Recording Shows No Signs Of Distress Before Small Plane Crashed

Review of radio communications between a Learjet that crashed January 5 and the control tower showed no signs of distress from the plane.

The small plane crashed in a forest preserve, killing both the pilot and co-pilot right after it had been cleared to land; about a mile from the Wheeling airport.

The recording was released Thursday by the Federal Aviation Administration. The National Transportation Safety Board is still investigating.

The contents of the voice recorder from the plane has been recovered, but its contents have not been made known.

A flight instructor at the airport said the plane had just been cleared to land as it was making its final descent, and nothing out of the ordinary was apparent on the recording.

The plane dove into the Des Plaines River. It was owned and operated by a Michigan-based company and had begun its flight near Pontiac, Mich.

If you or a loved one has been injured in a plane accident, we may be able to help. Contact us for a free consultation.

Evanston To Increase School Zone Speeding Fines to $550

A new law increasing fines for speeding in Evanston school zones is set to go into effect March 8.

The Evanston City Council voted to increase the fines from $200 to $550 because many felt the set school zones speed limits were not being obeyed. Motorist should slow down to 20 miles per hour between 7 a.m. and 4 p.m. when school is in session.

According to reports, $50 would go to the schools and the other $500 would go to the city.

Many studies have shown people hit by vehicles going 20 mph suffer significantly less life-threatening injuries than those hit by vehicles going just 10 mph faster.

If you or a loved one has been injured by a moving vehicle, Dwyer & McDevitt may be able to assist you. Contact us for a free consultation.

Man Cited For Striking Deputy With Car

A man was cited Wednesday for striking a Cook County Sheriff's Deputy with the vehicle he was driving.

The driver received multiple tickets, including driving under influence of alcohol, driving under the influence of drugs, driving on a suspended license, possession of alcohol in a motor vehicle and not using proper care to avoid pedestrians in the roadway.

According to the sheriff's office, the deputy approached the driver just before 11 a.m. Wednesday morning on Randolph Street to ask the man how long he had been parked there. The driver allegedly drove toward the deputy as the deputy was approaching the car, striking the deputy in the leg as he repeatedly told the man to stop.

The man then reportedly stopped his vehicle and as the deputy interviewed him, he noticed an empty 40-ounce alcohol bottle in the man's lap, said the man had bloodshot eyes and smelled of alcohol.

The Chicago Police arrested the man. His court date is set for March 23.

If you or a loved one has been injured by a driver under the influence of alcohol, contact our law offices for a free consultation. We may be able to help.

Wall Street Editorial Regarding Tort Reform

The following editorial was published in the Wall Street Journal. It addresses the role that trial lawyers and product liability litigation play in advancing public safety.

The following op-ed appeared in the Wall Street Journal on Monday, February 23, 2010.

Why We Need Trial Lawyers

Toyota is only the latest example of lethal defects gone unaddressed by

regulators.

By MARK ROBINSON AND KEVIN CALCAGNIE

The alleged need for "tort reform" has become a refrain in American

political life. Yet for all the demonizing of trial lawyers, the

reality is that product-liability litigation has become an ever more

important means of keeping consumers safe.

Case in point: the current Toyota Motor Corp. recalls, with their

attendant revelations of corporate obfuscation. This is only the most

recent situation in which lethal defects have gone uncorrected for

years at least in part because of insufficient government oversight.

In model after model, as we've now learned, car owner complaints were

either minimized or ignored altogether by Toyota and by the regulatory

agencies that were supposed to police the company. In one review of

federal records, the Los Angeles Times found 2,600 complaints of sudden

acceleration from 2000 to 2010 by Toyota and Lexus owners. And

according to CBS, recently released internal company documents indicate

that as far back as 2005 Toyota was tracing its sudden acceleration

problem to its software

-not to floor mats.

Yet for nearly a decade, neither Toyota nor federal regulators

aggressively addressed the problem. Toyota is now likely to face a

rising tide of class action lawsuits as consumers look to their

historic fallback: the courts.

Regulation is crucial to the creation of a level playing field for

consumers, particularly in this era of growing corporate power. But

regulation alone has never been enough. Federal agencies such as the

Food and Drug Administration (FDA), the Consumer Product Safety

Commission and the National Highway Traffic Safety Administration have

long been swamped by large work loads. And lobbyists are adept at

weakening and fending off regulations.

The laissez-faire policies of the Bush administration only further

weakened regulatory agencies by cutting funding and personnel, since

such agencies were viewed as an impediment to private-sector growth.

Government watchdogs soon found themselves so overwhelmed and

undermanned that they could scarcely do their jobs.

Consider the FDA. By the mid-2000s, the FDA's caseload extended to more

than 11,000 existing drugs, some 100 new drugs a year, and a breadth of

products from food to vaccines to medical devices that comprise

approximately 25% of all consumer spending.

Resources were stretched so thin that a 2006 report on drug safety by

the Institute of Medicine of the National Academies found that the FDA

simply couldn't ensure the safety of new prescription drugs. The

reasons given? Inadequate funds, cultural and structural problems, and

"unclear and insufficient regulatory authorities."

The FDA is just one example. Until April 2009, federal motor vehicle

safety standards were so weak that many vehicles could comply and still

sustain severe roof collapse from a force equivalent to a 5 mph parking

lot collision. Similarly, drivers and passengers are far too frequently

ejected in rear-end collisions because the minimum standard for

automobile seatback strength is so low that many folding lawn chairs

can pass the test.

The recession threatens to further starve the agencies responsible for

consumer safety, even as the tough economic climate subjects

manufacturers to brutal competition and discourages them from investing

in product safety on their own.

As a result, consumers are increasingly left with the courts not only

to compensate them when the regulatory system fails to protect them,

but also to deter manufacturers from cutting corners in the future.

Product liability lawsuits have played a crucial role in ensuring

public safety, encouraging-and sometimes compelling-manufacturers to

put safety first. A 1988 survey of 264 CEOS of manufacturing companies

found that a third had improved their product lines as a result of the

threat of litigation, 35% had improved product safety, and 47% had

improved warnings to consumers.

At the same time, such lawsuits have provided important assistance to

agencies overseeing product safety. Litigation involving defective

products has increased access by regulators and the public to critical

safety information about particular products. This has resulted in

stronger regulations, safer new products, and the removal of dangerous

products from the market. Just last year, in Wyeth v. Levine, the

Supreme Court noted that state tort suits "can serve as a catalyst" for

regulatory action.

Litigation has not only advanced public safety, but has encouraged

improvement in products almost too numerous to mention: air bags, seat

belts, child safety seats, tires, minivan doors, hot water vaporizers,

children's pajamas, farm machinery, firearms, building materials,

tobacco products, intra-uterine contraceptive devices, tampons,

sleeping pills, anti-depressants, pain medication, appetite

suppressants and many more. Toyota is just another sign of how much

work remains to be done.

Strong product liability laws remain vital to public health and safety-

no matter how passionate the political debate on tort reform.

Mr. Robinson, managing partner at Robinson, Calcagnie & Robinson in

Newport Beach, Calif., has represented plaintiffs in the Ford Pinto,

Vioxx, major tobacco and other cases. Mr. Calcagnie is a senior partner

at the firm.

Man Killed, Good Samaritan, Passenger Injured In Crash

A man was killed and two others were injured early morning Sunday when the man's car broke down on Highway 394.

The man and his wife were driving home about 2 a.m. from a night out when the 1999 Pontiac Grand Am they were in broke down along the side of Highway 394 near Lynwood. Reportedly, an officer stopped to help the couple and said he would call for help but was unable to stay at the scene. The couple later told the tow truck driver the officer had called they no longer needed him because a friend was heading to get some tools to help them.

A good Samaritan driving by then stopped to try to help start their car. When the two men went to check the battery, another vehicle then hit the men and the woman, killing the driver of the Pontiac and seriously injuring the good Samaritan as well as the passenger in the Grand Am.

Police said the driver who hit the three was later in another accident and was being held in custody but no charges had been filed as of Sunday afternoon.

If you or a loved one has been injured in a hit-and-run accident, our lawyers may be able to assist you. Give us a call for a free consultation at 312-332-0072 or visit us on the web.

Hit-And-Run Accident Injuries 5, Including 3 Pedestrians

A hit-and-run accident on the city's Near North side early Sunday morning injured three pedestrians as well as two passengers in a taxi.

The hit-and-run vehicle was heading east on Division when it struck a taxi with two passengers, drove a bit further and struck another taxi. It is unclear which vehicle hit the pedestrians, but three pedestrians were also injured in the course of the accident.

The unidentified vehicle fled the scene. Police said some surveillance videos may hold some information and the videos were being reviewed.

If you or a loved one has been injured in an accident, we may be able to help you. Contact Dwyer & McDevitt for a free consultation.

Woman With Flat Tire Is Struck, Killed On I-294

A woman who got a flat tire was struck and killed by a semi early Tuesday morning when she got out to check on her flat.

The 34-year-old woman has not been identified, but Illinois State Police said she was traveling south on I-294 just after midnight and had pulled over to check on her flat tire.

Shortly after, a semi hit her and went on to side swipe her car. At this time, the police do not believe drugs or alcohol played a factor in the accident.

If you or a loved one has been injured in an accident, we may be able to help you. Contact Dwyer & McDevitt for a free consultation.

University Of Illinois Study: Cell Phone Bans Decrease Personal Injuries In Urban Areas

A study conducted by the University of Illinois found cell phone bans more effective in cities and around areas of dense populations versus rural areas. The study also found a drop in personal injuries in all the areas with a handheld cell phone ban.

The study, released last week, found urban areas with a larger number of licensed drivers were positively impacted by handheld cell phone bans. The study also found more rural areas did not see the same effect that the urban areas did.

Sheldon H. Jacobson, a computer science professor and the director of the simulation and optimization laboratory at Illinois conducted the study. In the study his co-researchers analyzed the accidents in 62 counties in New York before and after a handheld cell phone went in effect in 2001.

The analysis showed 46 of the counties experienced lower fatal accidents and all 62 experienced fewer personal injuries from accidents.The study also showed the accident rate substantially decreased in areas such as New York, Queens and the Bronx.

“What that suggests is, if you have a congestion of cars and you’re distracted, you’re more likely to hit someone,” Jacobson said. “If you have a lower congestion of cars, you’re still distracted, but you’re less likely to hit anyone because there are less people to hit. It’s simple probability.”

Even though the ban didn't seem to have the same effect on rural areas, Jacobson said it doesn't mean those bans are worthless.

“Hand-held cell phone bans are very valuable in high-density urban areas, but less so in lower-density rural areas,” Jacobson said. “But that doesn’t mean they have no impact in rural areas. It just means that such legislation is less likely to have an impact on driver accident rates.”

Jacobson said the difference between his study and one recently published by the Highway Loss Data Institute, is that he used publicly available data and the number of licensed drivers as a proxy for accident prediction. The Highway Loss Data Institute showed handheld cell phone bans in four major areas of the United States had no positive impact on the accident rate.

The team picked New York because the state has had a cell phone ban in place since 2001. Chicago has had a handheld cell phone ban in place since 2005. The state of Illinois enacted a ban on texting while driving in January.

If you or a loved one has been injured in a serious accident, our Chicago personal injury lawyers may be able to assist. Contact us for a free consultation.

Young Man Struck, Killed By Amtrak Train In Downers Grove

A 22-year-old man was struck and killed when he stepped in the path of an oncoming Amtrak train Saturday afternoon in Downers Grove.

The man was reportedly dropped off at the Belmont Metra station to catch a Metra train about 2:30 p.m. Saturday afternoon. He was attempting to reach the opposite platform. He apparently crossed over the tracks in front of a westbound Amtrak when he was struck.

The man was pronounced dead at the scene.

Downers Grove police continue to investigate the accident.

If you or a loved one has been injured in a serious accident, our Chicago personal injury lawyers may be able to assist. Contact us for a free consultation.

