LRC Says Med-Mal Study Shows Need for Tort Reform

March 1, 2005

Tort reform proponents in Washington were reportedly not surprised that a report issued Tuesday by the Office of the Insurance Commissioner (OIC) showed continued escalation in both the frequency and the cost of medical malpractice lawsuits.

“This report validates what we’ve been saying about the need for tort
reform,” said Dana Childers, executive director of the Liability Reform
Coalition (LRC). “We would like to encourage the state Insurance Commissioner to conduct similar studies of other industries. We feel certain such studies would only add credibility to the case for comprehensive tort reform in the state of Washington.”

The LRC is a broad coalition of more than 70 businesses, charities and health care entities committed to ending lawsuit abuse.

“Soaring malpractice rates for health care providers have challenged
access to quality medical care throughout Washington,” said Childers. She indicated that many independent studies have shown that ever-increasing jury awards have caused insurance premiums to rise for all doctors, even for those who have never been sued. The costs of medical malpractice insurance and the fear of being sued have compelled doctors to curtail their practices to less risky patient care, to practice defensive medicine and even to shutter their

“The Insurance Commissioner’s report mirrors the other reports,” said
Childers. “We hope legislators will now recognize the need for comprehensive reform of our liability system. Bringing balance back to the judicial system will benefit everyone, especially the consumer.”

Rising liability costs have put pressure on industries across the state,
limiting businesses’ ability to be competitive. For example, these escalating liability costs have reportedly driven up the cost of housing construction, forced charities to curtail services and impacted the availability of high-risk medical practitioners, such as those doctors who deliver babies.

“Everyone feels the impact of rising health care costs,” said Childers, “but other sectors of the economy are in crisis mode as well. Common sense reforms will help businesses and charities to continue to offer goods and services to the citizens of Washington.”

Contractors from around the state have reportedly found themselves unable to find or afford liability insurance, even those who have never had a claim against them, according to Childers. The explosive growth of lawsuits against builders of homes and condominiums has a direct impact on the availability and cost of housing.

The liability crisis affects school districts, too. Liability costs cut
directly into the services and resources schools can offer. Every year school districts reportedly face significant cost increases in liability insurance premiums and things seem to be getting worse. In 2003 a pool of 80 school districts paid $900,000 in liability insurance premiums. The following year the figure jumped to $2.4 million, and this was for an excess policy that didn’t pay until after $1.5 million of a loss.

Charitable organizations and nursing homes are facing the sting of
liability insurance and are making tough decisions about the services they can offer in the face of these skyrocketing costs.

Other states, including Texas, Nevada and Georgia, reportedly recognize the effect that liability costs impose on society as a whole.

A leading medical malpractice insurer in Texas just announced a major reduction for policyholders, a direct result of comprehensive tort reform enacted in that state in 2003.

The state of Nevada also reports that insurance rates are stabilizing following the passage of a 2004 initiative that capped pain-and-suffering awards. The Georgia legislature, recognizing the time had
come to restore balance to that state’s judicial system, just passed sweeping legal reforms.

Important tort reform legislation has been introduced in Congress, too.

The Lawsuit Abuse Reduction Act of 2005 (LARA) addresses two principal causes of lawsuit abuse-frivolous lawsuits and forum shopping. LARA provides a mechanism for the judicial system to effectively police lawyers who file frivolous claims. Such legislation would be welcome relief to small businesses that incur tremendous costs in defending against a lawsuit, even when a complaint is completely baseless.

LARA also will reign in plaintiff lawyers’ habit of filing lawsuits in courts that consistently show a bias against defendants, whether their client has a connection to the jurisdiction or not.

A recent analysis by Tillinghast-Towers Perrin indicates that nationwide medical malpractice costs have increased at an annual rate of 11.8 percent, and that this escalation is a contributing factor in increased health care costs.

The report also indicates that tort costs exceed the overall economic

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