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Medical Liability: Tort Reform

WHEC Practice Bulletin and Clinical Management Guidelines for healthcare providers. Educational grant provided by Women's Health and Education Center (WHEC).

The greatest ongoing challenge for health care reform in the United States is to provide better health care for less money. Both aspirations are possible, but only if the nation is willing to overhaul the unreliable system of compensation for injuries that result from medical error. The challenge is crucial: American health care may bankrupt the country unless the waste is wrung out of the system. The size of the waste is staggering: $700 billion to $1 trillion every year -- an estimated 30% to 40% of total costs (1). Defensive medicine is notoriously hard to quantify, but some estimates place the annual cost at $100 billion to $200 billion or more. Containing costs requires overhauling the culture of health care delivery. Incentives need to be realigned. This requires a legal framework that, instead of encouraging waste, encourages physicians and healthcare providers to focus on what is really needed. One pillar in a new legal framework is a system of justice that is trusted to distinguish between good care and bad care reliability. Reliable justice would protect healthcare providers against claims that lack adequate medical and legal foundations and would compensate patients injured by medical errors expeditiously. Physicians in high-risk specialties are subjected to trial by a jury of lay persons in an adversarial arena dominated by skilled litigators and expert witnesses who are sometimes unprincipled, and are hurt by skyrocketing premium increases regardless of their malpractice track record as insurance companies tax everyone in the subspecialty to cover their enormous payouts. Society is hurt in several ways: Fear of being sued is the primary cause of defensive medicine, which costs the American medical system billions of dollars every year. Disgust with the perception of the unfairness of the system causes many physicians in high-risk specialties to stop practicing entirely or to limit the complexity of the cases they will accept, which results in a serious shortage of medical services in some areas of the country. Finally, and perhaps most importantly, the looming threat of a potential lawsuit that is present in every medical encounter has caused a change in the patient-physician relationship, that may have subtle consequences for the effectiveness of the therapy being administered, and undoubtedly has made the practice of medicine in high-risk fields less enjoyable and therefore perhaps less attractive to young people considering the course of their professional future.

The purpose of this document is to provide healthcare professionals with the information on tort (personal-injury) law and several legal issues related to malpractice and to lay the foundation for better understanding of such key concepts as medical negligence and various reforms in this field. There are two main goals of the current system "deterrence" of negligence and "compensation" for patients injured through medical negligence. All stakeholders have an ethical obligation to act in ways that promote the goals of deterrence of unsafe practice, enhancement of patient safety, and fair compensation of the injured. The current system of professional liability in the USA encourages patient safety to the extent that the threat of litigation results in attempts to prevent negligent injury. Despite the threat of litigation and despite ethical and legal imperatives to the contrary, the current system has not succeeded in efficiently and effectively encouraging fulfillment of the ethical obligation to provide a safer environment for patients. Interest-based "reforms" should be abandoned because they cannot solve the problems of incompatible interests among all stakeholders.

Background

The dual objectives of tort law are 1) to provide reasonable and prompt monetary compensation for injury, and 2) to deter negligent or substandard conduct. As applied to the complexities of medical science and therapeutics in the 21st century, it is widely recognized that America's civil tort system does not achieve these objectives. Compensation is neither prompt nor reasonable and the plaintiff who prevails receives only about 46% of the total direct costs of the negligently-caused injury (2). Evidence of negligence or causation can often be slight. The only reliable relationship is between the severity of the injury and the likelihood of negligence being found; thus, the more serious the injury, the more likely the defendant will be found liable. Consequently, the system fails to achieve its goal of deterrence and actually degrades the peer review process and the attempts of physicians and institutions to deal properly with those whose practices are substandard or negligent. Most concerning, those who have suffered adverse outcomes as a result of demonstrable negligence get no legal representation unless the injuries are of sufficient magnitude to make the case economically worthwhile to an attorney. Only a small percentage of meritorious cases get litigated. It is clear that the United States has needed national tort reform for decades, but no such reform is on the horizon. Several administrative systems and malpractice reform proposals presented here at the state level are somewhat successful. Should national tort reform ever become a reality, these systems would be compatible with the larger goals of such reform -- improved access to health care, higher quality health care, and less costly health care.

Studies indicate that the largest drivers of waste, with rough percentages each contributing to unnecessary costs are these: fee-for service incentives for unnecessary care (50%), the lack of consumer responsibility (40%), defensive medicine (20%), excess bureaucracy (20%), and fraud (10%) (1)(3). The numbers total more than 100% because the skewed incentives overlap -- a physician orders expensive tests because it is profitable and provides a potential defense in a law-suit, and the patient has no financial incentive to question the decision. Fraud thrives in a dense bureaucratic thicket with no patient incentive to check the false invoice. A Massachusetts survey showed that roughly 25% of all imaging tests were ordered for defensive purposes, and 28% and 38%, respectively, of those surveyed admitted reducing the number of high-risk patients they saw and limiting the number of high-risk procedures or services they performed (4). Although the costs of the defensive medicine are notoriously hard to quantify, some estimates place annual costs at $100 billion to $200 billion (4). Quantification is difficult because defensive medical practice is now embedded in the culture of American health care; it is hard to separate the financial incentives from the distrust of justice.