Evanston Approves Cell Phone Ban

The Evanston City Council approved a ban Monday night on the use of handheld cell phones will driving.

The ban makes it illegal for any driver to use a handheld device while driving a motor vehicle. The ban includes talking on a phone without a hands-free device and texting or emailing. Some proponents of it spoke to the council at the January 26th meeting, asking them to considered even a tougher ban outlawing all cell phone use while driving.

At the January meeting, James Heller, President of the Evanston Bicycle Club, said although the group would welcome any ban, they would like to see a stricter one enacted.

The issue has been front and center in recent years as more serious and fatal accidents have been attributed to cell phone use.

In May 2005, Chicago banned handheld cell phones while driving. In January, the state of Illinois enacted a ban on texting while driving.

If you or a loved one has been injured in a serious accident, our Chicago personal injury lawyers may be able to assist. Contact us for a free consultation.

There has been a lot of talk about the impact that the recent decision by the Illinois Supreme Court which found caps on patient compensation to be unconstitutional will have on doctors and hospitals in Illinois.  The Illinois Trial Lawyers Association recently published a paper describing the issues in the medical malpractice debate which shows why medical malpractice claims are not the problem doctors believe them to be, that malpractice claims have not had any impact on  the number of doctors in the state including obstetricians and neurosurgeons, and that medical malpractice claims have little or no effect on overall health costs.

The entire paper published by the Illinois Trial Lawyers Association is republished below.

The Whole Truth About Medical Malpractice and Insurance 

 

February 2010 

 

Illinois Trial Lawyers Association 

401 West Edwards Street 

Springfield, IL 62704 

800-252-8501 

www.iltla.com 

The Whole Truth About Medical Malpractice and Insurance 

                                                      Executive Summary 

 

In 2005, Illinois enacted an arbitrary $500,000 cap on the total amount of non- 

economic damages recoverable by patients in medical malpractice cases against 

doctors and an arbitrary $1 million cap in cases against hospitals.  Proponents of the 

cap argued that malpractice claims and verdicts were skyrocketing, driving doctors 

out of Illinois, and raising health care costs.  These arguments were a complete 

fiction, and the insurance companies’ own data proves the medical malpractice 

“lawsuit crisis” is a myth. 

Claims and payouts have been stable.  Court records show that the annual 

filings of malpractice lawsuits in Illinois steadily decreased before the enactment of the 

damages caps in 2005 and thereafter.  The insurance companies’ regulatory filings 

show that since 2000, both frequency and severity of malpractice claims and payouts 

have been stable, or even decreasing.  It was necessary for the proponents of caps to 

resort to statistical manipulations to argue for caps. For example, before 2003, the 

state’s largest medical malpractice insurer, ISMIE, counted a claim involving both an 

ISMIE-insured doctor and an ISMIE-insured medical corporation or clinic as a single 

claim.  In 2003, ISMIE altered its reporting system and, for the first time ever, began 

to count a combined doctor/clinic claim as two claims.  This change doubled the 

number of reported claims overnight. Then in 2005, in hearings before the General 

Assembly, ISMIE grossly overstated its expected future total payouts on claims to 

argue for caps — but after the cap was passed, ISMIE substantially lowered those 

numbers and admitted the cap had nothing to do with the change. 

The “judicial hellhole” claim is another myth.  The data show that Cook, 

Madison and St. Clair counties have seen the same trend of stable, if not declining, 

frequency and severity of medical malpractice claims.  

            

Insurance companies have enjoyed record profits.  Insurance company data 

reveals that total insurance payouts remained flat between 2000 and 2005, while 

malpractice insurance rates dramatically increased.  The result was record insurance 

company profits and gold-plated compensation packages for insurance executives.  

ISMIE’s net income doubled in three consecutive years (2004 through 2006), and it 

earned a record profit of $50.2 million in 2006.  ISMIE added profits of $40 million in 

2007 and $34 million in 2008, making it one of the most profitable carriers in the 

country. 

 

Insurance rate fluctuations are the result of market conditions.  Insurance 

companies have admitted that business conditions and diminished returns on 

financial investments – rather than malpractice claims – were responsible for the 

increase in insurance rates.   

 

Insurance reforms, not caps, will deal with excessive insurance rates.  

Insurance reforms have created new competition in the insurance market and 

stabilized and even lowered rates.  Insurance regulation superimposed upon market 

conditions is the only effective way to control insurance rates.   

           

Medical malpractice claims have had little effect on hospitals’ bottom line.  

Although hospitals have asserted that they face increased numbers of claims, they 

have never placed their internal data in the public domain and therefore has never 

been independently verified.  There is ample reason to be skeptical.  After hospitals 

submitted a selective analysis of Cook County verdicts to the General Assembly in 

2005, re-analysis (which included complete verdict data) showed that noneconomic 

damages awards against hospitals actually declined from 2002-2003.  Moreover, 

hospitals have been prospering financially and enjoying record profits, without caps 

having had any impact.   

             

Assertions of a physician “exodus” are phony.  The number of doctors in 

Illinois has increased every year since 1963— measured statewide in total terms, per 

capita, and even for specialists like neurosurgeons and OB/GYNs.  Illinois’ growth in 

physician supply has outpaced all but one of Illinois’ thirteen neighboring states, even 

though most of those states have damages caps. 

               The health care cost argument is phony.  Authoritative studies by 

independent scholars have consistently shown that medical malpractice claims and 

lawsuits have little or no effect on overall health care costs.  

 Improved patient safety prevents malpractice lawsuits. Medical malpractice is 

a leading cause of death and injury in the United States, injuring an estimated 180,000 

and killing tens of thousands of Americans annually.  Preventing malpractice in the 

first place is the best way to avoid malpractice litigation. 

 

History repeats itself.  Tales of a medical malpractice “crisis” were told in 1975, 

1985, and 1995 – a ten-year, repeating pattern that further underscores that insurance 

rates are related more to the business cycle and insurance company investment 

income than to tort claims.  In response to each tale of “crisis,” Illinois adopted 

arbitrary tort reform laws.  Each time courts held key parts of the laws 

unconstitutional, and every time caps were included in the laws, they were held to be 

unconstitutional.  Each time bogus predictions were made that “the sky-is-falling” 

and that the court action would cause another “crisis,” and each time these claims 

were subsequently discredited.  This time will prove to be no different. 

THE WHOLE TRUTH ABOUT MEDICAL MALPRACTICE AND INSURANCE 

 In 2005, Illinois enacted a law imposing an arbitrary cap of $500,000 on the total 

amount of noneconomic damages recoverable by patients in medical malpractice cases 

against doctors and $1 million in cases against hospitals.  The law was passed to address 

allegations that malpractice claims and verdicts were out of control and were causing: (1) a 

spike in malpractice insurance rates; (2) a “flight” of many doctors from Illinois; (3) higher 

health care costs; and (4) financial problems for hospitals.  Caps on damages were said to be 

the solution to all these problems.   

 

But these allegations had no basis in reality, or in “Reality Medicine,” to borrow a 

slogan from ISMIE, the predominant malpractice insurer for doctors in Illinois.1  As one 

scholar recently noted, “in fact almost all of the claims made to support tort reform in the 

area of medical malpractice are not consistent with the empirical data.”2    

• The medical malpractice “lawsuit crisis” is a myth. 

• Since 2000, malpractice insurance rates have dramatically increased while the 

frequency and severity of malpractice claims and payouts have not.  

• As in the rest of the state, Cook, Madison and St. Clair counties have seen the 

same trend of stable, if not declining, frequency and severity of medical malpractice claims, a 

trend which puts the lie to libelous allegations that these counties are “judicial hellholes.” 

• The dramatic increases in malpractice insurance rates in the years leading up 

to 2005 were not needed to pay claims, because there was no increase in claims.  

• Medical malpractice insurance rate increases between 2000 and 2005 arose from 

insurers’ business decisions and reduced investment returns, not medical malpractice claims. 

• The net result of the medical malpractice insurance rate increases was record 

insurance company profits and gold-plated compensation packages for insurance executives. 

• Medical malpractice claims have had little effect on hospitals’ bottom line.  

• The assertion of a physician “exodus” is phony.  The number of doctors in 

Illinois has increased every year since 1963- measured statewide in total terms, per capita, and 

for specialists like neurosurgeons and obstetricians.  Illinois’ growth in physician supply has 

even outpaced many states that have damages caps, including all but one of Illinois’ thirteen 

neighboring states. 

• Independent authoritative studies have consistently shown that medical 

malpractice claims have little or no effect on overall health care costs. 

• Insurance reform, not lawsuit reform, is the only way to reduce excessive 

malpractice insurance rates.  The recent decline in medical malpractice insurance rates was 

the result of government oversight leading to increased competition in the insurance market.  

• Medical malpractice is a leading cause of death and injury in the United States, 

injuring over 180,000 and killing tens of thousands of Americans annually.  Improved patient 

safety is the best way to prevent malpractice cases − by preventing malpractice in the first 

place. 

• History repeats itself.  The same cries of a medical malpractice “crisis” were 

also heard in 1975, 1985, and 1995 – a ten-year, repeating pattern that further underscores the 

fact that insurance rates are related to insurance business cycles and investment income 

rather than to malpractice claims.  In response to each “crisis,” Illinois adopted laws 

restricting patient rights.  Each time the courts held laws unconstitutional – twice specifically 

holding caps unconstitutional.  Each time the dire predictions that the court action would 

cause another crisis proved completely unfounded.   

Now yet again, the Supreme Court’s recent decision in Lebron was based upon its 

consistent history of rulings that non-economic damages caps are unconstitutional.  The 

Court observed that “we do not write today on a blank slate,”3 and explained that its decision 

in Best v. Taylor Machine Works striking down non-economic damages caps in medical 

malpractice and other kinds of tort cases, “is as valid today as it was in 1997 and controls the 

disposition of the present case.”4    

The Court noted that its decision also invalidated malpractice insurance reforms 

included in the legislation only because of the inseverability clause in the legislation which 

required all other parts of the law to fall with the invalid damages cap. The Court stressed 

that these other insurance market reforms were “deemed invalid solely on inseverability 

grounds, [and] the legislature remains free to reenact any provisions it deems appropriate.”5  

These highly effective insurance reforms should be reenacted as soon as possible. 

I. The Medical Malpractice “Lawsuit Crisis” is a Myth. 

 The Illinois State Medical Inter-Insurance Exchange (“ISMIE”) raised its 

malpractice rates by about 80 percent between 2000 and 2004 (5 percent in 2000, 12.47 percent 

in 2001, 15 percent in 2002, 35.2 percent in 2003, and 7.2 percent in 2004).6  ISMIE blamed this 

on dramatic increases in “frequency” and “severity” of claims but ISMIE’s own data show 

the opposite – claims frequency and severity were stable or even decreasing. 

A. “Frequency” was Stable, or Even Decreasing 

 “Frequency” is “insurance-speak” for the number of claims and lawsuits filed.  ISMIE 

contended that claims frequency had doubled, a contention disproven by ISMIE’s own data. 

The data clearly shows that there was no material change in the frequency of claims – 

frequency was actually stable or even decreasing. 

 When the damages caps were enacted in 2005, the number of claims ISMIE had paid 

each year had already been generally declining, according to ISMIE’s own annual statements, 

required by law to be filed with the Department of Insurance.7  In 1998, ISMIE paid a total of 

400 claims, in 2000 it paid 340, and every year since then it has paid fewer than 300.  By 2008, 

the number had fallen to 257. 

