Health courts may be best cure for what ails the liability system

America’s medical liability system is broken. It incurs high administrative costs, does little to improve the care that patients receive, and compels health care providers to waste billions of dollars on unnecessary tests and procedures. Special health courts would address these shortcomings by compensating injured patients more efficiently and equitably and by distinguishing good care from bad so that physicians can act on their best judgment—rather than fear of a lawsuit. These courts would go a long way toward reducing defensive medicine and fostering the openness that’s necessary to improve the quality and safety of medical care.

Improving accountability

A goal of any tort system should be to create reliable accountability. In a well-functioning medical liability system, lawsuits would discourage substandard care and ensure that patients who are injured due to medical errors receive fair compensation. Rulings need to be tied to actual error and similar cases must be decided in a similar manner. The current jury system is ad hoc, producing rulings that are inconsistent, including unjust rulings against physicians in cases where errors did not occur as well as failures to compensate patients who were injured by errors.1

Because physicians cannot predict when they will be exposed to an erroneous claim, they engage in the costly practice of defensive medicine.2,3 In this climate, physicians and hospitals also fear admitting errors or suspected errors—whether their own or those of others.4-7 As a result, many problems go uninvestigated, and opportunities to improve the quality and safety of medical care are lost. By bringing reliability to medical justice—and lessening the current demoralizing nature of the modern tort trial—health courts would address this culture of secrecy by promoting and justifying candor among health care providers.

Addressing existing problems

Under a health court system, trained, specialized judges would hear and rule on liability claims and would issue written rulings that would serve as precedent in future cases. And, as is the case in other administrative systems, such as tax courts and workers’ compensation tribunals, there would be no juries. Furthermore, instead of relying on expert witnesses hired by plaintiffs or defendants, health courts would employ neutral medical experts to evaluate claims and testify on proper standards of care.

The expedited proceedings and improved efficiency under a health court system would reduce the amount of time an injured patient waits to receive compensation, which currently averages three to five years.1 Health courts would also establish a schedule for payment of noneconomic damages to introduce consistency and fairness to the compensation system.7

Some health court advocates argue for changing the standard in liability claims from one of negligence to “avoidability,” thereby shifting the focus of error analysis from the individual to the system in which in the individual works.7 Others argue that the benefits of a health court system would still exist under a negligence standard. Either standard would markedly improve both the fairness and the reliability of the medical liability system.

The current liability system creates a situation in which compensation does not align well with the absence or presence of medical error. A 2006 study by Studdert and colleagues asked medical experts to review 1,452 closed claims. They found that in 28 percent of the cases in which no medical error occurred, the plaintiff received payment.1 Conversely, in 27 percent of cases where the experts judged that an error had occurred, injured patients received no payment.1 Data suggest that fewer than 5 percent of patients with serious injury from medical error ever file a claim.8,9 Furthermore, the current system is very inefficient. For every dollar paid into the liability system, 54 cents goes to legal fees and administrative costs.1

Under the current system, jury decisions are nonbinding, so two juries presented with the same set of facts might rule differently. “The civil jury,” as Yale University law professor George Priest asserts, “is an engine of inconsistency.”10 Juries also never issue a written ruling that explains their decision. The written rulings that health court judges would issue would set a legal precedent for determining whether acceptable care has been provided.

Improving quality

Reforming the liability system to include special health courts will improve the quality of health care while decreasing the costs associated with defensive medicine. In fact, error reporting could be supported explicitly with special health courts, with penalties enforced on hospitals and physicians that fail to disclose errors.11

Defensive medicine is estimated to cost the U.S. health care system from $45 billion to more than $200 billion a year, and the practice is widespread.2,3,12 A 2005 study in the Journal of the American Medical Association revealed that 93 percent of Pennsylvania specialists admitted to practicing defensive medicine.13 By bringing reliability to medical justice, physicians will feel comfortable making decisions based on medical need and not legal fear, thus reducing the cost of defensive medicine and America’s health care tab as a whole.

Success stories

Other countries and some U.S. states have adopted administrative solutions to medical injuries with great success. In New Zealand, the Accident Compensation Corporation (ACC), which was established in the 1970s, covers all injuries caused by medical treatment. Compensation covers lost earnings and rehabilitation costs, as well as a one-time payment to claimants for miscellaneous expenses.14 This system has helped to maintain total administrative costs to about 10 percent. The ACC processes approximately 3,000 claims annually, which suggests that even in a system with easy reporting, not all injured patients are filing claims.

