Good day, family and friends!
Today, we start looking at litigation, insurance fraud, and special interest legislation.
Another component that has caused the cost of doing business for both physicians and insurance providers to skyrocket is runaway litigation. Over the last 30 - 35 years, the concepts of 'Personal Responsibility' and 'Reasonable Expectation' have been either perverted or completely discarded by personal injury attorneys. People who are grieving over a personal tragedy are being convinced by these ambulance-chasers that it will make them feel better to lash out at the deepest pockets they can find. Here are two recent examples of such spurious abuse of litigation:
1) Earlier this year, a grieving family in Montana filed suit against the parent company of Louisville Slugger because their son was killed by a line drive hit by a batter using one of their aluminum bats. The jury awarded the family $850,000.
2) A woman in Oklahoma has filed suit against Samsung and Sprint Nextel because a man who was distracted by a cellphone call ran a red light and broad-sided a car in the intersection, killing the woman's mother. This suit is pending.
But the most famous case of abusive litigation that really opened the flood gates is the case of Liebeck v. McDonald's Restaurants from 1994. In case you don't remember, this is the case where a 79-year-old woman who, due to her own actions, spilled hot McDonald's coffee in her lap. Thanks to her weasel of an attorney and the twelve idiots on the jury she received a judgment of $2.86 million dollars for 'comparative negligence'. To add insult to injury, her husband filed a separate suit against McDonald's for "loss of spousal duties" because his wife couldn't have sex while she recovered. McDonald's settled his suit out of court for another $150,000.
What do these cases have to do with the cost of healthcare? They are some of the most egregious examples of the courts throwing personal responsibility out the window. This attitude that people are no longer responsible for their own actions has spilled over into every aspect of our society...including healthcare. Because of this 'victim mentality', the cost of medical malpractice insurance coverage has gone crazy. Paying the out of control punitive damages being awarded in malpractice cases have severely increased the operating expenses of the malpractice insurance carriers. They pass this cost along to the physicians in the form of a six-fold increase in malpractice insurance premiums. In turn, this increase in the operating costs of a physician's practice results in higher overall costs to the consumer for every visit to a doctor's office. As with just about every other cost in this debate, there is a wide disparity in just how much of a physician's cost is malpractice insurance...between 19% and 27%, depending on which report you read.
Next time, we continue looking at the impact of litigation, insurance fraud, and special interest legislation on healthcare costs.
Until then, best regards...
© James P. Rice 2009
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