Confronting the New Health

Care Crisis:

Improving Health Care Quality and

Lowering Costs By Fixing Our Medical

Liability System

July 24, 2002

Prepared by

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Assistant Secretary for Planning and Evaluation
Confronting the New Health Care Crisis:

Improving Health Care Quality and Lowering Costs By 

Fixing Our Medical Liability System

American health care is the envy of the world, but with rapidly rising health 

care costs, reforms are needed to make high-quality, affordable health care more 

widely available. These include new approaches to making employer-provided 

coverage more affordable, new initiatives to help states expand Medicaid and SCHIP coverage for lower-income persons, and new policies including health 

insurance credits for persons who do not have access to employer or public 

health insurance. A critical element for enabling all of these reforms to provide 

real relief, and to help all Americans get access to better and more affordable 

health care, is curbing excessive litigation. 

 Americans spend proportionately far more per person on the costs of 

litigation than any other country in the world. The excesses of the litigation 

system are an important contributor to “defensive medicine”--the costly use of 

medical treatments by a doctor for the purpose of avoiding litigation. As 

multimillion-dollar jury awards have become more commonplace in recent years, 

these problems have reached crisis proportions. Insurance premiums for 

malpractice are increasing at a rapid rate, particularly in states that have not 

taken steps to make their legal systems function more predictably and effectively. 

Doctors are facing much higher costs of insurance, and some cannot obtain 

insurance despite having never lost a single malpractice judgment or even faced 

a claim. 

This is a threat to health care quality for all Americans. Increasingly, 

Americans are at risk of not being able to find a doctor when they most need one 

because the doctor has given up practice, limited the practice to patients without 

health conditions that would increase the litigation risk, or moved to a state with a 

fairer legal system where insurance can be obtained at a lower price. 

This broken system of litigation is also raising the cost of health care that 

all Americans pay, through out-of-pocket payments, insurance premiums, and 

federal taxes. Excessive litigation is impeding efforts to improve quality of care. 

Hospitals, doctors, and nurses are reluctant to report problems and participate in 

joint efforts to improve care because they fear being dragged into lawsuits, even 

if they did nothing wrong. 

Increasingly extreme judgments in a small proportion of cases and the 

settlements they influence are driving this litigation crisis. At the same time, most 

injured patients receive no compensation. Some states have already taken 

action to squeeze the excesses out of the litigation system. But federal action, in 
Page 2

conjunction with further action by states, is essential to help Americans get highquality care when they need it, at a more affordable cost. 

Access to Care is Threatened

There are a number of obstacles that limit access to affordable health care 

in this country, including lack of affordable insurance and an outdated Medicare 

program. We now face another--the litigation crisis that has made insurance 

premiums unaffordable or even unavailable for many doctors, through no fault of 

their own. This is making it more difficult for many Americans to find care, and 

threatening access for many more. 

• Nevada is facing unprecedented problems in assuring quick access to 

urgently needed care. The University of Nevada Medical Center closed its 

trauma center in Las Vegas for ten days earlier this month. Its surgeons 

had quit because they could no longer afford malpractice insurance.1 Their 

premiums had increased sharply, some from $40,000 to $200,000. The 

trauma center was able to re-open only because some of the surgeons 

agreed to become county government employees for a limited time, which 

capped their liability for non-economic damages if they were sued. This is 

obviously only a temporary solution. If the Las Vegas trauma center closes 

again, the most severely injured patients will have to be transported to the 

next nearest Level 1 trauma center, five hours away. Access to trauma care 

is only one problem Nevada faces; access to obstetrics and many other 

types of care is also threatened. 

• Overall, more than 10% of all doctors in Las Vegas are expected to retire, or 

relocate their practices by this summer.2 For example, Dr. Cheryl Edwards, 

41, closed her decade-old obstetrics and gynecology practice in Las Vegas 

because her insurance premium jumped from $37,000 to $150,000 a year. 

She moved her practice to West Los Angeles, leaving 30 pregnant women 

to find new doctors.3 

• Dr. Frank Jordan, a vascular surgeon, in Las Vegas, left practice. “I did the 

math. If I were to stay in business for three years, it would cost me $1.2 

million for insurance. I obviously can’t afford that. I’d be bankrupt after the 

first year, and I’d just be working for the insurance company. What’s the 

point?”4

• Other states are facing the same problem. A doctor in a small town in North 

Carolina decided to take early retirement when his premiums skyrocketed 

from $7,500 to $37,000 per year. His partner, unable to afford the practice 

expenses by himself, may now close the practice, and work at a teaching 

hospital.5
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• Pennsylvania physicians are also leaving their practices. About 44 doctors 

at the height of their careers in Delaware County outside Philadelphia left 

the state in 2001 or stopped practicing medicine because of high 

malpractice insurance costs.6

• When Chester County (Pennsylvania) physicians were polled in January 

2001, 65% said they were seriously considering moving their practice to 

another state. Many specialists (such as neurosurgeons) have already 

moved to less hostile medical-legal environments of surrounding states.7

• At Frankford Hospital’s three facilities in Northeast Philadelphia and Bucks

County, all twelve active orthopedic surgeons decided to lay down their 

scalpels after their malpractice rates nearly doubled to $106,000 each for 

2001.8

• Many physicians in Ohio saw their malpractice premiums triple in 2001, and 

some are leaving their practice as a result. Dr. James Wilkerson, an Akron 

urologist, decided to retire. Had Dr. Wilkerson continued to practice, he 

would have spent seven months of his yearly income to cover the $84,000 

premium. “I would have had to go back to working 90 hours a week and I 

didn’t want to do that...”9

• West Virginia is also facing critical access problems for urgently needed 

care such as obstetrics. In rural areas, such as Putnam County and Jackson 

County, the sole community provider hospitals have closed their OB units 

because the obstetricians in those areas cannot afford malpractice 

insurance.10

• Many communities in Mississippi are losing access to needed medical care. 

Physicians who specialize in family medicine and obstetrics/gynecology in 

Indianola, and in other rural areas of the state, have stopped delivering 

babies because of skyrocketing insurance costs.11 Ambur Peterson’s 

obstetrician in Cleveland, Mississippi, stopped practicing three weeks before 

her due date, and she had to drive out of state, over a hundred miles, to 

Memphis, Tennessee, to get the care she needed.12

• Most of the cities with populations under 20,000 in Mississippi no longer 

have doctors who deliver babies.13 Doctors in Natchez say they will 

relocate their practice across the Mississippi River to Louisiana because of 

the cost of insurance in Mississippi and runaway jury awards. They are 

planning a new $6 million medical office building in Vidalia, Louisiana.14

• In Georgia, the 80-bed Bacon County Hospital in Alma took out a loan to 

cover a premium that more than tripled.15
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• Another Georgia hospital, Memorial Hospital and Manor in Bainbridge, that 

operates a hospital and a nursing home, was faced with a 600% increase.16

• In New Jersey, 65% of the hospitals report that physicians are leaving 

because of increased premiums (over 250% over the last three years).17

• In Tacoma, Washington, some doctors were faced with a tripling of their 

premiums. High premium rates and an inability to obtain insurance may 

force many physicians in the state to leave.

