volume 23 number 1 forum · david m. studdert, llb, scd, mph and troyen a. brennan, md, jd, mph 10...

2 Commentary: Looking for a Better WayJohn L. McCarthy

3 Medical Malpractice Tort Reform Across America: An OverviewMary Schaefer, RN, MEd, ARM, JD and Jessica Bradley, MPH

5 No-fault Birth-related Neurologic Injury Compensation:Perhaps Its Time Has Come, Again

John M. Freeman, MD and Andrew D. Freeman, JD

7 The Patient Safety Case for No-fault CompensationDavid M. Studdert, LLB, ScD, MPH and Troyen A. Brennan, MD, JD, MPH

10 MICRA AnalysisMichael B. Evans, JD

12 The Crisis in Professional Liability: It’s the System, Stupid!Barry M. Manuel, MD

14 The Future of Binding Arbitration in Medical MalpracticeThomas B. Metzloff, JD

15 Arbitration for CRICO DefendantsKaren O’Rourke

17 Medical Malpractice Crisis: Fact vs. FictionPaul R. Sugarman, Esq. and Valerie A. Yarashus, Esq.

RISK MANAGEMENT FOUNDATION HARVARD MEDICAL INSTITUTIONS

Updating Medical Malpractice Tort ReformIssue Editors: Mary Schaefer and Jessica Bradley

FOR

UM

February2003

Volume 23

Number 1

© 2

003

Risk

Man

agem

ent F

ound

atio

n of

the

Harv

ard

Med

ical I

nstit

utio

ns

FORUMFeb 2003 RISK MANAGEMENT FOUNDATION HARVARD MEDICAL INSTITUTIONS

2

Commentary: Looking for a Better Way

John L. McCarthy

Jack McCarthy is President and CEO, Risk Management Foundation of the Harvard Medical Institutions

Many veterans of past attempts to scrap thecurrent tort-based approach to medical mal-

practice have been wounded in their efforts to substitutesomething “better,” like enterprise liability or no-fault orMICRA-style reforms. We begin this issue of Forum withthe ambitious goal of outlining the current state ofmalpractice reform and providing a true forum for dis-parate points of view and methodologies.

Most observers agree that the present malpractice systemof fault finding and blame assessment does not constitutea social good. It takes muchtoo long, has high frictionalcost, and does not reimbursemany injured patients. Perhapseven more important, the goalsof the current system are un-clear: to some, it acts as a de-terrent to bad medicine andnegligent providers; to others,it constitutes an opportunityto collect a significant amountof money to ease a bad out-come. It does neither well.

Nationally, malpractice con-sumes billions of dollars of di-rect insurance costs. If theCRICO experience is any indi-cation, then approximately 23percent goes to defense costs(primarily attorneys). In thosecases that result in a payment(about 30 percent of cases filed), roughly 37 percent ofthe payment goes to plaintiff attorneys. When you look attotal indemnity payments, 80 percent of dollars go to-ward six percent of all claims that are filed and 20 percentof all claims that are paid. Stated another way, approxi-mately six percent of the people who file a claim get 80percent of the dollars paid, they wait about four years toreceive a payment, and then turn over more than a thirdof it to their attorney.

Malpractice also has indirect costs, such as defensivemedicine, providers who change specialties or leave prac-tice altogether after a suit (we have a number of real lifeexamples), overburdened court systems, and the poten-tial to inhibit efforts to improve patient safety.

So why do we cling to this inefficient system? Why have somany intelligent and well thought out attempts at reformsimply turned to dust? The answer lies in two areas. First,most attempts at reform happen in response to somecrisis, inhibiting the time for dialog and crafting a viablesolution. Second, the reforms are often presented inisolation rather than as part of a systematic attempt tocoordinate them with other aspects of health care.

For example, look at obstetrics, a major area of indemni-fication. Often, a newborn’s injuries have no identifiable

cause (from a scientific view-point) but they evoke tremen-dous sympathy from the jury.What we, as a society, end upwith is each jury deciding whatit costs to provide a lifetimeof care—even taking a posi-tion on how long that life-time is likely to be. The ques-tion then becomes do we, as asociety, want a “lottery” struc-ture that supports the fewplaintiffs who succeed in courtwith fantastic sums of money?Or, do we want to provide aguaranteed benefit to gravelyimpaired children and theirfamilies, based on actual life-time needs?

And even if it were equitable,should the malpractice sys-

tem be what’s used to keep providers from renderingnegligent care? Does the threat of malpractice act as agovernor on what would otherwise be grossly negligentbehavior on the part of uncaring physicians? There islittle real basis for this point of view. Indeed, a tinypercentage of providers may be impaired or not techni-cally competent, but their behavior is not altered by thethreat of malpractice suits. Again, the current system fallsshort. Would we not be better off with quality and out-come measures driving patient safety initiatives?

So, what is to be done, what are the options? As you readthis Forum, weigh the benefits and negatives of what hasbeen proposed—and in some states implemented—andjoin us in considering, and promoting a more effective,more patient-centered approach to compensation. ■

RISK MANAGEMENT FOUNDATION HARVARD MEDICAL INSTITUTIONSFORUM

Feb 20033

S ince the malpractice insurance crisis of the mid-1970s, almost every state, including Massachu-

setts, (see sidebar) has enacted some type of tort reformin an effort to discourage frivolous lawsuits. In spite ofmost state tort reform measures, skyrocketing jury awardsare once again evident. From 1999 to 2000, the na-tional median jury award for medical malpractice claimsincreased 43 percent, from $700,000 to $1 million.Such awards have grown at seven times the rate ofinflation and settlement payments grew at three timesthe inflation rate.1

Over-inflated payouts are endangering health care qual-ity across the United States. Higher payments are fol-lowed by higher malpractice insurance premiums, which,in some jurisdictions, threaten the public’s access tocare—most recently in Florida, Mississippi, Nevada, NewJersey, New York, Ohio, Oregon, Pennsylvania, Texas,Washington, and West Virginia.1 (Massachusetts healthcare providers have managed to avoid exorbitant ver-dicts, but jury verdicts and settlements are notably higher,particularly in failure-to-diagnose cases. 2)

In response to increasing jury verdicts, rising physicianinsurance premiums, and impediments to accessing care,states are once again looking to legal reforms in hopesof preventing further erosion of the professional liabil-ity insurance market.3 Most states already have statutesof limitations that shorten the period after an injury inwhich a suit can be brought forward. Some have specificdiscovery rules, which provide that the time limitationon filing a suit does not begin until the injury is discov-ered. Florida has a two-year statute that begins from thedate of discovery; however, in Maryland, a claim must befiled within three years from discovery and no later thanfive years.4 Shorter discovery limitations can limit aprovider’s risk of potential liability.3

More recently, the reformers’ attentions have been fo-cused on financial limitations. Several states are seekingto limit attorney fees, the premise being that a reasonablecap on attorney fees can help injured patients receivetheir fair share of damages. One tactic is to place a flatpercentage maximum on attorney fees; another is toconstruct a sliding scale conferring to lawyers a dimin-ished percentage as the size of the award increased. Forexample, in Illinois, fees are limited to 33 percent of thefirst $150,000; 25 percent of the next $850,000; and 20percent of amounts above $1 million.5 Massachusetts hasa similar scale (see sidebar page 4).

Medical Malpractice Tort Reform Across America: An Overview

Mary Schaefer, RN, MEd, ARM, JD and Jessica Bradley, MPH

Mary Schaefer is Director of Regulatory and Institutional Services for Risk Management Foundation. Jessica Bradley is a Loss Prevention Specialist at RMF.

Despite these and other efforts to curb medical malprac-tice costs, the majority of states have found little success.The American Medical Association lists only six statesthat have “escaped the current crisis” of rising malprac-tice premiums: California, Wisconsin, New Mexico, Indi-ana, Colorado, and Louisiana.6 Each of those states hassome form of cap on non-economic damages (i.e., dam-ages that include pain and suffering), loss of maritalcompanionship, and loss of consortium.7

Although damage caps can help stabilize liability insur-ance prices by restraining excessive damage awards, thosecaps are not always enforced by the courts.8 In some cases,state judges have substituted their own views of what tortlaw should be, a practice their critics believe has nullifiedpublic-supported legislative policymaking.8 As the major-ity of states struggle with effective tort reform measures,advocates are looking to the federal government formeaningful national legislation that would render state-level reforms, such as capping, less unpredictable.

Federal ReformsAt the federal level, the House of Representatives passedHR 4600, the HEALTH (Help Efficient, Accessible, Low-cost Timely Healthcare) Act of 2002, which is designed toreduce medical malpractice insurance premiums. Mod-eled after California’s successful statute, HR 4600 wouldimpose limits on medical malpractice litigation in stateand federal courts by:

1) limiting non-economic damages, including pain andsuffering, to $250,000;

2) imposing a sliding scale on attorney fees;

3) limiting punitive damages to $250,000, or twiceeconomic damages, whichever is greater;

states with caps ≤ $350,000average medmal premium increase 12%

states with caps ≤ $250,000average medmal premium increase 15%

states without capsaverage medmal premium increase 44%

source: Medical Liability Monitor

Continued on next page


4

4) eliminating joint and several liability; and

5) reducing the statute of limitations.9

Economic damages, e.g., medical expenses, lost income,would remain uncapped.9 The bill is likely to be high onthe Congressional agenda for 2003.

Even the best-designed tort reforms are likely to falterunless the medico-legal culture undergoes a parallel shifttoward encouraging and rewarding health care profes-sionals and institutions for identifying, reporting, andanalyzing errors. Non-punitive models, such as no-faultcompensation systems, could enhance reporting andcollection of medical error data because they wouldenable health care providers to discuss and resolve dis-putes without fear of legal liability. Another innovative,non-judicial approach with promise is the “early offers”program, in which the provider (i.e., the potential defen-dant) would offer early compensation for economic lossto patients who are injured as a result of medical error.10

Patients, by agreeing to accept an early offer, wouldprovide caregivers and health care institutions the con-trol necessary to achieve successful and prompt resolu-tion of medical injury claims. This would ultimately helpto create an environment that encourages hospitals andcaregivers to identify errors, evaluate causes, and takesteps to prevent future injuries.10

ConclusionWhether reform occurs through federal tort reform leg-islation, individual state reform, or through the adoptionof non-judicial models, the challenge confronted by allthree methods is the same: to create a system that bal-ances the competing interests of health care providersand patients alike. Injured patients deserve fair and swiftcompensation, while health care providers deserve topractice in a non-punitive environment that encouragesmedical error reporting and disclosure. ■

Notes and References

1. American Medical Association. Does limitless litigation restrict access to health care?Statement before the U.S. House Judiciary Subcommittee on Commercial andAdministrative Law Oversight Hearing on Health Care Litigation Reform. June 12, 2002.

