However, lawsuit costs affect small businesses, their employees and the economy in other ways as well. For example, there is the matter of health care costs. Again, small business owners understand the high costs of health care coverage. But a chunk of those costs are driven by lawsuits.
On November 18, the Boston Globe reported the following about medical practices in the state of Massachusetts:
A vast majority of physicians in Massachusetts say the fear of being sued is driving them to order unnecessary tests, procedures, referrals, and even hospitalizations, a phenomenon that is adding at least $1.4 billion to annual healthcare costs in the Bay State, according to a study released yesterday.
The Massachusetts Medical Society reported that 83 percent of physicians surveyed said they have practiced so-called defensive medicine and that an average of 18 to 28 percent of tests, procedures, referrals, and consultations, and 13 percent of hospitalizations, were ordered to avoid lawsuits.
The society said its findings, the first it has compiled on the issue, probably underestimate the cost of the problem because the 900 physicians surveyed, including family doctors, obstetricians, gynecologists, and general surgeons, accounted for only about 46 percent of the doctors in the state…
The medical society's study found that 28 percent of physicians surveyed said that liability concerns affected the care they provided "a lot," with emergency room physicians, obstetricians, and gynecologists leading the pack. From X-rays to ultrasounds, it found that roughly one in four doctors said they ordered excessive tests because they were worried about missing something and being sued.
Those are real costs that get passed on to individuals and businesses, making health care less affordable.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
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