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Current medical malpractice litigation: Proposals for reform
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Introduction
Of all medical professionals, orthopedic surgeons probably have the most frequent interactions with the legal profession. In this Round Table discussion, we have attempted to bring together a diverse group of professionals who will present their perspectives on medical malpractice litigation, reform proposals, and related issues.
This is a topic that has generated much controversy and debate in both the professional and lay media. It is hoped that this discussion will be thought-provoking for the reader, and serve to illustrate the foundations for the different perspectives offered.
— B. Sonny Bal, MD, JD, MBA
Moderator
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B. Sonny Bal, MD, JD, MBA
Steven E. Pegalis, JD
Lawrence H. Brenner, JD 
Michael Suk, MD, JD, MPH, FACS
David M. Glaser, JD
David Teuscher, MDB. Sonny Bal, MD, JD, MBA: Does our tort litigation system work effectively to resolve medical malpractice claims?
David Teuscher, MD: No, the current medical liability system is notorious for naming defendants who get dropped or non-suited in nearly 90% of claims, steals an inordinate amount of time and emotional energy away from one’s ongoing professional practice, takes years to resolve at an unpredictable pace, costs too much by rewarding the avaricious, and rarely delivers predictable and timely justice to the truly negligently injured patient.
An effective system would be one where innocent physicians accused would be either exonerated promptly or simply not suited, non-meritorious cases would be promptly dismissed with minimal expense of defense and discovery, and the vast majority of premiums paid would flow rapidly to the few truly deserving parties who were negligently harmed with real damages that can be reliably quantified and repaid.
What has been lost over the decades of case law is the basis of the entire civil litigation tort system in America was designed to promptly, predictably, and fairly make the negligently damaged party whole, not to buy them a lottery ticket to tomorrow.
Steven E. Pegalis, JD: The civil justice system can and should resolve medical malpractice claims expeditiously, economically, fairly and on the merits. In criminal cases, we rely on judges and juries not to make mistakes and resolve on the merits guilt or innocence even in capital murder cases. Because the defendant can be compelled to testify in a civil case, the full story is likely to be heard in the civil malpractice trial. Therefore the likelihood of a decision on the merits (liability and fair compensation vs. no liability) is even greater than in a criminal trial.
The adversarial system with an impartial jury of citizens has evolved over hundreds of years and has proven itself as the best way to arrive at the truth. Tort reform is and has been a euphemism for various ways to limit to rights of claimants and to impose additional burdens and obstacles on their attorneys. Thus to the extent that tort reform successfully imposes such limitations and obstacles, the system does not work effectively.
Lawrence H. Brenner, JD: The word “effective” has different meanings to different legal scholars. There are, broadly defined, three different schools of thought concerning the goals of our tort litigation system. I would describe these schools of thought as the economists, the sociologists and the philosophers. The economists note that of the many billions of dollars that we spend on malpractice premiums that only 24% result in compensation to patients. The balance is spent on transaction costs such as lawyers and expert witness fees. To the economist the tort litigation system is ineffective.
The sociologist believes that the purpose of the tort litigation system is social utility, ie, improving the community’s health care. Plaintiff’s representatives assert that this is accomplished when large verdicts send signals to community physicians and surgeons that unacceptable care will result in large verdicts. Defendant’s representatives claim that frequent and large verdicts lead to defensive medicine increasing the costs of health care and having a total negative impact on the health care delivery system. There do not appear to be any good studies, which would allow us to determine which of these two competing assertions is correct.
The third school of thought is the philosophers. The philosophers believe that the sole purpose of the tort litigation system is to achieve just and fair verdicts. Studies by Neal Vidmar suggest that our current system is reasonably effective in achieving just and fair verdicts. Other smaller studies suggest that there are many patients which meritorious claims who are being unjustly denied compensation.
Since I am “philosopher,” I generally believe that tort litigation system works effectively.
Michael Suk, MD, JD, MPH, FACS: No, it does not for a number of reasons. It is too easy to bring meritless claims. “Frictional costs” are way too high, generally in the 40% or more range. These costs are defined as the amount of money paid vs. how much goes to the benefit of the injured party.
Also, the system is not time efficient in getting injured party compensated. The determination of guilt is too inaccurate because of a number of factors including a broken expert witness system.
David M. Glaser, JD: Unfortunately, no. While it is understandable that physicians focus on the defense side of the equation, the inefficiency may be even starker on the plaintiff's side: a successful plaintiff often pays 40% of the recovery to a lawyer, and more to experts. This means a plaintiff who is seriously hurt by what is widely agreed to be malpractice typically sees less than 60% of their actual damages compensated. One consequence of the contingent fee is that claims where liability isn't really disputed wind up subsidizing claims where there is no liability. It is hard to see this as efficient.
