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Obama Takes the Lead on Malpractice Reform

January 26th, 2011 at 2:41 pm | 23 Comments |

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During his State of the Union address, viagra President Obama announced that he was willing to consider the possibility of medical malpractice reform as part of his willingness to consider modifications to Obamacare. Predictably, the right believes this idea won’t go very far and will only delay real reform, while the left opposes any malpractice reform until incompetent physicians are rooted out of the system and medical errors were eliminated. These views though are both off the mark.

There are far more patients who experience medical errors than actually sue their physicians so patients do need to have the opportunity to be compensated when they experience real injury. If the system compensated all patients who were injured rather than the few who actually sue but sometimes collect absurd sums, the overall cost of the payouts would likely not be that different.

On the other hand, the medical profession has made real strides in improving care, particularly in hospitals. One Philadelphia hospital has reduced the incidence of blood stream infections from about 15 to 20 per month to some months where no infections occur. This is the result of quality improvement efforts.  There will always be some errors in a complex setting like a hospital intensive care unit. But the current climate where physicians are under the gun and practice very defensive medicine or even avoid some high risk cases because of malpractice litigation fears is also very problematic. If the nation accepts that fact that the cost of medical care has become a national emergency that requires an aggressive response, then we must confront the costs associated with medical malpractice.

Several studies have suggested that malpractice reform would lead to savings of about $50 billion dollars per year. Some have called this a trivial amount and hardly an important component of runaway health care costs. On the other hand, describe it as half a trillion dollars over a decade and the savings suddenly sound important. Luckily, several solutions are at hand. Medical courts where the validity of lawsuits could be ascertained by expert panels is a good start. No fault payments with limits on pain and suffering payments is another. Freeing physicians from the burden of defending malpractice cases in court with all the expense and time associated with that activity would also reduce costs. Finally and perhaps most importantly, the costs of practicing defensive medicine would be dramatically reduced.

If we think health care costs are a national risk, we must act accordingly. Malpractice reform poses problems for some injured patients, no doubt. But combined with comprehensive health care delivery reform, it is a key part of the required approach to avoid financial calamity.


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23 Comments so far ↓

  • pnwguy

    OK, I’ll bite. You’ll get no argument from me that our mechanism for compensation for medical damages isn’t broken. But if Texas is any lesson, the cap on P&S damages amounts to next to nothing for providing any cost control. Our medical practice awards suffer from the same “winner take all” mentality that is happening in lots of other walks of life. As a society we less and less resemble a community with shared concerns and more and more look like players in a casino.

    But here’s the part where conservative obsession on this topic seems laughable. Most conservatives will grandstand about no additional spending on education until bad teachers can be held accountable. But there is no similar concern about expecting a comparable way to hold bad doctors accountable, if we do serious reform to the malpractice system. What we have now is arguably a “free-market” approach – the aggrieved consumer directly negotiates with the practitioner over damages, and when that fails they resort to the court system. What conservatives are arguing for is a “government takeover” of the doctor-patient relationship when patient satisfaction isn’t met.

    On top of that, the party of state’s right is arguing for a federal solution to this? Isn’t that the complaint about last year’s health care reform? Malpractice is a state by state issue, currently.

    BTW, I don’t have too much trouble accepting limits on pain and suffering awards IF they are aged base. An 80 year old injured in a hip replacement isn’t going to suffer decades of dysfunction. A ten year old child that loses use of a limb in a botched surgery is a different story. If we had a sliding scale on award caps based on the age of the victim, it could be more palatable and gain wider public support.

    My one perennial suggestion for tort reform of all kinds deals with punitive damages. They exist to punish egregious behavior, where as a society we need to intensify the economic hurt of a bad action. But it shouldn’t be the PLAINTIFF who receives those punitive awards. They should go to some broader social entity, like a victim’s compensation fund. Allowing the plaintiff to gain those creates perverse incentives to sue. They should only be able to win compensation for true losses, pain & suffering, and legal fees.

  • Churl

    And exactly what is this reform of which Obama speaks? Nice sounding words, but one is curious to know what he and the Democrats have in mind. He keeps using that word “reform” but I don’t think it means what he would like you to think it means.

    Given that the legal industry, with the American Association for Justice, (formerly The American Trial Lawyers’ Association) leading the pack among the largest financiers of Democrats’ campaigns, expect no substantial change that might decrease lawyers’ income and hence very little change to the present system.

  • think4yourself

    I thought this was well-stated from Stanley Goldfarb.

    A company I sometimes work with that manufactures fitness equipment recently lost a suit that the damages are 60MM. The equipment in question was 28 years old. The plantiff was an employee of the company that owned the equipment and wasn’t using the equipment, she leaned on it and it fell on her (causing her to become a quadraplegic). The attorneys for the plantiff argued that the equipment was top-heavy and poorly designed (possible, 28 years ago fitness equipment was not designed as well as it is today). This horrific accident may have been caused by a poor design or improper use(there had been no previous problems with this piece of equipment or similar pieces of equipment). If this judgment is allowed to stand, the company will file bankruptcy and cease to exist (they have a net worth of a couple million dollars.) and hundreds of people will lose their jobs.

