cost of about $92,000. These numbers do not include payments to plaintiffs, only the cost of mounting a defense.

Since physicians end up winning most cases, wouldn't it be better if we could reach the same outcomes at lower cost?