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A century of primary care transformation, chapter 4: The malpractice threat

Medical Economics JournalMedical Economics October 2023
Volume 100
Issue 10

Medical malpractice has existed for more than 100 years, but changed considerably as medicine advanced.

 © svetazi - stock.adobe.com

© svetazi - stock.adobe.com

Click here to read chapter 3: How insurance changed everything

Physicians often complain that, unlike doctors of previous generations, they face the constant threat of medical malpractice lawsuits. In reality, though, medical malpractice claims have existed since the mid-19th century, according to medical historian James Mohr, Ph.D., the College of Arts and Sciences Distinguished Professor of History and Philip H. Knight Professor of Social Sciences at the University of Oregon. They were driven by the rise of mass-market advertising, an absence of professional licensing standards, and a decline in what Mohr calls “religious fatalism,” the idea that physical afflictions were acts of “divine providence.”

“With the popular newspapers of the late 1830s and early 1840s full of hyperbolic claims and alleged success stories, patients … were no longer willing to dismiss unfavorable medical outcomes as either inevitable or normal,” Mohr wrote in an article published in JAMA in 2000.“And if someone was at fault, it must have been the physician.”

The odds of a doctor being sued for malpractice were relatively low through the first decades of the 20th century. But they were enough that the inaugural issue of Medical Economics included an article advising readers to get a “Physicians and Surgeons’ Liability policy, which will indemnify him against a possible judgment.” For most doctors, though, these policies were a relatively minor expense.

A century later, the possibility of facing a lawsuit is far greater. By 2020, one-third of all physicians reported having been sued at some point in their career, including 31% of general internists and 32% of family/general practitioners, results of an AMA study showed.

Nor is insurance any longer a minor expense. The Medical Economics 2022 Physician Report found that median annual premiums for family and internal medicine physicians were $9,200 and $9,100, respectively. (Lucarelli’s annual malpractice premium is $9,200, and she pays an additional $645 for general clinic malpractice liability.)

As for malpractice settlements, in 2018 they averaged more than $358,000, according to a report from consulting firm HomeTown Health based on data from the National Practitioner Data Bank Public Use Data File.

“Misdiagnosing injured and sick people was not an invention of the 20th century,” says David Studdert, LL.B., M.P.H., a professor law and of health policy at Stanford University. “It’s just that the prominence and scale have gotten larger.”

So what has happened to make malpractice suits — and the fear of them — such a prominent part of the medical landscape? As the headline of an article about malpractice in the 75th anniversary issue of Medical Economics asked, “How did it ever come to this?”

The answer lies in the confluence of several developments, starting with changes in the nature of medical care itself. The average American in the 1920s had far less contact with doctors than today, Studdert says, simply because there wasn’t nearly as much doctors could do for them.

But as medical knowledge increased and new and more powerful drugs were developed, people sought treatment more often. “And we know from lots of research that a nontrivial fraction of health care encounters involve adverse events, unexpected outcomes and injuries to patients, and all that is the raw material for malpractice lawsuits,” Studdert explains.

Another development was heightened expectations among patients as to what medicine could accomplish. “Medicine has … created the impression that it has the answers to all problems,” malpractice attorney James Griffith Sr., J.D., told Medical Economics in its 75th anniversary issue. By doing so, “it caused patients to believe that the only explanation for a bad result is physician error.”

Also contributing to the trend was the erosion of the doctor-patient relationship. Today few doctors know their patients in any context outside the examining room or have treated them for their entire lives. “People no longer have intimate relationships with their family doctor as they did a century ago,” Stanford University law professor Robert Rabin, JD, said in the 75th anniversary issue. “You don’t sue someone you’re close to.”

Partly in response to patients’ evolving expectations, plaintiffs’ lawyers began to view medical malpractice as a possible lucrative income source, marketing their services to patients who thought they had grounds for a malpractice lawsuit.

“The interaction of those trends — the raw material of injury, people looking for compensation, a plaintiff bar forming to meet that demand, and physicians turning to insurance companies to cover that risk — boosted the frequency and cost of medical malpractice litigation,” Studdert says. This, in turn, led more doctors and institutions to defend themselves by purchasing malpractice insurance or expanding their existing coverage.

The insurance industry bore some of the blame for the rising cost of malpractice coverage. In the late 1960s and early 1970s, companies raised premiums by less than what they needed to cover their costs. Moreover, the recession of the early 1970s cost them billions in stock market losses. The result was enormous increases in premiums — some by as much as 750%, according to an article in the 75th anniversary issue.

Meanwhile, an important evolution in malpractice law was making it easier for plaintiffs to win their cases. Historically, demonstrating malpractice required plaintiffs to prove, through expert testimony, that their doctor’s skill or care failed to meet the level of a comparable physician in the same community. Since finding a doctor willing to testify against another from the same area was next to impossible, the so-called “locality rule” afforded doctors a lot of protection from lawsuits.

In the late 1940s, however, a few judges began allowing physicians from other communities and states to provide expert testimony in malpractice cases. The practice spread, and by the 1960s the locality rule was effectively dead. That, along with other changes in tort law, made suing doctors easier. As a result, the threat of a lawsuit, once a distant worry for most doctors, instead became an everyday concern.

Fortunately for doctors, the first two decades of the 21st century saw a decline in the number of successful malpractice lawsuits, with the number of paid claims against doctors falling by 75% between 2002 and 2021.

Experts are uncertain as to the reasons behind the turnaround. In a 2022 New England Journal of Medicine article, Studdert offers several possible explanations, including widespread adoption of tort reforms, health care systems’ increased willingness to acknowledge medical errors and improvements in the overall quality of care, which reduced the types of harmful events apt to result in a malpractice suit.

Along with the decline in the number of lawsuits came some relief in the cost of malpractice insurance. An AMA analysis of premiums charged by major carriers found the percentage of year-over-year decreases exceeded the percentage of increases between 2013 and 2016, whereas the percentage reporting no change grew from 58% in 2013 to 81% in 2018.

The dawn of the 2020s saw a turnaround in that trend, however. The same AMA analysis found that approximately 36% of premiums increased between 2021 and 2022, a higher rate than any year since 2005, whereas only 8% decreased.

Mohr says the return to steady increases in premiums comes as no surprise because they reflect the underlying problems in the malpractice liability system. “If you set out to design a dysfunctional system that would cost the economy billions of dollars, you couldn’t do better than the system that we have,” he says. “It doesn’t do what it purports to do but it costs more and more, and society as a whole bears the costs for it.”

Click here to read chapter 5: The vanishing independent physician

A century of primary care transformation: Table of contents