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A Proposed Remedy for Medical Malpractice Miseries Jeffrey O’Connell, Samuel H. McCoy, II, Professor of Law, University of Virginia
51st Annual Meeting of the American College of Obstetricians and Gynecologists (ACOG), April 28, 2003 I. The Problem
The current medical malpractice tort regime not only fails in promoting the goal
of safety, but also often fails to live up to the tort system's own prime goal
- justly compensating victims of medical error. According to a Harvard study,
only one in eight negligently injured plaintiffs files a tort claim, and only
one in sixteen negligently injured plaintiffs is eventually compensated. Even
if a victim is successful in accessing the tort system, the average tort lawsuit
reaches trial years after it is filed. An injured plaintiff's financial needs
are probably most dire during this delay, as lost wages, medical bills, and low
morale begin to take their toll. Even if the case never reaches trial, studies
show that delays are long and the system’s transaction costs consume half or more
of all the dollars that defendants pay in tort settlements and verdicts. Indeed,
up to forty percent of any award is immediately diverted to a plaintiff's own
attorney fees.
As Harvard Law School Professor Paul Weiler notes, when it comes to just compensation
the current malpractice regime "has major flaws." As tort benefits are "doled
out in a rather arbitrary manner to some-but not most-deserving victims, and also
to those who are not even 'deserving' within tort law's fault-based frame of reference."
According to one source, fifty percent of plaintiffs' attorneys see little or
no evidence of malpractice in more than half of the cases they themselves file.
As a result, the current system often undercompensates deserving claimants (especially
the more seriously injured), while it grossly overcompensates other claimants
(often the less seriously injured).
Most serious disputes about damages in tort law focus not so much on payments
for actual economic damages, such as lost wages and medical expenses, but on the
validity of payments for non-economic or intangible harms. Traditionally tort
law purported to award plaintiffs money for the "pain and suffering" that accompanied
their physical injuries. Today, damages for pain and suffering may also include
compensation for the despair, humiliation, and "loss of life's pleasures" or so-called
"hedonic damages" that result from a bodily injury. Although the law recognizes
that no precise dollar value can automatically be placed on physical and psychological
hurt, non-economic damages generally rise with economic damages. This potential
for high awards can often result in needlessly or even fraudulently padded claims.
To increase a jury’s estimation of pain and suffering damages, claims may include
unneeded medical expenses, and unnecessary wage losses. According to the Rand
Institute for Civil Justice, pain and suffering awards based on the amount of
economic loss incurred for health care, which is often covered by private or public
insurance, result in huge and unnecessary health care expenditures.
Granted, for those truly injured victims who are able to survive the lengthy
process, a large monetary award, substantially enhanced with pain and suffering
damages, may offer some relief. But in the end, even high awards will often not
alleviate the emotional and economic hardship that plaintiffs may feel, not only
during their long battle for compensation, but for the remainder of their lives.
The data compiled by tort scholars and the stories of successful but disillusioned
plaintiffs demonstrate that the current tort scheme does not adequately address
malpractice claims.
Among the possible alternatives to the current tort regime, two are often mentioned:
restraints on damages for pain and suffering and no-fault insurance. However,
there are flaws with both of these reforms that render them less effective than
some would have it. A most serious objection to much tort reform, including enterprise
liability, is that it is still based on fault and still allows for pain and suffering
damages. These two variables are the principal problems of the current system.
As long as these variables are retained, reform efforts will remain unnecessarily
futile.
As to a no-fault system, a neo-no-fault “Early Offers” plan, first proposed by
the author of this article, is similar to a no-fault scheme in that compensation
is paid periodically as economic losses accrue, and non-economic losses such as
pain and suffering are excluded. Compensation is also delivered more swiftly with
less hassle than under the current tort system. This Early Offer plan differs
considerably from traditional no-fault regimes such as workers' compensation and
no-fault auto insurance statutes. Early Offers avoids the impractical task of
pre-accident definitions of when no-fault payments kick in for adverse results
from medical care. It does this by simply creating a device whereby any defendant
of a medical malpractice claim is given the option within 120 days after the adverse
result or after a claim is filed to make no-fault-like periodic payments of a
claimant's net economic loss. One hundred twenty days is a relatively prompt time
frame compared with the current tort system.
