For Immediate Release
Office of the Press Secretary
July 24, 2002
Fact Sheet: President Proposes Minimum Standards for Medical Liability
New HHS Study Highlights Higher Costs, Lower Quality Care
Resulting from Badly Broken Liability System
TODAY'S PRESIDENTIAL ACTION
In a speech at the Highpoint University, President Bush
proposed major legislative reforms to address the medical liability
crisis. To make health care more affordable, more available, and
better and safer for patients, the President proposed national minimum
standards for medical liability reforms and new protections for
good-faith efforts by health professionals to improve health care
quality and safety through new Patient Safety Organizations.
The President was accompanied by HHS Secretary Tommy Thompson,
who released a new HHS report on Confronting the New Health Care
Crisis: Improving Health Care Quality and Lowering Costs by Fixing Our
Medical Liability System. The report presents a comprehensive review
of how excessive litigation is threatening access to care, threatening
patient safety and the quality of health care, raising health care
costs for all Americans, adding billions to Federal health
expenditures. The report also highlights the proven success of the
national medical liability reforms proposed by the President in
reducing medical costs and improving health care access and quality.
THE PRESIDENT'S FRAMEWORK FOR IMPROVING THE MEDICAL LIABILITY
In his speech today, the President proposed a framework urgent
Federal action to address the medical liability crisis.
National adoption of proven minimum standards to make the
medical liability system more fair, predictable, and timely.
Experience in many states has demonstrated that these standards can
reduce Federal government costs by $30 billion per year or more,
freeing up needed funds for making health care more affordable. These
standards can reduce health care costs for all Americans by $60 billion
or more, and improve access to quality health care as well.
Secure the ability of injured patients to get quicker, unlimited
compensation for their "economic losses," including the loss of ability
to provide unpaid services like care for children or parents.
Ensure that recoveries for non-economic damages do not exceed a
reasonable amount ($250,000).
Reserve punitive damages for cases
where they are justified, and limit punitive damages to reasonable
amounts (i.e., up to the greater of two times economic damages or
Provide for payments of judgments over time rather
than in a single lump sum, to ensure that appropriate payments are
there when patients need them.
Ensure that old cases cannot be
brought years after an event.
Ensure that juries are informed if
a plaintiff has other sources of reimbursement for an injury.
Provide that defendants pay judgments in proportion to their fault.
Improvements in health care quality and patient safety through
litigation reform. Patients deserve high-quality health care without
avoidable medical errors and complications, and the Administration is
supporting many efforts to achieve this goal, through better
information and other steps to improve quality. One proven approach to
reducing errors and complications is patient safety and quality
improvement programs implemented by doctors and health care
organizations working together. By sharing information on quality
problems, errors, and near-misses, health professionals can determine
ways to avoid errors and complications in the first place. But these
efforts are blocked by fear of litigation -- good-faith efforts to
improve quality and safety result in lawsuits based on the new
information about opportunities to improve care that these efforts
Earlier this year, the President called for legislation
to give health professionals the limited liability protections
necessary to implement new programs to improve quality and safety.
Bipartisan legislation is now pending in both the House and the
Senate that will provide protection from use in lawsuits of new reports
and efforts of Patient Safety Organizations to improve patient care.
This protection will make it possible for health professionals to
work together more effectively to provide the best possible care for
HIGHLIGHTS OF THE NEW HHS REPORT, CONFRONTING THE NEW HEALTH CARE
CRISIS: IMPROVING HEALTH CARE QUALITY AND LOWERING COST BY FIXING OUR
MEDICAL LIABILITY SYSTEM, RELEASED TODAY BY HHS SECRETARY TOMMY
The HHS report includes a detailed review of recent studies on the
consequences of out-of-control medical liability, and new evidence on
the magnitude and consequences of the medical liability crisis that is
threatening health care in many parts of America.
The medical liability crisis is threatening access to care in
In Las Vegas, Nevada, the only Level 1 Trauma Center
had to close temporarily because its surgeons could no longer afford
malpractice insurance -- and it may have to close again. Overall, 10%
or more of Las Vegas doctors may leave their practice as a result of
the crisis, and many patients including expectant mothers cannot find a
In New Jersey, Pennsylvania, and West Virginia, dozens
of physicians are ending their practices, depriving patients of
long-term, trusted relationships and sometimes leaving them without a
In Mississippi, no doctors are available to
deliver babies in many communities.
