AAOS Now

Published 6/1/2013
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Andrew Markiewitz, MD; William Hiller, MD; David H. Sohn, JD, MD; Thomas Fleeter, MD

Solving Conflicts without Litigation

Alternative dispute resolution models present an alternative

Alternative dispute resolution (ADR) refers to a collection of nonlitigation means of resolving conflicts. Interest in ADR for medical liability has been fueled by the enormous cost and inefficiency of litigation as the primary means of resolving disputes. According to estimates from the U.S. Department of Health and Human Services, between $76 billion and $122 billion is spent per year on medical liability litigation, and yet plaintiffs receive less than 1 percent of this amount.

However, at the federal level, tort reform is currently stymied due to the influence of powerful special interest groups such as the trial lawyers. As a result, many medical organizations have taken it upon themselves to embrace ADR as a means of avoiding the courtroom altogether. Where implemented, ADR has reduced claims, reduced costs, and dramatically increased satisfaction for both plaintiffs and defendants.

At the 2013 AAOS Annual Meeting, the AAOS Medical Liability Committee presented a scientific exhibit outlining the success of various ADR programs across the nation. This article presents a summary of those findings.

The problems
Litigation is both expensive and inefficient.

  • Direct medical liability litigation costs are estimated to exceed $100 billion annually.
  • Indirect medical liability litigation costs, such as defensive medicine, are estimated at $174 billion annually.
  • Litigation is time-consuming; cases often take more than 3 years to resolve.
  • More than 60 percent of all filed claims are frivolous and summarily dismissed for lack of merit.
  • Only 15 percent of settled claims actually contain evidence of negligence.

The goals of ADR
ADR programs have become increasingly attractive. These programs have the following goals in mind:

  • Improve healthcare delivery, with patient safety taking first place
  • Reduce medical errors through an ongoing assessment of medical care
  • Address problems as they arise
  • Promote prompt, clear communication among parties to improve patient satisfaction
  • Improve access to care
  • Provide fair and timely patient compensation when indicated
  • Reduce litigation costs and legal fees
  • Reduce frivolous lawsuits
  • Reduce malpractice liability premiums

ADR elements
ADR programs may include elements of the following:

Mediation—This is simply a negotiation between plaintiff and defendant facilitated by a mediator. It is nonbinding, meaning that if either party does not like the way the negotiations are going, court is still an option. Many plaintiffs sue because they are angry or want to force disclosure. However, litigation discourages physician apologies or the sharing of information at the outset. Mediation can be helpful in resolving conflicts that are not primarily motivated by money and is successful in approximately 85 percent of cases. It is also much quicker, measured in months instead of years, and typically saves $50,000 per case in attorney fees alone.

Arbitration—This is a binding negotiation between plaintiff and defendant, formally adjudicated by an arbiter. Unlike mediation, the results of arbitration are final and court is not an option. Arbitration is more formal than mediation, with similar rules and procedures, but is less burdensome than actual litigation. Although arbitration is more cost-effective and efficient than litigation, satisfaction rates are not as high as with mediation.

Early apology—Some states will protect apologies made by physicians after an adverse event, so that saying “I’m sorry” cannot be used as an admission of guilt in court. Even in the absence of such protection, some institutions have implemented early apology programs by physicians to help preserve the physician-patient bond and address the patient’s anger and confusion surrounding an adverse event.

Pretrial screening—To prevent frivolous litigation, some states have mandated that medical liability claims be screened for merit. The screening panels typically include individuals with scientific backgrounds, such as healthcare professionals or experienced healthcare judges or attorneys.

Successful ADR programs
Three examples of successful ADR programs are the Colorado Physician’s Insurance Company (COPIC) 3 Rs program, the University of Michigan model, and the University of Illinois Medical Center at Chicago (UIMCC) 7 Pillars program.

COPIC’s 3Rs—The three “Rs” are Recognize and report an unanticipated event, Respond after the event with explanation and expression of regret, and Resolve related issues. COPIC’s philosophy is to fairly compensate negligently injured patients while minimizing waste of resources in the tort system.