The early payment offer must cover such costs as medical and rehabilitation expenses
as well as wage losses (beyond any collateral sources such as health or disability
insurance already payable to the claimant), and reasonable hourly fees for the
claimant's lawyer. Given the quick resolution of cases disposed of by Early Offers,
the attorney’s fees would be much less than the normal thirty to forty percent.
However, no compensation would be paid for non-economic losses such as pain and
suffering. A crucial feature of the plan is that a defendant who promptly offers
to pay a claimant's net economic losses forecloses further pursuit of a normal
tort claim for non-economic losses. In this way, the parties forgo the insurmountable
problems mentioned above of separating ex ante the adverse effects caused by health
care from the patient's presenting complaint. On the other side of the coin, victims
can turn down offers, but only if the defendant's injurious acts are proven beyond
a reasonable doubt, or at least by clear and convincing evidence, to have been
intentional or wanton. Thus, a crucial element of the tort system's deterrence
mechanism is retained. That is, needy plaintiffs can still win suitably large
monetary awards under the Early Offers model through the recovery of both economic
and non-economic damages in egregious cases of medical misconduct.
To qualify as an "early offer" under the plan, the offer must be made in accordance
with a formula for calculating damages for economic losses similar to those paid
under no-fault schemes that would be set forth in an Early Offers statute passed
either at the state or federal level. In fact, the Early Offers plan has already
been incorporated in a piece of federal legislation proposed by Republican Senator
Mitch McConnell of Kentucky. Because the early offer compensates only for actual
economic damages, some injured claimants such as the elderly, homemakers, or the
unemployed, might not stand to receive substantial payment under the system. Hence,
compensation for economic damages alone could not sufficiently deter defendants
in the event one of these individuals were injured. However, a simple solution
to this problem would be to stipulate an alternative of a substantial minimum
amount for all early offers covering serious injuries of these individuals, which
should be rigorously defined in the statute.
Because health care providers would not be required to define the conditions
under which they would make an early offer before the adverse event occurred,
the question arises: When would a defendant be inclined to make such an offer?
One obvious example of when not to make an offer would be when a defendant determines
that the claimant was never even treated by the practitioner or medical center
in question. Apart from such stark cases, the health care provider might not believe
the accident was its fault, and thus would be prompted to calculate what it would
likely cost to pay the claimant periodically for the net medical expenses and
lost wages brought about by the injury. If that sum turns out to be less than
what the defendant would pay to defense lawyers, plus its likely tort exposure-with
the whole panoply of possible repayment of collateral sources and non-economic
damages figuring into the equation-the defendant might well decide that it is
worthwhile to make the early offer. Given the huge costs of defending tort cases
and the gamble of having to pay large sums already paid by collateral sources,
as well as for intangible losses, many defendants would be prompted to pay for
net economic losses, not just in cases they are sure to lose, but even in many
cases in which the issue is legitimately in doubt. One leading defense lawyer
has hypothesized that of the 250 medical malpractice cases his large office was
then defending, all in various stages of litigation, he would advise making an
early offer in 200 (or eighty percent) of those cases if such a law were in effect.
Indeed, implementation of the Early Offers system would bring with it many benefits.
Perhaps most importantly, it ensures that victims can receive rapid and essential
compensation when they need it most, since the plan requires defendants to make
any offer early in the dispute process. Thereby, both parties avoid protracted
litigation. In addition, the Early Offers plan crucially reduces the possibility
that injured parties and their counsel will interpret a settlement offer as merely
an opening bid in negotiations and as a signal that they could eventually recover
much more. Such a possibility would simply spur further litigation, with all its
attendant waste and frustrations.
A prompt offer under the plan can also reduce the transaction costs for defendants
(and their insurers) by paying their own lawyers for far fewer hours of work.
Indeed, early offers could be expected to be generated in-house by insurers. The
Insurance Services Office has estimated that insurers' legal defense costs account
for fourteen percent of total operating costs of malpractice litigation. However,
it is not so much the insurance companies that feel the sting of these high costs
for legal defense in tort suits-it is the American public that must absorb the
resultant high liability premiums. Thus, the Early Offers program should actually
work to lower the cost of insurance that health care providers need to purchase
since the legal exposure of health care providers under Early Offers would be
dramatically reduced by the reductions in (1) attorneys' fees on both sides, (2)
payment for amounts already paid by collateral sources, and (3) pain and suffering
awards.
