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Policy Forum: The State of the Union Health Care Proposals
We Need a Cure for Lawsuit Abuse

James R. Copland
Medical Progress Today
February 9, 2006

The Bible tells us that wise King Solomon resolved a dispute over a baby’s true parentage by proposing to split the infant in two. Our modern-day infants are endangered as well: as President Bush rightly noted in his State of the Union address, thousands of counties in the U.S. lack a single obstetrician. And like the imposter mother in the Biblical story, the well-financed plaintiffs’ bar would rather see the baby killed than lose a grip on its counterfeit claims.

Perhaps nowhere in the wild world of torts do we see legal excess so injurious to public well-being as in Trial Lawyers, Inc.’s profitable suits over infant birth defects. Such suits are the mother lode of medical malpractice claims, bringing in verdicts that exceed $100 million, and in the process, greatly enriching kings of tort like former vice presidential candidate John Edwards, who scored much of his wealth convincing sympathetic juries to make doctors pay for babies born defective.

It’s sad but true that some babies are born with defects. It’s also true, though, that the vast majority of birth defects are either genetic or stem from the pre-natal environment in the mother’s womb. While doctor error in delivery can harm newborns, the percentage of birth defects linked to obstetrician error is low indeed.

Lay jurors have little ability to distinguish between the rare cases in which physician mistakes cause infant birth defects and the vast majority of cases in which babies’ problems are simply bad luck. Naturally sympathetic, jurors tend to err on the side of affixing blame, even when there is none.

The result is unsurprising. When any activity is taxed, we tend to get less of it. So OB-GYNs have dropped their high-insurance obstetric practices, retired, or moved to areas less hospitable to lawsuit abuse. The areas left behind – those 1500 counties alluded to by the president – have far worse health care for mothers and babies as a result. And the areas affected aren’t only in remote rural locations; in recent years, South Philadelphia, a hotbed for lawsuits, has witnessed the closing of all its maternity wards.

The other natural consequence of the tort tax on obstetricians is that the health care providers change their behavior in an effort to lower their costs. The plethora of multimillion-dollar verdicts linking cerebral palsy to alleged birth asphyxiation in delivery encouraged doctors to perform more caesarean sections – procedures that are more expensive and often riskier for mothers’ health. Over thirty years, the incidence of C-sections quadrupled; the incidence of cerebral palsy didn’t budge an inch.

In continuing to highlight how lawsuit abuse harms American health care – and specifically in pointing out how litigation drives crucial medical caregivers out of the market, to everyone’s detriment – the President deserves much credit. But what about his proposed solution?

The centerpiece of President Bush’s medical malpractice reform is a $250,000 cap on noneconomic damages. Such caps exist in many states, most notably California, where over the damage cap’s 27 years on the books medical malpractice insurance premiums have risen at less than one-third the national rate.

By eliminating sky-high verdicts, such damage caps keep the pressure off critical specialists treating high-risk patients, e.g., neurosurgeons, orthopedic surgeons, and obstetricians. Also, by restoring a sense of predictability to the med-mal lawsuit lottery, damage caps reduce defensive medicine and lower health care costs: studies have shown that $250,000 caps reduce health costs by 5 to 9 percent.

So the President’s pet reform could have real impact, and it isn’t inherently “unfair” as its critics like to suggest: regulatory agencies regularly put prices on intangible harms, including human lives, and most states have substituted strict workers’ compensation injury schedules for traditional workplace injury tort regimes. Still, it’s important to note that there are genuine federalist objections to establishing a national solution for medical malpractice lawsuit abuse. If California has good laws limiting medical malpractice suits, and Pennsylvania has an overly permissive regime, doctors will tend to move out of Pennsylvania and into California, all else being equal. So states have every incentive to get their laws right (even if legislatures held captive by the trial bar, in the short run, won’t do so). Medical malpractice liability is thus very different from that over drugs and medical devices, where suits in outlier plaintiff-friendly “magic jurisdictions” can affect all Americans’ health, owing to the national commercial markets for such products.

So while the President’s bill is probably salutary on its face, it could set an unsettling precedent in overturning states’ historic province over medical malpractice tort law. In different hands, the effects could be deadly: witness the current “Democratic alternative” to the President’s reform, which sets damage caps at $878,000 and attempts to exert federal price controls on state insurance policies.

I’m not sure whether these federalist objections are sufficient to override the real good that President Bush’s medical malpractice reform would do, but they are enough to give me pause. And there is simply no way that the United States Senate will approve the President’s bill. Therefore, in addressing medical malpractice, I hope that the President is genuinely committed to finding solutions that rely on alternative approaches, such as the bipartisan Fair and Reliable Medical Justice Act, which would offer states grants to develop special “health courts,” such as those advocated by Common Good’s Philip Howard.

America’s system of litigation harms our health care in myriad ways; not only in the area of medical malpractice, but also by retarding medical innovation through mass tort suits over drugs and medical devices. There’s simply no silver bullet solution. The President is offering needed leadership on this issue. Here’s to hoping that in promoting change he tackles the issue with enough flexibility to maximize opportunities for real reform.

Jim Copland is the director of the Manhattan Institute’s Center for Legal Policy.

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