Published 12/1/2011
David H. Sohn, JD, MD; S. Jay Jayasankar, MD

Medical liability reform: Is alternative dispute resolution the answer?

The AAOS Position Statement on Medical Liability Reform outlines the challenges of the current medical liability system, and sets forth principles for reform, introducing them by stating, “The AAOS believes that broad reforms are necessary to compensate negligently injured patients promptly and equitably, enhance patient–physician communication, facilitate improvement of patient safety and quality of care, reduce defensive medicine and wasteful spending, decrease liability costs, and improve patient access to care.”

The statement calls for the development of “more equitable and less adversarial mechanisms for dispute resolution.” Alternative dispute resolution (ADR) refers to any of a variety of nonlitigious means of resolving conflict. Common examples include mediation, arbitration, and early offers to compensate for losses.

The problem
Litigation is ill-suited to resolution of medical liability claims. First, it is inefficient. Only 28 cents of every dollar actually goes to the injured plaintiff.

Second, it is irrational. Most patients sue due to complications, or out of anger, not because of negligence. Only 15 percent of lawsuits are actually grounded in negligence, and less than 1 percent of lawsuits result in a verdict for the plaintiff.

Third, litigation is expensive. The U.S. Department of Health and Human Services estimates that between $76 billion and $122 billion is spent per year directly on medical liability litigation. The indirect costs of litigation, due to defensive medicine, are believed to be at least equally costly .

An alternative
A more efficient and satisfying solution to litigation is ADR. After a complication, patients often sue for nonmonetary reasons. In a survey of reasons to sue, money was fourth on the list behind disclosure, desire for apology, and prevention of future errors. Traditional litigation, however, drives the exact opposite behaviors: reticence and retraction.

Negotiation, early apology, mediation, and arbitration all offer more flexibility than traditional litigation. These methods also allow plaintiffs to hear explanations behind errors or complications, to hear a physician express remorse, and to settle claims for far less than litigation. After instituting early apology programs, for example, the University of Michigan saw yearly claims drop from 262 to 82 and the University of Illinois saw a 50 percent reduction in malpractice filings. The Colorado COPIC program uses ADR techniques to whittle settlement awards to a startlingly low average of $5,000.

Mediation, in particular, has very high satisfaction rates among both plaintiffs and defendants. With mediation, plaintiffs feel they receive what they really want: an explanation and an apology. Interestingly, physician defendants also appreciate the open forums encouraged in ADR. It gives them an opportunity to explain to the plaintiff that they did nothing wrong, that complications are inherent risks of medicine, and that they still feel sorry that the complication occurred.

The NPDB solution
Why then is ADR so infrequently employed and embraced by physicians? One possible reason is the National Practitioner Data Bank (NPBD). The NPDB records any medical malpractice judgments against physicians. Reports to the NPDB follow physicians from state to state and can affect state licensure, granting of hospital privileges, and malpractice insurance rates.

The problem is that the NPDB rigidly requires that all verdicts and settlements be reported. This is a severe deterrent against using mediation to resolve conflict. Consider the case of an infected total knee replacement. Despite following all reasonable precautions, the physician is sued. Without the NPDB, the physician may agree to settle the meritless claim for various reasons, if only out of empathy for the patient who, despite the absence of negligence, is still undergoing a seriously difficult time. The NPDB, however, would discourage this and instead incentivize the physician to defend his name vigorously, in turn leading to more wasteful and expensive litigation.

A reasonable solution would be to allow for some exceptions to the NPDB reporting guidelines. One possibility would be to allow for an exception when both parties agree that the physician was not at fault. Another possibility would be if both parties agree that the matter should not be reported, or, if a threshold settlement figure is established, so that only large and significant settlements are recorded. All three solutions would serve the underlying goal of the NPDB to protect patients, while providing flexibility to address meritless claims in a nonlitigation arena.

Apology laws
Several states have laws that promote free dialogue with the injured patient, but with varying degrees of protection from discovery for the physician’s expressions of sympathy or apology should there be a trial. Strong laws in this area would encourage this essential empathic conversation and use of ADR.

AAOS Position Statement
The AAOS Position Statement recognizes that medical liability reform must come from many levels and encourages ADR. In particular, it recommends the modification of “ punitive and NPDB reporting requirements to provide incentive for open communication, prompt resolution and compensation, and the improvement of patient safety through confidential data collection.”

The current medical malpractice system does not serve the best interests of patients, physicians, or the nation as a whole. Worse, it sets physicians and patients against each other, disrupting and driving a wedge between what should be an inviolate bond of trust. The emotional impact of the current system’s highly adversarial nature and long delay on the patient and family is easily recognized; its impact on the physician and healthcare team—and the resultant compromise on the quality of care and patient safety— is also being recognized. We as physicians should support measures that allow for conflict resolution and promote patient safety while preserving, rather than violating, the physician–patient relationship.

S. Jay Jayasankar, MD, is a member of the AAOS Medical Liability Committee. He can be reached at jaymd@massmed.org

David H. Sohn, MD, JD, is an AAOS Washington Health Policy Fellow. He can be reached at david_h_sohn@yahoo.com


  1. AAOS Position Statement on Medical Liability Reform.
  2. Weinstein SL. Medical liability reform crisis 2008. Clin Orthop Relat Res, 2009. 467(2):392-401.
  3. Kakalik JS. Costs and compensation paid in tort litigation. Institute for Civil Justice, RAND, 1986.
  4. Localio AR, Lawthers AG, Brennan TA, Laird NM, Hebert LE, Peterson LM, et al. Relation between malpractice claims and adverse events due to negligence. Results of the Harvard Medical Practice Study III. N Engl J Med, 1991. 325(4):245-251.
  5. Studdert DM, Mello MM, Gawande AA, Gandhi TK, Kachalia A, Yoon C, Puopolo AL, Brennan TA. Claims, errors, and compensation payments in medical malpractice litigation. N Engl J Med, 2006. 354(19):2024-2033.
  6. Kessler D, McClellan N, Do Doctors Practice Defensive Medicine? The Quarterly Journal of Economics, 1996. 111(2):353-390.
  7. Szmania SJ, Johnson AM, Mulligan M. Alternative Dispute Resolution in Medical Malpractice: A Survey of Emerging Trends and Practices. Conflict Resolution Quarterly, 2008. 26(1):71-96.
  8. Van Pelt F. Peer support: Healthcare professionals supporting each other after adverse medical events. Qual Saf Health Care. 2008. 17(4):249-252.
  9. Boyle DJ. What to say when things go wrong. AAOS Now, June 2011.