It comes as no surprise to neurosurgeons that the United States is in the throes of a medical liability crisis. The situation has become so critical that articles regularly appearing in the media report on the many physicians who are forced to limit services, move to other states where the medical liability system is more stable, or retire from practice altogether. Neurosurgeons are among the hardest hit by this crisis, with many struggling on a daily basis to keep their heads above water so they can remain in practice to serve their patients.
The leadership of the American Association of Neurological Surgeons (AANS) and the Congress of Neurological Surgeons (CNS) has clearly recognized that medical liability is neurosurgery’s most pressing problem and have moved to develop an aggressive public education and advocacy campaign aimed at passing federal medical liability reform legislation. The campaign will be conducted by neurosurgery’s new nonprofit advocacy organization, Neurosurgeons to Preserve Health Care Access (NPHCA). The purpose of this article is to give neurosurgeons a detailed overview of the many facets of this issue and to make the case for reform.
The Out-of-Control Medical Litigation System
The root cause of this problem is quite simple: the unrestrained escalation of jury awards and settlements, in even a small number of medical liability cases, is driving up physicians’ professional liability insurance (PLI) premiums and is forcing some insurance companies out of business altogether. This problem is making it difficult, and sometimes impossible, for neurosurgeons to obtain affordable liability insurance so they can remain in practice. There is a wide body of evidence to substantiate these conclusions.
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Medical liability awards are on the rise. Medical liability awards have been increasing steadily; according to Jury Verdict Research data, from 1994 to 2000 the median jury award rose by 176 percent. The number of mega-verdicts is also on the rise, with the proportion of awards that exceed $1 million increasing dramatically over this same time period. In 1996, 34 percent of all jury awards exceeded $1 million. Four years later, the number of $1 million awards increased to 52 percent, and the average jury award in 2000 was nearly $3.5 million. Awards for neurological injuries top the list of jury verdicts and settlements (see Jury Awards and Settlements 1994-2000 table).
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Not only are total jury awards rising, but the noneconomic damage portion now accounts for a steadily increasing proportion of these awards. According to Jury Verdict Research, from 1995 to 1997 the proportion of noneconomic damages compared with the total award was relatively constant. However, beginning in 1998 and continuing through 2001, noneconomic damages accounted for a significantly higher amount of total jury awards (see Jury Awards 1995-2001 graph).
PLI premiums are skyrocketing. The steep rise of medical liability awards is clearly responsible for the skyrocketing PLI premiums. Numerous studies demonstrate this linear relationship. In a June 2003 report, Medical Malpractice Insurance: Multiple Factors Have Contributed to Increased Premium Rates, the U.S. General Accounting Office confirmed what neurosurgeons already know: Increased losses on claims are the primary contributor to higher PLI premium rates. According to the Insurance Information Institute, which analyzed data from A.M. Best (an independent insurance rating agency that analyzes insurance companies’ overall financial strength and creditworthiness), the cumulative underwriting loss for the PLI sector from 1990 to 2001 was nearly $10 billion, and insurers now are paying out approximately $1.40 for every premium dollar collected.
This situation obviously is not sustainable, and this trend is therefore forcing insurance companies, which must set their rates based on anticipated future losses, to steeply increase doctors’ PLI premiums to ensure adequate reserves for payment of future judgments. As a result, over the past several years, physicians across the country have faced double-digit, and sometimes triple-digit, rate increases. Neurosurgeons have been disproportionately affected by these premium increases, and the trends are not encouraging. As the Bulletin has previously reported, according to a recent national survey of neurosurgeons conducted by the Council of State Neurosurgical Societies, between 2000 and 2002 the national average premium increase was 63 percent, from $44,493 to $72,682. The complete results are available at www.neurosurgery.org/CSNS/CSNSsurveyreport092502.pdf. A subsequent study by the AANS and the American Medical Association confirmed the CSNS findings, and from 2001 to 2003, premiums rose from an average of $55,500 to $84,100. In some states, neurosurgeons are now paying PLI premiums in excess of $400,000 per year.
Medical liability insurance is unavailable. Not only are PLI premiums rising at astronomical rates, but many doctors also are finding it increasingly difficult to obtain insurance coverage at any price. Citing the increases in liability losses, recently many companies have stopped selling medical liability insurance or have gone out of business, leaving thousands of doctors scrambling to find replacement coverage. Of the companies that have remained in the market, many are no longer renewing insurance coverage for existing policyholders, or they are not issuing new insurance policies to new customers. This is particularly true in states that have no effective medical liability reform laws in place.
