New approaches to liability reform: An introduction

The current medical liability system in the U.S. is broken. It is costly, draining the health care system of approximately $55.6 billion per year and accounting for 2.4 percent of annual health care spending.1 An estimated $45.6 billion is spent on defensive medicine.1 Of the money spent within the medical liability system itself (excluding defensive medicine), administrative costs comprise 54 to 60 percent of total costs, including attorneys’ fees and other overhead.1,2

Furthermore, fewer than 3 percent of patients who are injured as a result of medical errors ever seek compensation for their injuries.3-5 Additionally, nearly 25 percent of awards are not factually supported by the merits of the case.2 Fear of litigation leads practitioners to modify their practices to focus on specialties with lower risk and to avoid procedures and patients perceived as higher risk.6

Drivers of inefficiencies

Many stakeholders have stated that the liability system is simply too costly and inefficient, and the process of compensating injuries related to medical errors too inaccurate. How did we get here, and why is change so difficult? Surely, no one would purposefully devise a system like this.

Several forces have converged to create this expensive, inefficient, and damaging system. First, the medical liability system is based on tort law—an adversarial process in which the plaintiff must prove that the breach of a duty caused injury resulting in damages.7 In theory, this process is meant to illuminate the truth through discovery, expert testimony, and cross-examination in order “to deter unsafe practices, to compensate persons injured through negligence, and to exact corrective justice.”8 By its very nature the process is contentious and can be emotionally and financially damaging to both sides involved.9,10 It is not linked to quality and safety improvements; the process is purely an ex post facto financial resolution.8

Second, tort law differs from state to state, making national reforms very challenging. In the U.S., reforms to personal injury law in the 1960s and 1970s reduced the barriers for injured patients to file claims.11 Liability claims rose, sparking the liability insurance crises of the early 1970s and mid-1980s.11,12 In the past 40 or 50 years, a number of states have experienced liability crises, influenced in part by market forces and successive reforms to the liability system.8 Each crisis renews discussion of reform.13 Calls for reform, however, have been met by deeply entrenched opposition. Some health policy experts claim the Obama Administration did not pursue medical liability reform as part of the Affordable Care Act for precisely this reason. The Administration did not want opposition to liability reform to derail health care reform at large.14-16

New direction

Traditionally, the American College of Surgeons (ACS) and other physicians’ groups have advocated for tort reform to address the problems in the liability system. These reforms may include caps on noneconomic damages, statutes of limitation and repose, pretrial screening panels, certificate of merit requirements, limits on attorney’s fees, joint and several liability “fair share” rules, periodic payments, and collateral-source rules that reduce portions of the award already paid to the patient by another source.14 Overall, these reforms have reduced costs and defensive medicine practices to some extent in those states that have passed tort reform legislation, but the impact has been small and inconsistent.1,17

Given the current state of affairs, the College’s Legislative Committee has determined that a new direction in liability reform is needed. Cost containment cannot be the only goal of this effort. Reforms also must focus on improving safety and developing a system of just response and compensation. As a thought leader in the field of surgery, the ACS strives to develop new options and alternatives beyond traditional tort reform. These solutions should not only achieve financial goals, but also create a culture of transparency and accountability that ultimately improves safety and quality in surgical care in the U.S.

It is time for a culture change. We must work toward a system that encourages and supports a culture of safety. The punitive and inconsistent nature of the current liability system inhibits open reporting and discussion of errors at a system level. A culture of safety would encourage error reporting and investigation that recognizes that in many instances errors arise not simply from the actions of an individual, but from a failure of the system.18 A culture of safety should integrate existing hospital programs to ensure that all errors become an opportunity for system-wide improvements in quality and patient safety.

To achieve hospital-wide safety improvements, institutions’ risk management frameworks must be closely linked to their quality and safety improvement efforts. Risk management must be integrated into the quality improvement process to provide a feedback loop of improvement. Linking risk management and quality improvement is one step in improving communication across all levels of administration and patient care. Open communication and transparency about errors, near misses, and concerns are fundamental to identifying and correcting problems.

This communication also should include injured patients and their family members, who often want to ensure that these errors do not occur again.19 Involving these individuals in a transparent investigation process and sharing the resulting changes to prevent that error in the future can help assure patients that the hospital and clinicians are committed to patient safety.20

Formulating a vision

For physicians and hospitals alike, delivering safe, high-quality patient care is the ultimate goal. We need a liability system that is integrated with the health care infrastructure to promote those ends. We need a system that focuses less on risk management and more on managing risk through the creation of a just culture of safety and quality improvement. We need a system that provides just compensation when patients are injured as a result of medical errors, and movement away from the “lawsuit lottery.”8 We need a system that is efficient—a system in which the majority of the money is spent compensating the injured patient, and frivolous claims are dismissed early to avoid wasting resources. We need a system that compensates patients in a timely manner. Injured patients should not have to wait an average of five years to receive compensation.2 Achieving an affordable, efficient, and effective liability system focused on patient safety, appropriate accountability, and health care quality will require more than tort reform.

It is for these reasons that the College’s Legislative Committee recognizes that the ACS needs to take the lead in creating a more equitable and patient-centered approach. To this end, the College convened the 2012 Medical Liability Reform Summit October 19, 2012, at the ACS Washington Office (see agenda). Participants in this program sought to develop and promote comprehensive solutions that will best serve our patients and the system in which we work. The following articles in this special edition of the Bulletin of the American College of Surgeons are drawn from the discussions that occurred at the meeting. The College’s leadership anticipates that the symposium and publication of these articles will stimulate further exploration and discussion of this important issue.

Summit agenda

Welcome and Introductions
Julie A. Freischlag, MD, FACS, Chair, ACS Board of Regents
Andrew L. Warshaw, MD, FACS, Chair, ACS Health Policy and Advocacy Group
Carlos A. Pellegrini, MD, FACS, FRCSI, ACS President-Elect
David B. Hoyt, MD, FACS, Executive Director

Opening Speaker
Nancy Nielsen, MD, PhD, senior advisor, Center for Medicare and Medicaid Innovation, and senior associate dean for health policy, State University of New York, Buffalo, School of Medicine and Biomedical Sciences

Alternative Dispute Resolution
Jerry Roscoe, JD, arbitrator and mediator, JAMS, The Resolution Experts, Washington, DC

Disclosure and Offer Programs
Rick Boothman, JD, executive director, office of clinical safety, University of Michigan Health System, Ann Arbor, MI
Janet Cohn, JD, Deputy Director, NYS Stem Cell Science/NYSTEM New York State Department of Health, Albany, NY

Health Courts—A Debate on the Venue’s Viability
Philip K. Howard, founder and chair, Common Good, Brooklyn, NY
Max Mehlman, JD, Arthur E. Petersilge Professor of Law and director, Law-Medicine Center, Case Western Reserve University School of Law, Cleveland, OH

Keynote Luncheon
Michelle Mello, JD, PhD, professor of law and public health, Harvard School of Public Health, Boston, MA

Safe Harbors—Can They Protect Patients and Providers?
Allen Kachalia, MD, JD, associate professor, Harvard Medical School, Boston, MA

Stakeholder Panel: View from the Insurers, the Trial Bar, and Patients
Mark Horgan, JD, vice-president of claims, CRICO, Cambridge, MA
Jean Rexford, executive director, Connecticut Center for Patient Safety, Hartford, CT
Patrick Malone, JD, Patrick Malone & Associates, PC, Washington, DC

Attendee Forum and Wrap-Up
John G. Meara, MD, FACS, Chair, ACS Legislative Committee, Washington, DC


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