Subcommittee on Health
July 17, 2002
10:00 AM
2123 Rayburn House Office Building

On behalf of the American College of Obstetricians and Gynecologists (ACOG), an organization representing more than 44,000 physicians dedicated to improving the health care of women, we urge you to bring an end to the excessive litigation restricting women's access to health care.

In addition to providing an overview of the issue, this statement will explain how the medical liability crisis compromises obstetric care for women and detail the consequences for women's health care if excessive litigation persists. This statement will also highlight how the medical liability crisis is acutely affecting nine states, including Florida, explaining how access to basic and important women's health care in those states is severely jeopardized because of a liability system gone awry.

I. Effects of Excessive Litigation on Women's Health Care: An Overview

The number of lawsuits against all physicians has been rising over the past 30 years in an increasingly litigious climate, and obstetrics-gynecology--considered a "high risk" specialty by insurers--remains at the top of the list of specialties affected by this trend.

An ailing civil justice system is severely jeopardizing patient care for women and their newborns. Across the country, liability insurance for obstetrician-gynecologists has become prohibitively expensive. Premiums have tripled and quadrupled practically overnight. In some areas, ob-gyns can no longer obtain liability insurance at all, as insurance companies fold or abruptly stop insuring doctors.

When ob-gyns cannot find or afford liability insurance, they are forced to stop delivering babies, curtail surgical services, or close their doors. The shortage of care soon affects hospitals, public health clinics, and medical facilities in rural areas and inner cities.

Now, women's health care is in jeopardy for the third time in three decades. This crisis will only end soon with legislative intervention. The recurring liability crisis involves more than the decisions of individual insurance companies. The manner in which our antiquated tort system resolves medical liability claims is at the root of the problem.

A liability system--encompassing both the insurance industry and our courts--should equitably spread the insurance risk of providing affordable health care for our society. It should fairly compensate patients harmed by negligent medical care. It should provide humane, no-fault compensation to patients with devastating medical outcomes unrelated to negligence--as in the case of newborns born with conditions such as cerebral palsy. Our current system fails on all counts. It's punitive, expensive, and inequitable for all, jeopardizing the availability of care.

Jury awards, which now soar to astronomical levels, are at the heart of the problem. The average liability award increased 97% between 1996 and 2000, fueled by states with no upper limits on jury awards. This "liability lottery" is enormously expensive, and patients who need, but can't get, health care, pay the price.

The current liability system encourages attorneys to focus on relatively few claims with exorbitant award potential, ignoring other claims with merit. Even then, much of a jury award goes straight into the lawyers' pockets; often, less than half of every medical liability dollar ever reaches the patient.

Patients and physicians need a real solution to this crisis. In the 1980s, the Institute of Medicine warned that the liability crisis compromised the delivery of obstetric care for women across the nation. It urged Congress to provide both immediate relief and long-term solutions. ACOG has asked the Institute to reexamine this issue and update its report.

The liability crisis continues to compromise the delivery of health care today. A recent Harris survey showed that three-fourths of physicians feel their ability to provide quality care has been hurt by concerns over liability cases. And, patients understand the problem, too. An April 2002, survey by the Health Care Liability Alliance found that 78% of Americans are concerned about the impact of rising liability costs on access to care.

II. How Excessive Litigation Compromises the Delivery of Obstetric Care

Obstetrics-gynecology is frequently among the top three specialties in the cost of professional liability insurance premiums. Nationally, insurance premiums for ob-gyns increased over time: the median premium increased 167% between 1982 and 1998. The median rate rose 7% in 2000, and 12.5% in 2001, with increases ranging from 0.3% to 69%, according to a survey by Medical Liability Monitor, a newsletter covering the liability insurance industry.

A number of insurers are abandoning coverage of doctors altogether. The St. Paul Companies, Inc., which handled 10% of the physician liability market, announced in recent months that it was withdrawing from that market. One insurance ratings firm reported that five medical liability insurers failed in 2001. One-fourth of the remaining insurers were rated D+ or lower, an indicator of serious financial problems.

According to Physicians Insurance Association of America, ob-gyns were first among 28 specialty groups in the number of claims reported against them in 2000. Ob-gyns were the highest of all specialty groups in the average cost of defending against a claim in 2000, at a cost of $34,308. In the 1990s, they were first--along with family physicians-general practitioners--in the percentage of claims against them closed with a payout (36%). They were second, after neurologists, in the average claim payment made during that period ($235,059).

