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Appendix CThe Medical Malpractice Crisis and Poor Women Sara Rosenbaum and Dana Hughes CAUSES OF THE INCREASE IN MAT PRACTICE INSURANCE COSTS In recent years, providers of obstetrical care have seen their malpractice insurance costs rise exponentially. A 1985 survey conducted by the American College of Obstetricians and Gynecologists (ACOG) found that more than 9 out of 10 members surveyed reported an increase in premiums during the previous 2 years, with the average increase equalling nearly $10,000. One in four physicians was confronted with an increase of $13,000 or more.) The mean malpractice premium expense paid in 198S was $23,25~18 percent of a private obstetrician's total malpractice expenses and an increase of 28.8 percent more than 1982 prices.2 Malpractice premium expenditures represent approximately 10 percent of an obstetrician's gross income.3 By 1988, the average premium had risen to $37,015.4 The malpractice insurance crisis is part of a general explosion of liability insurance costs that has affected all sectors of society, from physicians to day care centers, bus companies, ice skating rinks, and vacation resorts. It began in 1974, when insurers began to escalate their rates5 and has been part of an effort by insurers to limit their risks generally, whether in the area of liability or health or disability coverage.6 Sara Rosenbaum and Dana Hughes are Director, Health Division, and Senior Health Specialist, respectively, of the Children's Defense Fund, Washington, D.C. 229

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230 APPENDIX C There are several reasons why obstetrical malpractice costs have risen dramatically. These include medical advances, the demise of the locality rule, large awards, substandard physicians, contingency fees, the profit- seeking of insurance companies, and the underfinancing of maternity care. Medical Advances and the Demise of the Locality Rule Two simultaneous trends have had a major impact on obstetrical malpractice costs. The first is the extraordinary advances in the manage- ment of pregnancy and childbirth in the past two decades,7 resulting in higher expectations regarding infant health. The second is the demise of the locality rule in tort litigation.8 Under the locality rule, an obstetrical defendant in a malpractice case could be held liable only if his or her care did not meet the professional standards of a reasonable obstetrician practicing within the defendant's focal community. Over the past 20 years, however, the public, the judicial system, and insurers have begun to judge physicians by national standards. This is appropriate in a nation in which medical education takes place at nationally accredited medical schools and physicians are certified in specialties by national boards.9 The demise of the locality rule has had two effects: it has brought national obstetrical standards into local communi- ties, and it has made it far easier for medical experts from outside the local area to testify in malpractice trials.~ Indeed, two noted experts have concluded that "the erosion of the 'locality rule' has probably had a greater impact on the increase in malpractice claims in recent years than any other change in the law." Large Awards Another major cause of rising malpractice rates is the increase in the number of cases being filed and in the size of the awards being granted. Between 1976 and 1986, the number of insurance-related civil lawsuits Doubleday Between 1960 and 1980, the number of million-dolIar judg- ments increased by more than 500 percent in some jurisdictions.~3 The average settlement grew from $5,000 in 1979 to $330,000 in 1986.~4 As the number and size of claims have increased, insurers have experienced medical malpractice loss ratios (that is, combined Toss and loss expenses over premium revenues) as much as 40 to SO percent higher than the norm.~5 These high loss ratios have been intensified, according to insurers, by the long "tail" of malpractice cases- that is, the tendency of malpractice claims to be filed and resolved (either by settlement or litigation) anywhere from 5 to 13 years from the date of the incident. High Toss ratios and the so-called tad! effect have also made it more di~cult

