Personal Financial Tips

Archive for January 12th, 2012

As the healthcare debate intensifies, many in Congress are calling for a tightening of medical malpractice awards. There is currently no national restrictions to how much can be awarded by juries in cases of medical malpractice, which occasionally results in awards of $10 million or above. Some lawmakers argue that these awards result in higher costs for malpractice insurance, which further drive up the costs of healthcare. They propose putting a $250,000 cap on jury awards in such cases, as a way of keeping payouts manageable. Opponents, however, say that this will not affect healthcare costs at large and would instead punish those who are already injured.

The Cost of Jury Awards

While seeing large awards granted to the victims of malpractice may seem alarming, the amount awarded by juries is actually a small drop in the very large bucket of overall healthcare costs. Doctors’ groups often fight for limits on malpractice, but studies have shown that the cost of malpractice insurance is actually not entirely tied to malpractice verdicts, and that the verdicts aren’t responsible for the rise in malpractice insurance premiums.

Doctors almost always have malpractice insurance which specifically covers the costs of malpractice suits. They pay monthly premiums for this insurance, the same way you pay monthly premiums for automobile insurance. In recent years, these premiums have been on the steady rise, and many have been quick to attribute this rise in costs to high jury verdicts in malpractice suits.

According to a 2005 article in the Boston Globe, the rising malpractice premiums are due to a lack of investment returns, rather than the cost of the lawsuits themselves. Malpractice insurance companies also make money by investing in the stock market, and when their stock portfolios aren’t making money, they have to look to other revenue streams to compensate.

Taken as a whole, malpractice awards have been rising in accordance with the overall costs of healthcare. The difficulty with putting a cap on malpractice awards is that “pain and suffering” is difficult to quantify. While it’s easy to come up with a price tag for the medical costs, it’s difficult to ascribe a dollar-and-cents compensation for someone who has lost an arm or will never be able to walk again. Many healthcare specialists argue that putting a cap on awards will actually hurt the people most injured by shoddy healthcare.

If you have any questions about healthcare litigation, visit the Philadelphia medical malpractice attorneys of Lowenthal & Abrams, P.C.