Anyone interested in ignoring the propaganda and taking an objective look at medical liability reform should read "New Directions in Medical Liability Reform," an article co-written by an M.D. and a Ph.D. and published in the April 20, 2011 New England Journal of Medicine (NEJM).
In assessing the effectiveness of past attemtps at medical liability reforms, the NEJM authors identify the opposing interests as follows:
Discussions about malpractice reform often start with physicians’ and insurers’ complaints about the system, which include the high cost of malpractice insurance coverage, the number of nonmeritorious suits, the size and unpredictability of jury awards, and the inefficiency of litigation as a mechanism for resolving disputes. Each of these complaints finds an empirical basis in studies of malpractice claims11,12 and in the volatility seen in malpractice premiums over the past 10 years.13 Yet patients and attorneys also reasonably object that the current tort system is hard for many injured patients to access, takes an unreasonable amount of time and expense to deliver compensation, and often results in different litigation outcomes for patients with similar injuries.9 The best estimates are that only 2 to 3% of patients injured by negligence file claims, only about half of claimants recover money, and litigation is resolved discordantly with the merit of the claim (i.e., money is awarded in nonmeritorious cases or no money is awarded in meritorious cases) about a quarter of the time. 11,12 Thus, from the perspectives of these stakeholders, evaluations of system reforms should consider the frequency with which claims are brought, the amounts that plaintiffs receive, the amounts that are lost to overhead expenses in the litigation process, and the ways in which these factors translate into insurance premiums.
The authors then focus the discussion on measuring how the liability system affects clinical care, including patient safety and the cost, quality, and availability of health care. The authors acknowledge that "[a] key purpose of the liability system is to encourage health care providers to deliver care at a socially optimal level of safety, … to encourage iinstitutions to adopt safer systems, and…spur individual providers to use greater care in practice." Indeed, because of medical malpractice cases, most, if not all, private hospital OR teams have mandatory protocols for counting surgical sponges, towels, and instruments to help protect against sewing up the patient with foreign objects left inside his body. As a result, these cases have become relatively rare. On the other hand, military hospitals, which are often immune from tort liability under the Feres Doctrine, seem to have a much higher incidence of malpractice involving foreign objects left in the patient. It’s all about incentives.
I’ve always been a free-market proponent. That’s why I honestly believe that too much regulation of the liability system is a very bad idea. History tells us that the liability system weeds out the bad apples and helps the most meritourious, whether they be doctors or manufacturers of products. Talk to any medical device representative or surgical nurse and they will tell you who are the horrible surgeons and who are the great surgeons. If the public had this information, the great surgeons would benefit. But enough about economic theory, back the the NEJM article. Here’s some more from the authors:
The tort system can affect clinical care either by design or because of unintended consequences. A key purpose of the liability system is to encourage health care providers to deliver care at a socially optimal level of safety. A well-functioning liability system thus should encourage institutions to adopt safer systems and should spur individual providers to use greater care in practice. These investments, in turn, should result in fewer adverse events and higher-quality care. An oppressive liability environment, on the other hand, can have the unintended effect of “overdeterrence” — causing unwanted provider practices aimed primarily at avoiding liability.7,15 These practices include defensive medicine, in which providers avoid high-risk patients or services or order extra tests, referrals, and services primarily to reduce their liability risk.
A liability reform may perform very differently across liability-related and care-related criteria, and improvements in some measures may come at the expense of others. For example, caps on damages may be successful in lowering premiums and reducing defensive practices, but they may also weaken the incentive to practice safely, resulting in decreased quality of care. Assessments of the efficacy of reforms thus need to consider the entire picture to properly calculate the overall value of reforms for all stakeholders.
Under the heading, "The Evidence on Traditional Tort Reforms," here’s what the authors conclude:
Our review yielded two main conclusions. First, evaluations of traditional tort reforms have remained heavily focused on metrics related to liability costs, with most care-related measures receiving relatively short shrift. Second, the evidence reveals that, with few exceptions, traditional tort reforms have not proved to provide many improvements in these liability metrics (Table 3).
The authors also point out the obvious conclusion that caps on noneconomic damages, which limit the amounts that juries may award for pain and suffering, reduce the size of indemnity payments. But, studies cited by the authors fail to prove conclusively that caps effect insurance premiums or increase the supply of physicians in a state. In Virginia, we have an absolute cap on the amount of the jury verdict. In other words, it is not a cap on noneconomic damages, but a cap on damages. The problem with such a cap is best illustrated by the case of obstetrical malpractice that results in the birth of a brain damaged baby who is faced with a full life expectancy requiring institutional care estimated to cost over $10 million. If the award is capped at $2 million, the cost of the physician’s negligence is shifted from the physician and his insurer to the parents and, if they are not extremely wealthy, the taxpayers.
Finally, for those who call themselves conservative but advocate legislation allowing the federal government to interfere with a private citizen’s contract with her lawyer, the NEJM article concludes that there is little or no evidence to show that limits on attorneys’ fees (or the elimination of joint–and-several liability) are effective. Maybe I should add that non-conservatives who feel the need to pander to the right (read, the Obama administration) should also read this article.