Malpractice Reform — New England Journal of Medicine – New Alternatives Analyzed

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There is a thought-provoking article in the New England Journal of Medicine entitled “Malpractice Reform — Opportunities for Leadership by Health Care Institutions and Liability Insurers,” which was posted online on March 31, 2010.  In essence, the authors suggest that health care institutions and insurers not wait for national tort reform legislation (“a political gridlock”) but rather become leaders in the development of alternative methods for “providing compensation for medical injuries.”

While the concept is somewhat intriguing, the methods discussed are in many instances nothing but a privatization of tort reform at its worst. Each “alternative method” will be examined seriatim.  

The overall concept seems to be rooted in what is commonly referred to as the “disclosure-and-offer” approach.  Three models are discussed: the reimbursement model, the early-settlement model and health courts.

Please refer to the article itself for a more thorough description of these models.  The length of this blog is concerning enough.

In essence, with the “reimbursement model, institutions offer to (as the name denotes) reimburse patients for some out-of-pocket expenses related to the injury and for “loss of time.”  Typically, there are pre-determined limits for each category,which often are $25,000 for expenses and $5,000 for loss of time. Clear cases of negligence, fatal injuries, cases that are the subject of a lawsuit or where an attorney is invovled are excluded from the program.  There is no investigation into “possible provider negligence” in this matters. Patients who accept money do not waive their right to sue.

As a general comment, this plan makes the most sense but does not really deal with the infamously named “malpractice crisis” to any large extent.  First, most cases of medical malpractice that make their way to the courthouse could not conceivably fall within these financial parameters.  If a malpractice lawyer takes on a case with $30,000 in special damages (economic losses such as medical bills and lost wages), that lawyer needs to reassess their intake procedures. Given the economics of costs of litigation (not fees), mandatory reimbursements such as Medicare and Medicaid, liens from private insurers and the like, it would be foolhardy for a lawyer to become involved in such matters since the client’s net recovery would be non-existent.  What does make sense, however, is no-fault reimbursement to patients with minor, non-permanent injuries as a sign of goodwill by the providers of health care.  In that respect, the “reimbursement model” is a good program – given its express limitations.

Another major defect in this “reimbursement model” is the premise that there is no “investigation into possible provider negligence.”  If I am reading this correctly (none of the hospitals with which I am familiar in our geographical area have such plans presently; therefore, I am not certain how this works), the risk manager or claims person simply decides to write-off the loss as potentially a cost-savings measure.  One of the positive features of our current litigation system (when meritorious cases are brought) is that it does serve to correct errors in the health care delivery system.  When a major injury case is brought, many valuable lessons are learned by providers of health care.  Whether there is a “system problem” or just a dangerous method of practice at play, people do (unless they are completely arrogant and/or dense) learn lessons so that other patients do not suffer the same harm. One of the goals of the medical profession in analyzing, handing and resolving cases of medical errors is to identify problems and take steps to correct those problems for future injury avoidance.  An entire essay, rather than a blog, could be devoted (and maybe will be) to this concept of the health care industry policing itself through conscientious, rigorous self-appraisal and correction when wrongs are identified.

The “early-settlement” model is described in the NEJM article as follows: “no preset limits on compensation,” but compensation is not offered unless the institution, “after an expedited investigation, determines that the care was inappropriate.”  Offers may include compensation for all elements of damage – economic as well as non-economic (e.g. pain and suffering) damages.  To accept the money, the patient must agree that such payment constitutes a “final settlement” – thus obviating the bringing of a lawsuit.

More research into this ‘early-settlement” model is called for since the NEJM article does not go into other critical details associated with such an approach.  Since the model was “pioneered by the self-insured University of Michigan Health System,” I intend to devote a separate writing to this program once more research on its possible limitations and efficacy has been accomplished.

Suffice it to say for the present that if such a model precludes attorney involvement, then this is a fatal flaw.  The reason individuals come to a lawyer when tragedy occurs in the medical context is because those of us who specialize in this area of law know and understand (1) what  proper claims should be made and (2) what the fair and reasonable parameters of just compensation are for the victims of medical malpractice.  Sure, one can take a jaded approach and scoff – “All the lawyer wants is a fee and that’s why you are against this model”  Simply not so.  A substantially reduced fee arrangement may well be in order in such instances.  If the client is at least properly represented and the case is handled expeditiously and the compensation is fair and reasonable, then I for one believe that a reduced fee is in order which would further benefit the patient/client.

That’s not the full story, however, when it comes to discussing this so-called model.

In our current system of medical malpractice litigation, the system would work a whole lot better and be much less expensive and be much more efficient if these same principles were applied to the current claims handling practices of insurers and self-insured health care providers.

