TortsProf Blog

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.

FL: House Passes Med Mal Reform; To Scott for Signature

Yesterday the Florida House passed a med mal reform bill that restricts experts testifying against a defendant doctor to the same specialty, not just the same field.  Bloomberg Businessweek has the story.

--CJR

Today in Med Mal Reform

In Missouri, the Senate is debating whether to reinstate a cap on med mal damages after the Missouri Supreme Court ruled last year that a prior cap was unconstitutional.  At this point, negotiations are "in limbo," with no vote after 8 hours of discussion.  St. Louis Public Radio has the story (see also the San Francisco Chronicle)

Meanwhile, in Florida, the House is set to vote on a bill that would restrict the type of experts eligible to testify against a defendant doctor.  See earlier posts here and here.  The Jacksonville Business Journal has the story.

--CJR

FL: Senate Approves Med Mal Reform

By a 27-12 vote, the Florida Senate passed SB 1792, requiring an expert against a defendant doctor to be in the same specialty as the defendant, not just the same field.  The bill now goes to the Florida House.  The Jacksonville Business Journal has the story.

--CJR

FL: Senate to Vote on Med Mal Tort Reforms Today

The Florida Senate is set to vote today on a tort reform package (SB 1792) that would make med mal cases more difficult to pursue.  The major provision requires expert witnesses called against a defendant doctor to practice the exact same kind of medicine as the defendant instead of only being in a similar field.  An AP story is here.

--CJR

AR: Tort Reform Via Constitutional Amendment?

House State Agencies and Governmental Affairs Chairwoman Andrea Lea says that consensus is forming for a proposed constitutional amendment on tort reform.  The Arkansas Supreme Court recently struck down several provisions in a decade-old tort reform law.  The proposed constitutional amendment would allow voters to replace those provisions.  The precise content of the potential amendment is not yet available.  The City Wire has details and a link to a podcast in which Lea discusses the issue.

--CJR

Mass Tort Filings Down 70% in Philly

The Pennsylvania Record reports that rules changes to the mass torts program at the Philadelphia Court of Common Pleas have resulted in a 70% drop in mass tort filings. 

- SBS

Georgia Proposes Tort Reform Bill

On Friday, Georgia state Senator Brandon Beach introduced a bill that would create a hearings-system to handle medical malpractice claims.    The proposed system would be similar to the worker's comp system:

[The bill] would create a system in which patients take complaints of doctor or hospital mistakes to a panel of physicians for hearings rather than filing lawsuits in court. If the panel concludes compensation is warranted, it pays out of a fund all providers pay into, like the no-fault system that covers on-the-job injuries.

The Augusta Chronicle has more.

- SBS

SD to Retain Alienation of Affections

For the 3rd time in 11 years, Sen. Stan Edelstein attempted to repeal South Dakota's alienation of affections law.  This time he was aided by a high-profile trial against a state's attorney in which the jury ultimately rejected the plaintiff's claims.  Media coverage was extensive and included specific and intimate details of the relationships involved.  The trial changed some minds, but not enough. The Senate Judiciary Committee rejected the bill on a 4-3 vote.  South Dakota will remain one of a handful of states retaining the heart balm tort.  Argus.com has the story.

--CJR 

Indiana Governor Seeks Tort Reform

Indiana Governor-elect Mike Pence has included tort reform in his first year legislative agenda.  Proposals include a loser pays bill.   Details have not been released yet.

The Chicago Post Tribune and WISH TV both have reports.

- SBS

Nora Freeman Engstrom: Damage Caps--And Why Fein May No Longer Be Good

Stanford's Nora Freeman Engstrom reconsiders MICRA and its constitutionality (pdf):  Download Torts Prawf Blog -8.

2012 Judicial Hellholes

The American Tort Reform Association released its list of Judicial Hellholes for 2012-2013.  California has replaced Philly at the top spot on the list.  The rest of the top five include West Virginia, Madison County, IL, New York City and Albany, NY, and Baltimore, MD. 

