American Journal of Law & Medicine

Bad "bad baby" bills. (Quality of Care and Health Reform: Complementary or Conflicting)

INTRODUCTION

In the twenty-year-long debate over medical malpractice reform, obstetrics is unique. No other area of specialty medical practice has managed to argue successfully that its malpractice victims should be singled out and barred from obtaining relief through the tort system. Yet, following a well-organized lobbying effort by OB/GYNs(1), the state legislatures in Virginia and Florida have enacted so-called "bad baby bills"(2) that create workers-compensation-type programs for victims of birth-related injuries.(3) Such statutes provide the exclusive remedy for this and only this class of plaintiffs. Other states are considering following suit: bills have been introduced in North Carolina, Illinois and New York.(4)

What justifies this extraordinary legislative action? Proponents of the reforms admit that the effect of these statutes is to reduce the malpractice burden on OB/GYNs.(5) But they are careful to portray patients rather than physicians as the primary beneficiaries of their efforts. Patients need legislation for two main reasons, reformers assert: to better compensate them for birth-related injuries, and to ensure continued access to obstetric care.(6) In the absence of reform, physicians will withdraw from practicing obstetrics. Indeed, according to groups like the American College of Obstetrics and Gynecology, physicians already are doing so.(7) This is particularly a problem for poor and rural patient populations.(8) Moreover, the reformers argue that the tort system does not adequately compensate victims of birth-related injuries: the few who are fortunate to recover damages obtain enormous windfalls, while most victims get nothing.(9) A memorandum from Governor Cuomo's office supporting birth-related injury legislation in New York state goes so far as to describe the tort system as "akin to a 'lottery.'"(10)

How real are these alleged problems? Is access to obstetric care actually being compromised by the malpractice system? Are victims of birth-related injuries dissatisfied with the compensation provided under the tort system? More importantly, to the extent that the malpractice system might be improved, are bad baby bills the answer? The discussion that follows will address each of these issues in turn.

I. IS THE MALPRACTICE SYSTEM A THREAT TO ACCESS?

At the outset, it might seem difficult to argue with the assertion that many people lack adequate access to obstetric care, and that the situation appears to be worsening. It also would seem to be beyond question that the malpractice burden on obstetricians has increased over time. Premiums for the average OB/GYN rose more than seventy percent between 1984 and 1987.(11) According to the Institute of Medicine, between 1982 and 1986, the mean liability expenses for obstetricians rose more than for any other specialty group analyzed.(12) The size or "severity" of recoveries by successful malpractice claimants also increased. In Florida, for instance, the mean OB/GYN malpractice claim rose from $96,261 in 1980 to $174,728 in 1986.(13) Finally, and perhaps most important from the standpoint of practitioners themselves, uninsurable costs -- costs like emotional upset, affront to personal dignity and integrity, distrust of patients, distraction, and time spend defending claims, which cannot be insured against by the purchase of malpractice coverage -- have arguably increased as well. One example is the impact of the creation of the National Practitioner Data Bank, which by law is required to be notified of all malpractice payments made to victims on behalf of physicians, and which hospitals must consult in the course of privileging and credentialing decisions.(14) This could lead to the denial of hospital admitting privileges, which seriously impairs the obstertricians' ability to practice their specialty.

In response to these pressures, it is widely reported that obstetricians are leaving practice, retiring early, shifting their practice from obstetrics to gynecology so that they no longer deliver babies, refusing to treat the poor, and relocating from rural to urban areas.(15) Citing a survey by the American College of Obstetricians and Gynecologists, the office of Governor Cuomo stated in proposing a birth-related injury bill in New York state that "one out of six obstetricians and seven out of ten general practitioners in this state have given up obstetrics," because of "high jury awards to plaintiffs in birth injury cases and the increasing potential threat of lawsuits."(16)