Bal: Is the cost of insuring against medical malpractice risks a significant cost driver in the health care industry?
Teuscher: It can be in states that do not have stable medical liability systems, especially those with high premiums based upon bad claim experience. Even in stable venues there is always the potential expense driver to the system of the cost of defense and the subtleties of assurance behavior, often described as defensive medicine.
Assurance behavior entails ordering tests, particularly imaging tests, but it might also include performing diagnostic procedures or referring patients for consultation in order to provide an extra layer of protection against abusive lawsuits, and it is common practice. Various studies indicate that 90% of physicians engage in this behavior including over 20% of their tests and procedures ordered; costing over 25% of all costs total spent on this behavior. The published statistics have placed this nationwide at $170 to $650 billion annually. Whatever the actual number, this is a very real and huge cost driver that needs to be addressed if truly we want affordable care.
Pegalis: There is an expression “penny wise, pound foolish.” Having an effective signal from a healthy tort liability system is the most powerful accountability mechanism promoting patient safety and fewer errors. Errors cause great harm and add huge monetary cost, to say nothing of the human emotional cost.
The actual cost of liability insurance premiums is well known to be a small percentage of health care costs and more than set off by the “savings” created by the accountability described above.
The notion that “defensive medicine” adds to cost and would disappear with more tort reform is pure nonsense. Doing a test or procedure that a patient doesn’t need to help defend a lawsuit that may be brought, represents a cost — when and if that actually occurs — that is unethical. To whatever extent defensive medicine costs exist that circumstance should be condemned and discouraged by the medical profession.
Brenner: In the book Overtreated by Shannon Brownlee, she examines the impact that overtreatment has on our health care system. She cites studies that 30% of the medical care that is paid for by Medicare as well as private insurers is “useless, unneeded, a waste … .” While she does not demonize physicians and surgeons, she does describe a complex cultural environment where the excess cost of American health care system is almost exclusively the result of providing too much care. With regards to malpractice reform she notes that it would only “… niddle around the edges of fixing the system”.
In Carl Elliot’s book White Coat Black Hat, he meticulously documents the extrodinary impact that the drug industries manipulation of data and deceptive marketing increase the costs of health care. Consequently, the costs of insuring against medical malpractice would not appear to be a significant costs driver in the health care industry.
Suk: The cost of the coverage and the fear of being sued are the major cost drivers of defensive medicine, which has been estimated to be in the $200 billion a year range.
Glaser: It certainly shouldn't be. A recent study claimed that physicians order tests that "are of no benefit to the patient" because the physician was worried about malpractice. If the physician is worried about malpractice risk, it means that the physician is worried that he or she might be missing something. In such a case, the test is certainly of some benefit to the patient. If a test is truly "useless" physician experts would not fault the physician for failing to order the test. Speaking as a patient, I have always wanted my physician to practice "defensive medicine." In the absence of malpractice liability, I would hope that all physicians would still want to be sure that the hoof beats really are a horse, not a zebra. I know I want my physician to check.
Bal: Have limits on economic damages improved things at the state level?
Teuscher: Actually, economic damages have rarely been limited except in some states with wrongful death caps. What have worked are caps on non-economic damages such as pain, suffering, and loss of consortium. These are commonly referred to as “soft damages” that are notoriously difficult to quantify or reach consensus, resulting in a significant portion of the dispute in the damage portion of litigation. These caps have been instituted in states such as California in the ’70s and in Texas in 2003, with unqualified success in stabilizing underwriting markets and improving access to care. The $250,000 noneconomic cap is the standard in both of those states, and the actuaries will tell you that the effectiveness of that type of measure vanishes as you raise the noneconomic cap above that level.
Not all noneconomic caps are the same and you can’t compare liability venues simply by their high end gross limit, as other factors such as a per claimant cap, statute of limitations, statute of repose, structured settlements, and discovery rules all can contribute to the relative stability of each venue. However, while both sides commonly agree on objective damages, the noneconomic cap is the foundation for surety in settlement for both sides as they assess their case for settlement or whether to proceed with litigation.
Pegalis: Limits on economic or noneconomic damages improve nothing. Such limits, when enacted as part of tort reform, work to the disadvantage of patients injured by medical error. The ethics of the profession requires physicians to disclose errors and support legitimate patient rights. Limiting an injured patient’s damages is thus inconsistent with the profession’s ethics.