Throughout 2003, reports of neurosurgeons being denied coverage have increased in frequency. The situation appears to be particularly acute in Florida, Kentucky, Mississippi, Missouri, Pennsylvania and Washington, and individual neurosurgeons in these states have plenty of tales to tell that illustrate how they and their patients have personally been affected by the crisis. Across the nation, even those neurosurgeons who have just one claim against them (regardless of the outcome of the case) are finding it impossible to obtain affordable insurance coverage. Nationwide, the AANS/AMA survey found that in the last two years nearly 33 percent of surveyed neurosurgeons have switched insurance companies, and of these, 41 percent did so because their insurance company failed or withdrew from the market.
Patient Access to Medical Care Is in Jeopardy
There are many casualties of the current medical liability crisis-but those affected the most are patients. Because the medical litigation system is broken, across the nation patients are finding it increasingly difficult to get access to the care they need, when they need it. According to the AANS/AMA study, over 70 percent of survey respondents made at least one of the following practice changes-referred, instead of treated, complex cases; closed practice; moved to a different state; stopped providing certain services; stopped providing patient care; or retired-and a growing body of evidence demonstrates just how serious this crisis has become.
Neurosurgeons are no longer performing some procedures. According to the CSNS survey, 43 percent of neurosurgeons reported that they are no longer performing high-risk surgery such as treating brain aneurysms, removing brain and spinal tumors, or complex spinal surgery. In addition, many neurosurgeons are no longer operating on children.
Neurosurgeons and trauma centers are closing their doors. According to the American Board of Neurological Surgeons, in 2001 alone, 327 board-certified neurosurgeons retired, representing an alarming 10 percent of the neurosurgical workforce in the United States. The CSNS survey found that 29 percent of respondents were considering retirement. In addition, many neurosurgeons are no longer serving on call to hospital emergency departments. An August 2003 GAO report entitled Medical Malpractice: Implications of Rising Premiums on Access to Health Care, confirmed that rising PLI premiums have contributed to reduced access to emergency surgery services in the five states it reviewed (Florida, Mississippi, Nevada, Pennsylvania and West Virginia) because certain high-risk specialists, like neurosurgeons, are no longer serving on call to hospital emergency departments.
Neurosurgeons are moving to states with a more favorable medical liability climate. The list of states experiencing the exodus of doctors continues to grow. Nationwide, neurosurgery’s survey data show that nearly 19 percent of practicing neurosurgeons either plan to move or are considering moving their practices to another state where the medical liability costs are relatively stable. Some states have been particularly hard hit. Mississippi, for instance, has lost 35 percent of its neurosurgeons in the past two years, and this year, 21 out of 79 neurosurgeons surveyed in Missouri stated that they were considering leaving the state. The flight of neurosurgeons from Florida, Pennsylvania, Washington and West Virginia mirrors this experience.
A National Problem Requires a Federal Solution
Those who oppose federal legislation to address this crisis cite various reasons to support their contention that this is not a national problem that merits a federal solution. In particular, they note that the regulation of insurance and healthcare are generally state issues, and therefore principles of Federalism preclude federal legislation to address this problem (see “Will the Constitution Permit Reform?”). They are, however, wrong. The undisputed truth is that this problem now touches nearly every American, and a federal solution is therefore a national imperative.
Nearly all states are facing a medical liability crisis. The AMA has identified 19 states in which all physicians are experiencing a medical liability crisis. These include: Arkansas, Connecticut, Florida, Georgia, Illinois, Kentucky, Mississippi, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Texas, Washington, West Virginia and Wyoming. For neurosurgery, the situation is even more widespread than the AMA reports: The CSNS survey has identified 25 states that are in a severe medical liability crisis, with an additional 12 states in potential crisis. In addition to states identified by the AMA, the crisis states for neurosurgery include Alabama, District of Columbia, New Hampshire, South Carolina, Rhode Island, Tennessee, Utah and Virginia.
Every American pays the costs of the current medical litigation system. According to the U.S. Department of Health and Human Services in its report Confronting the New Health Care Crisis: Improving Health Care Quality and Lowering Costs by Fixing Our Medical Liability System, the current medical litigation system imposes enormous costs on the healthcare system. These costs are passed on to all Americans in the form of increased health insurance premiums, higher out-of-pocket medical expenses and higher taxes. Furthermore, each year, the federal government pays for the increased costs associated with the current medical litigation system through various healthcare programs, including Medicare, Medicaid, and other healthcare programs for veterans and members of the armed forces. The U.S. Congressional Joint Economic Committee estimates that federal medical liability reform legislation would generate significant fiscal savings for the federal government, and further that the combined annual budget savings attributed to decreased direct costs (that is, PLI premiums) and indirect costs (such as defensive medicine) would total approximately $12.1 billion to $19.5 billion.