Furthermore, it can be argued that Early Offers will enhance public safety. The
need to make quick offers under the plan will encourage rapid reporting of adverse
events within an organization, since the opportunity to make a qualifying offer
can be lost if not made promptly after the adverse result or claim. In today's
medical malpractice lawsuits, the vast majority of medical injuries are neither
the result of "wanton," nor "intentional," acts but are only some variant of "negligence."
The Early Offers system provides incentives for both the claimant and defendant
to agree to a binding early settlement. In turn, the system also provides a key
incentive for the health care provider to reveal and report any medical mistakes
that might have occurred in the course of a claimant's treatment. Indeed, an Early
Offers statute could require that, after an early offer is accepted, a health
care provider offer to meet with patients and/or their families to explain as
fully as feasible, the circumstances surrounding the adverse result. Moreover,
to the extent that health care providers might fear that making an early offer
under the plan would be included in the National Practitioner Data Bank, which
lists medical malpractice payments and settlements by individual practitioners,
the Early Offers statute could specify that payments made through the Early Offers
system be noted in the Practitioner Bank as subject to special exonerating consideration.
Thus, implementation of the Early Offers system would help to lessen the often
myopic and counterproductive blame culture that permeates current tort law. Early
Offers would work to calm the animosities of the parties in an accident claim
rather than inflaming them, as the current litigation culture now does. It accomplishes
this by giving defendants a healthy incentive to promptly acknowledge any problems
and even to discuss what happened. Under the current adversarial tort regime,
claimants rarely receive an apology, admission of fault, or even an explanation
of the adverse event. Many times a simple apology or explanation by the defendant
can assuage the emotions of an injured party more effectively than a mammoth,
long-delayed monetary award for pain and suffering damages. Such open and candid
discussions could provide the accident victim with another form of valuable compensation
often overlooked by the judicial system-peace of mind. In fact, researchers report
that feelings of forgiveness and compassion have been proclaimed as therapeutic
for accident victims because they reduce the anxiety and stress associated with
continuing anger and resentment. The Early Offers plan induces the parties to
discuss what happened rather than forcing them to engage in the combat of the
current "blame game" of tort litigation. In so doing, Early Offers thus promotes
understanding, cooperation and swift compensation rather than contentious, hostile,
and dilatory legal proceedings.
In summary, Early Offers seems to be a well-suited reform in the context of medical
malpractice law. The Early Offers plan helps to create a different legal culture
in which the reporting of errors is fostered while promoting prompt and fair compensation
for injured patients. Reviewing again the mechanics of the system, claimants have
the right to deny an early offer if they think it can be proved that the health
care provider engaged in wanton or intentional misconduct. Although the burden
of proof is higher in such cases, if a health care provider's level of care is
so bad as to legitimately raise the question of whether maltreatment was egregious,
there would presumably exist a case where simply paying for economic loss is not
enough. Similarly, prolonged and extensive litigation in such cases would seem
to be worth it. Furthermore, just as health care providers have the option to
refuse to make an early offer if they do not believe a claim is justified, patients
have the option to pursue a tort claim under normal standards of proof, care,
and damages when no early offer is tendered. Finally, if so many cases result
in claims being pursued for wanton misconduct that the Early Offers plan seems
counterproductive, early offers will simply cease to be tendered, and the system
will die a natural death. However, this scenario seems unlikely given the experience
under workers' compensation laws, where few employees are successful in suing
employers for gross negligence.
If an Early Offers system is enacted, it might be argued that insurance rates
will rise for health care providers because many more injured patients will seek
quick settlements. Any added cost of medical malpractice insurance would then
be passed to patients. Thus, the Early Offers system, so the objection goes, would
end up costing the average American citizen more than the current tort system.
In reply, highly questionable or smaller claims are unlikely to receive an early
offer in the first place. Remember, the offer decision rests with defendants.
Medical providers (and their insurers) will not make an offer unless they believe
doing so is more advantageous than paying for defense costs under the tort system,
thereby taking the risk of losing the case and ultimately repaying for damages
covered by collateral sources and for large non-economic damages. Even in the
unlikely event of higher premiums as injured patients file more claims and more
settlements are provided under the Early Offers system, this arguably would still
be a vast improvement over the current legal system. Under the current system,
patients are often wrongly compensated (if at all) either too much or too little,
and always too late. Given the high rate of iatrogenic injuries, if injured people
who are clearly wronged are compensated expeditiously for their genuine economic
losses, and much less money is expended for transaction costs of litigation and
payment of less essential non-economic damages, the result can be viewed as a
real gain for society. | |
