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By 2005, the Philadelphia suburb of Montgomery County had reached a malpractice stalemate of sorts, a scenario likely familiar in other regions of the country, with none of the parties involved particularly satisfied.

Malpractice lawsuits were taking as many as eight years to work through the court system, says Regina Sturgis, director of patient advocacy at Abington Memorial Hospital. "That length of time can be very distressing for not only the patients and families, but also the caregivers involved in the case," she says.

So Montgomery county's physicians and lawyers, represented by the local medical society and local bar association, teamed up to pilot a mediation program at Abington, a not-for-profit hospital with 665 licensed beds. The initiative, launched in early 2008, strives to combine disclosure and mediation to compensate for unexpected outcomes. The process can begin nearly immediately, Sturgis says.

"People can start to get on with their life and heal," she says. "And that's also true for the caregivers involved. It's devastating for the caregivers when something happens. Nobody goes to work thinking, '"I want to make a mistake today or hurt somebody.'"

While the possibility of federal tort reform is periodically floated, including in President Obama's September speech to Congress, it's still the states and local communities like Montgomery County that remain the default malpractice laboratories in the ongoing struggle to resolve the nation's liability dilemma. How best to balance patient safety and fair compensation, without driving up defensive medicine costs and triggering a physician exodus to other states?

In recent years, capping malpractice damages has been a major focus in the state legislatures. But a variety of other reform initiatives also have been added to the mix—some more concept than reality—including mediation efforts, special health courts and birth injury funds. Last fall, Obama encouraged the development of more pilot projects, authorizing $25 million to be distributed early this year.

An Administrative Approach

At the American Hospital Association, officials have proposed replacing the existing court-based approach with an administrative compensation system, as a way to more effectively redress avoidable medical injuries. The system would be state-based, with expert panels to review the medical evidence and a related compensation schedule for those avoidable injuries that meet a minimum threshold of harm, says Maureen Mudron, AHA's deputy general counsel. The approach would benefit patient safety by shifting the focus from blame to determining what happened and whether clinical practices could be improved, she said.

And there are other advantages, according to Mudron. "You would have a much quicker decision," she says. "You would not have the kind of adversarial process as you do in court. You would not have the cost of litigation. And it's also expected to reach all patients who have been injured and it could have been avoided."

Meanwhile, some hospitals are already taking steps to broaden their patient safety efforts to incorporate a more open investigation of unexpected outcomes, including sharing the details with the patients and families involved (see sidebar). More than 30 states have passed some kind of disclosure or apology law, with varying degrees of protection for caregivers.

From a board member's perspective, the malpractice rhetoric can sometimes become pretty heated, with statistics and personal anecdotes flying from patients, doctors and lawyers alike. But hot-button emotions must not distract board members from the underlying issue—patient safety, says James E. Orlikoff, a long-time consultant to hospital boards and the author of several books on malpractice and patient safety.

It's the board members, after all, who have oversight of the facility's medical staff and finances, he says. And, given that today's hospital physicians are increasingly employees—rather than working as independent contractors—the facility's legal vulnerability only increases, he says.

"We may have a medical liability problem," Orlikoff says. "And we may need tort reform. But the real problem is a problem of high degrees of variability in quality and unsafe care that's provided to patients, which causes them injury."

The good news, Orlikoff says, is that boards can exert a lot of influence in regard to patient safety and disclosure, investments that will pay off for the hospital system. "You'll get better quality care and you'll reduce the incidence of patient injury and you'll reduce the exposure to liability," he says.

Debating the Caps Premise

To date, one common step by state legislators has been to institute a ceiling on malpractice damages, most commonly those that are considered noneconomic, such as pain and suffering. (Lost wages and medical bills typically fall under economic damages.) At least two-thirds of states have approved some type of limit, most frequently from $250,000 to $500,000, according to an analysis last fall by the National Conference of State Legislatures.