- SBS

Tort Reform Agenda in Virginia

Virginia Lawyers Weekly is reporting that the Virginia Chamber of Commerce has published its legislative wish list on tort reform.  Most of the hot-button issues are missing; for instance, there is no call for caps.  This may be explained by Virginia's relatively business friendly environment.  The Chamber would like summary judgment practice reform, nonsuit reform, and further limitations on venue.

--CJR

"Reforming the Tort System: Freeing the Patient"

Psychology Today has an article by John C. Goodman, Ph.D., on "Reforming the Tort System: Freeing the Patient."    The article examines medical malpractice liability by contract, rather than the tort system. Goodman is a Research Fellow at the Independent Institute and President and Kellye Wright Fellow in Healthcare at the National Center for Policy Analysis.

- SBS

Federalism and Tort Reform

A number of authors have been engaging in a lively debate about congressional power to enact tort reform. Starting it off, Paul Clement authored Federalism, the Framers, and Federal Legal Reform - Setting the Record Straight, released by the Chamber of Commerce in October.  Essentially, Clement defends federal tort reform as permissibe under the Commerce Clause.  Last week, Rob Natelson of the Independence Institute offered a response: Did the Founders Constitution Permit Federal Tort Reform?   And now, Randy Barnett over at Volokh Conspiracy has weighed in.   

- SBS

 

 

Med Mal Reform in Taiwan

The Taipei Times is running an article today about medical malpractice reform in Taiwan.  Here is a sample:

The Taiwan Health Reform Foundation (THRF) yesterday said there were four major problems that patients often meet in medical malpractice disputes, and urged that the mechanism for dealing with medical disputes be codified to solve the problems.

The four major problems are “difficult to obtain critical evidence, many traps within negotiations, no access to consultation and investigation and asymmetric professional information,” the foundation said, saying that the problems were revealed by patients or their family members through their complaints to the foundation over the past year.

Among other data provided in the article, a THRF survey found that many people only demand an apology and the truth, and up to 98 percent of respondents said what they needed most was professional consultation and investigation to clarify the problem.

--CJR

Rudy Giuliani on Tort Reform

Rudy Giuliani, former mayor of New York City, was the keynote speaker at the U.S. Chamber of Commerce's annual Legal Reform Summit held yesterday in Washington, D.C..  Using his experience as mayor, Giuliani discussed his views on why tort reform was necessary. C-SPAN has video of the speech. BLT also has the story.  

- SBS

Breaking News: Kansas Upholds $250,000 Pain-and-Suffering Cap

The Kansas Supreme Court has just released an opinion upholding a $250,000 cap on pain-and-suffering damages in personal injury cases.  Missouri invalidated a similar cap in August.

The (lengthy) opinion (pdf) is here:  Download DC-#413210-v1-Kansas_Cap_Constitutional_Cap_Decision[1]

--CJR

Tort Law in Recent State of the Union Addresses

Thanks to comments from Tony Francis and TPM, I know that George W. Bush discussed medical liability reform in his 2005 State of the Union address.  Also, in 2011, Barack Obama called for medical liability reform to cut down on frivolous lawsuits and save the government money.  It makes sense that tort law and reform would appear more in SoU addresses, which are policy-oriented, than in inaugural addresses, which focus on very broad principles.

--CJR

2012 Lawsuit Climate Report

The Chamber's Institute for Legal Reform has released the 2012 Lawsuit Climate Report.  The report surveys in-house general counsel, and senior attorneys at companies with at least $100 million in annual revenues about their perceptions of the states' tort systems.  According to the report, "[t]he worst jurisdiction was Chicago/Cook County, Illinois (17%), followed by Los Angeles, California (16%), the state of California in general (9%), San Francisco, California (9%), and Philadelphia, Pennsylvania (8%)."

A pdf of the report is also available.

- SBS