Impact of Legal Reforms on Medical Malpractice CostsImpact of Legal Reforms on Medical Malpractice...

Impact of Legal Reforms on MedicalMalpractice Costs

September 1993

OTA-BP-H-119NTIS order #PB94-105539

GPO stock #052-003-01351-7

.——

For de by the U.S. Govemmen[ Prmtmg officeSuperintendent of Documents, Mml Stop: SSOP, Washington, DC 20402-932X”

ISBN 0-16 -042097-0

Recommended Citation:U.S. Congress, Office of the Technology Assessment, Impact of Legal Reforms on MedicalMalpractice Costs, OTA-BP-H-1 19 (Washington, DC: U.S. Government Printing Office,October 1993).

IMPACT OF LEGAL REFORMS ON MEDICALMALPRACTICE COSTS

Background Paperprepared by the

Health ProgramOffice of Technology Assessment

Clyde J. Behney, Assistant Director, OTA

Project Staff

Judith L. Wagner, Project DirectorDefensive Medicine and the Use of Medical Technology

Jacqueline A. Corrigan, Study Director

David Klingman, Senior Analyst

Leah Wolfe, Analyst

Philip T. Polishuk, Research Assistant

September 1993

This paper was prepared for desk-top publishing by Carolyn Martin and Daniel B. Carson.

LIBRARYOFFICE OF TECHNOLOGY ASSESSMENT

CONGRESS di ) dt. bNI L L) STATESWASHINGTON, D. C. 2051LJ

.

Foreword

In the debate over rising health care costs, the medical malpractice liability system isfrequently cited as an area where reform could lead to substantial savings. The medical malpracticesystem adds to the costs of health care directly, through physicians’ liability insurance premiums, andpossibly indirectly, through changes in physician behavior. While the direct costs of medicalmalpractice arc relatively small (less than 1 percent of overall health care costs), the threat of medicalmalpractice may lead physicians to order medically unnecessary tests and procedures to protectthemselves against a future lawsuit. This indirect cost of medical malpractice, commonly referred to as“defensive medicine,” may add to overall health care costs. The cost of defensive medicine remainsunknown and is subject to much speculation because there arc no sound empirical data.

Congress is concerned about the cost of defensive medicine and requested that OTAundertake an assessment of this problem. The results of the assessment will be published in early1994. In the interim, this background paper provides Congress with the most recent information onmedical malpractice reforms in the States and examines whether these reforms reduce directmalpractice costs. The impact of these reforms on the indirect costs of medical malpractice, inparticular defensive medicine, will be explored more thoroughly in the final report.

This Background Paper was prepared in response to a request by the House Committee onWays and Means and the Senate Committee on Labor and Human Resources. The paper wasprepared by OTA staff, but OTA gratefully acknowledges the contribution of the assessment’s advisorypanel, numerous State attorneys general, their staff, and other individuals who providcd informaland reviewed drafts. As with all OTA documents, the final responsibility for the content of theassessment rests with OTA.

(7+- -Roger C. HerdmanDirector

. . .Ill

CONTENTS

PageExecutive Summary . , . . 0 0 , . 0 0 ● . . . . . . . . . . . . . . . . . . . . . ● 0 0 0 . . 0 . . 0 . ● . . 0 . . 0 . s 0 . . 0 . . 0 . . . 0 . 0 . . . . . . . . . . . . . . . . . . . . . . . . 0 0 1

Chapter1. Introduction: The Malpractice System and Malpractice Reform . . . . . . . . . . ● ......*..** . . . . . . . 5

Introduction ..............,,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... .....5Background on the Malpractice System . . ....,.., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Trends in Malpractice Cost Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Impact of Malpractice on Defensive Medicine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

2. Approaches to Malpractice Reform: States’ Experience and New Ideas . . . . . . . . . . . . . . . . . 23Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........23Overview of Malpractice Reform Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Reforms to Reduce the Frequency and Cost of Malpractice Suits .,...,,. . . . . . . . . . . . . . . . . . . . . . . 24Alternative Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38No-Fault Medical Compensation .,,..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42New Reform Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45Conclusion . . . . . . . . .,,..... . . . . . . . . . . . . . . . . . . . . . . . . . . . ,,,.,,,,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , 49

3. Impact of State Tort Reforms ● ...**....* ● *..***..*.. ● .*.....**.* .*.********* ● ****.**.*.* ..*..***..** 57Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57Study Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,..,,..,, . . . . . . . . . . . . . . . . . . . 57Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71Conclusion......., . . . . . . . . . . ..,,.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73

BoxPage

2-A. Selected Approaches to Alternative Dispute Resolution.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

FiguresFigure Page1-1. Medical Injuries, Negligent Conduct and Malpractice Claims . . . . . . . . . . . . .. .. .. .. .. .,. ... ,.....91-2. National Trends in Malpractice Premiums, 1975-1986 ..,,.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182-1. Pretrial Screening Panels for Medical Malpractice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282-2. Attorney Fee Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302-3. Collateral Source Offset Provisions for Medical Malpractice Damages . . . . . . . . . . . . . . . . . . . . 352-4. Caps on Damages for Medical Malpractice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362-5. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

TablesTable Page1-1. Annual Medical Malpractice Premiums for $1 Million Dollars of Coverage,

New Jersey. 1988 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141-2. Claims Per 100 Physicians, 1980 -1984 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151-3. Physician Malpractice Claim Frequency 1982-1987, in Minnesota.

North Dakota, South Dakota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151-4. Annual Malpractice Claims Per 100 Physicians: National and Regional Data. . . . . . . . . . . . 161-5. Aggregate Premiums Paid for Malpractice Insurance

in the United States, 1985-1991 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192-1. Summary of State Medical Malpractice Tort Reforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263-1. State Tort Reforms Examined in Six Empirical Studies on Medical

Malpractice Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583-2. Summary of Data and Methods Used in Six Empirical Studies on Medical

Malpractice Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613-3. Summary of Results of Six Empirical Studies on State Medical

Malpractice Reform ,....,,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66A-1. Collateral Source Offset Provisions, by State, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78A-2. Caps on Damages and State Patient Compensation Funds, by State, 1993. . . . . . . . . . . . . . . . . 81A-3. Periodic Payment of Awards, by State, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85A-4. Statutes of Limitation by State, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87A-5. Pretrial Screening Panels, by State, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90A-6. Attorney Fee Limits, by State, 1993......,..,,,,.,.,,............,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93A-7. Arbitration Provisions, by State, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96C-1. Results of Six Empirical Studies on the Impact of State Tort Reforms

on Medical Malpractice Claim Frequency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106C-2. Results of Six Empirical Studies on the Impact of State Tort Reforms

on Medical Malpractice Payment per Paid Claim ,......, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108C-3, Results of Six Empirical Studies on the Impact of State Tort Reforms

on Medical Malpractice Insurance Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

APPENDIXESPage

A. State Medical Malpractice Reforms ● . . . . . 0 0 0 0 ● . . . , . 0 0 0 . , . 0 0 , , . . 0 0 . . . . . . . . . . . . . . . . . . . . . . . . ● . 0 0 . . . 77B. Constitutional Challenges to Malpractice Reforms: Implications

for Federal Reform . 0 0 . . 0 . . . 0 . . 0 . 0 0 0 0 . . 0 . ● . * . . * * . . . . . . . . . . . . . . . . 0 0 . . . . . , . . ● . . . . 0 0 . . 0 . ● 0 0 . . . . . , . 0 99c . Results of Six Empirical Studies on State Medical Malpractice Reforms . . . . . . . . . . . . . 105D. Acknowledgments . 0 0 0 . 0 . . 0 . . 0 . . 0 . 0 0 . . . . . . . . . . . . . . ..0....0.0. . . . . . . . . . . . . . . . . . . . . . . .*....,***. ● . . . , . . 113

REFERENCES . . . . . , ● . . . . . . . . . . . . . . . . . . . . . , . 0 0 . . . . 0 0 0 . , 0 , . . . . . . 0 . . . . . . . . . . . ● . . . . . . . . . . . . . . . . . . . . . ● . * . . . . 119

Executive Summary

INTRODUCTION

Medical malpractice costs are increas-ingly being targeted in the political debate onhealth care reform. The direct costs ofmedical malpractice, measured byinsurance premiums paid by physicians,hospitals, HMOs, and other providers,account for less than 1 percent of the healthcare budget. However, many physiciansand policy makers believe that a potentiallylarge hidden cost of the malpractice liabilitysystem is the practice of “defensivemedicine. ” Definitions of defensive medicinediffer, but most include the practice ofordering extra tests and procedures primarilyin response to a perceived threat of a futuremedical malpractice claim.

OTA is currently studying defensivemedicine, its costs, and the potential impactof medical malpractice reform on defensivemedicine. The final report of this study willbe published in early 1994. This backgroundpaper reviews the medical malpracticereforms that have been implemented in theStates and the limited evaluations of theirsuccess in reducing three indicators ofdirect malpractice costs (hereinafter referredto as “malpractice cost indicators”):

■ Claim frequency (the number ofclaims per 100 physicians);

■ Payment per paid claim (the averagedollar amount awarded to plaintiffsfor claims that result in payment);and

w Malpractice insurance premiums.

The paper also provides a summary ofthe leading new reform proposals, high-lighting some of their possible strengths andweaknesses.

Trends in Malpractice Cost Indicators

Malpractice insurance premiums, claimfrequency, and average payment per paidclaim increased rapidly in the mid-1970s

and have since followed a fluctuating andmore moderate upward path, marked by arelatively sharp increase during themid- 1980s. Since 1988, premiums andclaim frequency have declined. Data onpayment per paid claim are difficult toobtain because insurance companies holdmost of these data. (Approximately 80percent of medical malpractice claims aresettled through private negotiationsbetween the physician’s insurer and theplaintiff.) One measure of malpracticeclaims payment that captures both actual andprojected damages per claim is directinsurance losses, a measure that combinestrends in both payment per paid claim andthe probability of a claim resulting inpayment. Between 1979 and 1985, directinsurance losses increased by 25 percent peryear and then declined by 2.7 percentannually from 1985 and 1991. suggesting thateither mean payment per paid claim or theprobability of payment, or both, havedeclined in recent years.

