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Hearing on Harming Patient Access to Care: The Impact of Excessive Litigation
Washington, Jul 17 -
Hearing on Harming Patient Access to Care: Statement of Rep. Henry Waxman I welcome this hearing today on the crisis of high medical liability insurance and its impact on doctors and patients around the country. The title of the hearing – which focuses on the impact of litigation – is unfortunate. It's unfortunate because it assumes that increases in malpractice premiums are simply the result of a legal system out of control. But that conclusion – which we heard during the insurance crisis of the mid-1980s and many times since – is far from clear. We don't know, for instance, to what extent the business cycle – and the business practices of insurance companies – have contributed to these increases. There is substantial evidence to suggest that rates are more closely related to these factors than to lawsuits and large jury verdicts. These are fundamental questions that need to be answered before we attempt any legislative fix for the problem and before we enact what is essentially a bail-out for the insurance industry. In 1975, California adopted MICRA, which stands for the Medical Injury Compensation Reform Act. MICRA imposed significant limitations on the rights of injured patients to sue and recover for malpractice-related injures. For example, MICRA imposed a $250,000 cap on non-economic damages and eliminated joint liability. Some of the witnesses appearing before us today are going to tell us that MICRA has worked well in California and that we should adopt legislation even more restrictive on the national level. H.R. 4600, for example, adopts many of MICRA's major provisions and goes further. It extends limitations to product liability cases for defective drugs and medical devices. And it imposes caps and other significant limitations on punitive damages. I have serious reservations about moving quickly to adopt limitations along these lines. Insurance regulation is an area that Congress has traditionally left to the states, and for good reason. It is a complex business that varies market-by-market and community-by-community. We do not license medical doctors and other professionals; that is done at the state level. One size does not fit all. We will hear testimony that raises serious questions about the California experience. Jamie Court, the Executive Director of the Foundation for Taxpayer and Consumer Rights, will testify that MICRA has prevented the courts from awarding adequate compensation to many deserving victims. He is also expected to testify that MICRA has given a windfall to insurance companies in California and has not delivered the reductions it promised for malpractice insurance. He will contend that malpractice premiums in California have stayed close to premium trends around the country. In fact, between 1991 and 2000, premiums grew at a rate of 3.5%, which is higher than the national average of 1.9%. According to Robert Hunter – an actuary, a former Texas Insurance Commissioner, and Federal Insurance Administrator in Republican and Democratic administrations – in the years since MICRA was enacted, medical malpractice insurers have profited more from their business in California than in any other state. According to Robert Hunter, since 1989, California medical malpractice insurers paid out less than 50 cents in claims for every premium dollar they took in. In other parts of the country, malpractice insurers typically pay out more than two-thirds of every dollar taken in through premiums. In addition, California medical malpractice insurers earn higher operating profits – that is, profits earned as a percentage of premiums – than do medical malpractice insurers outside the state. In short, there are a number of serious questions to sort through. We should be careful before we rush to use any as a model for the entire country. I look forward to hearing the testimony of our witnesses today.
The Impact of Excessive Litigation
July 17, 2002