Stephen Maturin

Sorry for the delay, Loren. I didn't notice that you'd responded.

A) Different insurance companies invest differently. Not all insurers are enamored with massive and wildly speculative stock market forays.

B) What makes you think that only malpractice rates were affected?

You should read up on the workings of newly started physician-owned malpractice insurers before making statements such as this.

If you're claiming that the only effect the stock market has on malpractice insurance premiums is beneficial, suffice it to say that the Congressional Budget Office and the GAO disagree.

Yeah, that was more than a little tangential. Your original claim -- for which you provided no support whatsoever, by the way -- was that trial lawyers somehow "sabotage" tort reform laws so that they "look good but don't work." Since that claim is literally meaningless as it stands, please describe specifically what you mean by "sabotage" and cite ten specific examples. (That should be a simple task if the "sabotage" is as widespread as you suggest.)

At last, we get to the meat of your position. You accept, apparently as articles of faith, that "the doctors": (A) studied the entire situation in detail from all angles; (B) concluded that a malpractice "reform" law would lead to lower premiums; and (C) were correct in their conclusion. That's a mighty flimsy appeal to authority.

I can't address what happened in your state, but elsewhere "the doctors" are usually a tiny cadre of higher-ups in the state's medical establishment who are about half a step shy of being full-blown insurance industry employees. The rest of the state's physicians only know that they're getting hosed on malpractice insurance premiums and will gladly sign on to any plan that promises relief. That, combined with the obvious fact that no one enjoys being sued, renders physicians willing to believe that insurers are innocent even though doctors know that insurers are screwing the everluvin' hell out of them in other contexts. (E.g., health insurers have a shocking amount of control over what doctors get paid and what treatments their patients can receive.)

Many an insurance company spends each and every year of its existence paying out more in claims than it collects in premiums. A combination of sound underwriting, rational claims handling (including proper reserving procedures) and conservative investing enables such companies not only to survive but to generate healthy profits.

Once again, no insurance company makes its money by premium collection alone. That's what's so misleading about simplistic premiums-to-payouts comparisons.

The proposal under discussion is eliminating the insurance industry's exemption from federal antitrust laws. That's not about "driv[ing] rates below costs" but about eliminating price collusion among insurers. Isn't genuine competition supposed to be a good thing?

Really? No blame at all? Let's see here.

St. Paul overreserved claims to the tune of billions of dollars in the late 1980s. It freed up those excess reserves in the early- to mid-1990s and, through some Andersonesque accounting techniques, made them look like profits. That, coupled with the big gains then possible in the stock market, sparked the price war.

Did the insurance companies have any reason to believe that big investment gains would turn into big investment losses? Sure. After all, the exact same shit went down in the mid-1970s and late-1980s.

Did they know those losses would endanger their ability to pay claims and related costs? Absolutely. Predicting total annual malpractice payouts has been about as easy as prediciting the time of sunrise for the last twenty years or so.

Did the insurers forge recklessly ahead despite all that knowledge? You betcha.

Given this state of affairs, the notion that the insurance industry bears no culpability for the price war or its results is wholly indefensible. I don't know if there's a comprehensive answer (other than abolishing private medical malpractice insurance altogether or instituting massive regulation at the federal level), but rewarding the industry's recklessness with a governmentally guaranteed cost ceiling -- the very essence of tort "reform" -- can't be it.

But according to you, they're still saying it. Either they're lying through their goddamned teeth or they disagree with your statement that the cap is "basically meaningless."

It's not about "logic." One can't plug propositions into a modus ponens syllogism and come up with a "right answer" here. This one's all about empiricism. I've been looking at this stuff for many years and have yet to see anything establishing a correlation between malpractice "reform" legislation and lower malpractice insurance premiums. All I've seen is a bunch of post hoc bullshit excuses aimed at explaining away the fact that such legislation had no beneficial effect on premiums.

If you've got any data establishing such a correlation, I'd love to see it.

Outstanding. Props to you for your willingness to acknowledge that insurers purposely misrepresent payouts by selectively relying on verdict data.

That's rough, but the trial judge obviously made one or more errors that an appellate court found serious enough to warrant a new trial.

As for the rest, I have no problem with joint and several liability as a general rule. Somebody's clearly going to get fucked in situations like this. One party will have to either take a big financial hit or try collecting from the deadbeat joint tortfeasor. As between an innocent victim and a tortfeasor's insurance company, who should bear that burden? The answer seems obvious.