Advocates for malpractice caps argue that they will limit outsized verdicts and hikes in malpractice premiums, a point that's hotly debated by some. A report released last summer by the Americans for Insurance Reform, a coalition of consumer groups, found that spikes in physician malpractice premiums weren't tied to claims, but to the economic cycle of insurers, including investment income. A 2004 Congressional Budget Office report makes a similar point, although it also cites the increasing size of malpractice awards. In regard to total health care spending, malpractice costs account for less than 2 percent, the report found.

Protections, including appeals and a judge's intervention, are already built into the system to guard against outrageous verdicts, says Bob Hunter, director of insurance for the Consumer Federation of America. Hunter is not a fan of caps of any kind. "What happens if you knock a school bus off a cliff with kids inside?" he asks. "You can always devise a hypothetical that would make a cap look outrageous."

At least a few states, including Colorado and Nevada last year, have attempted to raise the upper limit on malpractice damages. In Nevada, some legislators backed a bill to increase that state's $350,000 cap on noneconomic damages after a highly publicized spate of hepatitis C cases were traced to poor infection control practices at several endoscopy clinics.

Neither legislative effort was successful, which doesn't surprise Dayna Matthew, a health law professor at the University of Colorado Law School at Boulder. "There is a lot of inertia in raising caps," Matthew says. She points out that Colorado's cap on noneconomic damages, initially set at $250,000 in 1988, wasn't raised to its current $300,000 level until 2003.

One drawback inherent in noneconomic caps is that they can disproportionately impact certain groups, including older and poorer people, as well as stay-at-home mothers, says Charles Silver, the McDonald Chair in Civil Procedure at the University of Texas School of Law, who has studied the effects of malpractice reform in Texas. These groups are typically more vulnerable given that their earning potential is lower and they won't be able to recoup as much in economic damages, Silver says.

Caps also can influence how hospitals earmark resources for training, infection control and other patient safety areas, Silver says. "The incentive to treat elderly people, unemployed women and children with the care that is needed is reduced," he says.

Lone Star Experience

Few states have engaged in as high profile a battle as Texas. The debate continues, even after state legislators approved a 2003 law with a $250,000 cap on noneconomic damages.

Advocates for the law, dubbed Proposition 12, can provide numerous examples of doctors who flocked to the state or reopened key services, such as obstetrics, once the cap was instituted.

Twenty-one rural Texas counties have added at least one obstetrician since the law's passage, including a dozen that previously had no obstetric coverage, according to a 2008 Texas Medical Association analysis of the law's impact. In South Texas, CHRISTUS Spohn Health System recruited a number of specialists—who wouldn't even return phone calls prior to 2003—including two neurosurgeons, a hand surgeon and an interventional neurologist, according to Richard Davis, M.D., the system's chief medical officer.

In the years since the 2003 law's passage, the number of physicians applying annually for Texas licenses has increased by 60 percent, from 2,552 in fiscal year 2002 to 4,094 in fiscal year 2009, according to Texas Medical Board data. During the same time period, the number of complaints about physicians also increased, up 35 percent, to 6,968 complaints by fiscal year 2009. The medical board requested additional staff, and beginning last fall, 17 more positions were added, primarily on the enforcement side.

Mari Robinson, the medical board's executive director, says there's no data to determine if the 2003 law influenced the increase in either physician applications or patient complaints. As the number of doctors practicing in the state increases, it's not surprising that complaints also rise, she says.

She also acknowledges, though, another potential factor. "We know that there are some cases where people have approached medical malpractice lawyers and have been told: ‘Look, your case is not economically viable. If you want to make sure that somebody looks into this, and this doesn't happen again, you can report it to the board.'"

Beyond Traditional Courts

At Abington Memorial, choosing the mediation option doesn't preclude the patient or family member from later filing a lawsuit, Sturgis says. But the patients and clinicians involved must sign a confidentiality agreement, agreeing not to use the information in court, she says.