It is not known whether these recentdeclines are part of a cycle or indicate asecular change in the medical malpracticeenvironment. In addition, national averagesobscure the sometimes pronounced changesacross regions of the country and physicianspecialties.

Approaches to Medical MalpracticeReform

Over the past 20 years, almost everyState has passed some type of medicalmalpractice reform. Most of the legislativeactivity occurred during the mid-1970s andmid-1980s in response to two malpractice“crises” marked by rapid increases inmedical malpractice insurance premiums(Bovbjerg 1989). The “crisis” during themid-1970s was more dramatic, because insome States physicians found themselvesunable to obtain insurance. Most reforms

-1-

2- Impact of Legal Reforms on Medical Malpractice Costs

have had the goal of limiting the number ofmalpractice suits and payments per paidclaim, in the hope that such limits wouldlower insurance rates.

Reforms to limit the number of suits orpayment per paid claim include:

Shortening the statute of limitations(i.e., the time period in which a suitcan be brought);Limiting attorney fees;Requiring pretrial screening of suits;Setting specific dollar limits onpayments per paid claim (“caps ondamages”);Requiring the plaintiff’s health ordisability insurer be the first payerof medical and related expenses(amending the “collateral sourcerule”); andPermitting the malpractice insurer topay future damages as they comedue, rather than in lump sum(“periodic payment” of damages).

To date, reforms that aim to promoteaccess to the malpractice liability system byinjured patients have not been a priority,Some recent reform proposals are designedto increase patients’ access to the legalsystem, either by expanding the scope ofinjuries for which compensation will beprovided or by removing the dispute fromthe courts and using alternative disputeresolution procedures or an administrativetribunal, With the exception of limitedno-fault programs for birth-related injuriesin Florida and Virginia, few of theseproposals have been adopted by the Statesor used to any extent in medical malpracticeactions.

Finally, clinical practice guidelineshave received considerable attention as apotential tool for determining the standard

of care in medical malpractice trials.Maine and Minnesota have just begunprograms to use clinical practice guidelinesin medical malpractice litigation.

Impact of State Medical MalpracticeReforms

During the past decade, a handful ofrigorous empirical studies has examinedwhether the medical malpractice reformsimplemented by the States have had theirpredicted effects of reducing claimfrequency, payment per paid claim, ormalpractice insurance premiums. Thesestudies have used multi-State data andmultiple regression analysis to assess thespecific impact of individual medicalmalpractice reforms after controlling forother factors that might be responsible forsuch differences.

The one reform consistently shown toreduce malpractice cost indicators is capson damages. Requiring collateral sourcepayments to be deducted from theplaintiff’s malpractice award has also beenshown to reduce certain malpractice costindicators. Pretrial screening panels andlimiting the statute of limitations showconflicting results. Finally, statutes thatrestrict attorney fees, require periodicpayment of awards, and codify the standardof care have not been shown to have theintended result of reducing malpractice costindicators.

Although the finding that both caps ondamages and mandatory collateral sourceoffsets reduce certain malpractice costindicators is strong, one cannot concludethat the other reforms have no impact.Contradictory results in different studiesmay reflect different models and assump-tions. The failure to find an effect maybe a result of factors unrelated to the

Executive Summary -3

effectiveness of the reform. Certain reformshave not been studied sufficiently to drawconclusions. In addition, a number ofreforms were modest and might not beexpected to have large effects. For example,periodic payment of awards is triggered in avery small number of suits with large futuredamages, so the savings gained by payingawards on a periodic basis may be verymodest. Legal challenges to statutorychanges may have also delay the actualimplementation of the reform. Finally,due to data limitations, no conclusionscan be drawn regarding the impact ofmedical malpractice reform on claimfrequency.

Conclusion

Caps on damages and mandatorycollateral source offsets should reduce thedirect costs of the medical malpracticecompensation system, The studies are notdetailed enough to conclude anything aboutthe level of the cap necessary to achievethis effect, but caps on noneconomicdamages alone appear to reduce directmalpractice costs. It should be noted,however, that these savings are likely tocome by reducing the payments per paidclaim received by a small number of mostseverely injured plaintiffs.

The studies did not examine the impactof any of the reforms on access to compen-sation by patients injured by negligent care.While not addressing the access issuedirectly, some State courts have foundcertain medical malpractice reforms, mostnotably caps on damages, to violate theirState constitutions, because they singledout medical malpractice plaintiffs for a

reduction in their ability to recover damages.Other kinds of injuries (e.g., those resultingfrom other types of malpractice accidents)were not covered in the laws that have beenstruck down.

Analysis of the impact of most reformsis 1imited, especially of reforms that movemalpractice disputes outside the civillitigation system. The lack of uniformnational data on claim frequency, paymentper paid claim. and insurance premiumslimit opportunities for strong empiricalresearch on the potential for medical mal-practice reforms to reduce malpractice costs.

Even if a given reform reduces directmalpractice costs significantly, the directsavings (i. e., from reductions in malpracticepremiums) would represent only a verysmall portion of the national health carebudget. Medical malpractice reform can beexpected to generate significant savings inoverall health care costs only if it can beshown that physicians order a significantnumber of extra tests and procedures andthat these defensive practices are indeedinfluenced by the level of malpractice claimactivity.

The impact of changes in malpracticecost indicators on physician behavior is notknown. Although reducing malpracticecost indicators through medical malpracticereform might encourage physicians to limitdefensive ordering of tests and procedures,it may also dampen whatever beneficialeffects of the medical malpractice systemhas in deterring negligent medical practice.The advisability of such changes under a newhealth care payment regime--particularlyone with greater incentives to reducecosts--is a policy issue that deservescareful consideration.

Chapter 1Introduction: The Malpractice System and Malpractice Reform

Thebeen the

INTRODUCTION

medical malpractice system hassubject of debate and reform for

many years (1 1, 149). Critics claim that thecurrent system costs too much and is aninefficient and unpredictable means of com-pensating individuals injured by substandardmedical care. The malpractice system hasincreasingly been cited as a leading culpriti n health care cost escalation. For ex-ample, shortly before the November 1992election, President Bush claimed that “themalpractice . . . trial lawyers’ lawsuits . . .are running the costs of medical care up$25 to $50 billion” (155). If this estimate iscorrect, the malpractice system (includingpremiums) constitutes between 3 percent and7 percent of total annual health carespending. The search for cost containmenthas led Federal policy makers to pursuefurther reform of the malpractice system aspart of the larger effort to reform thenation’s health care system.

Malpractice and Health Care Costs

To understand how malpractice reformmight affect health care costs, one mustexamine the pathways by which the currentmalpractice system influences these costs.There are essentially two ways in whichmalpractice law alters health care costs:directly, through the costs of administeringthe malpractice system; and indirectly,through the effects of the malpracticesystem on providers behavior.

The direct costs of administering themalpractice system, including the cost ofcompensating injured parties (payouts), areborne by health care providers (and ultimatelyby consumers). Providers pay for theadministration of the legal system throughmalpractice insurance premiums, out-of-pocket expenses, and even time spent in

defending themselves against malpracticesuits.

The direct costs of the malpracticesystem are difficult to measure. Malpracticeinsurance premiums represent the costs paidby physicians and hospitals to insurers. butthey vary from year to year for reasons thathave nothing to do with changes in the levelof malpractice claim activity. Y

Malpractice p rem i u ms increasedsubstantially over the past 20 years buthave stabilized since the mid-1980s. In 1991,the total cost of medical malpracticepremiums in the United States was $4.86billion (98). These premiums account foronly 0.66 percent of total health carespending in the United States. 2 but theyexclude the malpractice costs of self-insuredhospitals. 3 OTA estimates that theinsurance costs of self-insured hospitals areroughly 20 to 30 percent of total insurancepremiums. 4 Based on this estimate. the

direct cost of the malpractice system is stillless than 1 percent of total national healthcare expenditures.

Some direct malpractice system costsare not captured i n these estimates.E x c l u d e d are health care inst i tut ionsin-house costs of attorneys whose job it isto oversee the institutions legal affairs andthe time and personal funds physicians spendin defending themselves against malpracticeclaims. Researchers at Harvard Universitysurveyed physicians in New York Stateabout costs they bear directly when they arecaught up in malpractice litigation ( 157).They found that doctors who had been suedspent an average of 6 days working on thecase. Six percent of these doctors had out-of-pocket expenses from retaining their ownattorney, and 2 percent paid their ownmoney to settle claims brought by patients.

The indirect costs of the malpracticesystem result from the signals it sends tophysicians and hospitals that certain kinds

-5-


of behavior may be penalized. The behaviorchanges that result from these signals mayeither increase or decrease health care costs.For example, if the malpractice signal tellsphysicians that to reduce their malpracticerisks they must spend more time withpatients, keep more complete medicalrecords, or perform more diagnosticprocedures, then it may increase health carecosts. But, if these actions prevent poorpatient outcomes by making diagnosis moreefficient or patient care safer or moreeffective, they may reduce subsequenthealth care spending. Whether the neteffect is to raise or lower health care costsis unknown. President Bush’s assertions,cited above, are based on the premise thatthe cost-increasing effects of the currentmalpractice system far outweigh its cost-reducing effects.

Deterrence and Defensive Medicine

The indirect costs of malpractice stemfrom a major goal of the malpracticesystem: to deter doctors and other healthcare providers from putting patients atexcessive risk of adverse outcomes. 5

Changes in behavior in response to themalpractice signal may deter adverse out-comes and, in the process, raise or lowerhealth care costs. However, if the mal-practice signal to physicians is murky,inconsistent, or perverse, some of thebehavior change may raise health care costswithout reducing the frequency of adverseoutcomes. This portion of the indirect costof the malpractice system is pure waste.

