Who really pays for jackpot verdicts and multi-million dollar settlements? Not the doctor nor hospital, but society as a whole:
Medical malpractice insurance is even more problematic. Every doctor with the same type of practice pays the same as every other doctor in that same type of practice. The world’s best surgeon pays the same price as a night-school butcher surgeon. What this means is that good doctors pay liability into a liability insurance bucket to cover the lawsuits for bad doctors. However, more importantly, businesses pass down costs to consumers when they set their prices. That means you’ve already paid the price for that settlement when you saw the doctor. Not a red cent comes out of the doctor’s salary or estate . . .. . . The idea that suing a company for some injustice (many imaginary and some, sadly, very real) to make them pay is false. It’s a creation of trial lawyers who like collecting 40% of those big multimillion dollar settlements. The dirty little secret is that society pays an increased amount for products to sustain that system. No matter what you think about a hack artist doctor or a negligent fast-food restaurant owner, they never pay for these lawsuits, society does.
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{ 20 comments }
Seriously. These helpless companies have no way to pay these judgments. United Health – where would it find any extra cash? AIG, with its plethora of offshore trusts won’t be able to find the extra cash without passing it on to the customer? Are you guys really so ignorant of business?
But if you’re arguing doctors shouldn’t have to pay punitive (punishment) damages, it’s a pretty lame argument. Punitive damages are almost never a factor in med mal judgments unless the doctor is drunk or high or some such thing. But I understand you have to protect your own.
And it doesn’t come out of the doctor’s salary either, it comes out of his insurer. And the best doctor in the world’s negligence can cause even more harm than the night school butcher.
If the best doctor in the world, who is much less likely to be negligent than the “night school butcher”, why don’t you guys point out those butchers to your insurer so you’re not rated the same? After all, it’s not like the patients know the difference. But again, you might have to identify your own bad apples so you probably don’t want that.
I think it’s funny you guys are hopping on the bandwagon with corporate america for protection. You’re known by the company you keep.
Did you just say that someone writing that businesses don’t pass the costs of outrageous jury verdicts down to customers is “ignorant of business?”
I think you need to go back to the drawing board, read the post again, and think long and hard about that one. I’d explain it to you, but I think it’ll take more than that for you to really understand how absurd that point of view is.
And the argument isn’t that doctors “shouldn’t have to pay” the damages, it’s that they don’t under the current system. Everyone is punished, not the one that the trial lawyer is going to great pains to demonize.
The point is that “sending a message” is a trial lawyer fiction to increase their profit. You didn’t even address that.
Start over.
I’m sorry you find it “demonizing” that you have to pay for the consequences of your negligence. It’s no less demonizing than the way your malpractice carrier treats the victim of your malpractice.
And yes, you read correctly. If United Health can pay $125 million to their CEO, forgive me if their cries of poverty because they have to pay an occasional million dollar judgment for ACTUAL HARM falls on deaf ears.
And here’s another wrinkle for you to throw into your economic analysis. If malpractice judgments don’t exist, society pays those costs anyway. The vast majority of malpractice awards are for medical expenses, both past and future. The past ones get paid back to the person’s health insurer, which using your logic, would lower health insurance costs. The future award gets paid back to physicians. Considering the person is likely uninsurable, the only other option is for the taxpayer to pick it up. So tell me, is it better or worse for society for the at fault person or their insurer who contracted for the risk NOT to pay for the harm they caused and let the taxpayer do it?
Start over with your analysis and maybe you’ll see the glaring weaknesses.
As for “sending a message”, you’re again mixing apples and oranges with trying to intertwine this with malpractice. Med mal rarely involves punitive damages. In fact, I’d challenge you to find a med mal case that did have punitives where they weren’t justified.
You’ve been tricked into hopping on board alongside the Enrons in this argument. Think about it.
You’re making the same mistakes you made before, so I’ll address that quickly before going on.
The article in the post isn’t talking about insurers not being able to pay, or crying poverty, or whatever term you want to use. It’s expressing the fact that in practice, the ones that the jury is being convinced to “send a message” to are not the ones being penalized. We may or may not agree on whether or not that should be the case, but the point of the post is that it simply isn’t the case at this point in them, so the only the primary beneficiaries of the “message” are attorneys, while everyone else pays the costs.
I find it amusing as well that you seem to think that I’m mixing apples and oranges by including issues that you feel are unrelated, and then lump doctors accused of malpractice in with “The Enrons” (there’s more than one? I missed that article). Again, start over.
There are many, many examples of punitive damages being awarded in malpractice cases, and I could cite them, but I’m sure we’d disagree on whether or not they were deserved. But if your point is correct, I’d have to ask, why is it that when non-economic damages are capped (not the medical ones you say comprise most of the awards), why are there so many fewer suits? Why do lawyers not take cases that they can’t get more than a quarter million in (again) non-economic damages for?
I think you understand, although I’m sure you’re loathe to admit it.
And again to go back to your argument, if society is paying the cost either way, why skim 40% or more off the top for lawyers and administration? It seems better to cut that cost out and let society bear the cost, as we seem to agree happens either way.
