Wrong solution

December 27, 2004|By Michael I. Krauss

THE PROPOSAL — THE HAGGLING between Gov. Robert L. Ehrlich Jr. and the state's top Democratic leaders over reforming Maryland's malpractice law has just begun, but what should trouble Marylanders as the General Assembly gathers today is a proposal on which they agree: creating a "stop-loss" fund of taxpayers' money.

The proposal -- a re-insurance fund that medical malpractice insurance providers could dip into -- would cost tens of millions of dollars a year, beginning with $30 million the first year. It would be intended to subsidize doctors' malpractice insurance and partly offset the dramatic increases in malpractice premiums experienced in recent years.

Malpractice law has an important role in society. It enables a patient who has been harmed by a negligent physician to receive just compensation for the injury. When malpractice law operates well, it also provides a powerful incentive for doctors to perform competently or else suffer financial losses through court judgments and higher malpractice premiums.

The dramatic recent increases in malpractice insurance premiums suggest that something has gone wrong. One of the following must be true: Maryland doctors are becoming increasingly negligent, plaintiffs are making -- and winning -- dubious claims about injuries, or something is wrong in the malpractice insurance market.

Regardless of which of those is the case, the stop-loss fund doesn't fix the problem -- it exacerbates it.

If Maryland doctors are increasingly prone to error, the fund would diminish the economic incentive for them to do better. Instead, it would shift some of the cost of medical errors from doctors to those who would provide revenue for the fund -- either HMO customers (through a surcharge on HMOs, as proposed by Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch) or all taxpayers (by using money from the state's general fund, as proposed by Governor Ehrlich).

If undeserving claims are what's driving Maryland's rising malpractice costs, the stop-loss fund would continue to deliver winning malpractice lottery tickets to plaintiffs and their lawyers, using money taken from HMO customers or taxpayers.

And if mismanaged malpractice insurance firms are what's causing Maryland's malpractice woes, then the stop-loss fund would encourage additional mismanagement by infusing those firms with millions of dollars from either HMO customers or taxpayers.

The irony of the stop-loss fund proposal is that it shifts the costs of the Maryland malpractice crisis away from those causing it -- either doctors, plaintiffs and their lawyers or malpractice insurers -- and places the costs squarely on the shoulders of folks who have surely committed no wrong. That's not an improvement over the current situation; rather, it's a further pollution of tort law.

The General Assembly is likely to implement the stop-loss fund because it is a political winner. It would benefit the physicians' lobby because it would effectively cap doctors' liability insurance premiums. And it would benefit the lawyers' lobby because it would allow them to continue pursuing large judgments. The stop-loss fund is the classic politician's dream: The benefits are concentrated on two deep-pocketed special interests while the costs are dispersed among the general populace.

But not all doctors and lawyers are accepting of this largesse. Attorneys with reverence for the ideals of tort will find the cost-shifting reprehensible, while doctors who value personal responsibility will bristle at the idea of being subsidized. As Hagerstown neurosurgeon Dr. John Caruso told me at a recent forum, "I don't want anybody paying my premiums. I just want my premiums to be fair."

Maybe, instead of creating a slush fund, state lawmakers will try to determine -- and fix -- the causes of the state's medical malpractice problems.

Michael I. Krauss, professor of law at George Mason University, is the author of the Maryland Public Policy Institute study "Medical Malpractice: Is It Time for Tort Reform in Maryland?"

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