MEDICAL MALPRACTICE AND THE U.S. HEALTH CARE SYSTEM

Vol. 16 No. 8 (August, 2006) pp.622-627

MEDICAL MALPRACTICE AND THE U.S. HEALTH CARE SYSTEM, by William M. Sage and Rogan Kersh (eds). New York: Cambridge University Press, 2006. 406pp. Hardback. $75.00/£48.00. ISBN: 0521849322. Paperback. $29.99/£19.99. ISBN: 0521614112.

Reviewed by Michael L. Rustad, Thomas F. Lambert Jr. Professor of Law & Co-Director of the Intellectual Property Law Concentration, Suffolk University Law School, Boston. Email: profrustad [at] aol.com.

What do we know and still do not know about the medical malpractice liability system? This collection is a new audit that provides the best available data to answer this question, and it highlights policy studies from a Who’s Who of health policy researchers and scholars. Most of the essays offer practical reforms based upon empirical data calculated to improve the functioning of the medical liability system. William Sage is a lawyer as well as a doctor on the faculty at Columbia Law School. His co-editor, Roger Kersh, has a Ph.D from Yale and currently teaches at Syracuse. The contributors include prominent tort and insurance scholars, such as NYU’s Jennifer Arlen and Connecticut’s Tom Baker. Outstanding health policy scholars, such as Randall R. Bovbjerg, Troyen A. Brennan, and David Studdert, also have interesting pieces in this volume.

Any medical liability reform must begin with granite-tough empirical research rather than anecdote or urban legends. The debate over medical liability reform during the past two decades has depended too much on passion rather than empirical studies. This volume represents the best available empirical research by top researchers but it does not by any stretch of the imagination give us the data necessary to resolve the medical liability conflict.

How can we improve the medical liability system if there is no central repository of claims, verdicts, and payouts? No reliable data exist on the number of malpractice claims, let alone the number of settlements, verdicts, and post-verdict adjustments by year. Studies are needed on how professional liability insurance reflects claims and actual payouts. Social scientists are in no position to address these issues without better data. There is a poverty of empirical work on the systematic problems that lead to medical liability in the first place.

The editors deliver on their goal of shedding light rather than heat, but it is extremely difficult to be truly neutral and objective given the self-interested sources of funding and the national debate which is beginning to take on the same divide as the blue and red states. One of the domain assumptions underlying many of the selections is that there is truly a litigation crisis. In Sage’s and Kersh’s introduction, they assert that, “malpractice premiums continue to rise” (p.1). My Suffolk University Law School colleague Marc Rodwin and his collaborators have examined the best available data on malpractice premiums, [*623] the American Medical Association (AMA) surveys of self-employed physicians from 1970 to 2000. The Rodwin study (2006) concluded “that premiums rose until 1986, then declined until 1996, rose thereafter, but were lower in 2000 than in 1986.” The Rodwin study of medical insurance premiums concludes that other items accounted for “a much greater share of total practice expenses in 1970 yet increased rapidly until 1996 and moderately thereafter, while spending on premiums fell during 1986-2000.” The Rodwin, et al. study also controls for high-risk specialties and examines fields such as obstetrics/gynecology, surgery, and anesthesiology across the United States. Mark Pauly’s article addresses the question of “Who Pays When Malpractice Premiums Rise?” But Pauly, like the editors, assumes that premiums have been rising. Hopefully, the editors and some of the contributors will respond to the Rodwin study in the next edition.

Each of the essays in this collection states hypotheses that would be testable if we had better claims and payout data. Texas required greater disclosure by insurers as a predicate for its 1995 tort reforms. Nonetheless, even in Texas reliable data on settlements and claims paid is not available in an accessible format. If average data on payouts are unavailable, it is all but impossible to have an informed debate on tort reform. The supporters and opponents of medical liability reform have no choice but to base competing claims on fragmented information. Academics can only stand by and ask for better data.

Mello’s and Studdert’s chapter describing the medical malpractice system (Chapter One) is a good descriptive account of the litigation process and lays out an excellent research design for assessing the performance of the liability system. The authors describe how insurance arrangements work. Physicians who are targeted by malpractice claims tend to be in high-risk specialties. The hospital, clinic, or other health care provider is vicariously liable for claims if it can be proven that malpractice resulted from the acts of employees. The authors acknowledge how difficult it is even to describe the liability system without a “centralized repository of information on all filed claims” (p.13).