Studies repeatedly have demonstrated that the current ad hoc system of justice, with verdicts that vary widely from one jury to the next, has spawned a culture of legal fear and self-protection. Studies also show that the system fails injured patients -- according to one study, a claim takes an average of 5 years to resolve and 54 cents out of every dollar spent in the malpractice system ends up going to lawyers or administrative costs (5). And because the legal process is so expensive, most injured patients without large claims cannot even get a lawyer unless they can afford to pay fees in advance. Many believe that the American compensation system for medical injuries is the most inefficient one in the world and that it skews incentives away from candor and good practices (6).

Malpractice Reform Proposals

A range of malpractice reform proposals have been suggested as part of the national debate, and it is useful to examine them and identify the advantages of each. All of these reforms have significant merit, but special health courts may prove to be the most effective mechanism in reducing defensive medicine.

Special Health Courts

Special Health Courts have been developed in the past few years jointly by the Harvard School of Public Health and Common Good with funding from the Robert Wood Johnson Foundation (7). A number of public forums have been held on the initiative at the Brookings Institution and other think tanks. The basic structure is an administrative system with judges, not juries, deciding cases in written rulings with advice from neutral experts. As with workers' compensation cases, medical malpractice claims would never go to the regular courts, unless they raise constitutional issues. The goal is a system that: 1) aspires to consistent rulings from case to case; 2) expedites proceedings, with most claims decided in a matter of months, encouraging early offers and settlements of meritorious claims; and 3) ensures that all information is compiled and fed back into the system so that physicians and hospitals learn from their mistakes. Supporters believe that the system will compensate more patients at a dramatically lower overhead cost. Most importantly, by providing a system of justice that aspires to make rulings based on accepted medical standards, special health courts should substantially eliminate the need for "defensive medicine". Tragic cases, such as babies born with cerebral palsy, would be decided based on medical science, not emotion. The idea of special courts is not radical. The United States has scores of special courts, precisely in areas in which special expertise is needed to achieve consistent and expeditious justice -- bankruptcy courts, tax courts, mental health courts, drug courts, workers' compensation tribunals, Social Security tribunals, vaccine liability courts (discussed below), family courts and others. Creating special health courts is proposal advanced by most serious observers to eliminate the incentives for defensive medicine -- including support by consumer groups such as AARP, patient safety groups, medical societies such as the American College of Obstetricians and Gynecologists (ACOG), and American Medical Association (AMA) (7). The public also overwhelmingly supports health courts: a 2009 national survey released by Common Good and the Committee for Economic Development shows that 67% of the public favored the reform initiative (8).

Caps on Damages

The tort reform picture is not uniformly bleak throughout the United States. California's Medical Injury Compensation Reform Act has limited non-economic damages in medical malpractice lawsuits to $250,000 in that state since 1975, and this legislation has served as a model for the Texas constitutional amendment of 2003 (9). Both Virginia and Florida have created "no-fault" programs for some neurologically impaired children. Colorado has passed an "I'm sorry" law, which encourages physicians to apologize for their errors. Colorado has also implemented "3Rs" (Recognize, Respond, and Resolve) an early intervention program pioneered by COPIC, the leading medical liability insurance company in the state, which has led to a remarkable reduction in cases that progress to litigation. The majority of states, however, continue to perpetuate a system that is needlessly expensive, inefficient, and often inequitable while steadfastly rejecting significant efforts to rectify its flaws. More than half of the states have enacted "tort reform" limiting noneconomic damages, generally capping "pain and suffering" and related types of damages at $ 250,000. These reforms have the effect of reducing malpractice insurance costs for physicians and hospitals, attracting medical professionals to the jurisdiction, and some studies suggest, reducing defensive medicine somewhat (4). But physicians still can be held liable, when they did nothing wrong, for millions of dollars of economic damages (e.g. a lifetime of care for a baby born with cerebral palsy, even if the condition was unavoidable and did not result from the physician's negligence), and physician in states with tort reform still say they practice defensive medicine. It is an article of faith among liberals that caps on noneconomic damages are an affront to fundamental notions of fairness (even though most states place no limit on actual compensatory damages). By way of comparison, other countries in the western world typically limit noneconomic damages but do so according to a schedule by which the pain and suffering award depends on the severity of the injury.

In February 2010, a long-awaited ruling from Illinois' high court invalidated the state's cap on non-economic damages of $500,000 for physicians and $1 million for hospitals. The Illinois Trial Lawyers Association made a public announcement, indicating it would rely on this lawsuit to challenge the constitutionality of the 2005 tort reform law in its entirety. It is noteworthy that after the cap was passed in 2005, medical liability lawsuits in Cook County, IL, dropped 25% the following year. This was the third ruling against caps. Once in 1976, and again in 1997, the Illinois Supreme Court ruled against them. The 2005 law had been crafted with careful attention to these past ruling, and included a findings section emphasizing the public policy value of caps in preserving patient access, as well as a severability clause tying the cap to increased state oversight of physicians and liability insurers. Nevertheless, the state's Supreme Court invalidated the cap.

The state of Tennessee recently enacted a statutory cap on non-economic damages in civil lawsuits, including malpractice suits. For most lawsuits, the cap on non-economic damages will be $750,000. In some cases, which a court decides, involve serious injury, the cap is now set at $1 million. This statute is the latest measure in Tennessee to promote tort reform. In 2008, the state also implemented a certification process which is intended to set aside lawsuits that lack legal merit.