Many physicians claim that the currentmalpractice system encourages the practiceof defensive medicine (1 14). Typically,the term “defensive medicine” is definedimprecisely by those who use it, but it almostalways has a pejorative connotation, raisingimages of doctors ordering unnecessary and

costly procedures, For example, as early as1969, an official of the U.S. Department ofHealth, Education and Welfare testifiedbefore Congress: “ ... we believe that theadditional procedures being ordered [tominimize a chance of suit] are addingsignificantly to the overall costs of medicalcare” (11).

OTA defines defensive medicine asphysicians’ ordering of tests and procedures,or avoidance of high-risk patients orprocedures, 6 primarily (but not necessarilysolely) to reduce their exposure tomalpractice risk,7 Under this definition,many defensive practices could be beneficialto patients, though potentially costly. Thus,defensivethat meetthose that

medicine encompass behaviorsthe goal of deterrence as well asare truly wasteful.

OTA’s Assessment of DefensiveMedicine

OTA is currently undertaking anassessment of the probable extent ofdefensive medicine in the United States andthe potential impact of malpractice reformon the practice of medicine. The assessmentwas requested by Congressman Bill Archer,Ranking Republican Member of theCommittee on Ways and Means and SenatorOrrin Hatch, formerly Ranking RepublicanMember of the Committee on Labor andHuman Resources and Member of theTechnology Assessment Board. A separaterequest was received from Senator EdwardM. Kennedy, Chairman of the SenateCommittee on Labor and Human Resources,and Senator Orrin G. Hatch. Additionalrequests were received from CongressmanJohn D. Dingell, Chairman of the Committeeon Energy and Commerce; Congressman CarlD. Pursell, former Ranking RepublicanMember of the Sub-committee on Labor,Health and Human Services. Education. and

Chapter I--Introduction: The Malpractice System and Malpractice Reform -7

Related Agencies of the House Committee onAppropriations, and Senator Charles E.Grassley. The study was endorsed by SenatorDave Durenberger, Ranking Member ofthe Medicare and Long-Term Care Sub-committee, Senate Committee on Finance. 8

The results of OTA’s full assessment ofdefensive medicine will be available earlynext year.

OTA’s Background Paperon Malpractice Reform

In the meantime, OTA has prepared thisbackground paper for use in the currenthealth care reform debate. One importantquestion in that debate is how Federalmalpractice reform might affect health carecosts. This background paper summarizeswhat is known about the impact of suchreforms on direct malpractice cost and itscomponents. Specifically, the paperdocuments important reforms alreadyintroduced in many States since the mid-1970s and summarizes what is known aboutthe impact of these reforms on threeindicators of direct malpractice cost:

■ the number of malpractice claims perphysician (claim frequency);

■ the amount of payment per paid claim(often referred to as claim severity);and

■ the price of malpractice insurance(premiums),

None of these three indicators of directmalpractice cost is complete. The total costof administering the system depends notonly on claim frequency and the amountpaid on successful claims, but also on theprobability of payment once a claim is madeand on how early resolution of the claimoccurs. Taken together. these characteristicsof the system influence malpracticepremiums, but their effect on premiums is

difficult to separate from the influence ofother powerful factors, such as variations ininsurers’ investment income (161 ). Also,premiums measure only the part of mal-practice system cost paid by insurers.Nevertheless, estimates of the impact ofmalpractice reform on malpractice premiums,when the independent effect of other factorsis adequately controlled, provide the bestproxy measure of malpractice reform’simpact on overall direct malpractice costs.

Not only do the malpractice costindicators help gauge which. if any. tortreforms affect the direct costs of themalpractice system, but they may also beimportant indicators of the impacts of tortreform on defensive medicine and theindirect costs of the malpractice system.These indicators may be the conduits of the“malpractice signal” that makes physicianspractice more or less defensively.

Evidence suggests that, despite thebuffer that malpractice insurance providesagainst physicians direct financial exposureto malpractice liability, physicians find theprospect of being sued singularly unpleasant,disruptive, and depressing (10,71 ,90). Theymay also fear that adverse publicity from alost case will harm their reputations and,hence, livelihoods.9 If physicians believethat they and their colleagues are beingsued more (or less) often and for higher (orlower) amounts, they may react by orderingdiagnostic tests more (or less) often. 10

Malpractice premiums may also be agood composite indicator of the relativestrength of the malpractice signal in onegeographic area or medical specialty versusanother. Inter-specialty or inter-regionaldifferences in malpractice premiums resultfrom the net effect of differences in thepropensity of patients to sue, the likelihoodand amount of payouts. and the cost ofdefending against malpractice claims. Thus,the premium may be a good overall proxy


for the amount of pressure that the malpracticesystem puts on physicians and hospitals tochange their practices.

These indicators shed little light onother important consequences of malpracticereforms, such as impacts on health careoutcomes or on injured patients’ access tocompensation. For example, studies haveconsistently shown that many injuries --in fact, the vast majority -- resulting frommedical negligence are never pursued asmalpractice claims 11 (29,75). Tort reformsthat lower malpractice costs by limiting accessto the courts could make compensation evenmore difficult for some people. And, ifmalpractice reforms reduce defensivemedicine, they may also weaken thedeterrent effect of malpractice. 12 OTA’sprimary focus in this background paper ison the impact of malpractice reform onhealth care costs, not on these otherimportant dimensions of malpractice systemperformance.

Organization of This Report

The remainder of this chapter presentssome basic background on the operation ofthe malpractice system and shows trendsover the past 15 years in the threeindicators of malpractice cost: claimfrequency, payment per paid claim, andmalpractice insurance premiums.

Chapter 2 summarizes the range ofpotential medical malpractice reforms andthe current status of their implementation inthe States.

Finally, in chapter 3 we analyze thefindings of selected studies of medicalmalpractice reforms and summarize what isknown about the impact of these initiativeson the three malpractice cost indicators.

BACKGROUND ON THEMALPRACTICE SYSTEM

What is Medical Malpractice?

All medical malpractice begins with aninjury to a patient caused by a physician orother health care provider, but not allinjuries result from malpractice. Medicalmalpractice occurs in a subset of injuriesthat directly result from a provider’snegligence. Negligence is “conduct thatfalls below the standard established by lawfor the protection of others againstunreasonable risk of harm” (66). In thesimplest interpretation, a physician’sbehavior will be judged negligent if he orshe is found to have caused an injury byfailing to perform up to the standard of theprofession.

The law governing medical malpracticeis a type of tort law. Tort law offerscitizens a private, judicially enforced remedyfor certain injuries. The remedy typically ismoney. Monetary awards are intended tomake patients whole, i.e., compensate themfor their losses. In addition, the threat ofhaving to pay these damages should be asignificant deterrent to further negligentbehavior.

The Malpractice Claims Process

Malpractice claims arise from a pool ofalleged medical injuries, some of whichinvolve physician or hospital negligence.The system gradually winnows down thenumber of claims through a process ofinformation exchange, discovery. negotiatedsettlement. and ultimately court trial. Someportion of the claims result in monetarycompensation to the plaintiff. Figure 1-1illustrates the relationship between the uni-verse of injuries and ultimate compensation.

Chapter I--Introduction: The Malpractice System and Malpractice Reform -9

Figure 1-1--Medical Injuries,and Malpractice

Negligent ConductClaims

Neglige

Malpractice claims

Source: Adapted from Posner, J. R., ‘Trends in Medical Malpractice Insurance, 1970- 1985,”Luw and Contemporary PmbZems:4g(2):37, Spring 1986.

The effectiveness of the malpracticesystem in compensating victims of medicalnegligence depends on how closely theset of injuries due to negligence matchesthe set of compensated victims. Ideally,negligence-caused injuries and compensatedvictims would be one and the same. Ifthe system discourages many legitimateclaims, many deserving patients willreceive no compensation. On the other

hand, if the system encourages manyspecious claims or if it compensates manyundeserving parties, then much money willbe wasted in the process of providingcompensation to those who deserve it.

The following sections describe theprocess by which injuries become claimsand claims get resolved in today’s medicalmalpractice system.


The Decision to Seek Legal RedressLittle is known about why patients

choose to sue, but studies of negligentinjuries in New York and Californiaconfirm that most victims of medicalnegligence do not sue (29,75). The limitedevidence indicates that the decision whetheror not to sue results from both the patient’sdisposition and the physician-patientrelationship, but the severity and costlinessof the injury appears to increase theprobability that patients will seek legalredress (55,81, 127, 157).

The decision to seek a legal remedy isusually made in consultation with anattorney. Virtually all medical malpracticecases are paid for on a contingency feebasis, whereby the lawyer’s legal fees arepaid out of the plaintiff’s award. If theplaintiff is not awarded money, the lawyeris not paid, Therefore, the lawyer has astrong incentive to weigh the probability ofwinning and the expected award against thecost of making a claim (1 19, 149).

Pre-Trial Resolution of Claims

The vast majority of claims are resolved(i.e., dropped by plaintiffs, dismissed by aj u d g e , o r set t led through privatenegotiations between the parties) beforethey reach trial. In 1984, only 12 percentof cases nationwide proceeded to trial(142). Of these cases in trial, another 12.5percent were settled before the jury reacheda verdict (142).13

Once a case is initiated, the partiesenter into a process of information exchange,which can be done either informally or undercourt “discovery” procedures that require theopposing parties in a lawsuit to provideeach other with relevant factual data, Thediscovery process allows each party toassess the merits of the claim.