2. Cunningham J. Failure to diagnose cases are on the rise. Massachusetts LawyersWeekly, 2001;30:3323.

3. American Medical Association. Liability reform: Common Provisions of State Laws.March 2002. Available at: http://www.ama-assn.org/ama/pub/category/7470.html.

4. American Medical Association. Select State Laws II: Liability Reform. August 2002.Available at: http://www.ama-assn.org/ama/pub/category/7470.html.

5. American Medical Association. Select State Laws I: Liability Reform. August 2002.Available at: http://www.ama-assn.org/ama/pub/category/7470.html.

6. Reuters Health eLine. June 17, 2002.

7. US Department of Health and Human Services. Confronting the New Health Care Crisis:Improving Health Care Quality and Lowering Costs by Fixing Our Medical LiabilitySystem. July 24, 2002.

Continued from previous page

Tort Reform (continued)Massachusetts Law on Medical MalpracticeActions and Tort Damages

Limitation on Attorney Fees (M.G.L. c.231 §60I)Attorney fees may not exceed the following a) 40 percent of first$150,000 recovered; b) 33.3 percent of the next $150,000 recovered;c) 30 percent of the next $200,000 recovered; and d) 25 percent of anyamount by which the recovery exceeds $500,000.

Pre-judgment Interest (M.G.L. c.231 §6B)Massachusetts law allows pre-judgment interest to accrue at 12 percentper annum from the date upon which the action was commenced.

Award of Damages and Itemization of Amount(M.G.L. c.231 §60F)Damages are itemized by the jury into: 1) amounts intended to compen-sate for damages incurred prior to the verdict, and 2) amounts intendedto compensate for future damages. Periodic payment plan for futureeconomic damages is not required.

The damages that are compensable are so-called special damages thatinclude medical expenses, lost earnings, and loss of earning capacity;and so-called general damages, which are often referred to as pain andsuffering. Pain and suffering includes not only physical pain andsuffering, but any loss of function, any loss of ability to performrecreational or household activities, embarrassment, and mental an-guish caused by an injury.

Collateral Sources: Reduction of Award(M.G.L. c.231, §60G)The trial judge may deduct from a damage award the amount receivedby the plaintiff from collateral sources.

Joint and Several LiabilityUnder the doctrine of joint and several liability, defendants may befound jointly liable for the entire amount of the plaintiff’s damages,regardless of each defendant’s proportion of fault in the case, so longas that defendant’s negligence is found to be a substantial contributingfactor in causing the injury.

Comparative Negligence (M.G.L. c.231, §85)Massachusetts has adopted the doctrine of modified comparativenegligence in which a plaintiff whose own negligence contributes tocause his or her own injury is not absolutely barred from any recoveryfrom the defendant unless his or her own negligence exceeds thenegligence of the defendant. However, the amount of damages allowedto that plaintiff is diminished in proportion to the amount of negligenceattributable to him or her.

Damage Caps (M.G.L. c.231, §60H)Non-economic damages limited to $500,000, but can be without limitationif there is substantial or permanent loss or impairment of a bodily functionor substantial disfigurement, or other special circumstances in the case thatwould deprive the plaintiff of just compensation for the injuries sustained.

Statutory Limitations on Recovery (M.G.L. c.260 §4)Medical malpractice actions must be brought within three years afterthe cause of action accrues, but in no event brought more than sevenyears after occurrence of the act or omission occurred, except where theaction is based upon the leaving of a foreign object in the body.

In the case of minors, a medical malpractice action must be broughtwithin three years from the date the cause of action accrues, except thata minor under the full age of six years shall have until his ninth birthdayin which the action may be commenced, but in no event filed more thanseven years after occurrence, except where the action is based upon theleaving of a foreign object in the body. (M.G.L. 231 §60D)

8. Schwartz V and Lorber L. Tort reform: approaches differ in legislatures and in courts:change nullification of civil justice reform violates our fundamental form ofgovernment. Boston Bar Journal May/June 2002:28.

9. H.R. 4600, 107th Congress, 2d Session.

10. O’Connell J. More Hippocrates, less hypocrisy: early offers as a means of implementingthe Institute of Medicine’s recommendation on malpractice law, Journal of Law andHealth. 2002;23.


Feb 20035

Under the current tort system, 60 percent ofmalpractice premiums paid by obstetricians go to

cover suits for alleged birth-related cerebral palsy (CP).Yet less than 10 percent of children born with CP receiveany compensation. Even those who do receive compensa-tion receive less than 40 cents of every dollar spent oninsurance premiums—the rest goes for lawyers, experts,insurance administrators, and other transaction costs.1

A report published in 1988 concluded that the tortsystem contributed to an adversarial patient/physicianrelationship, encouraged the practice of purely defensivemedicine, left nine out of tenmalpractice victims uncompen-sated, and expended more thanhalf of its income in overheadand transaction costs while pro-ducing widely differing mon-etary awards for comparable vic-tims.2 A new report, issued inJuly 2002 by the U.S. Depart-ment of Health and HumanServices, reiterates that the tortsystem remains unpredictable,costly, and slow; does not accu-rately identify negligence; doesnot deter bad conduct; and doesnot provide justice.3,4

Perhaps it is time to revisit the no-fault malpractice tortreform proposal we published in 1988.1 This was a trueno-fault insurance designed to compensate all childrenborn with cerebral palsy in proportion to the severity andexpense of their disability. For less than the cost ofmalpractice insurance, this no-fault insurance could payall children born with CP and their families for allexpenses not covered by medical insurance or othergovernment programs. No one would need to determinecausation or fault, but “plaintiffs” would not receivecompensation for pain and suffering. The program wouldachieve economic balance by foreclosing the option forsuits alleging birth-related malpractice.

BackgroundIn the late 1980s, Virginia and Florida, adopted whatwere inaccurately termed “no-fault” systems, limited toobstetrical cases that had resulted in severe injury to thebrain or spinal cord due to lack of oxygen or to mechani-cal injury.5,6 Under these plans, the most severely injuredchildren were to be removed from the tort system to a

workers’ compensation-type system that assured paymentand care for the duration of the child’s life. However, theVirginia law required evidence that the injury was due tooxygen deprivation, and covered only the most seriouslyimpaired children who were “permanently non-ambula-tory, aphasic, incontinent, and in need of assistance in allphases of daily living.” Virginia also required that boththe obstetrician and the hospital be enrolled in thecompensation plan.

As we predicted at the time, few children entered thesystem.1 The law did not decrease the cost of malpractice

insurance and has been difficultand expensive to administer. TheRichmond Times-Dispatch foundthat—in 14 years—only 75 chil-dren were admitted to the plan,that many families have had toendure years of hearings to deter-mine eligibility, and that the pro-gram has serious fiscal problems.7

The Florida program has hadsimilar problems.

Under both the Virginia andFlorida laws, the overly restric-tive definitions of covered chil-

dren result in the exclusion of many children with birthinjuries deemed insufficiently severe, but whose injuriesare otherwise similar to those who are covered. Thosedefinitions also provide an opportunity for some familieswho want to sue to opt out, and fail to eliminate the need forlengthy and costly hearings regarding the cause of thechildren’s birth defects.

During the 1990s the malpractice “crisis” abated. Insur-ance premiums rose less sharply, due in part to anincrease in the insurance industry’s investment income,increased competition, and the capping of awards forpain and suffering. Recently, however, the crisis hasreturned, with dramatic premium increases, especiallyfor obstetricians and emergency medicine specialists.Once again, many physicians are stating that the insur-ance is not affordable; some are leaving the practice ofmedicine or shifting their location or area of practice.Access to obstetrical care and, in some places, to emer-gency care, is limited or not available.3 As we address thiscurrent crisis, we should revisit the approaches taken inthe 1980s and learn from those mistakes.

No-fault Birth-related Neurologic Injury Compensation: Perhaps Its Time Has Come, Again

by John M. Freeman MD, and Andrew D. Freeman JD

Dr. John Freeman is Lederer Professor of Pediatric Epilepsy, Departments of Neurology and Pediatrics, Johns Hopkins School of Medicine. Attorney Andrew Freeman isa partner at Brown, Goldstein & Levy, LLP in Baltimore.



6

No-fault Birth-related Neurologic Injury Compensation (continued)


Some states, and the Congress, are currently consideringcaps on awards for pain and suffering, as were adopted byseveral states during the 1980s. While caps do reducesome of the cost of lawsuits, they do so inequitably, bylimiting recoveries only for the most severely injured.3

Moreover, caps are unlikely to reduce defensive medi-cine, which is practiced to avoid being sued, not to avoidan award of more than a certain amount.

Shifting away from the tort system for children born withcerebral palsy seems especially appropriate in light ofrecent research showing that a very small percentage ofCP results from malpractice. In 1988, Dr. Karin B. Nelsonfound that most CP was unrelated to birth asphyxia, andthat in less than eight percent of cases was it even possibleto have prevented the CP.7 Subsequent studies show thateven that number was far too high. As Nelson morerecently states, “It is often not possible to conclude withconfidence the cause of CP in an individual case.... It is farless possible to determine if the CP was preventable.” 9

She also states, “Increasing evidence indicates that muchof the CP previously ascribed to hypoxic injury may bedue to intrauterine infection. That infection is currentlynot detectable prior to or at the time of birth, and itseffects are not currently preventable.” 10 Thus, the result-ant CP cannot be attributed to obstetrical fault.

