Professional and hospital liability insurers have convinced their customers that malpractice premiums will go down if meritorious malpractice claims are capped by the state legislature.
But look what happened in Florida. According to Tallahassee.com, "the Legislature three years ago capped pain and suffering awards to $500,000 per physician and $1 million per case. Since then, [ Florida Department of Financial Services’ Consumer Advocate Steve] Burgess contends, insurance data shows medical malpractice legal costs and payouts have dropped 43.6 percent, from $989 million to $557 million." And rates? One insurer wants to cut them 8.6%.
Caps on human losses in malpractice cases will have no material effect on rates, and it the insurance companies believe that it will they should agree to a reduction in premiums as a matter of law. The amount of the reduction should be determined by an independent actuary, the cost of employing such borne by each company. The amount of saving should be available to the Legislature before voting on caps so that they can determine whether it is in the best interest of the state to save doctors and hospitals money by capping jury awards in meritorious cases.
Now, I know that the insurance industry will cry out that any caps will be subject to a constitutional challenge and that they cannot discount rates until after the constitutional challenge to the caps works its way through the courts. I understand that, but then the mandatory reduction in premiums should be paid to the state to hold pending the constitutional challenge. If the caps are struck down, the companies can get their money back. If not, the money can be refunded to the payor.
Caps do save insurance companies money by taking money away from (1) the claimants who have catastrophic losses and (2) eliminating downside-risk in cases involving injured or dead children, stay-at-home mothers, and the elderly, thus further suppressing settlements and judgments in cases for these people. But the savings will not find their way to the the insureds and, even if they would, represent bad public policy.
There needs to be some reforms in the area of medical malpractice litigation. There are too many expert witnesses – the number of experts per issue needs to be limited. The locality rule is ridiculous and needs to be eliminated. The contingous state rule makes no sense whatsoever, particularly concerning causation experts. We need to address the issue of lawyers who file cases without consulting experts first – almost always a bad practice. We need to encourage judges to force the cases to trial or other resolution quicker – lingering cases are not in the best interests of defendants or plaintiffs. We need to find a way to entice family practice doctors to move to rural counties, while helping the residents of those counties understand that this state cannot afford an OB unit in every hospital or a neurosurgeon in every county.