If you believe the insurance companies, doctors and chambers of commerce, lawsuits are easy, quick, and usually result in high settlements or massive jury verdicts. I don’t blame the doctors for this misinformation–they get their statistics and general knowledge from ads and propaganda spread by the insurance companies and the business associations.
The reality is that lawsuits, particularly medical malpractice lawsuits, are hard. From a lawyer’s perspective, we don’t want the “frivolous” cases. We only want cases that we think we can win. The reason is simple–medical malpractice cases are expensive to litigate. Even in the most minor of cases, it can cost $50,000 to $500,000 to take a case to trial. Except for cases of very clear negligence (those situations where a doctor cuts off the wrong leg, for example), pre-lawsuit settlements are basically unheard of. It’s important to remember that law firms are also businesses–they can’t sustain themselves if they take on frivolous lawsuits–the loss of money would eventually run the business into the ground.
So what about the claim that jury verdicts are overwhelmingly decided in favor of plaintiff-victims for huge amounts against defendant doctors? Here are some statistics from a recent study, looking at 10,056 medical malpractice cases from all 50 states between 2002 and 2005:
Extrapolating from this, there were settlements or voluntary dismissals by the plaintiff-victim in 41.4% of the cases.
Another claim frequently overheard is that the cost of medical malpractice lawsuits is what increases healthcare costs. However, the data (put out by the insurance industry) shows that medical malpractice payouts have increased less than 1% per year since 1992. By contrast, healthcare costs have increased by a factor of four since 1992, now up to about $2 trillion (with a “T’). Malpractice payouts are 0.25% of that number. A drop in the proverbial bucket.
The fearmongering by insurance companies is ridiculous, anyway. They are, of course, trying to protect their own profits. But they wage a public relations war, and try to draw doctors to their side by claiming that these medical malpractice cases actually hurt doctors. The reality is that doctors have insurance. The insurance is there to protect doctors, and it does just that. No one likes to get sued. But if I run a red light and hurt or kill someone, I have insurance to help resolve the situation. I want the person I hurt to get paid fairly. That’s personal responsibility.
The Washington Post (Ezra Klein’s Wonkblog) reported on Why an MRI costs $1,080 in America and $280 in France. In response to criticism, a follow-up blog post, What the Business Roundtable knows about American health care, was added.
The first tells us that the price of healthcare in America is so high because the prices are set high. It sounds silly, but they exclude other possibilities, namely that we go to the doctor more. We don’t, when compared with other major countries. The government sets the prices in some countries, and insurers and providers negotiate prices in other countries.
In America, Medicare and Medicaid negotiate prices on behalf of their tens of millions of members and, not coincidentally, purchase care at a substantial markdown from the commercial average. But outside that, it’s a free-for-all. Providers largely charge what they can get away with, often offering different prices to different insurers, and an even higher price to the uninsured.
It seems that the healthcare industry, mostly the pharmaceutical companies and the medical device companies, make huge profits, on the order of 20% margins. The health insurance industry doesn’t do very well–only about 2.2%. And, because medical care is so much cheaper in other countries, that means that America is subsidizing the costs for the benefit of the rest of the world. Many readers from the comments section describe how the health care systems in other countries are terrible despite (because of?) lower costs–in France it takes months to get approval for major surgeries, and the UK healthcare system is bankrupt (I have no personal knowledge of those claims).
The second post is interesting, and it addresses the unchecked liability and frivolous medical malpractice cases that lawyers like me file, forcing doctors into early retirement or keeping them away from high-risk positions like obstetrics and anesthesiology. Klein rebuts those claims, stating that:
Let’s start with medical malpractice. Its direct costs — premiums, payouts, legal fees, etc. — amount to about one-half of 1 percent of total U.S. health-care spending. It’s barely a rounding error.
So those frivolous lawsuits and runaway juries and lawyers suing for hangnails–even assuming any of it is true (and I believe it is less true than you might think), it doesn’t really carry a huge cost. I understand doctors don’t like to get sued. No one likes to get sued. I got a call last week from a woman against whom I filed a Maryland automobile lawsuit, and she was scared, angry and yelled a lot. I told her that her insurance would take care of, that this is the reason she carries insurance, and that I wasn’t going after her personal assets. She calmed down. If someone sued me, I wouldn’t be happy, either. But in the end, if I did something wrong that hurt someone else, I would hope that they would be taken care of. That’s why I carry insurance. When I was growing up, it was called “personal responsibility.” Maybe we don’t teach our kids that, anymore.
Personal Injury Protection (PIP) is a key element to both physical and financial recovery after a Maryland automobile collision. You PIP will pay for many things, mostly lost wages and medical bills, following an accident. Importantly, your PIP will pay regardless of fault–even if you caused the collision, or if it was a single-car accident (and your insurance company will not raise your rates for using it). Most people have the default $2,500.00 in PIP, though you can get up to $10,000 in no fault medical coverage from most Maryland insurance companies.
Let me explain why PIP is important. A family of three (mom, dad and and a child) came to us for injuries from a car accident. Mom and dad each had about $2,000 in medical bills, and the child had $5,000 in bills (she needed an MRI). No lost wages. After some workup, the settlement offers are $3,000 each for mom and dad, and $8,000 for the minor. These are terrible offers (remember–every case is unique. We’re going to have to file a lawsuit), but they are made even more terrible because the parents waived PIP. That is, they told their insurance company that they didn’t want the protection of PIP.
There are many technical requirements to waive PIP. Essentially, it has to be a signed waiver, with specific text in a specific font and type. PIP waivers are valid for every successive policy renewal unless the insured rescinds the waiver in writing. The insurance companies typically don’t ask whether you want it every policy period once you waived–they just assume you don’t want it. But there are good reasons to change your mind. Maybe you get a higher paying job. Maybe you become less risk-averse. Maybe you listened to the advice of your friendly Baltimore neighborhood lawyer (that’s me!).
Let’s assume the family wanted to accept the settlement offers. We’ll also pretend a parallel universe where they did not waive PIP:
You can see that PIP makes a big difference. Without PIP, the accident victims get nothing or next-to-nothing. With a small amount of PIP, the medical bills get paid and the family can be compensated somewhat for what they went through–pain, discomfort, inconvenience of having to drive to appointments, etc…. We try not to think about the existence of PIP in determining whether we recommend a settlement–the value of a case does not depend on PIP, and jurors/judges don’t know whether a plaintiff has it or not. But, in extreme cases, it may make a lower offer more palatable for some clients. In any event, higher PIP limits will increase a client’s take-home recovery.
One sidenote on waivers–a PIP waiver is not valid for minors under 16, who get the benefit of the default $2,500 when their parents waived PIP. In the case described, the father signed the PIP waiver when the child was 14. The accident happened when the child was 16, so she was not entitled to any PIP.
PIP only adds a small amount to your premium. For your safety, don’t waive it. For your safety, increase it to the maximum if you can.