- The Washington Times - Tuesday, November 16, 2004

Rising medical-malpractice rates in Maryland will cost the state’s economy thousands of jobs and $60.5 million in household income this year, according to a study commissioned by the Maryland Hospital Association.

The state’s medical liability insurance situation, called a “crisis” by health care providers, has forced dozens of doctors to give up practicing while others are cutting back on services to avoid malpractice lawsuits, said Anirban Basu, author of the study and head of Baltimore economic consulting firm Sage Policy Group Inc.

Mr. Basu’s study estimated that doctors and hospitals will eliminate 1,850 jobs in the state by the end of the year and more than 3,000 jobs in 2005.

Maryland’s businesses also would lose out on $171 million in sales this year from service cuts and reduced office staff, and $295 million in 2005, Mr. Basu said.

“This is not a crisis just for doctors or insurers, but a crisis for the broader macro economy of Maryland,” Mr. Basu said. “Malpractice litigation is runaway across the nation,” said Richard Clinch, University of Baltimore’s director for economic research.

Hospitals are allocating more of their budgets for “defensive medicine,” which are medical tests that are done solely to avoid lawsuits, Mr. Clinch said.

“But I’m not sure how big those impacts really are and how much they hurt Maryland’s economy,” he said, adding he has not conducted such a study and has not reviewed Mr. Basu’s report.

Mr. Basu said his forecast was the result of rising liability insurance premiums and higher payouts from juries.

Higher payouts awarded by juries have elevated the average amount for all claims. Total claims in Maryland averaged at $386,000 in 2003, a 65 percent surge from $234,000 in 2000, he said.

Liability insurers in Maryland have a lower return investment, less than 1 percent, compared with the national average of 7.4 percent. Mr. Basu said because of the lower rate of return fewer companies are willing to compete in the Maryland market.

Four companies offer medical liability insurance, compared with 14 in 1995.

With no new competition, insurers have been able to raise premiums by an average of more than 20 percent, with some increases reaching triple digits, while establishing restrictive limits and narrowing coverage terms, Mr. Basu said.

While he would not give any specific recommendations to fix the problem, Mr. Basu said a multifaceted approach would be needed to rein in soaring liability insurance premiums.

Maryland Hospital Association President Calvin Pierson said he hopes the study will propel the General Assembly to pass tort-reform legislation.

The group has called for new standards for calculating economic damages and an installment plan for paying settlements.

Dennis O’Brien, spokesman for the Maryland Trial Lawyers Association, said those measures would deprive those injured of fair compensation.

“There are already caps on damages. What [Maryland Hospital Association] is trying to do is lower those caps,” Mr. O’Brien said.

About 100 physicians in Prince George’s and Washington counties this week began a work slowdown of nonemergency services to lobby on the issue.

“I am confident that state lawmakers, now that they see the whole problem and its ramifications, will move more quickly to resolve this problem,” Mr. Pierson said.

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