Tort Reform & Subrogation

Funny thing about tort reform ("deform"), is that people think that a "scared" physician runs needless tests because they might be sued; that, in turn, jacks up the cost of health care. If the physician can’t be sued or there are limits on liability, he/she will run less unnecessary tests and we all save money. Unless, of course, the "unecessary" test was necessary and not running it causes a non or misdiagnosis, causes you to suffer needlessly, and costs thousands in procedures that you wouldn’t have needed if the doctor had just run the tests. Huh? Why would any doctor run an "unnecessary test, anyway? The whole debate is confusing isn’t it?

But here is where it gets even more interesting. If the patient has health insurance, there is a right of the health insurance company to reimbursement if the patient collects his/her medical expenses in subsequent litigation. This is called the right of subrogation. Here is an example: A Doctor makes significant error, a misdiagnosis, and surgery performed does not have the desired or necessary result. The mistake is so bad that several additional operations are needed. Unfortunately, these things happen, more often than you can imagine. Luckily, the patient has full coverage health insurance and the health carrier pays all doctor, hospital and surgery bills. The unfortunate patient files a medical malpractice lawsuit and obtains a verdict or settlement. As part of the settlement, the patient receives reimbursement for all extraordinary medical and hospital expenses necessitated by the doctor’s malpractice. The insurer who paid for the additional operations gets the money; you read that correctly; the health care provider gets full reimbursement out of the settlement proceeds for the expense of additional surgeries, if that amount is recovered in the medical malpractice litigation. This is what is referred to as the right of subrogation – the right of the insurer to get their money back.

Now, if the patient doesn’t or can’t file suit, the insurance company must foot the entire bill for the additional operations. If the "insurer" happens to be the government (Medicare or Medicaid) that means you and I – the taxpayers.

The "tort reformers" will not tell you how much money the government or private health insurance companies recover each year as a result of successsful medical malpractice suits. Fact: second operations (or more) are pricier than running "unnecessary" or "necessary" tests; thus, we often lose more than we save. How much “cents” does that make?

Tort reformers say that reform will save money; without knowing how much money is returned due to subrogation, it is difficult to cost out the so-called medical malpractice "deform" savings, if any. And, what of the patient? If there are any savings at all, are they worth the lives and health of real patients? Are they worth the risk to public safety? Lawsuit Financial, the pro-justice lawsuit funding company says "no". What do you say?