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isn’t cheap either—averaging $110,000 for a successful trial defense, and $27,000 even if the claim is dropped, withdrawn, or dismissed before making it to the courtroom.69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
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.
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.
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
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.
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.
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.