THCB

The Health Care Handbook: Medical Malpractice

 

Aaron Carroll, “Meme-busting: Tort reform = cost control,” June 2011. Used with permission.

Aaron Carroll, “Meme-busting: Tort reform = cost control,” June 2011. Used with permission.

Patients who believe they have been injured in some way by a health care provider can file a medical malpractice claim. To prove malpractice, the patient must show that the injury was caused by the provider’s negligence, meaning that he or she didn’t practice medicine consistent with the accepted medico–legal standard of care.

If a patient wins a case or a favorable settlement, the health care provider, through insurance, may have to compensate the patient for loss of income due to injury and for noneconomic losses, such as pain and suffering. Although most malpractice claims are made against physicians, claims can be brought against any health care provider, including students. To protect against the financial risk of future malpractice lawsuits, most physicians purchase malpractice insurance. Hospitals and health care networks often purchase insurance for their employees, while independent physicians typically purchase their own policies.

Medical malpractice serves two goals: (1) to compensate victims of poor medical care, and (2) to encourage safe and responsible medical practice. Our current system is designed to accomplish both by punishing negligent providers through the court system (called “torts”). Some question whether it wouldn’t be better to handle each goal separately, and to focus on the system rather than on individuals.

A few key facts about medical malpractice:

More than 75% of physicians will have at least one malpractice claim brought against them by the age of 65. For those in high-risk specialties such as general surgery, the rate is 99%.

The cost of malpractice insurance varies dramatically by location and specialty. Premiums for a general internist in Minnesota run around $3,500 per year, while those for OB/GYNs in Long Island, NY cost $225,000 or more.

The overwhelming majority of patients who receive negligent care don’t file malpractice claims.

Only one-fifth of malpractice claims result in payment to the patient; the average payment is $275,000. However, proving that there’s no liability isn’t cheap either—averaging $110,000 for a successful trial defense, and $27,000 even if the claim is dropped, withdrawn, or dismissed before making it to the courtroom.69

Americans file more malpractice claims than patients in other countries—four times as many as Canadians, for example.70

Problems

Costs to Providers

These costs are both economic and psychological. Some physicians pay exorbitant rates for their malpractice insurance. Economically, this may inhibit a physician’s ability to maintain a private practice and affect what field she or he chooses to enter. Many physicians think malpractice insurance premiums are a major problem.

Costs to System

The fear of litigation has caused a shift in the way that physicians provide care to patients, which is known as “defensive medicine.” There are two types of defensive medicine: positive, in which physicians overuse services to “cover their bases” in case of a lawsuit, rather than to practice good medicine; and negative, in which physicians avoid high-risk patients and procedures they fear could be a higher risk for litigation. This isn’t just a theoretical problem—in recent surveys, more than four out of five specialist physicians report practicing positive defensive medicine.71,72 This can have deleterious effects:

Questionable quality: Positive defensive medicine leads to the use of tests and procedures, such as MRIs or colonoscopies, when not medically necessary. Not only can this expose patients to procedural risks for very little possibility of a finding, but it also may turn up benign findings, leading to more procedures and more risks—providing no increased, and perhaps even decreased, health benefit.

Increased cost: Defensive medicine is how medical malpractice indirectly raises health care costs, as the above-mentioned tests and procedures tend to be very expensive. Although calculating the true cost of the medical liability system is an inexact science, a recent study by researchers at Harvard estimated that the total cost in 2008 was $55 billion—$47 billion of which is due to defensive medicine—in hospital services and physician and clinical (outpatient) services, accounting for 2.4% of total health care spending.73

Costs to Patients

Patients without good insurance coverage will often end up paying very large bills, in part due to defensive medicine (for instance, the average cost of an ED visit in 2011 was $1,354). In addition, if patients do encounter medical errors, it’s extremely unlikely that they will receive a malpractice pay-out. Several barriers are in their way:

A patient has to convince a lawyer to take on his or her case. Considering that most malpractice plaintiffs’ lawyers are paid via a percentage of the settlement, and considering the high costs of litigating malpractice lawsuits regardless of the victor, patients must have clear-cut cases with large damages to entice most lawyers. This means that most patients who experience medical errors face difficulties in establishing lawsuits and thus have no recourse for compensation.

Patients must convince juries to find in their favor. Regardless of the reasons, right or wrong, this just isn’t likely: Most claims are settled, withdrawn, or dropped before making it to trial, and most of those that do go to a jury trial are found in favor of the physician.  According to a recent study, “physicians win 80% to 90% of the jury trials with weak evidence of medical negligence, approximately 70% of the borderline cases, and even 50% of the trials in cases with strong evidence of medical negligence.”75

In addition, many feel that the psychological environment created by our current system of medical malpractice erodes the trusting relationship necessary for good medicine—which is bad for both providers and patients.