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APPENDIX C 23 for insurance companies to find reinsurers that will accept malpractice risks. 17 Substandard Physicians A third probable cause of the increase in malpractice cases is the perception on the part of many persons that the medical profession does a poor job of policing itself and that malpractice litigation is the only mechanism for protecting against, and vindicating, wrongs that have been committed. Anecdotes of physician abuses abound; indeed, lames Todd of the American Medical Association recently stated that "the biggest cause of malpractice [litigation] is malpractice."~9 Not only do unhappy experi- ences with substandard practitioners fuel the malpractice fires, but very large awards in serious cases appear to have a greater effect on malpractice rates than do many small awards. Thus, the substandard performance of a handful of physicians can significantly affect the rate of all physicians in an area.20 Unfortunately, as will be discussed below, evidence suggests that malpractice litigation as a weapon is least available to those women and infants most likely to be furnished poor-quality medical care. Moreover, litigation is obviously no substitute for rigorous quality control, which is designed to prevent malpractice through such measures as specialized training, documented adherence to adequate practice protocols, and referrals to other care settings when necessary. Contingency Fees A fourth, and often discussed, cause of the malpractice crisis is lawyers' willingness to take on malpractice cases because of the potentially large awards, and correspondingly large contingency fees, involved. There is no question that the possibility of a large contingency fee is attractive; but it is likely that the demise of the locality rule has had a far greater impact on the growth of malpractice litigation, since medical malpractice cases turn on the ability to present expert testimony that a physician's conduct fell below professionally accepted standards. Contingency fees have been severely criticized for promoting the filing of frivolous suits, yet between SO and 7S percent of all malpractice claims brought to attorneys are refused, either because the merits of the claim or the size of the anticipated recovery would not justify the attorney's time and effort.2i While contingency awards make it possible (and probably more attractive) to pursue claims, the Health Education and Welfare Secretary's Commission on Medical Malpractice found in 1973 that the "vast majority of malpractice claims are not entirely baseless."22

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232 APPENDIX C Insurance Companies In addition to the demise of the locality rule, the most serious reason cited by some for the increase in malpractice rates is the profit seeking of insurance companies themselves. While premium payouts for malpractice claims have grown dramatically in recent years, there is evidence from the early days of the malpractice crisis that, contrary to being money losers, malpractice policies represent one of the most lucrative lines for the industry.23 The financial rewards of malpractice insurance underwriting may be measured in several ways. First, while insurers cite the need for higher rates because of the tail effect in malpractice, that tad! enables the industry to amass hundreds of millions of dollars in reserves that do not have to be paid out until many years into the future and that can be invested lucratively in the present. Thus, while malpractice policies themselves are not moneymakers, they represent a means of amassing large cash reserves. Second, the methodology used to project premium increases can yield tremendous profits for insurance companies because of its susceptibility to manipulation. Establishing a premium rate is a function of (1) the number of exposures to claims a physician or medical group will generate in a year (an occurrence estimate); (2) the anticipated number of losses those exposures will yield; and (3) the rate and dollar amount by which claims will increase or decrease in a year.25 At each stage, insurance companies can overstate the situation, thereby projecting a highly inflated claims and cost profile. Few insurance commissions carefully scrutinize these projections; when they do, rate increases are frequently denied.26 Third, with the transition from individual to group policy underwriting that occurred by the mid-1970s, the probability of price gouging and monopolistic practices heightened. It is no coincidence, in the view of some experts, that the malpractice crisis occurred simultaneously with the elimination of all but a few insurers from the malpractice underwriting business. Underfinancing of Maternity Care Finally, the gross underfinancing of obstetrical care in the United States may itself be propelling malpractice claims. More than 14 million Amer- ican women are uninsured for maternity care, and two-thirds of these over 9 million personsare without any health insurance whatever.28 Physicians faced with the management of inadequately financed patients may be unable to provide or arrange for optimal care. In at least one instance, a Medicaid agency has been unsuccessfully sued over its failure

