Philadelphia Reflections

The musings of a physician who has served the community for over six decades

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Medical Malpractice
The medical system is on the point of abandoning the city to escape abusive lawsuits. A series of observations about shared blame, ultimately assigns responsibility to the mistake of allowing this matter to be covered by insurance, thus creating a financial target.

Medical reform Subjects (1)
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American Medicine Before 1965
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Malpractice: Captain of the Ship ... New Title, One Step At A Time, but A Big One.

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One important step is reducing the financial incentives for plaintiffs to sue {bottom quote}
Dr. Fisher

In a situation as complex as the medical malpractice crisis, it's hard to know where to begin, and how far to go. We argue here for reducing the financial incentives for plaintiff's to sue. Of the various steps which would accomplish that, the one with proven effectiveness is to place an upper limit of $250,000 on awards for non-economic damages, mainly pain, and suffering. Another step which is easy to explain is to allow juries to know about (and take into consideration) the economic damages which have already been paid by another insurance, like Blue Cross or Worker's Compensation. A third world is to pay out damages for support and disability month by month instead of in a big lump sum which may never be used. These financially-oriented changes, particularly the cap on pain and suffering awards, would be sufficient to stabilize the present chaotic situation for perhaps as long as ten years. During that period of respite, more basic reforms could be examined and tested. It would definitely be better not to get into many of the fundamental issues, just now.

-- The present tort system is said to have been invented by Charlemagne in the 8th Century, to put a stop to a private settlement of disputes by duels and revenge fights. It has evolved into a system which attempts to place a dollar value on every injury and compensate the injured party. It must be obvious that some injuries do not have any equivalent in dollars, and few injuries are much improved by being paid for. Society needs a long period of reexamination of how we can best compensate those who would benefit from financial compensation, and then what to do about problems that money will not solve. We need a new system that is less expensive to operate, gets better results quicker and has less tendency to provoke dissention. To do that well, will first require at least ten years of stability, not likely unless we do something first to stabilize.

-- Too many other issues are crowding the attention of our legislators. A related issue, product liability, has greater power to gain attention, regardless of its relative merit. Our medical leaders need to acknowledge that product liability reforms may get ahead of medical malpractice in the Congress if we dither, and therefore sweeping medical reform proposals will then require appreciable modification before they can pass.

-- Similarly, the public is presently dismayed to see the governance of major corporations needs fundamental reappraisal, along with difficult decisions about accounting methods within businesses in general. It is not sensible to respond drastically to the disruptions of hospital governance caused by malpractice-induced upheavals when there looms ahead some unknowable organizational rearrangement of corporations in general.

-- What is being proposed as a simple stop-gap -- is to make a change in the court system, in order to rescue a different profession, the insurance system. Never mind that the courts provoked this problem in the first place, courts will nonetheless prefer insurance to seek an insurance solution to its difficulties. Furthermore, it is a federal approach to what has traditionally been a state matter, both in trials of a tort, and in the business of insurance. Such an approach is not easy to accomplish and must contend with every competitive proposal made by those who would lose from it. All of the alternatives have already been examined and are truly not feasible, but they must have a hearing. Ultimately, it may require political brute force to pass this simple measure, and that has a political cost to be considered.

-- Once the public fully realizes that this problem has a lot to do with rising levels of health insurance and that universal health insurance would thoroughly confound its solution, many people will have to reconsider their deeply-held opinions. The steps taken to stabilize this situation must be simple, easily understood, and adopted soon. There is more to be said, but it's better to stick with a simple point, and adopt a solution that can demonstrate twenty-five years of success in several states.

To summarize the present medical malpractice snarl, particularly what the 2005 Congress should do about fixing it, please tolerate first a bit of naval history from 1777. Speculative Philadelphians rowed across the Delaware River to New Jersey and as far up the Jersey creeks as they could go. Walking a mile or so East, they reached the bustling shipyards of privateer captains, at the headwaters of creeks running the other way, out to sea. The speculators bought shares in the vessels of likely-looking captains, their money bought supplies and sign-on inducements for the crew. The captains then sailed out to blue water through the coastal creeks and bays, and if they came back, paid off the shareholders. If they never came back, the shareholders lost their money, the sailors including the captain lost their lives. When ships were lost, it was presumed to be the captain's fault, but he risked his own life in the process, so utmost diligence in a chancy business was fairly confidently presumed. That's the way the "captain-of-the-ship" idea evolved when corporations, especially hospitals, emerged in the following century. And that's the origin of the belief that the responsibility of the stockholder was limited to his investment, and supervision of the captain was very limited. As business corporations evolved out of this model, the stockholders took some responsibility, and the captain-like C.E.O. took considerably less personal responsibility for mistakes of employees doing what they were told to do. Eventually, stockholders were assigned the whole cost of corporate damage awards, gaining very little true control in the process. Hospitals, possessing charitable immunity, were just about the last to go down this trail, so many principles of the captain of the ship idea persisted, both confounding the hospital-physician relationship in court, and the mutual rights and responsibilities in actual medical care delivery, when charitable immunity was suddenly withdrawn. Using every argument weak and strong, and exploiting every legal ambiguity, the trial bar then unwittingly brought this disruption of essential services to the point where something absolutely must be done about it, and soon.