States face significant barriers to implementation of reforms. Many states face barriers-some legal and some political-to enacting effective medical liability reform laws. In the past, some states, including Florida, Ohio and Pennsylvania, have enacted medical liability reform laws, only to have their highest courts strike them down as unconstitutional. New laws passed by Florida, Mississippi, and Nevada face certain court challenge, and it will be years before it is determined whether these laws pass state constitutional muster. Finally, in some other states, the issue has become a political one, effectively killing any chances for passage. As a consequence, despite the increasing medical liability crisis in many of these states, they are effectively powerless to act to resolve the problem (see “States Press Forward for Reform Legislation”).
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Solution Should Be Patterned After California’s MICRA
Fortunately, Congress does not need to start from scratch and identify and implement a solution that is untested. Faced with a similar crisis in the early 1970s, the state of California, with bipartisan support, enacted the Medical Injury Compensation Reform Act, or MICRA. The key elements of MICRA include:
- providing full compensation for all economic damages, including medical bills, lost wages, future earnings, custodial care and rehabilitation;
- placing a fair and reasonable limit of $250,000 on noneconomic damages, such as pain and suffering;
- establishing a reasonable statute of limitations for filing a lawsuit;
- allowing for periodic payments of damages rather than lump sum awards;
- preventing the double recovery of damages by allowing evidence of collateral source payments; and
- ensuring that the bulk of any award goes to the plaintiffs, not to the attorneys.
For nearly three decades, MICRA has ensured that legitimately injured patients get unfettered access to the courts and receive full compensation for their injuries, while at the same time providing stability to the liability insurance market to ensure that doctors can remain available to care for their patients. Over time, the rate of increase of premiums for California doctors has been significantly lower than in other states. From 1976 to 2000, premiums for physicians in California have risen only 167 percent compared with an increase of 505 percent for the entire United States.
Data from the CSNS survey likewise demonstrates that the rate of premium increase for an individual neurosurgeon in Los Angeles, Calif., is significantly lower compared to other neurosurgeons who practice medicine in crisis states where there are no reforms in place (see CSNS Professional Liability Survey Results 2002 table). The average rate of increase for the neurosurgeons in these states without reform was 143 percent as compared to just 8 percent in Los Angeles.
U.S. government experts also agree that MICRA does in fact hold down the costs of medical liability insurance, and over the years there have been a number of studies that have identified MICRA’s $250,000 cap on noneconomic damages as a critical element in stabilizing premium costs.
Reform: A Lifeline to Neurosurgeons and Patients
Federal liability reform legislation is possible. Policymakers generally don’t act until a given situation is in crisis, and neurosurgery has made significant headway in demonstrating the widespread nature of the current medical liability problem and the growing public support for reform legislation. It is also highly likely that this issue will be at the forefront of the 2004 elections, and candidates for federal office will not want to be on the “wrong” side of this issue, lest they pay the price when the ballots are cast and counted.
There is no doubt that we have reached a very important juncture in the evolution of the U.S. healthcare system. At a time when lifesaving scientific advances are being made in nearly every area of healthcare, patients across the country are facing a situation in which access to healthcare is in serious jeopardy. Clearly the state of America’s healthcare system now and in the future is therefore at risk, and left unchecked, the medical liability crisis has grave implications for patient access to neurosurgical care.
When patients can’t find a neurosurgeon close to home, they must sometimes travel great distances, often going out of state, to get their medical care. When fewer neurosurgeons are available, hospital emergency departments and trauma centers must shut their doors, and patients with emergency medical conditions lose critical lifesaving time searching for an available emergency room. When neurosurgeons stop performing high-risk medical services, patients are often referred to academic medical centers, and these medical facilities already are overburdened and ill-equipped to handle the increase in patient volume.
When neurosurgeons retire at an early age, the looming shortage is accelerated and will place additional burdens on the healthcare system as the population ages and requires more medical care from an increasingly shrinking pool of practicing neurosurgeons. Once gone, these doctors are hard to replace, and those states currently facing a medical liability crisis are having a difficult time recruiting new neurosurgeons to their communities.
And finally, when the practice of medicine becomes so uninviting, fewer and fewer of our nation’s best and brightest will want to become doctors, thus jeopardizing our country’s status as one of the finest healthcare systems in the world.
Through Neurosurgeons to Preserve Health Care Access, the AANS and CNS are calling on all neurosurgeons to help preserve the profession and patients’ access to neurosurgical care. This medical liability reform campaign represents a lifeline, but the commitment of every neurosurgeon is necessary to resolve this problem once and for all.
Katie O. Orrico, JD, is director of the AANS/CNS Washington Office.