Document Type

Article

Publication Title

DePaul Law Review

Abstract

Malpractice insurance does give the medical profession a legitimate interest in tort reform, although the types of reforms that can be justified on this basis differ from those that have been favored by the AMA. At present, malpractice insurance may be priced in an indefensible manner by giving physicians an incentive to move from high-risk specialties and geographic locations. This dislocation is socially costly due to the way in which it reduces patient access to care, a social cost touted by the AMA as the reason for tort reform. Some of the physicians who leave a specialty, though, will be part-time practitioners who typically are unable to provide the same quality of care as full-time practitioners. Whether this benefit offsets the cost of reduced access to care is an open question. But if the cost of access looms as large as the AMA claims, then malpractice insurance is probably priced in a socially detrimental manner and the AMA would have legitimate grounds for complaining about malpractice premiums. The type of tort reforms that would make malpractice insurance more fair, however, do not involve damages caps, contrary to the AMA's lobbying position. Part II of this Article defines the appropriate baseline for considering the relation between malpractice insurance and the legitimate interests of the medical profession in tort reform and then finds that the general level of malpractice premiums does not create any unfairness for the profession. The available data show that the tort system is not generating total liability costs in excess of the total cost of malpractice injuries-the outcome required in order for the general level of malpractice premiums to be unfairly high. Although the general level of premiums is fair, Part III shows why many physicians may nevertheless pay unfairly high premiums. For any given policy limit, malpractice premiums typically depend only on the physician's medical specialty and geographic location within the state. Premiums are priced in a manner that gives physicians an incentive to avoid high-risk specialties and certain geographic locations in order to reduce their premiums. The relocation of physicians across specialties and geographic locales quite plausibly works to the net detriment of patient interests. In that event, the pricing of malpractice insurance violates the relevant legal, moral, and social criteria, creating unfairness for those physicians who must pay higher premiums only because of their specialty or geographic location. Part IV discusses the obstacles to fairer malpractice premiums. The unfairness problem could be completely solved by insurance regulation, making tort reform unnecessary. Alternatively, malpractice premiums would be substantially fairer if based upon the policyholder's malpractice experience. A significant obstacle to the "experience rating" of medical malpractice involves the inherent uncertainty regarding the reliability of malpractice determinations, a problem that can justify tort reform. Part V then evaluates various tort reforms in terms of their potential to promote fairer malpractice premiums. A damages cap does not facilitate experience rating or otherwise make malpractice premiums more fair. Other reforms would produce a better distribution of malpractice costs, most notably enterprise liability. Nevertheless, the AMA has previously resisted such a reform. Thus, the medical profession's interest in fair malpractice premiums justifies an approach to tort reform that differs markedly from that favored by the AMA.

First Page

439

Volume

54

Publication Date

2005

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