With Exponentially Rising Medical Expenses, Are West Coast Payout Caps a Joke?

A recent study published by Public Citizen shows that medical malpractice is one of the biggest contributors to rising medical costs. Yet somehow, according to the statistics reported, 2012 medical malpractice payments were the lowest on record since 1991. Eight west coast states – California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon and Utah – have caps on medical malpractice awards, yet medical expenses continue to rise.

California

California’s medical malpractice cap is $250,000 on non-economic damages, a decision that was upheld in Fein v. Permanente Medical Group (38 Cal 3d 137, 695 P.2d 665 (1985)). California was one of the first states to begin tort reform by instituting award limits in 1975. However, 12 years after the implementation of those caps, malpractice insurance rates were 190% higher than they were before the implementation of the caps.

In addition to an increase in malpractice premiums, in 2009, Californians averaged approximately $6,238 per year in healthcare costs. Arizona, which has no cap on medical malpractice awards, spends an average of $5,434, almost 15% less than those who live in California.

Colorado

Colorado’s medical malpractice cap is slightly less restrictive than California, with a $1 million cap on total damages, and the tort reform allows the court to award more than the cap if it is determined the award would be unfair. Even with the ability for courts to adjust caps in the state, residents of Colorado still spend, on average, $5,994 annually on healthcare, approximately 10% more than Arizona residents.

Idaho

Idaho imposes a limit of $250,000 on personal injury and wrongful death actions, but the cap is adjusted annually based on the average annual wage. The cap also does not apply to willful or reckless actions. In 2009, Idaho residents spent approximately $5,658 on health care costs, just over 4% higher than that spent by Arizona residents.

Montana

In Montana, there is a cap of $250,000 on non-economic damages per occurrence, but if a single incidence of malpractice injures multiple patients, the $250,000 cap applies to each patient and all claims. Even higher than that paid in California, Montana residents spend 22% more than Arizona residents in healthcare costs at $6,640.

Nevada

Nevada residents are limited to a $350,000 cap on non-economic damages to each plaintiff from each defendant. However, Nevada’s annual cost for healthcare is only 5% higher than Arizona, at $5,735.

New Mexico

New Mexico’s medical malpractice cap is slightly more complicated than that of surrounding states, as total damage awards are limited to $600,000, excluding punitive damages. Past and future medical-care are also not included in those amounts. However, a healthcare provider’s personal liability is limited to $200,000. Like Montana, healthcare costs for New Mexico residents are 22% higher than Arizona, averaging $6,651 per person per year.

Oregon

Oregon sets a limit for wrongful death damages at $500,000, but a $500,000 cap for non-economic damages was overturned in 1999. In 2009, Oregon residents spent an average of $6,580 in healthcare, 21% more than residents of Arizona.

Utah

For cases arising after July 1, 2002, but before May 15, 2010, a $400,000 cap on non-economic damages exists in Utah. For actions arising after May 15, 2010, there is a hard cap of $450,000 in the state. Of the west coast states with medical malpractice caps, Utah is the only state with healthcare costs lower than that of Arizona, with residents spending, on average, $5,031. This 2009 figure gives Arizona an 8% higher expenditure than Utah.

These statistics demonstrate that tort reform in the area of medical malpractice claims do not work to keep healthcare costs down. A review throughout the United States shows that states with malpractice limits often have higher healthcare costs than those that do not.

Sources:
http://www.citizen.org/documents/medical-malpractice-payments-do-not-increase-health-care-costs-report-2013.pdf
http://kff.org/other/state-indicator/health-spending-per-capita/