18

• Doctors who would volunteer their time to provide care in free clinics and 

other volunteer organizations, or who would volunteer their services to the 

Medical Reserve Corps, are afraid to do so because they do not have 

malpractice insurance. This makes it more difficult for clinics to provide care 

to low-income patients. The clinics must spend their precious resources to 

obtain their own coverage, and have less money available to provide care to 

people who need it. The proportion of physicians in the country providing 

any charity care fell from 76% to 72% between 1997 and 1999 alone, 

increasing the need for doctors willing to volunteer their services.19

• Health Link Medical Center opened in March 2001 in Southampton, 

Pennsylvania, to provide free health care to the working poor. Dr. Theodore 

Onifer, a retired physician, volunteers his services on the board but is 

unable to volunteer to provide medical care because of the fear of lawsuits 

and the cost of insurance. 

Patient Safety is Jeopardized

Because the litigation system does not accurately judge whether an error 

was committed in the course of medical care, physicians adjust their behavior to 

avoid being sued. A recent survey of physicians revealed that one-third shied 

away from going into a particular specialty because they feared it would subject 

them to greater liability exposure.20 When in practice, they engage in defensive 

medicine to protect themselves against suit. They perform tests and provide 

treatments that they would not otherwise perform merely to protect themselves 

against the risk of possible litigation. The survey revealed that over 76% are 

concerned that malpractice litigation has hurt their ability to provide quality care 

to patients. 

Because of the resulting legal fear: 

• 79% said that they had ordered more tests than they would, based only on 

professional judgment of what is medically needed, and 91% have noticed 

other physicians ordering more tests;
Page 5

• 74% have referred patients to specialists more often than they believed was 

medically necessary; 

• 51% have recommended invasive procedures such as biopsies to confirm 

diagnoses more often than they believed was medically necessary; and

• 41% said that they had prescribed more medications, such as antibiotics, 

than they would based only on their professional judgment, and 73% have 

noticed other doctors similarly prescribing excessive medications. 

Every test and every treatment poses a risk to the patient, and takes away 

funds that could better be used to provide health care to those who need it.

Physicians’ understandable fear of unwarranted litigation threatens patient 

safety in another way. It impedes efforts of physicians and researchers to 

improve the quality of care. As medical care becomes increasingly complex, 

there are many opportunities for improving the quality and safety of medical care, 

and reducing its costs, through better medical practices. According to some 

experts, these quality improvement opportunities hold the promise of not only 

significant improvements in patient health outcomes, but also reductions in 

medical costs of as much as 30%.21 

A broad range of experts on improving health care quality have developed 

strong evidence that the best way to achieve these needed improvements in 

quality of care is to provide better opportunities for health professionals to work 

together to identify errors, or practices that may lead to errors, and correct them. 

Many problems in the health care system result not from one individual’s failings, 

but from complex system failings. These can only be addressed by collecting 

information from a broad range of doctors and hospitals, and encouraging them 

to collaborate to identify and fix problems. Already many health care systems 

are beginning to make these improvements: 

• Intermountain Health Care and LDS Hospital in Utah improved quality and 

efficiency of the intensive care unit by applying quality improvement 

techniques and improving collaborative efforts.

• The Pittsburgh Regional Healthcare Initiative has brought together 

hospitals, health plans, physicians, and purchasers of health care in a 

collaborative effort to identify better ways to provide care. It has reduced 

blood infections in intensive care units by 20% in just two years, and it is 

encouraging reporting to reduce medication errors. 

• The Baylor Medical Center in Dallas, Texas, has recently initiated an error 

reporting system and integrated it into care delivery to reduce medication 

and other errors.22
Page 6

• Through the Northern New England Cardiovascular Disease Study Group, 

eight hospitals reduced mortality for cardiac bypass surgery by developing a 

collaborative patient registry, tracking how care is delivered and what the 

outcomes are, and sharing what they learn.

However, these efforts and other efforts are impeded and discouraged by 

the lack of clear and comprehensive protection for collaborative quality efforts. 

Doctors are reluctant to collect quality-related information and work together to 

act on it for fear that it will be used against them or their colleagues in a lawsuit. 

Perhaps as many as 95% of adverse events are believed to go unreported.23 To 

make quality improvements, doctors must be able to exchange information about 

patient care and how it can be improved--what is the effect of care not just in one 

particular institution or of the care provided by one doctor--but how the patient 

fares in the system across all providers. These quality efforts require 

enhancements to information and reporting systems. 

In its recent report, “To Err is Human,” the Institute of Medicine (IOM) 

observed that, “[R]eporting systems are an important part of improving patient 

safety and should be encouraged. These voluntary reporting systems [should] 

periodically assess whether additional efforts are needed to address gaps in 

information to improve patient safety and to encourage health care organizations 

to participate in...reporting, and track the development of new reporting systems 

as they form.”24

However, as the IOM emphasized, fear that information from these 

reporting systems will be used to prepare a lawsuit against them, even if they are 

not negligent, deters doctors and hospitals from making reports. This fear, which 

is understandable in the current litigation climate, impedes quality improvement 

efforts. According to many experts, the “#1 barrier” to more effective quality 

improvement systems in health care organizations is fear of creating new 

avenues of liability by conducting earnest analyses of how health care can be 

improved. Without protection, quality discussions to improve health care provide 

fodder for litigants to find ways to assert that the status quo is deficient. Doctors 

are busy, and they face many pressures. They will be reluctant to engage in 

health care improvement efforts if they think that reports they make and 

recommendations they make will be thrown back at them or others in litigation. 

Quality improvement efforts must be protected if we are to obtain the full benefit 

of doctors’ experience in improving the quality of health care. 

The IOM Report emphasized the importance of shifting the inquiry from 

individuals to the systems in which they work: “The focus must shift from 

blaming individuals for past errors to a focus on preventing future errors by 

designing safety into the system.” 25 But the litigation system impedes this 

progress--not only because fear of litigation deters reporting but also because the 

scope of the litigation system’s view is restricted. The litigation system looks at 

the past, not the future, and focuses on the individual in an effort to assess blame 
Page 7

rather than considering how improvements can be made in the system. “Tort 

law’s overly emotional and individualized approach...has been a tragic failure.”26

Health Care Costs are Increased 

The litigation and malpractice insurance problem raids the wallet of every 

American. Money spent on malpractice premiums (and the litigation costs that 

largely determine premiums) raises health care costs. Doctors alone spent $6.3 

billion last year to obtain coverage.27 Hospitals and nursing homes spent 

additional billions of dollars. 

The litigation system also imposes large indirect costs on the health care 

system. Defensive medicine that is caused by unlimited and unpredictable 

liability awards not only increases patients’ risk but it also adds costs. The 

leading study estimates that limiting unreasonable awards for non-economic 

damages could reduce health care costs by 5-9% without adversely affecting 

quality of care.28 This would save $60-108 billion in health care costs each year. 

These savings would lower the cost of health insurance and permit an additional 

2.4-4.3 million Americans to obtain insurance.29

The costs of the runaway litigation system are paid by all Americans, 

through higher premiums for health insurance (which reduces workers’ take 

home pay if the insurance is provided by an employer), higher out-of-pocket 

payments when they obtain care, and higher taxes. 

