Rising Medical Costs Push for Malpractice Reform

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In his State of the Union address, President Obama defended his signature health care reform law while acknowledging that further steps must be taken to reduce the significant proportion of spending devoted to health care. In a nod toward bipartisanship in this contentious debate, the President expressed a readiness to consider approaches that he had previously rejected. "I'm willing to look at other ideas to bring down costs, including one that Republicans suggested last year - medical malpractice reform to rein in frivolous lawsuits."

The President followed through on this pledge by including $250 million in his budget for grants to states from the Justice Department (DOJ) in order to implement tort reform measures in the area of medical malpractice. It is perhaps an indication that the President does not believe that any such new programs will actually save any money that his budget does not attribute any savings to this expenditure.

The DOJ grant program describes a number of possible reforms that would qualify for funding. These include the creation of health courts in which the right to a jury trial is taken away and replaced by specially trained judges who decide cases using workers' compensation style damages schedules. Written clinical guidelines designed to provide a cookbook approach to treating patients is another potential avenue of reform. Under this law, doctors would be given immunity from suit if they followed the guidelines. Another program that is actually being used successfully by some hospitals around the country is a "sorry works" plan in which the provider discloses mistakes, apologizes and makes an early offer for compensation. Other suggestions include changes to collateral source rules and apportionment of fault to replace joint and several liability.

WHAT DOES 'FRIVOLOUS' MEAN?

Before analyzing which, if any, of these potential revisions to tort law might be effective in reducing health care costs, it would make sense to identify and examine the source of the problem that these changes are purportedly designed to fix. President Obama used the language of his predecessor in defining the problem as arising from "frivolous lawsuits." Webster's Dictionary defines frivolous as "trivial; of little value or importance; not worth notice." Webster's New Twentieth Century Dictionary, unabridged, Second Edition, 1964. If the President has accurately identified the problem, then it does not stem from medical malpractice cases in general, the volume of which has been declining steadily over the past two decades, but from some subset of those cases that are trivial. In light of the fact that the total direct costs of the entire medical malpractice system are less than 2% of overall health care expenditures, even if these trivial cases made up a substantial proportion of malpractice litigation, the savings from their complete elimination would be quite limited. There is no evidence that insurance companies are paying out large amounts of money to plaintiffs who make trivial claims. It also seems doubtful that reducing payments to lawyers who defend these trivial cases will make a significant dent in overall health care expenditures.

Proponents of medical malpractice tort reform recognize that depriving injured victims of medical negligence of the right to have their cases heard by a jury cannot be economically justified based upon the direct costs associated with adjudicating and paying these claims. The bedrock of the fiscal case put forth in favor of changes to the civil justice system is the cost of defensive medicine. The frequently quoted statistic is that laws designed to eliminate frivolous medical malpractice claims will save this country over $50 billion each year in the costs of defensive medicine. Before we undo over two centuries of jurisprudence, it would be wise to critically examine the factual basis for this assertion.

DEFINING 'DEFENSIVE MEDICINE'

A logical place to start is by defining what is meant by "defensive medicine." In common usage, it appears to mean diagnostic tests and medical treatment that are not medically indicated, but rather only used by a health care provider in order to avoid potential liability.

If that is the appropriate definition, then every health care provider who has engaged in defensive medicine and billed Medicare or Medicaid has committed a felony. Rather than make excuses for this allegedly widespread illegal activity, the way to cut out these completely unnecessary costs is to enforce the laws that already exist to prosecute fraudulent Medicare or Medicaid claims. Similarly, private insurance companies that are billed for unnecessary tests and treatment should enforce the terms of their policies and refuse reimbursement to offending providers.

Perhaps there is another definition of defensive medicine that does not incriminate a large portion of the medical community. Rarely in medicine is anything so black and white as this definition implies. Defensive medicine may be expanded to include circumstances in which a physician orders a particular test or treatment which has only a small likelihood of being useful. The physician is aware of a small corresponding risk that something bad will happen to the patient if the test or treatment is not ordered and so, to avoid potential liability, the physician orders it. In this scenario, the apparent supposition is that the physician is more concerned about being sued if something is missed than he is about the effect on the patient. Any assumption that this is a widespread phenomenon necessarily reflects a very cynical view of the medical profession. More importantly however, is that from the standpoint of the patient, if there is even a small possibility that a test will uncover a serious illness, there is a distinct benefit to the patient that comes from ordering that test.

