Economic, Social Inflation Cause Spike in Malpractice Verdicts

By Vanessa Orr https://southfloridahospitalnews.com

Inflation is affecting everything these days, including malpractice verdicts. Jury awards are increasing, not only as the result of economic inflation, but because social inflation is changing the way that juries think about awards in malpractice cases.

“In the last four to five years, attitudes have changed in the ways that juries see large companies and corporations and how they respond to malpractice cases—there are public trust issues,” explained Tom Murphy, SVP National Healthcare Practice, Risk Strategies, part of the Brown & Brown team.

“A lot more physicians have become employed by corporations or private equity groups with fewer going into private practice, and that has put a strain on the doctor/patient relationship,” he said. “Physicians are also getting lower reimbursements, so they have to see more patients—in the same amount of time—to make up for lost income.”

Murphy added that many people, especially those under age 35, no longer understand the true value of a dollar as a result of many factors including social media.

“As the younger generation grows up with social media and reality TV, there has been a change in the valuation of money,” he said. “They see athletes and celebrities making crazy amounts. For example, Dodgers player Shohei Ohtani signed a contract for $700 million.

“The playing field has also changed because for many years you could determine what juries would be like in different regions of the country,” he added. “But because of social media and cellphones, it doesn’t matter if you’re in a town of 200 people in Oklahoma or New York City. They’re all seeing what everyone else is seeing.”

Not only has social inflation affected claims and legal costs in the malpractice world, but it has caused rates to rise as well. Between 2014-2024, economic and social inflation have added $4 billion in costs to insurance companies. Malpractice rates are up 20 percent for all carriers across the board, causing physicians to pay higher premiums. As economic and social inflation continue to have an effect, they are also at higher risk of being sued and paying higher damages if they lose.

According to Murphy, the average claim payment has increased by 60 percent in the last 20 years, with the average claim payment now equaling $485,000.

“I remember 20 years ago doing a presentation when the average claim payment was $250,000,” said Murphy. “Insurance companies are now pondering what to do as costs are spiraling; they are out of control.”

Nuclear verdicts of $10 million or more have also increased. Between 2013-15, there were 85 such judgements across the country. Between 2022-24, that amount doubled to 160 judgements nationwide.

“In a recent Hospital of the University of Pennsylvania birth injury trial, for example, the jury awarded $207 million to the plaintiff,” said Murphy, noting that it was the largest medical malpractice award in Pennsylvania’s history. “While there is never justification for the malpractice death or injury of a newborn, how did they come up with this number? In this case, it is mainly punitive—to make an example of the hospital and the insurance company.”

In a recent case between Phoebe Putney Memorial Hospital in Albany, GA and a double amputee, the jury awarded $70 million to the plaintiff.

“As a result of physician negligence, the hospital had to amputate the patient’s legs below the knees as the result of a medication overdose during treatment for sepsis,” said Murphy. “Fifteen or 20 years ago, that patient would have been awarded $5 million to $10 million. But now, even if a patient signs a surgical consent form, it’s like it doesn’t matter.”

He noted that while most judges in appeals court will lower these awards because they are so out of line, these verdicts cause other problems.

“Numbers like this cause carriers to settle more cases—even if they are defensible—because they are afraid of huge nuclear verdicts,” he said.

For more information, contact Tom Murphy at tmurphy@risk-strategies.com or call (800) 966-2120.