Brenner: The answer to this question depends on whose ox is being gored. If you were a parent of a child who had lost all of his or her limbs because of the negligent failure to timely diagnose a rapidly disseminating infection, limiting damages has been a disaster. If you are a physician and surgeon who can practice medicine and surgery with no stress over potential run away verdicts, then limits on damages has been effective.
Suk: We assume the questions means non-economic damages, since there are no economic damages limits. Yes, the limits in Florida are one of the factors that have led to more than 50% drop in most malpractice insurance rates here since the caps were enacted in 2003.
Glaser: Personally, I wouldn't limit economic damages. If a patient is harmed, and the physician or hospital was negligent, that patient should be fully compensated for the harm. Non-economic damages are an entirely different story. The whole goal of the tort system should be to put people back to the economic position they were in. Large economic windfalls make less sense, so limits on non-economic damages, ie, stress, loss of companionship, etc. are much more reasonable to me. Whether they have worked or not, I don't feel qualified to say.
Bal: Could you suggest three meaningful reforms that would benefit the medical malpractice environment?
Teuscher: Loser Pays: The insulating effects of contingency fee contracts takes the skin out of the game for most potential plaintiffs and gives them a free shot at fishing for a settlement which rarely happens. This is a big cost driver when frivolous suits must be defended, and the potential plaintiff my research their case more thoroughly before filing if they might be on the hook for paying for the defense. The opposing side of the coin to that in this model is where the truly negligent physician would be compelled to make an early and realistic settlement to avoid paying both lawyers’ fees. The American public has not shown the political will to adopt this British Rule alternative to date.
Expert Review Panels: Some states have an independent doctor panel review the claim and render an opinion as to negligence and damages before any litigation. This screening before lawsuit could quell some of the frivolous cases, mitigate the perceived bias of hired expert witnesses and reduce the expense of litigation if the panel findings were discoverable, admissible, and gave a preponderance opinion to the conclusions of the panel. If either party chose to proceed with litigation despite the panel’s findings, penalties could apply if they did not prevail greater than the negligence and damages recommendation of the screening panel, including loser pays for the additional costs of the other party, which could further deter inadvisably proceeding.
No Fault System: Why not have the patient purchase sub-optimal outcome insurance to pay for the contingencies of all complications, similar to when travelers bought flight insurance before they boarded the plane? Alternatively a surcharge on all medical care could be placed in a statewide victims fund that would pay out based upon objective criteria of disability and damages incurred.
Pegalis: Streamline discovery, including the elimination of expert depositions. Eliminate limitations on damages. Most important, the medical profession itself must accept that accountability that comes from liability cases promotes public trust and helps “good” doctors support pro-safety initiatives.
Brenner: I would suggest that the method for choosing juries in malpractice cases be reformed so that more jurors could be challenged for cause or, in the alternative, each side would be allotted substantially more challenge without cause. This would allow each side an opportunity to select a panel of jurors that is best suited to render an appropriate in a medical malpractice lawsuit.
I would eliminate the entire concept of standard of care since it is only a median by which experts offer highly subjective opinions. I would replace it with more classic tort principles such as justification and excuse. Currently the use of “standard of care” has created intellectual anarchy that often confuses the jury resulting in verdicts based on the jury’s impression of an expert rather than the substantive issues.
While the details would be too complex to describe briefly, I would institute reform in cases involving medical advances and new technologies.
Bal: Should tort reform be an issue for federal or state legislation?
Teuscher: It is already both, although it is the rare medical liability case that gets filed in federal court. Until recently it has been primarily a state issue. With the increasing federal involvement in the financing of health care and the push for affordability and accountability in the new health bill, the lack of any real reforms for the medical liability system is the greatest omission of all. I don’t see any clearer way to cut the cost of care to federal beneficiaries and those under federal mandates of coverage, than to reduce assurance behavior and defensive medicine through proven effective liability reform efforts. We should implement nationwide what has been verified to work in the states, and if desired we can continue to promote demonstration projects to quantify the further effectiveness of alternative but unproven remedies.
Pegalis: Repealing of any tort reform already on the books would be the only constructive future legislation.
Brenner: I believe we first have to decide whether or not what is being proposed is “reform” or unconstitutional denial of a patient’s right to recover damages when they have been negligently injured in a medical setting.
Suk: This should be a federal issue if it is to have a serious impact on decreasing defensive medicine costs.
Glaser: There is not a clear answer to this issue, but since most tort cases are in state court, I believe it is probably best to leave the issue to the states. That might also allow more experimentation, and permit us to see what systems work. One element of the Obama Health Care legislation that has not received much attention is that there are substantial grants to states to experiment with tort reform. It will be interesting to see if those grants result in any material improvements in the system.