Man, he must have screwed up pretty hard to be assigned any blame under those circumstances!

Whoever wrote that article you read has a serious case of the dumbs. Under Nevada's comparative fault statute, a plaintiff who's 90% responsible for her own injuries loses outright. So either the plaintiff wasn't found 90% at fault (or anything close to it) or the doctor in question doesn't owe her a thing.

Loren Pechtel

It happens. I've missed responses, also.

I don't see other rates going through the roof like malpractice rates.

Look at no-fault auto insurance laws. The ones that work set a very high threshold of damages before you can sue the other side. The ones that don't work set a very low threshold. One state sets the threshold at $400! You collect from your insurance, you sue the other guy's insurance and you get a double settlement. Meanwhile, rates go ever higher and the lawyers get to crow that it didn't work.

You don't go to the effort they did to get the measure on the ballot without studying the issue pretty carefully.

Of course insurance companies are trying to keep the payouts down. With health insurance they are on the opposite side from the doctors. With malpractice insurance they are on the same side.

To a *SMALL* degree, not to a 2:1 degree.

Prices are already below cost--that's why St. Paul quit. Thus no bureaucratic approach like that can help.

So? The doctors benefitted from the price war. What I'm saying is that it had to end sometime. You don't blame the business for the end of a price war.

What you're missing is that the doctors are no worse off than if there had never been a price war. They weren't harmed by it. It's just it's end meant that the problem appeared faster. Had there never been a price war the problem would have happened a bit sooner, that's all.

No--they said they would reduce rates when the cap was upheld. What they were referring to didn't pass (they put a big loophole in it), although the doctors are trying to get something very much like it on the ballot in 2006.

I'm not surprised--when I've looked for data most of what I've found has been the lawyers trying to discredit it. Most of the pages don't look like lawyer pages, either.

If you've got any data establishing such a correlation, I'd love to see it.

I don't know why the new trial was ordered. The outcome of the new trial was very similar to the first one.

The problem is that joint and severarl means that the guy who has deep pockets but only the most remote connection to the problem often gets stuck with the bill.

I haven't heard of the outcome, but after McVey's bombing some lawyers sued the fertilizer manufacturer.

All it takes is a sympathetic jury. They see a baby that will need a lifetime of care, they know the doctor will have insurance.

The baby didn't cause it's injuries. Comparative fault doesn't apply.

Stephen Maturin

Oh man, don't get me started on no-fault laws. Last time I checked, the five states with the highest auto insurance premiums were no-fault jurisdictions, as were the five states with the highest number of first-party customer complaints to state insurance authorities. By contrast, not a single no-fault state showed up in the top twenty on the list of states with the lowest auto insurance premiums. No-fault laws were all the rage in the 1970s and 1980s. Decades of experience made many a state legislature see the light, and today there are only eleven or so no-fault jurisdictions left.

For our purposes, suffice it to say that no-fault laws and med mal "reform" laws aren't even remotely comparable. For one thing, the provisions of no-fault laws vary dramatically from state to state. Med mal "reform" laws, all of which are cut from the same one-size-fits-all insurance industry legislative cloth, don't vary much at all.

Ultimately, we still don't know what you mean by "sabotaging" med mal reform, nor do we have any specific examples establishing that such sabotage is widespread.

The stuff I read from Nevada came straight from the American Tort Reform Association playbook. It's the same crapola the insurance industry uses in all its med mal "reform" lobbying. You're perfectly free to believe that Nevada doctors conducted an exhaustive, independent study of med mal premiums and the effectiveness of tort reform if that's what you want to believe. Personally, I'd like to see some actual evidence of it.

Nah. Doctors only think they're on the same side as insurers on the malpractice issue. That's a testament to the effectiveness of the insurance industry's propaganda machine.

Again, St. Paul's payouts-to-premiums numbers wouldn't have been nearly that bad but for its own questionable underwriting and accounting practices.

Sure it had to end sometime. The insurers didn't know when it would end, but based on decades of experience they certainly knew how it would end.

And when the industry gets everything it wants, you'll start hearing the same song and dance that GE Medical Protective Company (the big dog in med mal insurance nowadays) gave the Texas Department of Insurance when it requested a rate increase after the Texas legislature enacted a "reform" law with $250,000 cap on recovery* of noneconomic damages:

GE Medical Protective Co. Regulatory Filing (10/31/03) (PDF, 5 pages). Medical Protective estimated the total loss savings from all provisions of the "reform" law at less than three percent.

