Pennsylvania News

Public Citizen consumer group did a report on Pennsylvania medical malpractice

Public Citizen consumer group did a report on Pennsylvania medical malpractice that was released on January 14, 2003. According to the Public Citizen, the Pennsylvania medical malpractice "crisis", as described by the Pennsylvania Medical Society (PMS) is not in fact caused by the "frivolous lawsuits" and "out of control legal system" awarding "astronomic jury verdicts" as the PMS claims.

The consumer group found that Pennsylvania medical malpractice cases are the result of the quality medical care being provided, instead of a legal issue. The Pennsylvania health care providers have failed to address that instead of increasing the quality of medical care given, they are infringing on the legal rights of patients.

The Public Citizen executive summary highlighted aspects of its report on http://www.citizen.org, including:

  • The costs of medical negligence to Pennsylvania's patients and consumers is considerable, especially when compared to the cost of malpractice insurance to Pennsylvania's doctors. Extrapolating from Institute of Medicine findings, we estimate that there are 1,920 to 4,277 preventable deaths in Pennsylvania each year that are due to medical errors. The costs resulting from preventable medical errors to Pennsylvania's residents, families and communities is estimated at $742 million to $1.3 billion each year. But the cost of medical malpractice insurance to Pennsylvania's doctors is only $372 million a year. (Not including the varying amount assessed as contributions to the state's Catastrophic Loss Fund.)

  • Government data show that medical malpractice awards have increased at a much slower pace in Pennsylvania than claimed by the Pennsylvania Medical Society. According to the federal government's NPDB, the median medical malpractice payment by a Pennsylvania physician to a patient rose 33 percent from 1997 to 2001, from $150,000 to $200,000, or eight percent a year. By contrast, medical organizations in Pennsylvania quote data from Jury Verdict Research (JVR), a private research firm, indicating that verdicts rose almost 43 percent from 1997 to 2000, from $700,000 to $1 million, or 14 percent a year. The reason for the difference: JVR collects only jury verdict information that is reported to it by attorneys, court clerks and stringers. The NPDB is the most comprehensive source of information that exists because it includes both verdicts and settlements. Ninety-six percent of all medical malpractice cases are settled, as opposed to decided by a jury, and settlements result in much lower awards than jury verdicts.

  • Government data show that medical malpractice awards in Pennsylvania have increased at a slower pace than national health insurance premiums. While NPDB data show that the median medical malpractice payment in Pennsylvania rose 33 percent from 1997 to 2001 (an average of 8.3 percent a year). The national average premium for single health insurance coverage increased 39 percent over that time period (9.5 percent a year). Payments for health care costs, which directly affect health insurance premiums, make up the lion's share of most medical malpractice awards.

  • Government data reveals little growth in medical malpractice claims paid in Pennsylvania. According to the federal government's National Practitioner Data Bank (NPDB), there has been only a modest increase in the total number of malpractice claims paid in Pennsylvania from 1995 through 2001. The difference between the 957 claims paid in 1995 and the 1,049 claims reported in 2001 is less than ten percent over six years, or less than two percent a year.

  • Large verdicts in Pennsylvania have dramatically declined. The number of large jury verdicts in Pennsylvania and the amount paid in medical malpractice in these large verdicts decreased dramatically in recent years. From 2000 to 2002, the number of jury awards of $1 million dollars or more dropped by 50 percent (from 44 to 22) while the overall amount of these awards decreased by over 75 percent (from $415 million to $93 million).

  • At the height of the medical malpractice "crisis," the number of licensed physicians in Pennsylvania actually increased by 7.5 percent. According to data provided by the Pennsylvania State Medical Board, the government agency charged with issuing medical licenses to qualified doctors, 34,330 physicians were licensed and practicing medicine in Pennsylvania during 2001. In 2002, the Board issued 36,921 licenses-a 7.5 percent increase over 2001. This increase in physician population is not isolated. Over the past seven years, the number of doctors licensed and residing in Pennsylvania increased by 14 percent. The theory that skyrocketing medical malpractice insurance premiums are forcing doctors to flee the state is not borne out by the facts.

