In March, 2001, the HIH Insurance Group—Australia’s second largest of the doctors’ medical defense organizations—was placed into provisional liquidation. In 2002, the medical defense organization covering 90% of the doctors of New South Wales also went into provisional liquidation. Premiums in Australia, on average, doubled from 1997-98 to 2002-03. In the USA, medical liability insurance premiums skyrocketed after 2,000, with annual increases in several states of 30% or over. By 2001, yearly rates for obstetricians in Florida ranged from $143,000 to $203,000.
In theory, the legal systems should encourage doctors to practice medicine for the benefits of the patient. In practice, however, the current legal systems enforced defensive medicine—medical practice based on fear of legal liability rather than on patients’ best interests.
The common law of torts awards damages to a patient when doctors act negligently and cause an injury. Unfortunately, liability systems deviate substantially from this simple model. Fear of litigation forces doctors to perform many tests that are not always necessary as a precaution (positive defensive medicine), and/or doctors do not use innovative techniques to avoid blame of not practicing a “standard of care.” Positive defensive medicine arises because doctors feel victimized by the system : doctors bear substantial non-monetary costs of liability, including the lost time, damage of reputation, emotional traumas by litigation. Other perceived threats aside from tort—e.g. in the UK, reviews by regulatory bodies and other quasi-judicial activities such as the General Medical Council—only intensify this effect. Enormous pressure of liability drives doctors out of practice (negative defensive medicine). For example, there is reported significant (12%) decrease in “supply of doctors” in the USA states with caps on non-economic damages than in states without them.
The patients also faced high cost of multiple tests and procedures because many midsize companies could not afford full cover health insurance policies.
Thus, current legal system is costly for patients, for industry, not only for doctors.
The system needs reforms. They exist. Are they helpful? Yes, but very little.
In a series of studies, Kessler and McClellan reported that reforms that directly limited liability—such as caps on damages—reduced hospital expenditures by 5-9% in the late 1980s. By contrast, reforms that limit liability only indirectly were not associated with any substantial effects. Thus, caps on damages is a good move, but not enough.
Kessler and McClellan report that reforms directly limiting liability reduced malpractice claims rates and compensation conditional on a claim. Policies that reduce the time spent in defending against a claim can also reduce defensive practices substantially.
Research proved obvious: reforms that directly reduce the costs of liability have the greatest effect. Direct reforms include caps on damages; abolition of punitive damages; and collateral-source rule reforms, which revoke the common-law default rule that the defendant must bear the full cost of the plaintiff’s injury, even if the plaintiff were compensated for all or part of the cost by an independent source, such as health insurance. Do not forget to restrict attorney’s contingency fees. Fees per hours helped lawyers drag cases endlessly. When five of eight states in Australia have adopted caps on damages for pain and suffering cases dropped significantly. In 2002, only 12,686 matters were registered in the District Court of New South Wales compared with 20,784 in 2001.
Another serious matter – in UK and USA it is a judge, not a doctor, who decides what is customary practice versus malpractice based on the so-called the Bolam principle. The Bolam principle specifies that a doctor will be acting with reasonable care in accordance with a practice accepted at the time by a responsible body of medical opinion unless “peer professional opinion cannot be relied on if the court considers that the opinion is irrational.”(??) Thus, judges judge doctors on the doctoring. This reminds a joke that there are some Eskimos who dictate Africans how to handle hot weather (and the other way around – nothing personal).
There are two main alternatives to the conventional tort system for compensating patients for medical injuries: no-fault and private alternative dispute-resolution systems. No-fault uses an administrative system, such as government rather than the courts to compensate injuries. In the USA, many are interested in the “status quo” (no changes).
Private alternative dispute-resolution systems—also known as voluntary contracting—refer to agreements by doctors to make payments for alleged malpractice or medical errors according to a predetermined schedule or a third party other than a court. Proponents of such private systems argue that they are more efficient and more equitable than the courts. Opponents claim that decisions of such systems are biased towards defendants, because firms that supply arbitrators and the arbitrators themselves are more likely to develop ties to the provider organizations that pay for their services than to individual plaintiffs.
Conclusion: It is clear that the following changes should be made ASAP to get health care out of crisis, prevent defensive medicine and decreased the cost of care for patients:
Direct limits on damages that reduce malpractice pressure on doctors.
Restrictions on conditional and contingent fees for attorneys.
Introduce alternative punitive and compensatory mechanisms such as governmental and medical (peer group reviews) organizations.
Introduce punishment for plaintiffs and their attorneys for fraudulent and lost cases. This measure will prevent many clearly “money-seeking” cases.
Are those changes possible? – It is up to all of us. Bring them to your senator.
Reference: Daniel P. Kessler, Nicholas Summerton, John R. Graham
Effects of medical liability system in Australia, the UK, and the USA. Lancet July,2006