*"Cap on damages" is a rather egregious misnomer. A legislature can only cap recoveries.

Me neither. Data supporting the notion that malpractice "reform" lowers premiums, much like Adam Smith's invisible hand, can't be seen because it simply isn't there. (Apologies to Joseph Stiglitz )

Yeah, joint and several liability does have that effect from time to time. Whether or not it qualifies as a "problem" is largely a matter of perspective. As I see it, an insurance company with an active subrogation/contribution department and virtually limitless resources is far better equipped to squeeze money from an uninsured joint tortfeasor than is the average med mal victim.

The sympathetic, out-of-control jury claim gets a lot of airplay from the insurance industry, but it doesn't often hold up in actual practice. I know from experience that a med mal plaintiff has two strikes against him the moment he walks into the courtroom. First, insurers have been pissing in the proverbial punchbowl so long and so successfully that many jurors automatically assume that the plaintiff is a money grubbing douchebag whose case has no merit. (It's an old story; tell the same lies long enough and people will eventually come to accept them as truths.) Second, most people simply don't want to believe that doctors sometimes fuck up. Only after the plaintiff overcomes these formidable hurdles can it be said that the parties are playing on a level field.

Oops. My bad for failing to notice that the injury was to the baby rather than the mother.

Is this the case you're talking about? (It seems to fit the basic parameters.) If so, the mother wasn't tagged with any fault at all as to the child's claim. According to the jury, the primary bad guy was a now-defunct birthing center.

Also, it appears that the mother asserted her own separate claim for damages. She lost based on a comparative fault finding (though it was 75% rather than 90%).

Loren Pechtel

Of course--flawed no-fault.

The states with the lowest insurance rates never felt the pressure for no-fault. Selection bias.

Rather, what you need to look at is the trend line--did insurance go up faster or slower after no-fault?

Of course not--the relevance is both are things that the lawyers really try to spin and sabotage.

I don't remember the exact wording but it's something to the effect that the cap doesn't apply in certain bad (but without an adequate description) cases. Of course the cases that generate the big verdicts are likely to meet their very nebulous definition--and thus the cap means basically nothing.

What questionable underwriting?

Past claims have little value in predicting future claims.

Of course it ended. Don't blame them for that.

There's normally no point in trying to squeeze them--they don't have anything to squeeze. The name of the game is to get somebody with deep pockets assigned some tiny percent of the blame and the collect from them.

Except that normally the injuries are obvious. The only question is whether the doctor caused them.

That's the case, although I've seen it reported differently.

I find it very strange that she was 75% responsible for her harm but none for her baby's harm??? Sounds like this reporter goofed up.


P.S. You keep asserting that the caps will have basically no effect on claims. If this is true then the insurance companies have no reason to put up a big fight for them--they wouldn't gain much of anything. Nor would the doctors, so again, why spend millions?

Storm

These discussions always seemed to get framed by talking about protecting doctors from frivolous lawsuits. What about the legitimate claims of someone who was seriously harmed by a bad doctor? How can anyone justify limiting the recovery for those people?

Loren Pechtel

Nobody's suggesting limiting economic damages, only things like pain and suffering.

Storm

Does anyone have any data on the increase in pain and suffering awards? I tried a Google search and only found this.

It's an evulation of cases in Texas (the original article was looking at Texas attempt to limit recovery) identified by the Texas Department of Insurance as having paid claims either by settlement, jury verdict or arbitration. The article is here.

Basically non-economic awards are flat while the economic awards acount for the climb overall. So the non-economic couldn't have had much impact on any rate increases. I would be interested in seeing a wider analysis like this.

Stephen Maturin

Of course. There's no other kind.

Not at all. Colorado, for example, had the tenth lowest auto insurance premiums in the country when it adopted no-fault in 1974. (And by the time the state legislature dumped no-fault in 1993, Colorada had the eighth highest auto insurance rates.)

Regardless of their specific provisions, no-fault laws almost invariably result in a brief period of premium stabilization followed by massive increases.

Okay, I gotcha. It seems that you're basing this whole sabotage idea on Nevada's experience alone. Just a couple of observations. First, as I understand it, the current cap in Nevada is the result of ballot initiatives. Trial lawyers no doubt promoted the hell out of the one they thought would help their clients, but the actual "saboteurs" in this instance are the voters of Nevada.