“It’s expressing the fact that in practice, the ones that the jury is being convinced to “send a message” to are not the ones being penalized. “
And that claim remains wrong. First, there’s the possibility that they don’t even have insurance coverage for the act that resulted in punitive damages, so the company is punished. Second, if their premiums go up, that’s harm to their bottom line. Now, you can argue that if a company’s costs go up, then they pass it on to us. Maybe, maybe not, since maybe their competitor isn’t negligent and they can’t compete if they raise prices. Maybe their CEO pay is reduced. Maybe they’re required to be more efficient. Maybe they learn their lesson and don’t act in such a reprehensible manner again. But even if you’re right, then why would we ever hold anyone responsible monetarily for anything?
“so the only the primary beneficiaries of the “message” are attorneys, while everyone else pays the costs.”
How so? Does the victim not recover? Does society not win when actions that rise to the level of punitive damage are punished? Should we not punish criminals because society has to pay the bill for jailing them? Do the attorneys not pay the increased costs you claim exist? Do the victim’s medical providers not benefit? Do you not benefit because the victim can afford to pay their medical providers?
“There are many, many examples of punitive damages being awarded in malpractice cases, and I could cite them, but I’m sure we’d disagree on whether or not they were deserved.”
Against individual doctors? I would challenge you to cite them. I think you’ll be hard pressed to do so.
You are mixing apples and oranges when you start comparing the punitive damages assessed in business cases with malpractice cases. They are such a miniscule factor in malpractice cases as to almost be nonexistent. Most malpractice cases involve simple negligence, there is very rarely gross negligence or any intent. You lumped yourself in with Enron in trying to equate the two.
“It seems better to cut that cost out and let society bear the cost, as we seem to agree happens either way.”
You want universal health care, advocate for it. Go out and say “I don’t want responsible parties to pay for the harm they caused, I think the taxpayer should.” Let me know how that works out for you.
You also seem to forget one thing – the vast majority of lawsuits are businesses suing businesses. Would you eliminate those as well?
The system is set up to benefit the bar, first and last, and the palintiff is only the occasional beneficiary, always along with the lawyer. The 40% cut is not the fees; it is the prize. It isn’t the “costs,” either, those are assessed against the recovery separately. The 40% is the compensation for taking the litigation risks of less worthy cases; the costs of being less than discriminating and thorough in evaluating litigation risk prior to bringing suit, and for dealing with the rabble of plaintiffs drawn to billboarded lures of easy payoffs. All that costs real money–it is a business, after all–and the money has to come from somewhere. So it is the occasional winners who pay those costs, and of course, that usually means the insurers of the losing or settling defentant.
“But if your point is correct, I’d have to ask, why is it that when non-economic damages are capped (not the medical ones you say comprise most of the awards), why are there so many fewer suits? Why do lawyers not take cases that they can’t get more than a quarter million in (again) non-economic damages for?”
Sorry, I missed this question. A couple of reasons. Although if you’re referring to the drops right after insurer protection acts pass, it’s because cases that would normally be stretched out longer and might even settle without filing suit are filed to make sure their values aren’t compressed by the random caps.
But generally, it’s for two reasons. One, since I assume we’re talking med mal, there is less incentive for the victim if they don’t have earnings. Children, stay at home moms, the elderly. They have no benefit to going through an arduous trial and being told they are liars, malingerers, greedy, etc. when their recovery is uncertain and most of it will just go to medical bills anyway. Why should they go through that just for the providers and maybe the health insurer that’s going to drop them first chance they get anyway?
Second, because med mal is expensive for the lawyer. Would you bet $100,000 out of your pocket and countless hours of your time to win knowing the odds were stacked heavily against you? The people can’t pay hourly, so all we’ve done is limit what one side can pay its attorney. If, as insurers claim, trying a med mal case costs $100,000. And if, say, you’re a housewife with $75K in medical bills and a long term injury that won’t require a lot of future care. Your max recovery is $325K. the lawyer, who is betting that $100K, is going to get even 25% plus his expenses. What incentive do you have? And really, for the lawyer, what incentive does he/she have? Bet $100K against the odds to make $100K? Even to a doctor those economics should be clear.
By the way, does that seem fair to you? Why don’t we limit what businesses can sue for arbitrarily?
“The 40% is the compensation for taking the litigation risks of less worthy cases;”
Actually, it’s too compensate for the financial risk taken of paying the expenses up front and spending hundreds of hours of uncompensated time.
Given the costs of taking a med mal case, and the odds of winning at trial, taking dogs, even at 50%, is a quick way to go broke. Again, even a doctor should be able to understand those economics.
Actually, it’s too compensate for the financial risk taken of paying the expenses up front and spending hundreds of hours of uncompensated time.
I thought this was a response to a statement about another aritcle on this blog:
Clinical medicine continues to be one the most highly compensated lines of work according the National Bureau of Labor Statistics.
“You’re known by the company you keep”
Certainly you must have heard the trumpets of justice sounding when the Lerach law firm was ordered to pay the costs for frivolously bringing and continuing suit against Alliance Capital.
