Guest columnist Dean A. Hardy: No, malpractice tort reform is not needed

Friday, April 12, 2002 | 4:45 a.m.

Dean A. Hardy is past president of the Nevada Trial Lawyers Association and is co-chairman of its political action committee.

Before Nevada legislators consider overhauling a civil justice system that is the cornerstone of American democracy, they should be reminded that lawsuits have not caused higher malpractice insurance premiums and that so-called "tort reform" will not reduce premiums.

Caps, and other measures identified as "tort reform," will not bring medical malpractice rates down, but they would restrict patients' rights to hold bad doctors accountable for their negligence.

Charles Kolodkin, an analyst with Gallagher Healthcare Insurance Services, recently penned an article for the International Risk Management Institute, a Dallas-based research and publishing company focusing on risk management and insurance. He explained that in recent years medical malpractice companies cut premiums to compete for greater market share and more revenue. Insurers then used the capital generated by these cuts to invest in what was a booming stock market. When the economy took a downturn, insurers lost money and were unable to cover their underwriting losses.

A perfect example of this insurance game is what recently happened in Southern Nevada. In Las Vegas, in 1994, the St. Paul Insurance Cos. bought a small mutual insurance company, Nevada Medical Liability Insurance Co., that had been formed in 1974. At the time of the purchase, NMLIC insured about 12 percent of the physicians in Southern Nevada.

By ignoring their own underwriting standards, artificially depressing premium rates below market cost and continuing to insure bad doctors with double-digit claims made against them, St. Paul insured 60 percent of the physicians in Southern Nevada by 2001. Several of those physicians had an unusually high recurrence of medical negligence claims made against them. That did not deter St. Paul from insuring these very bad physicians because the return from the premiums invested was sufficient to pay malpractice claims and still afford St. Paul a profit. When the economy soured in 2001, however, this insurer led the charge for limitations on people's access to the justice system.

The data does not support a cause and effect relationship between malpractice insurance premiums and the number and size of medical malpractice claims.

In 1985 our Legislature enacted the Medical-Legal Screening Panel. Before an injured patient can file a lawsuit against a medical provider, the matter must be reviewed by three doctors and three lawyers. In the complaint submitted to the screening panel, the specific allegation of negligence against a medical provider must be supported by an affidavit signed by a doctor. This is an expensive proposition and is usually paid by the plaintiff's attorney.

The cost to present a matter to the screening panel can and does exceed several thousand dollars. Additionally, there are 4,000 doctors, 16,000 nurses and hundreds of medical facilities subject to the jurisdiction of the screening panel. Each of these medical providers conduct thousands of procedures each day and yet only 181 cases alleging medical malpractice were submitted to the screening panel in Southern Nevada in 2001.

It should also be understood that the findings of the panel are admissible in court. Additionally, if the plaintiff proceeds to court and loses after a finding of "no malpractice" by the screening panel, then the plaintiff must pay attorneys' fees and the costs of the medical provider that was sued.

Therefore, it is disingenuous to suggest that frivolous lawsuits have added to the current malpractice insurance premium problem.

The other argument being advanced in favor of caps is that excessive jury verdicts have added to the lack of available and affordable malpractice insurance. Yet, since 1996 there have only been 20 jury verdicts in favor of a plaintiff suing a negligent medical provider. The largest of the 20 verdicts was for $5.35 million. In that case, a baby sustained permanent brain damage at birth due to the negligence of a physician. The child now requires lifetime medical care. It was shown at trial that the victim's future medical care would exceed $9 million.

While the Nevada Trial Lawyers Association acknowledges that there is a medical malpractice insurance crisis, the civil justice system is not to blame. A 1999 study by the Center for Justice and Democracy, a nonprofit, nonpartisan public interest organization, concluded that limiting access to the civil justice system (tort reform) had not succeeded in reducing insurance premiums.

Additionally, the American Tort Reform Association, the leading advocacy organization for limiting access to our justice system, admitted that tort reform will not reduce insurance premiums. "We wouldn't tell you or anyone that the reason to pass tort reform would be to reduce insurance rates," American Tort Reform Association President Sherman Joyce told the law journal Liability Week in its July 19, 1999, issue.

If the Legislature considers restricting injured patients' access to justice, the only remaining certainty in medical malpractice cases is the guaranteed profits of insurance companies.