Second, what you describe is not at all common. Indeed, it may be wholly unique. Every other "reform" state I'm aware of has either a single-number cap for noneconomic damages or some sort of sliding scale with a defined high cap and low cap. So then, when independent entities such as Weiss Ratings study the data and conclude that malpractice insurance premiums are rising faster in "reform" states, such findings are clearly not the result of "sabotage" as you appear to define it (i.e., a cap that doesn't apply at all in the most serious cases).

Completely untrue in the case of medical malpractice claims. The number of claims has been steady for a long time, and per-claim payouts have tracked the rate of medical inflation almost exactly for the last twenty years.

Deal. But I'll continue blaming them for engaging in the war knowing how it would end (a massive spike in premiums) and for seeking government protection from the lows of their own business cycle.

That's certainly true in the Nevada case (the birthing center shut down and, if it ever had insurance at all, no doubt had "claims made" coverage that had long since lapsed), but it's not "normally" the case. You'd be amazed at how good insurance companies are at squeezing blood from putative turnips.

As for the rest, I'll simply reiterate that an insurance company is in a far better position to bear the loss in these situations than your average malpractice victim.

Which is where Strike Two comes into play.

Yeah, that does sound peculiar. I think I know what happened and, if I'm right, the reporter's error was one of omission; she didn't explain the procedural posture of the case thoroughly enough. (Not surprising, as the quality of legal reporting in the U.S. is abysmal, even among full-time law journalists.)

I don't recall saying that caps will have no effect on claims. I'm saying instead that they'll have no favorable effect on premiums. Insurers spend millions on getting "reform" legislation passed because they're convinced that caps will save hundreds of millions on future claims. The question is whether they plan to pass those savings on to the doctors who buy their product. The entire history of tort reform tells us that the answer is a resounding no.

Loren Pechtel

No. No-fault is often sabotaged. I simply gave the details of what happened to it here.

That depends on how the caps are written. We have a single # but it's meaningless.

We have 3x as many as only a few years ago.

Of course the end of a price war means a spike in the price.

I don't see the insurance companies clamoring so much about it, I see them getting out of the business. It's the doctors I see clamoring as it's their livelihood at stake.

This sort of thing is all too common. The lawyers make sure their net includes as many people with deep pockets as they can.

So what? Insurance is supposed to be a welfare system? *ANY* rule that turns private business into a welfare system is wrong.

The quality of reporting on anything complex is abysmal.

1) An insurance company that overprices by that much will find itself without customers.

2) Before you were asserting that the reform legislation did basically nothing to reduce payouts. Now you seem to be contradicting yourself.

3) If nothing is done pretty soon we will find the high risk fields have no practitioners. We already lost our only level 1 trauma center for a week and the only reason we got it back was an opinion from the attorney general that the specialists were protected by a state cap when they were working at the trauma center.

Stephen Maturin

In other states, single-number caps on recovery of noneconomic damages are set in stone. The exception for serious cases that Nevadans approved is the exception rather than the rule.

As for whether Nevada's cap is "meaningless," have there been any cases yet in which the plaintiff recovered more than the cap amount in noneconomic damages?

Sounds a bit like standard American Tort Reform Association propaganda to me. Assuming the number is accurate, though, Nevada's experience is radically atypical.

Of course. A lawyer who fails name as defendants everyone against whom his client has a claim reasonably grounded in law and fact isn't doing his job.

Ideally, insurance (including liability insurance) should be a loss distribution system designed such that as many people as reasonably possible pay for serious injuries. If you want to get down to root causes, the fact that medical malpractice liability coverage has been left to private industry is a huge part of the problem. As usual, Smith's invisible hand is off bopping the invisible bishop instead of doing its job. But that's a discussion for another thread.

Truer words were never written.

1) Not if all the insurers in a particular state or region are charging the same price. In many fields, med mal liability coverage included, the insurance industry operates as a cartel. Thus the need for subjecting insurers to federal antitrust laws.

2) That wasn't me talking to you; that was GE Medical Protective Company talking to the Texas Department of Insurance. Insurance companies have proven time and time again that they're not above lying to regulators in order to justify a rate increase.

3) True dat, my dawg. We're in complete agreement that something must be done about malpractice insurance premiums. Hell, I don't want a cardiac surgeon fretting about where his next mortgage payment is coming from while he's rummaging around inside my chest.

Our disagreement is about what to do. Once again, thirty years of history tells us that tort "reform" doesn't provide med mal premium relief. The answer most likely lies in insurance reform. Reasonable people can disagree on what reforms would work best, but at this point I'm open to damn near any suggestion.