Bal: What system would you propose, in lieu of our adversarial, jury-based tort system, in order to effectively address allegations of medical malpractice?
Teuscher: First, the term malpractice is imprecise and should be replaced with one of professional negligence or professional liability. Regardless, the allegation of negligence is always destined to be adversarial as there is an accusation of unprofessional behavior, be that an act of omission or commission. Probably the best method for evaluating and resolving these disputes is through an impartial peer review process, such as at the state medical board. The compelling public interest is to promptly restrict or remove the license of those physicians with a pattern of professional negligence. The medical board is where we discipline bad doctors, not the district trial court.
Second, the mere fact that negligence is defined at the professional level renders it difficult for the layman jury to understand an undefined standard of care, thus they are prone to undue influence by the theatrics of the officers of the court. Replacing laymen juries with experts in medicine, the medical specialties and the law may be an alternative to consider.
Lastly, there are advocates for special courts such as Philip Howard of Common Good, who make a compelling point. Though I am a critic of the current system, I would want to see such an alternative dispute resolution process proven effective before I would be willing to abandon the trial by jury system despite its many faults.
Pegalis: There is no system better than the adversarial system to arrive at the truth and there is no substitute for the random broad-based jury pool to best ensure an objective and impartial decision.
Once kings and lords had no peers and therefore they were above the law and not subject to justice from the people (jurors). That idea was abandoned hundreds of years ago.
Doctors are not above the law. Jurors are their peers and can be trusted to learn the medicine and decide each disputed case on the merits.
Brenner: This question assumes that current system is ineffective. For a number of years in Ohio, malpractice cases were initially decided by panels of attorneys and physicians. The panel’s decision was introduced as evidence at the jury trial and the jury was instructed that the panel’s verdict was presumptively correct. The system was abolished when it was discovered that plaintiffs were winning substantially more cases then they were prior to the institution of the pre-litigation panels. If I were a physician or surgeon the last thing I would want to do would be to eliminate the jury system which works effectively in their favor. I believe the plaintiffs’ attorneys could better serve their clients if they were to institute on a national level pre-litigation panels such as those that Ohio had instituted for a period of approximately 7 years.
Suk: I would propose a system of health courts with expert health law judges in various locations throughout the country. This system has worked well in other countries (England). It will be fought hard by the trial attorneys. Also, revert back to the English law system that does not allow contingency fees nor advertising by attorneys. In the 1960s both laws were in the United States and that is when the tort system’s integrity dramatically decreased.
Glaser: While the randomness of the jury system scares me a bit, I still believe it is better than most other options. To preserve trust in the system, it is important to include nonprofessionals in any system that evaluates professionals. Imagine if you brought a legal malpractice claim and the case was evaluated solely by lawyers. Would you worry at all that the lawyers "had one another's back?" The lawyers might administer the system fairly, but the perception problem would always exist. I am very intrigued by a no-fault system. I think it is superior for both physicians and patients. Absent that, I would probably combine expert panels with an option for jury review.
- B. Sonny Bal, MD, JD, MBA, is an associate professor of hip and knee replacement in the department of orthopedic surgery, University of Missouri School of Medicine. He can be reached at 1 Hospital Drive, Columbia, MO 65212: 877- 882-2574; e-mail: BalB@health.missouri.edu.
- Lawrence H. Brenner, JD, is on the faculties of orthopedics at Yale University and the University of Southern California and practices in Chapel Hill, N.C. He can be reached at lb@lawrencebrennerlaw.com.
- David M. Glaser, JD, health care attorney, Fredrikson & Byron, P.A., 200 South Sixth Street, Suite 4000, Minneapolis, MN 55402;612- 492-7143; fax: 612 492-7077; e-mail: dglaser@fredlaw.com.
- Steven E. Pegalis can be reached at Pegalis & Erickson, LLC, 1 Hollow Lane, Suite 107, Lake Success, NY 11042; 516 684-2900; e-mail: spegalis@pegalisanderickson.com.
- Michael Suk, MD, JD, MPH, FACS, associate professor, division chief, orthopaedic trauma, University of Florida - Shands Jacksonville, can be reached at 655 West 8th St., ACC Building, 2nd Floor/Ortho, Jacksonville, FL 32209; e-mail: Michael.suk@jax.ufl.edu.
- David Teuscher, MD, can be reached at Beaumont Bone & Joint Institute 3650 Laurel Ave., Beaumont, TX 77707; 409-838-0346; e-mail: sportdoctor@gt.rr.com.