Many malpractice claims go no furtherthan pre-suit inquiry, when the medical recordcan be screened by the plaintiff’s attorneyusing hired medical experts. 14 About 37percent of claims closed nationwide in 1984were dropped or settled before a legal suitwas even filed in a court, and of these cases36 percent resulted in a payment to theplaintiff (142). 15

The exchange of information betweenthe parties appears to be very effective ineliminating cases of dubious merit relativelyearly in the process and providing for earlysettlement for meritorious cases. Forexample, a study of 252 claims broughtagainst a single hospital and resolved by theend of 1989 found that, of claims eitherdropped by the plaintiff or dismissed by ajudge, the majority (68 percent) involvedcare that the hospital judged to be of goodquality, whereas only 10 percent were casesjudged to involve poor care (41). (Thehospital was uncertain about the remainingclaims).

Another study of almost 12,000 claimsagainst physicians closed in New Jerseybetween 1977 and 1992 found that 67percent were closed before discovery wascompleted, and in each stage of the process,the percentage of cases that resulted inpayment to the plaintiff was stronglycorrelated with the strength of the plaintiff’scase against the physician (135). *6 Theseresults are consistent with more recentresearch on 187 birth injury and emergencyroom malpractice claims closed between1986 and 1989 in Florida (127). Amongcases dropped by the plaintiff, an expertphysician panel found the defendants notliable almost three times as often as theyfound them liable. When cases were settledbefore trial, however, defendants weretwice as likely of be judged liable as notliable. 17

Chapter 1--Introduction: The Malpractice System and Malpractice Reform -11

Determination of Negligence

The decisions whether to offer to settleand whether to accept a settlement offerdepend on each party’s assessment of theprobability of winning and the cost of goingto trial (41, 127). These assessments arebased on the odds that a jury would belikely to find the physician or hospitalnegligent. How negligence is determinedin jury trials is, therefore, central to bothsettlements and jury decisions.

What constitutes negligence in medicalmalpractice? Stated simply, negligentbehavior is treatment that does not meet thecustomary standard of the medicalprofess ion. This standard of negligence isunique to medical malpractice, for in otherareas of tort liability, such as productliability, the standard of care owed by themanufacturer to the consumer is determinedby the jury and is only informed by custom(64,65). In practice, however, for reasonsdescribed below. malpractice juries oftenselect the correct standard of care.

In malpractice, the jury must decidewhether the physician behavior wasconsistent with the practices of his or herprofession. The jury is informed about thestandard of care in the profession throughexpert testimony and sometimes medicaltexts and other authoritative materials. Thisprocedure “gives the medical profession . . .the privilege, which is usually emphaticallydenied to other groups [of tort defendants],of setting their own legal standards ofconduct, merely by adopting their ownpractices” (64).

The standard of care is not defined bythe practices of medical leaders. Rather, aphysician is expected to have the skillpossessed by the average member of theprofession in good standing (64).

How is the “average member” of theprofession found? Until the early 1970s,physicians were judged by the practicesexisting in their locality, and that standard

was established for juries through thetestimony of local physicians as expertwitnesses. Because physicians in acommunity might be reluctant to testifyagainst their local colleagues, the “localityrule” was expanded in the 1970s to includecomparable communities or the entire State.Specialists have increasingly been held tonational standards because they have heldthemselves to such standards throughnational specialty certification (160).

Although the profession-based standardof care is simple in conception, it isdifficult to implement in practice. Both theplaintiff and the defendant call expert wit-nesses who frequently assert contradictorystandards of care. When faced withconflicting standards, the jury’s decisionmay depend largely upon the credentialsand credibility of the expert witnesses. Ineffect, the jury determines the standard ofcare based upon the expert testimony itfinds most credible (50).

Contradictory testimony from experts ispossible partly because of the uncertaintyinherent in medical practice and theconsequent variation in practice patterns,even within relatively small areas. Thecourts have accepted such variation throughthe “respectable minority” rule, whichallows a physician to follow a standard ofconduct that is not embraced by themajority of physicians but rather by a“school of practice” or considerable numberof physicians in good standing (50,66). Inaddition, the “error in judgment” ruleprotects a physician if he or she choosesbetween two or more legitimate choices oftreatment (66).

Though these exceptions appear tomitigate the power of the jury to establish thestandard of care, they are not as effective inthis regard as they appear. For example,during malpractice trials. the attorneys cantry to create a factual dispute about whetherthere are, indeed, two legitimate alternative


methods of practice if their expert witnessdiscredits one of the options. Again, becausejuries must resolve factual disputes, the juryultimately decides which option is thestandard of care (50).

DamagesFor the 10 to 12 percent of cases that

go to trial, compensation depends on ajury’s verdict, first regarding negligenceand, if negligence is found, then regardingdamages. Of claims against physicians thatwent to trial between 1975 and 1978, morethan four out of five were won by the defense(58). Thus, damages are assessed in only avery small proportion of filed claims.Damages have three components:

= direct economic losses, such as healthcare expenses, job-loss expenses, andother expenses incurred as a directconsequence of the injury;

■ noneconomic losses, or losses for “painand suffering;” and

■ punitive damages, potentially availablewhen the defendant’s conduct isfound to be intentional, malicious, oroutrageous, with a disregard for theplaintiff’s well-being.

In assessing damages for directeconomic losses, juries traditionally werenot informed about whether the plaintiffwas covered for some of his or her costs bya health or disability insurance policy.Since these benefits were obtained by theinjured person through his or her ownefforts or expense, it has been consideredunjust for the wrongdoer to get a “windfall”by receiving the benefit of them. In mostStates, however, health and disabilityinsurers can require the plaintiff toreimburse them for these “collateralsources” of payment if the plaintiffreceives a malpractice award covering these

expenses. In effect, health and disabilityinsurers can be reimbursed by the defendant(or his or her malpractice insurer) for theircoverage of medical and other costs incurredbecause of a negligent physician. A numberof States have altered their laws to allowevidence of such collateral sources ofpayment into the malpractice trial and someStates require that these amounts be deductedfrom the final award. (See ch. 2 for morediscussion of collateral source offsets.)

Noneconomic damages, which compen-sate victims for physical pain, emotionaldistress, mental anguish, disfigurement. lossof enjoyment, loss of companionship, andpecuniary losses not otherwise covered, arevery controversial because the subjectivenature of the jury evaluation is thought tolead to highly inflated awards. Jury awardsfor personal injuries of equivalent severityvary enormously. In one study, the totaldamages awarded to victims with comparableserious permanent injuries in two regions ofthe country were found to range from$147,000 to $18.1 million (15). Suchvariation is caused, in part, by the failureof the courts to provide guidelines to jurieson how to calculate damages for pain andsuffering (4, 15). In addition, estimates offuture damages for medical care and otherneeds involve numerous assumptions,especially for seriously injured plaintiffs.

Juries may not take attorneys’ fees intoaccount when determining damages in amalpractice suit. (Entering evidence ofattorney fees is considered prejudicial andirrelevant (76. 106). ) It is unknown whetherjuries speculate on these fees when theyestablish damages, and malpracticeattorneys have differing opinions as towhether they do (89, 106), Thus, if noaward for pain and suffering is made, theplaintiff may not, in the end, receive fullcompensation for economic losses afterpaying his or her attorney.

Chapter I --Introduction.. The Malpractice System and Malpractice Reform -13

Punitive damages are intended to punishthe defendant for grossly negligent conductand to provide retributive justice to theplaintiff (4). In the latter case, the argu-ment is that the plaintiff has suffered a“distinctive form of dignitary injury. ”especially when the relationship betweenthe plaintiff and the defendant is one of trustor reliance (4). The monetary damages areintended to reflect this. Punitive damage..,however. are rarely awarded in medicalmalpractice cases. 18

The Time to Claim ResolutionThe preceding rough sketch of the

malpractice system tells little about howexpensive and lengthy the ordeal can be.Most claims are not brought until a yearafter the injury (142). In addition. thoughmany cases are settled, claims take an aver-age of 25 to 30 months (median 19 months)

to be resolved after they are filed with theinsurer (11 1, 142), with one study showingthe time to resolution ranging from 1 monthto 11 years (142).

Malpractice InsuranceMost physicians are insured against

malpractice claims, so the monetary costs ofdefending against a claim and payingsettlements or jury awards are borne directlyby malpractice insurance companies (126). 19

Physicians’ malpractice premiums vary bythe State or locality in which they practice,the specialty or sub-specialty of practice,and sometimes the number of hours worked,years in practice, and attendance at riskmanagement training sessions (126). (Table1-1 shows the premium categories and ratesused by New Jersey’s physician-ownedmalpractice insurance company in 1988. )Malpractice insurers almost never basetheir physician premiums on the specificexperience of an individual doctor (125).Malpractice claims for an individual

physician are so rare and unpredictable thatpast experience is a poor indicator of futuresuits ( 116, 126).

Because almost all physicians areinsured, they generally do not directly bearthe costs of a malpractice suit.20 The lackof experience rating also means that thefinancial impact of a malpractice claim onthe sued physician will be largely attenuatedthrough pooling of costs.21 Althoughexperience-rating of physicians is rare,financial sanctions do occur in physician-owned companies. In a survey of membercompanies of the Physician InsuranceAssociation of America. Schwartz andMendelson found that about 3.2 percent ofinsured physicians had some sort offinancial or medical sanction placed onthem. including 0.7 percent whose insurancecoverage was terminated because ofnegligence-prone behavior ( 120). Never-theless, except in extreme cases, the individualphysician’s malpractice cost or premium isstill rather insensitive to changes in his orher own behavior.

TRENDS IN MALPRACTICE COSTINDICATORS

The indicators of direct malpracticecost--claim frequency, payment per paidclaim, and premiums--reveal a cyclical pathof increase over the past 20 years andv iv idly illustrate the onset of the two“malpractice crises” that arose during thisperiod. The first crisis occurred in themid- 1970s. when medical malpracticeinsurers raised their rates as much as 500percent and denied malpractice coverage tocertain specialties ( 112). In California andNew York, some physicians could notobtain malpractice insurance at any price(126). State legislatures were quick torespond, and between 1975 and 1976,43 States enacted various medical malpracticetort reforms (9).