The Federal Government--and thus every taxpayer who pays federal 

income and payroll taxes--also pays for health care, in a number of ways. It 

provides direct care, for instance, to members of the armed forces, veterans, and 

patients served by the Indian Health Service. It provides funding for the 

Medicare and Medicaid programs. It funds Community Health Centers. It also 

provides assistance, through the tax system, for workers who obtain insurance 

through their employment. The direct cost of malpractice coverage and the 

indirect cost of defensive medicine increases the amount the Federal 

Government must pay through these various channels, it is estimated, by $28.6-

47.5 billion per year.30 If reasonable limits were placed on non-economic 

damages to reduce defensive medicine, it would reduce the amount of taxpayers’ 

money the Federal Government spends by $25.3-44.3 billion per year.31 This is 

a very significant amount. It would more than fund a prescription drug benefit for 

Medicare beneficiaries and help uninsured Americans obtain coverage through a 

refundable health credit.32
Page 8

The Increasingly Unpredictable, Costly, and Slow 

Litigation System is Responsible

Insurance premiums are largely determined by the expensive litigation 

system. The malpractice insurance system and the litigation system are 

inexorably linked. The litigation system is expensive, but, at the same time, it is 

slow and provides little benefit to patients who are injured by medical error. Its 

application is unpredictable, largely random, and standardless. It is traumatic for 

all involved. 

Most victims of medical error do not file a claim--one comprehensive study 

found that only 1.53% of those who were injured by medical negligence even 

filed a claim.33 Most claims--57-70%--result in no payment to the patient.34, 35 

When a patient does decide to go into the litigation system, only a very small 

number recover anything. One study found that only 8-13% of cases filed went 

to trial; and only 1.2-1.9% resulted in a decision for the plaintiff.36 

Although most cases do not actually go to trial, it costs a significant 

amount of money to defend each claim--an average of $24,669.37 The most 

dramatic cost, however, is the cost of the few cases that result in huge jury 

awards. Even though few cases result in these awards, they encourage lawyers 

and plaintiffs in the hope that they can win this litigation lottery, and they 

influence every settlement that is entered into. 

A large proportion of these awards is not to compensate injured patients 

for their economic loss—such as wage loss, health care costs, and replacing 

services the injured patient can longer perform (such as child care). Instead, 

much of the judgment (in some cases, particularly the largest judgments, 

perhaps 50% or more) is for non-economic damages. Awarded on top of 

compensation for the injured patient’s actual economic loss, non-economic 

damages are said to be compensation for intangible losses, such as pain and 

suffering, loss of consortium, hedonic (loss of the enjoyment of life) damages, 

and various other theories that are imaginatively created by lawyers to increase 

the amount awarded.

Non-economic damages are an effort to compensate a plaintiff with money 

for what are in reality non-monetary considerations. The theories on which these 

awards are made however, are entirely subjective and without any standards. As 

one scholar has observed: “The perceived problem of pain and suffering awards 

is not simply the amount of money expended, but also the erratic nature of the 

process by which the size of the awards is determined. Juries are simply told to 

apply their ‘enlightened conscience’ in selecting a monetary figure they consider 

to be fair.”38
Page 9

Unless a state has adopted limitations on non-economic damages, the 

system gives juries a blank check to award huge damages based on sympathy, 

attractiveness of the plaintiff, and the plaintiff’s socio-economic status (educated, 

attractive patients recover more than others).39

The cost of these awards for non-economic damages is paid by all other 

Americans through higher health care costs, higher health insurance premiums, 

higher taxes, reduced access to quality care, and threats to quality of care. The 

system permits a few plaintiffs and their lawyers to impose what is in effect a tax 

on the rest of the country to reward a very small number of patients who happen 

to win the litigation lottery. It is not a democratic process. 

The number of mega-verdicts is increasing rapidly. The average award 

rose 76% from 1996-1999.40 The median award in 1999 was $800,000, a 6.7% 

increase over the 1998 figure of $750,000; and between 1999 and 2000, median 

malpractice awards increased nearly 43%.41 Specific physician specialties have 

seen disproportionate increases, especially those who deliver babies. In the 

small proportion of cases where damages were awarded, the median award in 

cases involving obstetricians and gynecologists jumped 43% in one year, from 

$700,000 in 1999 to $1,000,000 in 2000.42

The number of million dollar plus awards has increased dramatically in 

recent years. In the period 1994-1996, 34% of all verdicts that specified 

damages assessed awards of $1 million or more. This increased by 50% in four 

years; in 1999-2000, 52% of all awards were in excess of $1 million.43 There 

have been 21 verdicts of $9 million or more in Mississippi since 1995--one of 

$100,000,000.44 Before 1995 there had been no awards in excess of 

$9,000,000. 45

 

These mega-awards for non-economic damages have occurred (as would 

be expected) in states that do not have limitations on the amounts that can be 

recovered, as shown in Table 1. 
Page 10

TABLE 1. Mega Awards In States Without Caps

State Jury Award Year

Arizona $ 3,000,000 1998

Kentucky $ 13,000,000 1998

Mississippi $100,000,000 2002

Nevada $ 6,000,000

5,400,000

4,600,000

2001

2001

2001

North Carolina $ 23,500,000

4,500,000

8,100,000

1997

2001

2001

Pennsylvania $100,000,000 1999

Washington $ 3,790,000 1998

Source: ASPE Review of Media Reports from The 

Advocate, Las Vegas Review, North Carolina Lawyers 

Weekly, and other select sources.

Mirroring the increase in jury awards, settlement payments have steadily 

risen over the last two decades. The average payment per paid claim increased 

from approximately $110,000 in 1987 to $250,000 in 1999.46 Defense expenses 

per paid claim increased by $24,000 over the same period.47

The winning lottery ticket in litigation, however, is not as attractive as it 

may seem at first blush. A plaintiff who wins a judgment must pay the lawyer 30-

40% of it, and sometimes even more. Lawyers, therefore, have an interest in 

finding the most attractive case. They develop a portfolio of cases and have an 

incentive to gamble on a big “win.” If only one results in a huge verdict, they 

have had a good payday. Thus, they have incentives to pursue cases to the end 

in the hope of winning the lottery, even when their client would be satisfied by a 

settlement that would make them whole economically. The result of the 

contingency fee arrangement is that lawyers have few incentives to take on the 

more difficult cases or those of less attractive patients. 

One prominent personal injury trial lawyer explained the secret of his 

success: “The appearance of the plaintiff [is] number one in attempting to 

evaluate a lawsuit because I think that a good healthy-appearing type, one who 

would be likeable and one that the jury is going to want to do something for, can 

make your case worth double at least for what it would be otherwise and a badappearing plaintiff could make the case worth perhaps half...”48

For most injured patients, therefore, the litigation process, while offering 

the remote chance of a jackpot judgment, provides little real benefit, even for 

those who file claims and pursue them. Even successful claimants do not 

recover anything on average until five years after the injury, longer if the case 

goes to trial.49 
Page 11

The friction generated by operating the system takes most of the money. 