Sweden also has adopted an administrative system for compensating patients who experience medical injuries.15 Injured patients in Sweden submit their claims for review by an impartial expert. Between 40 and 45 percent of the claims in the system are reimbursed—and in up to 80 percent of claims, physicians actually help patients file for reimbursement.7,16

In the U.S., Florida and Virginia have developed administrative systems to address claims for birth trauma. Although both programs have limitations, they have demonstrated that non-tort based compensation plans for medical injuries are feasible and can decrease the cost for physicians in high-risk specialties like obstetrics.7

Success with administrative solutions to malpractice in these locales and growing recognition of the problems with our current medical liability system have led to increased support for health courts. Political supporters include President Barack Obama, former Massachusetts Gov. Mitt Romney, and New York City Mayor Michael Bloomberg. In addition, four 2011 deficit reduction commissions and several federal and state bills have called for establishing health courts.7,12,17 Professional societies, including the American Medical Association and the America College of Obstetricians and Gynecologists, support piloting this reform.17 The American public also supports health courts, with 66 percent of respondents in a recent poll favoring their creation to adjudicate medical liability claims.12,17 The only group in opposition is the trial bar, which benefits from the ad hoc nature and inequity of the current system.

Strongest solution

Health courts are preferable to other proposed medical liability reforms because they would successfully and reliably separate good care from bad and address the totality of flaws in the current system. Caps on damages would limit the costs of claims but would do nothing to protect a physician who acted appropriately. Early disclosure and offer programs improve transparency and address the issue of delayed compensation but do not enhance reliability. Safe harbor proposals fail to address who decides whether standards were followed. Would it fall to the same inconsistent juries under the current system? Additionally, it is impossible to establish evidence-based guidelines for every case or even most cases in health care. Physicians would continue to care for patients for whom no guidelines exist and the current culture of legal fear—the cause of defensive medicine—would persist.

Health courts, on the other hand, are the best solution to the failures of the current system because they address the issues of reliability and consistency in rulings, costs associated with defensive medicine, fair and efficient compensation for injured patients, patient safety, and physician accountability.17


  1. Studdert DM, Mello MM, Gawande AA, Gandhi TK, Kachalia A, Yoon C, Puopolo AL, Brennan TA. Claims, errors, and compensation payments in medical malpractice litigation. N Engl J Med. 2006;354(19):2024-2033.
  2. Mello MM, Chandra A, Gawande AA, Studdert DM. National costs of the medical liability system. Health Aff. (Millwood). 2010;29(9):1569-1577.
  3. PricewaterhouseCoopers’ Health Research Institute. The Price of Excess: Identifying Waste in Healthcare Spending. PricewaterhouseCoopers; 2010:22.
  4. DesRoches CM, Rao SR, Fromson JA, Birnbaum RJ, Iezzoni L, Vogeli C, Campbell EG. Physicians’ perceptions, preparedness for reporting, and experiences related to impaired and incompetent colleagues. JAMA. 2010;304(2):187-193.
  5. Kaldjian LC, Jones EW, Rosenthal GE. Facilitating and impeding factors for physicians’ error disclosure: A structured literature review. Jt Comm J Qual Patient Saf. 2006;32(4):188-198.
  6. Robinson AR, Hohmann KB, Rifkin JI, Topp D, Gilroy CM, Pickard JA, Anderson RJ. Physician and public opinions on quality of health care and the problem of medical errors. Arch Intern Med. 2002;162(19):2186-2190.
  7. Barringer PJ. Windows of Opportunity: State-Based Ideas for Improving Medical Injury Compensation and Enhancing Patient Safety. Washington, DC: Common Good; 2006:27.
  8. Localio AR, Lawthers AG, Brennan TA, Laird NM, Hebert LE, Peterson LM, Newhouse JP, Weiler PC, Hiatt HH. Relation between malpractice claims and adverse events due to negligence. Results of the Harvard Medical Practice Study III. N Engl J Med. 1991;325(4):245-251.
  9. Commonwealth Fund. Patient compensation for medical injuries: International approaches, in New Directions in Healthcare. The Commonwealth Fund’s podcast. 2011. Transcript available at: Accessed January 9, 2013.
  10. Kagan RA. Adversarial Legalism: The American Way of Law. Cambridge, MA: Harvard University Press; 2001.
  11. Howard PK. Beyond Obamacare: How to fix our enormous, inefficient health-care system. The Atlantic. 2012 Available at: Accessed December 10, 2012.
  12. Howard PK. The growing bipartisan support for health courts. Health Affairs blog. 2012. Available at: Accessed January 9, 2013.
  13. Studdert DM, Mello MM, Sage WM, DesRoches CM, Peugh J, Zapert K, Brennan TA. Defensive medicine among high-risk specialist physicians in a volatile malpractice environment. JAMA. 2005. 293(21):2609-2617.
  14. Bismark M, Paterson R. No-fault compensation in New Zealand: Harmonizing injury compensation, provider accountability, and patient safety. Health Aff. (Millwood). 2006;25(1):278-283.
  15. Kachalia AB, Mello MM, Brennan TA, Studdert DM. Beyond negligence: Avoidability and medical injury compensation. Soc Sci Med. 2008;66(2):387-402.
  16. Wyoming Health Care Commission. Medical Error Subcommittee. Report on medical errors and medical injury compensation. 2005. Available at: Accessed January 9, 2013.
  17. Howard PK. The menu of malpractice reforms. The Atlantic. 2009. Available at: Accessed January 9, 2013.

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