Cerebral palsy sometimes can be due to birth trauma andto birth asphyxia, but these are rare causes of neurologi-cal injury. Whatever its cause, CP remains an expensivetragedy. The more than 90 percent of children with CPwho receive no compensation from the tort system havethe same needs as the few children who receive multi-million dollar awards. Quick, efficient, and equitablecompensation to allow the child and family the bestpossible quality of life should be society’s goal. Thecurrent tort system does not achieve this, nor do theFlorida and Virginia “no-fault” laws. Capping paymentsfor pain and suffering as recently proposed will reduce asmall portion of the cost of the current tort system, but willproduce neither fairness nor any compensation for mostsufferers.3 Only a true no-fault system could achieve that.

True No-faultWhat are the goals of the tort system?

■ To identify causation? Since fault is difficult orimpossible to determine in most cases, a tort systemthat determines causation by pitting “expert” against“expert” in an adversarial forum before lay juries isboth inaccurate and inefficient.

■ To determine fault? If, in the majority of cases, wecannot even determine causation, the determina-tion of fault is even more difficult. The retrospectivedetermination of whether a different course ofobstetrical management was appropriate, andwhether it would have resulted in a different outcomefor the baby, is a matter of opinion, not of fact.

■ To compensate the injured victim? The currentsystem awards large monetary damages to a smallproportion of identically handicapped children.

■ To punish offending physicians? On very rareoccasions obstetricians (and other physicians)commit blatant malpractice. They may fail to appearat the delivery until too late, they may be drunk,drugged, incompetent, or ill informed. However,the current system of justice lumps them togetherwith competent practitioners involved in an adverseevent. A better system must be found to punish theegregious offenders and encourage (without thefear of civil suits) other physicians, nurses, andhospitals to more readily report, investigate, andaddress malpractice.

A true no-fault insurance system for children with cere-bral palsy would compensate all children for their excesshandicap-related medical expenses, would be more equi-table than the current tort system, and would avoid thecurrent costly litigation. It would be less expensive thanobstetrical malpractice insurance and would avoid defen-sive medicine and improve access to care. Perhaps it is anidea whose time has come. ■


1. Freeman AD and Freeman JM. No-fault cerebral palsy insurance: an alternative to themalpractice lottery. Journal of Health Politics, Policy and Law. 1989;14:707-17.

2. New York State Insurance Department. 1988 A Balanced Prescription for Change. NewYork: New York State Insurance Department.

3. Department of Health and Human Services, Confronting the New Health Care Crisis:Improving Health Care Quality and Lowering Costs by Fixing Our Medical LiabilitySystem http://aspe.hhs.gov/daltcp/reports/litrefm.pdf.

4. Malpractice premiums in Florida for 2001 were $143,000 to $203,000 per obstetricalphysician, or approximately $2,000 per delivery.

5. Virginia code #38.2-5000-5021

6. Florida Chapter 88-1,##60-75

7. McKelway B. Richmond Times-Dispatch, August 11-13, 2002

8. Nelson KB. What proportion of cerebral palsy is related to birth asphyxia? Journal ofPediatrics. 1988;112:572-74.

9. Nelson KB. The neurologically impaired child and alleged malpractice at birth.Neurology Clinics: 1999;17:293-93.

10. Nelson KB and Willoughby RE. Overview: infection during pregnancy and neurologicoutcome in the child. Mental Retardation and Developmental Disabilities ResearchReviews. 2002;8:1-2.

11. Harris Interactive’s Fear of Litigation Study: Executive Summary.www.ourcommongood.com/news.html


Feb 20037

The Institute of Medicine’s (IOM) recent report onerror in medicine introduced a wide audience to

the alarming extent of morbidity and mortality due topreventable adverse events in American hospitals.1 Thepublicity that surrounded the report, particularly attentiongiven to iatrogenic death rates, has stirred interest amongpolicy makers at both the state and federal levels.2-4

Leading policy responses promote two key strategies forenhancing patient safety: 1) design and implementationof “systems approaches” to reducing errors; and 2) im-proved tracking of incidents involving unintended harms.Scientific and regulatory goals are well-aligned here.Experts generally agree that both systems-oriented inter-ventions and data gathering are vitally important to anysignificant advances in patient safety.5-6

Unfortunately, because access to compensation for medi-cal injury in our health care system hinges on blame andindividual provider fault, the patient safety reformsspurred by the IOM Report are on a collision course withthe medical malpractice system. In the short term, thatcollision is likely to stymie much-needed attempts tomake American hospitals safer. In the long term, it willsubstantially restrict the scope of public health gains thatare achievable through error prevention efforts. Thechallenge of addressing error in medicine demands athorough reconsideration of the legal mechanisms cur-rently used to deal with harms in health care.

A System at Odds with Improvements in Patient SafetyHarmful accidents in health systems frequently involvehuman error, but their causes and consequences cannotbe meaningfully understood by examining provider be-havior alone.7-8 Hence, the most promising patient safetyinitiatives seek to identify and correct latent errors, andto avoid what James Reason has called the “blame trap.”9

A focus on individual provider judgment may not onlylimit the effectiveness of error-prevention efforts, but willactually exacerbate underlying causes of error. Punitiveenvironments appear to chill providers’ willingness togenerate information about errors—information thatcould be used to understand the causes of error anddesign effective prevention strategies10-13

Similarly, system-oriented approaches to reform are fun-damentally at odds with the medical malpractice disputeresolution system. At its core, malpractice law involves a

The Patient Safety Case for No-fault Compensation*

David M. Studdert, LLB, ScD, MPH and Troyen A. Brennan, MD, JD, MPH

David Studdert is a policy analyst with The Rand Corporation. Dr. Brennan is a Professor of Medicine at Harvard Medical School and Professor of Law and Medicine atthe Harvard School of Public Health

This article is excerpted with permission from: Studdert DM, Brennan TA. No-fault compensation for medical injuries: the prospect for error prevention. Journal of the American MedicalAssociation 2001;286:217-223.

set of adversarial proceedings, beginning with a patient’sallegation of negligence against an individual provider.14

Processes of care are relevant only insofar as they mayprove or disprove the defendant’s negligence.

In short, malpractice litigation induces silence and bitter-ness. Physicians do not believe it contributes to thequality of care,15-16 except perhaps when targeted at insti-tutions such as managed care organizations.17 Hospitalexecutives appear to share providers’ skepticism, an out-look exemplified by the fact that many hospitals continueto conceive of risk management and quality improve-ment as substantively different enterprises.18 The needfor openness and dispassion about errors in the currentmalpractice environment constitutes a troubling dead-lock for the patient safety movement. Although somecommentators continue to hold out hopes that the exist-ing system may adapt, clearly, alternative approaches topatient compensation must be seriously considered.

The No-fault ApproachCompensation programs that do not rely on negligencedeterminations are popularly referred to as “no-fault”systems.19 The workers compensation plans in operationin all states are a prominent example of the no-faultmodel. A number of states also have no-fault componentsembedded in their programs for compensating automo-bile injury; claimants must prove that they have sufferedan injury that was caused by an accident, but need not showthat the third party acted in a negligent fashion.

No-fault compensation systems are not completely un-known to medicine—several are in operation abroad.20

Among the international models, the Swedish approachis perhaps the most attractive. Patients who believe theyhave been injured as a result of medical care in Swedenare encouraged to apply for compensation using formsavailable in all clinics and hospitals. Physicians and otherhealth care personnel are actively involved in approxi-mately 60 to 80 percent of claims, alerting patients to thepossibility that a medical injury has occurred, referringthe patient to a social worker for assistance, even helpingpatients to lodge claims.21 Physicians in Sweden tend toregard the facilitation of medical injury claims as a natu-ral extension of their therapeutic responsibility to safe-guard patients’ best interests.


*


8

Once a claim is made, the treating physician prepares andfiles a written report about the injury. An adjustor makesan initial determination of eligibility and then forwardsthe case for final determination to one or more specialistswho are retained to help judge compensability. Theprocess is relatively fast, with the average claim taking sixmonths from initiation to final determination.21 Approxi-mately 40 percent of claims receive compensation.21

The key element of the compensation criteria in theSwedish model is the concept of avoidability. Systemdesigners recognized that compensating all injuries aris-ing from medical care would be prohibitively expensive.Thus, only a subset of medical injuries are eligible forcompensation. Successful claims are paid in a uniformmanner using a fixed benefits schedule, and includecompensation for both economic and non-economic(pain and suffering) losses.

The Fresh Case for No-faultIn comparisons with medical malpractice, the capacity ofno-fault systems to compensate injured patients is usuallytouted as their major strength.22 The two chief criticismstraditionally leveled against no-fault are that 1) the costsof achieving effective compensation are prohibitive; and2) removal of fault-based determinations will have adeleterious impact on deterrence goals. Recent empiri-cal findings and new patient safety imperatives debunkthe rationale for both criticisms.

Affordability Through FlexibilityBy combining data on the incidence and types ofadverse events in Colorado and Utah in 1992 withestimates of the losses stemming from those ad-verse events, we calculated the costs of three differ-ent compensation models:

■ one that would compensate all medicalinjuries;

■ one extending payment only to medicalinjuries attributable to negligence; and

■ one that compensated injury according toSwedish avoidability criteria.20, 23

The calculations use a compensation package withstandard components for each injury, including lostincome, household production, health care costs,and compensation for pain and suffering associatedwith the medical injury.

Figure 1 summarizes our results. Estimates showthat many more injured patients may be compen-

sated under no-fault than tort within budgets that aresimilar to or less than the costs of the current system. Webelieve that these data provide a strong case for thepotential affordability of no-fault schemes.

Deterrence ReconsideredCritics of no-fault have generally equated a shift to no-fault with abandonment of opportunities to use thecompensation system to leverage positive influences onprovider behavior. How can a system that jettisons indi-vidual blame for errors create incentives for carefulbehavior? Setting aside the questionable role of deter-rence in malpractice law, we see ample evidence that no-fault systems can be structured to promote safety.19, 24-27

Indeed, new insights into the causes of medical injurysuggest that they are actually far better placed to promotesafety than negligence-based litigation.

