THE WAY I SEE IT

Tort reform isn't enough

By David Karp

It may help fix the malpractice crisis, but it won't prevent medical errors and system failures.

President Bush, congressional leaders, and the American Medical Association rightly claim that our medical liability system is broken, and needs repair. One major reason, they believe, is that the courts are overrun by frivolous lawsuits, resulting in outrageously high awards that are driving up malpractice premiums, and causing physicians to flee certain states.

In fact, there are few truly frivolous malpractice claims—meaning those wholly without merit. Frivolous litigation does flourish in workers' compensation, auto accident, and product liability cases, but it's relatively rare in medical liability.

About a third of malpractice claims are resolved by settlement; defendants win most of the cases that do go to trial. Overall, at least 65 percent of all malpractice cases are resolved in favor of defendants. In most of those claims, the plaintiffs believe that the injuries they've suffered were caused by negligence. But while their injuries may be real, subsequent review of the evidence by medical experts usually determines that the injuries weren't caused by anyone's negligence. These cases lack merit, but they are not frivolous.

Plaintiffs' attorneys don't benefit by knowingly pursuing cases that lack merit because they work on a contingency basis, which means they get paid only if they win a verdict or settlement. To be sure, though, there are attorneys who, lacking competence or experience, file weak claims, wasting everyone's time and money—including their own.

There are also suits filed before they've been adequately investigated, resulting in unjustified litigation defense costs. Another problem is that juries aren't consistent in awarding damages to similarly injured patients.

The President and the AMA propose to fix the liability system with national tort reforms that mirror California's 1975 Medical Injury Compensation Reform Act, or MICRA, which has helped to stabilize malpractice premiums in that state. MICRA imposes a $250,000 cap on noneconomic damages (e.g., pain and suffering), limits plaintiffs' attorneys' fees, allows installment payments of large awards, and discourages double recovery from both a verdict and insurance payments.

MICRA's main beneficiaries are the defendants whom juries or arbitrators determine are guilty of malpractice. Because liability rates are amortized among all insureds in a given specialty, MICRA's reforms indirectly benefit physicians who otherwise would pay higher premiums because of their colleagues' losses in court or by settlement.

Tort reform is only part of the solution

In his last State of the Union address, President Bush said, "No one has ever been healed by a frivolous lawsuit." True, but neither has anyone been healed by tort reform, which doesn't reduce patient injuries caused by preventable medical, nursing, or system errors.

The widely publicized 1999 Institute of Medicine report estimated that between 44,000 and 98,000 hospital patients die each year as a result of medical errors and faulty health care delivery systems and processes. The tort reforms proposed by the president, however, don't address these patient safety issues:

• Claims resulting from medication errors are among the most frequent and most expensive, according to the Physician Insurers Association of America (PIAA), whose member companies insure about 60 percent of the nation's private practice doctors.

• Wrong-site surgery claims are increasing, despite considerable focus on this problem. Signing a surgical site is a nearly foolproof way to avoid error, but, according to the American Academy of Orthopaedic Surgeons, roughly 40 percent of its members still don't mark operative sites.

• Miscommunication between physicians and patients, co-treating physicians, and hospital personnel often leads to injury, and is a common catalyst for malpractice claims.

As a result of the IOM report, millions of dollars have been earmarked to study the causes and prevention of medical errors. But more study is unnecessary. The PIAA has analyzed malpractice data since 1986, and has published several major studies of the most serious and expensive claims. Insurers have, for decades, provided risk management programs for physicians and nurses about preventable causes of medical error. Still, every year, claims involving virtually the same allegations increase in number and cost.

Tort reform may well reduce the number of cases in which plaintiffs' attorneys litigate before adequate discovery; and it might discourage nuisance claims and "runaway jury" verdicts, thereby easing the financial pain of doctors. But tort reform by itself won't fix our broken medical liability system.

A formula for reducing injuries and malpractice claims

We need tort reform, but we need more. The current crisis can be resolved only by modifying the system to include measures such as these:

1. Plaintiffs' attorneys must be required to exercise due diligence before pursuing malpractice claims. Some states now demand certification from a qualified medical expert that the defendant's actions fell below accepted standards. Without such a certification of merit, the case cannot go to trial. Other states have established pre-litigation screening panels designed to weed out meritless claims. But these panels often conduct only cursory reviews of the facts, thereby depriving both sides of a fair hearing. And their decisions generally aren't binding or admissible in court.

2. Courts or legislatures should establish criteria for physicians who testify as experts in malpractice cases. By unreasonably criticizing defendants' care or exaggerating plaintiffs' injuries, some experts-for-hire prolong questionable cases and inflate jury awards and defense costs.

3. We need a fairer and more consistent system for compensating injured patients. Standardizing damages—as is done with workers' compensation claims—would narrow the wide disparity in jury awards to similarly injured patients and discourage plaintiffs' attorneys from "venue shopping."

4. Physicians, hospitals, and pharmaceutical companies must adopt proven methods for prompt identification and prevention of medical, nursing, and system errors. The airline industry's approach to passenger safety and quality improvement is a good model. It encourages the reporting of problems, and focuses on what can be done to prevent mistakes instead of simply counting them or punishing those who make them.

5. Legislatures must grant full immunity from liability for good-faith peer review and quality assurance activities of physicians and hospitals. Many physicians today are reluctant to judge or act against errant colleagues because of the threat of being sued.

6. Hospitals should be required to have safe levels of nurse staffing. Understaffing and the use of inadequately trained nurses are major threats to patient safety.

In most respects, America's health care system is the world's best. To keep it viable, however, we must put as much effort into ensuring patient safety as we do in enacting post-injury tort reforms.

The author has spent many years as a claims manager and loss prevention specialist with several California malpractice carriers, and is now a risk management consultant based in Cloverdale, CA.

 

David Karp. The Way I See It: Tort reform isn't enough. Medical Economics May 9, 2003;80:101.