ISMIE - Number of Claims Paid by Year 

0 

100 

200 

300 

400 

500 

600 

199419951996 1997 1998 1999 20002001 2002 2003 2004 20052006 2007 2008 

 

 ISMIE’s data likewise show a flat or even downward trend in the percentage of 

claims on which it made a payment to the plaintiff.  During a Department of Insurance rate 

hearing later in 2005, in analyzing “the ratio of claims that are closed with an indemnity 

payment to total closed claims,” an actuary for ISMIE admitted under oath that historically 

this ratio has “been relatively flat, possibly decreasing” since 2000.8   

 Medical malpractice payouts have also been on the decline nationwide for years.  The 

National Practitioner Data Bank, which tracks such payments, shows that the number of 

malpractice payments nationwide in 2008 was the lowest since its creation in 1990, and was 

the third consecutive year in which the number of medical malpractice payments fell to an all- 

time low.9  Another report from the National Center for State Courts showed that the number 

of malpractice cases filed between 1996 and 2006 dropped by 8 percent.10  

                 Court records show that the number of medical malpractice lawsuits filed in 

Illinois each year had been stable and then decreasing before the enactment of the damages 

caps in 2005. 

Illinois Med Mal Lawsuit Filings by Year 

0 

500 

1000 

1500 

2000 

2500 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 

(n 

um 

be 

r 

 o 

f 

 f 

il 

in 

gs 

) 

 

 Researchers at Tennessee State University found that there is no evidence to support 

the claim that in recent years jury verdicts in medical malpractice cases nationwide have 

increased significantly.11  One scholar has noted “the number of medical malpractice cases 

being filed per capita has dropped over the last ten years, as have tort filings generally.  Even 

in the states that the AMA has labeled ‘crisis states,’ the number of cases per capita has been 

dropping.”12 

             It was not until after the cap became law that ISMIE representatives admitted under 

oath that there was no actual data to support its claim of an increase in frequency of claims.13  In 

questioning ISMIE executives at a hearing in September 2005, the Director of the 

Department of Insurance noted that “[f]rom, say, 2003 to 2004, the data doesn’t show an 

increase in frequency or severity,” and repeatedly pressed ISMIE for its explanation of the 

premium increases.14  Under oath, high-level ISMIE representatives were completely 

incapable of answering a simple question: why had the number of “claims” reported to the 

Department more than doubled from 2002 to 2003, around the time of ISMIE’s 35 percent 

increase in insurance premiums?15   

 ISMIE’s Vice President of Claims sent the Director a delayed but damning response.  

He stated that he was “stunned” by the question and ISMIE’s inability to answer it at the 

hearing.  He explained that before 2003, a claim or lawsuit involving both an ISMIE-insured 

doctor and the doctor’s ISMIE-insured medical corporation (or clinic) had always been 

reported as one claim.  Starting in 2003, ISMIE changed its reporting system and, for the first 

time ever, began to report a claim against both a doctor and a clinic as two claims.16  Such 

double-counting accounts for much of the “increase” in claims reported by ISMIE to the 

Department in 2003 and thereafter.  The abrupt and covert change ISMIE made in 2003 to its 

longstanding practice of reporting combined doctor/clinic claims as a single claim had 

provided it with a phony yet dramatic “increase” in claims—one of its two stated reasons for 

its increase in premiums. 

  ISMIE employed other deceptive claim-counting practices to concoct the myth of a 

“crisis.”  ISMIE’s counting system registers five separate claims if five ISMIE doctors are 

sued in one case.”17  If thereafter a jury determines that one of those doctors is guilty of 

malpractice and the other four are not, ISMIE deems 80 percent of the “claims” in that 

lawsuit “closed without payment” to the patient and without merit.  Such a system inflates 

both the number of “claims” and the number of supposedly non-meritorious claims. 

Prominent advocates for limiting patients’ rights, such as well-known tort-reform advocate 

and American Tort Reform Association (ATRA) general counsel Victor Schwartz, admit 

that frivolous medical malpractice lawsuits are uncommon, “There is no question that it is 

very rare that frivolous suits are brought against doctors.  They are too expensive to bring.”18 

 Still other deceptive reporting practices by ISMIE served to inflate claim figures.  

ISMIE provided selected closed claim records to the General Assembly in 2004 which 

included many “claims” which were open for only months, weeks, or days, for which 

nothing was spent on administrative or defense costs.19 After the cap was enacted in 2005, 

ISMIE representatives belatedly admitted under oath that the broad definition that it had 

been using for “claim” also included “incidents,” which are not really claims at all, let alone 

lawsuits. “Incidents” included a request or subpoena for the doctor’s records, a subpoena to 

give a deposition, being named as a respondent in discovery, a complaint from the 

Department of Professional Regulation and even the belief of a doctor that he had committed 

an action for which he would be sued even when no lawsuit was ever filed.20  After learning 

of this, the Director of the Illinois Department of Insurance ordered ISMIE to cease this 

practice of counting these other types of  “incidents” as claims.21 

 In short, there was no real increase in frequency of claims, and ISMIE’s assertion 

otherwise was based on statistical trickery.    

B. “Severity” was Also Stable, or Even Decreasing 

 “Severity” is “insurance-speak” for the amount of a claim payment.  In 2005, ISMIE 

told the General Assembly that severity was dramatically rising, but this assertion is belied 

by ISMIE’s own filings with the Department of Insurance which show that its average claim 

payment had essentially peaked by 2003 and had plateaued thereafter. 

ISMIE - Average Paid Claim Amount by Year 

0 

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300 

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700 

800 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 

($ 

 in 

 th 

ou 

sa 

nd 

s 

) 

 

If the average payment per claim had merely kept pace with medical inflation, (9.3 

percent in 2000, 11.3 percent in 2001, 10.7 percent in 2002, 8.4 percent in 2003, and 8.2 percent in 

200422) it would have risen from its level of $480,000 in 2000 to over $771,000 in 2004, the year 

before the enactment of the damages cap.  Instead, the average payout in 2004 was only 

$535,000 – far below the rate of medical inflation.  The average amount ISMIE paid on a claim 

in 2004 even without adjusting for inflation was slightly less than the average of $558,000 in 2002 

and 20 percent less than the 2003 average of $667,000.23  In 2005, ISMIE inflated the average 

numbers to generate phony hysteria and influence elected officials and the media to support 

the damages caps.24 

 Moreover, ISMIE’s cry of increased “severity” ignores how severity actually affects 

its payouts and rates.  ISMIE purchases reinsurance to cover claims in excess of $500,000, 

meaning that all of its risk in excess of $500,000 is transferred to the reinsurer, no matter how many 

ISMIE doctors or clinics are sued.  A mere 7.4 percent of the total insurance premiums paid by 

doctors funds this reinsurance cost – a low figure showing that the reinsurance market 

recognizes that the assertions of increased “severity” were phony from the start.25  ISMIE 

has stated that it is comfortable with its level of reinsurance,26 a level which ISMIE 

representatives have admitted under oath allowed it to absorb annual total estimated claim 

payout errors up to $90 million per year.27  

A further reality of “severity” is that it is rudimentary math that if an insurer is 

paying out a consistent total amount each year for all claims (as shown in Section C) with 

fewer claims paid each year, the average claim “severity” will rise. At a rate hearing in 

September 2005, after the enactment of the damages caps, the Director of the Department of 

Insurance pressed ISMIE executives for verification of ISMIE’s claim of increased severity 

of claims.28  ISMIE representatives admitted under oath that they had no actual data to support 

the assertion of an increase in severity.29 

 Thus, both premises of the damages cap – supposed increases in frequency and 

severity of claims – were completely false. 

C. Total Annual Payments Were Stable 

 ISMIE’s total annual payments also refute arguments for its rate increases.  ISMIE’s 

annual statements filed with the Department of Insurance demonstrate that since 1994 its 

total annual payouts have been remarkably stable (between $138 million to $175 million except 

when payouts plummeted to $100 million in 1995), while it has collected twice as much or more 

in premiums each year. 

 

0 

50 

100 

150 

200 

250 

300 

350 

400 

450 

199419951996199719981999200020012002200320042005200620072008 

($ 

 in 

 m 

il 

lio 

n 

s 

) 

ISMIE Premiums ISMIE Paid Claims 

 

 Adding defense costs to the claim payouts shows a similar pattern: 

 

0 

50 

100 

150 

200 

250 

300 

350 

400 

450 

199419951996199719981999200020012002200320042005200620072008 

($ 

 in 

 m 

il 

lio 

n 

s 

) 

ISMIE Premiums ISMIE Paid Claims & Defense Costs 

 

 

As will be discussed further in Section E, the combination of stable payouts and increased 

insurance rates facilitated record profits and well compensated executives.  

D. “Judicial Hellholes” Are Another Myth. 

 The claim that there are three “judicial hellholes” in Illinois, specifically Cook, 

Madison and St. Clair counties, is a malignant myth.  These counties have been unfairly and 

falsely tagged by corporations and insurance company special interests as legal venues 

attracting soaring numbers of lawsuits resulting in allegedly excessive jury awards.  

 There is no evidence in these supposed “hellholes” of a lawsuit epidemic, of increased 

jury trials, or of increased plaintiff success rates.”30  An academic study concluded that 

“[e]xcept for a decrease in 2004, filings have remained relatively steady since 1998, although 

there are some yearly fluctuations.”31  In particular, the study found that from 1996 to 2001 in 

Cook County, the number of jury trials held relatively steady.  In 2002, the number of trials 

increased only 10 percent.  In 2003, the number of trials decreased to 99.  In 2004, there were 

two more trials than 2001.  In 2003, it was reported that the average jury award in medical 

malpractice cases tried in Cook County had dropped to a three-year low.32 From 1999 to 2003, 

the number of Cook County claims paid by ISMIE steadily decreased from approximately 

220 to about 160.33 

Court records from St. Clair and Madison counties show:  

• Out of nearly 400 malpractice and wrongful death cases filed in St. Clair 

County between 1996 and 2003, only three resulted in jury verdicts.  Plaintiffs won two, both 

involving Memorial Hospital in Belleville ($950,000 and $780,000), and one was in favor of 

the defendants.34 

• Out of 320 medical malpractice and wrongful death cases filed in Madison 

County between 1996 and 2003, only eleven resulted in verdicts — four in favor of plaintiffs 

($1.8 million, $470,000, $75,000 and $25,000) and seven in favor of defendants.35 

 ISMIE’s 1999 to 2003 closed claim records for Madison and St. Clair counties show 

that, ISMIE paid no more than 10 claims per year in St. Clair County and no more than 11 in 

Madison County. The average paid claim was less than $400,000 and over 80 percent of those 

claims were settled for less than $250,000.36  For each year, only $5 million per year was paid out 

in both counties combined, a very small fraction of ISMIE’s statewide payments (see Section 

C).  ISMIE has not released numbers by county since 2003.37 

 Hence, the “judicial hellhole” claim is another myth. 

E. Medical Malpractice Insurance Rate Increases Resulted in Record Profits and 

Gold-Plated Compensation for Executives. 

 

 ISMIE’s own data from 2000-2004 (and thereafter) show an extended period of 

stability of claim frequency, claim severity and total payouts.  “Reserves” are the amounts an 

insurer sets aside to pay claims.  Not surprisingly, ISMIE’s rate increases served to generate 

large insurance reserves for the company. This was exacerbated by ISMIE’s practice of 

consistently over-estimating its reserve requirements (also known as “incurred losses”), 

calculating premiums on that basis, and then revising its reserve requirements downward later.  

For example, in 2003, ISMIE predicted that it would ultimately be required to pay out $188.6 

million for claims from that year but the next year had revised this estimate down to $150.7 

million, a decrease of over 20 percent.  In 2004, ISMIE predicted that it would ultimately be 

required to pay out $201.6 million for claims from that year, but has now revised this amount 

downwards to $165.1 million, or a drop of 18.1 percent.  Its 2005 estimates were overestimated 

by a similar percentage. 

ISMIE Incurred Loss Estimates by Year 

100 

125 

150 

175 

200 

225 

2004 2005 2006 2007 

($ 

 in 

 m 

il 

lio 

ns 

) 

Then Now

 Not surprisingly, ISMIE’s business practices have generated record profits, also 

known as “net income,” which doubled in three consecutive years (2004 through 2006), with 

a record profit of $50.2 million in 2006.  ISMIE added profits of $40 million in 2007 and $34 

million in 2008. 

