Statement of Judiciary Committee Chairman Lamar Smith
Hearing on “Medical Liability Reform – Cutting Costs,
Spurring Investment, Creating Jobs”

Chairman Smith: The purpose of this hearing is to discuss the need to reduce the waste in our health care system caused by “defensive medicine.” This practice occurs when doctors are forced by the threat of lawsuits to conduct tests and prescribe drugs that are not medically required.

According to a Harvard University research study, 40% of medical malpractice lawsuits filed in the United States lack evidence of medical error or any actual patient injury.  But because there are so many lawsuits, doctors are forced to conduct medical tests simply to avoid a possible lawsuit.

Taxpayers pay for this wasteful defensive medicine, which adds to all our health care costs without improving the quality of patient care.

A survey released last year found defensive medicine is practiced by nearly all physicians.

President Obama himself acknowledged the harm caused by defensive medicine, stating “I want to work [to] scale back the excessive defensive medicine that reinforces our current system, and shift to a system where we are providing better care, simply -- rather than simply more treatment.”

Yet the health care legislation he signed does nothing to prevent defensive medicine.  In fact, it makes matters worse by allowing trial lawyers to opt out of any alternatives to health care litigation proposed by the states, and by exposing doctors to even more lawsuits if they fall short of any of the many new federal guidelines the law creates.

The encouragement of lawsuit abuse will not only make medical care much more expensive; it will drive more doctors out of business.

The Judiciary Committee will consider alternative health care lawsuit reforms modeled on California’s reforms, which have been in effect for over 30 years.  Those reforms have a proven record of reducing defensive medicine, reducing health care costs, and increasing the supply of doctors.

There is a clear need for reform at the federal level.  Many State supreme courts have nullified reasonable litigation management provisions enacted by State legislatures.  In such States, passage of federal legislation by Congress may be the only means of addressing the State's current crisis in medical professional liability and restoring patients' access to quality health care.

Further, federal legislation is needed to stem the flow of doctors from one state to another, as they flee states to avoid excessive liability costs.  Doctors should feel free to practice medicine wherever they want, and patients everywhere should be able to obtain the medical care they need.

Last year, the Congressional Budget Office (CBO) determined that a legal reform package modeled on Republican-supported reforms would reduce the federal budget deficit by an estimated $54 billion over the next 10 years—and that was a conservative estimate.

Another CBO report estimates that “under [Republican-proposed reforms], premiums for medical malpractice insurance ultimately would be an average of 25 percent to 30 percent below what they would be under current law.” 

The Government Accountability Office (GAO) has found that rising litigation awards are responsible for skyrocketing medical professional liability premiums.  Its report states that “GAO found that losses on medical malpractice claims – which make up the largest part of insurers’ costs – appear to be the primary driver of rate increases in the long run ...”

The GAO also concluded that insurer profits “are not increasing, indicating that insurers are not charging and profiting from excessively high premium rates.”

The National Commission on Fiscal Responsibility and Reform, which was created by President Obama, also supports health care litigation reform in its 2010 report:

Many members of the Commission also believe that we should impose statutory caps on punitive and non-economic damages, and we recommend that Congress consider this approach and evaluate its impact.

As a USA Today editorial concluded, “one glaring omission” from the Democrats’ health care law “was significant tort reform, which was opposed by trial lawyers.

I look forward to hearing from our witnesses today, who will help us assess the nature of the current health care litigation crisis.