The medical malpractice (med-mal) insurance industry, some politicians, and even some uncritical doctors, have of late been misleading the public about the efficacy of caps on med-mal awards, a.k.a. 'tort reform,' to contain healthcare costs. They are telling the public that med-mal awards are driving the disastrous cost inflation in health care we've seen over the past several years. But the truth is that 'tort reform' is just a free ride for insurers and incompetent doctors on the backs of seriously injured patients and good doctors.

'Tort Reform' is really nothing more than arbitrary compensation caps favoring doctors who harm or kill their patients and the companies who insure them. Policy makers actually interested in reforming the torts process would advocate for means of removing non-meritorious claims from the system, not for placing a strict limit on the compensation a jury can award to victims of malpractice. The cost of caring for a child paralyzed or otherwise disabled for a lifetime by malpractice can run into the millions, yet these so-called 'reformers' want to cap all awards at a low level, regardless of the facts of the case. That's not justice, that's risk management, and it's not what our court system is based upon.

Exploiting consumers' understandable concern about the affordability of healthcare, compensation cap advocates mislead the public into supporting the curtailment of their own right to full compensation for all damages due to malpractice. But it is high rates of inflation in healthcare costs generally that are the cause of inflation of med-mal payments, not the other way around; prescribing compensation caps to contain healthcare costs is like trying to make the tail wag the dog.

Although premiums for med-mal insurance have risen sharply in the past few years, this increase is not due to an 'explosion' in settlements and jury awarded compensation to victims of medical malpractice. In fact, the increase in med-mal payments conforms closely to the overall rate of medical inflation.

Increasing premiums are instead a function of the current poor investment environment. Because med-mal insurance companies depend on financial investments for the bulk of their profits, premiums for med-mal insurance have historically risen sharply in response to economic downturns. When interest rates and the equity markets are down, insurers increase premiums to preserve industry profitability. Current calls for compensation caps are reminiscent of those heard during prior recessions.

Nor do Med-mal torts constitute a significant share of healthcare costs. Even with recent inflation, the average doctor's premiums are less than 4% of his revenues, and malpractice claims amount to only 1/2 of 1% of total healthcare costs. The average claim is a modest $140,000, and the average settlement is just under $30,000. Less than 5% of awards top one million dollars (and about 3/4 of those are reduced by the courts to an average of $250,000). These averages are already well below most suggested compensation cap limits.

Few injuries even make it into the court system. Only 1 in 8 injuries due to malpractice are ever filed, and more than 3/4 of filed claims are dismissed. The existing legal system, and peoples natural reluctance to sue doctors, winnows out the vast majority of claims already. We can do a better job of ensuring that frivolous suits do not go forward by vetting cases independently before they are filed, and having higher standards for med-mal lawyers. But arbitrary compensation caps will not eliminate nuisance suits; they will only harm those who are the most grievously harmed victims of malpractice.