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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


  • 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.


    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 $250,000).
  • 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 create.
  • 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 all patients.


    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 many states.
  • 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 physician.
  • 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 physician altogether.
  • 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 care.
  • 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.
  • But these 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.
  • In 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 expenditures.
  • 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.
  • Excessive 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 country.
  • 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 insurance.
  • 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.

    For more information on the President's initiatives please visit

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