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APPENDIX C 233 to approve payments for procedures that the beneficiary's physicians deemed medically essential.29 Much attention has been paid to the impact of defensive medicine on medical inflation; less has been paid to the impact of underfunding on the medical community's ability to furnish appropriate care. For example, no single component of maternity care is more crucial to a good birth outcome than delivery in a setting appropriate to the risk involved in the pregnancy. According to experts, women at high risk of adverse outcomes of pregnancy should be delivered in inpatient hospitals with appropriately advanced neonatal care facilities. Yet a recent national survey of state- funded maternity programs for uninsured low-income women found that fewer than half the programs covered inpatient delivery services at all.30 Women in states that do not cover delivery costs are expected to make their own financial arrangements for admission. This means that they are dependent upon hospitals that will admit them free of charge or at least without a sizable preadmission deposit, regardless of whether their physicians have admitting privileges there or whether the hospital is equipped to meet their medical needs. Indeed, one state health official responded flatly that the regionalized perinatal system in her state was only available to insured women.3i As a result, proper management of high-risk maternity cases involving uninsured women may be virtually impossible in half the states. RESPONSE BY PROVIDERS OF OBSTETRICAL CARE Whatever the causes of the malpractice crisis, it has elicited several responses from the obstetrical community, all of which affect the poor most severely. First, large numbers of providers have simply ceased furnishing obstetrical care. Second, public health providers' ability to obtain insurance coverage has been threatened, leading to the reduction or elimination of subsidized maternity care. Third, many obstetricians have begun to reject high-risk cases, which they perceive as occurring dispro- portionately among poor and difficult patients, in order to avoid future liability. Finally, the crisis has caused many providers of obstetrical care to reject underfinanced (or completely unfinanced) persons who cannot pay their way. Cessation of Obstetrical Practice Studies indicated that, particularly in states with excessively high malpractice rates, physicians have ceased furnishing obstetrical care entirely. A 1988 ACOG survey of professional liability revealed that 12.4

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234 APPENDIX C percent of all responding obstetricians and 25.1 percent of Florida respondents have given up the practice of obstetrics altogether.32 Twenty- five percent of California obstetricians responding to a survey reported that they had completely ceased furnishing deliveries.33 Community Health Center directors in Florida, Texas, California, and New York report that private obstetricians who used to take referrals no longer do so because they have given up obstetrical practice. In some communities, particularly those with poorer populations and no teaching or public facilities, obstetrical care may simply be disappearing. Impact on Providers of Maternity Care to the Poor One of the most grievous effects of the malpractice crisis has been its impact on providers that represent the major source of obstetrical care for poor women, such as Title V-funded health clinics, Community and Migrant Health Centers, public hospitals and clinics, and nurse-midwife practices. Public and quasi-public clinics are modestly funded and cannot afford monumentally costly insurance policies, nor can nurse-midwives, with their average annual salary of $25,000. Yet even though both Community Health Centers and nurse-midwives have very low malprac- tice claims profiles compared to other providers of obstetrical care, their rates have risen dramatically.34 Health centers' rates have skyrocketed so high that centers are shutting down obstetrical programs. According to the National Association of Community Health Centers, policies that cost between $800 and $900 in 1985 cost $12,000 in 1986.35 In one graphic example, the Anchorage Neighborhood Health Center in Alaska, which performed 300 deliveries in 1985 and was expected to perform 500 in 1986, was told that the malpractice premium for its six obstetricians in 1986 would rise from $40,000 to between $200,000 and $400,000. As a result, the center eliminated four of its six obstetricians and dropped the number of deliveries from 500 to 150.36 The remaining women presumably either went without care or else relied on whatever charitable services they could locate. Numerous centers report that, while their staff continue to provide prenatal care, the malpractice crisis has forced them to cease providing delivery services because the additional premium cost they would incur in order to insure their physicians is far too high. For example, at one center in Florida, malpractice coverage for prenatal care services is $4,000 annually per staff member. Coverage for delivery, however, would add $25,000 in costs per staff person. Physicians at the center thus are faced with "going bare" and delivering their patients without coverage, or effectively abandoning their patients at the time of delivery, which ironically, could easily lead to malpractice litigation.

