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Chris Nace
Chris Nace
Attorney • (202) 930-0292

Repeal of McCarran-Ferguson Act a Better Option than Tort Reform

9 comments

Interesting letter in Roll Call today by Congressman Jerrold Nadler. In discussing the recent reforms of our health care system, Nadler points out that if we want to reduce the cost of malpractice premiums that physicians pay, we should repeal the McCarran Ferguson Act, which currently provides malpractice insurers an exemption to anti-trust laws. Seems logical: if you want to give physicians more power to reduce the cost of the insurance they buy, don’t let the insurance companies collude on price.

Nadler points out that doctors often decry the cost of malpractice premiums and blame lawsuits as the reason their premiums are so high. But consider this:

First, restricting patients’ rights does nothing to eliminate preventable medical errors. Every year, hundreds of thousands of Americans are seriously injured because of preventable medical errors, and as many as 98,000 die. Beyond the very real toll that medical malpractice takes on the injured and their families, these errors cost the health care system up to $29 billion per year. While it is disputed whether limiting medical lawsuits would actually reduce health care costs, it most certainly would limit the legal options now afforded to patients who suffer as a result of malpractice. To decrease the cost of health care we need to focus more on preventing medical errors instead of restricting the ability of a patient to pursue justice.

Moreover,

Second, claims that “frivolous” lawsuits are threatening the justice system and our medical professionals are simply not supported by the research. A 2006 study published in the New England Journal of Medicine found that the contention that frivolous lawsuits have overrun the judicial system is “overblown.” Instead, research showed that the vast majority of malpractice claims — about 97 percent — involved an actual medical injury and that 80 percent involved a major disability or death. In fact, the study found that nonpayment of claims in cases where an error has occurred represents a much bigger problem for the medical industry.

As Nadler explains:

Finally, it is the insurance companies — not the cost of malpractice awards — that are to blame for the high cost of malpractice premiums. Research shows that malpractice claims have remained stagnant for decades and that the number of lawsuits is significantly smaller than the actual number of people harmed by medical errors.

So what’s the point of all this? While those who would dare bring a malpractice lawsuit are vilified and blamed for the rising cost of health care, the simple fact is that insurance companies have been given a free pass and don’t have to deal with market competition under McCarran-Ferguson. Without competition, there is no reason for these insurers to offer reasonable rates to doctors.

We can all agree that doctors ought not be held hostage by insurance company premiums. But limiting the rights of those injured by medical errors is not the proper way to lower the cost of premiums. Letting the free-market set the price would ease pressures on doctors while keeping the court house door open to victims of medical negligence.

9 Comments

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  1. Mike Bryant says:
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    Interesting point which so many people miss. Of course no competition leads to a high rate. Nice world for the Insurance companies – charge high rates, attack the claims, taint the jury and rake in the profits. The have done a great job of pitting the doctors against the lawyers.

  2. Jim O'Hare AIC AIS VP med mal claimsj says:
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    Very little connection between med mal rates and the cost of healthcare. The M-F act has got to go for other reasons. Like – to bring competition and the cost of healthcare down. If HC was cheap – Who would care about defensive medicine? There are 1500 HC carriers in the US. How many do you have access to? A couple tops. A lobbyist generated captive market within individual state borders. An Aetna BC/BS dream scenario.

    The med mal market is very soft in Florida with more than enough capacity. Physicians Insurance company was founded in 2002, and we are the 2nd oldest domestic writer of med mal. I am sure recent reforms helped, as Florida was toxic for a long time. Rates are as good as they are going to get. Until the premiums collected by these new companies come due and they fail, leading to a hard market again.

    Honestly- do you really believe that 98k people die each year directly due to med mal. combine this number with the fact that 3-4% of incidents turn into a claim. Therefore the plaintiff bar is missing out of 90,000 Wrongful death cases a year? Really?

    I dont buy the frivelous lawsuit argument, since the majority is on contingency. It is your nickel and you are not going to out nickel me. Credible cases get credible responses from me. The impact is negligible.

