Study examining defensive medicine costs fuels med-mal cap debate

SACRAMENTO, Calif. (Legal Newsline) – A Southern California columnist who calls the savings from tort reform “mythical” is pointing to a new study examining the costs of defensive medicine to support his argument.

However, two California legal watchdog groups say the facts expel the myths.

On Saturday, the Los Angeles Times featured a column written by Michael Hiltzik entitled “New study shows that the savings from ‘tort reform’ are mythical,” in which he writes frivolous lawsuits are “a problem that exists mostly in the minds of conservatives and the medical establishment.”

To support his argument, Hiltzik cites a new study published in the Journal of the American Medical Association examining the cost of defensive medicine.

Defensive medicine is a term referring to the practice of recommending extra tests or treatments not necessarily necessary for the patient to protect the physician against potential lawsuits.

The study found defensive medicine accounted for 2.9 percent of health care spending, or $78 billion of the estimated $2.7 trillion U.S. healthcare bill.

“Tort reform has seldom been about reducing healthcare spending. For Republicans, it's about de-funding a bloc of reliable Democratic Party supporters - trial lawyers,” Hiltzik wrote. “That's why the suppression of malpractice lawsuits has remained part of Republican and conservative orthodoxy despite the evidence that its impact on healthcare spending would be minimal.”

When asked for her opinion on the article, Kim Stone, president of the Civil Justice Association of California, says she’s surprised the “naysayers are admitting tort reform is proving any cost reduction at all.”

To California’s “shame,” Hiltzik says in his article the “quintessential tort reform law” is the state’s Medical Injury Compensation Reform Act, which has capped noneconomic damages in medical malpractice lawsuits at $250,000 since 1975.

States, like Texas for example, have adopted the MICRA model and other tort reform measures in an effort to increase business growth and development, Stone says.

Tom Scott, executive director for California Citizens Against lawsuit Abuse, concurs, saying MICRA has made health care in California more accessible and affordable by reducing the incentive for lawyers to file abusive medical malpractice lawsuits, while preserving access to the courts for individuals with meritorious claims and reducing the amount of defensive medicine practiced.

"In 2003, high medical liability insurance costs were driving doctors out of Texas, and the state’s doctor-per-citizen ratio ranked 49th of out of the 50 states," Scott said.

"Since Texas passed its medical liability reforms, the state has added more than 30,000 doctors, with the numbers of high-risk specialists growing more than twice as fast as the population."

However, come November, Californians can decide on whether to abolish the landmark cap with a vote on Proposition 46 – a trial lawyer initiative that, in addition to inflating the MICRA cap to $1.1 million, will create a prescription drug database and call for the mandatory drug testing of physicians.

"If Prop 46 passes, trial lawyers will profit wildly while California consumers will be the ones left holding the bag," Scott said. "California is ranked time and time again as having the worst legal climate in the nation. Inviting more lawsuit abuse by passing Prop 46 would be a step in the wrong direction."

Not all studies can be used to cast tort reform in a negative light.

According to the Hamm-Frech-Wazzan report, while the MICRA cap has limited non-economic damages awards and discouraged the filing of weak and non-meritorious claims, it has not actually prevented the average payment to medical liability claimants from continuing to rise at a rate exceeding the rate of inflation.

Since 1976, the average size of paid medical liability claims in California has increased at a rate 2.54 times the rate of inflation. As a result, the average payment per claim in 2012 ($191,162) was more than six times what the average would have been if it had merely kept pace with the rate of inflation ($31,404), the report states.

Even the state believes a higher cap could mean higher health care costs.

Included in the official voter’s guide for Prop 46 is an assessment from the California Legislative Analyst Office, which estimates increased government health care from raising the cap of med-mal damages, likely ranging from the tens of millions of dollars to several hundred million dollars annually.

“MICRA is one of the few shining lights in the state. In my opinion it would be a tragedy if the voters did away with it,” Stone said. “However, I do think the voters are going to be unfriendly to this trial lawyer manipulation.”

For two years running, the American Tort Reform Association has crowned California as the No. 1 “Judicial Hellhole” in the nation – a ranking Stone says the state deserves.

And if voters inflate MICRA caps, the state may earn a three-peat.

“The nice thing about MICRA is it fully compensates any injured patient – there’s no limit on punitive damages,” Stone said. “The truth is there is no amount of money that can compensate a person for the physic bummer factor (non-economic damages such as mental anguish). No cap would mean less health care services, and that’s a calculation the legislature made.”

The JAMA report measured the cost of defensive medicine on three hospitals - Baystate Medical Center, Baystate Franklin Medical Center and Baystate Mary Lane Hospital.

Reach David Yates at elections@legalnewsline.com