The best example of deterrence in no-fault programscomes from the field of workers’ compensation where avariety of “experience rating” methods are used to createfinancial pressure on employers to pursue safety in theworkplace.28 Experience rating means that firms or indi-viduals with higher rates of injury pay higher premiums.W. Kip Viscusi and others have demonstrated the capacityfor this kind of incentive structure to deter injuries. 29,26

Linking a shift to no-fault with the adoption of “enter-prise liability” would provide an opportunity to train thesafety incentives of experience rating on the problem ofmedical injury. In its sharpest form, enterprise liability


The Patient Safety Case for No-fault Compensation (continued)

Figure 1

Number and Cost of Compensable Events Under AlternativeCompensation Models, Utah and Colorado, 1992Types of events by state Compensation package Compensable Cost

injuries ($ millions)UtahNo-fault model based on ■ 4-week disability threshold 1,465 55Swedish compensable events ■ 66% wage replacement

■ No household production■ Health care costs■ Pain and suffering up to $100,000

Medical malpractice system Standard tort award ~126* 55–60†

ColoradoNo-fault model based on ■ 8-week disability threshold 973 82Swedish compensable events ■ Full wage replacement

■ No household production■ Health care costs■ Pain and suffering

Medical malpractice system Standard tort award ~268* 100–110†

*We calculate the number of medical malpractice plaintiffs compensated annually by dividing theestimated number of claims statewide (361 in Utah and 476 in Colorado for injuries in 1992) by thenumber of paid claims. In Utah, we estimated the paid claim proportion (35 percent) using datacollected by the legislative auditor (Legislative Auditor General State of Utah). A Performance Audit ofthe Medical Malpractice Prelitigation Panels. January 1994 Report. No. 93-07. In Colorado we usedthe proportion of injury year 1992 claims paid at the state’s largest insurer (56 percent).

†Malpractice system costs were calculated by aggregating estimates of total premium dollars paid byphysicians and hospitals to insurers in each state.


Feb 20039

means that individuals do not directly bear the costsassociated with an accident. Instead, the enterprise—whether it be a large group practice, a hospital with anintegrated medical staff, or a health plan—would be“strictly liable” in both a legal and economic sense, bymeeting the costs of liability premiums for all affiliatedstaff.30-31 Premium levels could then be experience rated.For instance, a hospital would pay more following a rashof avoidable injuries and less if quality improvementinitiatives curtailed the incidence of such events.

In addition to its deterrence promise, enterprise liabilityis thoroughly consistent with system-oriented qualityimprovement efforts.1,31 If the aberrant behavior of indi-vidual providers is a relatively infrequent explanation forharm, as a growing body of empirical literature suggests,then the greatest potential for patient safety advancesmust lie in institutional, not individual, accountability. 1

An Incremental Approach to ReformMost hospitals and physicians are not prepared for a rapidshift to a no-fault model, much less enterprise liability, andthe unanticipated outcomes of such a major transitionshould be studied. In addition, a number of importantdesign issues must be worked through, including:

■ the status of the compensation authority(private or public),

■ the role of existing malpractice insurers,

■ institutional oversight to guard against cover-upsof injuries,

■ informed consent for patients cared for in ano-fault framework,

■ the extent of attorney involvement (if any),

■ appeal rights, and

■ the tensions that will inevitably emerge betweenno-fault and the coexisting tort regime. 32

Rather than wholesale replacement of the tort systems withno-fault, we advocate enabling legislation at the state levelthat would allow selected organizations to experiment withno-fault/enterprise liability models. We believe that insti-tutions participating in a no-fault/enterprise liability pro-gram would quickly outstrip their competitors both interms of their attractiveness to patients and their ability tobring about safety interventions.

More importantly, the combination of no-fault and enter-prise liability would provide institutions with carrots topursue error prevention efforts, in the form of a less

punitive environment and instructive data, and sticks, inthe form of experience rated premiums. Our view iscertainly optimistic. But it is a social experiment worthundertaking if we are to decrease significantly the num-ber of injuries caused by medical errors. ■


1. Corrigan J, Donaldson M (eds). To Err Is Human: Building A Safer Health System.Washington, DC: Institute of Medicine (1999).

2. Pear R. Group asking U.S. for new vigilance in patient safety. New York Times.November 30, 1999:A1.

3. David B, Appleby J. Medical mistakes 8th top killer. USA Today. November 30, 1999:1A.

4. Goodman E. In hospitals, to err is human, to fess up is necessary. Boston Globe.December 9, 1999:A23

5. Leape LL. Error in medicine. Journal of the American Medical Association.1994;272:1851–57.

6. Berwick DM, Leape LL. Reducing errors in medicine: it’s time to take this moreseriously. British Medical Journal. 1999; 319:136–37.

7. Cooper JB and Gaba DM. A strategy for preventing anesthesia accidents. InternationalAnesthesia Clinical. 1989. 27(3): 148–52.

8. Leape LL, et al. Systems analysis of adverse drug events. Journal of the AmericanMedical Association. 1995;274:35–43.

9. Reason J. Human error: models and management. British Medical Journal.2000;320:768–70.

10. Scott HD, et al. Physician reporting of adverse drug reactions: results of the RhodeIsland Adverse Drug Reaction Reporting Project. Journal of the American MedicalAssociation. 1990;263:1785–88.

11. Rogers AS, et al. Physicians knowledge, attitudes, and behavior related to adverse drugevents. Archives of Internal Medicine. 1988;148:1596–1600.

12. Ross L, Wallace J, Paton J. Medication errors in a paediatric teaching hospital in the UK:five years operational experience. Archives of Disease in Childhood. 2000;83:492–96.

13. Bosk CL. Forgive and remember: managing medical failure. Chicago: Univ. Chicago Pr., 1979.

14. The pursuit of specific providers is especially true in Massachusetts, where not-for-profithealth care institutions are covered by a charitable immunity liability limit of $20,000.

15. Lawthers AG, et al. Physicians’ perceptions of the risk of being sued. Journal of HealthPolitics, Policy and Law. 1992;17(3):463–82.

16. Gostin LO. A public health approach to reducing error: medical malpractice as a barrier.Journal of the American Medical Association. 2000;283:1742–43.

17. Studdert DM, et al. Expanding managed care liability: what impact on employment-based health coverage? Health Affairs. 1999;18(6):7–27.

18. Brennan TA, Berwick DM. New rules: Regulations, markets, and the quality of Americanhealth care. San Francisco: Jossey Bass, 1996.

19. Bovbjerg RR, Sloan FA. No-Fault for medical injury: theory and evidence. University ofCincinnati Law Review. 1998;67:53–123.

20. Studdert DM, et al. Can the United States afford a “no-fault” system of compensationfor medical injury? Law and Contemporary Problems. 1997;60:1–34.

21. Espersson C. The Swedish Patient Insurance: A Descriptive Report. 1992 (paperpresented at Balliol College, Oxford, England).

22. Weiler PC. The case for no-fault medical liability. Maryland Law Review. 1993;52:908–50.

23. Thomas EJ, et al. Costs of medical injuries in Utah and Colorado. Inquiry.1999;36(3):255–64.

24. Schwartz GT. Reality in the economic analysis of tort law: does tort law really deter?UCLA Law Review. 1994;42:377–444.

25. Sloan FA, et al. Tort liability and obstetricians’ care levels. International Review of Lawand Economics. 1997:17(2):245–60.

26. Viscusi WK, Moore MJ. Promoting safety through workers’ compensation: the efficacyand net wage costs of injury insurance. RAND Journal of Economics. 1989;20:499–515.

27. Worrall JD, Butler RJ. Experience rating matters. In: Borba PS and Appel DB. Workerscompensation insurance pricing: Current programs and proposed reforms. Boston:Kluwer Academic Publishers, 1988.

28. Spieler E. Perpetuating risk? Workers compensation and the persistence of occupationalinjuries. Houston Law Review. 1994; 31:119–264.

29. Viscusi WK, Moore MJ. Promoting safety through workers’ compensation: the efficacyand net wage costs of injury insurance. RAND Journal of Economics. 1989;20:499–515.

30. Abraham KS, Weiler PC. Enterprise medical liability and the evolution of the Americanhealth care system. Harvard Law Review. 1994;108:381–436.

31. Sage WM, Hastings KE, Berenson RA. Enterprise liability for medical malpractice andhealth care quality improvement. American Journal of Law and Medicine.1994;10(1&2):1–28.

32. Patient Compensation Act of Colorado, 1997. In: Final report to the IMPACS Programof the Robert Wood Johnson Foundation, August 28, 1997.


10

From the late 1960s into the 1970s, physician profes-sional liability insurance in California had shown

increases of 300-400 percent; in some instances almost1000 percent.1 In January of 1975, a major southernCalifornia malpractice carrier notified approximately2,000 physicians that their coverage would not be re-newed. At that same time, approximately 4,000 northernCalifornia physicians were notified that their premiumswere going up 380 percent. The legislature respondedwith the Medical Injury Compensation Reform Act of1975 (MICRA), which included this preamble:

“...[T]here is a major healthcare crisis in the Stateof California attributable to skyrocketing malprac-tice premium costs and resulting in a potentialbreakdown of the health delivery system, severehardships for the medically indigent, a denial ofaccess for the economically marginal, and deple-tion of physicians such as to substantially worsen thequality of healthcare available to citizens of thisstate. ...[T]his statutory remedy herein provided isintended to provide an adequate and reasonableremedy within the limits of what the foregoingpublic health and safety considerations permit nowand into the foreseeable future.”2

The legislature sought a balance between ensuring Cali-fornians would have access to care and at the same timeprotecting individuals who may be harmed through someact of medical negligence or malfeasance. Although MICRA’s

MICRA Analysis

by Michael B. Evans, JD

Michael Evans is Senior Vice President and Chief Risk Officer for Sutter Health in Sacramento, California.

$250,000 cap on non-economic damages tends to receivemost of the attention,3 the Act had goals which go wellbeyond this single purpose. They are:

■ The establishment of a specific statute of limita-tions, with a special statute for minors.

■ Specific limits on attorneys fees.

■ The requirement for advance notice in order to giveboth parties the opportunity to resolve issues beforethe expense and time lost to litigation.

