Liability and Patient Health
March 4, 2003

Introduction
With the cost of the American tort system now the highest in the world at $200 billion, or about 2 percent of the GDP, the system of medical justice is melting down, and in need of replacement. In cooperation with Common Good, a bipartisan initiative to overhaul America’s lawsuit culture, the Joint Center convened two panels to discuss the problems caused by the current system of medical torts and the qualities that systemic reform must possess.

Panelists for the discussion of the nature of the problem were Patricia M. Danzon of the University of Pennsylvania; Randall R. Bovbjerg of the Urban Institute; Steve Garber of the Rand Institute for Civil Justice; Eric Holmboe of Yale Medical School; Marshall Kapp of Wright University School of Medicine; and Michelle Mello of the Harvard School of Public Health. Panelists for the discussion of solutions were Robert W. Hahn of the Joint Center; John Euler of the U.S. Department of Justice; Martin J. Hatlie, President of Partnership for Patient Safety; Philip K. Howard, chairman of Common Good and the author of “The Death of Common Sense”; and David Studdert of the Harvard School of Public Health.

Health and Human Services (HHS) General Counsel Alex M. Azar II delivered opening remarks. David Beier, former chief domestic policy advisor to Vice President Al Gore, addressed the gathering at the concluding luncheon. Mr. Hahn and Mr. Howard served as co-hosts for the day’s activities.

Opening Remarks by Alex M. Azar II, General Counsel, HHS
With HHS Secretary Tommy Thompson called away for a meeting with President Bush, Mr. Azar summarized the Secretary’s outlook. Mr. Azar demonstrated the depth of the medical tort problem through a series of statements and statistics that articulate its nature: doctors are closing practices because of high premiums; patients in some areas are forced to travel long distances for treatment because of the lack of physicians; 79 percent of physicians say they order more tests to protect against malpractice liability and half of these tests are considered by the physicians to be unnecessary; extra and unnecessary testing adds $70 to $126 billion a year to the cost of medical care; and Americans spend more per person than any other country in the world on such litigation.

“The crisis isn’t about doctors, hospitals, or lawyers,” he said. “It’s about patients.”
 
Mr. Azar suggested solutions such as special and expert medical courts and “early offers” of incentive-based settlements. His talk set the framework for the day, with the first panel discussing the scope and nature of the problem, and the second panel assessing solutions.

Panel 1: The Effect of Liability on Patient Health
The first panel of the day was on the effect of liability on patient health, and was moderated by Ms. Danzon. Mr. Bovbjerg began the discussion by addressing the need for a transformation from a medical “culture of secrecy” to one of safety. He described how medical consent is largely just the acknowledgement of one’s right to sue for a bad outcome, and that it is not a truly communicative process. Mr. Bovbjerg also stressed that a remedy for entrenched mistrust in the system must come as a cultural change and not just as modifications to procedures.

Mr. Garber continued with a presentation on the effects of liability on the research, development and release of drugs and medical devices. Mr. Garber noted how liability risks deter clinical trials even more than regulatory delay. He further observed that the “social costs of deterred research and development… include forgone therapies and detrimental health effects,” the real bottom line effects for patients.

Next to speak from the five-member panel was Mr. Holmboe, who addressed the effects of the randomness and expense of medical malpractice claims on the patient-physician relationship. Echoing Mr. Bovbjerg’s assertion that communication is a casualty of the current system and a necessary foundation for any solution, Mr. Holmboe also touched on the fact that some patients do not want to know the details of their treatment or condition, and that the definition of “medical error” differs considerably between patients and doctors.

Mr. Kapp discussed the impact of liability on end-of-life care. He noted that overtreatment is a major source of cost, especially in the use of technical devices with “no realistic chance” of helping at the end of life. Mr. Kapp argued that more attention should be focused on pain control, which is a major issue in end-of-life cases.

Finally, Ms. Mello discussed the influence of medical torts as deterrence. “Scaring doctors is not the same as deterring them,” she said, noting that the limited research available shows that there is no relationship between past experience with torts and future patterns of care. In a preview of what the second panel would discuss, Ms. Mello also offered guidelines for the solution she favors for the medical malpractice problem, proposals she characterized as “radical reforms.” She recommended a so-called “no fault” system that shifts liability from individual doctors to enterprises in which doctors participate, and that moves from an adversarial system to one that hinges on “a simpler decision of avoidability.”