ISMIE Net Income by Year 

-20.2 

-3.2 

-61.7 

34.4 

40.1 

50.2 

23.6 

11.7 

19.8 

5.0 

17.5 

21.3 

12.0 

11.3 

23.0 

-80 

-60 

-40 

-20 

0 

20 

40 

60 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 

($ 

 in 

 m 

il 

lio 

n 

s 

) 

 

 

ISMIE’s net income loss of $61.7 million in 2002 was followed by its 35 percent across-the- 

board rate increase in 2003, which it has attributed to increased frequency and severity of 

claims, however, ISMIE has admitted that, “…[I]nvestment income was down in 2002 because of 

the drop in interest rates. Additionally, ISMIE realized significant losses from the sale of WorldCom, 

Tyco, and Qwest securities.” 38  ISMIE’s own explanation shows the absence of any link to the 

supposed medical malpractice “crisis.” 

            ISMIE’s net income of $50.2 million in 2006 and $40.1 million in 2007 represented the 

most profitable years in its 32-year history.39  ISMIE’s records show that even as it was asserting 

market conditions had forced it to raise insurance rates, it was spending large sums on 

political campaigns, executive loans and big-ticket salaries.40   ISMIE, which insured 60 percent of 

Illinois physicians – had doled out to CEO Alexander Lerner and other ISMIE executives a 

variety of perks since the late 1990s. Meanwhile the insurer was raising premium costs by 120 

percent in some cases.41  “The fall in claims was good news for ISMIE’s bottom line, which 

more than doubled, and for the pocketbooks of top executives, some of whom got raises as 

large as 33 percent.  CEO Alexander Lerner – one of six ISMIE execs who pull down 

$400,000 or more annually – saw his pay rise 4.5 percent to nearly $1 million.”42  In 2002, 

ISMIE paid $4.9 million to Donald Udstuen, its former chief operating officer, just before he 

pleaded guilty to crimes of dishonesty.43  The next year, ISMIE increased its premiums by 35 

percent.  Dr. Frank C. Madda, an ISMIE-insured doctor who unsuccessfully sought a seat on 

the ISMIE board of directors, noted that “[t]he whole thing stinks to high heaven.”44 

 In short, ISMIE’s own data show that the dramatic increases in premiums between 

2000 and 2004 were not needed to pay claims, because there was no increase in total payouts, 

claim frequency or severity.  Instead, the premiums produced record insurance company 

profits and gold-plated compensation packages for insurance executives. 

F.  Insurance Rates are a Function of Industry Practices and General  

 Economic Factors. 

 

 Experts studying medical malpractice insurance companies have concluded that 

“[w]hile insurers and other tort reform proponents blame malpractice litigation for the hard 

market premium increases, they are in fact consistently driven by the insurance companies' 

response to the broader economic cycle.”45 State insurance regulators, including the former 

Acting Director of the Illinois Division of Insurance, agree.46 

 ISMIE told the General Assembly that some doctors’ malpractice insurance 

companies left Illinois in the years leading up to 2005 because of the litigation environment 

in the State. However, in filings with the Security and Exchange Commission (SEC) in 

2000,47 ISMIE said there were six malpractice companies in 1992, and that later in the 1990s, a 

competitive market developed when the stock market was booming and medical malpractice 

insurance was more profitable and an additional twenty or so companies entered the Illinois 

market.  ISMIE told the SEC that the additional companies left as soon as the stock market 

went down and the insurance  “hard market” hit around 2002, so as of 2005, there were five 

companies.  This was a net loss of only one since 1992.  The number of companies was a function 

of trends in the financial markets, not of claims (which were stable in any event). 

Furthermore, in the 2005 insurance rate hearings looking into ISMIE’s rate increases, ISMIE 

representatives admitted under oath that the company’s 2000-2004 rate increases were an 

attempt to catch up after insurance market conditions had reduced its profitability.48  In fact, 

its representatives acknowledged under oath that ISMIE discovered in 2002 that it had 

mismanaged its reserves and failed to maintain them at adequate levels.49  Its rate increases 

had been an attempt to compensate for its own business mistakes. 

 Another major factor behind the rate increases was that ISMIE was “not getting the 

investment yield that it might have received at one time . . . .”50  Almost all of ISMIE’s 

investments are in fixed-interest assets.51  The interest rate on those assets dropped from 

about 6 percent during a “soft” market to about 3 percent by 2005.52  Each 1 percent drop in the 

interest led to ISMIE’s raising its premium rates by 5 percent to 6 percent.53  Thus, ISMIE 

representatives admitted under oath that a very substantial portion of its rate increases was 

required by changes in its investment outlook, even setting aside ISMIE’s past mistakes in 

pricing in the earlier “soft” market.  In short, ISMIE’s claims payments had nothing to do 

with its rate increases. 

 Independent scholarship has overwhelmingly concluded that malpractice insurance 

rates are a function of business conditions and investment income rather than claims.   

Thomas Baker, a professor at the University of Pennsylvania Law School and formerly the 

director of the Insurance Law Center at the University of Connecticut, has carefully 

reviewed the available empirical evidence: 

[T]he two most recent medical liability insurance crises [mid-1980s and early 

2000s] did not result from sudden or dramatic increases in medical malpractice 

settlements or jury verdicts.  Instead . . . the crises resulted from dramatic 

increases in the amount of money that the insurance industry put in reserve 

for claims.  Those reserve increases were so big because the insurance industry 

systematically under-reserved in the years leading up to the crisis.54 

 

Another group of scholars (one of whom testified on the same subject at Illinois House 

Judiciary Hearings in 2005) analyzed fifteen years of closed medical malpractice claims in 

Texas and reached the same conclusion: 

This evidence suggests that no crisis involving malpractice claim outcomes 

occurred.  It thus also suggests a weak connection between claims-related costs 

and short-to-medium-term fluctuations in insurance premiums. . . . [T]he 

more likely explanation is that much of the rise in premiums reflects insurance 

market dynamics, not litigation dynamics.55 

 

The Wall Street meltdown of 2008-2009 provides another illustration of the cyclical nature of 

financial markets.  The fact that insurance companies’ revenues are closely tied to the 

performance of their investments underscores the irrelevance of claims and lawsuits, let 

alone caps on them, in determining insurance rates. 

  

G. Insurance Reform has the Only Real Effect on Malpractice Insurance Rates - 

Not Caps on Damages. 

 

 To be sure, overall since 2005 medical malpractice insurance rates for individual 

doctors have not increased as sharply as they did in the period from 2000-2004. However, in 

2005 ISMIE increased rates for a large number of specialties, including cardiologists, family 

practice doctors, general practitioners, infectious disease specialists, and nephrologists, and 

increased rates for all corporations/clinics by 25 percent.56  ISMIE has stated that it kept its 

rates “steady” for 2007 and 2008 – but “steady” is not what it promised when seeking the 

damages cap in 2005.  As one doctor commented, “They’re making a lot more money now, 

and we still haven’t seen our rates go down.”57   

 To the extent insurance rates went down, any decrease cannot be attributed to the 

damages cap.  “ISMIE has said publicly that the caps won’t justify rate cuts until a court 

upholds the limits against expected court challenges.”58  In addition, proponents of the caps 

testified before the General Assembly that, even after the cap was implemented, there would 

be a three-year lag before it would have a financial impact.59   

 ISMIE has a reputation for stifling competition. "ISMIE complained to Aon (a 

reinsurer) in the mid-1990s that Aon’s brokers were taking their clients away from ISMIE 

and directing them to buy insurance from competing firms. According to two former Aon 

employees with direct knowledge of the situation, ISMIE’s chief operating officer (Donald 

Udstuen) met with representatives of Aon’s reinsurance brokerage and threatened to fire 

Aon as its reinsurance broker unless Aon brokers stopped taking their clients to ISMIE’s 

competitors. After the meeting, Aon’s insurance brokers were told to stop redirecting their 

clients away from ISMIE, the sources said.”60 

 A competing insurance executive explained “ISMIE’s near-monopoly has really 

squeezed anybody from coming in here.  Nobody knew how to set their rates.”61 Under 

insurance reforms enacted along with the damages cap in 2005, ISMIE was required for the 

first time to make its actuarial and claims data available to its previously disadvantaged 

competitors.  This new access has allowed competing insurance companies to accurately 

assess how to write policies in Illinois and to set competitive rates.  The positive effect of the 

insurance market reforms has been noted by no less an authority than Michael McRaith, 

Director of the Illinois Department of Insurance, who explained: “For the first time in the 

history of the state, [malpractice] insurance companies that want to compete for business in 

Illinois have access to actuarial information and loss and claims data…We see more companies 

coming in and a stabilization or decline in actual rates.”62  Director McRaith added “[m]ore 

companies are looking at Illinois as a viable marketplace because of the availability of this data”63 – not 

that the caps were effective.  ISMIE competitors agree. “Ann Storborg, Vice President of 

Investor Services for Michigan-based American Physicians Capital Inc., says it helped to 

have access to ISMIE’s data as a benchmark.”64   

 Thus, insurance reform – not caps on damages – is the proper remedy.  The American 

Bar Association, for example, has consistently advocated that the insurance industry should 

be subject to the same antitrust laws as every other industry and that Congress should amend 

the McCarran-Ferguson Act to eliminate the insurance exception to the antitrust statute.65  

 Caps on damages in malpractice cases have been low in California since 1976.  

Thirteen years after the enactment of those caps, doctors’ malpractice insurance rates had 

increased by 450 percent and reached an all-time high.66  In 1988, Proposition 103 was passed 

by California voters which: 

• Rolled back rates to 20 percent lower than rates in effect the year before for all 

property and casualty insurers, including medical malpractice insurers  

 

• Froze rates for one year. 

 

• Refunded billions of dollars to policyholders. 

 

• Created “prior approval” regulation of insurers, which allows the insurance 

commissioner to reject or alter rate increase requests. 

 

• Allowed consumers to challenge insurers’ rate increase proposals. 

 

• Ended the insurance industry’s exemption from anti-trust laws. 

 

• Made the Insurance Commissioner an elected position. 

 

Proposition 103 mandated refunds to be paid by major medical malpractice insurers. In the 

early 1990s, three of the state’s largest malpractice insurers – The Doctors Co., Norcal 

Mutual and SCPIE – refunded $69 million to doctors to comply with Proposition 103.67 

In fact, nationwide data show that average malpractice insurance rates for physicians 

as a whole are nearly identical in states with and without damages caps.68  Average insurance 

rates for obstetrician/gynecologists (“OB/GYNs”) are similarly virtually identical in cap 

and non-cap states.69  Average insurance rates for general surgeons are 9.3 percent higher in 

states with caps.70 Average insurance rates for internal medicine are 9.9 percent higher in 

states with caps.71   

 A study by a third-party ratings agency found that in states with damages caps, the 

median annual malpractice insurance rates increased by 48.2 percent between 1991 and 2002, 

but in states without caps, the median annual rates rose at a slower rate—by 35.9 percent.  

Among the states with caps, only 10.5 percent experienced flat or declining medical 

malpractice insurance rates.  In contrast, among the states without caps, the record was 

actually better: 18.7 percent experienced flat or declining rates.  The study concluded that 

- 21 - 

“[t]here are other, far more important factors driving the rise in med mal premiums than 

caps or med mal payouts.”72 

 The experience of states surrounding Illinois is instructive as well.  Iowa, which has 

lower indemnity payouts than Illinois, has not enacted a cap on noneconomic damages but 

instead has adopted a more aggressive program of professional discipline for negligent 

doctors.73   Indiana, which in 1975 enacted one of the nations strictest caps on total medical 

malpractice damages, experienced an increase in claims and payments during the 1980s.74   

A high-level insurance executive has been candid in saying, “I don’t like to hear 

insurance-company executives say it’s the tort system – it’s self-inflicted.”75  An internal 

document citing a study written by Florida insurers regarding that state’s omnibus tort 

“reform” law of 1986 said that “[t]he conclusion of the study is that the noneconomic cap . . . 