Although the number of claims filed against all physicians climbed in recent decades, the phenomenon does not reflect an increased rate of medical negligence. In fact, ob-gyns win most of the claims filed against them. A 1999 ACOG survey of our membership found that over one-half (53.9%) of claims against ob-gyns were dropped by plaintiff's attorneys, dismissed or settled without a payment. Of cases that did proceed to court, ob-gyns won 7 out of 10 cases closed by a jury or court verdict.

When a jury does grant an award, it can be exorbitant, particularly in states with no upper limit on awards. Jury awards in all civil cases averaged $3.49 million in 1999, up 79% from 1993 awards, according to the latest reports from Jury Verdict Research of Horsham, Pennsylvania. The median medical liability award jumped 43% in one year, from $700,000 in 1999, to $1 million in 2000: it has doubled since 1995.

Ob-gyns are particularly vulnerable to this trend, because of jury awards in birth-related cases involving poor medical outcomes. The average jury award in cases of neurologically impaired infants, which account for 30% of the claims against obstetricians, is nearly $1 million, but can soar much higher. One recent award in a Philadelphia case reached $100 million.

We survey our members regularly on the issue of medical professional liability. According to our most recent survey, the typical ob-gyn is 47 years old, has been in practice for over 15 years--and can expect to be sued 2.53 times over his or her career. Over one-fourth (27.8%) of ACOG Fellows have even been sued for care provided during their residency. In 1999, 76.5% of ACOG Fellows reported they had been sued at least once so far in their career. The average claim takes over four years to resolve.

III. Women's Health Consequences of Excessive Litigation

The medical liability crisis is complex, affecting every aspect of our nation's ability to deliver health care services. As partners in women's health care, we urge Congress to end the medical liability insurance crisis. Without legislative intervention, women's access to health care will continue to suffer. We urge you to bring an end to the meteoric rise in liability premiums that is already impeding women's access to health care.

This crisis is obstructing mothers' access to obstetric care. When confronted with substantially higher costs for liability coverage, ob-gyns and other women's health care professionals stop delivering babies, reduce the number they do deliver, and further cut back--or eliminate--care for high-risk mothers. With fewer women's health care professionals, access to early prenatal care will also be reduced, depriving them of the proven benefits of early intervention.

Excessive litigation also threatens women's access to gynecologic care. Ob-gyns have, until recently, routinely met women's general health care needs--including regular screenings for gynecologic cancers, hypertension, high cholesterol, diabetes, osteoporosis, sexually transmitted diseases, and other serious health problems. Staggering premiums continue to burden women's health care professionals and will further diminish the availability of women's care.

Legislative intervention is needed to avert another rural health crisis. Women in underserved rural areas have historically been particularly hard hit by the loss of physicians and other women's health care professionals. With the economic viability of delivering babies already marginal due to sparse population and low insurance reimbursement for pregnancy services, increases in liability insurance costs are forcing rural providers to stop delivering babies. Help sustain those providers dedicated to caring for America's rural women and mothers.

Allowing the crisis to continue will mean community clinic cutbacks. Also hurt by the medical liability crisis are the nation's 39 million uninsured patients--the majority of them women and children--who rely on community clinics for health care. Unable to shift higher insurance costs to their patients, these clinics have no alternative but to care for fewer people.

Acting now can save more women from the ranks of the uninsured. Health care costs continue to increase overall, including the cost of private health care coverage. As costs continue to escalate, employers will be discouraged from offering benefits. Many women who would lose their coverage, including a large number of single working mothers, would not be eligible for Medicaid or SCHIP because their incomes are above the eligibility levels. Last year, 11.7 million women of childbearing age were uninsured. Without reform, even more women ages 19 to 44 will move into the ranks of the uninsured.

As partners in women's health care, ACOG urges Congress to act swiftly to avert further access issues for women.

IV. Women's Health Suffers Nationwide

As ob-gyns, our primary concern is access to affordable, quality health care. Help us maintain the highest standard of care for American's women and mothers by ending the crisis in the following nine "Hot States": Florida, Mississippi, Nevada, New Jersey, New York, Pennsylvania, Texas, Washington, and West Virginia. In three other states--Ohio, Oregon, and Virginia--a crisis is brewing, while four other states--Connecticut, Illinois, Kentucky and Missouri--should be watched for mounting problems.