Case study of Mississippi: Ten years ago Mississippi had a national reputation as an unfavorable legal forum for civil defendants. Physicians were negatively affected, especially those practicing certain specialties such as obstetrics. In late 2002, a special session of the Mississippi legislature responded by passing legislation, House Bill (HB) 2, which generally became effective for causes of action filed on or after January 1, 2003, and made important changes to the state's medical liability laws (34). The core of HB 2 was a $500,000 limit on noneconomic damages, such as pain and suffering, applicable to most medical negligent cases. HB 2 also generally requires medical malpractice plaintiffs' attorneys to consult with an expert before filing suit, although "a complaint, otherwise properly filed, may not be dismissed, and need not be amended, simply because the plaintiff failed to attach a certificate or waiver." In addition, HB 2 requires plaintiffs to give defendants 60 days' written notice before commencing a medical liability lawsuit, abolished joint liability for noneconomic damages for any defendant found to be less than 30% at fault, and provides heightened pleading requirements for cases involving medical professionals who prescribe prescription drugs. Mississippi's tort reform laws are associated with a steep drop in lawsuits against the physicians insured by Medical Assurance Company of Mississippi (MACM), the largest medical liability insurer in the state, particularly obstetricians and gynecologists, as well as medical liability premium reductions and refunds (35). In the 5-year period (2005-2009) after the implementation of tort reform, the average number of lawsuits per year against all MACM-insured physicians (regardless of specialty) dropped 227% (from 318 to 140) compared with the years immediately preceding the implementation of tort reform (2000-2004). In the period from 2005 to 2009, the average number of lawsuits per year against MACM-insured obstetrician and gynecologist dropped 293% (from 44 to 15) compared with the period from 2000 to 2004 (35). Medical liability insurance premiums for MACM-insured physicians have been both reduced and refunded each year for the past 5 years (2006-2010).

Medical Screening Panels

About 20 states in USA have a requirement that malpractice cases be submitted first to expert panels. The findings of the panel are not binding, but in certain circumstances can be used in evidence. The panels have received decidedly mixed reviews. In one state, Maine, the panels have improved the reliability of claims substantially. In other states, the panels seem to add time and expense without substantial improvement of reliability or efficiency. In August 2009, the AMA released an article surveying their effectiveness (10). Safe harbors for following practice guidelines have been proposed. The idea here is to insulate physicians from liability if they conform to accepted guidelines. Safe harbors present two significant issues. First, there is no software program that will make that determination. The physicians deal with a live patient with a complexity of characteristics. It takes someone with expertise and judgment to decide whether a physician is complying with practice guidelines -- that is, a special court or panel with authority to make a binding decision. Second, some health care experts believe that the safe harbor will sometimes discourage physician from delivering the best care. Practice guidelines are accurate most of the time but not all of the time -- sometimes it is best not to prescribe beta blockers after a heart attack. Sometimes the patient is too weak to endure the prescribed protocol. There should not be a system that encourages physicians to act against their best judgment because it offers the physicians a safe harbor.

Disclose Errors and Early Offer Programs

Adverse outcomes, preventable or otherwise, are an uncomfortable reality of medical care. Patient's desire disclosure and discussion of adverse events in health care and policy makers strongly support disclosure. Improving the disclosure process through policies, programmatic training, and accessible resources will enhance patient satisfaction, strengthen the physician-patient relationship, and most importantly, promote a higher quality of health care. Numerous studies have shown that patients prefer full disclosure of a medical error and want details about how the error occurred, what the consequences are (including financial costs), and what measures are being taken to prevent the same error from occurring again (11). Disclosure of errors has been linked to many benefits, including increased patient satisfaction, greater trust with the physician, and higher likelihood of a patient's positive experience, all of which are related to a lower likelihood that a patient will sue (12). Physicians and ethicists have long acknowledged that physicians have an ethical and moral obligation to disclose errors (13). A number of health care organizations, insurance carriers, and states have developed programs to educate physicians about disclosure. It is important to remember the difference between expressions of sympathy (acknowledgement of suffering) and apology (accountability for suffering). It is also important to be knowledgeable about the state's laws on apology and disclosure because these laws vary and may have an effect on the way in which the disclosure is conducted (14). The early offer programs encourage defendants to make an early offer of compensation and encourage plaintiffs to take it because it limits attorney fees to 10% (15). Most observers support this idea as an efficient way to resolve many legitimate claims. But, it does not address the problem of judicial unreliability that is the main driver of defensive medicine. Early offers do not protect the physician who did nothing wrong.

Administrative Compensation Models in United States

A wide range of innovative measures and "reforms" have been instituted over the intervening years to provide relief from this unsustainable situation. Examples of these reforms include screening panels, expert witness reforms, modification of the collateral source rule, elimination of joint and several liability, and of course placing caps on noneconomic damages. California's MICRA legislation, passed in 1975, is an example of a successful reform package. More recently (2003), Texas enacted a statutory cap on noneconomic damages and passed a Constitutional Amendment to insure that the legislation would not be nullified by the state's Supreme Court (16). Administrative alternatives to traditional tort mechanism have a potential to lessen time, money and emotion spent on lawsuits, increase compensation to injured patients and strengthen the physician-patient relationship. Although administrative compensation systems are sometimes referred to as "no-fault" systems, it would be equally appropriate to consider them systems of "absolute liability". If the criteria for the compensable event are met and the patient is defined as part of the system, the liability to provide benefits in accordance with the plan is absolute. It is only because we have become conditioned to the notion that fault is a prerequisite to liability for compensation that we gravitate toward the "no-fault" label.