Table l-l--Annual Medical Malpractice Premiums for $1 Million Dollars of Coverage,a

New Jersey 1988

Class Premium

Neurosurgery

Orthopedics (maj)

Obstetrics and Gynecology

Cardio-Thoracic Surgery; Cardio-Vascular Surgery, Hand Surgery;Plastic Surgery; Thoracic Surgery

EENT (maj); General Surgery; Gynecology (maj); Industrial (maj);Otolaryngology; Pediatric Surgery

Anesthesiology, Urology (maj)

Dermatology (maj asst); ER (asst); FP (asst); Gynecology (rein asst);Internal Medicine (asst); Orthopedic (asst).....

ER (hospital); Gastroenterology; Internal Medicine (Gastroenterology);Radiology; Roentgenology

Acupuncture; Cardiology; EENT (rein, maj); ER (non-hospt.); FP (rein);GP (rein) Gynecology (non-hospital, rein); Internal Medicine(General, Cardiology, Endocrinology, Hematology, Nephrology,Oncology, Pulmonary Disease); Ophthalmology (mint maj);Rheumatology; Orthopedics (non-hospital) . . . . .

Dermatology (rein); EENT (no); FP (no); GP (no); Neurology (rein);Nuclear; Ophthalmology (no); Pediatrics (no); School Physician

Allergy, Forensic, Hematology, Manipulation, Oncology, Pathology

$42,000

$35,000

$31,000

$28,000

$25,000

$19,000

$13,000

$10,000

$7,000

$6,000

$4,000

ABBREVIATIONS: EENT = eye, ear, nose, throat; ER = emergency room; FP = family practice; GP = general practitioner; asst= assisting surgery practice; maj = major surgery; min = minor surgery; no = no surgery; off = non-hospital or office practice,

aTheW premiums are for coverage for $1 mi[lion/$1 miilion/M million (per medical incident/per awqate wW wjOd/ waggregate extended policy period).

SOURCE: Rolph, J. E., “Merit Rating for Physicians’ Malpractice Premiums: Only a Modest lkterrent,(’ law and ContemporaryProblems 54(2):65-86, Spring 1991.


Table 1-2--Claims per 100 Physicians, 1980-1984

State 1980 1981 1982 1983 1984

AR 6.6 8.4 8.8 7.7 8.6

CA 20.4 22.3 22.5 24.6 26.0

FL 20.8 31.6 32.3 29.1 26.1

IN 5.3 6.0 7.9 9.8 10.2

NY 27.1 28.9 31.4 38.1 35.7

NC na 7.5 8.7 8.9 8.9

SOURCE: General Accounting Office, Medical Malpractice: Six State Case Studies Show Claims and Insurance Costs Still

Rise Despite Reforms, GAO-HRD-87-21, December 1986.

The second crisis occurred in the mid-1980s, when premiums again rose substan-tially. Some States responded with addi-tional tort reforms, many of the same typepassed in the 1970s (14).

Illustrative statistics on trends in claimfrequency, payment per paid claim andmalpractice insurance premiums are pre-sented below.

Claim Frequency

Published data on trends inquency are available only forlater. The data show conflictingGAO survey of claims reported

claim fre-1980 and

trends. Aby leading

malpractice insurers in six states showed asteady increase in the number of claims per100 physicians over the period 1980-84 inevery State (141). (See table 1-2. ) However,a more recent analysis of claims filed in NewYork State (one of the six states studied byGAO) using similar data sources showed amuch lower rate of claim frequency (on theorder of 13 per 100 physicians) and a muchless pronounced trend in claim frequencyover the 1980-84 period (51), The laterstudy used a more limited definition of“claim” than did GAO, excluding from theanalysis “potential “claims that insurers openeven before a patient files a claim with the

insurer or court. Insurers often encouragetheir policyholders to report adverse eventsearly as a method of risk management (5 1),and if insurers became more aggressiveabout risk management over the period ofmeasurement, the trend observed in theGAO study could be spurious.22 Anotherstudy that measured both formal claims andincidents reported to insurers in three states(Minnesota, North Dakota, and SouthDakota) in the period 1982-87 showed noincrease in claim frequency (table 1 -3).

Claim frequency appears to have declinedin the late 1980s. Data from AmericanMedical Association for 1985 through 1990

Table 1-3--Physician Malpractice ClaimFrequency, 1982-1987 in Minnesota, North

Dakota, and South Dakota

Year Claims per 100 insured

1982 10.41983 11.71984 11.61985 13.51986 10.71987 11.6

SOURCE: State of Minnesota, Department, ofCommerce, “Medical Malpractice ClaimsStudy: 1982-87,” St, Paul, MN, 1989.


Table 1-4--Annual Malpractice Claims per 100 Physicians: National and Regional Data

Average annualrate of change,

Year 1985 1986 1987 1988 1989 1990 1985-1990

National 10.2 9.2 6.7 6.4 7.4 7.7 -8.9%

By regionNew England 7.6 10.1 4.0 8.4 4.0 2.4 -31.9Middle Atlantic 13.9 12.7 7.8 7.1 7.5 9.6 -11.6East North Central 13.2 10.1 10.5 7.5 10.8 9.5 -10.4West North Central 9.6 8.6 3.9 4.0 5.9 5.8 -15.5South Atlantic 7.0 7.5 5.6 4.7 4.8 5.7 -6.6East South Central 5.5 7.3 9.2 6.4 9.0 5.6 0.6West South Central 12.4 8.6 6.3 10.4 10.7 11.4 -2.8Mountain 6.2 9.0 4.1 5.0 5.6 8.8 12.4Pacific 9.3 7.5 5.4 4.4 6.1 7.0 -9.0

SOURCE: American Medical Association, Socioeconomic Characteristics of Medical Practice 1992 (M. Gonzalescd,) (Chicago, IL: American Medical Association, 1992),

show claim frequency declining for allspecialties after 1986 (table 1-4).23 A ninformal survey of malpractice insurancecompanies conducted in 1992 revealed that thefrequency of claims per 100 physicians maybe increasing once again (85). However, dataprovided to OTA by St. Paul Fire and MarineInsurance Company (the largest malpracticeinsurance company in the U. S.) show a stablepattern of claim frequency from 1990through the first half of 1992 (13 1).

Payments

Total payouts from malpractice claimsdepend both on the probability that a claimactually results in payment and on theamount paid per claim. Data are availableon the average amount paid per paid claim,but trends in the probability of payment areunavailable. Payouts can be measured atthe aggregate level by examining trends inmalpractice insurers’ incurred losses.24

The mean malpractice award increasedsteadily from 1975 to 1984 at a rate twiceas great as the consumer price index(35,54). Only a small part of this increasemay be attributed to the increasing cost of

medical care over the period, because onlyabout 22 percent of total awards were formedical expenses (14,97).

Researchers at the Rand Corporationexamined malpractice jury verdicts from 1960through 1984 in two areas of the country:San Francisco, California, and Cook County,Illinois (108, 109), In the years 1975 to1979. the average malpractice jury award inSan Francisco was $644,000, and in CookCounty it was $324,000 (109). Between1980 to 1984. the average jury verdict was$1,162,000 in San Francisco and $1,179,000in Cook County (109). (These figures are allin 1984 dollars). This represents an 80percent increase over the period in SanFrancisco and a 263 percent increase in CookCounty .25

Bovbjerg and colleagues also reported asubstantial increase in jury verdicts in fiveseparate areas of the country (includingthose studied by the researchers at Rand)after adjusting for inflation ( 16), Theaverage verdict (in constant 1987 dollars)increased from $501.000 in 1980 to $1.3million in 1985 ( 16). Jury verdicts arerare, of course, as most cases are dropped,dismissed, or settled before they reach trial,


Nevertheless, expectations about the potentialsize of a jury verdict enter the decision-making process during the early phases of acase. Thus, increases of this magnitudecould be a marker for increases in awardsacross all cases, regardless of the stage ofthe litigation process at which they weresettled.

Total direct insurance losses, a measurethat combines trends in both payment perpaid claim and the probability of a claimresulting in payment, has declined in bothcurrent and constant dollars in recent years.In the period 1979-1985, direct insurancelosses increased at a rate of 25 percent peryear (61 ), compared with a 2.7 percentannual decline between 1985 and 1991 (98).These changes suggest that either the meanpayment per paid claim or the probability ofpayment, or both, have declined in recentyears.

Malpractice Insurance Premiums

Figure 1-2 shows national trends in theprice of a standard malpractice policy (i.e.,for coverage of $100,000 per occurrence and$300,000 per year) across five medicalspecialties from the mid-1970s through1986 (126).26 The price of malpracticeinsurance increased rapidly in inflation-adjusted dollars during the two malpracticecrisis periods -- the mid- 1970s and themid-1980s. A more recent study of changesbetween 1989 and 1991 in the price of astandard malpractice insurance policy, thistime for coverage of $1 mil l ion peroccurrence and $3 million per year, found a10 percent decline in premiums duringthe period (162).

The price data presented above do notfully reflect the cost of buying adequatecoverage, because many doctors felt theneed to purchase more extensive coverage(126), probably in response to increases inclaim payments over the period .27 Data on

aggregate premium payments for malpracticeinsurance throughout the country show aninflation-adjusted increase between 1985 and1991 of 6 percent (see table 1-5). In recentyears, however, premiums have actuallydeclined nationally. When inflation is takeninto account, aggregate premiums declinedapproximately 16 percent between 1988 and1991.28

IMPACT OF MALPRACTICE ONDEFENSIVE MEDICINE

Whether and by how much physicianstailor their practices to avoid the cost,disruption, and discomfort of being sued is

2at present a matter of conjecture. 9 It isdifficult to measure the extent of defensivemedicine because the effect of malpracticecan work through subtle avenues, includingthe incorporation of defensive practices intophysicians’ training. If all physicians areaffected in their practices by the fear ofmalpractice, then studies that examinevariations in practices across physicians (oreven over time) will not be able to pick upthe full impact of defensive medicine.

