Investors are always looking to earn an easy profit, particularly from well-managed companies. But when the profit is from a hedge fund that finances medical malpractice lawsuits aimed at driving doctors out of the profession, Wall Street may have gone too far.
An entirely new industry has cropped in recent years as trial lawyers set their sights on making money off physicians, corporations and other targets – particularly financing malpractice suits through hedge funds. In 2010, hedge funds invested $1 billion in these types of suits and much of it was for medical malpractice cases.
Frivolous lawsuits are helping drive physicians out of the profession and pushing up the cost of healthcare. A survey conducted by Gallup which was sponsored by Atlanta-based Jackson Healthcare which was released last year found that one in every four dollars spent in healthcare is for defensive medicine. Defensive medicine is defined as those unnecessary tests, procedures, drugs and admissions