Potential Reforms

Arbitration

Arbitration is the determination of a dispute not through the court system but rather by an impartial referee (the arbitrator) agreed upon by both parties. A growing trend among clinics and hospitals is to make arbitration agreements mandatory, meaning that patients must use an arbitrator and can’t later sue for damages.

The benefits of this system are that costs are kept low for both parties, arbitrations can happen more quickly than lawsuits, and patients don’t need “rainmaker” cases to convince lawyers to represent them. The drawbacks of this system are that some institutions pressure patients to sign binding arbitration agreements before receiving care, arbitration pay-outs are often capped at levels that may be low (i.e., $250,000), and providers may reject arbitrators who decide in favor of patients too often.

Disclosure and Offer

Several private insurers and university health care systems have decided to avoid the judicial system by handling medical injuries internally. When a patient suffers an unexpected injury, the institution launches an internal investigation to determine whether it was the result of medical error. If it turns out the injury was the result of error or malpractice, the institution discloses that fact to the patient with as much transparency as possible. It then offers a settlement to that patient, roughly commensurate with (but usually below) the expected outcome of a trial.76 The patient must sign away his or her right to sue if accepting the settlement offer. This system marks a philosophical shift for physicians towards a “disclose and offer” system as opposed to “deny and defend.” The University of Michigan has implemented such a system and seen dramatic decreases in the number of claims filed by patients.77 Most important, it has learned from its investigations and implemented several institutional reforms that have led to increased patient safety.

Health Courts

Philip Howard, a New York attorney and founder of the legal reform organization Common Good, suggests keeping the courts but bypassing the juries. In Howard’s conception, “Expert judges with special training would resolve health care disputes. They would issue written rulings providing guidance on proper standards of care. These rulings would set precedents on which both patients and physicians could rely. As with existing administrative courts in other areas of law—for tax disputes, workers’ compensation, and vaccine liability, among others—there would be no juries. Each ruling could be appealed to a new medical appeals court.”78 Indeed, New Zealand, Sweden, and Denmark all have health courts that have proven effective at implementing a diverse array of patient safety mechanisms.79

Tort Reform

In general, tort reform seeks to cap damage pay-outs and block frivolous lawsuits. California was the first to enact tort reform, in 1975, when it passed the Medical Injury Compensation Reform Act. This act contains five stipulations:

1. Noneconomic damages are capped at $250,000
2. Attorneys’ fees are capped
3. The statute of limitations on medical errors is shortened
4. Arbitration is binding
5Physicians can pay damages in installments rather than in a lump sum

Many other states have enacted tort reform in varying ways, including 30 that limit noneconomic damages. Proponents of these reforms claim that they reduce the number of frivolous lawsuits as well as the emphasis on defensive medicine. Opponents claim that, in addition to punishing patients whose damages truly are higher than the cap, they’re ineffective in reducing medical errors and costs.

Summary

Medical malpractice and how to fix it appears to be a mess—a crucially important mess, based on how often it comes up in society. Which raises the question: Is the problem overstated?

Health services researcher Aaron Carroll made the graph shown below to illustrate the costs of medical malpractice in the context of total health spending.81 While the costs of defensive medicine—$47 billion—are nothing to sneeze at, it’s also clearly not the primary driver of high health costs. Accordingly, Carroll indicates that tort reform will do little to reduce costs.

 

Aaron Carroll, “Meme-busting: Tort reform = cost control,” June 2011. Used with permission.

The Health Care Handbook is a new feature that will appear in THCB on a approximately biweekly basis.  Elizabeth Askin, MD Nathan Moore, MD and Brian Yogi authored this section, with edits by John Irvine. To order a copy of The Health Care Handbook, visit Amazon.com or visit the book’s web site