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APPENDIX C 235 Rejection of High-Risk Women According to the 1988 ACOG survey, rising malpractice rates have led more than 27 percent of all responding obstetricians to reduce their high-risk caseloads.37 A separate survey of California obstetricians found that nearly 50 percent reported reducing their high-risk caseloads.38 This desire to avoid cases that pose high medical risks undoubtedly has led many obstetricians to stop treating publicly insured and uninsured low-income pregnant women on the premise that they are medically at risk. However, even if one assumes that high-risk cases are more common among low-income women, rejecting such patients may have little or no bearing on the number of malpractice claims filed against a physician. To understand why this is so, it is important to understand how medical malpractice policies are written. A malpractice policy is written on an occurrence basis; that is, an insured physician is covered for all claims arising from incidents (not for any incidents of malpractice that actually might arise) that occur in the year for which the policy is written.39 Thus, the key is really whether an incident leads to a claim, not simply whether an incident actually occurs. Actuaries project how many incidents will eventually result in claims; thus the skills and conduct of the physician may be significantly less important than the likelihood that a particular group of patients will sue. While an in-depth analysis of claims filed is needed to determine who is likely to sue, the modest evidence that already exists suggests that, regardless of whether poor women are more likely to be at risk or to suffer from actual incidents of malpractice, they are less likely than nonpoor women to present claims. Lower-income persons were significantly less likely to have ever reported any incident and one-half as likely to have reported two or more incidents. Similarly, persons with little education were only about half as likely to report any incident and one-third as likely to report one, two, or more incidents. A malpractice study conducted by the National Association of Commu- nity Health Centers in 1986 showed that center obstetricians (virtually all of whose patients have incomes that are less than 200 percent of the federal poverty level, and 25 to 40 percent of whom are eligible for Medicaid)40 have malpractice claim profiles approximately one-fifth as great as that of office-based obstetricians, who, even several years ago, were the least likely of all primary care physicians to accept any Medicaid patients in their practices.4i A recent General Accounting Office (GAO) study of the characteristics of medical malpractice claims closed in 1984 sheds some additional light on the issue of who files ciaims.42 Unfortunately, the study provides

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236 APPENDIX C financial information only on patient earnings, as opposed to total family income, and only in the aggregate, - not for specific subpopulations. (Children represented 17 percent of all claims closed in 1984, and one-third of those claims involved allegations of obstetrical malpractice.) The GAO study does, however, report the source of patients' health care financing prior to the incident on which the claim was based, which allows one to infer their general economic status at that time. It also allows one to differentiate between persons who became eligible for public medical assistance only after the occurrence of a disabling incident and persons who were poor enough to qualify for public medical assistance beforehand. Of all claims closed in 1984, only 3.9 percent of claimants were Medicaid patients at the time of their injuries. This number is dispropor- tionately low in relation to Medicaid representation in the population at large, suggesting that Medicaid patients (and thus poor persons) are less likely to file claims. Thus, while the GAO insurance data are not reported by age or sex and are limited only to a sample of claims closed in 1984 by 25 insurers, they do tend to confirm earlier studies suggesting that the poor are less, rather than more, likely to sue. Finally, a recent study conducted for ACOG found that women covered by Medicaid for their hospital delivery were somewhat more likely than other women to file a malpractice claim against the hospital, but this finding was not statistically significant.43 The study suffers from substan- tial flaws, however. First, the researchers' identifications of claimants were based on the payer of delivery costs. In thousands of cases, Medicaid pays retroactively for delivery costs incurred by women who were ineligible for coverage during their pregnancies and at the time of delivery as well. This retroactive feature seriously compromises any effort to discern malpractice claims patterns among Medicaid-financed women. Many women ostensibly insured by Medicaid were in fact completely uninsured for both prenatal care and delivery services; only much later were they found eligible for Medicaid. Second, the study measures claims against hospitals rather than claims against physicians. A disproportionate number of Medicaid-insured and uninsured women depend on hospital staff (that is, interns and residents) for both medical and hospital care; thus, even if they did file claims with any greater frequency than other types of patients, it might have little or no bearing on their behavior toward office-based physicians. Third, the findings were based on all claims made against the responding hospitals, including claims that were later dropped. Because of the great difficulties that Medicaid beneficiaries and other poor persons face in obtaining legal assistance, the number of claims generated by Medicaid patients may be significantly overrepresentative of all claims that are ultimately paid.