As a result, in many of these
states, patients must travel to a different state in order to get
Many doctors cannot volunteer their services for patients
who cannot pay, and the proportion of physicians who provide any
charity care at all has declined, because doctors cannot afford the
required liability coverage.
The medical liability crisis is threatening patient safety and
quality of care.
Many preventable errors and complications in the
health care system do not result from failures by individual doctors,
but from problems in how health professionals work together to provide
increasingly complex medical services. For this reason, health care
organizations have been able to reduce errors and complications through
better information systems and careful studies of how mistakes occur,
and how to prevent them. For example, the doctors and hospitals of the
Pittsburgh Regional Healthcare Initiative has reduced blood infections
in intensive care units by 20 percent through collaborative work to
identify safer ways to treat intensive care patients.
efforts are impeded by litigation fears: good-faith efforts by medical
professionals to generate new information and insights to improve care
should not be rewarded by lawsuits based on this new information.
The medical liability crisis is raising health care costs,
including adding billions to Federal spending.
Doctors alone had
to pay over $6 billion in medical liability premiums last year, and
premiums this year in many states have increased by more than 20% on
average and more than 75% for specialties in some states.
addition, the costs of "defensive" medicine -- additional, unnecessary
tests and treatments that help avoid frivolous lawsuits but do not
improve patient health -- add many billions more to American health
Altogether, medical liability adds $60 to 110
billion to the costs of health care each year -- higher health insurance
premiums and higher medical costs for all Americans.
medical liability also adds $30 to $60 billion annually to Federal
government payments for Medicare, Medicaid, the State Children's Health
Insurance Program, Veterans' Administration health care, health care
for Federal employees, and other government programs. It also accounts
for billions in additional tax deductions for the added costs of
liability of employer health insurance coverage.
The cause of the medical liability crisis is a badly broken
system of litigation that serves the interest of specialized trial
lawyers, not patients.
The vast majority of medical liability claims (up to 70%) do
not result in any payments to patients. Less than 2% of cases result in
trial victories for plaintiffs. But each of these cases costs almost
$25,000 on average to defend.
Within the very small proportion of
jury cases that find for the plaintiff, "mega-verdicts" with large
awards of noneconomic damages have been increasing in states that do
not have reasonable limits on non-economic damages. For example, there
have been over 20 verdicts of $9 million or more in Mississippi since
1995, and individual cases in Pennsylvania and Mississippi have reached
the $100 million level.
Yet even patients who are lucky enough to
get awards don't get most of the money. Lawyers' fees account for 40%
or more of the multimillion-dollar payouts. And less than 30% of all
the money that doctors pay in liability insurance fees goes to
patients. And patients must wait five years on average for these
payouts (longer in cases that go to trial).
This system rewards
personal injury lawyers who adopt a "lottery" strategy: seek out
patients and encourage them to file lots of claims, even though the
vast majority will have no merit and the patient will get nothing; and
then encourage patients to wait it out through years of litigation for
a small chance of a big win. If exaggerated awards are possible, even
if very unlikely, a personal injury lawyer only needs to win one out of
hundreds of cases to make it all worthwhile -- from the standpoint of
the lawyer. But the vast majority of patients get nothing for their
troubles, doctors lose billions in insurance costs and time and may
have to leave their practice altogether, and all patients pay higher
prices and get worse care as a result.
The HHS report also shows that there is a proven solution:
liability reforms including reasonable limits on non-economic damages
($250,000-350,000) are working in many states to reduce health care
costs and improve access and quality of care.
Reasonable caps on
noneconomic damages result in lower medical liability costs, resulting
in much lower medical liability premiums and stable availability of
liability insurance, so that access to doctors is not threatened.
Liability premium increases last year averaged 12% in states with caps,
and 44% in states without. Liability premiums for OB/Gyns in Florida
(no cap) are $100,000-$200,000 but in California (reasonable cap) are
$46,000-$57,000. Over the past 25 years since California instituted a
reasonable cap on noneconomic damages, liability premiums have
increased by less than one third as much as in the rest of the
If applied nationally, studies based on the experience
of these states indicate that: over $60 billion per year in health care
costs could be redirected from lawsuits and unnecessary care toward
paying for valuable drugs and other treatments; over $30 billion in
Federal payments could be redirected toward improving Medicare,
Medicaid, and other Federal programs for reducing health care costs;
and over 2 million more Americans would be able to afford health
Studies also show no adverse effects on patient care
associated with these caps. In fact, quality of care improves because
of greater access to physicians.