The New York Times reported 12/2/2006 that a federal judge awarded the defense in an Enron-related class action attorney fees against plaintiff class-action law firm Lerach, Coughlin, Stoia, Geller, Rudman & Robbins for continuing to press class action claims against Alliance Capital after it was apparent that the claims had no merit. The court’s decision to place financial responsibility for the sanctions on the class action attorneys was surmised to be because “non-attorney clients more likely than not would not have the ability to determine at what point, based on what evidence, an action becomes legally ‘frivolous,’ while its licensed counsel should be and is held to such a standard.” Defense attorneys are quoted as stating that the court’s ruling punishes class action plaintiff lawyers for continuing to pursue “what was clearly an innocent party.”
Amen!
“Again, even a doctor should be able to understand those economics.”
The next time you take a 5% paycut for doing the same amount of work thanks to a federal entity you will have the right to lecture us about economics.
Correction. That would be 5% plus the rate of inflation, so figure 8% or 9%.
Anon. 10:04 a.m. said: “Seriously. These helpless companies have no way to pay these judgments. United Health – where would it find any extra cash? AIG, with its plethora of offshore trusts won’t be able to find the extra cash without passing it on to the customer? Are you guys really so ignorant of business?”
SPEAKING of ignorant of business……
United Health and AIG aren’t medical liability insurers. They sell HEALTH INSURANCE.
HEALTH insurers DON’T PAY medical liability judgements. (They don’t pay for medical procedures, either, but that’s a conversation for another day….)
Medical Liability Insurers like MedPro and The Doctors Company and others which sell ONLY medical liability insurance to medical professionals pay malpractice judgements.
A deliberate attempt has been made by those who oppose medical liability reforms to confuse the two – and you fell for it. Shame on you.
“The next time you take a 5% paycut for doing the same amount of work thanks to a federal entity you will have the right to lecture us about economics.”
Actually, it appears that cut may be off the table. And of course, if you don’t like the bargain of guaranteed payment but less pay then don’t make it. You choose to. No one forces you to accept the government’s money. You’re welcome to get out in the free market and compete like so many other service providers.
“HEALTH insurers DON’T PAY medical liability judgements. (They don’t pay for medical procedures, either, but that’s a conversation for another day….)”
Donna’s right, they don’t. They do benefit though, through subrogation, when a judgment is had, because they get paid back. This, using Donna’s logic of “less payouts equals lower premiums” means more money in that health insurer pockets means lower health insurance premiums.
Everyone knows what United and AIG sell. If you read the original post, which I’m sure you didn’t, you’ll see that it wasn’t limited to the med mal industry. If it was, we really wouldn’t be talking about “send a message” verdicts because as you should know (even if your lobbyist soul won’t allow you to admit it) punitive verdicts are rarely a factor in med mal litigation.
Anon I really wish you had a clue as to what you were talking about. But it is easy to pontificate when you have never ACTUALLY WORKED IN THIS FIELD and have your head up your ass.
By each point:
1: This year’s pay cut was stopped. Next year’s is still in effect as congress never addressed the underlying issue. You never answered the question. When is the last time you took a paycut for the same amount of work done?
2: I would love to cut out the insurance middleman. My patient’s don’t have that luxury. I am a cancer doc, you expect me to cut my patient’s loose and tell them don’t come back unless they have cash, with life threatening illnesses? Do you have any idea the expenses these people (cancer patient’s) incur even with insurance? Trust me, I probably do more unpaid work in a month than you do “probono” work in a year to minimize these patient’s expenses. Next time have the decency about becoming educated about the subject. You will sound less like an uninformed idiot.
You are wasting your time. This joker is a lawyer troll. The only thing he is passionate about is making money. Hell they call their free work a special word “probono”. To us it is just another day on the job.
PATIENTS PAY WITH THEIR LIVES, MY DAD DID!! THERE IS NO AMOUNT OF MONEY THAT COULD EVER BE OFFERED TO ME, AND TO THINK ANY AMOUNT WOULD BE ENOUGH, I WOULD RATHER HAVE ONE MORE DAY WITH MY DAD, CAN ANY OF YOU OUT THERE OFFER THAT?? THINK NOT! MONEY CAN NOT COMPENSATE FOR EVERYTHING.HOW SAD PEOPLE ARE VIEWED AS A PRODUCT. IT COULD HAPPEN TO ANY OF YOU,LOOSE A FAMILY MEMBER. THEY CAN EVEN SAY THEY ARE SORRY.
MY DAD PAID WITH HIS LIFE.WE DID NOT GO AFTER MONEY,WHAT AN INSULT!!ONE MORE DAY WITH MY DAD IS PRICELESS,NONE OF YOU CAN OFFER ME THAT!! SO CONCERNED ABOUT MONEY, THE LOSS COULD VERY WELL HAPPEN TO ANYONE OF YOU.HOW MUCH VALUE $$$$$ ARE YOUR FAMILY MEMBERS??TRY TO UNDERSTAND WHY SOME OF US OUT HERE WE ARE NOT RUNNING AFTER THE $$$$$$$$$.
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