Initially, an occurrence report flags the physician as a potential 3R participant. The physician and COPIC need to agree on the intervention. The physician then informs the patient about the program and introduces the 3R administrator, who offers reimbursement based on actual expenses incurred. Situations involving a patient’s death, attorney involvement, or a written demand for compensation are excluded from the program. No waiver or release is required from the patient, and no report to the National Practitioner Data Bank is made.

The 3R program emphasizes communication and disclosure. It compensates patients for up to $25,000 in out-of-pocket expenses and $5,000 for lost wages. It results in rapid, fair compensation to patients and few lawsuits.

The University of Michigan—The Michigan ADR model rapidly and fairly compensates patients when care leads to injury. It supports caregivers when care is reasonable. It places patient safety first by learning from patient experiences. It attempts to replace the “deny-and-defend” system, which aims to prevent an adverse legal event by the provider’s refusal to acknowledge or discuss the event. Instead, the Michigan model focuses on the following:

  • Accountability—Responding to each patient injury with an evaluation of the event
  • Honesty—Assessing the event and disclosing findings to the patient
  • Principles—Adhering to principles of the model with predictability
  • Dismissing fear—Allowing and encouraging caregivers to voluntarily report adverse events

The Michigan system has led to many positive improvements including improved patient safety, less fear in reporting adverse outcomes, dramatic reductions in the number of lawsuits and litigation costs, reduced settlement amounts, and a reduction in the time to closure of adverse events.

This system encourages prompt self-reporting of incidents. It honestly evaluates medical errors and adverse outcomes to improve patient safety. It provides an open, clear communication path between families and caregivers. Compensation is fair, with an apology and appropriate evaluation of the financial factors in the case. The system allows for learning from mistakes to avoid similar problems from arising in the future.

UIMCC’s 7 Pillars—At the UIMCC, the 7 Pillars program has been established to change the dynamic of “shame and blame.” The program establishes a direct link between an adverse event and quality patient care to reward forthright communication and disclosure. These 7 Pillars are as follows:

  1. Reporting: Patient safety incident reporting is encouraged. The system encourages self-reporting by providers and patients. There are penalties for failure to report.
  2. Investigation: If a patient is harmed, a root cause analysis is performed within 72 hours to determine culpability versus a system failure. A patient liaison keeps the patient in the loop.
  3. Communication and disclosure: Patient and family are kept aware of all findings. If care was deemed reasonable, a third-party review is offered. In cases of “unreasonable care,” full disclosure with apology is offered.
  4. Apology and remediation: A patient communication consultation service assists with providing full disclosure and apology. A full explanation of any outcome is provided. A remedy is offered in cases of unreasonable care. A rapid settlement team works with the patient to provide rapid remediation and compensation where indicated.
  5. System improvement: The medical staff review board, hospital experts, patients, and family are involved in developing a system to prevent recurrence of the adverse event.
  6. Data tracking and performance evaluation: There is ongoing data tracking and evaluation to improve quality, evaluate adverse outcomes, and provide disclosure of these evaluations
  7. Education and training: This step includes annual competency assessments, organization-wide patient safety education, and training of staff and trainers.

This system has led to a doubling of incident reports. However, there has been no corresponding rise in lawsuits. The system does not stigmatize self-reporting, provides appropriate compensation for bad outcomes, and provides ongoing quality improvement.

Conclusion
In summary, ADR options exist and can be quite successful. Courtroom litigation is time-consuming, costly, often does not compensate victims of malpractice equitably, and fails to achieve meaningful improvements in quality of care. ADRs are proactive and provide flexible solutions by remaining outside the courtroom.

ADR options can improve physician-patient communication, prevent future harm by effecting meaningful changes, and offer means for expressing an effective apology. In cases of negligent care, payment for the injury is expedited. The focus is on improved quality of care and communication, not on “hunkering down.” ADRs can improve the transparency of care while providing an effective means to resolve disputes between patients and caregivers.

Andrew Markiewitz, MD; William Hiller, MD; David H. Sohn, JD, MD; and Thomas Fleeter, MD, are members of the AAOS Medical Liability Committee.

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.