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Widener Univ. School of Law

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Friday, May 17, 2013

Catastrophic Payments and Medical Malpractice

Terry Baynes of Reuters has written an article about the recent study by a group of physicians at John Hopkins finding that large med mal awards do not contribute significantly to healthcare costs.  The article quotes the lead author of the study, Dr. Marty Makary, and me on the issue.  My comments appear somewhat more skeptical of the med mal tort system than I actually am (through no fault of Ms. Baynes), and that caused me to reflect further on the significance of the study. 

The study (pdf) finds that catastrophic judgments (of over $1M) constitute approximately .05% of national healthcare costs (as measured in 2010).  I believe the inferences and recommendations that Dr. Makary and his colleagues draw from this are generally correct.  First, they determine that catastrophic payouts are not a major driver of health care costs.  Second, at least in interviews, Dr. Makary argues that defensive medicine due to the vague standard of care is a bigger expense than catastrophic payouts.  Third, acknowledging the study does not include costs of defensive medicine, the authors conclude that the financial savings due to malpractice reform may be minimal compared to other drivers of health care costs.  Fourth, at least in interviews, Dr. Makary argues that malpractice reform should not be focused on caps, but on the standard of care. 

First, the study does support, at least modestly, a policy decision against caps.  The argument is that "lopping off" the top of large med mal judgments does not save a lot of money because the amount of large judgments is small.  There are, however, confounding variables.  The study uses $1M or more as the definition of catastrophic payouts.  Most caps are set well below $1M and are caps not on total awards, but on noneconomic loss alone.  I don't see that the study differentiates between economic and noneconomic damages.  This is not a criticism; I don't believe the National Practitioner Data Bank from which the data are drawn makes this distinction.  It does, however, prevent a direct comparison between catastrophic payments and how caps would operate on them.

There are certainly other arguments against caps.  They have a disparate impact on those who are most seriously injured.  The most seriously injured in tort law are already under compensated, receiving a portion of economic loss, while those whose injuries are minor tend to receive several times economic loss.  Moreover, to the extent that caps are aimed not at the top awards but at generally reducing suits, particularly frivolous suits, there is a much more direct and fair tool available:  certificates of merit.  Suits filed without merit is a problem; a 2006 study found that 37% of med mal claims in random samples of closed-claim files at 5 med mal insurance companies were non-meritorious.  (David M. Studdert et al., Claims, Errors, and Compensation Payments in Medical Malpractice Litigation, 354 New Eng. J. Med. 2024 (2006)).  Pennsylvania has used certificates of merit (and no cap) to positive results.   

Second, I agree that malpractice reform would not dramatically reduce costs in the vast health care system.  Steven Brill's Time piece in March discussed numerous non-malpractice-related problems driving up costs.  That doesn't mean malpractice law should not be reformed, just that it should be reformed for other reasons.

Third, and most significantly, I agree with the conclusion that the standard of care is a big part of the problem with med mal litigation.  What is reasonable under the circumstances can be difficult to determine under banal circumstances.  When applied to the practice of medicine, those complications multiply.  Dr. Makary focuses on this as the cause of defensive medicine, and I'm sure it happens (though measuring it seems challenging).  Moreover, the uncertainty created by the standard leads to delay and transaction costs as the parties genuinely dispute whether a health care provider acted reasonably under the circumstances.  As to delay, the Studdert study referenced earlier found the average med mal claim spanned 5 years from occurrence to closing.  As to transaction costs, the study found only 46 cents of every dollar went to claimants.  Both these figures are consistent with prior studies. 

Thus, the uncertain standard creates 3 problems.  First, not all results are accurate.  The Studdert study found an accuracy rate of determining medical errors (not quite the same as med mal, but close) at between 70 and 75 per cent.  That is a better than random, but not great, particularly in light of the other 2 problems:  delay (5 years on average) and transaction costs (running the system costs 54 cents of every dollar).  This obviously creates potential problems for health care providers:  the possibility of an erroneous adverse judgment, time spent worrying and not focused on health care, and high attorneys' fees/insurance premiums.  To me, it is even worse for claimants.  The Studdert study found 1 in 6 victims of medical error did not recover.  In fact, the study found  nonpayment of claims with merit occurred more frequently than did payment of claims that were not associated with errors or injuries.  Moreover, a 5-year wait can be devastating to a claimant, particularly if there are large medical bills and lost wages involved.

Instead of simply raising the standard to make it more difficult for claimants to recover (recall 1 in 6 already doesn't recover when s/he should), it makes sense to me to provide claimants and health care providers a voluntary way to opt out of the tort system and handle the claim more along insurance lines, paying economic loss and a modest amount for pain and suffering.  New Hampshire's early offers law passed last June was a step in the right direction.  It may not be perfect, but it is an improvement over the current system.  I won't make a long post any longer, but those who are interested in New Hampshire's early offer law can go here, here, and here.   

