Caps on Medical Malpractice Awards Focus Resources on Access and Treatment

Plaintiffs in medical malpractice suits are reaping in damages across the country. Juries in New York awarded nearly $700 million in medical malpractice awards last year. California juries doled out approximately $274 million to plaintiffs in these cases. And when all medical malpractice costs- including settlements, legal and administrative costs, defensive medicine- are taken into account, national estimates range anywhere from $55.6 billion to $200 billion annually. That is nearly 10 percent of all healthcare spending in the United States.

States and municipalities have reacted to these costs with measures designed to curb medical malpractice awards. Currently, 35 jurisdictions have capped damage awards on medical malpractice liability. Proponents of these caps argue that the measures decrease unnecessary expenses while increasing access to care by minimizing the risk medical practitioners take on when treating high-risk patients.

Medical malpractice suits are an important form of redress for individuals to hold doctors and other health care providers accountable for negligent treatment. Medical malpractice plaintiffs sue for four different categories of damages: (1) economic damages commensurate to the injured party’s past and future medical costs, (2) economic damages to reimburse lost income and loss of potential future income, (3) damages for pain and suffering, and (4) punitive damages, generally reserved for cases of egregious or outrageous conduct on the part of the defendant.

Laws capping medical malpractice damages generally apply only to rewards that compensate “non-economic” losses, including plaintiff’s pain and suffering, stress, anxiety, and other negative non-monetary effects related to the plaintiff’s injuries and ongoing recovery. Depending on the jurisdiction, damage award caps generally range anywhere from $250,000 – $750,000.

Advocates for these caps explain why limiting medical malpractice liability lowers health care costs and increases access to treatment. As discussed above in the aggregate, damage awards are often very high in medical malpractice cases. High damage awards result in higher medical malpractice insurance premiums for doctors, the costs of which are passed on to individuals using the healthcare system. By setting a cap on damage awards, proponents believe that the savings experienced from lower malpractice premiums will be passed on to consumers, thus lowering the cost of health care services. Additionally, the potential risk of lawsuits and high damages may influence doctors to make medical decisions based on avoiding litigation, thereby practicing “defensive medicine”, rather than what is actually best for the patient’s interest.

Opponents argue that capping medical malpractice liability limit the power of juries, which are vested with the responsibility to hear cases and determine an appropriate award of damages. Moreover, liability is predicated on the notion that people must be held accountable for their actions, and thus medical malpractice caps should be disfavored because a negligent doctor, or a company producing defective products, should be held accountable to the full extent of the damages caused by their actions or inactions.

The truth is that many medical malpractice claims are frivolous. The American Medical Association reported that 60% of liability claims against physicians are dropped, dismissed or withdrawn. Where cases do go to trial, physicians are found not negligent 90% of the time, and those cases cost an average of $110,000 to defend- not to mention the time and credibility lost in the process.

Although the current system of medical malpractice liability is far from perfect, it is important to realize that balancing the interests between finding economic justice for victims, and protecting healthcare costs for all other individuals, is paramount. By setting a cap for medical malpractice liability, juries are provided guidance and prevented from routinely awarding excessive and arbitrary non-economic damages, thereby increasing fairness and consistency in medical malpractice liability proceedings. Medical malpractice caps may also serve to reduce the occurrence of frivolous lawsuits, as limitations on damage awards may serve to dis-incentivize plaintiffs filing lawsuits with the sole purpose of earning big payouts.

Ultimately, medical malpractice liability caps serve to further society’s interests, as such limitations promote lower medical care costs, encourage doctors to prioritize a patient’s beneficial interests, and increase access to affordable healthcare for individuals.