The current system fails both patients and physicians

Medical liability remains a crisis issue and a major contributor to the current problems in health care. The medical liability system has not only failed in its mission to compensate patients for injuries resulting from negligence, it is also ineffective in deterring physicians from engaging in dangerous behavior.

In fact, one could argue that the current system does exactly the opposite of what a well-designed, rational tort system should do: it compensates patients irrespective of negligence, and deters physicians from providing necessary, albeit high-risk, services. This article reviews some of the flaws of the current medical liability system; a follow-up article will provide practical advice on avoiding lawsuits, defending yourself if you are sued, and getting involved in the fight to change the system.

A review of the literature on the medical liability system shows that it not only is expensive and irrational, but also exacerbates the current crisis in health care.

An expensive system
Few costs in health care have risen as dramatically over the past several decades as awards for damages in medical liability claims and the corresponding premium payments physicians have had to make for medical liability insurance.

Numerous studies have shown that little relationship exists between the degree of negligence and the amount of compensation. Patients who truly are harmed by negligence often do not sue, and patients who do sue are often (as much as 40 percent to 80 percent of the time) not victims of negligence. Most (61 percent) lawsuits filed do not even make it to court because they are dismissed as without merit (but still cost money to file and defend). Thus this system is neither sensitive nor specific in its compensation for negligence.

An ineffective system
One could argue that the tort system is ill-suited to “discourage the practice of negligent care” as well. According to a study by the Institute of Medicine, most adverse healthcare events do not result from negligence, but from unavoidable human or system errors. The rate of negligence in malpractice cases is actually quite low, at about 15 percent.

Researchers have found that most errors are system errors, rather than an individual’s fault, and that most errors still occur even when doctors do their jobs correctly. Using a tort system as a form of deterrence is therefore irrational.

Because the current system is an indemnity system, it works against improvements. Settlement payments typically come from insurance providers, not a physician’s bank account. Physicians are unlikely to spend their own money on technologies that may lead to fewer systemic errors (such as computer order entry systems) because they will not realize the savings; the insurance companies would. Thus, it is difficult to see how the current tort system can effectively decrease the rates of negligence.

No “corrective justice”
Finally, the current medical liability system fails to “exact corrective justice.” Payments from the erring physician directly to the injured party would be corrective justice. Most medical liability settlement payments, however, actually go toward administrative costs. A 2005 study that examined 1,452 closed claims from five different liability carriers from across the United States found that 54 cents of every dollar spent on compensation actually went toward administrative expenses. “The vast majority of expenditures go toward litigation over errors and payment of them. The overhead costs of malpractice litigation are exorbitant,” wrote the authors.

Litigation hurts health care
The current crisis in health care centers around two issues: access to care and rising costs. The present tort system exacerbates both issues.

A successful tort claim must prove the following four basic elements: duty, breach of duty, causation, and damages.

In a medical liability claim, the plaintiff’s first task is to establish that a duty to deliver good care existed between the physician and the patient. Courts have established that being “on call” in an emergency department establishes a duty between the patient and physician even if the physician has never previously met the patient. Unsurprisingly, as the medical liability crisis developed, physicians withdrew from providing emergency care, limiting access to care.

Every surgical procedure has a small risk of complications. Higher-risk surgeries carry with them the risk of more serious complications and injury to patients. Whether injury is due to negligence or an unavoidable complication is not the strongest predictor of compensation in the current medical liability system. Instead, injury to the patient and the degree of disability are the most accurate predictors of the amount of compensation after complication. As a result, physicians have withdrawn from offering high-risk procedures, which also limits patients’ access to care.

The development of “defensive medicine”
To limit their liability exposure, physicians have begun to practice “defensive medicine.” Because plaintiffs must prove a “breach of duty” (vaguely defined as failure to meet the standard of care that a reasonable person with the same training would use), physicians order an overabundance of tests. These added layers of care eventually establish a new “reasonable care” standard.

A survey of physicians practicing in high litigation areas such as orthopaedics and obstetrics found that 93 percent of practitioners ordered superfluous tests and consultations to avoid lawsuits. The costs of these tests are not insignificant. One recent study found that in litigious counties of Mississippi, 15.9 percent of physician spending is due to fear of litigation. The direct cost of malpractice coverage and the indirect cost of defensive medicine to the federal government alone has been estimated at $28.6 billion to $47.5 billion per year. Some estimates place the cost of defensive medicine at $83 billion to $151 billion per year.

As noted by Charles H. Epps Jr., MD, well-known orthopaedic educator and leader, “Medical liability is indeed a momentous problem that involves many sectors of society. … Because physicians have a major interest in the outcome, we must assume a leadership role in obtaining solutions to the problem. … If we succeed, the practice of medicine and all of society will benefit.”

The Washington Health Policy Fellows include David H. Sohn, JD, MD; A. Alex Jahangir, MD; Ryan M. Nunley, MD; Aaron Covey, MD; James Genuario, MD, MS; John H. Flint, MD; Sharat K. Kusuma, MD; Samir Mehta, MD; Anil Ranawat, MD; and Alok D. Sharan, MD.

Did you know?

• Negligence is not related to payments to plaintiffs. The degree of disability experienced by the plaintiff is the only correlation to payment.
• Lawsuits claiming lack of informed consent have a higher rate of success than other medical liability claims.
• Wrong site surgeries are difficult to defend and result in average payouts of $101,000.
• Poor patients do not sue more often than wealthy ones.