    Companies should be responsible for their actions that have negative effects on others. It is also true that companies do build defective products and instead of going to the expensive of fixing the problem will factor in the cost of lawsuits and punitive damages are designed to encourage companies to act responsibly or face the consequences. However, we all bear the consequences in increased prices when lawsuit judgments are out of proportion to the problems they are attempting to remedy. A better solution must be found.

  • Charles M. Kelly

    I’d like to hear a little more about what exactly Obama et al mean by “malpractice reform.” If it means shielding doctors, hospitals and insurance companies from the legal and financial consequences of incompetence, I have a huge problem with it.

    I’m 49. When I was 38, I was diagnosed with testicular cancer. Just before I was taken into the OR to have the offending body part amputated, the nurse said to my doctor:

    “Why did they give Mr. Kelly’s blood a pregnancy test?”

    “Well, obviously, they made a mistake.”

    The nurse didn’t answer, but you could see from the look on her face that she was expecting the doctor to say something more.

    As it turned out, this error was a no-harm, no-foul deal: the doctor explained to me that had my test results indicated I was pregnant, it would have meant I had another, undetected, tumor growing in my body. Since the incorrect test gave him the information he was after, there was no reason to delay the surgery.

    He then made a point of making darn sure that everyone, including the patient, knew which testicle was to be removed.

    Since the insane mistake of giving a man a pregnancy test didn’t endanger my life, I didn’t even consider suing. But had the medical team removed the wrong body part, I would have sued and felt not one whit of shame about it.

    We can discuss my inconsistent treatment at the paws of my former insurance provider another time.

  • think4yourself

    Charles Kelly: Yes, punitive damages are the stick to encourage good corporate behavior. We don’t want to lose the tool so companies more often make a cost/benefit analysis that it is okay to continue a harmful practice because their is no financial reason to stop. But, the tool is used in ways that simply increase costs today.

  • cotton

    Left unsaid in this article is how much it cost to practice defensively. I work in a clinic where expensive unnecessary test are common – performed solely to minimize liability so the provider can minimize risk of a lawsuit or complaint before our licensing board.

  • Nanotek

    “There are far more patients who experience medical errors than actually sue their physicians so patients do need to have the opportunity to be compensated when they experience real injury. If the system compensated all patients who were injured rather than the few who actually sue but sometimes collect absurd sums, the overall cost of the payouts would likely not be that different.”

    Not all medical errors result in injury, of course. Tort reform is not reform unless frivolous legal defenses, from insurance companies lawyers trying to run out the clock, are also addressed so people who are unfairly injured are compensated by those who injured them.

    Charles M. Kelly … sorry you went through that

  • JeninCT

    pnwguy wrote: ” As a society we less and less resemble a community with shared concerns and more and more look like players in a casino.”

    Well said, and unfortunately true. My problem is that I don’t believe Obama is sincere. Where was he two years ago when the Reps were begging for tort reform? Ignoring them, that’s where.

  • Crime Dog

    Obama and company would have gladly put tort reform into the health care bill if they could have gotten some, maybe even any, Republicans to support the final product. But the Democrats knew that no matter what they did the GOP was going to oppose the bill. So rather than piss off a key constituency they kept tort reform out as a future bargaining chip.

  • SpartacusIsNotDead

    pnwguy: “They exist to punish egregious behavior, where as a society we need to intensify the economic hurt of a bad action. But it shouldn’t be the PLAINTIFF who receives those punitive awards. They should go to some broader social entity, like a victim’s compensation fund.”

    This is certainly a reasonable and fair point in theory, but what incentive would a plaintiff have for continuing to litigate a case (as opposed to taking an early settlement) if the plaintiff won’t receive any of the punitive damages?

  • SpartacusIsNotDead

    Churl: “And exactly what is this reform of which Obama speaks? Nice sounding words, but one is curious to know what he and the Democrats have in mind.”

    Probably the same kinds of tort reform that have been enacted in some form or another by most states in the country.

    Once the average voter looks closely at calls for tort reform they’ll realize that this is neither the panacea that conservatives pretend, nor the catastrophe that its opponents claim.

    http://uspolitics.about.com/library/bl_tort_reform_state_table.htm

  • SpartacusIsNotDead

    cotton: “I work in a clinic where expensive unnecessary test are common – performed solely to minimize liability so the provider can minimize risk of a lawsuit or complaint before our licensing board.”

    If there is no medical reason for performing the tests, then the doctors for whom you work are committing fraud if those tests are being paid for by either private insurance or Medicare.

  • Churl

    undeadspartacus, here is my idea for tort reform: Rational caps on liability and the loser pays the legal fees for both parties after the decision.

