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From 2013 to 2023, the American court system saw a roughly 67% increase in the number of medical malpractice verdicts awarding $10 million or more<\/a>. Last year, more than half of these verdicts awarded $25 million or more<\/a> in damages to patients. The average of the top 50 MPL verdicts increased 50% in 2023 to $48 million each from $32 million each in 2022.<\/p>\n Skyrocketing dollar amounts could give an observer the idea that the pace of medical malpractice litigation is up\u2014yet the opposite is true. Claim frequency is flat or decreasing nationwide.<\/p>\n In the insurance industry, we call this \u201csocial inflation.\u201d The term describes periods like this one, in which the costs of medical malpractice claim resolution are increasing faster than general inflation. Social inflation arises<\/a> from the convergence of various social and economic forces: desensitization to big numbers, third-party investors in litigation, and more.<\/p>\n Social inflation increases the price of healthcare. It ratchets up the costs of doing business for healthcare professionals and organizations, and fear of litigation inspires defensive medicine.<\/p>\n Fortunately, through tort reform, states may be able to contain social inflation\u2019s effects on healthcare costs.<\/p>\n Our society has become inured to large quantities and large dollar amounts. Professional athletes routinely chalk up tens of millions of dollars per year, and we\u2019ve seen lottery jackpots of over a billion. Most people shrug at a multimillion-dollar verdict.<\/p>\n For decades, researchers in cognition have observed that their fellow citizens<\/a> experience \u201cnumber numbness.\u201d We human beings are generally bad at understanding large numbers<\/a>, and numbers over one million are especially hard to grasp<\/a>.<\/p>\n Researchers who study risk and decision-making say that some of us are more prone than others to being swayed by moods and narrative<\/a>s, especially in an environment of heightened emotion\u2014and heightened emotion is definitely present in a court proceeding surrounding an allegation of medical malpractice. Whether or not a medical error has occurred, adverse events can happen to patients, and the results are often devastating.<\/p>\n We know that within a cultural setting of number numbness, the courtroom\u2019s environment of strong emotion can further skew our understanding of large numbers. Amplifying this effect, plaintiffs\u2019 attorneys attempt to exploit jurors\u2019 emotions using \u201creptile theory\u201d: They frame the defendant as threatening, which arouses jurors\u2019 primal sense of fear\u2014thus engaging the more basic parts of the human brain, those responsible for fight-or-flight responses.<\/p>\n The end results are verdicts designed to punish the defendant to deter others. These verdicts go far beyond making the injured party whole. Exploiting jurors\u2019 sense of empathy to achieve high-dollar verdicts might even lead to harming the very people jurors wish to help: patients.<\/p>\n Although juries that award large sums to plaintiffs may feel concern for an injured person, up to 40% of that indemnity can go to the plaintiff\u2019s attorney, not the plaintiff.<\/a><\/p>\n Further, most Americans are unaware that people invest in medical malpractice lawsuits, but hedge funds and other investors often float plaintiffs\u2019 attorneys\u2019 litigation in exchange for a share of the settlement or jury award<\/a>. Enriching these third-party funders is probably not what jurors have in mind when they choose massive awards.<\/p>\n Defensive medicine involves adding steps to the course of care out of fear of litigation, rather than hope for a treatment outcome. For instance, many of us are familiar with the idea that doctors may seek to protect themselves by ordering medically unnecessary tests<\/a>. This increases the cost of healthcare overall.<\/p>\n The exact amount of spending increase is unknown, but some estimate that defensive medicine adds at least $55 billion per year<\/a> to U.S. healthcare costs. Tort reform measures<\/a>, including caps on noneconomic damages, can help mitigate these fears and added costs.<\/p>\n The ripple effects spread far beyond the parties to a medical malpractice lawsuit. Eventually, premiums for medical professionals are affected, and increases in premiums for healthcare professionals can affect the cost of care.<\/p>\n And it\u2019s not only healthcare that has to pay the \u201ctort tax.\u201d In 2022, the U.S. Chamber of Commerce Institute for Legal Reform calculated a tort cost equivalent to 2.1% of gross domestic product, or $3,621 per American household<\/a>.<\/p>\n The insurance industry needs our elected representatives to support damage caps and other tort reform measures.<\/p>\n A survey conducted by the American Property Casualty Insurance Association and Munich Reinsurance America indicates that many Americans are not aware of litigation aspects such as third-party litigation funding or the potential impact on their own household costs\u2014but upon learning about these issues, most people surveyed wanted commonsense reforms<\/a>.<\/p>\n American healthcare has plenty of challenges to navigate\u2014halting social inflation won\u2019t overcome them all. But it will be easier for U.S. healthcare to steer through those obstacles if it is piloted by clinicians who are free from fears of crippling litigation costs.<\/p>\n<\/div>\n\nNumbness to big numbers<\/h2>\n
Large verdicts pay attorneys\u2014and investors<\/h2>\n
Large verdicts promote defensive medicine<\/h2>\n
Steering U.S. healthcare through the challenges ahead<\/h2>\n