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APPENDIX C 237 Finally, the report sheds no light on the size of the claim nor the incident that forms that basis of the complaint. As a result, there is no means of separating out either high-impact claims (since it is the very large claims that affect physicians' malpractice premium rates most) or merito- . . rlous c. .alms. Why fewer malpractice claims appear to arise trom poor women probably has less to do with the quality of care they receive than with their failure to understand that potential malpractice has been committed, their fears about pressing their claims, and their inability to secure legal assistance. Indeed, except for communities served by Community Health Centers, specialized clinical or hospital-based perinatal projects, or other public providers, poor women and their infants probably face a greater risk than any other group of women and children of receiving substandard care from either nonspecialty physicians or relatively untrained interns and residents. The heightened risk can be seen in the elevated maternal and infant mortality rates that plague the low-income population. A significant amount of this mortality has been deemed preventable by experts. It is evident that, even among the general population, there is only a small likelihood that an injured person will file a claim. The Commission on Medicaid Malpractice found that, while 7.S percent of all hospital discharges involved an iatrogenic injury and 30 percent of them were caused by negligence, only 1.7 percent resulted in a claim and only one-third of that ~ _. . , ~ , 1 1 . 1 44 . .1 . 1 r 1 .1 . 1 a,` . r number obtained a recovery. Another study tound that only 1() percent ot injured persons file a claim and only 4 percent achieve a recovery.45 Poor women may be even less likely to sue. They have less contact with the health system generally, and when they do it is more likely to be within a relatively forbidding institutional setting in which they fee! powerless, as opposed to a one-on-one, empowering, ongoing relationship with a single physician. Because the poor traditionally have received less and poorer-quality medical care, they may be less aware of what a positive medical experience should be and less inclined to take action against even gross malpractice. When poor women do wish to act on an incident, they confront enormous barriers to finding an attorney. First, legal services attorneys may not accept malpractice cases unless no pro bono assistance is available or the claimant has been denied even a consultation not actual represen- tation by two attorneys.46 Attorneys refuse nearly three-quarters of the malpractice claims brought to them, whether because the claim is without merit, the case is too Circuit to prove, the recovery amount is too small to be worth their time, or there exist legal defenses to the providers' actions. Private lawyers may be even more likely to reject poor women's claims. The way medical malpractice recoveries are valued reduces the size of the award an attorney can anticipate, and special defenses are often available to institutions serving the poor.

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238 APPENDIX C Attorneys freely admit that the amount of the economic loss claimed is a major factor in deciding whether to take a case.47 Economic loss is chiefly a function of out-of-pocket costs, lost earning capacity, and pain and suffering. As limits are placed on pain and suffering awards (see the discussion below) and as more state legislatures overturn the so-called collateral source rule (which prohibits malpractice defendants from pre- senting evidence that plaintiffs can collect for their injuries from other sources, such as insurance, Supplemental Security Income, and Medicaid), the lost earnings factor becomes increasingly important. In the case of poor persons, estimates of lost earning capacity are set tow.48 Moreover, when poor women or children who are also Medicaid recipients do recover a major award, the law's third-party liability and liens and recoveries provisions require that they turn over their awards to the state, to the extent that the state pays for care.49 While courts have ruled that attorneys do have the right to recover their fees in these situations, at least one state has determined that attorneys are not entitled to collect any part of their fee from the proceeds due the state for medical assistance rendered.50 This reduces considerably the size of the award on which an attorney's fee will be based. In short, the Medicaid provisions make it less in the interest of recipients to file claims and less in the interest of attorneys to bring them. Certain defenses are available to defendants serving large numbers of poor patients that may not be available to other providers. For example, public providers may be protected from suit by sovereign immunity. Nonprofit providers are protected in some jurisdictions by the common law (or statutory) doctrine of charitable immunity.5i And physicians who perform deliveries in emergencies are frequently provided a good Samar- itan defense, so long as they have not been grossly negligent and have not had reasonable access to the women's medical records.52 In sum, there is certainly evidence that poor women pose higher medical risks than nonpoor women insofar as obstetrical care and pregnancy outcomes are concerned. But higher risk in and of itself does not affect a physician's malpractice exposure if the incidents do not become claims. The health profiles of poor women often dictate more intensive care, but evidence suggests that poor women are less likely to sue. While no definitive measures can be provided without an audit of all claims filed against obstetrical providers, the evidence on malpractice litigants points away from the poor. Rejection of Underfinanced Women One clear response to the malpractice crisis has been a widespread refusal among obstetrical providers to see publicly insured and uninsured

