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Spring 2005

Lawsuits Not Cause Of Malpractice “Crisis" Study Finds

According to a recent article published in the Houston Chronicle, lawsuits against physicians were not the cause of rapidly increasing malpractice premiums in the State of Texas.  Research by professors at the University of Texas and the University of Illinois studied data collected by the Texas Department of Insurance between 1988 through 2002 to discover whether there was a connection between the amounts awarded in malpractice lawsuits and the levels of insurance premiums paid by physicians.  This research indicated that, adjusted for inflation, malpractice awards had remained stable over that time period; therefore, the rapid increase in malpractice premiums in Texas in recent years “appear to (be) largely unconnected to claim outcomes." 

The study’s authors speculated that the spike in malpractice insurance rates were the result of malpractice insurance companies earning less on the investments made with premiums paid rather than any increase in the number of malpractice claims or the amount awarded in such lawsuits.  In other words, the “insurance crisis" was more the result of a sluggish stock market since 2000 than any “litigation explosion".  Concern over the claimed “insurance crisis" and its effects on physicians led Texas to adopt severe limits on injured patients’ recovery–similar to the $250,000 damage cap in place in California since 1978.  Unfortunately, this study indicates that the citizens of Texas sharply curtailed their rights where the exercise of those rights had nothing to do with the “crisis" being claimed by the insurance industry.

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