Mello’s and Studdert’s essay is a model of excellence in its description of how insurance works. If better data were available, we would likely uncover risk factors that could result in fewer malpractice claims. The authors provide a compelling argument that compensation falls short of the mark when it comes to optimal liability. The best available data on compensation indicate that approximately 1 in 10 victims of medical malpractice file suit.

The authors cite Patricia Danzon’s path breaking California medical liability study that finds that only 40% of these claims resulted in a payment. “In other words, in this [California] sample, a physician who committed an error leading to injury had only a 4 percent chance of having to compensate the patient” (p.16). The highly publicized Harvard Medical Practice Study in the mid-1980s followed the Danzon [*624] publication (p.16), and these studies have been replicated by empirical investigations in Utah and Colorado. The authors conclude that “the system does not perform well either in compensating eligible patients or in avoiding claims by those who are not eligible” (p.17), and they also report a low correlation between likelihood of being sued for malpractice and deterrence.

Perhaps, a different methodology would unveil a more complicated multi-factorial explanation for the disjuncture between claims and deterrence. Tom Koenig and I studied punitive and non-economic damages in medical malpractice cases going to verdict (1963-1993). We interviewed plaintiffs’ counsel as well as defense counsel who tried these cases about what remedial steps were taken in the wake of awards and post-verdict settlements (Koenig and Rustad 2001). Although deterrence was not the focus of our study, we found it noteworthy that many hospitals, clinics, and even individual physicians implemented safety and protocol improvements after awards. A study of specific deterrence would minimally study what safety steps, disciplinary actions, or other remedial measures were taken after a verdict or settlement. The weak relationship between specific deterrence and claiming may be the result of a methodology that does not accurately measure the dependent variable.

General deterrence is all but impossible to measure although publicity in medical journals is an unobtrusive measure that the signal of litigation is heard by medical providers other than the defendant. Sponge and instrument counts, for example, were instituted in hospitals across the country after high-profile malpractice cases. It is unknown, or perhaps even unknowable, whether a claim sends a signal more generally that changes inadequate protocols or procedures. The authors conclude that corrective justice is the one area of the medical liability system that appears to be working well (p.22), and they do a remarkable job in explaining physicians’ responses to liability.

The entire concept of defensive medicine is slippery, like trying to nail Jell-O to a wall. Defensive medicine, the authors explain, consists of both goods news and bad news. A physician receiving the signal of deterrence may take preventive steps, but it is difficult to determine whether they take inefficient measures. One of the most corrosive effects of medical liability is what the authors term “bristling behaviors” that interfere with the physician/doctor relationship (p.25). They also describe cloaking behavior that results in underreporting of possible malpractice, and they conclude that the plaintiffs’ view of medical liability and patient safety clash with a non-punitive, cooperative-based approach to patient safety. In Sweden, for example, doctors frequently cooperate with an injured claimant in helping them obtain compensation. However, this cooperative-based approach would only work in a system of universal health care, as in the Scandinavian countries.

Co-Editor William Sage’s magisterial essay on malpractice reform contends that policy debates are clouded by [*625] professional rivalries. Malpractice, he writes, has been “a defining issue for the American medical profession in its relationship with lawyers over nearly two centuries” (p.30). President Bush has mentioned the need for liability reform in his last three State of the Union addresses, which confirms Sage’s conclusion that medical liability has indeed drawn closer to national partisan politics. Sage notes that tort reform has taken a myopic view of caps on noneconomic damages without looking at ways to improve the medical liability system. All Americans should share the policy goal of keeping patients safe, improving legal process, and requiring liability insurance to pay where appropriate (p.31).

Sage explains that the only good thing about a “malpractice crisis” is that it spurs research (p.32). Real liability reform would help injured victims obtain redress for adverse claims. One of the difficulties for physicians is that the standard of care continues to rise as a function of technological development (p.34). Brain-damaged babies, who would have died with earlier technologies, now survive for many decades. Sage notes that lifetime care can result in $100 million dollar judgments. True medical malpractice reform will need to refine and even rethink the standard of care where technologies make it possible to tackle hopeless cases. At present, the occasional $100 million judgment may have a chilling effect on innovation. This is a topic that requires further empirical research. His chapter covers big policy questions such as the possibility of a “no-trial” dispute resolution system (p.39). The chapter does a good job of going beyond the tort reform debates to discuss major issues.