Birth Injury Compensation Funds

In 1987 and 1988, with many obstetricians losing insurance coverage and thousands of patients unable to find an obstetrician, Virginia and Florida passed birth-injury legislation. The intent was to achieve fair and prompt compensation in cases of neonatal encephalopathy resulting from alleged birth injury without resorting to the tort system. In fact, the tort remedy is foreclosed in both states if the claimant meets the criteria of the birth-injury program.

The Florida Birth-Related Neurological Injury Compensation Association (NICA) (17) and the Virginia Birth-Related Neurological Injury Compensation Program (VBIP) (18) are much the same. Both plans address injury to the brain or spinal cord of an infant caused by oxygen deprivation or mechanical injury occurring in the course of labor, delivery, or resuscitation. Whereas Virginia's statute requires that the infant be "permanently motorically disabled" and 1) developmentally disabled or 2) cognitively disabled, Florida's statute requires the infant to be "permanently and substantially mentally and physically-impaired." Both statutes apply only to live births and exclude disability or death caused by genetic or congenital anomaly. In addition, Florida requires a birth weight of 2,500 g for singletons and 2,000 g for multiple gestations and excludes "degenerative neurological disease" or "maternal substance abuse." Eligibility of patients varies slightly. In Virginia, the birth must occur in a participating hospital or services must be provided by a participating physician. In Florida, the birth must occur in a hospital and there must be at least one participating physician. The injuries must be "birth-related" injuries as defined by the respective statutes. In both states, an administrative claim must be made in administrative court. Should the plaintiff initiate a civil court action before eligibility for admission to the birth injury program is determined, the defendant physician or hospital or both will move to suspend the civil proceeding pending a determination on admission to the program. Such motions are routinely granted in both states.

After an administrative claim is made, experts review the medical records. Florida utilizes two staff and two outside experts. Typically, the experts are a maternal-fetal medicine specialist and a pediatric neurologist; they are paid by NICA for their services. Virginia employs a three-physician medical school panel, a claimant expert and as needed, and a program expert. An administrative law judge decides admission, and if admitted into the program, tort action is foreclosed. In Florida, the health care provider's failure to give prior notification of the program may allow the claimant to avoid NICA and choose a tort remedy. In either state, once admitted to the program, a lifetime of care is provided. There is no cap on costs; "medically-necessary" treatment is the only limitation. Eligibility in most cases is decided within 6 months and "fault" or "negligence" plays no part in determining benefits. The administrative plans allow more money to be spent on care and less on attorneys. Less than 1% of the total ultimate cost of the claim ("incurred loss") goes to attorneys in Florida; less than 4% goes to attorneys in Virginia.

Funding of these programs is entirely private. This is important. Neither the U.S. Congress nor the state legislatures can be expected to fund these types of compensation systems. This is true now and no change can be expected under current economic conditions. Physicians elect to participate in both states, paying $5,000 per year in Florida and $5,900 in Virginia. Nonparticipating physicians pay a mandatory fee of $250 in Florida. In Virginia, the mandatory fee for nonparticipating physicians is $300, but this fee is imposed only when the Virginia plan is deemed actuarially unsound. Hospitals are required to participate in Florida and pay $50 per live birth. Hospital participation in Virginia is voluntary; hospitals pay $55 per live birth up to the $200,000 maximum. However, a nonparticipating Virginia hospital is not eligible to benefit from the program. Both programs are functioning well. A surprising finding in Florida's system is the number of cases that escape the statute owing to alleged failure to give proper notice to patients of the plan's operation. NICA provides printed pamphlets that must be given to each obstetric patient. These pamphlets are available in 13 languages, and a form is provided to document the patient's receipt of the materials.

Binding Early Offers of Recovery

Binding early offers might be considered a variant of an administrative compensation model like the birth injury funds. However, here the compensable event is defined by the healthcare provider rather than by statute. Once the provider tenders the offer and the offer is accepted by the patient-claimant, payment of all economic loss and attorney's fees is mandated. Tort litigation is not permitted. Despite widespread interest in the proposal, the attempt at economic modeling, and clear benefit to patients, payors and physicians, the Professor Jeffery O'Connell (The Samuel H. McCoy II Professor of Law, University of Virginia School of Law) (19) plan has yet to be implemented in legislation. Given the gridlock on reform, particularly at the federal level, adoption of the program's essential features in contract form is now proposed for state-based demonstration projects.

Nonbinding, Voluntary Administrative Compensation

The Colorado Physicians' Insurance Company (COPIC) is a physician-owned and run medical liability company formed by the Colorado Medical Society during the early years of the liability crisis in 1990s. This plan emphasizes face-to-face disclosure, transparency, apology, and patient benefits. The Board authorized $2,000,000 for a 2-year pilot program (20). Now, a decade later, the program has evolved into a successful model for dealing with adverse medical outcomes (20). Although some would say that the program, now called the 3Rs Program (Recognize, Respond, Resolve), is nothing more than a well-run, proactive, risk-management and insurance claims handling program, it can equally be considered a system of administrative compensation, albeit entirely private, entirely voluntary, and administered by a physician-owned insurance company. There are three basic tenets in the 3Rs Program. Recognize when an untoward event occurs and report it. Respond by telling the patient of the problem and its implications. Resolve by offering an apology, and when appropriate, offer payments for out-of-pocket expenses not compensated by insurance (maximum $25,000) and loss of time at a per diem of $100 (maximum $5,000). The program emphasizes prompt compensation. Negligence (fault) may or may not have caused the adverse medical outcome. If the patient involves a lawyer or initiates a written demand of payments, the 3Rs Program ceases.