When doctors and hospitals buy insurance (sometimes they are required to buy 

coverage that provides more “protection” than the total amount of their assets), it 

is intended to compensate victims of malpractice for their loss. However, only 

28% of what they pay for insurance coverage actually goes to patients; 72% is 

spent on legal, administrative, and related costs.50 Less than half of the money 

that does go back to injured patients is used to compensate the patient for 

economic loss that is not compensated from other sources--the purpose of a 

compensation system.51 More than half of the amount the plaintiff receives 

duplicates other sources of compensation the patient may have (such as health 

insurance) and goes for subjective, non-economic damages (a large part of 

which, moreover, actually goes to the plaintiff’s lawyer). 

The malpractice system does not accurately identify negligence, deter bad 

conduct, or provide justice. The results it obtains are unpredictable, even 

random. The same study that found that only 1.53% of patients who were injured 

by medical error filed a claim also found, on the flip side, that most events for 

which claims were filed did not constitute negligence.52 Other studies show the 

same random results.53 “The evidence is growing that there is a poor correlation 

between injuries caused by negligent medical treatment and malpractice 

litigation.”54

Not surprisingly, most people involved in health care delivery on a day-today basis believe that the system does not accurately reflect the realities of 

health care or correctly identify malpractice. A recent survey indicated that 83% 

of physicians and 72% of hospital administrators do not believe the system 

achieves a reasonable result.55

With this randomness, the litigation system cannot be expected to deter 

error or set meaningful standards of care. That this is, in fact, the case is 

evidenced by the IOM’s estimate that as many as 98,000 people die each year 

from medical error.56 If so, the system is failing not only to compensate patients 

fairly, but even more importantly to ensure quality care. 

Yet our current system forces injured patients to sue their doctors in order 

to obtain compensation and forces both patients and doctors to go through what 

is a traumatic process for all. Patients must wait years for recovery (if they ever 

win any). Doctors are subject to minute scrutiny of actions they took, often years 

before, and their actions are judged on the basis of hindsight and perhaps even 

on the basis of changed medical standards. The process consumes the time and 

energy of the doctor that could better be spent in patient care. It is essentially 

punitive in nature, yet random. Rather than helping doctors do better, it causes 

them to engage in defensive medicine. It is a process that benefits no one 

except those who live off it--trial lawyers, both those who represent plaintiffs and 

those who represent defendants. 
Page 12

Insurance Premiums are Rising Rapidly

The cost of the excesses of the litigation system shows up in the cost of 

malpractice insurance coverage. Premiums have increased rapidly over the past 

several years. Experts believe we are seeing just the tip of what will happen this 

year and next. Rates have escalated rapidly for doctors who practice internal 

medicine, general surgery, and obstetrics/gynecology (see Table 2 below). The 

average increases ranged from 11% to 17% in 2000, were about 10% in 2001, 

but are accelerating rapidly this year. A recent special report revealed that rate 

increases are averaging 20%.57 

TABLE 2. Medical Malpractice Liability

Average Premium Increases by Specialty, 2000-2001

July 2000 July 2001 December 2001

Internists 17% 10% 22%

General Surgeons 14% 10% 21%

Obstetricians/ 

Gynecologists

12% 9% 19%

SOURCE: Medical Liability Monitor, 2001

However, these increases have varied widely across states, and some 

states have experienced increases of 30-75%, although there is no evidence that 

patient care had worsened. As seen in Table 3, a major contributing factor to the 

most enormous increases in liability premiums has been rapidly growing awards 

for non-economic damages in states that have not reformed their litigation 

system to put reasonable standards on these awards. 

TABLE 3. Premium Increases in Non-Reform States

Between 2000-2001 or 2001-2002

State Premium Increase

Nevada 30%

Mississippi 30-40%

North Carolina 50%

Pennsylvania 40%

Virginia 75%

Florida 30%

Ohio 30%

Illinois Over 30%

Source: Survey of PIAA companies, July 2002 and ASPE 

Review of Articles, 2000-2002.

Among the states with the highest average medical malpractice insurance 

premiums are Florida, Illinois, Ohio, Nevada, New York, and West Virginia.58

These states have not reformed their litigation systems as others have. 

(Florida’s caps apply only in limited circumstances. New York has prevented 

insurers from raising rates, and accordingly it is expected that substantial 

increases will be needed in 2003.) The comparison of the rates in these states 
Page 13

with those in California, which has reformed its litigation system, is shown in 

Table 4 below.

TABLE 4. States with High Annual Premiums in 2001 by Specialty

Compared to California

OB/GYN Surgeon Internists

Florida $143K-203K $63K-159K $27K-51K

Michigan $87K-124K $67K-94K $18K-40K

Illinois $89K-110K $50K-70K $16K-28K

Ohio $58K-95K $33K-60K $11K-16K

Nevada $60K-95K $32K-57K $9K-$16K

New York $34K-115K $19K-63K $6K-22K

West Virginia $63K-85K $44K-56K $8K-16K

California $23K-72K $14K-42K $4K-15K

Source: Medical Liability Monitor’s “Trends in 2001 Rates for Physicians’ 

Medical Professional Liability Insurance,” Vol. 25, No. 10, October 2001.

The effect of these premiums on what patients must pay for care can be 

seen from an example involving obstetrical care. The vast majority of awards 

against obstetricians involve poor outcomes at childbirth. As a result, payouts for 

poor infant outcomes account for the bulk of obstetricians’ insurance costs. If an 

obstetrician delivers 100 babies per year (which is roughly the national average) 

and the malpractice premium is $200,000 annually (as it is in Florida), each 

mother (or the government or her employer who provides her health insurance) 

must pay approximately $2,000 merely to pay her share of her obstetrician’s 

liability insurance. If a physician delivers 50 babies per year, the cost for 

malpractice premiums per baby is twice as high, about $4,000. It is not 

surprising that expectant mothers are finding their doctors have left states that

support litigation systems imposing these costs. 

In addition to premium increases for physicians, nursing home malpractice 

costs are rising rapidly because of dramatic increases in both the number of 

lawsuits and the size of awards. Nursing homes are a new target of the litigation 

system. Between 1995 and 2001, the national average of insurance costs 

increased from $240 per occupied skilled nursing bed per year to $2,360. From 

1990 to 2001, the average size of claims tripled, and the number of claims

increased from 3.6 to 11 per 1,000 beds.59 

These costs vary widely across states, again in relation to whether a state 

has implemented reforms that improve the predictability of the legal system. 

Florida ($11,000) had one of the highest per bed costs in 2001.60 Nursing homes 

in Mississippi have been faced with increases as great as 900% in the past two 

years.61 It has been recently reported that “nearly all companies that used to 

write nursing home liability [insurance] are getting out of the business.”62 Since 

the costs of nursing home care are mainly paid by Medicaid and Medicare, these 

increased costs are borne by taxpayers, and consume resources that could 

otherwise be used to expand health (or other) programs. 
Page 14

Insurers are Leaving The Market

The litigation crisis is affecting patients’ ability to get care not only because 

many doctors find the increased premiums unaffordable but also because liability 

insurance is increasingly difficult to obtain at any price, particularly in non-reform 

states. Demonstrating and exacerbating the problem, several major carriers 

have stopped selling malpractice insurance. 

• St. Paul Companies, which was the largest malpractice carrier in the United 

States, covering 9% of doctors, announced in December 2001 that it would 

no longer offer coverage to any doctor in the country.63

• MIXX pulled out of every state; it will reorganize and sell only in New Jersey.