Only one study to date has documenteda relationship between the malpractice costindicators in an area and the utilization of amedical procedure. That study, by Localioand colleagues, found that New York Stateobstetricians who practice in hospitals withhigh claim frequency and high malpracticepremiums do more Caesarean sections,(controlling for patient severity and otherfactors that might affect the Caesarean sectionrate), than do obstetricians practicing inareas with low malpractice claim frequencyand premiums (75). The incremental effect ofhigher claim frequency and direct malpracticecost on this one medical procedure appears tobe large. For example, the odds of aCaesarean section in a hospital with thehighest frequency of obstetric malpractice


Figure 1-2--National Trends in Malpractice Premiums,1975-1986

$20T

OBG

i

IORTH

$15

GSUR

1,,<--,-- “$10 . : -- ANEST- ,. -- - - /

----- - ,“/.\- .,_/-’.<-----. -- —---- - —— — ..— —— - — — -

$5 4’

I , GP,/-------- —-

. —--------l—-+---–}~----

1975 76, y–”~—~-”-- ,

77 78 79 80 81 82 83 84

,-----

8 5 1 9 8 6

Year

Abbreviations: ANEST = AnesthesiologyGP = General PracticeGSUR = General SurgeryOBG = Obstetrics/GynecologyORTH = Orthopedics

Note: Mean annual premiums for $100,000/$300,000 policy limits

Source: Sloan, FA., Bovbjerg, RR, and Githens, P.B., Insurimz Medical Mahxactice (New York,NY: Oxford University Press, 1991).

claims were 32 percent greater than the At present, the pressureodds of a Caesarean delivery in a hospital defensively occurs in a health

to practicecare system

with the lowest frequency of obstetricmalpractice claims. Because the studyexplored only the incremental impact ofhigh versus low malpractice systemindicators, its results provide a conservativeestimate of the impact of the malpracticesystem on Caesarean section rates. Thefear of malpractice may be operating inthe background to affect all physiciansdecisions.

that in large part imposes no financial penaltyon doctors, and little on hospitals, for suchbehavior. Indeed, under fee-for-servicepayment of physicians and charge-basedreimbursement of hospitals, physicians andhospitals actually make more money whenthey perform some procedures or tests fordefensive reasons. Under a different paymentregime--for example. a regime of managedcompetition--30 providers would have an


Table 1-5-Aggregate Premiums Paid for Malpractice Insurance in the United States, 1985-1991

Premiums Annual rate Premiums Annual rate($ billions in of change ($ billions in of change

Year current dollars) (percent) 1985 dollars) (percent)

1985 2.66 .- 2.66 -.1986 3.81 43% 3.75 41 0/01987 4.55 19 4.24 131988 5.07 11 4.61 91989 5.12 1 4.43 -41990 4.93 -4 4.08 -81991 4.86 -1 3.85 -6

Rate of change1985-1991 (o/o) 11 6

SOURCE: National Insurance Consumer Organization, “Medical Malpractice Insurance 1985-1991 Calendar YearExperience,’( Alexandria, Wginia, National Insurance Consumer Organization, March 1993, based on datafrom annual reports on profitability published by the National Association of Insurance Commissioners

incentive to consider the costs of practicing payment per claim might have a smaller effectdefensive medicine against the reduction in on defensive medicine than such reformsrisk of suit and might engage in such practices would have in the present health care system.less frequently even in the absence of tort In short, the impact of any tort reform onreform. Under a payment regime that itself defensive medicine will depend on thediscourages defensive medicine, tort reforms payment regime in which the tort reformthat reduce malpractice claim frequency or is implemented.


Footnotes for Chapter 1

1Ma]practice insurers make par( of their income from premiums and part from im’csting those premiumsin income-producing assets. The price of malpractice insurance (i.e.. the prcmium) reflects thein~’estment potential of the premium as well as the need to co~’cr cxpcctcd future 10SSCS , Thus. thepremium in any year approximates the amount that must be imwted (at the expected interest rate) to payoff losses as the>’ occur in the future, meet operating expenses. and repa) the in~’esters in insurancecompanies for the risks they bear. As the interest rate expected from capital intfcstmcnts rises and falls.premiums are adjusted accordingly to assure a compctiti~’e rate of return to the in~rcstors ( 126). Becauseexpected interest rates ~’ary over time, premiums will too, for reasons that often hmc nothing to do \\iththe number or kinds of malpractice suits.

2This js based on 1991 estimated health care cxpcnditurcs in the United states of $751.3 billion (72).

~ApproximatelY, 20 t. J() percent of hospitals are self-insured (93), and a S11K311 proportion of PhJ’sicians do

not carry malpractice insurance.

4A detailed memorandum describing OTA’S proccdurc for estimating lllC COSI Of SClf-lllSUIW1lCC IS a\ailablc

upon request.

5Thc other major goal of the malpractice slrstem is to compensate \’lCtlnls fOr thCir losses.

6 T hc p e r f o r m a n c e o f tcs[s and procedures for defensii’c purposes IS pOSitiF’C ~~f~nSi\’c medicine;a~’oidance of high-risk patients or procedures is ncgati~’e (lcfcnsi}’c medicine.

7A more strlngcnt definition of defensi~e medicine would limit it to tests and procedures that arc ordered

solely to protect the physician against future malpractice suits. Under this definition, the phj’sicianwould be engaging in defensive medicine only when he or she bcl ictcs that the test or procedure offersabsolutely no chance of helping the patient and is therefore pure waste, OTA rcjcctcd this stringentdefinition of defensive medicine for two reasons: first, such bcha~’ior \riolatcs ph~rsicians’ ethicalprinciples; and second, medical practice involves implicit judgments about whether the benefits of testsor procedures outweigh their risks and costs to the patient. The fear of being sued may cause phj’siciansto increase their threshold of tolerance for these risks and costs.

8Thc Congrcsslonal Sunbelt Caucus (J. ROY Rowland and Michael Bilirakis. Co-Chairmen, InfantMortality Task Force) requested that OTA examine the specific issue of tfhcthcr Medicaid recipients filea greater number of suits against obstetricians than women who arc co~crcd b) pri~’atc insurers.

9Recent Fcdera] legislation ma} ha}c increased phj’siclans’ a~rcrsion tO 1lU]l~r:]ctlcC SUltS. Thc Health Care

Quality Impro\rement Act of 1986 (Public Law 99-660) requires tha[ all medical malprac[icc claimsending in payment (settlement or verdict) be reported to a National Prac[i[ioner Data Bank main(aincd bythe Department of Health and Human Scn’ices, The Data Bank must be consulted b~r hospi[als whcnck’cra practitioner applies for staff pri~filegcs and at least CJICO tw’o >cars thereafter (45 CFR $ 6(1. 10), At the\’cry least, phj’sicians who ha~’c been sued and lost or settled will ha\c the discomfort of haling to jus[if~their malpractice experience to the institutions at which they prac[icc.

IOHoJ%,eYer, Phjslclans appear t. grossl}r okcrestimate the probability of being sued for n~alpraclicc (7 1). so.defensive medicine may not be Icry sensitive either to differences in rates of suit or to pa>vncnt Ic\cls insuccessful suits.

1 IRescarchers at Ha~ard University found that for ef’ery 7.5 negligent medical lnJUrlCS OCCUrriIlg in

hospitals in the State of New York in 1984, only one malpractice claim w’as filed, Among patientssubjected to serious injury bj’ negligence, onl~r about one-third filed a claim (75).

121n an attempt t. Cstlmate the deterrent effect of medical malpractice. researchers at Hanard uni~’crsil}’recently anal~’zed the relationship between the number of malpractice claims per negligent injur-j and therate of negligent injuries in New York State hospitals in 1984. The?’ failed to demonstrate a significant

.


relationship between malpractice claim acti\it? and the rate of ncgl igent i]~jun in a hospita] ( 157).Although the rcscarchcrs based their analjsis on a con~prchcnsi\c assessment of the frcqucnc} ofncgl igcncc in New York hospitals, the analjsis ]\’as still limited bj a small sample size (less than 50hospitals) and a single jcar of data. Thus, the analysis ma} not ha~c been po\\crful enough to detect adeterrent effect with suff]cicnt confidence.

1 ~ThcsC findings are consistent with other Surlc}fs of malpractice Claims (~~.~ 1.97)

l~prior t. forma] fillng of a suit, the confidcntia]it} of the phjsician-patient relationship is prcsc~cd. sothe insurer cannot talk vith the doctor about the claim without rccciting permission from the patient.The plaintiff (or his or her attornc~r). on the other hand. can obtain a cop! of the medical records and canalso talk with the doctor about the case if the doctor is ui]l ing Once the suit is filed. the State or Federalrules of disco~cry prc~ail. and the plaintiff and defendant CaJI question each other and other }1 itncsscs( 106),

1 ~This Cstlmatc, and others taken fronl the General Accounting OffICC’S st~]d~ of chilnls closed II] 1 ~~~( 142), was based on a probability> sample ofapproximatclj 1700 claims (68) -

16Thc strength of [hc case \Jas assessed b} the insurance compan~ using an in[crnal prOCCSS Ih:lt assigns

each case to one of three categories: defensible, indefensible. and unc[car,

17Ncgligcncc \\as judged b~ ph~slclan panels based On medical ma]~rac[icc closed cklinls forllls. tl~c

hospital records, and inforn~ation gathered from claimants through personal intcn ic~ts ( 127) It shouldbe noted. howc~cr. that in a large pcrccntagc of cases the rc~im~crs \\crc uncertain as to ll~c ph! sician’sIiabi lit? ( 127).

