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Appendix C: The Medical Malpractice Crisis and Poor Women
Pages 229-244

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From page 229...
... The mean malpractice premium expense paid in 198S was $23,25~18 percent of a private obstetrician's total malpractice expenses and an increase of 28.8 percent more than 1982 prices.2 Malpractice premium expenditures represent approximately 10 percent of an obstetrician's gross income.3 By 1988, the average premium had risen to $37,015.4 The malpractice insurance crisis is part of a general explosion of liability insurance costs that has affected all sectors of society, from physicians to day care centers, bus companies, ice skating rinks, and vacation resorts. It began in 1974, when insurers began to escalate their rates5 and has been part of an effort by insurers to limit their risks generally, whether in the area of liability or health or disability coverage.6 Sara Rosenbaum and Dana Hughes are Director, Health Division, and Senior Health Specialist, respectively, of the Children's Defense Fund, Washington, D.C.
From page 230...
... This is appropriate in a nation in which medical education takes place at nationally accredited medical schools and physicians are certified in specialties by national boards.9 The demise of the locality rule has had two effects: it has brought national obstetrical standards into local communities, and it has made it far easier for medical experts from outside the local area to testify in malpractice trials.~° Indeed, two noted experts have concluded that "the erosion of the 'locality rule' has probably had a greater impact on the increase in malpractice claims in recent years than any other change in the law." Large Awards Another major cause of rising malpractice rates is the increase in the number of cases being filed and in the size of the awards being granted. Between 1976 and 1986, the number of insurance-related civil lawsuits Doubleday Between 1960 and 1980, the number of million-dolIar judgments increased by more than 500 percent in some jurisdictions.~3 The average settlement grew from $5,000 in 1979 to $330,000 in 1986.~4 As the number and size of claims have increased, insurers have experienced medical malpractice loss ratios (that is, combined Toss and loss expenses over premium revenues)
From page 231...
... Contingency Fees A fourth, and often discussed, cause of the malpractice crisis is lawyers' willingness to take on malpractice cases because of the potentially large awards, and correspondingly large contingency fees, involved. There is no question that the possibility of a large contingency fee is attractive; but it is likely that the demise of the locality rule has had a far greater impact on the growth of malpractice litigation, since medical malpractice cases turn on the ability to present expert testimony that a physician's conduct fell below professionally accepted standards.
From page 232...
... It is no coincidence, in the view of some experts, that the malpractice crisis occurred simultaneously with the elimination of all but a few insurers from the malpractice underwriting business. Underfinancing of Maternity Care Finally, the gross underfinancing of obstetrical care in the United States may itself be propelling malpractice claims.
From page 233...
... Cessation of Obstetrical Practice Studies indicated that, particularly in states with excessively high malpractice rates, physicians have ceased furnishing obstetrical care entirely. A 1988 ACOG survey of professional liability revealed that 12.4
From page 234...
... Impact on Providers of Maternity Care to the Poor One of the most grievous effects of the malpractice crisis has been its impact on providers that represent the major source of obstetrical care for poor women, such as Title V-funded health clinics, Community and Migrant Health Centers, public hospitals and clinics, and nurse-midwife practices. Public and quasi-public clinics are modestly funded and cannot afford monumentally costly insurance policies, nor can nurse-midwives, with their average annual salary of $25,000.
From page 235...
... 40 have malpractice claim profiles approximately one-fifth as great as that of office-based obstetricians, who, even several years ago, were the least likely of all primary care physicians to accept any Medicaid patients in their practices.4i A recent General Accounting Office (GAO) study of the characteristics of medical malpractice claims closed in 1984 sheds some additional light on the issue of who files ciaims.42 Unfortunately, the study provides
From page 236...
... are less likely to file claims. Thus, while the GAO insurance data are not reported by age or sex and are limited only to a sample of claims closed in 1984 by 25 insurers, they do tend to confirm earlier studies suggesting that the poor are less, rather than more, likely to sue.
From page 237...
... Indeed, except for communities served by Community Health Centers, specialized clinical or hospital-based perinatal projects, or other public providers, poor women and their infants probably face a greater risk than any other group of women and children of receiving substandard care from either nonspecialty physicians or relatively untrained interns and residents. The heightened risk can be seen in the elevated maternal and infant mortality rates that plague the low-income population.
From page 238...
... In the case of poor persons, estimates of lost earning capacity are set tow.48 Moreover, when poor women or children who are also Medicaid recipients do recover a major award, the law's third-party liability and liens and recoveries provisions require that they turn over their awards to the state, to the extent that the state pays for care.49 While courts have ruled that attorneys do have the right to recover their fees in these situations, at least one state has determined that attorneys are not entitled to collect any part of their fee from the proceeds due the state for medical assistance rendered.50 This reduces considerably the size of the award on which an attorney's fee will be based. In short, the Medicaid provisions make it less in the interest of recipients to file claims and less in the interest of attorneys to bring them.
From page 239...
... , physicians are increasingly unwilling to shift costs to make up for the tosses they suffer from treating publicly insured and uninsured women, particularly given their general unwillingness to treat such women to begin with. STATE RESPONSES The states' responses to the malpractice crisis as of 1986 commonly included · Elimination of the collateral source rule, including express legislation that classifies as a collateral source medical and disability payments by the Social Security Administration and other federal, state, and local public aid programs.
From page 240...
... · Periodic payment rules to guard against sudden windfall outlays. If the demise of the locality rule and the move by insurers to build up large reserves against what they estimate to be major risks truly lie at the heart of the malpractice crisis, then the above state actions may produce very little relief.
From page 241...
... 18. Indeed, the report of the HEW Secretary's Commission on Medical Malpractice of 1973 found that attitudes toward physicians and the desire to indicate a perceived harm lay at the heart of many malpractice claims.
From page 242...
... 34. A 1986 study of the medical malpractice claims experience of Community and Migrant Health Centers conducted by the National Association of Community Health Centers in Washington, D.C., revealed that, while 75 percent of all private obstetrics/gynecology specialists had at least one claim filed against them in 1985, only 16 percent of such specialists practicing at Community and Migrant Health Centers had a claim filed.
From page 243...
... 52. See, e.g., legislation enacted by Virginia in 1987 that provides as follows: Any person who, in the absence of gross negligence, renders emergency obstetrical care or assistance to a female in active labor who has not previously been cared for in connection with the pregnancy by such person or by another professionally associated with such person and whose medical records are not reasonably available to such person shall not be liable for any civil damages for acts or omissions resulting from the rendering of such emergency care or assistance.


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