Solutions to Medical Malpractice Costs in America

The American approach to medical malpractice is odd at best. The general concept is that if a doctor makes a mistake, that doctor is then responsible for any harm that comes to the patient. The actual implementation of the general concept, though, is not so simple.

Let's suppose that Dr. Jane Love is a general surgeon and John Smith is referred to her after he is diagnosed with appendicitis. Mr. Smith agrees to undergo an appendectomy and understands that there are certain risks involved but he also understands the necessity of having his appendix removed. Mr. Smith undergoes the procedure and develops an infection at the site of the surgery. Following two weeks in the hospital, he recovers and then goes to talk to his attorney, Marc Nelson.

For arguments sake, let's say that there are some serious questions about whether or not Dr. Love did everything possible to prevent an infection. Dr. Love did a very good job with the procedure, but it is possible that she could have done something more. There is also evidence that the infection would have resulted no matter what she did. Nobody knows if Dr. Love could have prevented the infection but it is obvious that Mr. Smith suffered greatly, accrued extensive hospital bills and missed considerable amounts of work.

At this point the American malpractice system becomes very convoluted for a number of reasons. I'll just address a few of them:

1. Mr. Nelson could refuse to represent Mr. Smith and (assuming other lawyers do the same), he really can't sue Dr. Love. Whether or not malpractice was performed will not be decided unless a lawyer can be convinced to take up the case.
2. Since Dr. Love followed procedure, she is not under threat of losing her license, she is only under the threat of monetary damages. In this case, "justice" is only about who pays what to whom and who covers the cost of the undesired result.
3. Dr. Love doesn't believe she did anything wrong and she did follow hospital procedure. Regardless of her actions, she will be forced to hire an attorney if Mr. Nelson takes the case, even if it never even progresses to court. She is carrying the entire "risk" of the operation until Mr. Smith drops his claim (through a verdict, settlement or because he doubts he will win).

The major problems arise because it is very difficult to determine fault and causality in malpractice cases. There is rarely a clear-cut line where you can state that because person A did X, person B suffered Y (such has removing the wrong leg). Often, cases simply boil down to a situation where person A expected result X and ended up with result Y. When Y is a bad result, person A expects recompense. Is it justice to assign blame when no obvious blame exists? The American malpractice system operates on the basis that the answer is "yes".

Problems

The first problem with meting out justice in this fashion starts with the hurdles to have your day in court. Since malpractice attorneys generally operate under a contingency-fee basis (where they only get paid if they win - usually a percentage of the total award), they will only take cases that will pay enough to justify their time. Since litigation is expensive (court costs, depositions, travel, expert witnesses, staff, etc.), attorneys first make a business decision about a case before they consider the merits. Is it better to spend $20,000 litigating a case where you have a 25% chance at winning $1 million or to spend that same $20k on a case where you have a 95% chance of winning $30,000? Attorneys will only take cases that will make a return, and they don't really care who wins as long as they win enough to stay in business. An attorney can stay in business if they win one case a year and make $1million on it - losing another 12 wouldn't matter and each of those clients would get absolutely nothing. An individual, of course, could directly pay for litigation out of pocket, but few people have thousands of dollars available to take a case to court and there's no cheaper way to litigate. It would seem odd to have to pay a policeman a $3000 retainer (direct payment option) or else prove to him that you can tell him where the robber is (contingency-fee with a good chance of winning) before he investigates a robbery, but in malpractice law, that's the situation that exists. The entry to the case is based on the whims of the attorneys.


The next problem comes from the idea that justice is comparable to dollars. No matter what happens, Mr. Smith can't undo his time in the hospital, he can only be recompensed for his losses. Dollar values can recompense lost wages and hospital fees, but it is a bad way of compensating for pain and suffering since it doesn't recompense, it only replaces. The idea of monetary damages for suffering boils down to the idea that "because something bad happened to me, somebody should pay me" - it's an untenable position since bad things happen all the time. The idea that "my ex-girlfriend broke my heart and so now I'm going to sue her for all the emotional turmoil I went through" makes no more sense than trying to quantify how much pain is worth in dollar figures. If the ex-girlfriend kept the boyfriend’s car, getting it back is justified, but paying for emotions isn't. Only in the realm of medical malpractice do courts seriously try to repair a broken heart (or, for that matter, a broken leg) with a dollar bill.