One of the largest drawbacks  for both the health care system and for the patient/client are the costs associated with medical malpractice litigation.  I recently wrote a blog regarding the issue of costs and their effect on the so-called malpractice crisis.  When clear-cut cases of medical negligence exist and are ignored or denied by risk management or insurance claims  personnel, the costs sky-rocket.  The health care insurer or provider hires counsel at an hourly rate to defend the case.  Discovery in the form of record production, depositions and the like proceed with sickening and dollar-wasting frustration for the plaintiff lawyers and their clients.  Cases slog along unmercifully through the system for months if not years. If you have a clue what you are doing as an experienced medical malpractice lawyer, you have a pretty good sense of what cases have merit and which do not.  Of course, no one is infallible, but for the most part, “good cases almost try themselves.”

Applying the principles of the “early settlement” model to what exists in today’s world of medical malpractice, I suspect that nationally, on an annual basis, billions of dollars would be saved in ridding our system of the needless waste of money in defending cases that should have been resolved early in the process.  Why not take the principles of this model and apply them to what exists in the current system?  That’s what the health insurance industry should have been doing years before now.  Did they need a new “model” to tell them that? If insurers took a more responsible approach by fairly and honestly assessing these cases and did so in an “expeditious” fashion, our courts would not be clogged with needless litigation, the health care industry would save enormous amounts of money, and – most important – patients would be justly and timely compensated.  If only the public knew just how much waste there is in our current system due to the lack of due diligence and timely claims handling, they would perhaps have a more balanced approach to this ‘discussion’ of tort reform.

Institutions and insurers that are responsible in their claims handling practice are not the problem.  Fortunately, in my work for  years as a defense lawyer, I had the privilege of working for one such organization. Unfortunately, they are not in the majority.  I would love to see figures of defense costs (fees and expenses) on those cases that are ultimately settled or unsuccessfully defended.  I have zero doubt that those numbers are staggering.  If those fees and costs were substantially reduced through conscientious and timely claims handling, we might well not be having this discussion of tort reform in the first place.  When critics say blame the plaintiff lawyers – they may have half the phrase right – just not the right adjective.  A fuller discussion of the abject waste due to poor claims handling and delaying tactics by the defense bar is the subject for future consideration.

Finally, the infamous option of the ‘health courts.’  Succinctly stated (in the interest of relative blog-brevity), the essentials are described in part as follows:

A panel of experts, aided by decision guidelines,determines whether the injury was avoidable — a determination that turns on whether the injury would ordinarily have occurred if the care had been provided by the best specialist or an optimal health care system; the avoidability standard is more generous than the negligence standard. For avoidable injuries, the institutionoffers full recompense for economic losses plus an amount for pain and suffering according to a predetermined compensation schedule that is based on injury severity.

Various alternatives for this model are discussed in the NEJM article and include items such as making the program voluntary, permitting limited appeals to some extent and so on.  As one reads further, however, repugnant elements start rearing their ugly heads.  Just some of these components of the ‘health court’ system proposal are (1) waivers of the right to file a lawsuit “as a contractual condition of receiving care,” (2) so-called “decision guidelines,”  and (3) “predetermined compensation schedules.”

Waivers of right to a jury trial as a condition to receiving care screams “void for being against public policy.”  Who is advising a patient in need of care what his or her rights are when signing a waiver. Can’t you just picture the following scenario?  Mr. Jones is clutching his chest in the ED and before care is rendered he’s asked, “Would you like to receive care here?  If so, you will need to sign this waiver form.”

Predetermined schedules of compensation?  Is this a euphemism for contractually created caps?

The NEJM article raises some valid issues and concerns. A great deal more thought of how to fix the system is warranted.  The answer may well  lie in the underlying approach being advocated in the article – malpractice reform should be self-initiating for health care institutions and liability insurers.  They should take a leadership role and not sit passively on the sideline shouting the same old song – “We need caps….Our system is about to crumble…It’s all the fault of the greedy plaintiff lawyers!”  Maybe a new model is in order – grab a mirror and examine how to better police your own claims-handling practices.  Stop wasting everyone’s time and money through poor claims practices.  Expeditiously and honestly assess claims.  Offer fair compensation early in the process.  Maybe if the health care and insurance industries tried fixing their own practices in the framework of the current system of civil justice, these endless calls for restricting injured patient’s rights might stop and the so-called crisis just might be averted.  Ever consider working with the plaintiff malpractice bar….or is just a lot easier blaming them?

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One Response to “Malpractice Reform — New England Journal of Medicine – New Alternatives Analyzed”

  1. Study Finds Differences Among Doctors, Risk Managers in Admitting Errors – Joint Commission Resources – Answer: Just Tell the Truth! « Medical Malpractice and Catastrophic Injury Litigation | Eye Opener: The Nash & Associates Blog Says:

    […] is it so complicated?  This past Friday, I reported on an article from the New England Journal of Medicine, in which the concept of acknowledging wrongdoing early in […]

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