68. Studdert DM, Thomas EJ, et al. Negligent Care and Malpractice Claiming Behavior in Utah
and Colorado. Medical care. 2000;38(3):250.
69. Carroll A, Parikh P, et al. The Impact of Defense Expenses in Medical Malpractice Claims,. J
Law Med Ethics. 2012;40(1):135.
70. Anderson GF, Hussey PS, et al. Health Spending in the United States and the Rest of the
Industrialized World. Health Affairs. 2005;24(4):903.
71. Massachusetts Medical Society. Investigation of Defensive Medicine in Massachusetts.
72. Studdert DM, Mello MM, et al. Defensive Medicine among High-Risk Specialist Physicians
in a Volatile Malpractice Environment. JAMA: The Journal of the American Medical
Association. 2005;293(21):2609.
73. Mello MM, Chandra A, et al. National Costs of the Medical Liability System. Health Affairs.
2010;29(9):1569.
74. Agency for Healthcare Research and Quality. Medical Expenditure Panel Survey. meps.
ahrq.gov/mepsweb/index.jsp. Accessed June 19, 2014.
75. Peters P. The Case for Medical Liability Reform. Symposium: Clinical Risk and Judicial
Reasoning. 2008;467(2):352.
76. Mello M, Gallagher T. Malpractice Reform—Opportunities for Leadership by Health Care
Institutions and Liability Insurers. New England Journal of Medicine. 2010;362:1353.
77. Boothman R, Blackwell A, et al. A Better Aproach to Medical Malpractice Claims? The
University of Michigan Experience. Journal of Health and Life Sciences Law. 2009;2(2):1.
78. Common Good. Establish Health Courts. www.commongood.org/pages/establish-healthcourts.
Accessed June 28, 2014.
79. Mello MM, Studdert DM, et al. “Health Courts” and Accountability for Patient Safety.
Milbank Quarterly. 2006;84(3):459.
80. American Tort Reform Association. Noneconomic Damages Reform. www.atra.org/issues/
noneconomic-damages-reform. Accessed June 19, 2014.
81. Carroll A. Meme-Busting: Tort Reform = Cost Control. theincidentaleconomist.com/
wordpress/meme-busting-tort-reform-cost-control-2/. Accessed June 28, 2014.

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  1. Thanks for sharing this very informative article. Medical malpractice is something we should try to eradicate. Doctors and hospitals are trusted by people with their life and health and a carelessness or malpractice is unforgivable. The increasing amount of cases handled by medical malpractice lawyers like Campisi LLP Personal Injury Lawyers in Brampton is so alarming. Every measures should be taken to prevent harm due to carelessness of doctors and hospitals.

  2. Allan, that’s a great point. The goal of malpractice is to improve the quality of care and our current system fails in many important ways.

  3. Retiring the Medical Malpractice System

    Medical mishaps and healthcare-acquired infections cause an estimated 200,000 deaths every year in the U.S. alone. That’s losing, every year, nearly 67 times the number of people lost in the September 11 terrorist attacks. Roughly 40 times the number of soldiers lost in Iraq and Afghanistan during the first seven years of warfare. Five times the number lost in automobile accidents. Each year. Almost 550 people every day, 1.8 million total since the IOM report was issued in 1999. That’s the cost of medical mishaps and healthcare-acquired infections. Short of disease, it’s the most likely cause of your own untimely death. In terms of national crises that lead to physical harm, it’s at the top of the list, ahead of war, crime, suicide, and automobile accidents combined.

    Perhaps you wonder why we’re apparently all so sanguine about 200,000 preventable deaths each year—I know I do. Maybe it’s because they happen one at a time? Losing fifty or 200 airline passengers in a single accident or thirty soldiers in one insurgent attack is so much more dramatic; these events always lead the evening news. But one person inadvertently killed at your local hospital? It rarely does. And so, that one individual’s family is left to find their own way to wholeness. It is the medical malpractice system that offers hope, often on giant highway billboards put up by plaintiff attorneys: Hurt by your doctor? Call us!

    What would the medical malpractice system look like here in the U.S. if we adopted the New Zealand approach? Answer: It would simply go away. We would retire it.

    So what would this accomplish? Medical malpractice attorneys make two claims: 1) that the current system provides a needed remedy for those who are injured, and 2) that it deters future malpractice. Malpractice attorneys make the claim that injured parties rightly deserve some financial protection against the threat of unanticipated harm. I agree, and so do the New Zealanders. New Zealanders actually make the claim for all injuries, for whatever cause, not just those caused by healthcare misadventures.

    Remember the report that said $587 billion is wasted in our U.S. tort system? In the area of medical malpractice, only 2.5 percent of injured patients even use the system. More than 97 percent of patients harmed by a medical mistake either never know their condition was caused by medical mistake, choose their own health insurance to provide the remedy, or they simply go without any meaningful redress. Rather than continuing with a system that is motivated to limit payouts, we could actually replace our current malpractice system with a no-fault system that would provide a remedy for all injuries received through the malpractice of a healthcare provider. As the New Zealanders say, we’ll do it as a matter of national responsibility. And, by the way, the New Zealanders claim that their overhead expenses are only 8 percent as compared to administrative costs as high as 55 percent here in the U.S. And speed, well, four months to benefits in contested claims in New Zealand, whereas we average fifteen to twenty months to settle torts in the U.S. Oh, and one last thing, purely from a perspective of equity. An external review of the New Zealand system identified that only 5 percent of ACC claimants would have been able to prove fault in the American system. Ninety-five percent of claimants would have been without a remedy here in the U.S.

    So what about the second claim, the deterrent effect of medical malpractice claims? The effect is simply not there—at least as a substantive tool for reducing what is now estimated at up to 200,000 lives lost per year in the U.S. There is no evidence that our tort liability system substantially changes individual behavioral choices of practitioners—particularly if what they’re being sued for was a human error, by definition both unintentional and inadvertent.