  • Pennsylvania ranks 5th in doctor population. According to the American Medical Association (AMA), Pennsylvania is home to five percent of the nation's doctors, a distinction that ranked the state's physician population the 5th highest in the nation. Further, the AMA reports that Pennsylvania has one of the largest physician populations under the age of 35, with 5.5 percent of the nation's younger doctors practicing in Pennsylvania.

  • Repeat offender physicians are responsible for the bulk of medical malpractice costs. According to the federal government's National Practitioner Data Bank, which covers malpractice judgments and settlements since September 1990, 10.6 percent of the state's doctors, have paid two or more malpractice awards to patients. These repeat offender doctors are responsible for 84 percent of all payments. Overall, they have paid out $2.9 billion in damages. Even more surprising, only 4.7 percent of Pennsylvania's doctors (1,838), each of whom has paid three or more malpractice claims, are responsible for 51.4 percent of all payments.

  • Repeat offender doctors suffer few consequences in Pennsylvania. Public Citizen's analysis of the federal government's NPDB finds that Pennsylvania ranks second, only behind Kansas, in having the largest proportion of malpractice committed by repeat offender doctors. Only 5.1 percent of those doctors who made five or more malpractice payments were disciplined by the state board of medicine. Only 6.8 percent of those doctors who made 10 or more malpractice payments were disciplined.

  • Where's the doctor watchdog? Pennsylvania's State Board of Medicine is dangerously lenient with doctors, regularly letting serious and sometimes repeat offenders off the hook. In Public Citizen's ranking of state medical boards, Pennsylvania ranked 36th out of 50 states and the District of Columbia. The ranking is based on the number of serious disciplinary actions per 1,000 doctors in each state. In 2001, nationally there were 3.36 serious actions taken for every 1,000 physicians. Pennsylvania is among the bottom third of U.S. states when its diligence in taking disciplinary actions is measured - 2.18 serious actions per 1,000 doctors.

  • The spike in medical liability premiums was caused by the insurance cycle, not by "skyrocketing" malpractice awards. J. Robert Hunter, one of the country's most knowledgeable insurance actuaries and director of insurance for the Consumer Federation of America, recently analyzed the growth in medical liability premiums. He found that amounts charged for premiums do not track losses paid, but instead rise and fall in concert with the state of the economy. When the economy booms and investment returns are high, companies maintain premiums at modest levels; however, when the economy falters and interest rates fall, companies increase premiums.

  • Insurer mismanagement compounded the problems. Artificially low premiums in the 1990s, market competition, and accounting irregularities forced the Phico and St. Paul insurance companies to stop offering medical malpractice insurance in Pennsylvania. Phico Insurance Co. was the third-largest malpractice insurer in the state, and the St. Paul Companies, Inc. was the seventh largest. Together they carried about 18 percent of the state's physicians. In each case, the departure of the insurance company from the market had little to do with malpractice award payments than with the mismanagement of the company itself. Phico had been placed under the supervision of insurance regulators and was later sued by the state's Insurance Department. The lawsuit alleged that Phico directors ignored signs of financial trouble at the company and pressured the board to pay dividends at a time when the insurer's surplus "was declining drastically and significant strengthening of loss reserves was required." As the Wall Street Journal found in a front page investigative story on June 24, 2002, when malpractice claims increased in the 1980s, St. Paul and its competitors sharply raised rates. But, as the frequency and size of claims leveled off, St. Paul realized it had set too much money aside for malpractice payments. The company then released $1.1 billion from its reserves between 1992 and 1997, which dramatically boosted its bottom line. St. Paul's apparent profitability attracted numerous, smaller carriers into the malpractice insurance market, which led to widespread, competitive price-cutting. By the end of the 1990s, the revenue from premiums decreased to the point that insurers no longer could cover malpractice claims. Some collapsed and others, like St. Paul, withdrew from the market.


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