AIA Disputes Findings of Ill. Medical Liability Report

Court statistics were improperly used in a study released last week that concluded the Illinois tort system is not the cause of medical malpractice premium increases, according to the American Insurance Association (AIA).

“Medical Malpractice and the Tort System in Illinois,” by Prof. Neil Vidmar of Duke University, is simply the latest unsuccessful attempt by opponents to undermine state medical malpractice reform efforts with faulty and incomplete ‘research’,” said David Corum, AIA assistant vice president. “Other available data that are conveniently ignored by Prof. Vidmar provide ample evidence of the problems plaguing Illinois’ medical liability system and the need for reform.”

Prof. Vidmar reviews three primary statistics – the number of court filings, the number of trials, and plaintiff win rates. According to AIA, none of these measures are reliable or meaningful indicators of the final outcomes of the civil justice system as a whole.

• The number of court filings are virtually meaningless as a measure of civil justice system outcomes. The frequency of court filings is determined, in large part, by the criteria and methods plaintiff attorneys use to decide whether to accept a case. In recent years, plaintiff attorneys have become more sophisticated in judging whether a case is likely to end with a favorable settlement. The number and size of costly settlements could very easily be rising as the number of court filings declines.
• The number of trials also tells us very little about final civil justice system outcomes. In fact, as the risk of actually going to trial increases, with higher verdicts and an increased risk of a very large verdict, it should not be surprising if fewer cases go to trial because the incentive to settle a case before trial increases.
• Like the other measures used by Prof. Vidmar, plaintiff win rate statistics are of little use. A decline in plaintiff win rates is meaningless if plaintiffs are simply settling more cases before a verdict is ever issued.

“Common sense suggests that if one wanted to know why insurance premium costs have risen significantly in recent years, the place to look for an answer would be the claim losses actually incurred by insurance carriers,” explained Corum.

Incurred claim losses are what a carrier estimates it will ultimately have to pay as a result of settlements with plaintiffs and final court judgments against medical providers. Ideally, insurance premiums should be sufficient to fund incurred claim losses, the cost of defending medical providers, and any operating expenses.

“If Professor Vidmar had examined the incurred claim losses of medical malpractice insurers in Illinois, he would have found a significant increase in recent years, as well as marked year-to-year variation,” according to Corum.

Incurred medical malpractice claim losses in Illinois, over the period 2000-2004, increased 60 percent, from $322 million to $517 million, according to A.M. Best.

AIA said the Vidmar report fails to acknowledge this basic fact or review the available data on incurred claim losses, and, therefore, fails to provide a useful explanation of recent changes in insurance prices.