Tort Reform and the Impact on Medical Malpractice

Editor’s note: This editorial column concludes a two-part series on medical malpractice lawsuits and payouts.

Insights following a record malpractice payout

In July, the largest single patient medical malpractice payout occurred: A then-10-year-old girl underwent scoliosis surgery. Postoperatively, she experienced pain and neurological dysfunction. The plaintiffs contended that the surgeon ignored the complaints and went on vacation (twice). Ten days later, another surgeon took the patient back to the operating room and removed the implants. Unfortunately, the patient’s clinic course included one year of wheelchair use before she returned to ambulation and, apparently, permanent incontinence. The patient was awarded a $135 million payout.

However, eight years after the patient case took place, it is still not fully resolved. Those years likely were torture for everyone involved: the patient and her family, the doctor, and the care team. In part one of this editorial (“A Record Payout from a Broken Malpractice System,” AAOS Now, September 2018), I discussed the impact of long, complex, and expensive malpractice cases on patients, decision making, and fair outcomes. Here, I conclude with a look at the system’s impact on physicians and the advantages and limitations of current efforts at tort reform.


Eeric Truumees, MD

Addressing physician burnout

We know that physician burnout and its impact on care keep increasing. One recent systematic review of surgeon burnout reported that more than half met the criteria for burnout, and the rate was rising rapidly.

In 2011, Balch et al., surveyed 7,197 members of the American College of Surgeons, 24.6 percent of whom had been sued during the previous 24 months. Compared to members who were not recently sued, those who were had higher rates of burnout, symptoms of depression, and suicidal ideation. The authors addressed the question of causality: “Since burnout can contribute to poor decision making, less compassion, and diminished dedication to safe, optimal care, it is reasonable to suggest that these physicians were more likely than their nonsued counterparts to be at risk for error.” In a study of Oregon physicians, receiving a malpractice claim one year essentially doubled the risk of a second claim in the following year.

Seabury et al., reported on data from nearly 41,000 doctors insured for malpractice by The Doctors Company. During the course of a mean physician career of 40 years, they found that the average doctor spends 50.7 months, or more than 10 percent of the time, with an unresolved, open malpractice claim.

At this point, we do not know whether burnout increases the risk for malpractice or the other way around, and it might be a vicious cycle. But we know that malpractice has other, significant impacts on the healthcare system.

Although available data are conflicting, it is reasonable to assume that, in general, doctors may be more likely to relocate to states with some version of tort reform. Physician-recruiting firm Merritt-Hawkins reported that, as of 2016, “33 states have imposed caps on any damages sustained in medical malpractice lawsuits: Alaska, California, Colorado, Florida, Georgia, Hawaii, Idaho, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wisconsin.” But they noted that such measures are highly variable and under constant legislative and judicial scrutiny. Physicians planning to move from one state to another should familiarize themselves with the malpractice climate in the area they are considering.

In 2016, Sage et al., reported on the impact of tort reform on the malpractice claims made against the 6,000 physicians in the self-insured University of Texas Health System. They found that annual closed claims dropped from 244 in 2001–2002 to an annual mean of 96 after 2009. Paid claims dropped from 60 in 2001 to 20 after 2009. They noted, however, that “even after tort reform, … claims that resulted in payment remained slow to resolve.”

Chou et al., reported that damage caps reduce malpractice premiums and likely encourage physicians to move into lower-risk areas. The difference in premiums had a stronger deterrent effect on surgeons than other physicians, such as primary care providers. Additional large awards may stimulate more lawsuits in the area and may set a new threshold for how such suits are valued.

It is also important to consider the effect that the malpractice threat has on healthcare spending. Previous research has reported conflicting results on the impact of “defensive medicine” on either the costs or quality of care. A recent article published in The New York Times reported that the widespread ability of U.S. patients to sue their physicians made finding a control group next to impossible. The article followed the findings from a study published by the National Bureau of Economic Research that compared costs of care in the military healthcare system. Active-duty personnel are permitted to sue military doctors or hospitals, and family members may sue caregivers in either the military or civilian systems. In this study, the researchers found that the ability to sue led to increased healthcare spending, “particularly on extra diagnostic tests.” For the families of active-duty personnel, increased overall costs and rates of testing increased with physician vulnerability to lawsuits.

The study did not support a 2010 claim from former Secretary of the Department of Health and Human Services Tom Price, MD, who said that defensive medicine represented 26 percent of the healthcare dollar. The results indicated that about 5 percent of the cost of care could be attributed to excessive testing engendered by a medical environment. I suspect that the study underestimated the costs of defensive medicine because many of the physicians in the military system were trained in a nonmilitary medical context where more “defensive” treatment pathways could have become engrained as good, safe medicine. Additionally, despite the study’s “precision” in measurement of outpatient care, the researchers did not measure care domains that might be especially vulnerable to defensive medicine, such as the emergency department.

