A recent article in the New England Journal of Medicine (NEJM) acknowledges what advocates for consumers of healthcare have long known: caps on damages in medical malpractice claims do not work. The NEJM article, titled “A Systematic Approach to Containing Healthcare Spending,” explains that “
The State of California led the charge with so-called tort reform legislation that put caps on damages in med mal cases. Caps were meant to address a “medical malpractice” crisis that was supposedly created by runaway verdicts. However, the supposed crisis never existed; it was manufactured by Travelers Insurance, which controlled 70% of the California market at that time (mid-70s), and raised rates approximately 250%, 380% and 400% in three consecutive years. Doctors’ protests eventually resulted in the passage of the Medical Injury Compensation Reform Act (MICRA).
The insurer’s scheme was proven in a lawsuit in which Travelers was required to disgorge millions in bogus profits. But this case and the underlying scam was ignored by the media. Despite the fact that the rationale for MICRA never existed, tort reform was subsequently spread to virtually every State, including Ohio.
Ohio’s tort reform statute, like MICRA, puts arbitrary caps on damages in medical negligence actions. Worse yet, the legislation is so inherently devious that malpractice lawyers cannot even mention the cap to jurors in the courtroom. So, jurors are left with the false impression that their decision is sacrosanct, when in fact it is subject to the whim of legislators who are beholden to the contributions of well-heeled insurance interests. These caps have never even been adjusted for inflation. In fact, the California caps have not been adjusted since their enactment in the 70s.
Caps not only deceive jurors, they cheat the most severely injured Ohioans out of fair compensation. Imagine being told that your pain and suffering for having your arms or legs amputated, a devastating brain injury or being made quadriplegic are capped at $500,000. While most Ohioans support common-sense jury verdicts, few would agree that such a cap comports with common sense.
Equally troubling is the practical economic impact of caps. With a cap of $500,000, you can bet that any settlement will be a fraction of that amount, since insurers’ maximum exposure is set low. For consumers injured by a negligent doctor or hospital, you can forget a fair settlement offer. These economics make it virtually impossible for malpractice lawyers to even represent malpractice victims who do not have a significant economic loss. These are often children, the elderly, the unemployed and homemakers.
As physicians wake up to the facts, like in the NEJM article, and the public learns that tort reform only hurts the most vulnerable in society, these laws should face stiff legal challenges. Unfortunately, the insurance companies’ endless war chest will make it impossible for courts or legislatures to overturn it.