Why Legal Reform Must Be a Part of Healthcare Reform

According to Dr. Stuart Weinstein of the American Academy of Orthopedic Surgeons, we could save at least $200 billion a year from simple legal reforms.

In his recent speech to a joint session of Congress President Obama acknowledged for the first timely publicly that perhaps something should be done to address the legal component of health reform if “reform” is to have a realistic chance to hold medical costs down. To the degree that the President is truly serious about gaining bipartisan support for his reform proposals beyond Maine’s Sen. Olympia Snowe, he should consider proposals that limit liability and streamline tort law so that physicians do not need to practice defensive medicine to the degree that they do. Fear of legal liability drives doctors and health care providers to administer treatments that do not have worthwhile medical benefits

Furthermore, a recent  poll  conducted by Clarus Research Group for Common Good, a nonpartisan legal reform coalition, and the Committee for Economic Development (CED) showed that a full 83 percent majority of Americans want Congress to  address legal reform of the medical malpractice system as part of any health care reform plan. A full 72 percent of voters think the fear of being sued often changes the way doctors deal with patients (i.e. they practice “defensive medicine”). Finally, 67 percent of voters favor special health courts deciding medical malpractice cases rather than the regular court system. And in a stunning indictment of the American legal system: Only 43 percent of Americans have confidence that a lawsuit “without merit” that was filed against them would be resolved in their favor, and only 30 percent have confidence it would be resolved quickly and efficiently.

Not surprisingly the trial lawyers are against the idea. The Associated Press reported last week that the American Association for Justice, formerly known as the Association of Trial Lawyers of America, is opposed.”We don’t think that doctors and hospitals need special courts,” AAJ chief lobbyist Linda Lipsen was quoted as saying. “It’s a slippery slope. First you have a court for doctors, and then what? A court for plumbers?”

Special health courts  is at the top of the list of proposals that  been long been advanced by Phillip K. Howard,  himself a recovering lawyer and the author of  “The Death of Common Sense,” which outlines what the runaway legal system has done to our society. Recently in an article in The Atlantic, he sets forth why these and other remedies—while being no silver bullet—could have far-reaching beneficial effects. This proposal has been developed in the last few years jointly by the Harvard School of Public Health and Common Good (an organization which Howard chairs), with funding from the Robert Wood Johnson Foundation. Having special health courts can vet cases as to their merits and  create consistent rulings that can serve as a guide to judges. Two Stanford professors Daniel P. Kessler and Mark B. McClellan studied defensive medicine and found it to be a “potentially serious social problem.” They found that malpractice reforms that directly reduce provider liability pressure lead to “reductions  of 5 to 9 percent in medical expenditures without substantial effects on mortality or medical complications.”

Well-designed pretrial screening allows legitimate cases to go to trial faster with more of the settlement claims actually going to patients. Some 20 states use pretrial review panels currently. A study conducted by an  actuarial and consulting firm conducted last year for the  American Medical Association,  found that states with screening panels generally had better overall medical liability insurance rates – 20 percent below the national average — and lower claims costs than states without such laws. States with stronger panel laws also showed a higher percentage of cases that closed without any payout and quicker settlement times.

The concept has faced resistance from critics who say it unnecessarily and unfairly drags out the legal process. But supporters point to Indiana as one of the states that was found to be particularly effective in weeding out frivolous claims and encouraging early settlement of valid cases. While it is not uncommon to see a typical medical claim take two or more years to resolve, Indiana panels usually take a day or two to deliberate a committee of one to two physicians an attorney and a non-voting chairman who render a nonbinding opinion. The process does not inhibit or limit a trial and either side can use the evidence. The review panel doesn’t try to be the final decision maker, but merely provides neutral expertise. States with review panels tend to have lower malpractice insurance rates than those that do not have them.

In addition to special health courts Howard proposes a number of other measures that should be explored such as caps on damages that limit non-economic damages  such as “pain and suffering” to $250,000. Such measures tend to reduce malpractice insurance costs for doctors and hospitals as well as reduces defensive medicine practices. Other reforms include offering “safe harbor guidelines” which would give doctors a measure of protection if they follow accepted guidelines. Critics say that this idea has its downside in that practice guidelines may be accurate most of the time but cannot be accurate in every case. Sometimes a heart attack patient shouldn’t be prescribed beta-blockers, for instance. This is where judgment and special court panels can be useful because one wouldn’t want doctors to go against their better judgment.

Also, there are early offer programs that encourage defendants to make an early offer of compensation—and encourages plaintiffs to take it because it limits attorneys fees to 10 percent. Finally there are apology statutes where some states have laws that encourage doctors who have made mistakes to apologize to patients with the idea that the apology cannot by used an evidence. Sometimes that can at least bring patient and doctor together without adversarial litigation. Common Good summarizes a number of these proposals in the following table

Medical Liability Reform Proposals


Reliability / Reduce Defensive Medicine

Fair Compensation

Efficient Compensation

Improve Patient Safety

Reduce Malpractice Premiums

Physician Accountability

Special Health Courts

Caps on Damages





Medical Screening Panels



Safe Harbors




Early Offer Programs



Apology Statutes




A Combination of Reforms

 = Somewhat Helpful    = More Helpful    = Most Helpful

Source:   Common Good


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