■ Periodic payment for future losses.4 This provisionapplies to awards of $50,000 or more. Periodicpayment does not apply for the present value awardof future non-economic damages. Also periodicpayment for wage loss does not terminate on theplaintiff’s death, although future payment ofmedical expenses does.

■ California Civil Code section 3333.1 also providesthat in medical malpractice cases defendants mayintroduce evidence of payment of plaintiff’s medicalexpenses by other sources such as social security,government income, disability, workers’ compensa-tion coverage, plaintiff‘s health or disability insur-ance, accident insurance providing income ormedical payment benefits, or health plan. Juries arenot obligated to take into consideration in awardingdamages the existence of collateral sources of pay-ment. Opponents of MICRA have argued that thisprovision allows defendants to avoid their obligationwith respect to the damages incurred by an injury.

■ Limits on punitive damages and provisions requiringcourt approval to make a claim for punitive damagesbefore proceeding.

One of the most significant outcomes from the enact-ment of MICRA has been a limitation on the growth ofmalpractice premiums without inhibiting continued ac-cess and availability of medical care. California physicianspay, on average, one half to one third of the premiumpaid in most other populous states (see Figure 1), withouteffecting access to the courts nor compensation for thenon-economic losses plaintiff may incur for such things asthe cost of ongoing care, rehabilitation, and lost earnings.

Since 1975, malpractice insurance premiums have risen168 percent in California while rising approximately 420percent nationwide.5 An obstetrician in California paysapproximately $45,000 in annual liability premium,

Figure 1

Premium Rate Comparison

Selected Non-MICRA States by Medical Specialty (Average Rate)*

*The Doctors Company average rates as of 01/01for mature claims-made coverage at $1 million/$3 million limits.

$0

$30,000

$60,000

$90,000

$120,000

$150,000Texas

Nevada

Illinois

Florida

California

Ob/GynNeurosurgeryGeneral Surgery


Feb 200311

Chart Title

whereas the average liability premium for obstetricians inother large states is twice that.6 Justice Cruz Reynosa, nowretired California Supreme Court Justice and on the courtthat upheld the constitutionality of MICRA in 1986, re-cently stated, “MICRA has reached a balance between theinterest that plaintiffs have and the interest of providingreasonable insurance and medical attention.”7

Plaintiff AwardsDespite MICRA, however, the average cost of a medicalmalpractice claim in California has outpaced the rate ofinflation, increasing from about $10,000 in 1976 toapproximately $120,000 in 1996.8

Many would argue that, in spite of MICRA’s cap on non-economic damages, plaintiffs awards for damages neces-sary to compensate for those costs that can be attributed tomedical negligence have been adequate and reasonable.

The history of MICRA is replete with challenges to itsconstitutionality and the constitutionality of individual pro-visions. In American Bank and Trust Company vs. CommunityHospital, the court upheld the periodic payment provisionsof the Act.9 In Barme vs. Wood, the court upheld the collateralsource provisions of the Act.10 In Roa vs. Lodi Medical Group,the court upheld the constitutionality of the limitations onlegal fees provisions.11 In Fein vs. Permanente Medical Group,the court upheld the provisions of MICRA limiting non-economic damages to $250,000.12

More recently there have been attacks on MICRA fromdifferent quarters, including attempts to avoid the limitsof MICRA by alleging causes of action that purportedlypreclude impositions of MICRA limits. One example iselder abuse, in which plaintiff attorneys attempt to turnevents of potential medical negligence into a claim ofelder abuse in order to avoid the MICRA limits and haveaccess to unlimited attorney fees.

Two cases significant to MICRA are now on appeal. Atissue in American Continental Insurance Company, et al. vs.Shirley Allen, et al. vs. Los Alamitos Medical Center, et al13 andTerry Lathrop and Douglas Lathrop vs. Health Care Partners14

is whether a physicians group is a “health care provider”and, therefore, afforded the protections of MICRA. Thetrial courts in Orange County and San Francisco Countydecided that the Medical Groups are not covered andcannot avail themselves of MICRA’s $250,000 limit onnon-economic damages. The current tactic of the plain-tiffs’ bar is not to attack MICRA directly, but to avoid

MICRA by attacking its application in certain circum-stances. Many believe the success of this argument wouldeffectively negate the benefits accrued to Californians ingeneral as a result of MICRA.

Health care in California remains in crisis. The good newsis that professional liability insurance—although notwithout its problems—is not contributing materially tothat crisis. Given its stated purpose, MICRA has achievedits goals. ■


1. Preliminary report, Assembly Select Committee on Medical Malpractice, June 1974,pages 3–4.

2. Statutes 1975, Second Executive Session 1975-1976, chapter 2 section 12.5, page 4007.

3. California Civil Code section 333.2.

A $250,000 cap on non-economic damages, better known as pain and suffering. This$250,000 award is available also to other members of the plaintiff’s family undercertain circumstances where they can claim to be a direct victim. This cap in no waylimits the economic damages recoverable by a plaintiff, and these costs (e.g., ongoingcare, rehabilitation, lost earnings,) are subject to inflationary increases.

4. California Code of Civil Procedure, section 667.7.

5. National Association of Insurance Commissioners, 1999 Profitability Study.

6. Medical Liability Monitor, 2001.

7. Testimony of Danielle J. Walters on Behalf of Californians Allied for Patient ProtectionBefore the Subcommittee on Commercial and Administrative Law of the Committee onthe Judiciary U.S. House of Representatives June 12, 2002

8. The Doctors Company Report.

9. American Bank and Trust Company vs. Community Hospital, (1984) 36 Cal.3d359

10. Barme vs. Wood, (1984) 37 Cal.3d174,

11. Roa vs. Lodi Medical Group, (1985) 37 Cal.3d920

12. Fein vs. Permanente Medical Group, (1985) 38 Cal.3d137

13. American Continental Insurance Company, et al. vs. Shirley Allen, et al. vs. Los AlamitosMedical Center, et al, venue California Appeals Court, 4th District, Division 3

15. Terry Lathrop and Douglas Lathrop vs. Health Care Partners, venue California AppealsCourt, 1st District, Division 5.

Figure 2

Payments to Injured Patients Have Outpaced Inflation

Total percent increase 1984-2000

US cities CPI vs. The Doctors Company California closed allocated claims with indemnity

0 50 100 150 200

All Consumer Items Inflation Rate

Health Care Inflation Rate

Payments to Injured Patients

153%

144%

65.7%


12

Medical malpractice is again causing a crisis inhealth care in the United States. Women are

having difficulty obtaining obstetrical care; trauma sur-gery and neurosurgical care are limited in some areas ofthe country. A survey of hospitals by the American Hospi-tal Association revealed that the current professionalliability crisis has caused 20 percent of the association’s5,000 member hospitals to cut back services and sixpercent have eliminated some units.1 The cost of profes-sional liability insurance for physicians has been risingsignificantly for several years. In 2002, premiums forinternists and general surgeons rose (on average) 25percent; for obstetricians the increase averaged 20 per-cent.2 Physicians are finding that the rising cost and/oravailability of professional liability insurance are forcingthem to limit their practice to less risky procedures,abandon specialty practices, move to other states, “gobare,” or retire prematurely.

What is the Cause of this Crisis?We have a flawed system of dealing with medical injury inthe United States. Indeed, it is difficult to imagine asystem worse than the one we now have. Consider thefollowing:

■ Fewer than one in 16 patients who are negligentlyinjured ever receive compensation.3 This is totallyunacceptable as a compensation mechanism,providing financial relief to far fewer injured partiesthan any other form of insurance. That includesproperty and casualty insurance, disability insur-ance, and workers’ compensation insurance, wherevirtually all people who suffer an injury or loss arecompensated.

■ More than 55 percent of the premiums paid byphysicians is consumed by what we euphemisticallyrefer to as “overhead” but, in reality, are legal fees.4

This is far more than any other form of commercialinsurance.5

■ Individuals who litigate may have to wait five toseven years before receiving compensation. This canresult in severe hardship to the truly injured patient.

■ A malpractice suit frequently causes severe emotionaldamage to the physician and his or her family, evenwhen the physician is later acquitted by the courts.6,7

The Crisis in Professional Liability: It’s the System, Stupid!

by Barry M. Manuel, MD

Dr. Manuel is Associate Dean, Professor of Surgery, Boston University School of Medicine, and Chairman of ProMutual Group.

■ The current system promotes the practice ofdefensive medicine, the cost of which has beenestimated to be as high as $50 billion per year.8

■ Our current litigation system impedes the develop-ment of a patient safety system which requires theself-reporting of errors.

The first crisis in professional liability occurred in themid-1970s and, as a result, all 50 states passed legislationto deal with the crisis. However, most of these legislativereforms did very little to improve the system. The mosteffective legislation, passed in California, was the MedicalInjury Compensation Reform Act of 1975 (MICRA), theessential components of which were a cap on pain andsuffering at $250,000, the mandating of proportionateliability, collateral source offset, reduction in the statuteof limitations, structured awards over $50,000, limitationof legal contingency fees, and a required 90-day notice ofintent to sue.9 While MICRA did moderate the rate ofincrease in the cost of professional liability insurance forCalifornia physicians, it did little to materially change thesystem. Most of the flaws described above persist today inCalifornia as in the rest of the nation.

What is the Answer to Our Flawed System?For many years, I have advocated a form of medical injuryinsurance. I would like to change our fault-based systemto an insurance-based system. Instead of spending a greatdeal of time and energy trying to determine fault, I wouldlike to see a system which identifies those injuries thatqualify and compensates them as they would be withother forms of insurance. Americans are accustomed topurchasing insurance for disability, for death and dis-memberment, for injuries sustained at work, in an auto-mobile, airplane or boat. Why not purchase insurancewhen one has to undergo the complex and sometimesrisky treatments available today to deal with medicalillness? The system would cover all out-of-pocket ex-penses and lost wages for a compensable event. Here ishow it might look:

■ A list of compensable events would be developed byan expert panel composed of health care profession-als and representatives of the public.

■ Claims could be filed by a physician, patient,or hospital.


Feb 200313

■ All medical injury claims would firsthave to be submitted to the medicalinjury insurance company. If theinjury were deemed to be non-compensable, patients could bringsuit in the usual manner.

