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Medical malpractice litigation blamed for rising health care costs

By Chris Rizo | Oct 13, 2009

Jim Copland

NEW YORK (Legal Newsline)-Medical malpractice litigation has driven up U.S. health care costs dramatically, translating into higher costs for consumers, a study said Tuesday.

The report by the Manhattan Institute's Center for Legal Policy said the direct cost of medical malpractice litigation is roughly $30.4 billion annually.

"America's lawsuit-friendly culture skews medical decision-making and inflates costs," the report by Jim Copland, the director of the New York-based think tank's legal center.

Copland told Legal Newsline that despite the ever-increasing costs of medical care, the nation's trial attorneys are steadfastly opposed to legal reforms that would bring down health care costs.

"It all really comes down to money," he said in an interview, explaining that trial lawyer political action committees undoubtedly wield more than their fair share of influence over the Democrat-led Congress.

"The trial bar in many respects is the most influential lobby over the congressional leadership," he said. "The PAC money coming from the trial bar is second only to labor unions for Democratic candidates."

The American Association of Justice, formerly known as the Association of Trial Lawyers of America, is the second biggest donor to Democratic candidates, Copland said.

In all, lawyers doled out $127 million to congressional candidates in the 2008 political cycle.

Copland said lawyers gave more campaign cash to 2008 candidates than did doctors and other health professionals, hospitals and nursing homes, pharmaceutical companies and HMOs combined.

The Manhattan Institute report -- titled "Trial Lawyers Inc. Update: Healthcare" -- chided plaintiffs' lawyers for resisting Republican calls for tort reform provisions to be a part of current congressional legislation aimed at overhauling the nation's health care system.

There are currently five bills -- two in the Senate and three in the House -- that would significantly change the way the health insurance industry operates in the United States. The bills will be separately merged into one House bill and one Senate bill that will later be reconciled in conference committee.

"Regardless of the merits or demerits of various portions of the health care reform bills in Congress, the bills' failure to address out-of-control litigation is a glaring omission that will limit any reform's ultimate effectiveness," Copland's report said.

The director of the independent Congressional Budget Office, Douglas Elmendorf, said in a letter to members of the Senate Finance Committee last week that enacting tort reform would save U.S. taxpayers billions of dollars annually.

He said legal reforms -- including a $250,000 cap on damages for pain and suffering and a $500,000 cap on punitive damages and restricting the statute of limitations on malpractice claims -- would reduce total national health care spending by about 0.5 percent, saving taxpayers about $54 billion over the next 10 years.

"In spite of the clear evidence that litigation is an important piece of the puzzle in explaining high U.S. health care costs, Congress is refusing to consider any serious efforts to reform the legal system," the report said. "Instead, congressional leaders are pushing legislation that threatens to increase litigation and drive up health care costs."

Among other things, the CBO report blamed the practice of so-called defensive medicine for skyrocketing health care costs.

A 2005 survey published in the Journal of the American Medical Association indicated that 93 percent of doctors say they have practiced defensive medicine, where they perform unnecessary tests and procedures to protect them from possible civil action, so not to get caught up in a medical malpractice claim.

"The cost of defensive medicine likely exceeds the total cost of malpractice liability itself because doctors themselves bear the cost of any potential litigation even if their insurance companies cover their losses, doctors must endure the time, stress, and reputational effects of dealing with the lawsuit, while they bear little cost for imposing extra tests and procedures since patients with low-deductible health insurance are not price-sensitive, in part because the expenses are borne by their insurance companies," the report said.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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