    What is wrong with arbitration? It is just a different forum. I understand that it removes the hollywood ham acting dog and pony show to the non peer audience. That just adds gas to the forest fire. Lets take the hysteria away and let people that can understand decide. Try on the defendant hat for a second, you charged with legal malpractice. Would you want Goober that skipped 10th grade to control your future? Fairly, wouldn’t you want those in the know to decide your case sans emotion. Other attorneys even!!
    Tell me no, and that any ole citizen would do as this is the way our slave owning founding fathers wanted it.

    What was Jack Nicholsons comment about the truth?

    Some of you can- please pipe in

    regards jim

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    Jim,
    Some interesting comments. Some I certainly agree with, others . . . .

    Yes, we can agree that M-F has to go. Competition across state lines should certainly exist. As small businesses, most plaintiffs’ lawyers certainly understand the costs that all small businesses deal with and HC is a big one.

    Yes, I do believe that 98,000 people die each year from medical errors and that countless others are injured each day. I’m not sure what you mean by questioning how the plaintiffs’ bar is missing them. We need to be approached by a client to even investigate a case. This isn’t an area where we can go out looking for cases. And the truth is most people–even those that do seek out a lawyer–are skittish about filing a lawsuit.

    But you are right about contingency fees keeping frivilous cases to a minimum. These cases are too expensive to get involved in unless there is a very real chance for recovery. Most doctors / hospitals will vigorously defend med mal cases, so there isn’t any reason to ever think you can collect on a truly meritless case–you would just end up losing time and money, so no point in bringing a bad case.

    Finally, with regard to arbitration, let’s not forget that trial by jury is a constitutional right. It’s as American as the right to free speech, freedom of religion and the freedom of the press. On that basis alone we should trend lightly on limiting citizens’ access to juries.

    Moreover, it sure seems that when deciding issues of damages don’t we want our neighbors listening to the evidence and deciding the value of a case rather than some panel of doctors?

    Thank you for your very honest and interesting comments. All the best,
    Chris

  4. Jim O'Hare AIC AIS VP med mal claims says:
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    Thanks for your response and allowing me to participate in the discussion. I am very surprised that views from my side of the fence are so rare. If not for the opposing opinion, you may just preach to your own choir.

    I do not suggest soliciting WD cases. I just find it hard to fathom that maybe 90,000 people die each year due to me mal , and with our litigious society, every one of those deaths doesn’t get reviewed. With that in mind, I dispute the number. It is also impossible to measure. Who is looking at every death and assuming that it was med mal ? Impossible to be credible.

    Arbitration is the same argument with a different forum that eliminates the nonsense. Pick your own arbitor, yours and mine will pick a third. When we had med mal panels in NY there was a doc an esq and a judge on the panel.

    Trial by jury is a defendants constitutional right, So is a jury of peers- doctors dont get them. In 25 years I never had a juror MD, not even a dentist nor chiropractor. Actually, the further away from a peer , the better. Defenses are always complicated, causation is an artful concept. The jury pool has dogs playing poker on velvet over the mantal. A joke – an exaggeration of the premise.

    Keep them coming.

    regards
    jim O’Hare VP claims Physicians Ins co

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    Jim,
    Sorry to just get back to you. I’ll keep this short and sweet because it is late:

    1. Trial by Jury is not a defendant’s right. That is the sixth amendment in criminal cases. The seventh amendment covers civil actions. It is actually a right that was coveted by plaintiffs and defendants alike.

    2. I think it is a fallacy that we live in a litigious society. At least in the med mal area. My clients HATE that they have sought out a lawyer. They talk about trying to get by on one salary or disability by finally sucombing to financial stress and not knowing where else to turn. Or they fear that someone else might be unnecessarily hurt. But they never are looking to make a quick buck. Each and every one of my clients would gladly exchange any amount of money to have their mother, son or sister back. Or to live pain free. Or to just be able to go back to work.

    3. I’m not sure what nonsense you are referring to that make arbitration a better forum. Civil trials are generally stale. There really isn’t any sort of dog and pony show because judges don’t allow it.