The COPIC program has been very successful in Colorado. It fosters early and complete reporting of untoward outcomes. It is based on physician-patient communication and engenders trust. Although this exact program may not be suitable in other states, some states may chose to adopt some of its principles and features. Although it does not offer resolution of all unanticipated adverse medical outcomes, it provides opportunity for education and improvement of patient safety. It achieves the goal of prompt and fair compensation for adverse medical outcomes or medical errors, albeit mostly in cases where injuries are not severe. It allows questions about quality of care, patient safety, and physician or institutional performance to be addressed in more appropriate and constructive venues.

No-Fault Compensation following Vaccination Adverse Events

The public health benefits of vaccination are clear. However, vaccines are not without risks and it is commonly accepted that regardless of proper design, manufacture and delivery, adverse events occur following vaccination although serious adverse events are rare (30). At a population level, it is considered that these small risks are balanced by the benefits of widespread population immunization. This means that an individual occasionally bears a significant burden for the benefit provided to the rest of the population. Although these vaccine-related adverse events occur occasionally due to negligence, more often there is no clearly attributable fault. Without evidence of clear negligence, it is difficult to obtain compensation through traditional legal mechanisms. Recognizing this, several countries have implemented vaccine-injury compensation programs (31). These programs reflect a belief that it is fair and reasonable that a community that is protected by a vaccination program accepts responsibility for and provides compensation to those who are injured by it. There are about 19 countries with current vaccine compensation schemes. In 1953, the German Supreme Court ruled that people who were injured by compulsory vaccination (in this case smallpox) were entitled to compensation. Germany enacted a compensation program in 1961. France implemented a similar scheme in the 1960s. Concern over injuries caused by medicines and the inadequacies of traditional litigation processes increased after the thalidomide tragedy in the 1960s. In the 1970s, concerns over adverse events related to diphtheria-tetanus-pertussis vaccination led to programs being established in Austria, Denmark, Japan, New Zealand, Sweden, Switzerland and the United Kingdom of Great Britain and Northern Ireland (UK). In the 1980s, Taiwan (China), Finland, the United States of America (USA) and Quebec (Canada) implemented programs. Italy, Norway and the Republic of Korea followed in the 1990s. The most recently implemented programs are those in Hungary, Iceland and Slovenia (32). There is interest in harmonizing health policy within the European Union, for injuries caused by defective products. France has moved away from a court-based compensation scheme to an administrative system, and in UK, there has been discussion of an alternative general medical accidents' liability scheme. There has also been significant public pressure in other countries, including Australia, Canada and Ireland, to establish similar schemes. Recently, China has shown interest in a no-fault compensation scheme for vaccine injuries. To date there are no schemes that cover developing countries.

"Causation of fact" considers and injury to be proven if these 3 criteria are met: (i) a medical theory causally connecting the vaccination and the injury; (ii) a logical sequence of cause and effect showing that the vaccination was the reason for the injury; and (iii) a showing of a proximate temporal relationship between vaccination and injury. Balance of probabilities means that there is a "preponderance of evidence" or more evidence than not to suggest the vaccine caused the injury. This is a lower burden of proof than "beyond reasonable doubt". Between 2001 and 2010 more than 5,600 claims were made for autism or autism spectrum disorder caused by measles-mumps-rubella vaccine and thimerosal-containing vaccines. These cases were consolidated into the Omnibus Autism Proceedings. After several test cases, no causal link has been found between autism and the vaccines, however a large number of cases have not yet been formally dismissed or withdrawn from the courts. Given the separate process that has been established for this large number of claims, this data is listed separately in the claims data published by the National Vaccine Injury Compensation Program in the United States of America (33).

A vaccine-injury compensation scheme removes the uncertainty of tort liability for manufacturers and provides more fair, efficient and stable approach for injured patients. Litigation is expensive and restricted avenue that is inaccessible for many vaccine recipients. Furthermore, compensation schemes avoid the polarization of drug companies against vaccine recipients through litigation and the associated negative media coverage. Many countries that have implemented compensation schemes have done so as an expression of community solidarity. Vaccine injuries can be severe and complex, and are often suffered by children who require a lifetime of care and may not qualify for other benefits under accident insurance schemes. In a vaccination program, the injured and uninjured pay unequal shares of the social cost of producing the social good of herd immunity. Six elements are common to all schemes: administration and funding; eligibility; process and decision-making; standard of proof; elements of compensation and litigation rights. Vaccine-injury compensation programs are increasingly regarded as an important component of successful vaccination programs. They have been used for the past 50 years to ensure that individuals who are adversely affected in the interests of protecting the whole community are adequately compensated and cared for. In USA if compensation is accepted for vaccination injury, no further civil claim is allowed.