• PHICO and Frontier Insurance Group have also left the medical malpractice 

market.64, 65

• Doctors Insurance Reciprocal stopped writing group specialty coverage at 

the beginning 2002.66 

States that had not enacted meaningful reforms (such as Nevada, 

Georgia, Oregon, Mississippi, Ohio, Pennsylvania, and Washington) were 

particularly affected.67 Fifteen insurers have left the Mississippi market in the 

past five years.68

States with Realistic Limits on Non-Economic Damages 

Are Faring Better

The insurance crisis is less acute in states that have reformed their 

litigation systems. States with limits of $250,000 or $350,000 on non-economic 

damages have average combined highest premium increases of 12-15%, 

compared to 44% in states without caps on non-economic damages, as shown in 

Table 5. 
Page 15

TABLE 5. Comparison of States with Caps to States without Meaningful 

Non-Economic Caps

(Average Premium Increase)

States with Caps < $250,000 States without Caps

California 20% Arkansas 18%

Indiana 15% Connecticut 50%

Montana 21% Georgia 32%

Utah 5% Nevada 35%

New Jersey 24%

Oregon 56%

Pennsylvania 77%

Washington 55%

Ohio 60%

West Virginia 30%

AVERAGE 15% AVERAGE 44%

States with Caps < $350,000 States without Caps

California 20% Arkansas 18%

Hawaii 0% Connecticut 50%

Indiana 15% Georgia 32%

Michigan 39% Nevada 35%

Montana 21% New Jersey 24%

New Mexico 13% Oregon 56%

North Dakota 0% Pennsylvania 77%

South Dakota 0% Washington 55%

Utah 5% Ohio 60%

Wisconsin 5% West Virginia 30%

AVERAGE 12% AVERAGE 44%

SOURCE: Medical Liability Monitor, 2001. Percentages represent the 

combined average of the highest premium increases for OB/GYNs, Internists, 

and General Surgeons among select states, 2000-2001. Average highest 

premium increase is derived from the highest potential premium increase 

among internal medicine, general surgery or obstetrics/gynecology specialists 

in that state during 2001. These combined averages are not weighted.

As Table 6 below shows, there is a substantial difference in the level of 

medical malpractice premiums in states with meaningful caps, such as California, 

Wisconsin, Montana, Utah and Hawaii, and states without meaningful caps. 
Page 16

TABLE 6. Malpractice Liability Rate Ranges by Specialty by Geography as of July 2001

Cap in 

NonEconomic 

Damages

Low High

INTERNISTS

State Wide Data

 Wisconsin $350,000 $5,000 $6,000

 Montana $250,000 5,300 7,000

 Utah $250,000 5,900 5,900

 Hawaii $350,000 6,800 6,800

 Connecticut No cap 6,200 15,800

 Washington No cap 7,100 9,000

Metropolitan Area Data 

 California (Los Angeles area) $250,000 $7,900 $13,000

 Pennsylvania (Urban Philadelphia area) No cap 10,700 11,800

 Nevada (Las Vegas area) No cap 11,600 15,800

 Illinois (Chicagoland area) No cap 16,500 28,100

 Florida (Miami and Ft. Lauderdale areas)* No cap 17,600 50,700

GENERAL SURGEONS

State Wide Data

 Wisconsin (state wide) $350,000 $16,000 $17,500

 Montana (state wide $250,000 23,300 27,000

 Utah (state wide) $250,000 26,200 26,200

 Hawaii (state wide) $350,000 24,500 24,500

 Connecticut (state wide) No cap 26,200 45,800

 Washington (state wide) No cap 20,100 32,600

Metropolitan Area Data 

 California (Los Angeles area) $250,000 $23,700 $42,200

 Pennsylvania (Urban Philadelphia area) No cap 31,500 35,800

 Nevada (Las Vegas area) No cap 40,300 56,900

 Illinois (Chicagoland area) No cap 50,000 70,200

 Florida (Miami and Ft. Lauderdale areas)* No cap 63,200 126,600

OBSTETRICIANS/GYNECOLOGISTS

State Wide Data

 Wisconsin (state wide) $350,000 $23,800 $27,500

 Montana (state wide $250,000 36,000 38,600

 Hawaii (state wide) $350,000 40,900 40,900

 Utah (state wide) $250,000 44,300 44,300

 Connecticut (state wide) No cap 45,400 64,800

 Washington (state wide) No cap 34,100 59,300

Metropolitan Area Data 

 California (Los Angeles area) $250,000 $46,900 $57,700

 Pennsylvania (Urban Philadelphia area) No cap 45,900 66,300

 Nevada (Las Vegas area) No cap 71,100 94,800

 Illinois (Chicagoland area) No cap 72,500 110,100

 Florida (Miami and Ft. Lauderdale areas)* No cap 108,000 208,900

Source: Medical Liability Monitor, Vol. 26, No. 10, October 2001: Shook, Hardy, Bacon, L.L.P., 

October 9, 2001.

* Florida imposes caps of $250,000-350,000 unless neither party demands binding arbitration 

or the defendant refuses to arbitrate.
Page 17

In the early 1970s, California faced an access crisis like that facing many 

states now and threatening others. With bi-partisan support, including leadership 

from then Governor Jerry Brown and now Congressman Henry Waxman, then 

chairman of the Assembly’s Select Committee on Medical Malpractice, California 

enacted comprehensive changes to make its medical liability system more 

predictable and rational. The Medical Injury Compensation Reform Act of 1975 

(MICRA) made a number of reforms, including:

• Placing a $250,000 limit on non-economic damages while continuing 

unlimited compensation for economic damages.

• Shortening the time in which lawsuits could be brought to three years (thus 

ensuring that memories would still be fresh and providing some assurance 

to doctors that they would not be sued years after an event that they may 

well have forgotten).

• Providing for periodic payment of damages to ensure the money is available 

to the patient in the future. 

California has more than 25 years of experience with this reform. It has 

been a success. Doctors are not leaving California. Insurance premiums have 

risen much more slowly than in the rest of the country without any effect on the 

quality of care received by residents of California. Insurance premiums in 

California have risen by 167% over this period while those in the rest of the 

country have increased 505%.69 This has saved California residents billions of 

dollars in health care costs and saved federal taxpayers billions of dollars in the 

Medicare and Medicaid programs. 
Page 18

FIGURE 1. Premium Growth: California vs. U.S. Premiums 1976-2000

(billions of dollars)

SOURCE: NAIC Profitability Study, 2000.

The President’s Framework for Improving the Medical 

Liability System 

Federal and state action is needed to address the impact of the medical 

liability crisis on health care costs and the quality of care. 

Achieving a Fair, Predictable, and Timely Medical Liability Process

As years of experience in many states have proven, reasonable limits on 

the amount of non-economic damages that are awarded significantly restrain 

increases in the cost of malpractice premiums. These reforms improve the 

predictability of the medical liability system, reducing incentives for filing frivolous 

suits and for prolonged litigation. Greater predictability and more timely 

resolution of cases means patients who are injured can get fair compensation 

more quickly. They also reduce health care costs, enabling Americans to get 

more from their health care spending and enabling federal health programs to 

provide more relief. They improve access to care, by making insurance more 

affordable and available. They also improve the quality of health care, by 

avoiding unnecessary “defensive” treatments and enabling doctors to spend 

significantly more time focusing on patient care. Congress needs to enact 

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99

Rest of U.S.