I Sscc (~ J 11 ~), In a rcylc}} of nlcdica] malpractice trials in San FI-a IICISCO and COOk Co(lllt!. III il~ois. .from 1960-1984. onl~ 9 awards included puniti~c damages, accounting for less than 1 pcrccnt ofplaintiff’s \’crdicts (107), A recent stud~’ examined 4747 malpractice claims filed in Minnesota. NorthDakota and South Dakota between 1982 and 1987, No puniti~c damages \\crc a~t ardcd in aIIj of tl]c 110cases that actuall~ rcachcd trial. (Onl>r 20 of the 110 cases had an~ compensation a\\ ardcd (o theplaintiff.) (94).

19Bcforc tllc ~ 970s ~lost nlalpractlcc i[lsurancc \Jas \\rlttcn b} prilate commcrcid ins~lr:~ncc con~P~~l~ics.In the carl~ 1970s, man! insurers raised their premiums and. in some cases. exited [he marketcon~plctclj. When a number of commercial insurers quit the market. medical and hospital associationsand States jo i ncd to expand the pool of insurers. By 1986, about 37 pcrccnt of ph! sicl ans ~t crc Insuredthrough ph)sician-sponsored companies ( 120).

20111 ~1 slllal] nulllbcr of cases the ju~ a~~ ard Ina} cxcccd the limits Of tllC In:]lwicticc ins~lraI~c~ Pollc!. bL1t

such awards arc frcqucntl}’ rcduccd by judges or b~’ post-trial negotiations among (he part ics (26 ) Insome cases, the insurance company will pay for awards abo~c the phl sIcIan’s insurance 1 imit The resultis that ph~sicians rarcl~ pa~ anjlhing abo}c their polic~ limits (26).

21111 contrast t. ph~ slclans. hospita]s arc gcncrall}’ cxpcricncc-rated b~ Insurance companies (~ 1 ). ~~ndman} large hospitals insure thcmscl~’cs for malpractice (93). Hospitals [hcrcforc ha\c a clear fin;~nciaiinterest in managing their malpractice risks,

22T}Ic rcscarchcrs in the second stud} tried unsucccssfull}’ to rcplicatc tllc GAO results froll~ NCJJ Yorkusing the same databases. so the source of the d iscrcpanc) in lc\ cls and t rcl]ds IS not ful 1! ul]cicrstood,

2SAlthough oJcra]] C]aj[ll rates dcc]incd, t]lc rate of change \aricd J\ idcl} :ICI”OSS spCCialt ics. Obslctrics ‘]lld

gjnccology had the highest rate of charlgc in liabilit? claims per loo” ~h! sicians bct\\ccn 1985 and 1990(-23 pcrccnt), but thcl began with more than ti}icc the a~eragc frcqucnc~r of claims (25.8 pcr 100”physicians compared with 10,2 pcr 100 physicians across all specialties In 1‘)85) (6),


24 Losses incurred are defined as the sum of claims paid by insurers to doctors and hospitals plus insurers’estimates of what they expect to pay out in the fhture on both claims they’ know about and those ttvq’ donot yet know about. Direct losses are the losses incurred by the insurer before taking into account an}protections the insurer may have through reinsurance.

25This increase occurred in California despite the passage of a cap on noneconomic damages of $250.000in 1975, However, the constitutionality of the California malpractice reform law of 1975 was in questionfor 10 years afler its passage, and most lawyers and judges were reluctant to implement its pro~isionsuntil it was upheld by the California Supreme Court in 1985 (Fein Jr. Pcrmancntc Mcdica] Group, 695P.2d 665 (Cal. 1985) cer(. denied 474 U.S. 892, 106 S. Ct. 214 (1985): 22: 59: 78).

26 The data presented in the fi~re were calculated from data collected by the U.S. Health Care Financing

Administration. It can be interpreted as the price of a mature clairns-made $100,000 pcr incident and$300,000 per annum.

27 According t. Danzon, in 1976, 79 percent of physicians carried $300,000 of cmreragc, but @ 19~6 o~’cr50 percent carried at least $1 million dollars in coverage (33). By 1988, approximatel~r t~~o-thirds ofphysicians had coverage of at least $1 million per occurrence (145).

28 These rates of change in pwnlurns are roughly equivalent to those reported by physicians [o theAmerican Medical Association (AMA). The AMA reported an annual rate of change in a~cragcpremiums paid by surveyed physicians of 11.4 percent between 1985 and 1990, but the a~cragc reportedpremium declined by 8.8 percent between 1988 and 1990 (6),

290n1Y t~vo quantitative estimates of defensive medicine costs exist. First. the AMA estimated thatnational costs of malpractice were between $12.1 and $13.7 billion in 1984 (114). This estimate hasbeen criticized for biases in its methodology, (15,32, 140). The second anal~’sis, made rcccntly by theprivate consulting firm Lewin-VHI, Inc., estimates defensive medicine costs of bct}lccn $4.2 and $12.7billion in 1991, (73), but these new estimates are based primarily on the earlier AMA estimates andhence are subject to many of the same methodologic criticisms.

soManaged competition in this paper refers to a system in which each consumer ChOOSCS anlOng con~pCllng

health plans that offer a standard set of benefits at different prices (i.e.. prcmiums). Compcti[ ion amongplans for patients on the basis of price as well as quality would presumably force plans to look foropportunities to eliminate wasteful or only marginally useful scn’ices. Plans would c.~crt greaterinfluence on their participating doctors and hospitals to curb such prac~iccs.

Chapter 2Approaches to Malpractice Reform: States’ Experience and New Ideas

INTRODUCTION

Because malpractice liability is felt bymany interested parties to be a contributorto health care cost escalation, numerousmedical malpractice reform provisions havebeen proposed both as components of com-prehensive health care reform bills and asseparate pieces of legislation. 1 A numberof the proposed reforms have already beenimplemented in some States. To understandwhether and how Federal adoption or en-couragement of these reforms might affectcurrent trends in medical malpractice, it isimportant to examine the experience ofStates that have tried them.

This chapter describes the malpracticereforms that have been implemented orproposed to date. It focuses exclusively onstrategies that would change the way mal-practice claims are handled in the legalsystem--strategies commonly referred to as

2 For each type of reform, it“tort reforms."offers a brief description of the rationale andmechanism. discusses State experience (ifany), and raises what have been or are likelyto be key issues of concern, Appendix Bbriefly discusses constitutional challenges toState reforms and the implications of thesechallenges for Federal tort reform efforts.Chapter 3 provides a comprehensive andcritical review of the existing empiricalevidence of the impact of these reforms onmedical malpractice claims and insurancepremiums.

OVERVIEW OF MALPRACTICEREFORM APPROACHES

Tort reform approaches range frommodest to comprehensive. Some wouldlargely retain the current system for resolv-ing malpractice claims but change some ofits legal rules; others would entail broader

changes in the forum for deciding malprac-tice claims; still others would eliminate thecurrent fault-based system and create anentirely new system for compensatingvictims of adverse medical outcomes.

The goal behind many of the reformsthat have been implemented to date is toreduce the frequency and/or payouts for mal-practice claims. Some do this by limitingmalpractice awards (e. g.. caps on damages):others, by limiting access to the courts (e. g.,pretrial screening): and still others. bychanging the legal rules for determiningphysician negligence (e. g., use of practiceguidelines to establish the legal standard ofcare).

It should be noted that concern forpatient s--e. g., increasing access to thecourts for the many meritorious claims thatare never filed and reducing the incidenceof malpractice has been conspicuously ab-sent from the rationale supporting many ofthe existing reforms. Rather, most reformshave been driven by the perception of a“malpractice crisis, ” in which high litigationrates and questionable financial incentives areviewed as the culprits.

One exception is procedural reforms. suchas alternative dispute resolution (ADR), whichattempt to reduce the costs of resolving amalpractice suit, facilitate quicker resolutionof suits, create more rational and uniformdamage awards, and/or decrease theadversarial nature of the litigation process,Many ADR procedures are already availablebut are not widely used in medicalmalpractice. More comprehensive ADRproposals, such as the American MedicalAssociation/Specialty Society Medical LiabilityProject (AMA/SSMLP) administrative system,would require legislative action to im-plement and are now merely proposals.The potential impact of these proceduralreforms is difficult to predict. To the

_ 23-

.


extent that they lower the costs of bringinga suit, or otherwise make litigation moreappealing, they may prompt additional suits.However, if these strategies discourage orweed out nonmeritorious suits, they mayenable more deserving victims to receive com-pensation without greatly increasing costs.

Some recent reform proposals aim tochange the malpractice system in a morefundamental way. For example, enterpriseliability is designed to remove personalliability from the physician and place it onthe health care organization in which the carewas given. The goals of enterprise liabilityinclude improving quality control in theprovision of health care, reducing overallpremiums, and simplifying the resolution ofmalpractice claims. Another proposal wouldreform liability through private contracts,allowing providers and patients to contractfor different liability arrangements. Thisreform rests on the assumption that uniformlegal rules for liability may not serve theinterests of all providers and patients.Providing them with the authority to con-tract for different liability systems mayprove more efficient in terms of cost, time,and psychological effort involved in resolv-ing a malpractice claim.

Finally, there are proposals to replace thefault-based malpractice system with a no-fault system (e.g., one that is analogous toworkers’ compensation). There are severalarguments for such a change, including theneed to increase the percent of injuredpersons who receive compensation, to con-trol administrative costs, and to remove thestigma of a malpractice claim for the phy-sician.

Most of the tort reforms proposed orconsidered at the Federal level have beenimplemented in a number of States over thepast two decades (see table 2-1).3 In recentyears, a few States have begun experiment-ing with more innovative reforms, such as

limited no-fault programs and the use ofpractice guidelines in determining the legalstandard of care. Some proposals have beendebated mainly in academic journals and byinterest groups, not in legislatures. All ofthese reform proposals are discussed below.