    Providers are apt to drift in their behavioral choices to places they believe are safe through personal experience, yet from a system-level perspective, appear risky. Take the CDC standards for hand hygiene, where rates of non-compliance among doctors are always lower than the compliance rate among nurses. It is generally the doctor, not the nurse, who gets sued for medical malpractice. Even with that increased threat of a lawsuit, doctors still lag behind in hand hygiene compliance rates.

    In today’s malpractice world, attorneys are forced to wait until there is injury before they reactively move in to punish the surgeon who we knew all along was engaging in risky behavioral choices. It is a totally reactive system, when the real system safety question should be, “How do we help the surgeon before his risky behavioral choices lead to harm?” How do we empower the state regulator and the local health care team to help the surgeon make better, safer choices before harm occurs? Given that we humans often disassociate our behavioral choices from their future unintended consequences, there is little hope that the tort system can help practitioners make substantially safer choices.

    Build a Safer Healthcare System

    Unfortunately, there is a lot of work to be done in our healthcare regulatory system. As we’ve seen, many healthcare regulators, including the Centers for Medicare and Medicaid Services and most state Departments of Health, are still playing Whack-a-Mole in their regulatory policies and approach.

    We do need to provide a remedy for those injured by medical misadventure. We also need to build a safer healthcare system. Yet, our trust is simply misplaced when we believe that the medical malpractice system will help with a cure for either of these ills. The approach must be different, Whack-a-Mole has run its course; it has outlived its usefulness, if it ever had any.

    Tossing the medical malpractice system will in itself not solve the problems we have. First, we’d have to replace it with a no-fault system of insurance, such as New Zealand’s ACC or our own Workers’ Compensation system. That would take care of the remedy for those who have been injured. Next, regulators and healthcare administrators would have to shift their focus from the severity of harm and who caused the injury, to the design of the healthcare system and the control of behavioral choices within the system. Our no harm, no foul system of accountability in healthcare today, turning a blind eye until harm occurs, must end. As a society, we need to shift to a more proactive system where system design and behavioral choices are additional measures of accountability—in healthcare, in automobile accidents, in spilt milk at the dinner table.

    In healthcare, administrators and practitioners should be required to obtain basic competencies in safety science—especially around the roles of system design and personal behavioral choices. We must teach practitioners that they can influence the design of the system, and that in their behavioral choices they have some control over the likelihood of the undesired adverse event. Doctors and hospitals should be required to disclose adverse events and critical near misses, both to the patient and to the state. Transparency and accountability go hand-in-hand. What typically occurs in secrecy today, even between regulatory agencies within the same state, must be made visible.

    Doctors and other individual providers must be required to participate in a more effective system of quality assurance that would involve near miss reporting, analysis, and corrective action. Many in the general public do not realize that hospitals have no real oversight over physicians; many physicians work as independent contractors and are given “privileges” at individual hospitals. If the physician/hospital relationship goes awry, the hospital’s only recourse is often to rescind the doctor’s privileges—something they are not motivated to do given the doctor’s revenue-generating role. Practitioners cannot be allowed to work in isolation from a more formal system of quality assurance.

    Most healthcare providers choose a life of service. They put themselves in harm’s way to take care of others. They expect a lot of themselves as professionals. Yet, they remain fallible human beings, regardless regardless of any oaths to do no harm. They are going to make mistakes and occasionally drift into risky places (see hand hygiene). The future of our nation’s health depends upon our ability to learn from their errors and at-risk behaviors.

    Policy makers, regulators, educators, administrators, and professional organizations must work to help change the public’s perceptions about the appropriate accountability of healthcare providers. Accountability rests with practitioners’ choices, not their errors or their unintended outcomes. This paradigm shift creates more accountability rather than less. There are alternatives to Whack-a-Mole—alternatives that have a history of success.

    President Barack Obama has said that we need to re-evaluate our systems and toss those that do not work. I heartily agree. Medical malpractice, America’s most sophisticated and expensive form of Whack-a-Mole, should be the first to go—if not merely to do the right thing for the professionals who dedicate their lives to the service of others, then for the millions injured and the 200,000 who are killed each year by a costly, ineffective healthcare system.

    Marx, David (2012-06-06). Whack-a-Mole: The Price We Pay For Expecting Perfection (Kindle Locations 1722-1797). By Your Side Studios. Kindle Edition.

  4. One thing I didn’t see discussed above was that our malpractice system creates malpractice. Instead of being encouraged to talk about poor or bad outcomes involved in treatment the system induces everyone to keep quiet. Every physician learns on the job even from his own ‘mistakes’. Those ‘mistakes’ even those that are not negligence, malpractice or even causing harm contain a learning experience for others.

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