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AAOS Now

Published 8/1/2010
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S. Jay Jayasankar, MD

Avoidability: An alternative standard for medical liability

Will adopting a different standard help?

Medical liability systems aim to compensate the injured, deter and/or prevent recurrence of the error, and deliver corrective justice. Negligence, the U.S. standard for liability, is established through an adversarial litigation system that is costly and emotionally demanding to all, takes an average of 5 years for resolution, and achieves these aims poorly.

Tort reform—especially limits on noneconomic damages—controls costs. It, however, does not address other shortcomings with the system, including the adversarial approach, compromise of the patient-physician relationship, high overhead costs, inhibition of open communication and learning from errors, and the practice of defensive medicine.

Interest is increasing in system changes, such as establishing special courts and administrative panels with neutral experts; developing early recognition and settlement offers; and replacing the negligence standard with another standard, such as avoidability or no fault.

Alternate systems and standards
The Scandinavian countries and New Zealand provide examples of alternative systems and standards (
Table 1).

Alternative medical liability systems were established in Sweden (1975), Finland (1987), Norway (1988), Denmark (1992), and Iceland (2001) because the tort system was time-consuming and expensive. Both Denmark and Sweden separate the compensation and disciplinary systems, which facilitates physician reporting and data collection for learning.

In 1967, New Zealand started extending its work injury disability insurance to all injuries. But as more medical injuries were included, costs increased. A 1992 law limited compensation to medical errors and medical mishaps. New Zealand does not separate the compensation and disciplinary systems; a finding of error in the compensation system is automatically reported to the disciplinary system.

A 2005 law abandoned the medical error standard, resulting in a system closer to no fault. The reasons for the change included the negative impact of the fault standard on the patient-physician relationship and on error reporting by physicians and the inherent unfairness of a system that required fault-finding for medical injuries only.

How they work
In Denmark and Sweden, a claims handler with clinical or legal background reviews claims for eligibility. Determinations are based on precedents, and medical experts experienced in compensation evaluation are used as needed. Patients may appeal to a board and, at a second level, to a court, but these awards are all subject to caps.

Sweden’s standard requires a finding of avoidability, rather than negligence or fault, for compensation. Avoidability is determined under the “experienced specialist” rule: Would the injury have occurred at the hands of the “best” specialist in the relevant specialty?

Two other rules are also used. The alternate treatment rule allows compensation if an alternative treatment was available that was at least as safe and efficacious as the chosen treatment and that would have avoided the injury. The retrospectivity rule allows compensation if the necessary clinical information, though unknown at the treatment time, was potentially discoverable, thus avoiding the injury (such as an allergy). The retrospectivity rule does not apply to delayed diagnosis because all such cases would then be compensable, by definition. More complex rules determine compensation for infections.

Denmark’s system and standards are similar. Accident injuries (such as falls) require a negligence determination, and no special rules apply to infections. The endurability rule compensates extreme situations defined with reference to patient and physician expectations rather than the severity of the resultant harm.

New Zealand’s 1992 medical error standard resembles the negligence standard and is defined as failure to observe a standard of care and skill reasonably expected in the circumstances. The medical mishap is closer to a no-fault standard, requiring the occurrence of a rare (occurring in no more than 1 percent of cases) and severe (leading to more than 14 days hospitalization, significant disability lasting more than 28 days, or death) consequence of properly given treatment (no physician error finding). Failure to diagnose or treat is excluded from the definition of a medical mishap.

The 2005 law is nearly no fault, compensating all “treatment injuries.” It excludes what are “necessary parts of treatment” or the “ordinary consequences of treatment” (such as a scar).

The compensation funds in these countries are broad based and not dependent on physician insurance payments.

U.S. system
Litigation costs for the U.S. medical liability system amount to 54 percent of plaintiff compensation. Plaintiffs receive only 28 cents on the dollar of all the money flowing into the liability system. The system is also not very effective (
Fig. 1). The defense costs for even successful cases averaged $17,000.

A 2006 closed-claims study of four high-risk categories (obstetrics, surgery, missed or delayed diagnosis, and medication) found defense overhead costs averaged $52,521 per claim ($112,968 for cases that went to trial and $42,015 for claims that were resolved out of court). Tort costs in the medical liability system grew from $1.1 billion in 1975 to $30.4 billion in 2008. Based on these data, medical liability direct litigation costs in 2008 were about $10 billion.

Studies show that a large number of negligent injuries do not result in a claim. The contingency fee system favors the selection of high compensation and jury impact cases. The median settlement rose from $350,000 in 1995 to $500,000 in 2000, and the median jury award rose from $500,000 to $1 million in the same period.

Standard or the system?
The United Kingdom and Canada follow the negligence standard, but their litigation systems function more satisfactorily. The Scandinavian countries and New Zealand have administrative adjudicatory systems determining eligibility within 7 to 8 months under different and complex standards and rules. Countries that separate compensation and disciplinary systems tend to promote error reporting and facilitate learning for prevention, a factor emphasized by the Institute of Medicine.

The online version of this article includes a chart outlining of the potential effects of changing the negligence standard for medical liability or the litigation system in the United States.

Payors, regulators, and others are mandating ‘avoidability’ of untoward events willy-nilly through ‘never events’ and ‘no pays.’ What is really needed is accountability, compensation for the injured, and improvement thorough learning from errors. The AAOS Medical Liability Committee would like to hear from AAOS Now readers on these evolutions and controversies.

S. Jay Jayasankar, MD, is a member of the AAOS Medical Liability Committee, contributing editor of the ORM Series, and an AAOS delegate to the American Medical Association. He can be reached at jaymd@massmed.org