The final problem I want to discuss is that once litigation has begun, it carries disparate risks on the opposing sides. In our example, once Mr. Nelson has taken the case, Mr. Smith has no reason not to continue with it since he has no risk of losing and only a risk of gain (Mr. Nelson is operating on a contingency fee basis and is paying all the litigation costs and will only get paid if Mr. Smith does). Dr. Love, though, is forced into a situation where she is only carrying risk. Once Mr. Nelson begins a suit, Dr. Love must hire an attorney to defend her. If the case goes nowhere, she is out the money she paid the attorney. If she loses, she pays her attorney and any damages awarded to Mr. Smith. Additionally, Dr. Love's lawyer has no incentive settle the case early since he will be paid as long as it goes on, often leading to increased litigation costs. Justice, then, cannot be had for Dr. Love, only for Mr. Smith - once he gets a lawyer to take his case (and has jumped the entry barrier) he cannot really lose, he can only gain. No matter what Dr. Love did, even if she was the best doctor ever and did the best job ever, she is going to lose - the only question is to what degree.


Solutions

There are some ways to get around these problems.

To start, we must identify the point of the civil courts - to make whole. If a physician is negligent or inflicts intentional harm, the physician should be punished by losing privileges or licensure from a professional committee or even being punished by the criminal justice system. This should be initiated and governed by the state or licensing committee and not depend on an injured party bringing suit and should not involve any benefit for the injured party. The state or professional committes can use expert panels who can decide whether a physicians actions were correct, honest mistakes or true mistakes that need to be punished. Conversely, the civil side of the law should not be involved in punishment but in restitution and making the injured party whole. Medical malpractice law currently attempts to both benefit the injured and punish the injurer and fails at adequately accomplishing either.


Next, we must continue with efforts to cap pain and suffering. There is no good way to quantify pain and suffering and money does not make up for it. Making someone whole by returning what they lost is appropriate, but paying a speculative amount serves no person other than to punish the offender.

Finally, we must remove the cost of litigation and inherent incentives and disincentives to pursue specific cases. The way to do this would be to eliminate the need to place all the risk on only one party. Why should physicians carry all the risk? While they certainly are involved with healthcare, they definitely aren't the only ones who benefit from their efforts. The risk pool should be shared more broadly and then recovering from that fund should be easier. By eliminating the litigation middle-man, millions of dollars can be saved and injured parties can be compensated much more quickly. I have two, competing suggestions on how to do that:

1. Create an additional insurance that patients can choose to buy (or have their insurance buy) before a specific operation or even just for life in general that is called "bad result insurance" where they will be automatically given money if something bad happens to them. If doctors can insure against future mistakes (medical malpractice insurance), why can’t patients simply elect to insurance against bad results? It would be very simple to pay an extra $100 for a wisdom tooth removal with the understanding that if dry socket resulted any future care would be covered plus you would get an automatic one-time payment of $1000 for pain and discomfort. The types of things that could be insured against are innumerable and the market would dictate who bought what coverage and how much it cost. In this case, risk sharing would be pool everyone who decided to buy insurance.
2. A state-funded entity comparable to workers compensation could be formed where, in the result of a bad result during a medical procedure, a patients losses would be automatically covered. Payments into the fund would automatically be charged for every procedure performed (with rates varying by the risk of complication) and as a general tax on healthcare expenditures. This would result in a risk sharing pool that includes everyone who uses healthcare.

Conclusion

Malpractice expenses can be curbed, but we need to recognize the problems and fix them from the base. Current efforts focus on limiting how much is paid out in damages, but the underlying problem isn’t the amount of the damages physicians have to pay, it’s the process by which those amounts are arrived at. We need to reevaluate our malpractice system and individually focus on the aspects of punishment and restitution. By dividing the two and taking the focus off the inefficient process of litigation we can truly lower the costs of medical malpractice while still making whole the injured and punishing the offender. When we leave all aspects of restitution and punishment in the hands of for-profit attorneys we arrive in the exact position we are in right now.