■ This insurance would be purchasedby the consumer as part of a healthand accident policy.

■ The cost of this insurance would be approximatelyone-and-a-half percent of a typical comprehensivehealth and accident policy.

A similar plan was enacted by the federal government in1986 in response to a crisis when the few remainingvaccine manufacturers informed the government thatthey would cease manufacture of childhood vaccinesunless the government solved the liability problem. Thegovernment’s response was the National Childhood Vac-cination Injury Act of 1986. A list of compensable eventswas developed and if a child experienced such an eventfollowing vaccination, a claim could be filed and, ifappropriate, payment made through a compensationfund. This fund was established by placing a small sur-charge on every dose of vaccine sold. The plan hasworked well and has allowed manufacturers of childhoodvaccines to continue production.

The medical injury insurance plan would work in asimilar manner. It would compensate greater numbers ofpatients in a more timely, efficient, and fair manner thanour current system. It would be non-adversarial andwould significantly reduce the cost of defensive medi-cine. It would take the financial pressure off many high-risk specialists and relieve the pending crisis of access tocare for many Americans. It would promote the reportingof medical errors and near misses resulting in a meaning-ful patient safety system. For many years, similar alterna-tives to the tort system have been in effect in Sweden,Australia, and New Zealand, and appear to work well.10-12

For more than 25 years, attempts have been made by all50 states and the federal government to reform ourcurrent medical liability system. These reforms have beenaimed at the consequences of a flawed system and not theunderlying defective system itself. We must change thefocus of our thinking when compensating a medicalinjury toward an insurance based model. The publicwould favor this type of solution. A recent poll of thepublic by The Health Care Liability Alliance (HCLA)

showed that, by an overwhelming mar-gin, Americans favor medical liabilityreform because they are concerned thatskyrocketing liability costs could limitaccess to care and that medical liabilitylitigation is one of the primary forcesdriving the increase in health care costs.13

ConclusionWe have a fundamentally flawed system of dealing withmedical injury that is having a profound effect on ourhealth care system. We recommend a paradigm shiftfrom a fault-based system, which compensates few in-jured patients at a great cost to physicians, both finan-cially and emotionally, to an insurance-based systemwhere far more patients are compensated and where thesystem is funded by those who receive the benefits.

This insurance-based system would:

■ Remove from physicians the omnipresent andpervasive fear of litigation allowing physicians toengage in “best practice” rather than “safe practice,”

■ Reduce the cost of defensive medicine, and

■ Promote the self-reporting of medical errors and“near misses” resulting in improved patient safetyand thus a safer health care system.

The question that remains is: Can the will of the Ameri-can people overcome the powerful and pervasive influ-ence of the trial bar on federal and state legislation so thatthis much-needed reform can be enacted. ■


1. Hospitals face a challenging operating environment. State of the American HospitalAssociation before the Federal Trade Commission Health Care Competition Law andPolicy Workshop. September 9-10, 2002.

2. Medical Liability Monitor. October 11, 2002.

3. Patients, Doctors, and Lawyers. Medical Injury Malpractice Litigation and PatientCompensation in New York. The Report of the Harvard Medical Practice Study to theState of New York, 1990.

4. Tillinghast-Towers Perrin - as described in AMA testimony to Congress June 12, 2002.

5. For data related to the cost of defending claims filed against clinicians insuredthrough Harvard’s Controlled Risk Insurance Company (CRICO), see CRICO PresidentJack McCarthy’s Commentary (page 2).

6. Charles S, Wilbert J, and Franke K. Sued and nonsued physicians’ self-reportedreactions to malpractice litigation. American Journal of Psychiatry. 1985;142:437-40.

7. Charles SE. Malpractice suits; their effect on doctors, patients, and families. Journal ofthe Medical Association of Georgia. 1987;76:268-72.

8. Kessler and McClellan. Quarterly Journal of Economics. 1996;11:353-90.

9. See Michael Evans article on MICRA in this issue (page 10).

10. Fallberg LH and Borgenhammer E. The Swedish no fault patient insurance scheme.European Journal of Health Law. 1997;4:279-86.

11. Brahms D. No fault compensation Finnish style. Lancet. 1988;2:733-36.

12. Oliphant K. Defining “medical misadventures”: lessons from New Zealand. Medical LawReview. 1996;4:1-28.

13. Poll conducted for the Health Care Liability Alliance by Wirthlin Worldwide, April 2002.

“We have a flawed systemof dealing with medical

injury in the United States.Indeed, it is difficult to

imagine a system worsethan the one we now have.”


14

Physicians have longbeen concerned about

medical malpractice lawsuits. Itis not the possibility of beingheld accountability that istroublesome—many physiciansbelieve that if a doctor makes amistake then the patient is en-titled to be compensated forhis or her injuries. Rather, whatmany physicians object to is howthe court system goes about de-termining liability. At the cen-ter of their concern is theAmerican constitutional com-mitment to lay juries and theadversarial process.

Those interested in changing the malpractice systemoften focus on the litigation process. Many so-called “tortreform” measures have had a procedural component,looking to promote alternative methods for determiningphysician liability. One potentially attractive alternative isthe use of binding arbitration. Is it attractive enough that,soon, a large percentage of malpractice disputes will bedecided by arbitrators instead of by juries?

From Whence it CameFor decades, arbitration has been used routinely in sev-eral commercial contexts—such as disputes between com-panies. Unlike mediation, which is intended to assist theparties in a voluntary settlement of the dispute, arbitra-tion is an adjudicative process designed to produce abinding decision on the merits. Ideally, it is also efficient.One manifestation of that interest is in the limited rightto appeal an arbitration result. Absent a manifestly unjustresult, arbitration decisions will not be overturned evenin cases with substantial question as to whether or not thearbitrator correctly applied the substantive law. In part,this is justified by the belief that arbitrators should bemore flexible in incorporating non-legal norms, such ascommon commercial practices, in making their decisions.

The arbitration process itself is not strictly structured,and can be subject to negotiation among the parties.Thus, it would be possible for the parties to developinnovative approaches to such variables as 1) the selec-tion of the arbitrator(s); 2) the amount of discovery or

The Future of Binding Arbitration in Medical Malpractice

by Thomas B. Metzloff, JD

Thomas Metzloff is a Professor at the Duke University School of Law.

investigation to be permitted;and 3) the ground rules forthe hearing itself. While theparties sometimes conductthe arbitration themselves,many parties retain an entitysuch as the American Arbitra-tion Association (AAA).

Prior to the mid-1980s, courtsin many states looked withdisfavor upon binding arbi-tration particularly if it in-volved consumers. Courtswould approve arbitrationagreements when they werenegotiated after a dispute arose(because the parties at that

point could assess whether they preferred arbitration toa jury trial), but they would not enforce arbitrationagreements entered into before a dispute arose.

Beginning in 1985, however, the Supreme Court, in aseries of decisions, has held that the Federal ArbitrationAct, which provides that arbitration agreements shouldgenerally be enforceable, preempts contradictory statelaw provisions that purport to limit such agreements.1 Forexample, the state of Montana required that any contractwith an arbitration clause have the arbitration provisionprominently displayed in capital letters on the first page.The purpose of the provision was to help call the consumer’sattention to the fact that the contract had an arbitrationclause. The United States Supreme Court held that thisprovision was preempted by the Federal Arbitration Actbecause it suggested a hostility to arbitration.2

The Supreme Court’s signal favoring arbitration hasbeen widely criticized by academics who believe that, inmany situations, arbitration agreements between largecorporations and consumers are inherently unfair.3 De-spite this criticism, arbitration agreements are increas-ingly common. Many financial institutions, such as Ameri-can Express, impose arbitration agreements in contractswith credit-card holders. Gateway Computer includes anarbitration clause in its sales contracts to those buying acomputer. This rapid escalation in the number of entitiesimposing arbitration clauses on their customers hasspawned active litigation to limit their use; to date, theSupreme Court has generally upheld the provisions.4


Feb 200315

Arbitration for MalpracticeGiven that 1) the Supreme Court has sent a clear signalthat arbitration agreements should be upheld and 2)many physicians would seem to favor arbitration over ajury trial, one might think that arbitration would havebecome—or at least soon would become—commonplacein malpractice cases. Has it?

Surprisingly, the answer is no. Arbitration has been widelyused in the malpractice context only in California, one ofthe few states that actively encouraged arbitration (inpart, in response to lengthy dockets in their courts) priorto the Supreme Court’s recent pro-arbitration stance.Most significantly, Kaiser Permanente, a large healthmaintenance organization with several million Californiamembers, mandated arbitration. Accordingly, since theearly 1980s, hundreds of malpractice claims against Kai-ser have been arbitrated. (Unfortunately, Kaiser did notpermit access to performance statistics, thus making itimpossible to assess how wide-spread arbitration mightimpact the disposition of malpractice claims.5)

A recent case has raised considerable concern aboutwhether arbitration can work fairly in the malpracticecontext. In Engalla v. Permanente Medical Group,6 theCalifornia Supreme Court considered a case filed by apatient against Kaiser claiming that its arbitration systemwas unfair. Engalla alleged that he was dying as a result ofthe failure of Kaiser’s physician to diagnose cancer.Engalla wanted to complete the arbitration prior to hisdeath. Kaiser’s attorney, however, did not move expedi-tiously to select the arbitrator and convene the hearing.Frustrated by the delays, Engalla filed suit claiming thatthe delays were unconscionable and that Kaiser hadtherefore forfeited any rights to insist on arbitration. Theevidence showed that, in fact, most arbitrations under theKaiser system were delayed. The California SupremeCourt wrote a blistering opinion criticizing many aspectsof the arbitration system employed by Kaiser. As a result,Kaiser implemented a series of changes to improve itsmethod of operations.7

In general, plaintiffs’ attorneys are strongly opposed tobinding arbitration. Insurers who attempt to imposesuch agreements in the medical context should expect afight. This is largely a function of the comfort level thatplaintiffs’ attorneys have with the current litigation pro-cess, especially with juries. Even though relatively fewmalpractice cases are actually tried before a jury (about10 percent), the possibility of a jury trial greatly influ-ences the settlement process. Thus, the plaintiffs’ bar

Few things grab a physician’s attention more than being sued by apatient. To be told that your failure to give appropriate care causedharm to your patient challenges the core reason most physicians havefor committing their lives to the medical profession. Being served withthe lawsuit is devastating, and the litigation process can be even moredisruptive, intrusive, humbling, baffling, and frightening as it lumbersthrough discovery toward resolution.