    4. Finally, I would point to the statistics in the District of Columbia where I spend a good part of my practice. Check out the 2009 stats here: http://www.dccourts.gov/dccourts/docs/civil/Medical%20Malpractice%20Statistics%20(2009).pdf

    You can find stats for other years here: http://www.dccourts.gov/dccourts/superior/civil/civil_actions.jsp

    The reality is that defendants want to be in front of juries because they win the VAST majority of jury trials. There are various reasons for these stats, including the misperception you make about our litigous society.

    Despite the odds being against us, I still think trial by jury is an institution worth protecting and participating in.

    All the best,
    Chris

  6. Jim O'Hare AIC AIS VP med mal claims says:
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    Thanks for the info: Let me explain myself. The right to trial by jury requires a discussion of “peer Group”. Black state like station in society as a definition. I believe peer refers to the defendant, as in tried by a jury of his/her peers. Am I wrong here? Do Doctors ever get a peer? Not in my 25 years. Have you ever picked a doc?

    Having monitored more than 100 trials to conclusion among all the other juries selected, consistently, over the last 25 years, the further away you are from being in the doctors “peer group” the higher the chance that you are selected by the plaintiff side.

    We dont live in a litigious society? really? Blaming McDonalds for , making me fat, the coffee is too hot, or yesterday’s

    :Group will sue McDonald’s over Happy Meal toys:

    I could clog your server with lawsuit goofiness, so can anyone else reading this post. No sale!99% of plaintiffs are truly injured in my view. The extent and why is always the gray area that we argue about.

    Why does the defense bar win 80% of cases tried? Because they get to select which ones to try, like the good ones that are slam dunk winners. ! Even then , they lose 20%.

    The “NONSENSE” that I am talking about is Ham acting TV performances to the lay jury to sway emotion instead of analyzing the facts. Perfect example- I did not settle a case with an experienced plaintiff attorney, and friend. This Brooklyn NY jury was a mix of people, mostly minorities. During his summation he quoted- MLK, Gandi, Coshise, Golda Meir and Muhammed, he turned to me and winked. He lost despite ham acting and the nonsense. A jury is a much less sophisticated audience than an arbitration panel of doctors and lawyers. Can we agree there? if so, are they better equipped to analyze facts?

    I have listened to more than 200 openings and 200 closing arguments. Most if not all of them are some attempt to recreate Matt McConaghys’ closing argument in a Time to Kill.

    I will give you that it is usually a mix of fact and ham. Chris – are you telling me there is no Ham? It is all above board, nothing but the facts maam? no tugs at the sympathy strings?

    Your argument that the defense wins 4 of 5 trials is accurate, but an example of what I am talking about. Finish the story.

    There are no perfect cases for the defense or the plaintiffs. When duty, liability, causation, and damages are discussed over a bottle of beer, both sides will focus on the problems with their own case. One of the above is always weak. That is why most cases settle. Since I win 4/5, a casual listener may think that the courts lean toward the insurance companies and there is an imbalance or the fix is in. Less than 10% of cases get tried, the rest settle.

    You couldn’t make a living winning one case in 5 could you? The odds are not against you, unless your case is so weak that the company really really likes their chances. If I won 4 out of 5 there would be no crisis- would there ?

    please advise
    Thanks Chris
    regards Jim

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    Hey Jim,

    No, I don’t think that a defendant in a civil case gets tried by a jury of his/her peers. Both sides are equal before the jury. That is a different between criminal and civil litigation. It is supposed to be a jury of each party’s peers.

    Yes, I have had doctors on juries. It is darn near impossible in Washington, DC or Montgomery County, MD to not end up with a doctor on the jury. And that is fine, but they obviously bring certain biases to their deliberations.

    But keep in mind that there is an inherent problem with having doctors on the jury: they are only supposed to decide cases based upon the evidence before them, not their own education, training and experience. So where do you draw the line? If I doctor were on a jury, she would have to consciously push her own knowledge out of her head and decide only on the evidence in the case. That’s just the way our civil system works.

    Okay, as for the McDonald’s coffee case, all I will say is see this movie: http://hotcoffeethemovie.com/

    The reality about the coffee case is MUCH different than what the media has put out there.