Administrative Compensation in Other Countries

Medical injury administrative compensation systems are well-established in many countries, including Sweden, Norway, Australia, Canada and New Zealand. Both Denmark (21) and Sweden (22) completely separate patient compensation from complaints. In essence, complaints reflect adverse outcomes resulting from avoidable injury, negligence, or medical error without negligence. In Denmark, compensation is based on a tax-paid system administered at the country level. The country, deemed the healthcare provider, takes out insurance from a Patient Insurance Association. Sweden requires individual health care providers to purchase patient insurance. Insurers who issue patient insurance are affiliated with a Patient Insurance Association. If a Swedish health care provider has not purchased the required insurance, the Patient Insurance Association will investigate and compensate the injury. Reimbursement of paid compensation will then be claimed from the caregiver. It is important to note that these programs are not pure absolute liability or no-fault programs. They address only those injuries caused by examination, treatment or care. These are systems without blame, but they are not guarantee schemes. The patient injury compensation panel determines whether the injury or adverse outcome is within the provisions of the respective program and therefore constitutes a compensable event.

Sweden defines a compensable event in terms of avoidable injury, one which an experienced physician (general practitioner or specialist) could have avoided. In Denmark, the compensable event includes all avoidable, and some unavoidable, injuries. In both countries, fault or negligence is no longer a condition for receiving compensation (damages). These programs are related to only those injuries caused by examination, treatment or care. The patient injury compensation panel determines whether the injury or adverse outcome is within the provisions of the respective program and therefore constitutes a compensable event. Nonetheless, in both Denmark and Sweden more patients are compensated, the ground for compensation is more objective, rules of evidence are more liberal, and there is no economic risk to patients. Time for handling claims is shorter and administrative costs are low. Perhaps most important, there is better relations between patients and physicians.

There are exceptions to the right of compensation. In Sweden, for example, if the procedure or other intervention was for treating a life-threatening condition or one that could lead to severe permanent disability, the claim might be excluded. Injuries due to insufficient information or failure to obtain consent are not covered. Compensation from patient insurance is always subsidiary or excess to the general welfare system, e.g., sick leave compensation and early retirement benefits. In Denmark, the criteria for compensating unavoidable injuries depend on application of the Endurability Rule, which weighs the seriousness and rarity of the event. The Endurability Rule is a "type of catastrophic compensation safety net, with catastrophe defined according to patients' and providers' baseline expectations rather than the objective severity of the harm involved." (23). The Endurability Rule is not particularly transparent and is considered a weakness of the system. In Denmark, because the interests of the patient and the physician are aligned in the compensation process and the patient can rely on the physician's help to file the claim, there are fewer complaints against physicians alleging negligent or substandard care.

The British Approach

The inexorable rise in claims has continued in United Kingdom. In 2004-2005 the National Health Service Litigation Authority dealt with 5,609 claims of clinical negligence and 3,766 of nonclinical negligence (e.g., patient falling out of bed, hospital-acquired infections). About 38% of claims were abandoned by the claimant (plaintiff), and about 43% were settled out of court. The remaining claims were defended successfully by the National Health Service Litigation Authority. In 2004-2005 502.9 million was paid out for clinical negligence claims and 25.1 million for nonclinical claims. In 2008-2009, 6080 claims of clinical negligence and 3,743 claims for nonclinical negligence against National Health Service bodies were received by the Authority. A total of 769 million was paid in connection with clinical negligence claims during 2008-2009, up from 633 million in 2007-2008 (24)(25). Although the costs of damages are considerable, particularly when children are found to have cerebral palsy that was negligently caused, the legal costs are also high. In the United States, plaintiff attorneys get a percentage of the amount of damages awarded as their fees, but in the United Kingdom (U.K.), the fees, referred to as costs, are paid to the winning party in addition to damages. The actual amounts paid out in costs are virtually always kept confidential, but the highest sums awarded in the United Kingdom are believed to be well in excess of 5 million. Awards in the United States are much higher, the reason being that damages in USA may include punitive as well as compensatory damages whereas those in the United Kingdom are strictly compensatory. State funding is readily available for poorer claimants and for all children up to age of 21. This funding comes from the Legal Services Commission, which is part of the U.K. government; the defense costs are borne by the National Health Service Litigation Authority. In essence, the U.K. government pays up irrespective of who wins. As a result, there is effectively no financial disincentive to bringing a claim.

The situation is different with regard to the U.K. private medical sector, i.e., when the claimant brings an action against a physician in private practice. The numbers are exceedingly small when compared with the National Health Service, but, in some of these cases, the claimants' solicitors may work on a no-win-no-fee basis, and the physicians' costs will be met by his or her insurers. If nursing or paramedical staff working in the private sector are involved in a negligence claim, their employer will bear the costs and any damages. In reality, all private hospitals in the United Kingdom are insured for such situations. Another important difference between the United States and the United Kingdom is that experts in the United Kingdom owe a duty to the court, not to whichever party instructs them. They invariably will agree to a fee for the work entailed, usually on a hourly basis (currently about 200), but they are not permitted to participate in any no-win-no-fee arrangement because it puts them into a potential conflict of interest in terms of the neutrality of their report. Importantly, at the end of their report, experts must certify that they understand what is required of them. Part of this entails accepting that the expert is likely to be the subject of public adverse criticism by the judge if the court concludes that the expert has not taken responsible care in the preparation of his or her report or under cross examination. An expert who is subjected to public adverse criticism is unlikely to be asked to act as an expert again.

