Published 1/1/2013
Thomas B. Fleeter, MD

The Future of Liability Reform

ACS summit on medical liability examines solutions for reducing physician exposure

Last October, the American College of Surgeons (ACS) held its first Medical Liability Reform Summit to evaluate the future of medical liability in the United States. The consensus was that future medical liability reforms need to focus on improving patient safety to reduce malpractice claims and their associated costs.

Although increases in medical liability rates have slowed, the future of these rates is uncertain. Despite an increased emphasis on patient safety from the Centers for Medicare and Medicaid Services (CMS), the Joint Commission, and a range of governmental agencies, recent legislative progress toward liability reform can best be described as uneven. For example, some states have enacted caps and other protections for physicians against liability; in other states, caps have been declared unconstitutional.

On a national level, the likelihood of significant liability reform is small. The Patient Protection and Affordable Care Act (PPACA) does not contain medical liability reform provisions, although it does set aside funds for several demonstration programs. Given the difficulties in passing legislation in a divided Congress, federal liability reform is unlikely in the foreseeable future.

Most efforts at liability reform have been directed at limiting plaintiff access to the courtroom. These efforts have included requiring pretrial screening panels, restrictions on attorney fees, mandatory certifications of merit, periodic payments of payouts, and caps on noneconomic damages. Of these limitations on liability claims, only caps on liability payouts have had a significant effect on liability insurance premiums. All of these changes, however, are aimed at reducing insurance premiums without focusing on increased patient safety.

Reducing the frequency of patient injuries and improving patient satisfaction scores is another route to reducing the number and financial value of malpractice claims. An examination of the epidemiology of malpractice claims finds that less than 1 percent of patients suffered negligent care. Of negligently injured patients, only 1 out of 20 actually sought redress. In one closed claims study, 30 percent of claims were deemed frivolous. Clearly, few injured patients make liability claims, a significant number of claims are deemed frivolous, and patients with legitimate claims experience long delays and are paid unpredictably.

Alternative systems
Nevertheless, creative options exist for reducing liability exposure that do not involve new legislation. For example, the University of Michigan Health System (UMHS) was able to overturn common misconceptions about reducing liability costs with its disclosure and offer program. The program is not about saving money; it is about making things right with the patient. In other words, the primary goal is patient safety, not avoiding malpractice litigation. UMHS tries to avoid adversarial positions, analyzes root causes, and, in the end, helps the patient. The program has resulted in fewer claims, a significant reduction in liability costs, more quickly closed claims, and less litigation.

The UMHS adheres to the following three principles of accountability:

  1. Compensate injured patients quickly and fairly when inappropriate care causes injury.
  2. Support the staff when the care involved was reasonable and appropriate.
  3. Reduce patient injuries by learning from previous patients’ experiences. When unanticipated outcomes occur, make an effort to determine the difference between mistakes and reasonable care. Using this system, injured patients are identified and engaged in the process.

Self-reporting is critical to success of this disclose and offer program. When a case that generates concern is identified, it is presented to the medical quality committee, not to the claims committee. The committee has three possible paths to follow after an incident: peer review, clinical quality improvement, or negotiation with the patient.

A second alternative liability system is utilizing health courts. As part of a demonstration project funded under PPACA, five major New York City medical centers are using health courts to process claims. These courts use specially trained adjudicators to help speed claims and damage awards. Judges also receive training to increase their understanding of medical issues so they can direct the progress of the case and encourage early settlements.

These courts are designed to expedite handling of claims. They advance and promote patient safety, improve patient–provider relationships, and encourage prompt, fair settlements. They are also designed to reduce frivolous lawsuits and keep insurance premiums low. A nonprofit organization, Common Good, is mounting an ongoing campaign to increase the availability of health courts nationwide.

Another promising alternative liability measure is the use of safe harbors. In this scenario, care that follows established clinical practice guidelines would be protected from liability. For instance, if a physician followed the AAOS guidelines for anticoagulation after arthroplasty, a pulmonary embolus that results while the patient is anticoagulated appropriately would be immune from liability.

Practical experience with safe harbors, however, is limited. In Florida, a 4-year project for reducing Caesarian section liability produced unclear results, and Maine’s 4-year experience covering 100 doctors has shown only limited results. Oregon currently has a planning grant for safe harbors.

One study of closed claims from 2002–2009 paid particular attention to commonly occurring medical management or diagnostic issues. Of 266 claims, 133 had clinical guidelines covering the incident. In approximately 50 percent of the 133 cases, treatment deviated from the appropriate clinical guideline. The belief was that if the clinician had followed the guideline, the injury would not have occurred. However, only 48 of the 266 claims resulted in a payment to the plaintiff. The safe harbor rule would have prevented only two of those payments.

The safe harbor program has generated a great deal of interest because it appears to encourage practice of evidence-based medicine. But many lawsuits are for injuries that arise following a range of complex events that cannot be covered by clinical guidelines. Additionally, in the case of conflicting guidelines, which should be followed? How often should safe harbor guidelines be updated?

What do patients want?
Patients want to be told about any error that occurs, including how and why it happened and how the error affects their health. In one survey, more than two-thirds of patients said they would want compensation following an injury, but not necessarily a large amount. Patients want an accountable system that is patient-centered with robust professional self-regulation within an environment that supports providers doing the right thing. Transparency about failures as well as successes is also critical.

In conclusion, future medical liability reforms need to focus on the potential to reduce malpractice costs by improving patient safety, not just restricting a patient’s access to the courtroom. Moving from liability to accountability can reduce liability expenses. Changing the culture to focus on patient safety and identifying where costs lie while providing safe care and just compensation to patients may be the best result of liability reform.

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

Editor’s Note: Articles labeled Orthopaedic Risk Manager (ORM) are presented by the Medical Liability Committee under the direction of David H. Sohn, JD, MD, ORM editor.

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.


  1. Kachalia A. New Directions in Medical Liability Reform, NEJM, 364;16, April 21,2011.
  2. Boothman R. Nurturing a Culture of Patient Safety and Achieving Lower Malpractice Risk Through Disclosure: Lessons Learned and Future Directions, Frontiers of Health Services Management, 28;3