[and other tort ‘reforms’] will produce little or no savings to the tort system as it pertains to 

medical malpractice.”76 Sherman Joyce, President of the American Tort Reform Association 

(ATRA-the very organization that has rated certain Illinois counties as “judicial hellholes”) has 

admitted: “We wouldn’t tell you or anyone that the reason to pass tort reform would be to 

reduce insurance rates.”  77 Victor Schwartz, General Counsel of the ATRA, has admitted: 

“Many tort reform advocates do not contend that restricting litigation will lower insurance 

rates, and I never said that in 30 years.”78   Ed Murnane, Chairman of ATRA and the 

longtime President of the Illinois Civil Justice League, the main Illinois front group for 

insurance companies supporting caps, admitted in 2005 that caps will not lower insurance 

rates for doctors: “We have never made the claim that a cap is going to lower insurance rates.”79 

 Thus, the reduction in insurance rates since 2005 is plainly not due to the damage caps 

but to other provisions of Public Act 94-677—specifically, insurance rate regulation, rules for 

creating transparency and competition in the insurance market, and other insurance 

- 22 - 

regulatory measures.  On March 14, 2006, under this new authority and as follow-up to the 

ISMIE rate hearings which had taken place in late 2005, the Department of Insurance ordered 

ISMIE to reduce its insurance rates, create a dividend distribution process to give refunds to 

policyholders, and change the manner in which it was counting claims.80  These reforms, and 

not the damages cap, directly addressed the issues of abuses in the insurance industry, which 

have been a major factor leading to higher insurance rates.  

 A cap is not the answer to any problems with medical malpractice insurance rates- 

insurance reform is. 

 

II. Medical Malpractice Claims Have Had Little Effect on Hospitals’ Bottom Line. 

 

 Hospitals have also asserted that they are threatened by rising malpractice claims.  

Although hospital representatives testified before the General Assembly in 2005 as to the 

number of claims they faced, the internal data they presented has never been placed in the 

public domain and therefore has not been independently verified.81  There is ample reason to 

be skeptical of the hospitals’ assertions.  For example, after the hospitals submitted to the 

General Assembly their selective analysis of Cook County verdicts, re-analysis (which 

included complete verdict data) showed that noneconomic damages awards against hospitals 

actually declined from 2002-2003.82  

         Moreover, hospitals have been prospering financially, even before any impact could 

have been realized from the damages caps.  Northwestern Memorial Hospital reported a net 

profit of $142.9 million for 2007, an increase of 33.3 percent from 2006.83  The University of 

Chicago Medical Center reported a net profit of $140.8 million for 2007, Rush University 

Medical Center reported $120.7 million, and Loyola University Medical Center reported $31.1 

- 23 - 

million.84 The University of Chicago Medical Center’s net profit was up 32 percent in 2008 to 

almost $190 million.85 

Advocate Health Care Network has reduced its self-insured retention for general 

liability and professional liability claims from $15 million to $12.5 million,86 not through a 

damages cap but by instituting safety measures including onsite obstetricians and mandatory 

breaks for surgeons.87  

 Advertising for Chicago metropolitan hospitals is ubiquitous. The hospitals are also 

the subject of news stories -- and not because of a medical malpractice crisis: 

• Northwestern Memorial Hospital’s 2004 investment income increased to $68 

million, up from $7.9 million in 2003. 

 

• Northwestern Memorial Hospital’s 2004 net profit was up 448 percent from 

2003. 

 

• Northwestern Memorial Hospital is reported to have $1 billion in assets. 

 

• Northwestern Memorial Healthcare’s retiring CEO received a $17 million 

golden parachute when he retired in 2006.88 

 

• Northwestern is moving to purchase the site of Lakeside VA Hospital, after 

already spending over $1 billion on additions to its campus over the past 

decade.89 

 

• Northwestern recently opened a luxurious $507 million women’s hospital 

featuring “spectacular lake views and 42-inch flat-screen televisions loaded 

with movies for order.”90 

 

• Northwestern is planning to replace or rebuild Lake Forest Hospital at the cost 

of hundreds of millions of dollars.91 

 

• Advocate Health Care’s 2004 investment income increased 73 percent, to $69 

million from $40 million in 2003.   

 

• Advocate Health Care’s 2004 net profit was $148 million, up 16 percent from 

2003.   

 

• Advocate Hospitals continues to acquire new hospitals and expand upon 

existing ones.92  

 

• The Rehabilitation Institute of Chicago recently announced it has purchased 

the property upon which it will be building a new hospital costing several 

hundred million dollars. 93 

 

• The State Health Planning Board rejected requests for two new hospitals in 

Lake County because the county already has too many hospital beds.94 

 

        In 2005, representatives from the Chicago Hospital Risk Pooling Program (CHRPP), 

affiliated with the Metropolitan Chicago Healthcare Council, told the General Assembly 

that independent factors in the insurance market had nothing to do with the hospitals’ 

problems.  However, earlier that year the same Council had said precisely the opposite, as the 

following quotes from its slides show: 

A. The Medical Liability Crisis: Why Does it Exist?  

During the 1990s, medical liability was one of the most profitable lines of insurance 

in the casualty industry. 

• Lower than expected claims losses.  

• A reduction in funds set aside to cover future liability.  

• Low overall inflation, and equally-low health inflation.  

• Solid returns on insurance company stock market investments.  

Malpractice insurers responded by only modestly increasing premiums. Many 

even scaled back their rates. 

B.  The Medical Liability Crisis: Why Does it Persist?  

Today, however, few insurers remain in the metro Chicago area. The reasons: 

• Insurers’ investment income has declined 

• To boost insurance company profitability in what has been a down or 

stagnant economy, the insurers that remain continue to raise their 

premiums to boost revenues and improve their balance sheets.” 

 Thus, the hospitals’ own statements show that insurance and investment markets – 

and not tort claims – are the reason for any financial difficulties they may have faced in the 

past. 

  III. The Physician “Exodus” is a Myth and Cannot Justify Caps. 

 Rising malpractice insurance rates have supposedly caused a physician “exodus” from 

Illinois.  This allegation is false.  Quite simply, Illinois has been gaining doctors, not losing 

them.  Since 1963 (the earliest year for which comprehensive data was publicly available from 

the American Medical Association (“AMA”)), and particularly from 1998 to 2008, the 

number of total patient care doctors in Illinois steadily increased: 

Number of Doctors in Illinois by Year 

34,375 35,395 35,943 36,361 37,020 

37,908 38,513 39,240 39,986 40,255 

37,608 

0 

5,000 

10,000 

15,000 

20,000 

25,000 

30,000 

35,000 

40,000 

45,000 

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 

 

Source: Physician Characteristics and Distribution in the U.S., Various Editions, 

American Medical Association 

 

According to official statistics compiled by the AMA and the Illinois Department of Public 

Health, the number of physicians licensed and engaged in “patient care” in Illinois has 

steadily increased and has never declined for the past 45 years, both in net numbers and in 

relation to Illinois’ rising population.95  Significantly, this consistent trend spans both (i) the 

“crisis” periods that preceded enactment of other tort reform measures struck down in 1976, 

1986, and 1997, and (ii) the periods after those decisions were decided, during which cap 

proponents had predicted that doctors would flee unless the caps were upheld. 

 In fact, Illinois has consistently had a higher rate of “physicians per 100,000 residents” 

– the metric of physician availability used by the AMA to compare one state to another and 

one period to another – than twelve of Illinois’ thirteen neighboring states, nine of which 

have caps on medical malpractice damages.96 The rate of licensed physicians has risen from 

134 doctors per 100,000 persons in 1963 to 302 doctors per 100,000 persons in 2005.97   The only 

state with a higher rate of doctors per capita is Minnesota, which has never had a cap.  

 In 2005, only fifteen states in the country had a higher rate of licensed physicians per 

100,000 population than Illinois – Connecticut, Hawaii, Maine, Maryland, Massachusetts, 

Minnesota, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, 

Vermont, Virginia, and Washington.98  Only three of those fifteen states have damages caps: 

Maryland, Massachusetts, and Virginia.  Illinois also has more doctors per capita than three 

other states – California, Ohio, and Texas – frequently cited by tort reformers because of 

their damages caps.99   

 Nor are caps effective, let alone necessary, to remedy any supposed problem of 

physician “flight” in medical sub-specialties.  Data from the AMA and the Illinois 

Department of Health show continuing increases over the past 45 years in both the number 

and the per capita rate of Illinois licensed and patient care physicians practicing in medical 

specialties such as OB/GYNs and neurosurgeons.100  Illinois’ leading business journal 

observed in 2005 that “data likewise fail to support the medical lobby’s claims that Illinois is 

losing doctors in those specialties.  An analysis by the American Board of Medical Specialties 

shows Illinois registered 3 percent or more neurosurgeons and 2 percent more OB/GYNs in 

the past year.”101 

 Further, the number of physicians practicing in the 51 counties in the largely rural half 

of the state south of Springfield has even steadily increased, both in total numbers and in 

proportion to the region’s population.102  The rate of all licensed doctors in southern Illinois 

rose from 141.71 per 100,000 population in 1995, to 163.73 per 100,000 population in 1999, and to 

179.91 per 100,000 population in 2005.  Similarly, the rate of all primary care physicians rose 

from 118.99 per 100,000 population in 1995, to 134.20 per 100,000 population in 1999, and to 

147.99 per 100,000 population in 2005. 

 The claim of “doctor flight” has always been suspect.  A 2005 report noted that “[t]he 

number of doctors licensed in Illinois rose 9 percent in the last three years, despite assertions 

that physicians are fleeing to neighboring states with lower malpractice insurance rates.”103  

A spokeswoman for the Illinois Department of Financial and Professional Regulation 

explained, “We’re not seeing an unstable market for docs in Illinois.”104  By comparison, 

during the same time period (2002 through 2005), the number of licensed doctors in Indiana, 

which has had a damages cap in medical malpractice cases since the 1970s, declined by 18 

percent.105  “[L]icensing data for Illinois and the surrounding states doesn’t reveal any 

correlation between the physician population and liability caps.” 106   

 In 2003, the Center for Organization and Delivery Studies at the U.S. Department of 

Health and Human Services compared physician supply in 1970 and 2000 in each state and 

found that the per capita supply of doctors in Illinois increased by 74.2 percent, more than 

that experienced by many states that capped medical malpractice damages.107  At the same 

time, eleven of the eighteen states that experienced the highest (more than 100 percent) 

growth in per capita supply of doctors did not have caps.     

 One reason that caps have not produced a growth in physician population is that 

malpractice insurance does not represent a significant portion of a doctor’s expenses.  Suffolk 

Law Professor Marc Rodwin and several colleagues published a study based on thirty years of 

AMA data in Health Affairs (the leading peer-reviewed journal of health policy and 

research).  The study concluded that, while the “list price” of malpractice premiums 

periodically rose and fell from 1970 to 2000, the premiums actually paid by physicians rarely 

exceeded 10 percent of a doctor’s “total practice expenses” – typically amounting to only 6 to 

7 percent of those expenses – and an even smaller percentage of a doctor’s “total practice 

income” or gross revenue.108  Office rent, medical supplies and equipment, and health 

insurance for staff all absorb a far greater portion of a physician’s expenses.  Moreover, the 

study found that a far greater cause of physician dissatisfaction was declining practice 

revenue stemming from the policies of Medicaid, Medicare, and HMOs/PPOs to limit 

reimbursements for medical procedures. 

 California, which has had damages caps for over 25 years, confirms that caps do not 

address doctors’ real complaints.  The California Medical Association conducted a survey of 

19,000 physicians and found that 58 percent reported having experienced difficulty attracting 

other physicians to join a practice.  More than 25 percent of physicians had difficulty in 

recruiting doctors in various counties in California, particularly in primary care, neurology, 

orthopedic surgery, and neurosurgery.  More than one-fourth of physicians stated that they 

would no longer choose medicine as a career if starting over today, and more than one-third 

of those who would still choose medicine would not choose to practice in California.  Forty- 

three percent of all California doctors planned to close their practices within three years.  

