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Medical Malpractice Caps: Do They Help or Harm?


If you are a patient who has been severely injured by medical negligence in Colorado, your ability to obtain compensation will be limited by what are known as medical malpractice caps.

Unlike other injured people in Colorado, all patients hurt by medical negligence are limited to $1 million in compensation, with only $300,000 attributable to non-economic damages (permanent disabilities, pain and suffering, etc.), and unlike the state’s general non-economic damages cap, these numbers are not adjustable for inflation. Also, if more than $150,000 in future damages is awarded, the patient is typically not permitted to receive this money in a lump sum. It is instead paid out in periodic installments to the patient while the insurer is allowed to collect interest on it.

Here are some facts and myths about medical malpractice lawsuits in Colorado and elsewhere:

  • Fact: The number of medical malpractice claims have steadily declined over the years. According to the National Association of Insurance Commissioners, the number of new medical malpractice claims dropped about four percent between 1995 and 2000, and a Harvard study concluded that only one of eight preventable medical errors actually results in a malpractice lawsuit.
  • Myth: Most medical malpractice lawsuits are frivolous. Researchers at the Harvard School of Public Health who examined more than 1,400 closed medical negligence claims found that 97 percent of them had merit, and 80 percent involved serious injury or death.
  • Fact: An overwhelming majority of medical malpractice claims are in response to permanent injury or death. According to Becker’s Hospital Review, in 2012 approximately 31 percent of medical malpractice claims were related to a death, 19 percent involved a significant permanent injury, 18 percent resulted from a major permanent injury, and only 0.4 percent arose from an insignificant injury.
  • Myth: Medical malpractice claims drive up doctors’ premiums. According to the National Bureau of Economic Research, there is actually very little correlation between medical malpractice claims and medical malpractice premiums. Instead, premium rates are determined almost entirely by insurance trends.
  • Fact: Medical errors cost more than medical malpractice insurance. The Institute of Medicine estimates that the annual costs of medical errors in hospitals is $17 to $29 billion, while the National Association of Insurance Commissioners estimates that $6.4 billion is spent annually on medical malpractice insurance.
  • Myth: Medical malpractice lawsuits are driving up healthcare costs for everyone. According to the Insurance Journal, the notion that medical malpractice lawsuits are to blame for sky-high healthcare costs is simply not true — in a review of malpractice payouts of more than $1 million, Johns Hopkins researchers determined that those kind of payouts amount to about $1.4 billion per year, less than even one percent of national medical expenditures in the U.S. each year.

In the opinion of Dr. Marty Makary, associate professor of surgery and health policy at Johns Hopkins University School of Medicine, the real culprit in the rising costs of healthcare is defensive medicine — too many tests and procedures being performed for fear of being sued, which amounts to $60 billion per year. Makary said legal reform efforts should focus on doctor protections to reduce defensive medicine rather than the creation of medical malpractice caps.

Image by Stephen Rathke


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