Medical negligence cases in the U.K. are heard by a sitting judge without a jury. Factual and expert witnesses are examined under oath and cross-examined by the barristers (counselors) instructed by either side. The judges, who are usually (but not invariably) skilled in medical cases, may also ask questions of the witness. The choice of judge is generally made on the basis of experience and availability and if his or her decision is thought by one or other side to be unreasonable, an appeal to a higher court judge may be made. Medical negligence cases rely mainly on U.K. case law, the most notable being Bolam and Bolitho. Bolam lays down the rule for assessing the appropriate standard of reasonable care in negligence cases involving skilled professionals and is widely known as the "Bolam test." This requires that standards of care be in accordance with a responsible body of medical opinion, even if others differ in opinion. The Bolam test states that "If a doctor reaches the standard of a responsible body of medical opinion, he is not negligent." Bolitho clarifies the standard of care required by medical specialists. It follows the Bolam test for professional negligence but addresses the interaction with causation. Where appropriate, other cases are taken into account.

Damages: Compensatory damages are awarded by the court after considering Condition and Prognosis Reports provided by experts in the relevant clinical fields, such as rehabilitation, physiotherapy and special schooling. In general, the damages will include compensation for actual damages, for example, ongoing care for a child with cerebral palsy that has arisen as a result of substandard care, with additional amounts for pain and suffering. The parents of the damaged child are entitled to compensation for loss of earnings and other consequential losses. Any pretrial agreed settlement involving minor has to be approved by court.

Discussion

Litigation is a fact of life for today's medical practitioner. It is easy to say that there would be no litigation for medical negligence if physicians did not make mistakes, but this is a facile point of view given that litigants often do not appreciate the difference between a non-negligent mishap or accident and one that is due to substandard care. Nevertheless, one of the most important learning processes for physicians and all healthcare providers is to be aware of cases that have progressed to litigation. Irrespective of the country or legal system, it has become abundantly clear that litigation against physicians is not going to go away. To this end, it remains essential for all physicians and other healthcare providers to keep up to date with medical advances and to practice to as high as a standard as possible. The United States already has an elaborate system of recertification and the United Kingdom is currently in the process of adopting mandatory recertification and relicensing of all physicians although the General Medical Council program is just beginning and will not be fully implemented for several years. Ultimately this should reduce the number of claims for damages for clinical negligence, but in the meantime, it is probable that the courts and the medical and legal professions, will remain busy with medical negligence cases for many years to come.

Perhaps the most important reason for adopting administrative compensation models for adverse medical outcomes is the effect on patient safety and quality of care. As the birth injury legislation and the Danish and Swedish systems demonstrate, it is possible to select those adverse medical outcomes that deserve compensation. The authors discussing these systems (16)(24) believe that demonstration projects will convince patients, physicians, actuaries, insurers, and policy-makers that compensation of patient injury can be fairly and promptly made on a sound financial basis through administrative compensation mechanisms. There would be no need for recourse to the tort system to determine whether or not an event is compensable. Persuading attorneys in the United States to relinquish their grip on medical malpractice litigation may prove quite challenging, however, even in the face of evidence that alternative systems work better.

The need for an administrative compensation model for neurologically-impaired newborns has been recognized because of the enormous medical and financial consequences of this birth outcome. Such a system could extend to other serious compensatory events such as brachial plexus injuries, intra-operative complications, medication errors, or delay/failure in diagnosis, severe brain injury resulting in permanent unconsciousness or minimal consciousness, and fetal, neonatal, or adult patient death. Administrative compensation systems for neurologically impaired newborns provide a means of providing care and support without necessarily making claims of substandard care. In such situations, an administrative system of the types mentioned above offer enormous potential for both personal and public good. Extending such a system of compensation to other serious conditions to alleviate the burden of unexpected expenses is reasonable.

Arguments supporting vaccine-injury compensation include political and economic pressures, litigation threats, increasing confidence in population-based vaccine programs and ensuring sustainability of vaccine supply. However, compensation schemes are also based on underlying principles of fairness and justice. If there is no formal compensation scheme, the only source of compensation is through courts, usually under the law of tort. Tort law requires a claimant to prove that he or she has suffered a wrong due to another person's negligence or deliberate harm. The problem with this process, in the case of vaccination, is that there is often no clearly negligent party. A court-based approach to compensation can be inequitable and unpredictable, resulting in high monetary awards for some, while those do not seek legal recourse receive nothing. In the USA, before 1987, those injured by vaccines had no choice but to take their chances in the court system and seek recovery for their injuries directly from the manufacturer. Without a compensation system, it became difficult for vaccine manufacturers to predict their exposure to lawsuits. Accordingly, manufactures and their insurers increased prices based on worst-case estimates (32). This led to exponential price rises, vaccine shortages and a reduction in vaccine research. Furthermore, several small vaccine manufacturers left the market. In the first decade of 21st century, acceptance of vaccine-injury compensation has grown. Schemes are being enacted beyond industrialized Europe and North America. The importance of these schemes, based on ethical principles, has been stressed by parent groups, and claimants have reported satisfaction in having received compensation through a streamlined process.

