Wednesday, February 09, 2005


Tort Reform

Many years ago, in a galaxy far, far away, I was a practicing attorney. So, yesterday, I had more than a passing interest in the Senate committee hearing on tort reform broadcast on
C-Span radio. (Yeah, I know, I'm a news junky). Several witnesses testified about the effects of the California tort reform system. California adopted a $250,000 cap on non-economic loss i(that is "pain and suffering") in 1975 (it has never been adjusted for inflation). Prominently featured at the hearing was the Olsen family whose 12 year old son was left blind and brain damaged due to egregious medical malpractice. Though a California jury awarded the Olsens $7,000,000 (they were not allowed to be informed of the cap), the award was reduced by the trial judge to the statutory maximum of $250,000.

Our Beloved Leader has argued that malpractice litigation is one of the prime reasons for the high cost of medical care in the U.S. I don't understand this.

First, the number of doctors has increased in every state of the union 1996 in both absolute terms and per 100,000 of population.

Second, malpractice insurance rates have increased 190% in California since the adoption of the $250,000 cap. In fact, in every state where economic caps have been adopted malpractice insurance rates have increased not decreased.

Third, the Congressional Budget Office has found that so-called defensive medicine (i.e. unnecessary tests) is primarily motivated by the income it generates for doctors not fears of malpractice claims.

I know that plaintiff's attorneys are not all spotless knights in search of truth and justice for their clients. I also know that most physicians are not hurting for money. It's been awhile since I've seen a doctor moonlighting as a greeter at the local Wal-Mart. But I have never heard the White House criticize either doctors or insurance companies or insurance brokers.

You might remember that Marsh & McLennan, the nation's largest insurance broker, agreed to settle a lawsuit by refunding $850,000,000 to their customers and apologizing for bid rigging of its contingent fees last week. This law suit was brought by the New York Attorney General Eliot Spitzer, not the Justice Department. Aon Corp. the country's second largest insurance broker announced today that it has set aside $50,000,000 to settle any potential lawsuit concerning its contingent fees.

I don't understand why contingent fees by plaintiff's attorneys are inherently evil and contingent fees charged by insurance brokers which have a clear and direct impact on the price of liability insurance are ignored by the White House. If malpractice insurance is such a clear contributor to the cost of health care, shouldn't the federal government take action?

I am looking for witnesses with knowledge of AON and Marsh & McLennan's bid rigging, contingency commissions and income accelleration practices who may be willing to talk about them. Please email any info to
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