The study included letters from specialists, including OB/GYNs and neurosurgeons, 

predicting that in the near future there would be no specialists in many areas of California.  

The primary reasons cited for leaving were low insurance reimbursement, problems with 

managed care plans, and government regulation.109   Hence, a cap does not address any of the 

reasons for doctor dissatisfaction or flight. 

 An exhaustive nationwide study showed that the supply of OB/GYNs had no 

statistically significant association with malpractice insurance rates or tort reforms and that 

damages caps do not help states attract and retain high-risk specialists.110  

 Another recent study found that New York data “also contradict another claim often 

made by hospital lobbyists and doctors’ advocates: that high malpractice premiums are 

driving doctors out of the state. In fact, the report states the number of doctors practicing in 

New York has grown at a rate more than five times the rate of growth in the state’s 

population.”111 

 Moreover, the physician “flight” argument fails to acknowledge that some doctors – 

those guilty of repeated acts of malpractice – should be leaving the profession.  The National 

Practitioners Databank reports that 5 percent of the doctors who have made malpractice 

payments over the last fifteen years were responsible for almost one-third of the costs.112 

 In 2005, the St. Clair County Medical Society and local hospitals ran ads claiming that 

160 various unnamed specialists had supposedly left the area because their malpractice rates 

were so high.  Despite repeated requests for the names of these specialists, none have ever been 

disclosed.  William Sprich, formerly of St. Clair County and now practicing in Missouri, is a 

neurosurgeon who can safely be assumed to be on that “list.”  Seven lawsuits were filed 

against him in the 1990s and thirteen from 2001 through 2004.  One of the cases was filed by a 

patient, himself a doctor, who sustained severe injury from spine surgery, during which Dr. 

Sprich allegedly ignored the warnings of the operating room nurses that the equipment he 

was using was defective.  The Illinois Department of Professional Regulation responded to 

this incident with only a reprimand. But when this same incident was reported to the 

authorities in Ohio in 2003, his license was permanently revoked and then surrendered. 113 

 John Petrovich, a Granite City surgeon, has been sued in at least fifteen cases. One 

suit alleged that a health care worker was fired by Granite City Hospital after stating that 

Petrovich was using cocaine.  Petrovich also pled guilty in 2005 in the U.S. District Court for 

the Southern District of Illinois to one felony charge of health care fraud.  Pursuant to the 

plea agreement, he admitted that he knowingly participated in a scheme to defraud the 

Illinois Medicaid program and his scheme was in connection with the delivery of 

prescription drugs.  According to a statement issued by the U.S. Attorney, Petrovich 

admitted he rented a hotel room in Caseyville in 2004, where he was visited by a female 

Medicaid recipient.  According to the U.S. Attorney, Petrovich admitted the purpose of the 

visit was not to provide medical treatment, but to prescribe anti-anxiety and pain relief 

medication for the Medicaid patient and others solely for recreational use.  “Petrovich knew 

and understood that the Illinois Medicaid program would not pay for prescription drugs 

under those circumstances, and at times even told the beneficiary to pay cash rather than 

using Medicaid,” according to the statement.114  

 Proof of a doctor “exodus” is clearly lacking but even if there was such proof, it could 

not justify damage caps given (i) the absence of any link between malpractice litigation and 

malpractice insurance rates, and (ii) the failure of caps to lower malpractice insurance rates. 

 Tellingly, the widespread allegations and anecdotes about doctors fleeing Illinois 

abruptly stopped as soon as the cap went into effect in 2005 – rather odd if they were leaving 

because of high malpractice insurance rates since there had been no immediate drop in the very 

malpractice insurance rates that were supposedly making them leave.  The “physician exodus” 

claim is phony. 

 

 IV. Medical Malpractice Claims Have Little to no Effect on the Cost of Health Care 

 

 Proponents of caps have suggested that malpractice claims – in addition to raising 

malpractice insurance rates – also increase the cost of health care, both directly through jury 

awards and indirectly through “defensive medicine” and unnecessary procedures.  Just as 

there is no evidence to support the malpractice insurance argument, there is no evidence to 

support the health care costs argument – an argument which has been refuted by objective 

scholarship time and again.   

 In 2004, the Congressional Budget Office (CBO) concluded that “even large savings 

in [medical malpractice] premiums can have only a small direct impact on health care 

spending – private or governmental – because malpractice costs account for less than 2 

percent of that spending.”115  In 2008, CBO again concluded that, “[b]y reducing the average 

size of malpractice awards, tort limits would ultimately reduce the cost of malpractice 

insurance premiums, but in CBO’s estimation, the effect would be relatively small – less 

than 0.5 percent of total health care spending.”116    

 On the issue of “defensive medicine,” CBO’s 2004 report found such evidence to be 

“weak or inconclusive”117 and “at best ambiguous.”118  The report also observed that 

malpractice premium increases were attributable at least in part to “reduced income from 

[insurance company] investments and short-term factors in the insurance market.”  

“Insurance companies’ investment yields have been lower for the past few years, putting 

pressure on premiums to make up the difference.”119  In that same report, CBO concluded 

that, “[o]n the basis of existing studies and its own research, CBO believes that savings from 

reducing defensive medicine would be very small.”120   

 In 2006, CBO conducted its own empirical analysis of the link between tort reforms 

and the use of health care services and concluded that the results were “mixed” and 

“inconsistent,” noting that some tort limits reduce spending, whereas others have no effect or 

actually increase spending.121  In December 2008, CBO stated that “[t]he evidence . . . is not 

conclusive, and whether limits on malpractice torts have an impact on the practice of 

medicine has been subject to some debate.” 122  The report concluded:  “The Congressional 

Budget Office has examined the issue by looking at the experience of states that 

implemented limits on torts and has not found sufficient evidence to conclude that practicing 

defensive medicine has a significant effect on health care spending.”123 

 Lakdawalla and Seabury (2009) concluded “policies that reduce expected malpractice 

costs are unlikely to have a major impact on health care spending for the average patient, and 

are also unlikely to be cost-effective over conventionally accepted ranges for the value of a 

statistical life.”  Indeed, the researchers found that, based on the value of a statistical life, 

“malpractice reform is more likely to be cost-ineffective,” that “reducing malpractice costs is 

more likely to harm than improve social welfare,” and “any policymaker wishing to defend 

tort reform would need to depart from these accepted U.S. regulatory practices, and advocate 

a lower value of statistical life than conventionally used, in order to justify their case.”124 

  Avraham, Dafny, and Schanzenbach (2009) found the impact of tort suits on health 

care costs cannot be assessed.  “To understand the social welfare implications of these 

reforms, however, additional research on health outcomes and long-run costs is needed.”125 

Sloan and Shadle (2009) found “assertions that tort reforms will reduce waste of scarce 

resources seems, at best, highly premature,” and “it seems inappropriate to conclude that tort 

reforms implemented to date succeed in reducing non-beneficial care as their proponents 

would have it.”126 

 Baicker, Fisher, and Chandra (2007) concluded that malpractice premiums were not 

responsible for physician exodus or defensive medicine and that changes in health care 

spending could not be deemed to be “defensive medicine”:   “To the extent that additional 

malpractice costs mean greater precautionary testing with some medical value, any 

additional procedures might be protective of patient health or valued regardless of their 

therapeutic properties.”  The study also found that “past and present malpractice payments 

do not seem to be the driving force behind increases in premiums.”  The study cited other 

factors for premium increases, “such as industry competition and the insurance underwriting 

cycle.”127  

 Currie and MacLeod (2008) found that, in the context of childbirth, caps on damages 

“are found to increase procedure use, and hence costs.  They also increase complications of 

labor and delivery in some specifications. Hence, in one important example, tort reform that 

reduces the malpractice risk facing doctors appears to increase rather than decrease procedure 

use, with potentially harmful effects on patients.”  The study concluded: “Without knowing 

more about the specific incentives faced by physicians, it is hazardous to predict that a 

specific tort reform will either reduce unnecessary procedure use or have beneficial impacts 

on health.”128 

 Quite simply, quoting the headline of one recent editorial, “Malpractice Suits Aren’t 

Driving the High Cost of Health Care.”129 

V. Medical Malpractice is One of the Leading Causes of Death and Injury –Improved 

Patient Safety Prevents Malpractice Claims. 

 

 Proponents of caps always ignore one inconvenient truth: medical malpractice, which 

is the root of medical malpractice claims and lawsuits, is one of the leading causes of death 

and injury in this country. The most direct way of reducing medical malpractice claims and 

lawsuits is to reduce the incidence of malpractice. 

The Congressional Budget Office (CBO) has recently estimated that over 180,000 

patients are injured every year by medical negligence.130 

Tommy G. Thompson, Secretary, U.S. Department of Health and Human Services 

under the Administration of former President George W. Bush, has described the enormous 

social problem posed by medical malpractice:  

“The Institute of Medicine’s (IOM) landmark 1999 report, To Err is Human, 

alerted the nation to the patient safety challenge in ways that prior studies had 

not. The IOM estimated that between 44,000 and 98,000 Americans die each 

year as a result of medical errors, making them the eighth leading cause of death 

in the United States. More people die from medical errors than from 

automobile accidents, breast cancer, or AIDS. While there has been subsequent 

debate about the actual number of deaths, it is clear that the rate of medical 

errors is unacceptably high.”131 

Similarly, Newt Gingrich has criticized the medical profession: 

“Consider this: Healthcare is the only industry in America that can give you a 

disease and then charge you to cure the disease it gave you. Clearly this is an 

outrageously wrong principle . . . . . The enormous number of needless deaths 

from medical errors (44,000), hospital-induced infections (88,000), and 

medication errors (7,000) is not only unacceptable, it is un-American.”132 

 A truly national response to the IOM’s call to reduce preventable injuries by 90 

percent requires that every health care board, executive, physician, and nurse make patient 

safety an absolutely top strategic priority—fully equal to the corporate priority of financial 

health.  And JAMA said that at a national level, such a commitment has yet to emerge; 

indeed, it is not in sight 133 

            Caps have the unjust effect of insulating negligent (and even grossly negligent) 

medical care providers from full accountability and instead forcing grievously injured 

patients to bear the costs of “reform.”  Indeed, the cruel irony of a cap is that it comes into 

play only in meritorious cases, when a jury, trial judge, and reviewing courts all agree that a 

- 35 - 

plaintiff’s claim has merit and that he or she is entitled to substantial damages.  By 

definition, a cap has the greatest impact on the most deserving and most seriously injured. 

           The oversight, risk management, serious financial penalties for negligent and 

substandard care and other aspects of medical malpractice liability improve safety in the 

provision of medical care, contributing to consumer protection in the market for physician 

services. 134  Putting caps on damages would inhibit these efforts and hurt consumers.135 

VI. History Repeats Itself- Medical Malpractice “Crises” are a Ten-Year Cyclical 

 Occurrence 

 

 The year 2005 was not the first time a claim had been made that there was a “medical 

malpractice” or “lawsuit” crisis.  The General Assembly had heard this in 1975, 1985, and 1995 

– a ten-year, repeating pattern that further underscores that insurance rates are related more 

to the business cycle and insurance company investment income than to lawsuits or claims. 

In response to each “crisis,” Illinois enacted laws that drastically limited the rights of injured 

victims, and despite the argument that the laws were necessary to address a supposedly 

pressing problem, court decisions struck down each of the laws as unconstitutional. 

 In Wright v. Central DuPage Hospital Assn. (1976), the court struck down a $500,000 

damages cap in medical malpractice cases.  In Bernier v. Burris (1986), the court struck down a 

system of medical review panels.  And in Best v. Taylor Machine Works (1997), the court 

declared unconstitutional a $500,000 cap on compensatory damages for noneconomic injuries 

in personal injury cases, including medical malpractice cases. 

