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Reforming malpractice 'reform'

PHYSICIANS HAVE an unlikely ally in their malpractice reform efforts: trial lawyers. The two groups are battling over proposals to replicate California's 1975 Medical Injury Compensation Reform Act, or MICRA, which caps damages for "pain and suffering" at $250,000. As a result, the malpractice debate has again been defined in terms of how much money plaintiffs and their attorneys should receive. And this time, considering the severity of the current crisis and the strength of the Republican Party, the doctors might win.

Reality is more complicated. In addition to stabilizing malpractice premiums, meaningful reform must make medical care safer and improve the process of dealing with errors. A lot has been learned since the crises of the 1970s and '80s, and a lot has changed. When MICRA was enacted, it was believed that malpractice was rare and that restricting awards would rein in runaway juries and unscrupulous lawyers. Subsequent research, mainly at Harvard University, uncovered high injury rates and found that very few negligent injuries generate lawsuits. The Institute of Medicine's estimate of 50,000 avoidable deaths annually was extrapolated from malpractice studies.

The health care system has also evolved since the 1970s, and the liability system has not kept pace. Expectations of success are greater, as are patients' financial needs if something goes wrong. A severely injured newborn may have a near-normal lifespan and may require millions of dollars in future medical care not subject to a MICRA-style cap.

A fundamental problem is that malpractice insurance -- unlike health insurance -- is "third party" coverage. It is designed to shield physicians, regardless of the fact that lawsuits are brought by their own customers. Defending a malpractice claim is an exercise in denial and delay that withholds information from patients, undermines therapeutic relationships, offers little feedback about safety, and ultimately makes it harder for insurers to calculate fair premiums. This process is wholly incompatible with the Institute of Medicine's vision of the future health care system as "safe, effective, patient-centered, timely, efficient, and equitable."

Furthermore, the financial burden falls mainly on physicians in a few "high risk" specialties. Modern medicine is an industrialized, collaborative enterprise. It requires a full complement of clinical skills and depends on a high-tech infrastructure that costs $1 trillion annually in excess of doctors' fees. Current practices make no more sense than asking airline pilots to guarantee safety for the entire aviation industry, and forcing those who fly the most dangerous routes to compensate injured passengers from their personal paychecks.

Small changes could yield significant improvements in conflict management. Other states should follow Pennsylvania and require prompt disclosure to patients of unexpected problems while protecting physicians from having those discussions used against them in court. Early mediation, under way in Massachusetts, helps both patients and physicians come to terms with failure and loss. Offering immediate financial assistance to injured patients without making them surrender their legal rights, done in Colorado, should be encouraged. The federal law requiring malpractice payments to be reported to a national databank, which makes physicians resist settlement, should be repealed.

Stabilizing malpractice premiums is harder. Juries need guidance on appropriate damages, and judges should correct unjustifiable awards. Health and disability insurers should pay patients' out-of-pocket losses, and "subrogation" claims against liability insurers should be prohibited. Barriers to pooling risk between hospitals and physicians, including federal antikickback laws, should be removed.

Eventually, medical liability must be reconfigured to complement other forms of accountability in health care, such as performance incentives, informed choice, and regulation. The key to making this work is selectivity. Hospitals and medical groups with demonstrated capacity to deliver high-quality care should receive malpractice relief in exchange for putting in place systems that detect and prevent medical errors, communicate effectively with patients, and pay timely, reasonable compensation for avoidable injuries.

Chances are slim that comprehensive reform will emerge from malpractice politics-as-usual. Patients and physicians are chess pieces in a larger political contest between business and consumer groups over the effects of personal injury lawsuits on the American economy and social fabric. In the 1990s, pro-lawsuit forces persuaded physicians to support rights to sue HMOs in order to further a broad campaign against hazardous industries. Today, anti-lawsuit groups hope to make MICRA-style legislation the leading edge of general business tort reform.

The federal government can break the logjam. An administrative compensation system for Medicare and Medicaid patients, linked to other innovations in quality improvement, would set the standard for everyone else. Seniors would benefit from better medical care and quicker dispute resolution, and the malpractice crisis would finally be placed on the national health policy agenda rather than being exploited by special interests.

William M. Sage is a professor of law at Columbia University and principal investigator for the Project on Medical Liability in Pennsylvania. 

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