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Making a case for overhauling the malpractice system

A policy expert argues that even tort reform won't fix what's wrong with the current approach to liability

From the June ACP Observer, copyright © 2004 by the American College of Physicians.

By Phyllis Maguire

NEW ORLEANS—Internists across the country say they are grappling with soaring liability insurance premiums and shrinking availability of malpractice coverage. Many warn about the escalating costs of defensive medicine—and have turned the issue of tort reform into a litmus test when it comes to elected officials.

But the problems with the current malpractice system go far beyond the issue of tort reform, according to Robert A. Berenson, FACP, a senior fellow at the Washington-based Urban Institute. Dr. Berenson presented "Medical Liability Reform: What Does and Does Not Work" at Annual Session.


Dr. Berenson argues for fundamental alternatives to the present tort system, as well as binding arbitration and experience ratings to reduce premiums.


In fact, Dr. Berenson claimed, trying to reform the tort system of malpractice from within will keep physicians paying high premiums, stop injured patients from being adequately compensated and hinder efforts to improve patient safety. Instead, he proposed alternatives that would put the emphasis on reducing errors, not on establishing individual blame.

'At cross purposes'

Talk to both physicians and trial attorneys—as Dr. Berenson said he has, having served as an advisor in presidential administrations—and you'll hear both sides "at cross purposes, talking past each other," he said.

According to physicians, malpractice litigation is a lottery system where plaintiffs are egged on by a greedy trial bar to pursue frivolous suits.

According to attorneys, however, "there are too few [malpractice] cases, not too many," Dr. Berenson said, characterizing the legal profession's point of view. "The contingency system protects against frivolous lawsuits, and physicians need to clean up their own house before they ask to do away with 200 years of tort law."

Federal tort reform won't be possible without a dramatic political shift, Dr. Berenson said, although some state legislatures have started passing reform measures.

But even if comprehensive tort reform was possible, he added, those reforms wouldn't get to the root of what's wrong with the current system.

For one, he cited figures issued by the Congressional Budget Office that capping noneconomic damages at $250,000 (a reform the College supports) would reduce physicians' liability premiums by no more than 30%.

While that would give physicians some relief, it wouldn't reverse recent premium increases. Dr. Berenson chalked those increases up to market corrections and to problems with reinsurance.

A broken system

And tort reform won't help the malpractice system realize its two basic goals, he continued: making "injured patients whole, or near whole," and deterring further malpractice.

Right now, he claimed, "injured patients are not being reliably and timely compensated," while the patients who are most severely injured are probably not adequately compensated.

Instead, patients wait years through the discovery and negotiation phases of a suit before they can pay for their medical care and rehabilitation. And 60% of any award or settlement is swallowed up by attorney and witness fees and court costs.

In addition, malpractice cases now have multiple defendants, which drives up the time and money it takes to consider cases. And most insidiously, "I would say the tort system has minimal—or even a negative—effect on patient safety, because everything's kept in the dark," Dr. Berenson said. "People are nervous about sharing information."

Tort system alternatives

Instead of the current tort system, Dr. Berenson posited an error prevention system that would focus on safety, compensate patients for their actual needs, stabilize (or even reduce) physicians' premiums and preserve access to care.

Instead of targeting individual errors and infrequent actions, as the current system does, an error prevention system would bring routine scrutiny to bear on medical errors, to prevent a pattern of errors from continuing.

"You'd have robust reporting of actual injuries and near misses," he said. "The system wouldn't penalize you for reporting and reviewing what happened." Instead-as in Sweden, which Dr. Berenson said maintains a "non-negligence, non-court-based system"—physicians "actually help patients get in the system."

Dr. Berenson argued that other approaches should be subjected to formal testing as alternatives to the current system, including:

  • Early settlement offers. "If you are aware that you have injured a patient negligently, instead of waiting for that patient to bring a suit, you agree ahead of time either by contract or by statutory regime that you will pay the economic loss going forward," Dr. Berenson said. "In exchange, the injured patient would lose some ability to recover greater awards by going to court."

  • Arbitration system. An arbitration system that was fair, mandatory and binding would at least, he said, take malpractice out of the courts. The challenge is to ensure that the arbitration is truly neutral.

  • Medical courts. If malpractice remains in the courts, states could establish medical courts in which a judge would come to the bench with medical expertise, just as state judicial systems have set up family courts.

    By the same token, Dr. Berenson said he supported exploring the notion of having expert witnesses serve the court, not plaintiffs and defendants. "The court would have its own experts and get a neutral view of whether the standard of care was met," he said.

  • Enterprise liability. "When a plane goes down, you don't consider suing the pilot, but rather suing the airline," Dr. Berenson said. Likewise, hospitals and health plans could bear liability for suits involving physicians, even if those physicians are not technically employed by the hospital or plan.

    Enterprise liability would also give health plans and hospitals more of a stake in reducing medical errors by making investments—in technology, for instance—to promote patient safety.

  • Experience-rated premiums. More widespread use of experience rating would give organizations incentives to build malpractice prevention systems and benefit from reduced premiums. Because of small numbers, it would be difficult and unfair to experience-rate individual physicians, so broader reliance on experience rating should occur only with other major reforms.

And finally, Dr. Berenson did not endorse the notion of a one-size-fits-all monetary cap on noneconomic damages.

"We need a number higher than $250,000," he said, "or something more sophisticated, like a sliding scale based on the nature of the injury people have had."

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