The outrageous lawsuits represent a microscopically small minority of all cases. You just hear about them more because they are so outrageous. They make good news. But they aren't representative of 99% of the medical malpractice cases. In those few cases, lawyers often do get sanctioned, and the cases, as mentioned above, rarely get to trial because most states require a medical expert opinion from a licensed physician for such cases to get off the ground. If those outrageous lawsuits were costing the system real money I would agree with you, but we are talking a minute drop in a very big bucket (litigation), and this was exactly what the Harvard study a few years back looked at. They determined that, in fact, there haven't been "a lot" of this kind of case, nor do they contribute significantly to litigation/insurance costs of the system.
These cases are rare -- Hope Diamond rare -- and in most cases what folks on SDN want to call "frivolous" isn't at all -- that's a loaded term that means very different things to folks on SDN than it does under the law. The term frivolous should not be applied to a case where the plaintiff loses, but he was able to find a physician who agreed that the standard of care was deviated from and that negligence, however slight, contributed to injury. And that's the kind of cases that end up making insurance so expensive, because no judge is going to supplant his level of medical knowledge over that of a so-called "expert" with a medical license, and so those cases get heard. Thus the real problem in med-mal is the shill physicians who lend themselves out to the more questionable (yet not frivolous) cases, because those "opinions" are what ends up costing the system. Without them, these cases don't get brought. And THAT is what could save the system a lot of time and money. And again, these cases aren't frivolous because an expert physician opinion has been given that the standard of care was deviated from. So this isn't a plaintiff of a lawyer or a judge bringing an absurd claim -- it is the system working as it's supposed to -- giving credence to a physician as to what the medical standard of care actually is. Hence not even close to frivolous by any legal definition.
You don't fix this by capping awards on legitimate claims where patients are actually injured. You fix it by circling the wagons and stopping doctors from giving opinions that run afield of their knowledge base or are designed to get them a better expert fee. Because, again, without their signature on an opinion, these cases never get off the ground or even filed.