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APPENDLY C 239 persons. As previously noted, a preponderance of obstetricians and gynecologists has traditionally refused to treat Medicaid patients, but over the past several years news stories from around the nation have reported a wholesale pullout by obstetricians from Medicaid and other public health programs in many communities.53 In each instance, low reimbursement rates are cited as the main reason. A recent analysis by the Texas Health Department of implementation of the 1985 Maternity and Infant Health Improvement Act reported as follows: The most severe issue to face the program is that of malpractice insurance of health providers Many physicians, in particular those practicing in obstetrics, have been deterred from participating in the program because of concerns about increased liability, about alleged increases in their own malpractice insurance premiums and in some instances, about the inability to obtain any malpractice insurance at all if they accept indigent high risk women as patients.... Some hospitals have expressed the same reasons but are also very concerned about what they see as the very low reimbursement offered....54 As reimbursement rates fall behind the per-capita cost of practice (which includes the per patient cost of malpractice premiums), physicians are increasingly unwilling to shift costs to make up for the tosses they suffer from treating publicly insured and uninsured women, particularly given their general unwillingness to treat such women to begin with. STATE RESPONSES The states' responses to the malpractice crisis as of 1986 commonly included Elimination of the collateral source rule, including express legislation that classifies as a collateral source medical and disability payments by the Social Security Administration and other federal, state, and local public aid programs. Limitations on recoveries for noneconomic damage. Curbs on the filing of frivolous claims. Elimination of the joint and several liability rule, which makes defendants liable for damages in excess of their actual liability if other defendants are unable to pay. Limitations on contingency fees. Mandatory cooling off periods prior to the filing of a claim. Staff discipline measures, including, in one state, a requirement that all obstetrical physicians perform risk assessments and refer patients to appropriate facilities as a condition of insurance coverage. Establishment of prelitigation arbitration panels.

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240 APPENDIX C Joint underwriting associations (JUAs), which underwrite malprac- tice insurance for providers unable to secure coverage from another source. Shortened statutes of limitations, particularly in the case of injuries to minors, in order to reduce the tad! effect. Establishment of patient compensation funds. Increases in Medicaid payment rates to better enable providers to cover their costs. Periodic payment rules to guard against sudden windfall outlays. If the demise of the locality rule and the move by insurers to build up large reserves against what they estimate to be major risks truly lie at the heart of the malpractice crisis, then the above state actions may produce very little relief. Indeed, a recent study by GAO concludes that very few reforms have had a major impact.56 No policymakers appear to have suggested resuscitating the locality rule, since there is widespread belief among physicians, insurers, and consumers that, at least in certain medical disciplines, national standards of practice can, and must, be articulated. Interest groups are split as to whether the best solution is to raise the standards by which fault is established or substitute a no-fault resolution mechanism in place of the current system.37 CONCLUSION AND RECOMMENDATIONS The basic issue of whether to modify the fault system or switch to a no-fault system is one for long-term debate. In the interim, several things might be done to protect poor women: States might use their JUAs to set up a subsidized, umbrella malprac- tice plan for all physicians who practice at, or accept referrals from, public, hospital-based, and other clinics for the poor. Physicians who furnish prenatal care in their offices might also be brought under the umbrella. States might abandon a risk mode} altogether in the case of obstetrics and establish no-fault compensation systems. In 1987, Virginia enacted legis- lation to establish a program to compensate patients suffering birth-related neurological injuries. This program will be available to physicians and hospitals who agree to provide obstetrical care for Medicaid recipients and indigent patients, pay an annual fee, and submit to a review of all claims by the Board of Medicine. The fee ($S,OOO in the case of physicians) is subsidized by an annual levy of $250 on nonparticipating physicians. Hospitals must pay $50 per delivery. States should raise reimbursement rates for obstetrical care under Medicaid and indigent health insurance to better cover the cost of . . ma .practlce Insurance.