The HEALTH Act of 2011, HR 5

There is prospect of federal medical liability reform -- a bill is currently advancing in the US House of Representatives which is titled, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011, HR 5 (112 Congress, 1st session 2010-2011). This legislation would introduce major changes, long sought by physicians in general and obstetrics/gynecology in particular, that would create a more just and efficient medical tort system. The Congressional Budget Office (CBO) has reported that if the reforms included in HR 5 reduced malpractice premiums by 10%, total national healthcare spending would be reduced by about 0.5%, or $11 billion per year (26). Enactment also would reduce the federal budget deficit because the Act contains provisions that would decrease spending by Medicare, Medicaid, the Children's Health Insurance Program, and the Federal Employees Health Benefits program. It has been estimated that states at the top quintile of malpractice liability insurance payments have 4.2% higher total Medicare spending and 7% higher spending on physicians (27). The CBO expects that these changes would lower costs for healthcare both directly and indirectly; directly, by lowering premiums for medical liability insurance; and indirectly, by reducing the use of defensive healthcare services by providers under the threat of financially catastrophic and/or career-damaging malpractice suits. Those reductions in costs would in turn lead to lower spending in federal health programs and to lower private health insurance premiums.

The Act's primary components are designed to mitigate the unjust elements of current system and to insure more equitable awards while discouraging frivolous litigation and predatory practices. Elements include (26):

  • A 3-year statute of limitations for medical malpractice claims, with certain exceptions, from the date of discovery of an injury;
  • A cap of $250,000 on awards for noneconomic damages;
  • A cap on awards for punitive damages and restrictions on when punitive damages may be awarded;
  • Replacement of joint-and-several liability with a fair-share rule under which a defendant in a lawsuit would be liable only for that percentage of the final award equal to his or her share of responsibility for the injury;
  • Sliding-scale limits on the contingency fees that lawyers can charge; and
  • A safe harbor from punitive damages arising from the use of products that meet applicable US Food and Drug Administration (FDA) safety requirements.

The Effects of Tort Reform on Health Outcomes: Because medical malpractice laws exist to allow patients to sue for damages that result from negligent health care, imposing limits on that right might be expected to have a negative impact on health outcomes. There is less evidence about the effects of tort reform on people's health, however, than about its effects on health care spending -- because many studies of malpractice costs do not examine health outcomes (26). Some recent research has found that tort reform may adversely affect such outcomes, but other studies have concluded otherwise. This report in 2009 found that a 10% reduction in costs related to medical malpractice liability would increase the nation's overall mortality rate by 0.2 percent (28). However, Kessler and McClellan (1996 and 2002) and Sloan and Shadle (2009) concluded that tort reform generated no significant adverse outcomes for patients' health (29).

Summary

Defensive medicine wastes billions of dollars per year and leads to a surfeit of tests and procedures that paradoxically reduce patient safety by imposing a risk of iatrogenic harm. Moreover, defensive medicine creates a culture of fear, distrust, and secrecy that does little to enhance patient outcomes. Patient safety efforts will advance more swiftly when the threat of frivolous lawsuits dissipates in a blameless culture of transparent, open communication. Thus, the patient safety movement will be complemented and strengthened by medical tort reform. Although there is no doubt that the California and Texas reforms have improved the insurance and liability climates significantly, many other states have attempted these and lesser reforms in the USA and have failed. Moreover, there is increasing recognition that caps on noneconomic damages are blunt instruments that sometimes create inequitable results, and offer no amelioration of awards in situations such as neurologically impaired infant cases in which the damages are principally economic rather than noneconomic. It has been estimated that only three-fourths of litigation outcomes are consistent with the merits of the claims, leaving significant percentage of those with negligently caused injury not compensated after a lengthy legal process. There are many conflicts of interest and conflicting interests among the stakeholders that often work against the goal of fair compensation for injured patients. Physician leaders should lead change by promoting objectivity and education as a matter of obligation. One realistic change, to blunt the self-interests of current experts, would be to appoint experts from academic medical centers to review a limited number of redacted records and provide an outside, objective assessment of cases for which claims are brought as well as near misses. In current system of professional liability all stakeholders share the ethical obligation to uphold the integrity of the judicial system, whose goals are patient safety and fair compensation for injury. Reforming the current liability system will require a crucial conceptual shift on the part of stakeholders, away from interests, toward their shared obligation to improve patient safety and ensure fair compensation. To put this change into practice, physicians should lead change in the medical system and lawyers should lead change in the legal system. There is no question that liability reform must move to the forefront of the national health care agenda if patients are to continue to receive the quality care they need. The adoption of specific practice protocols can significantly reduce risk. Additionally, implementing systems to monitor and track lab and imaging results, follow-ups, and effectively communicate with unhappy patients are important components of a risk management program.

Funding: The Women's Health and Education Center (WHEC) with its partners in health, has developed this curriculum which will enable and encourage medical schools and healthcare providers to include patient safety in their courses. The series on Medical Liability is funded by WHEC Initiative for Global Health.

Acknowledgement: Special thanks to Professor Barbara A. Noah, Professor of Law, Western New England University School of Law, Springfield, MA (USA) for expert opinions, reviewing the series on Medical Liability and helpful suggestions.

Suggested Reading:

  1. National Institute of Health (NIH)
    Health Economics: HIN Research Priorities for Health Care Reform
  2. American Medical Association (AMA)
    Medical Liability Reform

References

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Published: 23 August 2011

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