Vested Interest - News and Notes - December 2003 Issue

World’s Biggest Insurer Reports 27% Rise in 3rd Quarter Profits

American International Group Inc., the world’s largest insurer, said its’ third quarter earnings rose 27 percent, buoyed by the highest prices on property and casualty coverage in nine years. AIG is benefiting from price increases that followed insurers’ losses stemming from the Sept. 11 terrorist attacks, a bear market in stocks, and higher than-expected claims. AIG and its competitors are charging the highest commercial insurance rates in the U.S. since 1984 – more than $7 for every $1000 in revenue, according to the Insurance Information Institute. (Bloomberg News – October 30, 2003)

Report Cites Danger in Long Nurses’ Hours

Many hospitals and nursing homes are endangering patients by allowing or requiring nurses to work more than 12 hours a day, the National Academy of Sciences said. Such long hours cause fatigue, reduce productivity and increase the risk that nurses will make mistakes that harm patients, the academy said in a new report commissioned by the federal government. Donald M. Steinwachs, chairman of the health policy department at Johns Hopkins University, said fatigue was a "major cause of mistakes and errors" in hospitals and nursing homes. To reduce "error-producing fatigue," the report said, state officials should prohibit nurses from working more than 12 hours in any 24-hour period or more than 60 hours a week. (ATLA Law News Digest – November 6, 2003)

U.S. Rejects Arsenic-Treated Lumber Ban

Federal regulators decided against banning arsenic-treated lumber for playground equipment, saying most manufacturers no longer use the wood-protecting chemical that is believed to increase the risk of cancer. The Consumer Product Safety Commission voted unanimously to adopt a staff recommendation that a ban was unnecessary, given the shift away from treated wood in playground structures, decks and picnic tables. The industry agreed in 2002, following discussions with the EPA, to stop building products with the treated wood by the end of the year. The EPA has removed the pesticide, chromated copper arsenate, from its list of approved chemicals. The pesticide protects lumber from decay and insect damage. (ATLA Law News Digest – November 6, 2003)

Deaths Spur New Caution From FDA on Stent Use

More than 60 patients who received a popular new drug-coated heart stent have died, a surprising increase since the last health warning about the device months ago. The Cypher stent is a tiny metal scaffold used in patients with heart disease. It props open a cleaned-out artery but goes beyond other stents to emit a drug to reduce the chance the artery will clog again. But that drug does not prevent a different risk posed by all stents: blood clots that form around the devices and can cause a heart attack. (ATLA Law News Digest – November 6, 2003)

Link Between Autism, Thimerosal Questioned

Researchers said they had found in a study of more than 140,000 children no significant link between childhood vaccines containing the mercury-based preservative thimerosal and neurological problems such as autism and attention-deficit disorder. Critics charged that the study, published in the November issue of Pediatrics, had been manipulated to protect the federal government and vaccine manufacturers. In a study of records from three HMOs, researchers from the federal Centers for Disease Control and Prevention and the private sector found conflicting data when they screened for a connection between vaccines and neurological disorders in children born between 1991 and 1999. One group of vaccinated children had a higher incidence of tics, and a separate group had a higher rate of language delays. But a second phase of the study showed no significant links to such problems in another group. (ATLA Law News Digest – November 6, 2003)

Opinion: The Free Market Versus Tort Reform

"I have a question for politicians who call themselves ‘conservatives,’ yet are pushing for laws to limit legal damages or make it more difficult for patients, investors and consumers to sue. What ever happened to the principle that less government intervention is better?....Five Questions [to ask conservatives]. If it’s wrong for government to limit the prices pharmaceutical companies can charge for drugs, and the amount doctors charge for treatment, why would it be right to limit the amount of damages a harmed patient can be awarded in a lawsuit? If you believe it’s too hard for doctors to get malpractice insurance, why is it the consumer’s fault, rather than the insurance industry or the medical system? If you believe the government shouldn’t tell a company how to do its business, or how much it can pay its executives, why would you support a limit on how much lawyers can make suing those businesses on behalf of defrauded consumers or investors? If you believe government shouldn’t stop companies from moving offshore to avoid regulation and taxes, why would you believe the government should prevent plaintiff’s lawyers from ‘venue shopping’ to find a court more favorable to their consumer lawsuit. And if as a conservative you believe in ‘states rights,’ why would you want to force class-action consumer suits out of state courts and into the federal courts?" (Michael Collins, CBS Marketwatch, November 5, 2003)

Increase in Medication Errors at Hospitals

Hospitals continue to make a large number of medication errors despite efforts to cut down on those mistakes, according to a study of several hundred hospitals. Older patients, the study found, are disproportionately harmed by the medication problems. The findings were made in the fourth annual release of results from a database run by U.S. Pharmacopeia, a non-profit group of pharmacists and other health-care professionals that develops standards for prescription-drug use and monitors medication errors. For 2002, the database saw what it called a "large upsurge" in reported errors, which were up by 82 percent although institutions reporting to the database had grown by only 31 percent. A spokeswoman for U.S. Pharmacopeia said the increase in reported errors could be due to better internal reporting procedures at the hospitals and a change in culture at those facilities that encourages the reporting of medication errors. Computer-entry errors were blamed for 10 percent of errors. In addition, nearly 17 percent of all errors were blamed on a hospital’s procedure or protocol not being followed. (The Wall Street Journal – November 18, 2003)

New Consumer Study Shows Insurers Price Gouging Doctors Without Basis

Americans for Insurance Reform announced the release of a comprehensive study of medical malpractice based on new insurance data through 2002. First, contrary to what the insurance industry and medical lobbies have alleged, the years 2001 and 2002 saw no "explosion" in medical malpractice insurer payouts or costs to justify sudden rate hikes. Rather than exploding, inflation-adjusted payouts per doctor dropped from 2001 to 2002. Payouts (in constant dollars) have been essentially flat since the mid-1980s. Second, medical malpractice insurance premiums rose much faster in 2002 than was justified by insurance payouts. The 2002 hike is similar to the rate hikes of the past, which occurred in the mid-1980s and mid- 1970s and were not connected to actual payouts. In sum, the result’s of AIR’s analysis are startling; premiums rise and fall with the insurance industry’s economic cycle. For a complete copy of the report, go to www.insurance-reform.org.