Litigation As a Means of Extortion
In 20 years, Vegas has driven away three major insurance companies
- Monday, June 10, 2002
I had a conversation the other day with a personal-injury attorney. He’d come by to drop off a malpractice claim against one of the doctors who is insured through my office
For some reason I was curious to find out how this particular trial lawyer views Southern Nevada’s medical malpractice liability crisis. Personally, in the 13 years I have been writing policies in the area, I’ve never seen a worse situation for everyone in Clark County—not just doctors, but each of us, as individuals who may someday soon suddenly need medical services but find none available.
It turned out that my visitor—like most personal injury attorneys I’ve talked to—views litigation as a good thing. To him, more lawsuits, by and large, translate into more justice for society in general. The way he explained it, plaintiff attorneys are obligated to do all they can to make the most emotionally compelling case possible for their clients, while defense attorneys are to do the same thing for their clients. Then, in the big showdown before 12 jurors, justice with a capital “J” is supposed to emerge.
I pointed out what he already knew—that jurors often don’t understand the scientific evidence, or, when they do, choose to ignore it out of sympathy for the plaintiff. Increasingly common now are cases where the doctor clearly was not guilty of malpractice—the service he rendered met the required standard of care—but jurors nevertheless found for the very sympathetic young mother or young child who had suffered an adverse outcome. Presuming that the doctor or his insurance company “can afford it,” juries often try to help out the plaintiff with a generous award. In the process, though, these juries—and the attorneys who have made a science out of picking and manipulating them—are destroying medical practices all over America.
My visiting trial lawyer blamed such bad outcomes on the insurance companies, saying they should have hired better attorneys. If defense counsel should turn out to be a better attorney than himself, so be it, he said. His recipe? Let the best counsel prevail!
Unfortunately for all of us, the State of Nevada has allowed this attitude to rule unchecked for too long. The result has been to put all of us—and the future of the state—at risk.
Clearly, litigation is not an unmitigated “good thing.” At best it’s a necessary evil—something that any of us may have to resort to if no other alternative is left. But when litigators are allowed to run rampant, using unwitting lay juries as their hammers, our system of civil justice degenerates into little more than a tool for extortion. And that is exactly what Nevada has been suffering, on an accelerating basis, over the last 20 years.
During that period, three different major providers of malpractice liability insurance have, at different times, dominated the Southern Nevada market. One after another, however, each of them were forced to back away. Why? Because of Southern Nevada’s exceptionally high and actuarially unpredictable jury awards.
In the late ’70s and early ’80s Medical Insurance Exchange of California (MIEC) dominated—until they had to double and triple digit their premiums. This allowed The Doctors Company (TDC) to come in, and—following a different business model—aggressively take away market share. But they, too, in the mid-’90s, discovered that their business model could not stand up to Southern Nevada’s uniquely high claims and jury decisions. Last fall it was St. Paul Co., which had replaced TDC as the area’s major provider, that also admitted defeat and pulled the plug.
This pattern is now very clearly known to every insurance company in America. That’s why none of them are willing, under current circumstances, to come into the state and compete for Southern Nevada’s medical malpractice liability business. Even Governor Guinn’s Medical Liability Association of Nevada (MLAN) is not exempt from these issues. And the more price-friendly that the state makes MLAN, the more that MLAN, too, will be subject to the same serious financial dangers that doomed earlier liability insurers in Nevada.
To break this pattern that threatens the life of every man, woman and child in the Silver State, our elected leaders must embrace the solution that saved Colorado and California.
We must reform Nevada civil law and reclaim it from the personal injury lawyers.
Larry Roberson is the principle of Roberson Insurance and a policy fellow with the Nevada Policy Research Institute.