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APPENDIX C 241 States should watch more carefully the process of setting malpractice insurance rates. Insurance companies' projections of the likelihood of litigatio~particularly their tendency to use projections from high- litigation states in low-litigation jurisdictions merit scrutiny. REFERENCES AND NOTES 1. American College of Obstetricians and Gynecologists, Professional Liability Insur- ance and Its Effects (Washington, D.C., 19851. 2. Adams, E. Kathleen, and Burfield, W. Bradley, "Malpractice Premium Expenses: Another 'Crisis' and Its Implications," Medical Benefits (Kelley Communications, Charlottesville, Va.), April 15, 1988, p. 6. 3. ACOG, on cit. 4. American College of Obstetricians and Gynecologists, Professional Liability and Its Effects: Report of a 1987 Survey of ACOG's Membership (Washington, D.C., 1988~. 5. Law, Sylvia, and Polan, Steven, Pain and Proft: The Politics of Malpractice (New York: Harper ~ Row, 1978~. 6. Just as insurers have sought to limit their exposure to liability awards by refusing to cover certain classes of activities or by extending coverage only at prohibitive rates, they have also sought to limit their exposure in other areas. For example, companies that now underwrite group medical insurance plans routinely attach riders prohibiting coverage for preexisting conditions or for certain diagnoses (such as AIDS or cancer). Thus, insurers' behavior in malpractice coverage parallels their behavior in other areas of risk taking. See Rosenbaum, Sara, "Children and Private Health Insurance," in Children in a Changing Health Care System, Schlesinger, Marie, ed. (Baltimore: Johns Hopkins University Press, in press). 7. Institute of Medicine, Preventing Low Birthweight (Washington, D.C.: National Academy Press, 1986~. 8. Law and Polan, op. cit., p. 100. 9. Ibid. 10. Finding expert witnesses from the defendant's community who were willing to testify has traditionally been one of the greatest barriers to malpractice cases. 11. Law and Polan, op. cit., pp. 1-8. 12. Nicholas, Nancy, "The Manufacturing of a Crisis," The Nation, February 15, 1986, pp. 173-175. 13. Ibid. 14. Intergovernmental Health Policy Project, State Health Notes (Washington, D.C.: George Washington University, 1987), p. 1. 15. "Reforming Malpractice Law," Washington Report on Medicine and Health (George Washington University) September 30, 1985, p. 1. 16. ACOG, op. cit., 1985, p. 4. 17. "Reforming Malpractice," op. cit., p. 2. 18. Indeed, the report of the HEW Secretary's Commission on Medical Malpractice of 1973 found that attitudes toward physicians and the desire to indicate a perceived harm lay at the heart of many malpractice claims. 19. Quoted in Health Advocate (National Health Law Program, Los Angeles), Spring 1986, p. 3. 20. Law and Polan, op. cit. The authors note that, according to the National Association of Insurance Commissioners, in 1975 claims of $50,000 or more