    Now somebody is sure to say that “loser pays” denies the poor and downtrodden masses legal redress from the wrongs done to them by the … whoever the deep-pocketed fiend defendant happens to be.

    My solution to that problem is: Let the lawyers buy insurance or bonding to pay the legal fees of the plaintiff if they lose a contingency-fee case for their clients. Since the lawyers want only justice and never bring frivolous suits on a contingency fee basis, this coverage should not be too costly.

  • pnwguy

    Spartacus:

    “but what incentive would a plaintiff have for continuing to litigate a case (as opposed to taking an early settlement) if the plaintiff won’t receive any of the punitive damages?”

    The point of a legal action SHOULD BE to recover the person’s losses, both real damages – medical costs, lost income, pain & suffering, and foreseeable future costs that stem from the malpractice. And they should be able to collect reasonable legal fees needed to secure the remedy. If a defendant practitioner or his insurer is willing to settle for that, the deal is done, with no need for trial. The goal SHOULD BE to remedy the damage, not get some unearned payday, as if they were doubling down on their hand.

    It’s the extra payola of a punitive award that hangs out there like lottery winnings if it looks like a defendant is moneyed enough to cover a huge judgment. I’m not arguing that the financial stick isn’t necessary to punish bad practitioners who would otherwise not be curbed from their actions. We still need that part to deter recklessness. But we don’t need it to distort the plaintiff’s incentives to sue. That’s why I think a neutral third party should receive those.

  • Nanotek

    “undeadspartacus, here is my idea for tort reform: Rational caps on liability and the loser pays the legal fees for both parties after the decision.”

    if medical error left you bed-ridden and in pain for life, unable to work any longer, what would be the “rational cap” on the liability of those who caused it? As in dollars.

    how do you define “loser” ? if the insurance company’s lawyers want to run out the clock on that bed-ridden patient … years go by from filing a suit until the final appellate court rules (and if they send it back the whole process starts anew) … if the patient dies without winning, who pays? who is the “loser” ? society … that’s who … because if the insurance company doesn’t pay for that bed-ridden patient’s care, we get stuck with the bill … arbitrary caps on liability is socialized medical harm …

  • dgkerns

    The current medical liability “system” is completely broken. Most injured patients never seek compensation, and most seeking compensation did not experience care outside the bounds of accepted practice. A far more sensible and fair system would compensate seriously medically injured patients (on a no-fault basis, whether “malpractice” or not) via a neutral judicial mechanism funded by fees paid by providers (these would replace, and be considerably less than, malpractice premiums). The enormous expense of defensive medicine would be diminished and quality issues would still be dealt with via state medical licensing boards. The big (only?) losers would be the malpractice attorneys.

  • Rob_654

    Typical penny savings… Sure – let’s do whatever about Malpractice – but lets be honest and not look at it as a real cost savings act – because this would be so typically American – like when the GOP says let’s cut education spending – like we spend enough there to make a dent in the deficit…

  • SpartacusIsNotDead

    Churl: “undeadspartacus . . . ”

    That’s actually pretty funny:)

    “here is my idea for tort reform: Rational caps on liability and the loser pays the legal fees for both parties after the decision.”

    Well, most states already have rational caps on liability for non-economic damages (i.e. pain and suffering). Are you proposing caps on actual economic damages? For example, if a doctor’s error requires you to undergo extensive brain surgery, that doctor’s liability for the cost of the surgery should be capped at a certain amount? I would hope that is not your proposal.

    With respect to “loser pays,” there is rarely a declared loser in these cases because practically all of them end up settling before a jury can decide who the winner and loser are. Moreover, what’s the likelihood that a malpractice insurer will be able to recover its litigation expenses from the typical patient? Hospitals have had the right to sue uninsured patients for unpaid bills for a very long time, but it hasn’t done them much good because most people aren’t capable of paying.

    Again, there simply isn’t much to be gained or lost with most forms of tort reform.

  • SpartacusIsNotDead

    pnwguy: “We still need [punitive damages] to deter recklessness. But we don’t need it to distort the plaintiff’s incentives to sue. That’s why I think a neutral third party should receive those.”

    I understood your point the first time, and I don’t disagree with you. I’m just saying that if the patient plaintiff is not entitled to keep the punitive damages, then s/he won’t continue to litigate the case. Instead, he’ll accept a settlement that doesn’t contain any amount for punitive damages. As a result, the reckless party does not suffer any punishment or deterrent.

  • think4yourself

    If the lawyers aren’t making 30% of the punitive damages and all punitive damages go to a 3rd party (not sure who – maybe reducing the Federal debt :) , then maybe that will reduce the amount of frivolous lawsuits and oversized awards.

    In my post above I mentioned the quadraplegic who just won 60 million (now on appeal). I’m sure she would rather be whole-bodied than have 60 million. On the other hand her cost of care for the rest of her life is significantly less than that (2MM?). Nor should her accident cause a company to declare bankruptcy resulting in many hundreds of fired employees.

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