Caps on Damages Do Not Lower Physician Malpractice Premiums
Louisiana, Maryland, Missouri, South Carolina, Florida, Ohio, Oklahoma, Mississippi, Nevada, Texas and California are all states that have enacted legislation which has placed caps on the damages a victim of medical malpractice may recover. In every instance, law makers supporting the caps have been bombarded with false and misleading information from the insurance industry blaming the skyrocketing costs of physicians' medical malpractice premiums on lawsuits and the trial lawyers who bring lawsuits for medical malpractice. In every one of these states that enacted a cap on damages because of this alleged "crisis", malpractice premiums have continued to spiral out of control.
Louisiana passed its cap on damages in 1975. It places a cap of $500,000 on a victim's recovery. Incredibly, this cap does not limit damages to only non-economic recovery. Inc. Included in this cap are lost wages. Louisiana's cap has never even been adjusted for inflation in over 30 years. Yet, physician medical malpractice premiums continue to rise at an alarming rate in Louisiana.
In the 1980's Maryland and Missouri enacted caps on medical malpractice cases. In a 2005 article, the New York Times reported that "Despite the cap, the state (Maryland), medical malpractice premiums rose by more than 70 percent." In Missouri, New medical malpractice claims dropped 14 percent in 2003 and total payouts dropped by 21 percent. Moreover, since 1991, the number of paid claims against physicians dropped by 42.3 percent. Yet the Missouri Department of Insurance found that insurance premiums rose by 121 percent between 2000 and 2003.
In South Carolina, malpractice premiums increased 22 percent less than two months following its passing of a cap on damages. This increase was in addition to a 27 percent increase the year before.
In Mississippi, several news articles reported that many Mississippi doctors were still limiting their practice or walking off the job in protest because doctors could not find affordable insurance four months following institution of caps there.
In Florida, after sweeping changes and caps were instituted to specifically address rising malpractice premiums, the Senior Vice President of a major Florida insurance provider admitted that
"tort reform had little effect on medical malpractice premium rates."
Similarly, in Texas, soon after it enacted a cap on medical malpractice cases, GE medical Protective, one of the state's largest insurers of doctors, stated that the cap was only responsible for a 1 percent drop in losses and thus, it increased its premiums by 10 percent.