Med Mal Lawsuits Down, Profits Up

MedMal Lawsuits Down, But Insurance Profits Up

Peter Olszewski
Peter Olszewski

If you’ve paid attention to the debate over healthcare costs in the United States, one refrain you’ve often heard from the health insurance industry is the public menace posed by the growing threat of frivolous malpractice lawsuits. We are told that these claims inflate the cost of doing business for doctors’ offices, clinics, and virtually every other type of healthcare business. Hospitals, as the story goes, struggle to stay in the black while their malpractice insurance premiums drag on their bottom line. Doctors allegedly practice “defensive medicine,” prescribing oodles of unnecessary tests and procedures in order to shield themselves from malpractice allegations down the road. They say it all gets passed on to patients in the form of higher costs for access to healthcare, and there’s only one solution: tort reform. Limit the amount of damages that malpractice suits can seek from healthcare providers. It all seems reasonable upon first impression. There’s just one problem: it’s a $2.3 billion load of baloney. Over the past decade, the number of malpractice lawsuits has dropped almost every year, and so have the damages awarded in those lawsuits. Even though medical errors in Pennsylvania hospitals have risen nearly every year, the number of malpractice cases filed has dropped by 40 percent over the last decade, according to statistics from the administrative office of Pennsylvania’s courts. As a result, the amount paid out by insurance companies in malpractice suits has also plummeted. After paying $552 million in claims in 2004, commercial insurance companies paid only about $280 million in 2013. Meanwhile, the number of claims paid out by MCARE, a special fund within the Pennsylvania state treasury that serves as a malpractice insurer of last resort for the state’s participating healthcare providers, essentially has remained flat for the past seven years. After $379 million in claims during MCARE’s first year of operation in 2003, the annual payout to malpractice victims fell below $200 million in 2007 and has not risen above that threshold since, according to annual statistical reports of the Insurance Department of Pennsylvania. Not surprisingly, the decline in claims has not been matched by a similar decline in how much insurance companies are charging to protect healthcare providers from malpractice suits. Since the advent of MCARE in 2003, companies offering medical malpractice insurance have taken in $2.3 billion more in premiums than they’ve paid out in claims. The tort reform legislation those companies seek would inflate that number even more, while hindering your ability to ensure the well-being of yourself and your family after a medical error destroys your health. We don’t buy the insurance industry’s sob story, and neither should you. Tell your friends – and, if you really want to make a difference, your legislators – that calls for tort reform are a “solution” for a problem that doesn’t exist. With $2.3 billion in Pennsylvania profits, the health insurance industry is doing just fine.

Peter Olszewski
Peter Olszewski

Peter Paul Olszewski, Jr., a shareholder and managing partner at Scartelli Olszewski, P.C., brings 37 years of litigation experience. He is a renowned trial lawyer in Pennsylvania, specializing in medical malpractice, personal injury, and criminal defense. Peter's notable achievements include securing multi-million-dollar verdicts and serving as District Attorney and Judge. He is committed to community involvement and is actively engaged in various legal associations.
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