Likewise, few things focus an insurer’s attention more than a multi-million dollar, headline-grabbing verdict. In processing medical mal-practice claims against the Controlled Risk Insurance Company (CRICO)Risk Management Foundation (RMF) is constantly seeking the bestways to manage litigation and defend physicians, nurses, and institu-tions. One of the most valuable tools that helps RMF to achieve itsmission is binding arbitration as an alternative to a jury trial.

Since 1991, when it first used binding arbitration to resolve a medicalmalpractice case, RMF has concluded 98 arbitrations. Over the past fiveyears, RMF has concluded 55 arbitrations, securing defense verdicts for81 percent of defendants. For 2002, the win rate was 92 percent,exactly the same as RMF experienced in jury trials, perhaps reflectingan ability to better select appropriate candidates for arbitration, as wellas growing a mature panel of capable arbitrators.

The average arbitration award over the past five years is $399,000 andthe median is $170,000. Because RMF’s win rate for defendants at jurytrial has averaged 96 percent over the past five years, we have fewverdicts to average, therefore skewing the data. However, for sake ofcomparison, the average for the seven cases with plaintiff verdicts is$2.9 million and the median is $1.4 million.

The Keys to Success

The key to success in the arbitration venue is selecting capable, even-handed, knowledgeable arbitrators. Most of the arbitrators RMF workswith are retired judges who understand the law and apply it, know howto apply the rules of civil procedure when necessary, and truly compre-hend what their role is.

RMF’s arbitration process is totally voluntary and binding for all theparties, including the insured defendant, the plaintiff, and the insurer.A process that is non-binding (e.g., some mandatory, contractualarbitration clauses), accomplishes very little and may actually harm acase by revealing the defense strategy and experts to the plaintiffwithout achieving a final favorable result (plus it incurs the additionalcosts of trying a case twice). Furthermore, unless the defense team canpre-select the panel of arbitrators, defendants are at the whim of those“neutrals” who may be anything but. On top of which they may lackknowledge of medical malpractice and tort law.

Another key to successful arbitration is a defense team (insurancerepresentative, attorney, and risk manager) adequately supported andtrained to select proper candidates for arbitration, develop persuasivearguments for the plaintiff attorneys it will be working with, and to trysomething different to effectively defend the defendants.

Adding binding arbitration to the arsenal of defense tools did nothappen overnight. It took RMF several years to make inroads with thelocal plaintiff bar, to convince the adjusting staff of the value of workthey wouldn’t be required to do if the case proceeded to trial instead,and to reassure its panel of defense counsel that arbitration is anecessary alternative to consider in place of jury trials. Considering theresults, it was a worthwhile effort. ■

Arbitration for CRICO Defendants

by Karen O’Rourke

Karen O’Rourke is Senior Vice President at Risk Management Foundation.



16

believes—rightly or wrongly—that their settlement leverage wouldbe greatly reduced if the alternative to a settlement was an arbitra-tion as opposed to a jury trial.

Several additional reasons explain why malpractice arbitrations arenot yet common. Most malpractice insurers have not evidenced astrong interest in developing arbitration programs. Since malprac-tice insurers handle the defense of malpractice claims, arbitrationwill be seriously pursued only when they decide to do so. Insurers,perhaps, are reticent about committing to arbitration in part be-cause they appreciate that, despite “conventional wisdom,” juries infact often favor physicians.8 They may be concerned that arbitra-tors—sometimes accused of “splitting the baby”—will tend to findfor plaintiffs more often than do juries. Also, given that arbitrationmay be cheaper to pursue, installing an arbitration system may tendto increase the number of claims. Second, physicians find discussingarbitration agreements with patients awkward; few doctors want todiscuss what will happen if they make a mistake. Third, few organi-zations are geared up to handle malpractice arbitrations.9

One of the most interesting recent events is the decision by the AAAto drop health care arbitrations. Perceiving a possibly importantnew growth opportunity, AAA developed a model set of arbitrationprocedures for health care disputes.10 Some notable health careproviders, such as Duke Hospital which asks but does not require itspatients to sign an arbitration agreement, had used AAA to arbitratemalpractice cases. As a result of criticism about the inherent unfair-ness of hospitals and physicians forcing patients (who lack bargain-ing power) to sign arbitration agreements, AAA has decided to exitthe field, leaving few organizations with a track record available forhandling malpractice arbitrations.

What then of the future? Despite the potential that arbitrationmight be a more efficient and fairer system for resolving malpracticeclaims, considerable expansion in the current context seems un-likely. Consumer advocates and plaintiffs’ attorneys are stronglycontesting the growing use of arbitration. Without an easier pathtowards use of arbitration, it is more likely that its potential willcontinue to be unrealized. ■


1. E.g., Mitsubishi Motors Corp. v. Soler Chrysler Plymouth, Inc., 473 U.S. 614 (1985).

2. Doctor’s Associates, Inc. v. Casarotta, 116 S.Ct. 1652 (1996).

3. Haagen PH. New wineskins for new wine: the need to encourage fairness in mandatory arbitration.Arizona Law Review. 1998; 40:1039.

4. For example, in Green Tree Financial Corp. v. Randolph, 531 U.S. 79, 121 S.Ct. 513 (2000), a dividedSupreme Court refused to invalidate an arbitration agreement despite uncertain information as to howmuch it would cost a consumer (who had financed her mobile home purchase) to pursue an arbitrationto collect an alleged improper $15 fee. The Court held that the burden was on the party who waschallenging the arbitration to prove that they could not vindicate their rights in the arbitration setting.

5. Rolph E, Moller E, and Rolph JE. Arbitration agreements in health care: myths and reality. Law &Contemporary Problems. 1997; 60:153

6. 15 Cal.4th 951, 938 P.2d 903, 64 Cal.Rptr.2d 843 (Cal. 1997).

7. Ware SJ. Hornbook on Alternative Dispute Resolution. West, 2001:20.

8. Metzloff TB. Resolving malpractice disputes: imaging the jury’s shadow. Law & Contemporary Problems.1991;54:43.

9. Metzloff TB. The unrealized potential of malpractice arbitration. Wake Forest Law Review. 1996;31:203.

10. Health Care Claims Settlement Procedures, www.adr.org.


A B O U T F O R U M

FORUM provides in-depth analyses of specific medicalmalpractice claims and issues along with practical lossprevention advice and case abstracts.

The Massachusetts Board of Registration in Medicine hasapproved Forum as qualifying for the equivalent of AMACategory 1 continuing medical education credit suitable for theMassachusetts requirement in risk management education.

COPYRIGHT AND PERMISSIONS

All rights reserved; use by permission only.

Images on pages 2, 5, and 14 ©2003 GettyImages.

Letters to the Editor and requests for Permission toReprint should be addressed to the Managing Editor, at:

Risk Management Foundation101 Main StreetCambridge, MA 02142

www.rmf.harvard.edu

E-mail: [email protected]

Fax: 617.495.9711

CURRENT DISTRIBUTION

FORUM is published quarterly by Risk Management Foundationof the Harvard Medical Institutions, Inc.

FORUM is distributed at no charge to institutions, staff, andphysicians insured by the Controlled Risk Insurance Company(CRICO). Subscription is provided on request.

Non-CRICO insureds may subscribe on line atwww.rmfinteractive.com.

ELECTRONIC DISTRIBUTION

Forum archives are available at www.rmfinteractive.com.

EditorJock Hoffman

Issue EditorsMary SchaeferJessica Bradley

Editorial StaffTom A. AugelloAnnette BenderKathleen DwyerFrank FedericoHeidi GroffRobert HanscomLuke Sato, MD

Managing EditorNancy Hudecek

Production DesignerAlison Anderson

Communications SpecialistChristopher Herbert

Arbitration (continued)


Feb 200317

We do not have a crisis of runaway juries, we do nothave a crisis of skyrocketing numbers of new

malpractice cases, and we do not have a medical malprac-tice insurance crisis in Massachusetts.1,2 Juries are notoverwhelmed by sympathy for plaintiffs, as evidenced bythe rate at which physicians prevail in medical malprac-tice cases.3,4 This is all worth stating because those whopropose to dismantle the present system need to showthat any other system could accomplish the dual goals ofdeterrence and compensation more effectively. Any “re-form” that seeks to deal with the problem by restrictingpatients’ rights, particularly for those who have beenmost seriously injured, would approach the situationfrom the wrong direction.

Historically, interest in “reforming the system” has coin-cided with a perceived crisis in malpractice insurance.And, while medical malpractice premiums in this state, aswell as others across the country, have risen recently, thereasons do not cry out for “tort reform” so much as for“insurance reform.” The cycle is not a new one, and itscauses have been known for at least 25 years.5 A recentstudy conducted by Americans for Insurance Reformmade two important findings:

First, the amount that medical malpractice insurers havepaid out, including all jury awards and settlements, di-rectly tracks the rates of medical inflation; payments (inconstant dollars) have been extremely stable and virtuallyflat since the mid-1980s.

Second, medical insurance premiums do not correspondto increases or decreases in payouts, but rather, increaseor decrease in direct relationship to the strength orweakness of the economy.6

Thus, the amount of premiums are more closely tied to theeconomy, the stock market, and the rate of medical inflationthan they are to any change in claims experience.

The two most common suggestions made to change thesystem are: 1) a no-fault system which avoids the tortsystem altogether, and 2) measures designed to reducethe amount of damages injured patients can receive.Many commentators have recognized that a no-faultsystem could well be more expensive than our currentsystem.7–10 Surely, physicians who are concerned abouttheir premiums should not be drawn to a no-fault systemfor cost-saving reasons. The no-fault system in Florida for

Medical Malpractice: Fact vs. Fiction

Paul R. Sugarman, Esq. and Valerie A. Yarashus, Esq.