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242 APPENDIX C accounted for only 3 percent of claims made but 63 percent of premiums paid out. Thus the large claims tend to drive payout rates. 21. Ibid. 22. Cited in Law and Polan, op. cit., pp. 28-S0. 23. Law and Polan, op. cit., p. 161. 24. Ibid., pp. 161-194; Nichols, op. cit., p. 3. 25. Law and Polan, op. cit., p. 178. 26. Ibid. 27. ibid. 28. Alan Guttmacher Institute, Blessed Events and the Bottom Line (New York, 1988~. 29. Wic1zline v. State of California, No. 13010156 (California Court of Appeal, July 30, 1986~. Reprinted in CCA Medicare/Medicaid Guide, par. 36,325. 30. Rosenbaum, Sara, Hughes, Dana, and Johnson, Kay, "Maternal and Child Health Services for Medically Indigent Children and Pregnant Women," Medical Care 26 (1988):315-332. 31. Ibid. 32. ACOG, op. cit., 1988, p. 22. 33. Survey reported in "Reforming Malpractice," op. cit., p. 2. 34. A 1986 study of the medical malpractice claims experience of Community and Migrant Health Centers conducted by the National Association of Community Health Centers in Washington, D.C., revealed that, while 75 percent of all private obstetrics/gynecology specialists had at least one claim filed against them in 1985, only 16 percent of such specialists practicing at Community and Migrant Health Centers had a claim filed. Similarly, because only 6 percent of all nurse-midwives have had claims filed, their rates should be modest; yet in 198S midwives lost their coverage entirely. 35. National Association of Community Health Centers, "Medical Malpractice: Here We Go Again," NACH Newsletter, Winter, 1986, pp. 1-4. 36. Ibid., p. 3. 37. ACOG, op. cit., 1988, p. 22. 38. "Reforming Malpractice," op. cit., p. 3. 39. Law and Polan, op. cit., pp. 97-116. 40. Rosenbaum, Sara, Two Decades of Achievement (Washington, D.C.: National Association of Community Health Centers, 1986~. 41. Mitchell, lanes, and Cromwell, Jerry, "Medicaid Mills: Fact or Fiction?" Health Care Financing Review, Summer 1980, pp. 1-33. The authors report that, while 21.6 percent of all primary care physicians refused any Medicaid patients in their practices, 36.8 percent of obstetricians/gynecologists saw no such patients. More- over, the latter were only about two-thirds as likely as primary care physicians to have a large Medicaid practice. 42. U.S. General Accounting Office, Medical Malpractice; Characteristics of Claims Closed in 1984, GAO-HRD-87-SS (Washington, D.C.: Government Printing Once, 1987~. 43. Opinion Research Corporation, Hospital Survey on Obstetric Claim Frequency (Washington, D.C., 1988~. 44. Health Advocate, February 1986, p. 3. 45. Ibid., p. 3. 46. Ibid., p. 2. 47. Law and Polan, op. cit. 48. Ibid. 49. 42 U.S.C. par. 1396aLa) ~ 18~(a) (25~.

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APPENDIX C 243 50. Attorney General op., New York, March 20, 1981. 51. See, e.g., Ponder et al. v. Fulton-DeKalb Hospital Authority Georgia Civil Action, 1986. 52. See, e.g., legislation enacted by Virginia in 1987 that provides as follows: Any person who, in the absence of gross negligence, renders emergency obstetrical care or assistance to a female in active labor who has not previously been cared for in connection with the pregnancy by such person or by another professionally associated with such person and whose medical records are not reasonably available to such person shall not be liable for any civil damages for acts or omissions resulting from the rendering of such emergency care or assistance. The immunity herein granted shall apply only to the emergency medical care provided. 53. Stories have appeared in newspapers in Massachusetts, Rhode Island, Maryland, California, New York, and Florida, to name only some. 54. Indigent Care Programs: Annual Report (Austin: Texas Department of Health, 1987). SS. See, generally, Intergovernmental Health Policy Project, State Health Notes (Sep- tember 1986~. 56. U.S. General Accounting Office, Medical Malpractice: No Agreement on the Problems or Solutions, GAO-HRD-86-50 (Washington, D.C.: Government Printing Office, 1986). S7. Ibid.

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