 After each of these decisions, there were dire predictions of catastrophe: malpractice 

insurance rates would skyrocket, doctors would leave Illinois, and hospitals would shut 

down.  None of this ever came to pass.  In fact, in its 2000 filing with the U.S. Securities and 

Exchange Commission, ISMIE admitted that the Supreme Court’s invalidation of the 1995 

damages cap in Best had not led to a higher level of claims and that ISMIE had “continued to 

experience lower claims frequency as compared to historical patterns.”136 

 Now after the fourth consecutive cycle of “crisis,” it is now even more clear that the 

factors leading to increased medical malpractice insurance rates are insurance company 

business decisions, their investment income, and other economic factors - all completely 

unrelated to actual lawsuit and claims experience.  The insurance industry’s own data show 

that medical malpractice claims and lawsuits in Illinois are stable – in total payouts, 

frequency and severity.  

          In truth, the medical profession has had many exclusive and special legal protections 

since 1985, just a few of which are: 

• A doctor’s certificate of merit is required to file a lawsuit. 

• Punitive damages are abolished. 

•  Plaintiffs’ (but not defense) attorneys’ fees are limited by statute. 

• Periodic payments of verdicts can be chosen by an insurer. 

Before passage of the 2005 cap, its proponents had requested and agreed to several other 

unique protections under the law, only a few of which were eventually included in the law. 

The proponents admitted that none of these provisions would have any meaningful impact upon the 

issues at hand.137 

         In sum, malpractice insurance rates may be high, but claims and lawsuits are not the 

root causes of these insurance “crises.”  Let’s not be fooled again. 

Conclusion 

 In the run-up to the 2005 cap legislation, special interest groups yet again made 

unsupported, if not outright false, assertions that increases in claims and excessive awards by 

“runaway” juries in “judicial hellholes” were causing higher malpractice insurance rates. The 

special interests also alleged that doctors were “fleeing” Illinois in droves and that 

malpractice cases were increasing the cost of health care.  These misrepresentations entered 

the debate as proven fact, were repeated without fact-checking or attribution, and left the 

debate in the form of parroted legislative findings. 

 In truth, claims, lawsuits, and payouts have all been stable or declining, and are not 

responsible for increases in doctors’ malpractice insurance rates.  Nor have claims and 

lawsuits caused a shrinkage of physician supply or an increase in the costs of health care.   

           It is time for the public debate to focus on fact rather than fiction, on the need for true 

insurance reform and improved patient safety rather than irresponsible fear-mongering about 

the justice system. 

NOTES 

                                                             

1 

 Illinois State Medical Inter-Insurance Exchange (“ISMIE”), a mutual insurance company, has long been the 

dominant medical malpractice insurer , insuring approximately 60 percent of the physicians in the state. Its 

campaign for a cap had a slick public relations component, called “Reality Medicine.” 

2 

 Edward J. Kionka, Things To Do (Or Not) To Address The Medical Malpractice Insurance Problem, 26 N. Ill. L. 

Rev. 469, 471 (2006).  

3 

 Lebron v. Gottlieb Mem. Hosp., Docket Nos. 105741, 105745 cons., slip op. at 23 (Ill. Feb. 4, 2010). 

4 

 Lebron v. Gottlieb Mem. Hosp., Docket Nos. 105741, 105745 cons., slip op. at 25 (Ill. Feb. 4, 2010). 

5 

 Lebron v. Gottlieb Mem. Hosp., Docket Nos. 105741, 105745 cons., slip op. at 24 (Ill. Feb. 4, 2010). 

6 

 Illinois Dept. of Financial and Professional Regulation, Division of Insurance, In the Matter of the Medical 

Malpractice Rate Increase of ISMIE Mutual Insurance and ISMIE Indemnity Company  (available at 

http://www.idfpr.com/DOI/pressRelease/pr05/110905MM.pdf) (hereinafter “ISMIE Rate Hearing”) (Nov. 9, 

2005, pp. 5-6, 17  

7 

 ISMIE Annual Statements filed with Division of Insurance, 1998-2005, Supplement “A” to Schedule T. 

8 

 ISMIE Rate Hearing, Nov. 9, 2005, pp. 60, 63 (Conway) (emphasis added).   

9 

 Public Citizen, The 0.6 Percent Bogeyman. 

10 

  “I’m A Doctor. So Sue Me.  No. Really.”, Rahul K. Parikh, MD,  Salon.com, October 28, 2009. 

11 

 Lewis L. Laska, Ph.D and Katherine Forrest, M.D., Faulty Data and False Conclusions: The Myth of 

Skyrocketing Medical Malpractice Verdicts (June 2003).   

12 

 Geoff Boehm, Debunking Medical Malpractice Myths: Unraveling the False Premises Behind “Tort Reform,” 5 Yale J. 

Health Policy L. & Ethics 357, 358 (2005). 

13 

 ISMIE Rate Hearing , September 27, 2005, pp. 20-21, 24, 236. 

14 

 ISMIE Rate Hearing, Sept. 27, 2005, p.236.   

15 

 ISMIE Rate Hearing, November 9, 2005, pp. 31-34, 41. 

16 

  December 15, 2005, letter from ISMIE to Michael McRaith, Director, Illinois Dept. of Insurance, p. 5. 

17 

 ISMIE Rate Hearing, November 9, 2005, p. 28. 

18 

 Public Citizen, The 0.6 Percent Bogeyman. 

19 

 February 5, 2004 letter from ISMIE to Senator Willian Haine, et al. 

20 

 ISMIE Rate Hearing,  November 9, 2005, pp. 28-29, 50-52. 

21 

 Order of Department of Financial & Professional Regulation – Division of Insurance, March 14, 2006, ¶10-12. 

- 39 - 

                                                                                                                                                                                                 

22 

Bradley C. Strunk, Paul B. Ginsburg, John P. Cookson, “Tracking Health Care Costs: Spending Growth 

Stabilizes at High Rate in 2004,” Data Bulletin No. 59, Center for Studying Health Care System Change (June 

2005) (available at http://www.hschange.org/CONTENT/745). 

23 

 March 15, 2004, letter from ISMIE to Senator Don Harmon. 

24 

 James Tierney, ISMIE’s lobbyist, testified in the House Judiciary Committee on March 8, 2005, that whatever 

pressures were driving the rate increases in 2003 had lessened in 2004. He overstated the average indemnity 

payment in 2003 as $589,000 (vs. $535,000).  (Mar. 8 hearing at 76).  He also testified that the average indemnity 

“may have declined in 2004 for the first time in a long time by single digits,” when in fact, there had been a 

decline only three years earlier, in 2001. (Mar. 8 hearing at 77-78).  In a press release on April 6, 2005, ISMIE 

again overstated its average indemnity payment for 2003 as $589,000 and as $556,000 in 2004.  In an April 7, 2005, 

article in the Chicago Sun Times, ISMIE was quoted as saying that its average indemnity payment was $556,000 

in 2004, and repeated Tierney’s statement that the average indemnity payment had dropped “6 percent” from 

2003.  ISMIE misrepresented the actual decline in average claim payments and never mentioned that there was 

a decrease of 10 percent on its total payouts in 2004.  

 

25 

 ISMIE Rate Hearing,  September 27, 2005, pp. 26, 60, 64-69, 71-74, 77, 139, 143-146; November 9, 2005,  pp. 232- 

235. 

26 

 ISMIE Rate Hearing, September 27, 2005, pp. 70-72. 

27 

 ISMIE Rate Hearing, November 9, 2005, pp. 233-234. 

28 

 ISMIE Rate Hearing,September 27, 2005, p. 236.   

29 

 ISMIE Rate Hearing, September 27, 2005, pp. 20-21, 24, 236. 

30 

 Medical Malpractice and the Tort System in Illinois; A Report to the Illinois State Bar Association, Neil Vidmar, 

Ph.D., American Medical Association, Physicians Characteristics and Distribution in the US, 2005 Edition). 

31 

 Id.  

32 

 Chicago Daily Law Bulletin, June 10, 2003. 

33 

 ISMIE has not publicly released county by county data since 2004 . 

34 

 Belleville News Democrat, July 18, 2004. 

35 

 Belleville News Democrat, July 18, 2004. 

36 

 February 5, 2004 letter from ISMIE to Senator William Haine, et al. 

37 

 Id. 

38 

     Management’s Discussion and Analysis, 2002 ISMIE Annual Statement..  

39 

 Crain’s Chicago Business, April 10, 2008. 

40 

 Belleville News Democrat, January 1, 2006. 

41 

 Id. 

42 

 Crain’s Chicago Business,  March 20, 2006. 

- 40 - 

                                                                                                                                                                                                 

43 

 “Rebels Take Aim at ISMIE,” Crain’s Chicago Business, Mar. 28. 2005, p. 8. 

44 

 Id. 

45 

 Geoff Boehm, Debunking Medical Malpractice Myths: Unraveling the False Premises Behind “Tort Reform,” 5 Yale 

J. Health Policy L. & Ethics 365 (2005).    

46 

 House Judiciary Hearing,, Mar. 1, 2005, at 7 (Manna testimony); Senate proceedings, Mar. 1, 2005, at 33. 

47 

 ISMIE Holdings Inc., Amendment No. 3 to Form S-4, Registration Statement Under the Securities Act of 

1933 filed with SEC (Feb. 14, 2000). 

48 

 E.g., ISMIE Rate Hearing, Sept. 27, 2005 pp. 95-96 (“we just missed the rates that were needed”); Nov. 9, 2005,  

pp. 18-19 (Washburn) (“we did not have the rates correct in previous years, and because of that, the rate 

increases had to be dramatic when it came to be 35 percent.”). 

49 

 Id. at 229 (“in 2002 [ISMIE] discovered [its] reserves were deficient” and had to increase premium rates). 

50 

 ISMIE Rate Hearing, September 27, 2005, p. 54.   

51 

 House Judiciary Hearing, Mar. 1, 2005, p.62 (Angoff testimony); Senate Judiciary Committee Hearing, Mar. 

10, 2005, p. 33 (Manna testimony).   

52 

 ISMIE Rate Hearing, Nov. 9, 2005, pp. 150-51.   

53 

  House Judiciary Hearing, Apr. 7, 2005,  pp. 41 (D’Arcy testimony). 

54 

 Thomas Baker, The Medical Malpractice Myth 53-54 (2005). 

55 

 Bernard Black, Charles Silver, et al., “Stability, Not Crisis: Medical Malpractice Claim Outcomes in Texas, 

1988-2002,” 2 J. Empirical Legal Stud. 207, 210 (July 2005). 

56 

 The maximum premiums for corporate/entity polices rose in the 2006-2007 policy year to 25 percent of the 

sum of the five highest premiums for physicians within the entity. Previously the maximum premium was 

calculated as the average of the five highest physician premiums. ISMIE also prohibited physicians from 

dropping the corporate coverage. 

57 

 Dr. Ellen Brull, quoted in “Doctors’ Insurer Sees Profit Soar,” Crain’s Chicago Business, Apr. 14, 2007. 

58 

 “Med-mal Insurer Sees Claims Fall,” Crain’s Chicago Business, Mar. 20, 2006. 

59 

 House Judiciary Hearing, Feb. 23, 2005, p. 92 (testimony of Max Brown of Rush Univ. Hospital.).   

60 

 Chicago Tribune,  December 12, 2004. 

61 

 “Suddenly Insurers Covet Illinois Docs,” Crain’s Chicago Business, Nov. 25, 2006. 

62 

 St. Louis Post-Dispatch, August 18, 2008. 

63 

 “Suddenly Insurers Covet Illinois Docs,” Crain’s Chicago Business, Nov. 25, 2006. 

64 

 Illinois Issues, March 2008. 

- 41 - 

                                                                                                                                                                                                 

65 

 The ABA House of Delegates adopted a resolution to that effect in Feb. 1989.  The ABA testified most 

recently on October 8, 2009 on McCarran-Ferguson Act reform before the House Judiciary Committee, 

Subcommittee on Courts and Competition Policy. 