Paul R. Sugarman is a founding partner of Sugarman and Sugarman, PC, a former president of the Massachusetts Bar Association, and former deanof Suffolk University Law School. Valerie A. Yarashus is a partner at Sugarman and Sugarman, PC and current president of the MassachusettsAcademy of Trial Attorneys.

brain injured babies has fallen far short of its goal ofcompensating more patients in a more predictable waythan the tort system.11 States that approach “tort reform”through caps on non-economic damages do so by dis-criminating against children, women, low wage earnersand the elderly.12

Deterrent Effect of Tort SystemAny system of medical liability that fails to offer strongdeterrence to malpractice should be viewed as an inad-equate system. Professors Thomas H. Koenig and MichaelRustad recently undertook a review of the effects of thetort system that “revealed a large number of cases inwhich safety measures were instituted after a successfultort verdict.”13 These include:

■ a hospital that adopted a sponge-count and surgicalinstruments policy,

■ hospitals that developed a standard protocol fordiagnosing the source of chest pain,

■ implementation of a protocol to prevent misplacedcatheters, and

■ a revised protocol for an entire nursing home chainthat protects Alzheimer patients from drowning intheir own bathtubs.14–15

Koenig and Rustad concluded that, “Tort damages pro-vide a wake-up call to medical providers to change theirpractices or face the consequences. Hospitals are learn-ing to avoid liability by error-proofing their practices andprocedures. Sometimes it takes tragic cases and litigationto ‘overhaul equipment and policies.’”15

Professor Paul Weiler, who co-authored the HarvardMedical Practice Study Group’s report on medical inju-ries on New York state, has written that,

Malpractice law has played a valuable role in stimu-lating broad-based improvements in the institu-tional environment and procedures through whichmedical care is provided: the Harvard study pro-vides revealing (though not impregnable) evidencethat increasing the chances that a tort claim will befiled when negligence occurs in a hospital willreduce the danger of negligent injuries occurringin the first place. 16



18

He has also stated:

I am satisfied that tort law has had a substantialeffect on the way physicians now practice in thiscountry. The somewhat more expensive mode ofdefensive medicine fortunately appears to haveproduced some of the hoped-for reduction in doc-tor negligence and patient injuries.”17

The tort system is able to provide this important functionbecause it offers a strong incentive for hospitals andmedical care providers to develop protocols that result inbetter patient care. These are not protocols imposedfrom the outside by a governmental agency; these areprotocols developed by the hospitals and medical provid-ers themselves when forced to deal with a problem.

Although the tort system cannot improve the performanceof the most careful anesthesiologist in town, it can improvethe performance of anesthesiologists generally. It does thisby unearthing errors that would remain hidden, publiclyexposing them (“Sunlight is said to be the best of disinfec-tants: electric light the most efficient policeman,” saidJustice Louis D. Brandeis) and imposing monetary penal-ties. The combination gives business organizations powerfulincentives to reduce errors as much as is feasible.

While errors cannot be eliminated, unnecessarily higherror rates are unnecessarily costly. The tort system,therefore, encourages effective self-regulation, that is,regulation not by government agencies but by entities,including hospitals, that know their businesses best.18

Certainly, the deterrent aspect of tort law could bestrengthened by changes in the law that would place ac-countability more directly where it should lie, for ex-ample, permitting injured patients to sue managed careorganizations (MCOs) directly, without the prohibitionsin ERISA, in cases where the MCO played a significantrole in determining the standard of care that was deliv-ered.19 It would also make sense to allow “institutional”or “enterprise” liability, including the ability to hold hospi-tals or other medical institutions accountable for negligentacts that take place within their hospital or institution.

ConclusionIn the final analysis, the case for “tort reform,” whether bymeans of restricting patient rights directly in the tortsystem or establishing a no-fault system, has not beenmade. Restricting patients rights does not lower premi-

ums appreciably; it primarily benefits the insurance in-dustry. No-fault schemes are impractical, costly, andunpredictable. The current system of medical malprac-tice serves the crucial goal of deterring breaches from thestandard of care, which is now more important than everin the age of corporate managed care. It also compen-sates those who have been wrongfully harmed just as theywould be compensated if they had been negligentlyharmed by anyone other than a medical provider. Anyattempts to “reform” the system should be focused uponchanges which would bring about greater deterrence andnot upon changes which would serve to restrict the rightsof those patients who have been the most seriouslyinjured through negligence. ■


1. Massachusetts averages approximately 300 medical malpractice payouts per year; theaverage payout for 1999 was $384,000. See Special Report on Medical MalpracticePayments: Overview of Medical Malpractice Payments Reported to the MassachusettsBoard of Registration in Medicine Commonwealth of Massachusetts. Board ofRegistration in Medicine, 1990 through 1999, p. 13 (available at www.massmed-board.org/mm2000.pdf).

2. Testimony of Joanne Doroshow, Executive Director of the Center for Justice &Democracy, during an Oversight Hearing of the Joint Committee on Insurance,Massachusetts, October 1, 2002.

3. “We continue to close 60 percent of all claims without payment, and of those cases weare forced to defend in court, we prevail in 90 percent.” Barry Manuel, MD, Chairmanof the Board of ProMutual Group, Inc, 2001 Annual Report.

4. Taragin M, et al. The influence of standard of care and severity of injury on theresolution of medical malpractice claims. Annals of Internal Medicine.1992;117:780,782.

5. How Lawyers Handle Malpractice Cases: An Analysis of an Important MedicolegalStudy. U.S. Department of Health, Education and Welfare, Public Health Services,Health Resources Administration, National Center for Health Services Research. DHEWPublication No. (HRA)–76–3152, Washington, 1976.

6. Americans For Insurance Reform. Medical Malpractice Reforms: Stable Losses/UnstableRates. New York, 2002.

7. Richards MK. The Utah medical no-fault proposal: a problem-fraught rejection of thecurrent tort system. Brigham Young University Law Review. 1986;103:116–17.

8. O’Connell J and Neale FN. HMO’s, cost containment, and early offers: new malpracticethreats and a proposed reform. Journal of Contemporary Health Law & Policy.1988;14:308.

9. Kupeli MA. Tort law = no fault comparison: an unrealistic elixir to the medicalmalpractice ailment. Suffolk Transnational Law Review. 1996;19:570.

10. Hyman DA. Medical malpractice and the tort system: what do we know and what (ifanything) should we do about it? Texas Law Review. 2002;80:1639.

11. Martin S. NICA-Florida birth-related neurological injury compensation act: four reasonswhy this malpractice reform must be eliminated. Nova Law Review. 2002;26:609.

12. Statement of Senator M. Kennedy in Opposition to the Medical MalpracticeAmendment, July 26, 2002, available at http://www.senate.gov/~kennedy/statements/02/07/2002730306.html.

13. Koenig TH and Rustad M. In Defense of Tort Law. New York: New York UniversityPress, 2001:146.

14. Ibid. pp. 146–47, citing Petrangelo v Engelman, No. 84-553 (Hamden County., Mass.Super. Ct., 1988) cited in Roxanne Conlin’s Cases that Have Made A Difference 59(Washington D.C.: ATLA Press, 1990).

15. Ibid. p. 147, citing Cases that Have Made A Difference 59 (Washington D.C.: ATLAPress, 1990).

16. Weiler PC. Medical Malpractice On Trial. Cambridge: Harvard University Press, 1991: 91.

17. Ibid, p. 89.

18. Bogus CT. Why Lawsuits Are Good for America: Disciplined Democracy, Big Businessand the Comon Law. New York: New York University Press, 2001: 3.

19. Studdert DM, and Brennan TA. Deterrence in a divided world: malpractice law in an eraof managed care. Behavioral Sciences and the Law. 1997;15:21–48.


Medical Malpractice: Fact vs. Fiction (continued)


Feb 200319

www.RMFinteractive.com

Why is RMF Going Interactive?Hazardous care delivery, skyrocketing malpractice awards,ever-increasing insurance costs—and the media fascina-tion with it all—can result in a health care system unsafefor patients and providers.

As the industry and the public demand that professionalsraise their awareness and understanding of patient safety,Risk Management Foundation (RMF) is responding.We’re building on core services that include unparalleledclaims management, low medical malpractice premiums,resources for safe patient care, and risk managementrecommendations based on actual evidence. RMF willnow deliver instant access to our knowledge base in orderto address your growing time pressures and need foraccurate and insightful information.

A New Online ResourceRMFinteractive offers 24–hour/day multimedia access toinformation for navigating patient safety and health carerisk management. The website was created to address“target areas” of health care risk that are threatening topatient safety and in some cases, the most expensive forliability insurance programs. Through analysis of profes-sional liability claims, each target area on RMFinteractive willhelp you identify, analyze, and remedy factors that cancontribute to high risks.

You will be able to draw on nearly 30 years of RMF’sresearch and experience in mitigating health care riskssuccessfully. Through RMFinteractive, we can now offer tothe larger community:

■ guidelines, articles, interactive learning, and exercisesto address patient safety and risk management issues;

■ data behind defined risk areas for many clinicalspecialties;

■ audio interviews with opinion leaders and researchers;

■ best practices with detailed techniques for errorprevention and care improvement;

■ examples and abstracts based on actual closedmalpractice claims;

■ valuable ongoing advice for self-insurance andcaptive programs;

■ news from around the web about patient safety andrisk management, updated every business day; and

■ online product purchasing of Risk ManagementFoundation resources and materials.

Please visit the site at www.rmfinteractive.com. Join thecommunity. Make medical care delivery safer for yourpatients and providers. And give us your feedback, so wecan tune RMFinteractive to your needs.

RMFinteractive is offered to CRICO insured free of charge.It is also available outside the CRICO community at aspecial introductory rate until March 30, 2003.

—Luke Sato, MDVice President & Chief Medical OfficerRisk Management Foundation

your beacon for patient safety and

health care risk management

PRSRT STDU.S. POSTAGE

PAIDBoston, MA

Permit No. 55682

volume 23 number 1 forum · david m. studdert, llb, scd, mph and troyen a. brennan, md, jd, mph 10...

Documents