The essays in this collection provide a treasure trove of the best available data on medical liability. Maxwell J. Mehlman of Case Western University School of Law’s Law-Medicine Center, (Chapter 8) authored an excellent summary of the research on noneconomic damages. Catherine Struve’s insightful essay describes how a growing number of states are requiring plaintiffs’ lawyers to sign certificate-of-merit provisions, a tort reform measure calculated to preclude the possibility of frivolous claims. Massachusetts has gone even further, requiring a record review by a doctor, lawyer, and judge before a complaint may be filed. These measures bring common sense to the common law. Struve’s well-argued audit of jury performance points to a system that works rather well. She notes that juries do fairly well assessing expert evidence on the standard of care and the causal connection between malpractice and injury. She points out that case management coupled with good jury instructions, jury note taking, and better jury education can also improve jury performance, although she acknowledges that no single measure can fix the malpractice system. (Chapter 10).

Catherine M. Sharkey’s convincing chapter on “Caps and the Construction of Damages in Medical Malpractice Cases” is a policy study backed by data and provides the best available audit on the effectiveness of capping award size (Chapter Nine). Her report card on [*626] effectiveness will be of interest to policymakers as well as academics. One major finding is that there is no statistical effect of caps on the overall judgment. Further research using different methodologies will be necessary before we conclude that caps have no disparate effect. Sharkey, like many of the other contributors, provides legislators as well as policymakers with a careful and meticulous roadmap of what we know about the impact of caps on medical liability. Policymakers need to base further medical liability reforms on data, rather than anecdote.

Tom Baker’s path breaking piece on enterprise insurance explains that the medical liability problem requires insurance reform, not tort reform. His dazzling book, THE MEDICAL MALPRACTICE MYTH (2005), systematically dismantles a number of other myths about the so-called medical malpractice crisis. Baker provides a convincing argument that the medical liability crisis arises from defective medicine rather than too many medical malpractice cases. In this volume (Chapter 14), he cogently explains that the volatility of the underwriting cycle has a far greater effect on insurers’ losses than medical liability claims (p.272). Smoothing out the underwriting cycle would go a long way toward stabilizing premiums. Placing barriers to patient malpractice recovery in the form of tort reforms is not likely to improve the functioning of the liability system and creates distortions in the pricing of premiums.

Baker systematically dismantled many of the myths surrounding the medical liability crisis. The best available empirical data finds no causal connection between large medical liability claims and premium pricing. California’s $250,000 cap on noneconomic damages, for example had an insignificant impact on premiums until that state enacted insurance reforms. He calls for even broader insurance reforms that have the potential of stabilizing premiums in all states. Another key component to Baker’s reform package is to key underwriting decisions into patient safety measures. Prevention should be the watchword of health care providers. He proposes “enterprise insurance” that would cover all liabilities arising out of provided medical services (p.268). Baker concludes by responding to potential objections to his enterprise insurance plan. His clarion call for insurance reform, not tort reform, is based on convincing empirically-based policy analysis.

Each contributor to this book is a national expert, and each provides a useful review of the empirical data. The book is highly recommended for all law libraries, and it would be an ideal reader for a course on health policy or a specialized seminar on medical malpractice. A future volume is needed based upon information from a central repository of data on claims, settlements, and verdicts. Any effort to improve our medical liability system must be predicated upon accurate data, rather than policy conjecture. [*627]

REFERENCES:

Baker, Tom. 2005. THE MEDICAL MALPRACTICE MYTH. Chicago: University of Chicago Press.

Rodwin, Marc A., Hak J. Chang, and Jeffrey Clausen. 2006. “Medical Premiums and Physicians’ Income: Perception of a Crisis Conflict with Empirical Evidence.” 25 HEALTH AFFAIRS 750-758.

Koenig, Thomas H., and Michael L. Rustad. 2001. IN DEFENSE OF TORT LAW. New York: New York University Press.

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