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Monthly Archives: July 2008

Loss of chance recognized in Massachusetts

Victims of medical negligence can recover damages for reduced chance of survival even if the patient’s prospect for recovery was already less than 50 percent, Massachusetts highest court ruled this week. The Massachusetts Supreme Judicial Court decision stemmed from a $1 million award to the estate of a man whose doctor failed to diagnose his stomach cancer.

“Where a physician’s negligence reduces or eliminates the patient’s prospects for achieving a more favorable medical outcome, the physician has harmed the patient and is liable for damages,” the court said in a decision written by Chief Justice Margaret Marshall.

The SJC recognized for the first time a doctrine known in medical malpractice cases as “loss of chance,” which allows a patient whose odds of recovery are 50 percent or less to receive damages for any negligence that reduced those odds. The court established a formula for juries to award damages proportionate to the reduced survival rate caused by the doctor’s negligence which will require the fact finder to undertake the following calculations:

(1) The fact finder must first calculate the total amount of damages allowable for the death under the wrongful death statute, G.L. c. 229, § 2, or, in the case of medical malpractice not resulting in death, the full amount of damages allowable for the injury. This is the amount to which the decedent would be entitled if the case were not a loss of chance case: the full amount of compensation for the decedent’s death or injury. [FN42]

(2) The fact finder must next calculate the patient’s chance of survival or cure immediately preceding (“but for”) the medical malpractice.

(3) The fact finder must then calculate the chance of survival or cure that the patient had as a result of the medical malpractice.

(4) The fact finder must then subtract the amount derived in step 3 from the amount derived in step 2.

(5) The fact finder must then multiply the amount determined in step 1 by the percentage calculated in step 4 to derive the proportional damages award for loss of chance.

To illustrate, suppose in a wrongful death case that a jury found, based on expert testimony and the facts of the case, that full wrongful death damages would be $600,000 (step 1), that the patient had a 45% chance of survival prior to the medical malpractice (step 2), and that the physician’s tortious acts reduced the chances of survival to 15% (step 3). The patient’s chances of survival were reduced 30% (i.e., 45% minus 15%) due to the physician’s malpractice (step 4), and the patient’s loss of chance damages would be $600,000 multiplied by 30%, for a total of $180,000 (step 5).

Expert testimony is required to ascertain what measure of a more favorable outcome is medically appropriate (for example, five-year survival as in this case), to determine what statistical rates of survival apply in what circumstances, for example, a 37.5% chance of survival, and to apply these rates to the particular clinical circumstances of the patient.

You can view the Boston Globe report by clicking here. To view a full copy of the decision, click here.

Posting malpractice data on doctors

The North Carolina Medical Board, the board charged with licensing and disciplining the 22,000 doctors who practice in North Carolina, has proposed posting all malpractice payments going back seven years as part of a new effort to broaden the kind of information patients can see about the doctors who treat them. About 25 states have adopted similar rules. To view the report from the News Observer, click here.

The Web site also would state whether a physician had been publicly disciplined by the board, which could indicate if the payment was due to negligence. The site would not include actual payment amount or information that identified patients. The Web site would allow physicians to add comments to explain incidents. The site also would note that malpractice payments do not always suggest negligence and that some specialties, such as obstetrics and neurosurgery, typically face more lawsuits.

Yesterday, the Board has voted to scale back its plans for posting the details of medical malpractice settlements on its Web site, but the move still might not be enough to avoid a legal squabble over the issue, according to a report in the News Observer. Under the new plans, the medical board now will post malpractice settlements of greater than $25,000 on its Web site. Also scaled back were plans to post the details of settlements going back seven years from the date the malpractice Web site goes live.