California

Increase of 

505% Since 

1976

Increase of 

167% Since 

1976
Page 19

legislation that would give all Americans the benefit of these reforms, eliminate 

the excesses of the litigation system, and protect patients’ ability to get care. 

The President supports federal reforms in medical liability law that would 

implement these proven steps for improving our health care system: 

• Improve the ability of all patients who are injured by negligence to get 

quicker, unlimited compensation for their “economic losses,” including the 

loss of the ability to provide valuable unpaid services like care for children or 

a parent.

• Ensure that recoveries for non-economic damages could not exceed a 

reasonable amount ($250,000).

• Reserve punitive damages for cases that justify them--where there is clear 

and convincing proof that the defendant acted with malicious intent or 

deliberately failed to avoid unnecessary injury to the patient--and avoid 

unreasonable awards (anything in excess of the greater of two times 

economic damages or $250,000).

• Provide for payment of a judgment over time rather than in one lump sum--

and thus ensure that the money is there for the injured patient when 

needed.

• Ensure that old cases cannot be brought years after an event when medical 

standards may have changed or witnesses’ memories have faded, by 

providing that a case may not be brought more than three years following 

the date or injury or one year after the claimant discovers or, with 

reasonable diligence, should have discovered the injury.

• Informing the jury if a plaintiff also has another source of payment for the 

injury, such as health insurance. 

• Provide that defendants pay any judgment in proportion to their fault, not on 

the basis of how deep their pockets are. 

The success of the states that have adopted reforms like these shows that 

malpractice premiums could be reduced by 34% by adopting these reforms.70 

The savings to the Federal Government resulting from reduced malpractice 

premiums would be $4 billion.71

Legislation such as H.R. 4600--a bill introduced by Congressman Jim 

Greenwood with almost 100 bipartisan cosponsors--is now pending in Congress. 

Enactment of this legislation with improvements to ensure that its meaningful 

standards will apply nationally, will be a significant step toward the goals of 
Page 20

affordable, high-quality health care for all Americans, and a fair and predictable 

liability system for compensating injured patients. 

In addition, there are other promising approaches for compensating 

patients injured by negligence fairly and without requiring them to go through fullscale, time-consuming, and expensive litigation. Just as states like California 

have demonstrated the effectiveness of litigation reforms, they should also adopt 

and evaluate the impact of alternatives to litigation. 

Early Offers is one innovative approach.72 This would provide a new set 

of balanced incentives to encourage doctors to make offers, quickly after an 

injury, to compensate the patient for economic loss, and for patients to accept. It 

would make it possible for injured patients to receive fair compensation quickly, 

and over time if any further losses are incurred, without having to enter into the 

litigation fray. Because doctors and hospitals would have an incentive to discover

adverse events quickly in order to make a qualifying offer, it would lead to prompt 

identification of quality problems. The money that otherwise would be spent in 

conducting litigation would be recycled so that more patients get additional 

recovery, more quickly, with savings left over to the benefit of all Americans. It 

may also be possible to implement an administrative form of Early Offers as an 

option for care provided under federal health programs. 

A second innovative approach involves strengthening medical review 

boards. Boards with special expertise in the technical intricacies of health care 

can streamline the fact-gathering and hearing process, make decisions more 

accurately, and provide compensation more quickly and predictably than the 

current litigation process. As with Early Offers, incentives are necessary for 

patients and health care providers to submit cases to the boards and to accept 

their decisions.

The Administration intends to work with states on developing and 

implementing these alternatives to litigation, so that injured patients can be fairly 

compensated quickly and without the trauma and expense that litigation entails. 

Encouraging Improvements in Health Care Quality and Patient Safety 

Through Litigation Reform

The best protection for patients can be provided by medical professionals, 

not lawyers. High quality care that achieves the best possible patient outcomes 

makes litigation unnecessary. The Administration is already taking many steps 

to improve quality of care. 
Page 21

The ability of Americans to work with their doctors to choose and control 

their own health care is an important ingredient of quality. The people who are 

most affected by the quality of care--patients and their families--should be the 

ones deciding how they obtain their health care. To do so, they need helpful 

information. 

The Administration is undertaking a number of activities to promote quality 

by increasing and improving the information available to patients, and taking 

other steps to make the system safer and better. Some specific activities include:

• Developing the Consumer Assessment of Health Plans Survey (CAHPS) 

that provides information on consumers’ descriptive ratings of health plans 

as well as evaluative ratings of care.

• Providing quality information about nursing homes on the Internet to enable 

families to make comparisons and informed judgments.

• Examining how information technology, such as decision support systems 

embedded in clinicians’ personal digital assistants (PDAs), can improve safe 

patient care.

• Promoting the introduction and use of bar coding for dispensing prescription 

drugs to reduce errors.

• Developing voluntary standards necessary to make the creation of an 

electronic health care record possible; this would make a patient’s medical 

records available across different care sites, and to the patient.

• Examining model disease management programs that can improve the 

quality of care for people with asthma and diabetes.

• Developing computer software that hospitals can use to identify quality 

problems, assisting in quality improvement activities.

• Developing a program called “Put Prevention into Practice” in order to 

assure that evidence-based recommendations for clinical prevention are 

actually translated into improved delivery of services.

The Administration will work to expand these efforts, to give patients and 

their doctors the information they need to make informed and appropriate 

medical decisions, while protecting the confidentiality of sensitive information 

from inappropriate uses. 

One of the key ingredients to reducing errors is optimizing doctors’ 

inherent ethical imperative to improve patients’ health care. We must do a better 
Page 22

job of helping them and other experts to identify problems before they result in 

injury and to develop better ways of providing care. 

Researchers have found that most errors are system failures, rather than 

individual faults. Doctors could do their job correctly, and most errors would still 

occur. In addition, since human error inevitably occurs, built-in systems should 

automatically prevent, detect and/or correct errors before they occur. Continuous 

quality improvement processes, which have been effective in many other “highrisk” sectors, focus on finding ways to design work processes so that better 

results and fewer errors can be achieved. This requires measurement and 

analysis of the ways health care is provided, and the results of care for patients. 

By encouraging the experts to work both inside their own organization and with 

outside groups to share information on how medical errors or “near misses” 

occur and ways to prevent them, health care organizations have begun to 

develop tools to prevent injury and increase knowledge of how errors occur.

Success in improving health care practices to prevent errors and deliver 

high-quality care, however, requires a legal environment that encourages health 

care professionals and organizations to work together to identify problems in 

providing care, evaluate the causes, and use that information to improve care for 

all patients. 

A principal obstacle to taking these steps is the fear by doctors, hospitals, 

and nurses that reports on adverse events and efforts to improve care will be 

subject to discovery in lawsuits. As several distinguished physicians recently 

wrote, “for reasons that include liability issues and a medical culture that has 

discouraged open discussion of mistakes, the power of individual case 

presentation, so important in the physician’s clinical medicine education, has not 

been harnessed to educate providers about medical errors.”73 

A number of states have enacted peer review statutes that protect the 

confidentiality of information reported to hospitals and other health care entities. 