The erosion of access to obstetric care, and particularly the supposed link between the malpractice system and loss of access, is not that clear, however. Reports that malpractice woes are causing obstetricians to abandon their practices are based entirely on surveys which ask obstetricians to state their views of the malpractice system and of its impact on their practices. Yet self-reporting of this sort is notoriously unreliable.(17) Moreover, the popularity of the specialty has not declined noticeably amongst medical students: the Institute of Medicine of the National Academy of Sciences stated in 1989 that "[t]he percentage of fourth-year medical students selecting obstetrical residencies has remained fairly constant over the last six years."(18) New York, one of the states considering birth-related injury bills, had the fourth highest ratio of obstetricians to women in the country, according to data from the mid-1980's.(19) There does seem to be a decline in the number of obstetricians practicing in rural areas.(20) Yet this appears to be part of a general decline in specialists in rural areas, rather than a phenomenon specific to obstetricians.(21) With regard to lack of access for the poor, the Institute of Medicine reports that, while forty percent of obstetricians refused to serve Medicaid patients in 1986, this rate was virtually unchanged over the past ten years "despite an overall worsening of the malpractice problem."(22)

Nor is the impact of the malpractice system on obstetricians as negative is it is often portrayed. Between 1987 and 1991, malpractice premiums actually decreased 6.6% for obstetricians.(23) While the Institute of Medicine claimed that mean liability expenses for obstetricians rose more than for any other specialty group analyzed,(24) it only compared obstetricians to aggregate specialty groups such as "general surgery."(25) When obstetricians are compared to the other two high-risk specialties -- orthopedic surgery and neurosurgery -- there is no significant difference in liability expenses. In 1989, for example, mean malpractice premiums for obstetricians were a smaller percentage of mean gross income and of all professional expenses than for neurosurgeons (9.7 vs. 9.8% and 23.4 vs. 30.9% respectively).(26) Obstetricians had higher mean liability premiums as a percentage of mean net income than other specialties,(27) but the difference between obstetrics and other high-risk specialties was not substantial (e.g., 18.8% for obstetricians in 1989 compared with 17.4% for neurosurgeons).(28)

In any event, at the same time that obstetricians' malpractice expenses were increasing, so was their income. Between 1982 and 1989, the net income of obstetricians -- that is, their income after substracting business expenses, including the expenses of malpractice insurance -- rose seventy-nine percent.(29) The median net income of obstetricians and gynecologists rose forty-seven percent between 1987 and 1991 alone, to $198,380.(30) In fact, on average, they earned more than all surgical specialists (whose median net income only rose twenty-eight percent between 1987 and 1991, to $198,230) and all office-based physicians (whose median net income during the period increased by only eighteen percent, to $140,090).(31) Nor is this increased income accounted for by inflation; during this same four-year period, the consumer price index only rose 19.5%.(32)

In short, while malpractice insurance costs were increasing for obstetricians, virtually all of these costs were being passed on to their patients.(33) As the Institute of Medicine admitted, "the national aggregated data ... do not suggest that rising premiums are depressing net income on a national basis."(34) This contradicts the notion that obstetricians are leaving practice because rising malpractice premiums are cutting into their earnings.

If increasing numbers of obstetricians in fact are refusing to treat the poor, the real culprit is not the malpractice system. While the poor make up a disproportionate number of high-risk obstetric patients,(35) they sue physicians far less frequently than the population in general,(36) and when they are successful, they recover far less in damages. The U.S. General Accounting Office, for example, found that, while the average expected payout for a malpractice claim by a privately insured patient was $250,000, it was only $52,000 for a Medicaid patient.(37) What overwhelmingly accounts for physician unwillingness to treat the poor is inadequate reimbursement. Medicaid only pays providers forty-eight percent of their usual fees for obstetric care.(38) This factor is routinely cited in provider surveys as the reason obstetric providers are abandoning the Medicaid patient population.(39) This leads the Institute of Medicine to conclude that "the problems associated with the underfinancing of the maternity system in the United States make it difficult to assess the independent effect of professional liability concerns on the delivery of obstetrical care."(40) Poor reimbursement, together with the lack of access to first-rate facilities and equipment, also undoubtedly accounts for much of the reason that rural practitioners are relocating to urban areas.

II. WHY ARE MALPRACTICE INSURANCE PREMIUMS FOR OBSTETRICIANS SO HIGH?

There is no question that malpractice insurance premiums for obstetric care are higher than for most other areas of practice. Only orthopedic surgery and neurosurgery are comparable.(41) This prompts cries of outrage from obstetricians and other critics of the current system, who blame suit-happy patients and lawyers.(42) But there is a much more straightforward explanation for these high premium levels: like these other specialities, obstetrics is an extremely high risk area of practice. …

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