Unfortunately, redesigning responsibilities in the whole corporate structure of America is too heavy a topic for this spring's debate on medical malpractice. We're certainly moving in some direction, with criminal lawsuits now in the process personally against the C.E.O.s of some of our largest corporations for transgressions that may not be medical, but nevertheless, leave undigested implications from the recent Sarbanes-Oxley Act concerning for-profit corporate governance. No one is willing to permit so unique a corporation as a hospital undoubtedly is, to establish principles of law governing the entire economy. Herein lies one of the main arguments in favor of stop-gap legislation, rather than get-to-the root-of-it legislative statesmanship about MICRA, or whatever we call medical malpractice legislation on a federal level.

The second argument for a patchwork solution lies in the vexing entanglement of the medical malpractice crisis with other inflammatory national medical questions: what should we do about employer-based third-party health insurance or even health insurance in general? The wounds are too sore from the 1993 Clinton proposal, and from the subsequent managed-care fiasco, or the more recent prescription drug tangle, for there to be any hope of keeping those echoes out of a medical malpractice debate. Employers are deeply involved in product liability questions at the same time they are heavily invested in employee health insurance. If we force them to choose between their conflicting interests in these two areas, they may decide the net balance of their Washington interests favors a course of action on medical malpractice which makes the malpractice crisis worse. Notice that malpractice awards are pretty much confined within the limits of malpractice insurance, with a major role of moral hazard making things worse. Malpractice insurance, particularly the hospital part, is almost entirely financed out of health insurance. And rising costs of malpractice awards are thus a major source of rising malpractice insurance premium rates while rising malpractice premiums put upward pressure on health insurance premiums. Round and round it goes, making it impossible to establish a new theory of one form of insurance without a new theory of managing the other one. The situation cries out for a workable stopgap, followed by a period of calm rumination.

A number of earnest proposals have been made in the last forty years, and almost none of them has had any effect. The defense bar, putting forth a succession of obscure legal doctrines to make it easier to defend cases, has not been a productive source of ideas. Since only a small proportion of very similar medical mishaps trigger a lawsuit, all those well-meant ideas for arbitration or alternative dispute resolution raise the specter of creating a staggeringly huge entitlement for a particular sort of injury. Carry that further to all injuries caused by anybody, and you can't tell where you would be going, but you know for certain it would be more expensive than even the present crazy system.

In all the wrangling and experimentation about medical malpractice which has been going on for two generations, only one general approach has been demonstrated to work quickly and surely: reduce the financial incentives of plaintiffs and their representatives. California and Indiana provide twenty-year demonstration projects on the consequences of placing a $250,000 cap on non-economic damages, generally known as awards for pain and suffering. Legislation which includes a provision that juries be told that health insurance has already paid for injury repair (repealing the Collateral Source Rule) or that a widower has since remarried and does not need supplementary child care, or similar circumstances, would probably get attached to such legislation without great debate. Structured (rather than lump-sum) payment of damages is another legal term for reform of a "money issue" which would probably pass any session of Congress willing to pass a cap on pain and suffering.

So let's get on with it. Put a reasonable cap on pain and suffering, attach a few other legal obscurities, and bring this malpractice issue to a screeching halt. And then, in the ten or twenty years of respite, it would provide, thrash out all those fundamental questions of corporate governance and responsibility, of non-adversarial dispute resolution, of party politics, and universal health insurance. There's a fair chance those questions can never be satisfactorily resolved. But even if they can be, this malpractice matter won't allow you to wait for it.

Originally published: Wednesday, June 21, 2006; most-recently modified: Sunday, July 21, 2019