--CJR 

There is one other facet of the study that is interesting.  The authors find a physician's years in practice and, most significantly, previous paid claim history had no effect on the odds of a catastrophic payout.  Ted Frank mentioned this at Point of Law.  I would not have expected a strong correlation, but the lack of any correlation is surprising to me.

May 17, 2013 in Legislation, Reforms, & Political News, Scholarship, Science | Permalink | Comments (0) | TrackBack (0)

Thursday, May 16, 2013

Scheuerman on Class Certification in NFL Concussion Litigation

TortsProf's Sheila Scheuerman has posted to SSRN The NFL Concussion Litigation:  A Critical Assessment of Class Certification.  The abstract provides:

In the world of high-stakes class action litigation, a new theory is emerging that seeks to overcome the longstanding hurdles that have precluded certification of personal injury class actions: the "medical monitoring" class action. A recent example is the concussion-related lawsuits brought by former football players against the National Football League. The players allege that the NFL concealed the long term effects of on-field head injury, and failed to warn players of the risks of harm from repeated concussions. The players only seek class certification on a medical monitoring claim — a tort that may allow asymptomatic plaintiffs to recover anticipated medical testing. Like the putative personal injury class or no-injury class, however, aggregation of medical monitoring claims presents its own individual issues that preclude class certification under the Federal Rules of Civil Procedure.

This symposium essay examines the class certification issues presented by the "NFL concussion" litigation. The essay presents the history and status of this litigation, provides an overview of concussion science, and examines the players’ claims against current standards for class certification. The essay concludes that the players’ medical monitoring claim as currently pled fails to satisfy the criteria for class certification. This does not mean that these plaintiffs have no redress against the NFL. It means only that the NFL players need to employ the traditional personal injury lawsuit — not the class action device — to pursue their relief.

 --CJR

May 16, 2013 in Scholarship, Sports | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 14, 2013

Rhee on the Tort Foundation of Duty of Care and Business Judgment

Robert Rhee (Maryland) has posted to SSRN The Tort Foundation of Duty of Care and Business Judgment.  The abstract provides:

This Article corrects a misconception in corporation law – the belief that principles of tort law do not apply to the liability scheme of fiduciary duty. A board’s duty of care implies exposure to liability, but the business judgment rule precludes it. Tort law finds fault; corporation law excuses it. The conventional wisdom says that the tort analogy fails. This dismissal of tort principles is wrong. Although shareholder derivative suits and ordinary tort cases properly yield systemically antipodal outcomes, they are bound by a common analytical framework. The principles of board liability are rooted in tort doctrines governing duty, customs, and pure economic loss. Properly applied, they produce a duty “to care” (vis-à-vis duty of care), based on a good faith undertaking of care, but upon such undertaking no liability for negligently inflicted economic loss – the exact result achieved by the fiduciary duty of care and the business judgment rule. A sound tort analysis not only theorizes the enigmatic relationship between the duty of care and the business judgment rule, but it also explains Delaware’s puzzling procedural-substantive divide. Fiduciary duty in corporation law rests on a tort foundation. Lastly, the thesis of this Article has a broader implication. The contractarian view of corporation law seeks to relegate the role of courts to passive custodians of the corporate contractual terms provided by the legislature and the corporation’s constituents. However, this view is constrained by a tort framework wherein courts do and should play a robust, albeit reserved, role in regulating important aspects of corporate governance through the continued common law process of doctrinal development of the idea of a wrong.

--CJR

May 14, 2013 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Condo/Co-Op Liability Following Hurricane Sandy

The New York Law Journal has an interesting story about negligence suits filed against Condo and Co-Op Associations following Hurricane Sandy.

Thanks to Lisa Smith-Butler for the alert.

- SBS

May 14, 2013 in Current Affairs, Teaching Torts | Permalink | Comments (0) | TrackBack (0)

Monday, May 13, 2013

Can a texter be liable for sending text and distracting driver?

The ABA Law Journal reports on an novel theory being tested in the New Jersey appellate courts:  Does sending a text to someone you know is driving create tort liability?    The plaintiffs were injured by a driver who was distracted by a text message.  In a twist, the plaintiffs sued both the driver and the sender of the text message.  The plaintiffs argued that "the court should impose a duty of care on those who know the recipient is both behind the wheel and likely to be reading texts while driving."  In response, the defendant-texter has argued that she could not control when the message is read.   Let's see what the New Jersey appellate court decides.

- SBS

May 13, 2013 in Current Affairs, Teaching Torts | Permalink | Comments (0) | TrackBack (0)