Published 9/1/2011
Thomas B. Fleeter, MD

Worldwide trends in medical liability

By Thomas B. Fleeter, MD

What can the United States learn from other countries?

Defensive medicine and legal costs are believed to play a significant role in our country’s rising healthcare costs. Moreover, the current U.S. tort system is both cumbersome and expensive, while providing relief to relatively few patients who sustain injuries as the result of a medical error.

Westernized countries with legal systems similar to the United States have developed less costly and more efficient systems for managing medical-legal conflicts. This article analyzes how these countries manage adverse medical outcomes and compensate patients for their injuries.

Contrary to popular belief, Canada does not have a socialized healthcare system; most physicians are in private practice. The major difference between the Canadian and U.S. healthcare systems is that each Canadian province has one health insurer that covers all provincial residents. Under this single-payer system, physicians bill the health insurer in each province for the medical-related services they provide to patients. Canadian physicians can opt out of the provincial program and bill patients directly, but if they do, they can only bill the patient, not the provincial insurer.

All Canadian physicians purchase medical liability insurance through the Canadian Medical Protective Association (CMPA). The fees, which are based on medical specialty and the region in which the physician practices, are published publicly. Most provinces reimburse physicians directly for a portion of the insurance fee. For example, in 2008, Ontario reimbursed 83 percent of the insurance cost.

Malpractice insurance premiums in Canada are lower than those in the United States for the following three major reasons:

  • The courts in Canada have set caps on medical liability awards.
  • Existing Canadian laws set a high hurdle for proving medical liability.
  • The CMPA is notorious for vigorously defending any and all medical liability suits.

Additionally, in Canada, the losing party pays approximately two-thirds of the winner’s costs. This is a significant disincentive for bringing a medical liability suit.

The Canadian Supreme Court has established guidelines for noneconomic awards at a maximum of roughly $300,000, and the types of cases in which noneconomic awards can be made is limited. Although the number of medical liability cases in Canada has risen steadily in the past decade, the bar to prove malpractice remains high. In order to sue, the plaintiff must prove that the physician not only caused injury, but also violated a duty of care. Errors in judgment are generally not causes for lawsuit.

In England, the National Health Service (NHS) employs most physicians and administers all of the legal and business aspects of practicing medicine. Physicians are not personally liable for medical liability expenses or claims and, as a result, they do not have to purchase medical liability insurance.

Under the principle of vicarious liability, the NHS is the body that is sued because it has the “right, ability, or duty to control” the acts of its physician employees. Physicians are indemnified for their work and the NHS assumes responsibility for any negligent act. Because physicians are not individually liable, the NHS alone decides whether to litigate or settle each claim. Interestingly, the NHS does not insure general practitioners, physicians employed by hospitals, or ancillary providers such as pharmacists and optometrists. These practitioners generally obtain insurance through a medical defense society, purchased through the open market.

The NHS has established a series of defense trusts that raise funds using a ‘pay-as-you-go’ approach. The trusts are overseen by the NHS Litigation Authority and operate with a mandate to avoid litigation, if possible. As a result, only 4 percent of all potential claims result in trials and most claims are closed in less than 18 months. In most settlements, the cost of the settlement is spread evenly over the plaintiff’s life. In 2008, only 5,470 claims were filed.

NHS recently established a new program to address cases of negligence for claims less than approximately $28,000 and to expedite claim resolution. This program provides for compensation as well as an explanation, an apology, and a demonstration of the action taken to prevent similar episodes in the future.

Germany guarantees universal healthcare coverage, yet more than 200 insurers compete in the insurance marketplace, which is governed by a federal agency. Although most physicians are in private practice, their professional organizations negotiate with insurers on their behalf. Both patients and physicians may opt out of the federal system, although less than 10 percent of the population actually does.

Medical liability in Germany is determined by standards similar to those in the United States. However, because any resulting disability costs are covered by the German social security system, minimizing out-of-pocket losses to the individual, awards tend to be low.