In a spirited question and answer session, new ideas emerged. Ms. Danzon pointed out that tort actions are a kind of insurance in which all participate, and that the system places no caps on payouts. Just as insurance has limits, she noted, we should consider working toward limits on torts as well. Also, panelists noted that in exchange for speedier approval of a drug for use in humans, patients are willing to assume some risk in exchange, especially for life-saving drugs to treat conditions such as AIDS.

Panel 2: Assessing Possible Reforms
The second session, Assessing Possible Reforms, was led by Mr. Hahn. Mr. Euler began the discussion with an overview of the Vaccine Injury Compensation Program, which he described as a system that handles legal claims in a specific medical matter quicker, more efficiently, and with a broader reach that usual courtroom action. Mr. Euler said that in 5,600 cases since the start of the program in 1989, 1,800 claimants have been compensated with about $1.4 billion. “These families likely would not have been compensated under the tort system,” he said. “I don’t think a person with a legitimate vaccine claim has come out uncompensated,” he added. Mr. Euler explained that vaccine claims take about 18 months to process in the system he helped create, versus five years through the tort system, and that much of the efficiency comes from the fact that all claimants must meet a clearly defined standard. “It’s a science-based system,” he said, and if the evidence is not there, a claim does not succeed.

Mr. Hatlie described a three-part proposal for medical tort overhaul he helped create in the 1980s. The first element was eliminating lawsuits and replacing them with a hearing by an administrative law judge. “Obviously,” said Mr. Hatlie, “we realized we were taking away a huge right, so we wanted to be sure it would be perceived as fair.” The second part of the program created a significant role for states in administering physician competency. The final part centered on the creation of a rulemaking agency for malpractice standards, with primary focus on improved compensation and quality care, and with the authority to make changes to increase efficiency.

Mr. Howard argued that the problem of reform is one of “trying to change human behavior to improve human health—and we don’t know how to do that.” He said that the problems of doctors leaving practices, the practice of defensive medicine, the culture of secrecy, and the lack of affirmative standards have in common the need for a reliable decision-making body. Mr. Howard made a point that nearly all participants seconded, that the lack of predictable and reliable courtroom outcomes has left everyone on all sides “nervous” about their behavior no matter how well-intentioned it is. “We have to not simply talk about incentives and fairness. We have to change a prevailing frame of reference. Until we restore a solid foundation of justice… we doom all our efforts.”

The final speaker, Mr. Studdert, offered strategies for making a no-fault system a more attractive alternative for healthcare providers and the general public. Mr. Studdert described four “public relations strategies,” including exchanging the current name of the approach for the more friendly “patients’ compensation system,” and portraying the current tort system as a lottery not only for those who win outrageous claims but also “a lottery of the tens of thousands who will suffer and receive nothing.”

In the question and answer session following the presentations, a discussion of transparency and of how to deal with problem physicians drew many comments. Mr. Howard asserted that self-policing of physicians is not possible, while a questioner complained of a lack of programmatic or legal support for private efforts to force from the system a group’s self-identified “bad apples.”

Luncheon Remarks, David Beier, former chief domestic policy advisor to Vice President Al Gore
The program concluded with luncheon remarks by Mr. Beier, who agreed that the current system is too complicated, too slow, and too expensive, echoing many of the demonstrated claims made throughout the morning. He proposed several broad rules as the foundation of any reform, including an increase in access to lawyers to make claims for patients, the need for a consistent and predictable set of rules that can be changed as circumstances change, and the use of decision making methods other than judges and courtrooms in use now.

Conclusion
The majority of speakers agreed that a no-fault system will be superior to an adversarial system, though all agreed on the nature of the problem as not only a matter of costs and benefits but also as a lack of communication, goodwill, and trust. All panelists also seemed to agree that every system, even the no-fault system advocated by at least two panelists, would require a reliable decision maker in a position of great authority. Participants also agreed that the current political and social climate is particularly amenable to a constructive discussion of the need for change, with an approach emphasizing “patient safety” as the most likely opportunity for influence.