This is one of the problems encountered in the discussion of defensive medicine. It is not an all-ornothing proposition. There is very likely some benefit to the patient from most of what could be characterized as defensive medicine. The conflict this highlights is between the macroeconomic interests of society in general, and the microeconomic interests of individual patients. This is a public health debate that is seen in such arenas as breast cancer screening guidelines. If mammograms performed on women under the age of 50 only detect cancer in a very small number of patients, then from a societal standpoint it may be economically preferable to begin screening at age 50 instead of 40. Compare recommendations for screening mammograms made by the United States Preventive Services Task Force (beginning at age 50) with those of the American Cancer Society (beginning at age 40). However, an individual patient may well decide that the consequences of a delayed diagnosis of breast cancer are so severe that screening should start earlier. Likewise, any analysis of defensive medicine must take into account not only the cost to society, but also the potential benefit to the patient.

WOULD TORT REFORM FIX THE PROBLEM?

The absence of a clear, generally accepted definition of defensive medicine, or any accurate assessment of the cost of defensive medicine, certainly raises questions about what the problem is that advocates of tort reform are trying to fix. Even if those issues could be resolved, it would still be necessary to examine whether changes to the tort system are an effective means of reducing the practice of defensive medicine. To the extent that it actually exists, defensive medicine is based upon a health care provider's perception of the risk of being sued. Therefore, in order for tort reform to be effective, it must alter that perception of risk enough to cause a change in the behavior of the health care provider.

A recent study funded by the Robert Wood Johnson Foundation and carried out by University of Iowa researchers in collaboration with the Harvard School of Public Health and others examined the correlation between physician fear of being sued and the actual risk. Emily R. Carrier, James D. Reschovsky, Michelle M. Mello, Ralph C. Mayrell and David Katz, Physicians Fear ofMalpractice Lawsuits Are Not Assuaged By Tort Reforms, Health Affairs, 29, no. 9 (2010):1585-1592. The study assessed the objective malpractice risk to physicians in a number of states using data such as malpractice premium rates and the statistical likelihood of being the subject of a paid malpractice claim. What the researchers found was that the fear of being sued formalpractice was relatively the same despite wide variations in actual risk There was very little difference in the level of concern between physicians in different states even where the objective risk of being sued differed by more than 300%. This disparity between perception and reality has direct consequences on the ability of changes in the tort system to change physicianbehavior. As the authors of the Iowa study concluded: "Overall, the study suggests that current tort reform efforts aimed at reducing malpractice risk would be relatively ineffective in alleviating physicians' concerns about lawsuits and therefore may not alter defensive medicine practices."

CONCLUSION

Instead of spending money to explore various means of limiting the rights of injured patients and undermining the civil justice system, our attention should be focused on addressing the root of the problem: medical malpractice. The best way to reduce costs and to advance the interests of society is to make real efforts to minimize preventable injuries to patients.

That problem was highlighted more than a decade ago when the Institute of Medicine reported that 98,000 people die each year, and more than one million are injured, by medical errors. Kohn LY, Corrigan JM, Donaldson MS, eds. To Err Is Human: Building a Safer Health System. Washington, DC: National Academies Press, 1999. Unfortunately, a recent study reveals that since those data were published in 1999, very little progress has been made in improving patient safety. In a study published in the New England Journal of Medicine in November 2010, researchers examined medical records for the six-year period from 2002 to 2007 from 10 North Carolina hospitals. Landrigan CP, Parry GJ, Bones CB, Hackbarth AD, Goldmann DA and Sharek PJ, Temporal Trends in Rates of Patient Harm Resulting from Medical Care, N Engl J Med 363;22 (Nov. 25, 2010): 2124-2134. North Carolina was chosen because it has demonstrated a higher level of commitment to patient safety than most of the other states. The results of the study were disturbing. The authors concluded: "[W]e found that harm remains common, with little evidence of widespread improvement. Further efforts are needed to translate effective safety interventions into routine practice and to monitor health care safety over time." This is the real problem.

The conclusion must be this: The way to protect patients and doctors and to reduce health care costs is to find effective methods to reduce the incidence of medical malpractice.

At Maya Murphy, P.C., our personal injury attorneys are dedicated to achieving the best results for individuals and their family members and loved ones whose daily lives have been disrupted by injury, whether caused by a motor vehicle or pedestrian accident, a slip and fall, medical malpractice, a defective product, or otherwise. Our attorneys are not afraid to aggressively pursue and litigate cases and have extensive experience litigating personal injury matters in both state and federal courts, and always with regard to the unique circumstances of our client and the injury he or she has sustained. Please contact Joseph C. Maya, Esq., at 203-221-3100, or at JMaya@mayalaw.com, to schedule a free consultation.

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Source: Christopher Bernard, Addressing the Costs of Medical Malpractice, 28 Medical Malpractice Law & Strategy 7, Apr. 1, 2011, at 1.