AMA analysis reaffirms: Tort reforms work

The review said research shows that caps reduce insurers' claim payouts, meaning lower rates for physicians.

By Amy Lynn Sorrel, AMNews staff. March 3, 2008.

An analysis of recent research testing the impact of noneconomic damage caps on the medical liability environment confirms that such reforms are successful, physicians and insurance industry experts say.

But consumer advocates and trial lawyers criticized the report as misleading. They argue insurers are to blame for high premiums and advocate that other changes are needed.

The American Medical Association reviewed about 10 independent studies that looked at how limits on pain and suffering awards and medical liability risk affect insurance premiums, physician supply and defensive medicine costs. The summary, released Feb. 5, found that recent research -- consistent with earlier studies -- revealed that noneconomic damage caps continue to reduce insurers' claims payouts, which translates to lower rates for doctors.

The AMA analysis also concluded that reforms can help alleviate physician shortages. And some research showed that medical liability risk contributed to higher health care spending, the report said.

"This tells the story again: Tort reform works, and this just reaffirms it for the umpteenth time," said AMA Immediate Past President William G. Plested III, MD. "In this day and age of evidence-based medicine, we ought to have evidence-based tort reform."

He pointed to California and Texas as examples where a $250,000 noneconomic damage cap has kept doctors' premiums down. According to 2007 data from the Medical Liability Monitor, which tracks insurers' medical liability rates nationwide, Texas posted some of the lowest rates in the country for ob-gyns.