66 

 The Foundation for Taxpayer and Consumer Rights, How Insurance Reform Lowered Doctors’ Medical 

Malpractice Rates in California and How Malpractice Caps Failed. 

67 

 Source: California Department of Insurance 

68 

 “New Data Shows Tort Law Changes Won’t Reduce Malpractice Premiums,” available at 

www.justice.org/clips/premiums2009.pdf. 

69 

 Id. 

70 

 Id. 

71 

 Id. 

72 

 Martin D. Weiss, Ph.D, et al., Medical Malpractice Caps: The Impact Of Non-Economic Damage Caps on 

Physician Premiums, Claims Payout Levels, and Availability of Coverage at 3 (June 3, 2003). 

73 

  House Judiciary Hearing, February 23, 2005, p. 72 (Hard testimony). 

74 

 Kinney, et al., Indiana’s Medical Malpractice Act: Results of a Three-Year Study, 24 Ind. L. Rev. 1275, 1286 

(1991); see also David Morrison, In Search of Savings: Caps on Jury Verdicts Are Not a Solution to Health Care Crisis, 

7 Loy. Consumer L. Rep. 141, 149 (1995) (showing that Indiana’s cap on damages has not resulted in a savings for 

health care consumers). 

 

75 

 Donald J. Zuk, chief executive of SCPIE Holdings, Inc., a leading malpractice insurer in California, Wall 

Street Journal, June 24, 2002. 

76 

 Medical Professional Liability, State of Florida, St. Paul Fire and Marine Insurance Company, St. Paul 

Mercury Insurance Company. 

77 

 Study Finds No Link Between Tort Reforms and Insurance Rates, Liability Week, July 19, 1999. 

78 

 “Tort Reforms Don’t Cut Liability Rates” Business Insurance, July 19, 1999) (paraphrased). 

79 

 Ed Murnane, Chicago Daily Law Bulletin Tort Reform Summit, May 17, 2005. 

80 

 Dept. of Financial and Prof. Regulation, Division of Insurance, Order, In the Matter of the Medical        

Malpractice Rate Increase of:  ISMIE Mutual Insurance Company (available at 

http://www.idfpr.com/DOI/pressRelease/pr06/03142006ISMIEDecision.pdf).  See also “Insurance Department 

Orders Rate Breaks for Many Illinois Doctors,” Chicago Defender, Mar. 15, 2006, at 2; Steven R. Strahler, “Med- 

Mal Insurer Sees Claims Fall; Profit and Executive Pay Rose at ISMIE in 2005,” Crain’s Chicago Business, Mar. 

20, 2006, at 2. 

81 

 House Judiciary Hearing, Mar. 8, 2005,  p. 81 (Kane testimony). 

82 

 Id. at 59-68 (Hebeisen testimony); “Caps on Damages Protect Insurers at the Expense of Those Injured or 

Killed by Medical Malpractice: The Patients’ Perspective” (2005), at 8-11 (submitted to General Assembly and 

available in the Supplemental Appendix (pp. 209-12) of Plaintiffs-Appellees in Lebron v. Gottlieb Memorial 

Hospital, Nos. 105741 & 105745 (Ill. S. Ct.)). 

- 42 - 

                                                                                                                                                                                                 

83 

 Crain’s Chicago Business, Apr. 7, 2008, at 31-32.   

84 

 Crain’s Chicago Business, Apr. 7, 2008, at 31-32.   

85 

 Crain’s Chicago Business, November 16,2009 

86 

 “Risk Management Changes Improve Health Care Delivery,” Business Insurance, April 28, 2008, at 11.   

87 

 “Risk Management Changes Improve Health Care Delivery,” Business Insurance, April 28, 2008, at 11.   

88 

 Crain’s Chicago Business,  February 18, 2008. 

89 

 Crain’s Chicago Business,  August 25, 2008. 

90 

 “Betting On Baby,” Crain’s Chicago Business, Oct. 8, 2007. 

91 

 Chicago Tribune, “Bid For Hospital Offers New Site”, November 26, 2009 

92 

 Crain’s Chicago Business, September 8, 2008. 

93 

  Chicago Tribune, “Hospital Preps For New Facility”, December 15, 2009 

94 

 Crain’s Chicago Business, November 30,2009: April 9, 2008; October 2, 2006. 

95 

 Medical Malpractice and the Tort System in Illinois; A Report to the Illinois State Bar Association, Neil Vidmar, 

Ph.D., American Medical Association, Physicians Characteristics and Distribution in the US, 2005 Edition); 

Amicus Curiae Brief of Professor Neil Vidmar, et al., in Lebron.   

96 

 Id. 

97 

 Id. 

98 

 Medical Malpractice and the Tort System in Illinois; A Report to the Illinois State Bar Association, Neil Vidmar, 

Ph.D., American Medical Association, Physicians Characteristics and Distribution in the US, 2005 Edition; 

Amicus Curiae Brief of Professor Neil Vidmar, et al., in Lebron.   

99 

 Medical Malpractice and the Tort System in Illinois; A Report to the Illinois State Bar Association, Neil Vidmar, 

Ph.D., American Medical Association, Physicians Characteristics and Distribution in the US, 2005 Edition; 

Amicus Curiae Brief of Professor Neil Vidmar, et al., in Lebron.   

100 

 Medical Malpractice and the Tort System in Illinois; A Report to the Illinois State Bar Association, Neil Vidmar, 

Ph.D., American Medical Association, Physicians Characteristics and Distribution in the US, 2005 Edition); 

Amicus Curiae Brief of Professor Neil Vidmar, et al., in Lebron.   

101 

 “Caps Or No, Illinois Adds To Doc Totals,” Crain’s Chicago Business, Sept. 12, 2005. 

102 

 Medical Malpractice and the Tort System in Illinois; A Report to the Illinois State Bar Association, Neil Vidmar, 

Ph.D., American Medical Association, Physicians Characteristics and Distribution in the US, 2005 Edition); 

Amicus Curiae Brief of Professor Neil Vidmar, et al., in Lebron.   

103 

 “Caps Or No, Ill, Adds To Doc Totals,” Crain’s Chicago Business, Sept. 12, 2005. 

104 

 Id. 

- 43 - 

                                                                                                                                                                                                 

105 

 Id. 

106 

 Id. 

107 

 Fred J. Hellinger & William E. Encinosa, The Impact of State Laws Limiting Malpractice Awards on the 

Geographic Distribution of Physicians (2003). 

108 

 Marc Rodwin, “Malpractice Premiums and Physicians’ Income: Perceptions of a Crisis Conflict with 

Empirical Evidence,” 25 Health Affairs 750 (May/June 2006). 

109 

 And Then There Were None-The Coming Physician Supply Problem,, California Medical Association, 2001. 

110 

 A Longitudinal Analysis of the Impact of Liability Pressure on the Supply of Obstetrician-Gynecologists, Y. 

Tony Yang, David M. Studdert, S.V. Subramanian, and Michelle M. Mello, Journal of Empirical Legal Studies, 

Volume 5, Issue 1, 21-53, March, 2008. 

111 

 New York Times, June 5, 2009. 

112 

 Chicago Tribune, May 1, 2005 

113 

 Although the Medical Society and hospitals have never publicly disclosed the names on the “list,” perhaps 

some of the following would (or should) have been on it:    

 

Michael S. Schiff, Alton – license indefinitely suspended for failing to pay Illinois income taxes for 2000. 

 

T. Bruce Vest, Godfrey - license revoked for a minimum of 5 years in 2001 due to conviction of a felony, 

failing to report his exclusion from the Medicare program, and committing gross negligence in the 

treatment of one patient.  

 

Terrence Tyrrell, Belleville – reprimanded for allegedly misinterpreting a mammogram. 

 

Richard Kaminsky, Belleville – indefinitely suspended for failing to undergo a mental and physical 

examination as ordered by the Medical Disciplinary Board. 

 

James Probst, Swansea – license placed on probation until Nov. 13, 2006, for diverting controlled substances 

and license reprimanded after testing positive for Darvocet while on probation for addiction to alcohol and 

controlled substances. 

 

Tanin Parich, Alton – reprimanded for refilling a kidney transplant patient’s medications without 

consulting with the patient’s nephrologists. 

 

Walt Mutschler, Glen Carbon – placed on probation for five years due to the habitual use of drugs and/or 

alcohol. 

 

Srinivasarao Yaganti, Belleville – placed on probation for two years for improperly touching a patient. 

 

Elizabeth Wuebbels, Highland – license placed on indefinite probation for prescribing controlled substances 

to an acquaintance for non-therapeutic use, and addiction to alcohol. 

 

Farooq K. Ghory, Mt. Vernon – license temporarily suspended pending proceedings before the Medical 

Disciplinary Board after being disciplined in Kentucky for engaging in inappropriate sexual conduct with 

multiple patients and for non-therapeutically prescribing controlled substances in exchange for sexual 

favors. 

 

Christopher A. Rice, DuQuoin - probation for violating care, counseling and treatment agreement. 

- 44 - 

                                                                                                                                                                                                 

 

Kwangsup S. Kim, St. Louis, MO - Kim agreed to apply to renew his medical license after he allegedly 

breached the standard of care in examining female patients. 

 

114 

 Ann Kneff, Granite City Woman Files Med Mal Suit Against Petrovich, The Madison St. Clair Record, January 

31, 2006, http://madisonrecord.com/news/174056-granite-city-woman-files-med-mal-suit-against-petrovich. 

115 

 Congressional Budget Office, Economic and Budget Issue Brief: Limiting Tort Liability for Medical 

Malpractice (Jan. 8, 2004), at 1 (“CBO 2004”). 

116 

 Congressional Budget Office, Budget Options Volume 1: Health Care (Dec. 2008), at 22 (“CBO 2008”).  

117 

 CBO 2004, at 1. 

118 

 Id. at 5. 

119 

 Id. at 1. 

120 

 Id. at 6. 

121 

 Congressional Budget Office, Background Paper: “Medical Malpractice Tort Limits and Health Care 

Spending.” (April 2006). 

122 

 CBO 2008, at 21.  

123 

 Id. 

124 

 Darius Lakdawalla and Seth Seabury. “The Welfare Effects of Medical Malpractice Liability,” NBER 

Working Paper No. 15383. September 2009.  

125 

 Ronen Avraham, Leemore Dafny, and Max Schanzenbach. “The Impact of Tort Reform on Employer- 

Sponsored Health Insurance Premiums,” NBER Working Paper No. 15371. September 2009. 

126 

 Frank Sloan and John Shadle. “Is there empirical evidence for “Defensive Medicine”? A reassessment,” 

Journal of Health Economics. Vol 28, Issue 2. March 2009. Pg 481-491. 

127 

 Katherine Baicker and Amitabh Chandra, The Effect of Malpractice Liability on the Delivery of Health 

Care, National Bureau of Economic Research Working Paper 10709, at 20 (Aug. 2004).   

128 

 Id. 

129 

  St. Louis Post-Dispatch, September 14, 2009 

130 

 Congressional Budget Office, Key Issues, pp. 150-154, December 2008.  

131 

 Testimony before U.S. House Ways and Means Committee, September 10, 2002. 

132 

 Saving Lives and Saving Money, Gingrich Communications 2003. 

133 

 Journal of the American Medical Association (JAMA)   

134 

 Increasing Risk, Hurting Patients- Shirley Svorny (from the Cato Institute) - Forbes, November 2, 2009 

135 

 id. 

- 45 - 

                                                                                                                                                                                                 

136 

 ISMIE Holdings Inc., Amendment No. 3 to Form S-4, Registration Statement Under the Securities Act of 

1933 filed with SEC (Feb. 14, 2000) at 54 (emphasis added). 

137 

 House Judiciary Hearings- April 14, 2005, pp. 127-128,133, 137-147; April 7, 2005, pp. 131-132, 134-136; March 8, 

2005, pp. 56-57; March 1, 2005, pp. 100-102. 

 

 

ITLA would like to acknowledge the work of Past President Keith A. Hebeisen in preparing this White Paper.