A Review of Damage Caps & Med Mal Exposure

Physician Holding BabySeveral states this year explored the possibility of placing damage caps on med mal damages, including Florida, Oregon and Virginia. A recent article in Claims Journal asked, “Can Damage Caps Limit Medical Malpractice Exposure?” The article reviews several sources of information that point to such a limit when damage caps are in place.

The article sites many recent, large-scale and well-done studies conducted regarding medical malpractice cases and how they play out both in terms of trajectory and finances.

The article discusses a New England Journal of Medicine study which showed that 75% of all med mal cases result in no payment to the plaintiff. The AMA quoted another study done by an insurance organization which had a similar statistic of 64% of all med mal cases either ending up dropped, dismissed, or withdrawn. Despite the fact that payouts are not that common, med mal claims are still extremely costly. Even if cases are settled, the average legal cost is around $70,000.

It is thought that med mal damage caps serve several ends: 1) they limit the number of cases initially filed because the pockets are not as “deep,” 2) they lower doctor liability coverage rates because less cases are filed, less resources are wasted and less significant damages are awarded, and 3) they allow physicians to practice less defensive medicine, again saving time, money and resources.

Despite the fact that half of US states had damage caps at the beginning of the year, the Medical Liability Monitor recently said that the number is shrinking, because both Illinois and Georgia both overturned their damage caps.

And, in states that do not have med mal damage caps, the impact is dramatic: physicians leave those states. This has recently been shown in a study of Illinois medical graduates and in another study which cited emergency physicians moving to Texas because of its friendly environment and health care reform (ie, damage caps).