Massachusetts was the first state to offer a comprehensive program to give patients access to information about the education, training, and experience of all licensed physicians. You can access the Massachusetts data by clicking here. The Massachusetts profiles of doctors include information on the following: education, training, medical specialties, professional demographics, professional or community awards received, research or publications by the physician, malpractice claims paid in the past ten years, hospital discipline in the past ten years, criminal convictions in the past ten years, and disciplinary actions of the Massachusetts Board of Registration in Medicine in the past ten years.

More evidence of a mythical malpractice crisis

Despite assertions that high malpractice rates are driving them out of the state, Massachusetts doctors are paying less than they were in 1990, after adjusting for inflation, according to a Suffolk University Law School study. Reports of skyrocketing medical malpractice premiums in Massachusetts are flawed, according to the new study, released in the May/June issue of the journal Health Affairs. It raises serious questions about claims that Massachusetts doctors are facing a medical malpractice premium crisis that threatens the viability of medical practice in the Bay State.

Massachusetts has the fourth-highest median malpractice settlement payments in the nation, and therefore should have the fourth-highest premiums. Yet, when adjusted for inflation, Bay State physicians’ malpractice premiums were lower in 2005 than in 1990 in nearly all cases. The study — which provides the most comprehensive analysis of premiums to date — clashes with popular perceptions and assumptions underlying legislative proposals to cap damages awards.

Suffolk University Law School researchers Marc Rodwin and colleagues analyzed malpractice premiums from 1975 to 2005 using data from the state-regulated mutual insurer known as ProMutual Group. In 2005, inflation-adjusted malpractice premiums were $17,810 for the coverage level and policy type that physicians most frequently purchased, compared with $17,907 in 1990. Despite premium increases since 1995 or 2000 for all physicians, premiums were still lower in 2005 than 1990, when they reached a 30-year peak. Mean premiums increased only in three specialties comprising 4 percent of physicians: obstetrics, neurology and orthopedists performing spinal surgery.

The study furthermore documents growing differences among premiums paid within each practice specialty since 1990. That’s when insurers began to adjust rates for each practice specialty by discounting low-risk physicians and surcharging those with high risks. By 2005, there was a threefold difference in premiums for physicians within OB-GYN, the highest-risk specialty, as a result of rate discounts and surcharges based on an individual physician’s risk factors. As a result, although mean OB-GYN premiums increased significantly since 1990, nearly one-third of physicians in OB-GYN paid lower premiums in 2005 than in 1990.

The authors note that premiums for OB-GYN are higher than for most other physicians because infants injured in birth sometimes require lifelong custodial care, which is very expensive. They therefore recommend that patient safety and quality efforts should focus on OB-GYN and the two other high-risk specialties to reduce injuries. When similar efforts were undertaken in anesthesiology in the 1990s, injuries fell dramatically, and premiums did as well.

The authors also propose alternative means to compensate injuries. For infants injured in birth they recommend a no-fault compensation system such as those used in Virginia and Florida. Alternatively they suggest shifting liability from physicians to hospitals for all injuries that occur in hospitals. Both proposals would reduce the malpractice premiums for high-risk physicians while still compensating patients.

You can get more information on the study by clicking here. For the Boston Globe report on the study, click here.

Ten worst insurance companies

Allstate ranks as the worst insurer for consumers, according to a comprehensive investigation of thousands of legal documents and financial filings released by the American Association for Justice.

The rankings show a distinct pattern of insurance industry greed amongst 10 companies that refuse to pay just claims, employ hardball tactics against policyholders, reward executives with extravagant salaries, and raise premiums while hoarding excessive profits.

“While Allstate publicly touts its ‘good hands’ approach, it has instead privately instructed its agents to employ a ‘boxing gloves’ strategy against its policyholders,” said American Association for Justice CEO Jon Haber. “Allstate ducks, bobs and weaves to avoid paying claims to increase its profits.”

Allstate (NYSE: ALL) set the standard for insurance company greed and placing profits over policyholders. Allstate contracted with consulting giant McKinsey & Co. in the mid-1990s to systematically force consumers to accept lowball claims or face its “boxing gloves,” an aggressive strategy designed to deny claims at any cost. One Allstate employee reported that supervisors told agents to lie and blame fires on arson, and in turn, were rewarded with portable fridges.