The German judicial system also has several unique features that help keep settlements low. Judges, not juries, try German civil cases, and standardized reimbursement tables for noneconomic losses guide judges’ decisions. If a claimant wants an award greater than the amount specified in the table, the costs of the litigation are deducted from the award. Nonetheless, medical malpractice awards for severe cases have risen to an average of nearly $650,000 per successful suit.

All malpractice claims are initially referred to mediation boards made up by experts designated by Germany’s Physicians’ Guild. Free mediation is provided, but plaintiffs may reject the nonbinding results of mediation and proceed to court.

Sweden’s no-fault system originally avoided the courts and compensated patients for out-of-pocket losses and injuries they sustained, regardless of whether the complication was the result of malpractice or an unavoidable risk or complication. In 1996, the Patient Torts Act modified the no-fault system, requiring that patients go to court to prove liability claims and that all physicians carry malpractice insurance.

The burden of proof for a medical tort is lower than in Sweden’s general courts. Patients are compensated for complications from transmission of infections and side effects of medication, or if a different procedure might have prevented the injury. However, compensation is not available if the injury is deemed unavoidable. Claims are capped at $700,000.

Compensation is paid through a patient insurance fund that is funded by a tax on organizations that represent physicians. The system was refined to require every healthcare authority to compensate for injuries regardless of fault. The reimbursements are carried out according to a standardized reimbursement schedule, and most payments are part of a structured settlement. Lawyers are not a part of this system.

Claims of malpractice are brought before the Medical Responsibility Board in writing by either the patient or his or her lawyer. Although this board resembles a court and may administer disciplinary actions, it is separate from the reimbursement system for compensating patients.

In Japan, members of the Japanese Medical Association, which represents about 40 percent of the country’s physicians, obtain insurance through a large insurance pool. Private physicians obtain medical liability insurance through the marketplace, but insurance is not required.

Most Japanese physicians earn their income from outpatient care, not surgical procedures or inpatient medical care. Even though the surgery rate in Japan is roughly a quarter of that in the United States, a large percentage of malpractice costs are attributable to surgical procedures.

A study by the Institute of Medicine found that the number of errors and reportable events in Japan was nearly equal to those in the United States. Patients pursuing claims must initially go through a binding mediation process. In certain situations, however, patients may still seek redress through the courts. In Japan, injuries or deaths due to medical error are frequently treated as criminal matters that may result in the arrest and a jail sentence for the physician.

Although malpractice claims in Japan have increased tenfold in 25 years, the number of new claims per population is still dramatically lower than in the United States. This variance is often attributed to Japan’s healthcare structure, its social system, and legal barriers that discourage lawsuits.

Societal norms also may play a role in the rise of malpractice suits in Japan. The country has experienced an across-the-board erosion of trust in Japanese professionals, including medical personnel. In addition, awareness of patient rights, including the right to be compensated in the case of medical error, is on the rise in Japan. Over the past 15 years, contingency fees have become the norm, filing fees have been reduced, and the court system has been streamlined. The effect of these changes has been to make it easier to file malpractice claims.

Westernized judicial systems outside the United States include creative solutions for managing medical-legal conflicts. However, it is debatable whether elements of any of these systems would gain acceptance in this country due to the differences in cultural norms, patient expectations, and available social safety nets. Any modification to the U.S. system would also have to address the common arguments that the current system helps identify bad doctors and that any limitation on a patient’s right to go to court is unconstitutional.

Thomas B. Fleeter, MD, is a member of the AAOS Medical Liability Committee. He can be reached at bonedock@comcast.net

Editor’s Note: Articles labeled Orthopaedic Risk Manager are presented by the Medical Liability Committee under the direction of contributing editor S. Jay Jayasankar, MD.

Articles are provided for general information and are not legal advice; for legal advice, consult a qualified professional.

Email your comments to feedback-orm@aaos.org or contact this issue’s contributors directly.

You be the judge
Weigh in on this month’s Orthopaedic Risk Manager articles.

  1. Health Courts offer a viable alternative to the U.S. liability system. Yes or no?
  2. Elements of the liability systems in other countries should be considered in reforming the U.S. liability system. Yes or no? If yes, which elements?

Send your responses to aaoscomm@aaos.org