BRIEF: Medical Tort Reform

Background: During the debate over health care reform in 2009-2010, medical tort reform was a frequent topic of discussion, but serious tort relief never made its way into President Obama’s sweeping healthcare law. For doctors, the constant threat of being sued over medical outcomes over which they may have no control contributes to the rising levels of health care spending and costs, and influences doctors to practice costly defensive medicine or, in some cases, leave their profession altogether. The end result is that patients may face problems in accessing the specialized care that they need, and doctors have strong incentives to make medical decisions to avoid a lawsuit, rather than resolve a medical problem in the most appropriate way possible.

A comprehensive study by the Harvard School of Public Health (HSPH) discovered that medical liability cost totaled $56 billion or 2.4% of all U.S. health care spending in 2008. Other studies show that medical liability costs may account for up to 10% of all U.S. health care expenditures.

While the need for medical malpractice reform is national in scope, state governments must lead the charge. The Constitutional responsibility over tort law, including the right to regulate medical malpractice law, is reserved to the states, where doctors are also licensed to practice medicine.

Texas Case Study: In 2003, the Texas state government passed House Bill 4 (HB4) in response to the growing number of lawsuits against doctors that were driving up the cost of malpractice insurance rates, pushing insurers out of the state, and forcing doctors to practice medicine elsewhere. By 2003, one out of every four doctors in Texas had a malpractice claim filed against them each year, 85% of all medical malpractice claims failed but still cost over $50,000 each to defend, and the number of medical malpractice insures dropped from 17 in 2000 to four in 2003. Texas Department of Insurance data shows medical malpractice claims, including lawsuits, resolved in a year fell by nearly two-thirds between 2003 and 2011. The average payout declined 22 percent to about $199,000.

Texas legislators enacted HB4, which included a number of common sense tort reforms for the state of Texas. The most important were a statute of limitations for claims within a reasonable time period, a provision that only those individuals who cause harm should pay and only to the extent of their own fault, and most importantly, a cap on non-economic damages (pain and suffering) set at $250,000. The Texas law does not limit reimbursement for medical bills or lost wages occurring to the plaintiff.

Within a ten year time period of HB4 implementation, the number of licensed physicians in Texas doubled, malpractice insurance premiums fell by an average of 60 percent, and most Texas doctors are paying less than half of what they were in 2003.

Conclusion: State laws and medical practice patterns differ in various states. Nonetheless, Texas’ success in medical tort reform in Texas could serve as a model for many other states.  State-led medical tort reform that provides justice for those who have been wronged while also balancing the rights of physicians can lower health care spending and cost, empower physicians to make prudent medical decisions for their patients, based on their best professional judgment, and improve access to health care for individuals and their families.

On the federal level, Congress could pass similar legislation for punitive damages for medical devices and products approved and cleared by the Federal Drug Administration (FDA) or undertake tort reform in federal health programs, where Congress has authority to establish conditions of participation for doctors and other medical professionals.

Download this brief

PDF Download
Sign Up
Sign Up