In identifying these states, the College considered a number of factors in the escalating medical liability insurance crisis for ob-gyns. The relative weight of each factor could vary by state. Factors included: the lack of available professional liability coverage for ob-gyns in the state; the number of carriers currently writing policies in the state, as well as the number leaving the medical liability insurance market; the cost, and rate of increase, of annual premiums based on reports from industry monitors; a combination of geographical, economic, and other conditions exacerbating an already existing shortage of ob-gyns and other physicians; the state's tort reform history, and whether tort reforms have been passed by the state legislature--or are likely to be in the future--and subsequently upheld by the state high court.

A. Florida

With the highest average premium for ob-gyns in the nation in 2000, at $158,000 per year, Florida has a high number of medical liability lawsuits and a history of large jury awards. According to First Professionals Insurance Company, Inc., Florida's largest medical liability insurer, one out of every six doctors is sued in the state as compared to one out of every 12 doctors nationwide.
In South Florida, where insurers say litigation is the heaviest, annual premiums for ob-gyns went as high as $208,949 in 2001 -- the highest rates in the country, according to Medical Liability Monitor.
The liability situation has been so chronic in Florida that during the crisis of the 1980s, the state began to allow doctors to "go bare" (not have liability coverage), as long as they could post bond or prove ability to pay a judgment of up to $250,000.
Double- and triple-digit premium increases have forced some doctors to cut back on staff, while others have left the state or have stopped performing high-risk procedures to avoid the lofty rates. Ob-gyns in this state are more likely than their colleagues in other states to no longer practice obstetrics.
Florida already has some tort-reform laws aimed at protecting doctors. But more recent Florida Supreme Court rulings have weakened such laws, causing the number of lawsuits to climb again. Now Florida is one of at least a dozen states contemplating another round of legislation.

B. Mississippi

According to the Mississippi State Medical Association, medical liability insurance rates for doctors who deliver babies have risen 20% to 400% in the past year, depending on the carrier. Annual premiums range from $40,000 to $110,000.
The Delta Democrat Times reported that from 1999 to 2000, the number of liability lawsuits faced by Mississippi physicians increased 24%, with an additional 23% increase in the first five months of 2001.
According to the Delta Democrat Times, 324 Mississippi physicians have stopped delivering babies in the last decade. Only 10% of family physicians deliver babies.
In Cleveland, Mississippi, three of the six doctors who deliver babies dropped that part of their practice in October 2001 because of the increase in premiums.
In Greenwood, Mississippi, where approximately 1,000 babies are born every year, the number of obstetricians has dropped from four to two. The two remaining obstetricians are each limited to delivering 250 babies per year, leaving approximately 500 pregnant women searching for maternity care, reports the Mississippi Business Journal.
In Yazoo City, Mississippi, which has 14,550 residents, there is no one practicing obstetrics.
Natchez, Mississippi, which serves a 6-county population of over 100,000, has only three physicians practicing obstetrics.
The State Legislature defeated 12 tort and insurance reform bills this year. No reforms were approved during the 2002 session, which adjourned in mid-April.
The St. Paul Companies, Inc., was the 14th insurer to leave Mississippi in five years, according to the Mississippi State Medical Association.
State Insurance Commissioner George Dale has stated that unless tort reform is passed, it is unlikely that insurance companies will be interested in doing business in Mississippi.

C. Nevada

In December 2001, The St. Paul Companies, Inc., the nation's second largest medical liability insurer, announced it would no longer renew policies for 42,000 doctors nationwide -- including the 60% of Las Vegas doctors who were insured by St. Paul. Replacement policies are costing some Nevada doctors four or five times as much as before: $200,000 or higher annually, more than most doctors' take-home pay, the Los Angeles Times reports. Prior to the St. Paul announcement, insurance premiums for Las Vegas ob-gyns had been in the $40,000 range.
A February 2002 survey of Clark County ob-gyns, commissioned by their ob-gyn society, revealed:

60% indicated that they are going to drop obstetric care from their practices because they cannot afford the increases in their professional liability insurance.
50% reported they have been quoted premium increases ranging from 50% to 200%.
42.3% are making plans right now to leave the state if there is no resolution in the medical liability situation in the next couple of months.
78% percent indicated that they ultimately will have to leave the state if there is no long-term solution.