    With regard to the hamming it up, there is passion and emotion in a trial. I mean, we are dealing with someone’s life. It is our job as advocates to portray that emotion to the jury. But most judges will only let that go so far (at least in my experience) and, quite honestly, I think juries see through it if you push it over the line.

    My point is that despite my faith in juries, I think that there are a lot of external factors that influence their decision-making, and it isn’t sympathy for the plaintiff. If anything, doctors are the sympathetic party in a lawsuit (at least in my neck of the woods).

    I agree there are some bad cases that get filed. But that happens in any area of law. Part of that is because we have to file a lawsuit to do discovery, so sometimes you learn things about your case that you could only learn during discovery.

    But I’m just not sure that there is this “crisis” that exists. The top 10 malpractice carriers are more profitable than 99% of the Fortune 500 companies. That doesn’t sound like a crisis to me. It sounds like a crazy lucrative business. So what is the crisis? Where is the evidence of a crisis? Or is it just make believe to justify higher premiums?

  8. Jim O'Hare AIC AIS VP med mal claims says:
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    Chris I’ll give you the last word:

    Your problems with doctors, as jurors, is that their personal experience, training and education with interfere with the facts. Really? His/her understanding of a choleducojejunostomy doesn’t trump the guy from Burger king? Not an asset for fact weighing? I understand how this wouldn’t help you and why passion and emotion are necessary to trump knowhow.

    Everybody brings their training , or lack thereof, experience, usually none related to medicine, (other than watching a few episodes of House.) And the juror education piece of the puzzle, usually falling miles short of the doctors 12 years of post HS training. The ordinary citizen with 1/2 that is the way our founders wanted it. Look at PEER in Blacks.

    You mention emotion and passion, I call it ham acting and bias, it has nothing to do with the fact deliberation. Not necessary and used to fuel a jurors bias that you are so concerned about from physicians. “The evidence before them.!” Is any of that evidence? Do you really want an educated jury? if so, you are unique Chris.

    If you were ever sued for legal malpractice, the chances that you would be pleased with any of the juries you picked to sue a physician, are slim. Maybe an unfair guess on my part. Of the 200+ juries that I have seen over the years, I wouldn’t want any of them deciding my fate as a claims guy.

    Erkle, Jim from Taxi, pee wee herman, roseanne, glen beck, and chewbacca are sitting and get to decide your fate, based on their training education and experience. They are passionetly and emotionally sold a bill of goods. you’d be ok with that? that is the justice system.

    No passion, no emotion, jurors with similar degrees, or any degree. that provides a fair shot, level field.

    The market is as soft as it has been in years. Everyone is writing med mal, as the cycle predicts. The new ones dont put money aside for the rainy day , get hammered and drown. Leading to the hard market.

    Please advise where you get your med mal industry figures. Would really like to see those companies outperforming the fortune 500. Look at PRI in NY with the “negative surplus” of $150mil. I am still not sure what that means. I left MLMIC, a top 3 carrier in the county in 1996. They had a $2Billion, with a B, surplus, down to 100+ million.

    Boiled down- I want an educated group that understand to decide as a doctor is not an ordinary citizen. I agree with your jury trying the doc if he stole a pocketbook, then he is an ordinary citizen.

    give me a good case and I’ll pay it.
    best of Luck
    regards Jim

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    Jim,
    We’ve gone back and forth enough on this, but I will just clarify one thing. My problem with doctors as jurors isn’t that they have specialized knowledge. It is that the rules of court and of evidence only ask juries to consider the evidence that has been presented to them. So if a doctor has read literature on a topic but that literature hasn’t been admitted in evidence–either because the lawyers didn’t raise it or the judge found some reason to exclude it–now that doctor might weigh facts that are not properly before him or her.

    That’s how our civil justice system works. Doctors might not like it because they think they should be judged by different standards, but the rules of evidence apply equally to auto cases, antitrust actions, patent cases and medical negligence cases.

    So it isn’t that I have a problem with a doctor as a juror, but it does present evidentiary issues.

    I’ll look for the report on med mal insurers and will forward once I find it. I think it is on my desktop at work.

    All the best,
    Chris