By last September, the Abington mediation program had been used in 10 cases. Of those, two cases were still in mediation. Of the remaining eight, six had been settled, including financial compensation. The seventh case didn't involve financial compensation. Instead, the family member wanted to speak to the nursing leadership about her father's case. And the final case, as of September, had been unsuccessful in the sense that the demands couldn't be met, although hospital officials were still trying to pursue a resolution, Sturgis says.

Mediation is limited to certain situations, such as when the unexpected outcome involves hospital staffers or physicians insured by the hospital, Sturgis says. Over time, she believes the program will hold down malpractice bills for the hospital, if nothing else because it will save on legal preparation costs. "I don't think it's the end-all and be-all," she says. "I think for the right cases this is definitely a great way to move."

So far, the program does seem to be working well and benefiting patients, says Robert Slota Jr., a malpractice attorney who served as the Montgomery Bar Association's president when the mediation effort was conceived. "The intent of the program was to try to get the suits resolved without the adversarial feeling that develops through litigation," he says.

But mediation, disclosure and other emerging efforts don't protect the doctors who haven't actually committed any malpractice, argues Philip Howard, the founder and chair of Common Good, a nonprofit legal reform coalition. Thus, defensive medicine persists, along with some inefficient practices, he says. "Right now, hospitals provide care in a kind of legal quicksand," he says. "Most doctors in hospitals don't use e-mail with patients. You could write 50 e-mails in the time that it takes to see one patient."

Howard's organization is advocating for a system of special health courts, similar to the existing bankruptcy system, to replace traditional courts as the arbitrators of malpractice allegations. Last fall, Howard said he was developing a pilot project with two New York hospital systems, which he declined to name.

The public appears intrigued. Two-thirds of those surveyed on Common Good's behalf last August favored special health courts over the traditional court system.

Unlike the special courts approach, AHA's proposed administrative compensation system would completely remove medical treatment cases from the court system, with the exception of intentional injuries or criminal acts, Mudron says. Avoidable injuries, such as an accidental medication overdose, would fall under the system's jurisdiction, she says. The concept is similar in some respects, Mudron says, to the birth injury programs already established in Florida and Virginia.

The Florida and Virginia birth injury programs differ somewhat in their specifics. But their overarching goal is to quickly compensate for injuries to newborns occurring during delivery, says Gil Siegal, M.D., chair of the Center for Health Law and Bioethics at Israel's Kiryat Ono College in Israel. The surgeon co-authored an analysis of the two U.S. programs for a 2008 journal article.

There are drawbacks to the birth injury programs, most notably that the injured patients lose their right to a day in court, Siegal says. And the system doesn't assign fault, he points out: "No fault runs the risk of ignoring the need to do better." On balance, though, the birth injury programs seem to be working well, reducing the number of obstetricians leaving the state or bypassing high-risk cases, Siegal says. The approach, he says, could be expanded to other types of high-risk patient care, such as brain surgery.

Toward Transparency

Today's board members are becoming increasingly savvy about the role they play in reducing their facility's malpractice risk, from broadening adherence to standardized clinical protocols to improving patient safety training, Orlikoff says. But delving into these types of issues can require significant time and a stiff spine as well, he says.

Physicians are frequently in the room, sometimes sitting on the board itself. "It's very rare that you don't encounter some strong anger and defensiveness on the part of some physicians, and that tends to shut the lay board members down," he says.

And stonewalling, when injuries do occur, can create unnecessary liability risk, as Hunter, of the Consumer Federation, can personally attest. His wife nearly died last year from a staphylococcus infection she acquired during a hospital-based screening test, he says.

She was so sick, he says, that their children flew to her bedside fearing the worst. After the immediate crisis was over, Hunter asked hospital officials to provide a letter saying they would pay for her home health care costs. "And they wouldn't give it to me," he says.

Then he threatened a lawsuit, saying he wouldn't stop at simply collecting home health care damages. "Finally they gave me the letter," Hunter says. "That's stupid. I didn't want to sue them."

Charlotte Huff is a writer in Fort Worth, Texas.

Sidebar - Disclosing a Tragedy