According to a March article in the Las Vegas Review-Journal, many Las Vegas Valley doctors say they will be forced to quit their practices, relocate, retire early or limit their services if they cannot find more affordable rates of professional liability insurance by early summer.
According to the Nevada State Medical Association, it is estimated that between 200 and 250 physicians will be facing bankruptcy, closing their offices, or leaving Nevada this year.
In February 2002, the Las Vegas Sun reported that medical liability cases in Clark County had more than doubled in the past six years. In that period, plaintiffs' awards in the county totaled more than $21 million.
USA Today reports that in the past two years, Nevada juries have awarded more than $1.5 million each in six different medical liability trials.
Recruiting doctors to Las Vegas is extremely difficult because of the escalating medical liability premiums and the perception that it is highly litigious. Nevada currently ranks 47th in the nation for its ratio of 196 doctors per 100,000 population. The state's medical school produces just 50 physicians a year.
Unlike neighboring California, which has a cap on noneconomic damages, there is no limit in Nevada as to what juries can award patients in medical liability cases.

D. New Jersey

In February 2002, the Newark Star-Ledger reported that three medical liability insurance companies went bankrupt or announced they would stop insuring New Jersey physicians in 2002 for financial reasons. The state's two largest medical liability insurers have stated that they cannot pick up all the extra business and are rejecting doctors they deem high risk.
MBS Insurance Services of Denville, one of New Jersey's largest medical liability insurance brokers, estimates that approximately 300 to 400 of the state's doctors cannot get insurance at any price.
According to the Medical Society of New Jersey, premiums have risen 50% to 200% over last year.
According to the Star-Ledger, "An obstetrician with a good history -- maybe just one dismissed lawsuit -- can expect to pay about $45,000 for $1 million in coverage. Rates rise if the physician faces several lawsuits, regardless of whether the physician has been found liable in those cases."
The president of the New Jersey Hospital Association says that rising medical liability premiums are a "wake-up call" that the state may lose doctors. Hospital premiums have risen 250% over the last three years, and 65% of facilities report that they are losing physicians due to liability insurance costs.

E. New York

New York State currently faces a shortage of obstetric care in certain rural regions. Increasing liability insurance costs will only exacerbate these access problems.
In 2000, New York was second only to Florida in the average cost of annual liability insurance premiums for ob-gyns ($144,973 per year).
Also in 2000, there was a total of $633 million in medical liability payouts in New York State, far and away the highest total in the country. According to the insurance consumer web site www.insure.com, this is 80% more than the state with the second highest total.
Increased insurance rates have forced some physicians in New York to "quit practicing or to practice medicine defensively, by ordering extra tests or procedures that limit their risk," according to a recent New York Times report.
Physician medical liability insurance costs have historically been a problem in New York State. The legislature and governor had to take significant action in the mid-1970s and again in the mid-1980s to avert a liability insurance crisis that would have jeopardized access to care for patients.

F. Pennsylvania

Pennsylvania is the second-highest state in the country for total payouts for medical liability. During the fiscal year 2000, combined judgments and settlements in Pennsylvania amounted to $352 million -- or nearly 10% of the national total.
From the beginning of 1997 through September 2001, major liability insurance carriers writing in Pennsylvania increased their overall rates 80.7% to 147.8%, according to a January 2002 York Daily Record article.
Philadelphia and the counties surrounding it are hardest hit by the liability crisis. From January 1994 through August 2001, the median jury award in Philadelphia for a medical liability case was $972,900. For the rest of the state, including Pittsburgh, the median was $410,000.
One-quarter of respondents to an informal ACOG poll of Pennsylvania ob-gyns say they have stopped or are planning to stop the practice of obstetrics. 80% of medical students who come to the state for a world-class education ultimately choose to practice elsewhere, according to the Pennsylvania State Medical Society.
On April 24, 2002, Methodist Hospital in South Philadelphia announced that it will stop delivering babies due to the rising costs of medical liability insurance. The labor and delivery ward closed on June 30, leaving that area of the city without a maternity ward. Methodist Hospital has been delivering babies since its founding in 1892.

Despite some tort reform measures passed by the state legislature (House Bill 1802) this past winter, ob-gyns were disappointed the measures did not provide more relief. The law did not include: caps on jury awards; sanctions on frivolous suits; changes in joint and several liability; limits on lawyers' fees; or, a guarantee that a larger share of jury awards will go to injured plaintiffs.
The rules for venue of court cases in Pennsylvania are very liberal. Recently approved measures only appoint a committee to study venue shopping, but do not limit the practice.
Since HB 1802 passed, experts predict a 15% to 20% overall reduction in doctors' liability premiums. But with the 50% to 100% premium increases of the last two years, medical officials believe the bill is not enough to stop physicians from leaving practice or to attract new physicians. Nor do they believe new insurers will begin writing policies in Pennsylvania.

