News Release

Austin, TX: Some of Governor Perry’s policy prescriptions to rein in the rising rates that doctors pay for medical malpractice insurance would harm the very patients whom they are supposed to help, an Austin-based consumer watchdog organization said today.

“The governor should get a second opinion before he swallows the misdiagnoses that are being spoon fed to him by the medical and tort lobbies,” said Texans for Public Justice Director Craig McDonald. “The contention that ‘runaway’ jury awards and  ‘frivolous’ lawsuits have forced reluctant insurance companies to hike their medical malpractice rates has not been independently substantiated. Governor Perry is falling for the same-old legislate-by-anecdote campaign that the tort lobby always uses to justify its attacks on consumer rights.”

The Governor’s plan to cap medical malpractice awards, regulate plaintiff attorneys’ fees, grant legal immunity to certain physicians and even create special medical malpractice tribunals will benefit insurers and—to a lesser degree—doctors at the expense of consumers. If the governor really wants to benefit consumers, he will have to concentrate more aggressively on his proposals for the state to collect better data on malpractice insurance rates and to play a role in insuring certain health-care providers.

The Governor’s sudden plan came in direct response to the walkout that Citizens Against Lawsuit Abuse (CALA) and some Rio Grande Valley physicians have scheduled Monday to protest their claim that frivolous lawsuits are inflating malpractice insurance rates and driving doctors out of that area. Contrary to these claims, State Board of Medical Examiners data demonstrate that the number of doctors in the Rio Grande Valley has increased 20 percent in the past four years from 825 to 1,034 physicians.

“Fortunately, the evidence shows that medical malpractice claims and pay outs are not increasing at the alarming rates that CALA and the Governor would lead us to believe,” McDonald said. “Doctors should join consumers to demand that the state stop insurers from price gouging across the board—in the auto, home and health insurance markets. Abandoning patients and abolishing their rights is a reckless prescription for affordable insurance.”

As in the mid-1980s, the insurance industry priced its liability policies relatively low during the 1990’s stock market bubble to maximize the revenues that it could reinvest on Wall Street. Now that the bubble has burst, this cash-strapped industry seeks to blame the civil justice system for its own management failures.

Arguing that the facts do not bear out sensationalist claims, McDonald called upon the Governor to make Texas insurers fully disclose the basis of all premium-hike requests. Facts that the Governor and CALA have chosen to ignore include:
 

• The number of physicians per 100,000 Texans has risen steadily over the last 20 years. In the past four years, the number of physicians in the Valley’s Hidalgo and Cameron counties jumped 20 percent.

 
• State Board of Medical Examiners data show that high-risk medical specialists also are coming to the Valley. Between January of 1998 and January of 2002, Hidalgo and Cameron Counties saw:
• An increase from 42 to 58 anesthesiologists;
• An increase from 17 to 22 emergency medicine doctors;
• An increase from 7 to 9 neurosurgeons; and
• An increase from 52 to 72 obstetricians and gynecologists.

 
• The number of malpractice claims against doctors in Hidalgo and Cameron counties decreased between 1999 and 2000 by 59 percent and 35 percent, respectively, according to the State Board of Medical Examiners. During the same period such claims dropped 15.5 percent statewide from 5,333 to 4,501.

 
• Increases in medical malpractice rates transcend the Valley. After holding steady for years, these rates are increasing nationally by between 10 percent and 40 percent. Mismanagement of the industry’s pricing and investments is the main cause of these rate spikes. The $108 million that St. Paul Insurance Co. lost in the Enron debacle, for example, is almost three times its malpractice pay outs in Texas in 2000.

 
• Nationally, the average insurance payment to a medical negligence victim is $30,000. This amount has remained virtually flat for a decade, according to the Consumer Federation of America. Jury Verdict Research uses unscientific data to suggest dramatic increases in jury awards.

 
• Nationally, medical malpractice costs, as a percentage of national health care expenditures, are at an all- time low of 0.55 percent, according to the Consumer Federation of America.

 
• The National Academy of Sciences reports that up to 98,000 people are killed each year by hospital medical errors; these fatalities far exceed those caused by car accidents, breast cancer or AIDS. A Harvard University study found that just one out of every eight malpractice victims ever files a claim.

 
• Overall consumer medical cost increases far outstrip the increase in medical malpractice rates. Between 1988 and 1998, U.S. medical care costs increased 75 percent, while malpractice premiums increased 5.6 percent.

 
• Responding in March to research that shows no significant difference between insurance rates in states that passed “tort reforms” and those that did not, the American Insurance Association said, “The industry never promised that tort reform would achieve specific premium savings.” Doctors in states that have capped legal damages pay higher malpractice premiums than those in states with no caps.

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