Tort reform

In the aforementioned lawsuit, the plaintiff’s attorney, Jeffrey Fieger, said of the payout, “She’ll have enough money to get her catheter changed for the rest of her life. That’s it.” If he is right, and a $135 million award will only cover catheter changes, why maintain this slow, expensive system? Antireform advocates insist that medical malpractice is the only way to hold doctors and hospitals accountable for their errors. Yet several studies have found that system changes limiting tort exposure did not adversely impact quality of care and had a limited effect on healthcare costs and health insurance premiums. However, those articles, almost always written by faculty of business or law schools, miss some key points. First, physician practices change very slowly (even in the face of compelling scientific evidence). A change in malpractice climate or a physician’s move to a more or less favorable tort jurisdiction is not likely to result in immediate changes in practice pattern. Second, as Columbia Law School professor Catherine Sharkey pointed out, there are crossover effects. When states limit noneconomic damages, the plaintiff’s attorneys focus on—and juries award—much larger economic damages. She cites a $70.9 million award from a San Francisco jury, of which only $500,000 was noneconomic damages. Third, tort reforms can have mixed impacts on care. Patient advocates claim doctors might not provide patients the same degree of service. However, with decreased risk of malpractice, others argue, costs could increase as physicians take on riskier cases.

It is important to understand the differences in tort reform in different states, as they will have markedly different impacts on the risk of a suit and the degree of exposure in a suit. In Texas in 2003, reform included some class-action and product-liability adjustments. But, for physicians, key elements included: a limit was placed on noneconomic damages to $250,000, parties pay only their proportionate responsibility, and loopholes allowing lawyers to venue shop were closed.

Paik et al., reported that the 2003 reforms “produced an estimated 60 percent drop in claim rates and a one-third drop in payouts per claim, for a combined drop of [more than] 70 percent in total payouts.”

Similar studies have had a difficult time identifying an impact of tort reform on healthcare spending. The December 2016 Congressional Budget Office option 13 to reduce the federal deficit centered on reducing healthcare costs through federal malpractice reforms. If malpractice risk were reduced, the costs of malpractice premiums that are passed on to patients via higher costs would be reduced, as would costs associated with increased services related to the practice of defensive medicine. The Congressional Budget Office’s proposal included:

Cap noneconomic damages awards at $250,000.

Cap punitive damages at either the greater of $500,000 or twice the economic damages award (e.g., lost income and medical costs).

Shorten the statute of limitations to one year from the date of discovery of an injury (three years for children).

Establish a fair-share rule. In Texas, such rules limit a defendant’s liability to the share of the final award proportional to that person’s share of responsibility for the injury.

At trial, allow defendants to present evidence of a claimant’s income from collateral sources. These costs, such as life insurance and health insurance reimbursements, can reduce a claimant’s economic damages.

Cap attorneys’ fees in larger awards to a percentage lower than the 33 percent common now.

Conclusions

Tort reform clearly benefits physicians without harming quality of care. Over time, I suspect such reforms will translate into savings for the healthcare system more broadly, but tort reform alone will not eliminate defensive medicine. Even a 70 percent decrease in payouts will not alter physician behavior. Most doctors will instinctually do as much as they can to avoid getting sued at all.

Reforms, although helpful, are only short-term solutions. The online comments regarding the $135 million scoliosis case show how destructive this adversarial situation is to our healthcare system.

Ironically, given the size of our example case’s award, several commenters suggested that “doctors and hospitals get away with murder.” Others suggested that the doctor’s fingers be cut off. Most importantly, only one side of the story was told. The plaintiff’s attorney referred to “simple scoliosis surgery.” I have never heard the term “simple” used to describe spine surgery, especially when implants are placed near the spinal cord and major vascular structures. I, like Merriam-Webster, would rather contrast the two:

Minor surgery involves “little risk to the life of the patient; specifically, an operation on the superficial structures of the body or a manipulative procedure that does not involve a serious risk.”

Major surgery involves risk to the patient.

All spine surgery is major surgery, and this case both under- and overplays the risks to the patient. The patient and her family will have to wait years to get compensation, a large share of which will go toward attorney fees. Most other injured patients get little or nothing. Given the “enormous psychological burden” this system places on physicians and other caregivers, is there a better way?

The New York Times’ Margot Sanger-Katz asked several health policy experts for their recommendations for malpractice reform. The options included shielding doctors if their care adhered to accepted standards, using administrative courts in lieu of juries to determine liability and damages, and implementing no-fault systems—such as those in place for vaccines—that pay for patient harms independent of determinations of liability. It’s not clear which of those paths is the best, but the current system is clearly broken.

Eeric Truumees, MD, is the chair of the AAOS Now Editorial Board, editor-in-chief of AAOS Now, and an orthopaedic spine surgeon in Austin, Texas, where he is also professor of orthopaedics at the Dell Medical School, University of Texas.

References:

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  3. Seabury SA, Chandra A, Lakdawalla DN, et al: On average, physicians spend nearly 11 percent of their 40-year careers with an open, unresolved malpractice claim. Health Affairs (Millwood) 2013;32:111-9.
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  13. Congressional Budget Office: Limit medical malpractice claims. Available at: https://www.cbo.gov/budget-options/2016/52241. Accessed August 7, 2018.
  14. Merriam-Webster: Major surgery. Available at: https://www.merriam-webster.com/medical/major%20surgery. Accessed August 7, 2018.
  15. PRNewswire: Geoffrey Fieger announces $135 million malpractice jury verdict against DMC. Available at: https://www.prnewswire.com/news-releases/wayne-county-jury-awards-135-million-malpractice-verdict-against-dmc-300675429.html. Accessed August 7, 2018.

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