G. Texas

Preliminary results of a recent Texas Medical Association physician survey indicate that:

More than half of all Texas physicians responding, including those in the prime of their careers, are considering early retirement because of the state's medical liability insurance crisis.
Nearly a third of the responding physicians said they are considering reducing the types of services they provide because of recent premium increases for medical liability. The percentage of physicians answering "yes" to that question was higher in Fort Worth, Houston, San Antonio, and Dallas than in Brownsville or El Paso.

Medical liability insurance premiums for 2002 are expected to increase from 30% to 200%, according to the Texas Medical Association. In 2001, ob-gyns in Dallas, Houston, and Galveston paid medical liability insurance premiums in the range of $70,00 to $160,000.
According to Governor Rick Perry's office, between 1996 and 2000 an average of one in four Texas physicians had a medical liability claim filed against them. In the Lower Rio Grande Valley, the situation is even worse.
According to a February 2001 Texas Medical Association survey, one in three Valley doctors say their insurance providers have stopped writing liability insurance.
In 2000, 51.7% of all Texas physicians had claims filed against them, according to the Texas Medical Examiners Board. Patients filed 4,501 claims, up 51% from 1990.
By some estimates, as many as 86% of medical liability claims filed in Texas are dismissed or simply dropped without payment to the patient. Yet providers and insurance companies must still spend millions of dollars in defense, even against baseless claims.
According to a Texas Medical Association study, the amount paid per claim in 2000 was $189,849 (average for all physicians), a 6% increase in one year.
Texas has no limits on noneconomic damages in medical liability cases, although the legislature enacted such limits in the 1970s as part of a comprehensive set of reforms. The Texas Supreme Court later rejected them in the 1980s.
Texas has procedures in place to screen lawsuits for merit and to sanction lawyers who file frivolous suits, but these are not enforced uniformly across the state, according to an April 2002 news release issued by Governor Rick Perry.
Only about 30% of the medical liability insurance market is served by insurance companies that are regulated by the Texas State Department of Insurance and subject to rate review laws, according to Governor Perry's office.

H. Washington

According to Medical Liability Monitor, in late 2001 the second largest carrier in Washington State announced that it was withdrawing from providing medical liability insurance for Washington physicians. This decision by Washington Casualty Company impacted approximately 1,500 physicians.
In 2001, state ob-gyns paid medical liability insurance premiums in the range of $34,000 to $59,000. For many physicians, this meant an increase of 55% or higher from the year 2000.
According to the Pierce County Medical Society, some Tacoma specialists reported 300% increases.
Unlike California, Washington has no cap on noneconomic damages in medical liability cases. The State Supreme Court found a previous cap unconstitutional in 1989.
In April, The Olympian reported that Washington State Insurance Commissioner Mike Kreidler's office has heard repeatedly from physicians throughout the state that they may be forced out of Washington because of high medical liability rates or the lack of available insurance.

I. West Virginia

There are only three carriers in the state -- including the state-run West Virginia Board of Risk and Insurance Management -- currently writing medical liability policies for doctors. Annual premiums range from $90,700 to $99,800.
In 2000, many physicians had problems affording or finding insurance. This urgency prompted Governor Bob Wise to issue a request for proposals to commercial insurance carriers asking them to provide terms under which they would be willing to come to the state. The governor's office received no response at all. To date, some carriers previously active in West Virginia are under an indefinite, self-imposed moratorium for new business in the state, according to the West Virginia State Medical Society.
Legislation eked out during a grueling special session in the fall of 2001 reestablished a state-run insurer of last resort. However, with rates 10% higher than the highest commercial rate, and an additional 50% higher for those physicians who are considered high risk, the state-run insurer does not solve the affordability problem, according to ob-gyns in the state.
According to an informal survey of ACOG's West Virginia section, more than half of all ob-gyn residents plan to leave the state once they have completed training because of the state's medical liability insurance climate. A majority of private practitioners who provide obstetric care plan to leave the state if there is not improvement in the insurance crisis.
West Virginia cannot afford to lose more doctors. The West Virginia State Medical Society reports that a majority of the state is officially designated by the federal government as a health professional shortage area and medically underserved.

V. Conclusion

Thank you, Mr. Chairman, for your leadership on this important issue and for the Subcommittee's attention to this crisis. ACOG appreciates the opportunity to present our concerns for the panel's consideration. The College looks forward to working with you as we push for a solution.

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Harming Patient Access to Care: The Impact of Excessive Litigation