States that have such laws have found that they improve reporting of adverse 

events, thereby facilitating efforts to identify problems and improve quality. These 

protections do not take away from the ability of plaintiffs to succeed in lawsuits: 

all of the medical information currently available to pursue a lawsuit is still 

available. 

Confidentiality protections provided by law for specific activities also have 

proven successful in identifying problems and reducing medical errors:

• The National Nosocomial Infections Surveillance System, operated by the

Centers for Disease Control, receives voluntary reports from hospitals on 

hospital-acquired infections. It has reduced these infections by 34%. The 

system works because federal law assures participating hospitals that 

information supplied by them will be kept confidential. 
Page 23

• MedWatch is a voluntary Medical Products Reporting System operated by 

the Food and Drug Administration. Adverse events concerning medical 

devices and drugs may be reported to it to identify problem areas. Names 

of the reporting doctors and hospitals, and the name of patients involved, 

are not releasable under the Federal Freedom of Information Act.

• The Department of Veterans Affairs maintains a Patient Safety Reporting 

System to learn about issues related to patient safety. To encourage 

reporting, federal law provides that reports relating to new safety ideas, 

close calls, or unexpected serious injury are confidential and privileged. 

This is based on the successful system operated by the National 

Aeronautics and Space Administration for aviation safety reporting.

• New York State operates the New York Patient Occurrence Reporting and 

Tracking System. Adverse events are reported to it. New York State law 

prevents disclosure of reports under the state’s freedom of information law.

The IOM report “To Err is Human” noted that while many of the legal 

protections developed by states have promise, many current state peer review 

statutes do not go far enough. For example, these laws typically apply only to a 

single institution and do not reflect the systemic nature of health care as it is now 

provided. They do not provide a way to obtain data from various providers at one 

time and to compare results. Many states, moreover, do not have any peer 

review statutes at all. The IOM, therefore, recommended legislation to ensure 

that peer review proceedings and reports remain confidential.74 

The President believes that new, good-faith efforts to improve the quality 

and safety of health care should be protected and encouraged, not penalized by 

new lawsuits. In his speech in Milwaukee on February 11, President Bush urged 

Congress to do something about this problem by enacting legislation that will 

give health professionals the confidence necessary to expand their reporting of 

problems in the health care system.

 Following the President’s request, and with assistance from the 

Administration, legislation was introduced in both Houses of Congress that would 

provide protection from discovery in lawsuits for reports made to Patient Safety 

Organizations and for their collaborative efforts to improve care. A tri-partisan 

Bill that reflects the President’s goals, sponsored by Senators Jeffords, Breaux, 

Frist, and Gregg, has been introduced in the Senate (S. 2590). Chairwoman 

Johnson and others have introduced a similar Bill in the House (H.R. 4889). 

Enactment of this legislation will ensure that patient safety and quality reports are 

given the protection they deserve. Information developed or used as part of 

Patient Safety Organizations’ activities would be protected, and would not be 

available for trial lawyers to exploit in order to find new opportunities for litigation. 
Page 24

The assurance of confidentiality is a proven approach to increase 

reporting by doctors, nurses, and other health care providers. With more 

information, quality experts will be better able to identify problems and 

recommend improvements in a proactive way. Rather than reacting to an 

avoidable injury or quality problem after it occurs, without benefit of careful and 

systematic review, medical professionals will be able to find system weaknesses 

and fix them before a patient is injured. Passage of the legislation will improve 

the quality of health care. 

 

1

 Washington Post, July 4, 2002.

2

 Los Angeles Times, “Physicians Fold Under Malpractice Fee Burden,” March 4, 2002.

3

 Los Angeles Times, March 4, 2002.

4

 Los Angeles Times, March 4, 2002.

5

 Senn, Dunn, Marsh, Roland Insurors, Personal Correspondence, July 2002.

6

 Allentown Morning Call, “Care crisis: Malpractice premiums crippling doctors,” January 3, 2002.

7

 Philadelphia Inquirer, “Doctors and Patients are at Risk,” January 19, 2001.

8

 Philadelphia Inquirer, “Rising Costs of Insurance Sends Doctors Scurrying,” December 21, 

2000.

9

 Akron Beacon Journal, January 2002.

10 Advancing Health in America, June 12, 2002, Statement before the House Judiciary 

Subcommittee on Commercial and Administrative Law.

11 Los Angeles Times, “Mississippi Doctors Give Up Obstetrics,” November 19, 2001.

12 Associated Press, “Exodus of doctors causing crisis for moms-to-be in Mississippi,” July 11, 

2002.

13 Fox News, “Lawsuits Fueling Health Care Crisis,” May 14, 2002.

14 The Advocate, “Natchez Doctors Eye Vidalia,” May 19, 2002.

15 Bryant, Julie, “Malpractice Rates Sicken Hospitals,” Atlanta Business Chronicle, March 25, 

2002.

16 Bryant, Julie, “Malpractice Rates Sicken Hospitals,” Atlanta Business Chronicle, March 25, 

2002.
Page 25

 

17 American College of Obstetricians and Gynecologists, “The Hot States,” Red Alert Facts: The

Professional Liability Insurance Crisis, May 2002.

18 American College of Obstetricians and Gynecologists, June 12, 2002.

19 Center for Health Systems Change, “An Update on the Community Tracking Study, A Focus on 

the Changing Health System,” Issue Brief No. 18, February 1999. 

20 “Fear of Litigation Study,” conducted by Harris Interactive, Final Report, April 11, 2002. 

21 Berwick, Donald M., “As Good As It Should Get: Making Healthcare Better in the New 

Millennium,” National Coalition for Healthcare, 1998.

22 Maulik, Joshi; Anderson, John; et al., “A Systems Approach to Improving Error Reporting,” 

Journal of Healthcare Information Management, Vol. 16, No. 1. 

23 Maulik, Joshi; Anderson, John; et.al., “A Systems Approach to Improving Error Reporting,”

Journal of Health Care Information Management, Vol. 16, No. 1.

24 Committee for Quality Health Care in America/Institute of Medicine, “To Err is Human: Building 

a Safer Health System,” 2000. 

25 IOM Report, “To Err is Human: Building a Safer Health System,” 2000.

26 O’Connell, Jeffrey; Baldwin, Joseph, “Tort Law as Melodrama--Or Is It Farce?,” forthcoming 

article in UCLA Review.

27 A.M. Best, Statistical Study, July 16, 2001.

28 Kessler, D.; McClellan, M, “Do Doctors Practice Defensive Medicine,” Quarterly Journal of 

Economics, 111(2): 353-390, 1996. 

29 A recent health insurance study estimate that a 1% increase in health insurance premiums 

leads to a 0.31% reduction in employer-sponsored coverage. Gruber, J.; Lettau, M, “How elastic 

is the firm’s demand for health insurance,” National Bureau of Economic Research Working 

Paper, #8021, 2000.

30 This amount includes $23.66-42.59 billion for the cost of defensive medicine; $3.91 billion in 

liability insurance paid to Medicare, Medicaid, Veteran’s Affairs, and other federal programs; $246 

million in liability insurance paid through health benefits for its employees and retired employees; 

and $778 million in lost tax revenue from self-employed and employer-sponsored health 

insurance premiums that are excluded from income.

