Law & Medicine

Patient safety and tort reform



Question: Developments in medical tort reform include:

A. Continued constitutional challenges to caps on damages.

B. An emphasis on patient safety.

C. Hillary Clinton’s Senate bill.

D. Linking medical tort reform to error reduction.

E. All of the above.

Dr. Siang Yong Tan

Dr. Siang Yong Tan

Answer: E. Recent years have witnessed a stabilizing environment for medical liability, although insurance premiums continue to vary greatly by specialty and geographic location.

Recent statistics from the American Medical Association show that 2014 ob.gyn. insurance rates range from less than $50,000 in some areas of California to a high of $215,000 in Nassau and Suffolk counties in New York. The highest average expense in 2013, around a quarter of a million dollars, was for those claims that resulted in plaintiff verdicts, while defendant verdicts were substantially lower and averaged $140,000.

As in the past, most claims were dropped, dismissed, or withdrawn. About one-quarter of claims were settled, with only 2% decided by an alternative dispute resolution. Less than 8% were decided by trial verdict, with the vast majority won by the defendant.

The plaintiff bar continues to mount constitutional challenges to caps on damages. The California Supreme Court had previously ruled that reforms under California’s historic Medical Injury Compensation Reform Act (MICRA)1, which limits noneconomic recovery to $250,000, are constitutional, because they are rationally related to the legitimate legislative goal of reducing medical costs.

However, the statute has again come under challenge, only to be reaffirmed by a California state appeals court. In November 2014, California voters rejected Proposition 46, which sought to increase the cap from $250,000 to $1.1 million.

Texas, another pro-reform state, sides with California, and Mississippi also ruled that its damage cap is constitutional. However, Florida and Oklahoma recently joined jurisdictions such as Georgia, Illinois, and Missouri in ruling that damage caps are unconstitutional.

Asserting that the current health care liability system has been an inefficient and sometimes ineffective mechanism for initiating or resolving claims of medical error, medical negligence, or malpractice, then-U.S. senators Hillary Clinton (D-N.Y.) and Barack Obama (D-Ill.) in 2005 jointly sponsored legislation (S. 1784) to establish a National Medical Error Disclosure and Compensation Program (National MEDiC Act). Although the bill was killed in Senate committee, its key provisions were subsequently published in the New England Journal of Medicine (2006;354:2205-8).

The senators noted that the liability system has failed to the extent that only one medical malpractice claim is filed for every eight medical injuries, that it takes 4-8 years to resolve a claim, and that “solutions to the patient safety, litigation, and medical liability insurance problems have been elusive.”

Accordingly, the bill’s purpose was to promote the confidential disclosure to patients of medical errors in an effort to improve patient-safety systems. At the time of disclosure, there would be negotiations for compensation and proposals to prevent a recurrence of the problem that led to the patient’s injury. However, the patient would retain the right to counsel during negotiations, as well as access to the courts if no agreement were reached. The bill was entirely silent on traditional tort reform measures.

Nearly 4 decades earlier, a no-fault proposal by Professor Jeffrey O’Connell made some of these points, but with sharper focus and specificity, especially regarding damages.2

In marked contrast to the Clinton-Obama bill, his proposal gave the medical provider the exclusive option to tender payment, which would completely foreclose future tort action by the victim. Compensation benefits included net economic loss such as 100% of lost wages, replacement service loss, medical treatment expenses, and reasonable attorney’s fees. But noneconomic losses, such as pain and suffering, were not reimbursable, and payment was net of any benefits from collateral sources.

This proposal elegantly combined efficiency and fairness, and would have ameliorated the financial and emotional toll that comes with litigating injuries arising out of health care. Legislation in the House of Representatives, the Alternative Medical Liability Act (H.R. 5400), incorporated many of these features, and came before the 98th U.S. Congress in 1984. It, too, died in committee.

There may be something to the current trend toward pairing tort reform with error reduction. Thoughtful observers point to “disclosure and offer” programs such as the one at the Lexington (Ky.) Veterans Affairs Medical Center, which boasts average settlements of approximately $15,000 per claim – compared with more than $98,000 at other VA institutions. Its policy has also decreased the average duration of cases, previously 2-4 years, to 2-4 months, as well as reduced costs for legal defense.

Likewise, the program at the University of Michigan Health System has reduced both the frequency and severity of claims, duration of cases, and litigation costs. Aware of these developments, some private insurers, such as the COPIC Insurance Company in Colorado, are adopting a similar approach.


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