Response from Robert J. Bingle, Managing Partner of Corboy & Demetrio and President of The Illinois Trial Lawyers Association to President Bush’s Legislative Recommendation to Put a Cap on Medical Negligence Lawsuits

In a speech today, January 16, 2003, President Bush advocated legislation that would put a cap on non-economic damages, elimination of joint and several liability, limits on attorney’s fees and other anti-patient measures sought by the insurance industry and many in the medical community relating to medical negligence lawsuits. Unfortunately, legislative history in states that have enacted such reform have proven that the main beneficiary of this type of legislation is the insurance industry. This legislation is entirely insurance industry motivated and President Bush has always been a loyal and trusted friend of big business and especially the insurance lobby.

In support of these statements, one only has to look at the history of the medical malpractice crisis to see the specious basis for the presentation of this legislation.

Simply stated, this is the third time in the past thirty years that our country’s medical system and its doctors have been racked by a medical insurance crisis. These crises always coincidentally concur with drastic reduction in the insurance industry’s profits.

The first crisis occurred in the mid 70's. Again in the 1980's, the insurance industry fabricated a new crisis and now today we are again being bludgeoned with propaganda by the insurance company that the legal system has wrought havoc with the medical insurance premiums. It is interesting to look back on the newspaper reports from the mid 70's and the mid 80's. One finds the same type quotations from doctors across the country threatening to quit practice and close the doors of hospitals due to insurance premium increases. One logically might ask the question as to what happened to the medical insurance crisis during the 10 to 15 year hiatus between these “medical insurance crises”? What ultimately proved to be true was that the cause of the “liability insurance crisis” in all three of these instances was not the legal system at all. Study after study that examined the property/casualty insurance industry found that the “insurance crisis”, was actually a self-inflicted phenomenon caused by the mismanaged underwriting practices of the industry itself. During the years of high interest rates and/or excellent insurer profits, insurance companies engage in fierce competition for premium dollars to invest for maximum return. This is what occurred throughout the boom years of the 1990s. Insurance companies lower prices and insure very poor risks just to get premium dollars. In short, for the past 10 years insurance companies were making millions and millions of dollars. For the past two years, they were losing money. The insurance industry lost close to $3 billion last year. Whenever this downturn occurs, the insurance industry very cagily decides that it can now create an insurance crisis and blame lawyers and the legal system. This cycle is so obvious that it is amazing that physicians and other leaders in the medical industry don’t recognize how they are being played by the insurance industry. It certainly must be a wonderful industry that, in its good years, can make millions and millions of dollars and in its bad years can offset these losses by raising premiums at their will with no consequences and have a convenient scapegoat available in the legal system.

Physicians should be forewarned that before they jump on the insurance industry bandwagon, they should know that in a startling admission, the American Insurance Association (AIA), a major insurance industry trade group, admitted that lawmakers who enact “tort reform”, should not expect insurance premium rates to drop. Specifically, a March 13, 2002 AIA press release stated that, “the insurance industry never promised that tort reform will achieve specific premium savings”.

Before Congress jumps on the President Bush anti-lawyer and anti-civil justice system bandwagon, these facts should be examined:

• FACT: Consumer groups, a bi-partisan legislative committee and even the insurance industry say insurers’ bad business practices, not jury awards, drive up premiums
• FACT: Experience in states with caps has shown - and insurers and tort “reformers” admit - that caps and tort “reform” won’t and do not lower doctors’ premiums
• FACT: Median payouts in medical malpractice cases are relatively low - and have not risen significantly over the past decade
• FACT: Most people with legitimate medical malpractice claims never go to court
• FACT: Insurers themselves admit that they don’t settle frivolous claims
• FACT: Though California has some of the most draconian limits on the rights of patients in medical malpractice (via a 1975 law called MICRA), average medical malpractice premiums are higher than in states without caps, premiums and health care costs continue to rise, and most Californians want to eliminate the cap. The state had to pass insurance reform to stop skyrocketing premiums after its tort “reform” succeeded only in filling insurer’s pockets
• FACT: Caps don’t reduce premiums

Instead, caps discriminate against patients most seriously injured by malpractice and children, women, seniors and minorities - while enriching the insurance companies that caused premiums to rise because of their own bad business decisions and investments.

The only thing we need to reform is the insurance industry - not the legal system.

* Article Reprinted with the Permission of the Chicago Daily Law Bulletin.