31 This amount includes $23.66-42.59 billion in savings from elimination of defensive medicine 

and $1.68 billion in reductions in liability insurance premiums paid by the Federal Government.

32 The Administration’s proposed Medicare prescription drug plan is estimated to cost $190 billion 

over ten years by the CBO. The Administration’s proposed Health Insurance Tax Credit is 

estimated to cost $89 billion over ten years.

33 Localio, A.R.; Lawthers, A.G.; et.al., “Relation between malpractice claims and adverse events 

due to negligence. Results of the Harvard Medical Practice Study III,” New England Journal of 

Medicine, Volume 325:245-251, July 25, 1991.
Page 26

 

34 GAO, “Medical Malpractice: Characteristics of Claims Closed in 1984,” GAO/HRD-87-55, April 

1987, p. 18; PIAA.

35 Subcommittee on Commercial and Administrative Law before the House Judiciary Committee, 

testimony presented by PIAA, June 12, 2002.

36 O’Connell, Jeffrey, “An Alternative to Abandoning Tort Liability,” 60 Minnesota: 501-506-509, 

1976.

37 PIAA Fact Sheet, Malpractice Insurance: The Basics, 2000.

38 Weiler, Paul, “Medical Malpractice on Trial,” 1991.

39 O’Connell, Jeffrey; Kelly, Brian, “The Blame Game,” p.125; Dodd, Christopher, “A Proposal for 

Making Product Liability Fair, Efficient, and Predictable,” p.139; Statement of George Priest, 

“Punitive Damages: Tort Reform and FDA Defenses,” Hearings before the Committee on the 

Judiciary of the United States Senate, Serial No. J-104016, April 4, 1995, p. 85. (Dealing with 

product liability litigation generally).

40 Medical Malpractice, III Insurance Issues Update, March, 2002.

41 Fox News Channel, “Lawsuits Fueling Health Care Crisis,” May 14, 2002, source from 

American College of Obstetricians and Gynecologists (ACOG).

42 Trends in Personal Injury by Jury Verdict Research, 2001.

43 2001 Current Award Trends in Personal Injury by Jury Verdict Research, 2002.

44 Personal Communication from Rep. Chip Pickering, July 2002.

45 Personal Communication from Rep. Chip Pickering, July 2002.

46 Physician Insurers Association of America (PIAA), Trend Analysis of Claims by Close Year, 

2000. 

47 PIAA in Health Care Financial Trends Report, April,2002.

48 Quoted in Keeton, Robert; O’Connell, Jeffrey, “Basic Protection for the Traffic Victim,” Little 

Brown, 1965.

49 Subcommittee on Commercial and Administrative Law before the House Judiciary Committee, 

testimony presented by PIAA, June 12, 2002.

50 O’Connell, Jeffrey, “An Alternative to Abandoning Tort Liability,” 60 Minnesota: 501-506-509, 

1976.

51 O’Connell, Jeffrey, “An Alternative to Abandoning Tort Liability,” 60 Minnesota: 501-506-509, 

1976.

52 Localio, A.R.; Lawthers, A.G.; et.al., “Relation between malpractice claims and adverse events 

due to negligence. Results of the Harvard Medical Practice Study III,” New England Journal of 

Medicine, Volume 325:245-251, July 25, 1991.
Page 27

 

53 O’Connell, Jeffrey; Pohl, Christopher, “How Reliable is Medical Malpractice Law?,” 359 Journal 

of Law and Health,1998. A Review of Vidmar, Neil, “Medical Malpractice and the American Jury: 

Confronting the Myths About Jury Incompetence, Deep Pockets, and Outrageous Damage 

Awards,” University of Michigan Press, 1995.

54 O’Connell, Jeffrey; Pohl, Christopher, “How Reliable is Medical Malpractice Law?,” 359 Journal 

of Law and Health,1998. A Review of Vidmar, Neil, “Medical Malpractice and the American Jury: 

Confronting the Myths About Jury Incompetence, Deep Pockets, and Outrageous Damage 

Awards,” University of Michigan Press, 1995.

55 “Fear of Litigation Study,” conducted by Harris Interactive, Final Report, April 11, 2002.

56 IOM Report, “To Err is Human: Building a Safer Health System,” 2000.

57 Medical Liability Monitor, Vol. 27, No. 1, January 2002. 

58 American Tort Reform Association, December 2001--Non-Economic Damage Reform; Shook, 

Hardy & Bacon L.L.P, Liability Reform Laws, October 2001.

59 Aon Risk Consultants, Inc., “Long Term Care General Liability: Professional Liability Actuarial 

Analysis,” February 28, 2002.

60 Aon Risk Consultants, Inc., “Long Term Care General Liability: Professional Liability Actuarial 

Analysis,” February 28, 2002.

61 Information supplied By Rep. Chip Pickering.

62 A.M. Best Company, Inc., “As Nursing home liability losses soar, carriers stop writing 

business,” February 7, 2000.

63 Modern Healthcare, January 7, 2002; Medical Malpractice, III, Insurance Issues Update, March 

2002.

64 The Record (New Jersey), December 23, 2001.

65 The New York Times, “Doctors Face a Big Jump in Insurance,” March 22, 2002.

66 The Clarion-Ledger, “Lloyd’s of London Agrees to Insure Mississippi Doctors But 25-Member 

Group Will Pay Rates 400% Higher,” December 22, 2001.

67 HHS Analysis of PIAA and other source data, 2002.

68 Best’s Insurance News, “Mississippi Looks for Answers to Lack of Med-Mal Coverage,” 

December 28, 2001.

69 NAIC Profitability by Line by State, 2001, presented before House Judiciary Committee by 

PIAA June, 2002. 

70 Zuckerman, Stephen, Bovbjerg, Randall R., and Sloan, Frank, “Effects of Tort Reforms and 

Other Factors on Medical Malpractice Insurance Premiums,” Inquiry 27: 167-182, Summer 1990.

71 Analysis from the Council of Economic Advisors, July, 2002. 
Page 28

 

72 O’Connell, Jeffrey, “Offers that Can’t be Refused,” 1977 Northwestern University Law Review 

589 (1982); Moore, Henson; O’Connell, Jeffrey, “Foreclosing Medical Malpractice Claims by 

Prompt Tender of Economic Loss,” 44 Louisiana Law Review 1267 (1984); Moore, Henson; Hoff, 

John, “H.R. 3084: A More Rational Compensation System for Medical Malpractice,” 49 Law and 

Contemporary Problems 117 (Spring 1986). A Statement by the Committee for Economic 

Development, “Breaking the Litigation Habit,” 2000. A Bill to implement this approach was first 

introduced by Rep. Henson Moore and Rep. Richard Gephardt in 1987, H.R. 5400, 98th

Congress.

73 “Learning from our Mistakes: Quality Grand Rounds, a New Case-Based Series on Medical 

Errors and Patient Safety,” Annuals of Internal Medicine, Volume 136, Number 11, June 4, 2002. 

74 IOM Report, “To Err is Human: Building a Safer Health System,” 2000.