Thousands of court documents, materials uncovered from litigation and discovery, testimony, complaints filed with state insurance departments, SEC and FBI records, and news accounts were reviewed to compile the rankings and statistics.

The rest of the rankings are as follows:

2. Unum (NYSE: UNM) – Unum’s actions are even more shameful considering the type of insurance it sells: disability. Unum’s behavior was epitomized when it denied the claim of a woman with multiple sclerosis for three years, stating her conditions were “self-reported,” contrary to doctors’ evaluations. In 2005, Unum agreed to a settlement with insurance commissioners from 48 states over their practices.

3. AIG (NYSE: AIG) – The world’s biggest insurer, AIG’s slogan was “we know money.” AIG, described by commentators as “the new Enron,” has engaged in massive corporate fraud and claims abuses. In 2006, the company paid $1.6 billion to settle a host of charges.

4. State Farm – State Farm is notorious for its deny and delay tactics, and like Allstate, hired McKinsey consultants. State Farm’s true motives became apparent during Hurricane Katrina; for example, it employed multiple engineering firms until they could deny the claims of the Nguyen family of Mississippi. In April 2007, State Farm agreed to re-evaluate more than 3,000 Hurricane Katrina claims.

5. Conseco (NYSE: CNO) – Conseco sells long-term care policies, typically to the elderly. Amongst its egregious behavior, the insurer “made it so hard to make a claim that people either died or gave up,” said a former Conseco-subsidiary agent. Former Conseco executives were fined when they admitted to filing misleading financial statements with regulators.

6. WellPoint (NYSE: WLP) – Health insurer WellPoint has a long history of putting profits ahead of policyholders. For instance, California fined a WellPoint subsidiary in March 2007 after an investigation revealed that the insurer routinely canceled policies of pregnant women and chronically ill patients.

7. Farmers – Swiss-owned Farmers Insurance Group consistently ranks at or near the bottom of homeowner satisfaction surveys, and for good reason. For example, Farmers had an incentive program called “Quest for Gold” that offered pizza parties to its adjusters that met low claims payments goals. Like Allstate, it also hired the McKinsey consultants.

8. UnitedHealth (NYSE: UNH) – The SEC opened an investigation into former UnitedHealth CEO William McGuire for stock backdating, which ultimately led to his ouster in 2006 and returning $620 million in stock gains and retirement compensation. Physicians have also reported that their reimbursements are so low and delayed by the company that patient health is being compromised.

9. Torchmark (NYSE: TMK) – According to Hoover’s In-Depth Company Records, Torchmark’s very origins were little more than a scam devised to enrich its founder, Frank Samford. Torchmark has preyed on low-income Southern residents and charged minority policyholders more than whites on burial policies.

10. Liberty Mutual – Like Allstate and State Farm, Liberty Mutual hired consulting giant McKinsey to adopt aggressive tactics. Liberty’s tactics were highlighted when a New York couple’s insurance was “nonrenewed” by Liberty, even though they lived 12 miles from the coast and never experienced weather-related flooding.

Financial documents also revealed extravagant profits and executive compensation while policyholders’ claims were routinely delayed and denied:

• Over the last 10 years, the property / casualty and life / health insurance industries have each enjoyed annual profits exceeding $30 billion.

• The insurance industry takes in over $1 trillion in premiums every year. It has $3.8 trillion in assets, more than the GDPs of all but two countries.

• The CEOs of the top 10 property / casualty firms earned an average of $8.9 million in 2007. The CEOs of the top 10 life / health insurance earned an average of $9.1 million.

• The median insurance CEO’s cash compensation is $1.6 million per year, leading all industries.

To see how consumers can hold the insurance industry accountable and view a full copy of the study, click here.