REFORMS TO REDUCE THEFREQUENCY AND COST OF

MALPRACTICE SUITS

Economic theories of behavior postulatethat a patient’s decision to sue is based inpart upon the expected return, net of legalfees and other costs of litigation (16), Thepatient’s attitudes toward risk and the judi-cial system may also play a role (4 1.92). Anumber of reforms attempt to 1imit thefrequency and cost of malpractice litigationby altering the financial incentives to sue orby changing the legal rules of the system todiscourage lawsuits. Some of these reformssimply attempt to reduce the number andmonetary size of lawsuits, irrespective oftheir merit. Others discriminate morecarefully between meritorious and non-meritorious claims in their attempt to stemlitigation.

Several reforms attempt to discourageplaintiffs from pursuing claims by raisingthe transaction costs of bringing a suit or byplacing restrictions on damages. A secondclass of reforms attempts to reduce thenumber of suits by changing the process orthe incentives for filing a lawsuit. Forexample. limits on attorney fees both lowertransaction costs and control lawyers’ fi-nancial incentives to take on plaintiffs cases.Shortening the statute of limitations andrequiring pretrial screening presentadditional barriers for individuals who wantto pursue litigation. A third class of reformsattempts to reduce the probability of a plain-tiff’s success by changing the legal rules fordetermining physician negligence.4

Chapter 2--Approaches to Malpractice Reform: States’ Experience and New Ideas -25

Limiting Access to the Courts

Several reforms limit plaintiffs’ accessto the legal system. Statutes of limitationsact to cut off all access after a certain pe-riod of time. Most other reforms focus onlimiting the number of nonmeritorioussuits brought, although in practice they maydiscourage other meritorious suits.

Shortening Statutes of LimitationsStatutes of limitations are legal rules

that determine how long after the injury onecan bring a lawsuit. Part of the rationalefor limiting the time in which a plaintiffcan file a lawsuit is (hat evidence becomesstale over time (e.g., witnesses leave or die,evidence is lost, and the accepted standard ofcare may change). At some point, theplaintiff’s right to bring a suit is outweighedby the defendant’s interest in not beingsubjected to a suit in which some of theevidence needed to defend himself or herselfis no longer available. The limitations alsoallow individuals and insurers to anticipatefuture liability from past conduct (66).

Requiring a patient to bring a lawsuitwithin a certain number of years after the in-jury may appear reasonable; however, insome cases medical injuries are not discoveredfor a long time. To address this problem, thecourts adopted a “discovery rule” in which theperiod during which a suit can be broughtdoes not begin until it was reasonable for theplaintiff to have discovered the injury (66).Most medical malpractice statutes oflimitations now include such a “discovery”provision. The standard leaves judges todecide when it was “reasonable” to havediscovered an injury and may therefore stillallow some claims to be filed long after themedical treatment that caused the injury. In astudy of 48,550 medical malpractice claimsclosed between 1985 and 1989, the averagetime elapsed between the date of the incidentand the date it was reported to the malpracticeinsurance company was 20 months: however,

the time elapsed exceeded 3 years in approxi-mately 10 percent of the claims studied (111).

Every State has some statute of limita-tions for medical malpractice claims. Duringthe 1970s, a number of States shortened thestatutory limits in hopes of decreasing thenumber of old suits brought. The new stat-utes of limitations usually make exceptionsonly in cases involving fraud, deliberatemisconduct, or foreign obiects left inside apatient during surgery (see app. A, table A-4). The traditional provisions for minors(which typically extended the statute oflimitations until a specified time after thechild has reached the age of 18 or 21 ) haveoften been limited as well (14). A number ofrestrictions on statutes of limitations havebeen overturned by State courts, especiallyrestrictions for minors. 5

Today, most States require that a malprac-tice suit be brought within a specified time ofthe date of the negligent care or injury (inmost States within 2 years) or, in caseswhere the injury cannot be discoveredeasily, within 6 months to 3 years afterthe injury is discovered or should havereasonably been discovered (table A-4). InCalifornia. for example, a malpractice suitmust be brought within 1 year of reasonablediscovery of the injury, or within 3 years ofthe date of the injury (Ann. Ca. Code C.C.P.$340.5 (West 1982)). In onlythe statutes of limitationsdiscovery provision.

Pretrial Screening Panels

eleven States,do not contain a

Another reform that limits access tothe courts is the use of pretrial screeningpanels to review cases before they go tocourt.6 These panels may offer a mandatory

or voluntary screening process by which themerits of the case can be reviewed andnonmeritorious suits weeded out (14). Thetypical panel consists of a physician or otherhealth care worker, a legal professional(e. g.. retired judge or lawyer), and a


> > > 3 > >d

c c c c n n n n o

n n n >

—

—

—

7

2

—

3

o

—

o

3

—

-7

n

—

n

—

i-

— — — — — — — — — — — —

)i-

—

7 7

—

>

7

—

7 7- 7 7 7 -

— — —

7

—

7

—

—

7 7

—

7

7

.

7

—

7 -?

— — — — — — —

7 i-

— — — — —

a

MedicalMalpracticeArbitration Attorney Fee Caps on Collateral Periodic Payment of Pretrial Screening

State Provisions b Limitsc Damages Source Offset Awards PanelsM = Mandatory D = Discretionary V = Voluntary

New York 4 d M DNorth CarolinaNorth Dakota o DU DOhio d o M M

Oklahoma dOregon J D DPennsylvania o 0 0Rhode Island M D oSouth Carolina DSouth Dakota d d D MTennessee d M MTexas oUtah d d d M M MVermont MVirginia 4 d vWashington 4 0 MWest Virginia dWisconsin d dWyoming o. . . .

M = MandatoryD = DiscretionaryV = VoluntaryO = A malpractice specific provision was overturned by Court. In certain States, the legislature corrected the constitutional deficiency.

Footnotes:aFor additional details on all categories, see aPP. AbA Id II indicates States with “Oluntaw, binding arbitration provisions that are designed Specifically for medical malpractice cases. Voluntary, binding arbitration isan option in every State under general arbitration statutes. In Hawaii the provision applies to mandatory non-binding arbitration.

cA ,~ II in IIAHorney Fees” means the statutofy provision limits attorney fees to a specific percent of award.

determine or approve attorney fees (see app. A).

SOURCE: Office of Technology Assessment, 1993.

In a few States the courts are given the authority to

. .


‘< -r-.‘\ 5L’-’”--v-

~“

“QI

‘ /,.-’

..-’

1-. Mandatory

Pretrial Screening4* * 0t-.-%-.-,-.-,,-,...-....,....,,,,.7,,,.

i

‘::<ff~~~:~~~~:~~’2:’’~’”f’ voluntary. . . . . . . . . . . . . . . . . ,.,,,,,, ,,<<..............% ..7...7,.:.:.:.%+,/

I ::::::::::::::::::::::::::jj:c:,::::::y.y;j::~;::;::;;:;\f;;~<f+j.:A2:9MWAIIZAW Pretrial Screening

—— .——1

Source: Office of Technology Assessment, 1993,

layperson. The panel’s judgment usually does not sit on screening panels.preclude the par t ies f rom going to court ; members on the panelhowever, the judgment is often admissible erable delay (20).

I No Provision

States that require moremay experience consid-

in any subsequent trial and may influence thejury (20,48).

OTA identified 22 States with some formof pretrial screening. In 16 of these States theprovision is mandatory (although in some States itcan be waived if requested by one or both par-ties), and in an additional six it is voluntary (table2-1; figure 2-l). The details of screening panelcomposition and function vary among States andcan change the panel effectiveness. One recur-ring problem is recruiting professionals willing to

The panel role and the admissibility of itsdecision in subsequent proceedings may alsodetermine its influence on the disposition of theclaims. In some States the panel can render anopinion on damages, while in others the panelcan address only liability (20). The admissi-bility of the panel decisions in further judicialproceedings and the evidentiary weight ac-corded to the decision also vary. Some Statesallow the decision to be admitted if both partiesagree. At least one State does not permit the

Chapter 2--Approaches to Malpractice Reform: States' Experience and New ldeas -29

decision to be introduced in further proceedingsunless it was unanimous. One State--Maryland--requires that the decision (on bothfault and damages) be admitted in subsequenttrials, and the jury is instructed to presume thatthe panel’s decision is correct unless rebuttedby the party rejecting the finding (Ann. Codeof Md. Cts. & Jud. § 3-2A-06 (Michie 1989)).In other States, the decision is admissible but isnot regarded as definitive evidence. (See ap-pendix A for further details. )

Pretrial screening provisions have beenoverturned in six States on the grounds thatthey infringe upon State constitutionalguarantees of right to trial or access tocourts. 7 In five other States, pretrial screeningprovisions were passed but then repealedthrough legislative action (table 2-1).

A less involved approach to screening suitsis the requirement that the parties meet for asettlement conference prior to trial. The par-ties may be required to submit a reasonablesettlement offer at the conference. This is nota novel idea, and many courts have imple-mented it without explicit legislative directives.Finally. some States require the plaintiff to filea certificate of merit prior to filing a suit.A certificate of merit is basically an affidavitby a physician attesting to the fact that theplaintiff’s case has merit (see. e.g., 735 ILCS 5/2-622 (West 1992); Ann. Code of MD. Cts. &Jud. § 3-2A-04(b) (Michie 1989)).

Limits on Attorney FeesUnder the traditional system, plaintiffs’

attorneys are paid on a contingency basis; i.e.,they are paid only if they win (see ch. 1).Attorneys collect on average 33 percent of theplaintiff’s award (142). Since financial incen-tives play a role in lawyers’ decisions whetheror not to take on malpractice cases (1 12), thenumber of malpractice suits might be reducedby restricting fees. However, such reductionsmight occur at the expense of further discouragingattorneys from taking on meritorious cases whose

expected financial returns are low. About one-halfof the States either specify a limit on attorneyfees or authorize the courts to set attorney fees(table 2-1; figure 2-2). In most cases, attorneyfee limits are not direct limits on the amountattorneys can charge their clients. Rather. theyare limits on the portion of the damage awardthat may be applied toward attorney fees. Theform of the limitation varies from State to State(app. A; table A-6).

Costs Awardable in Frivolous SuitsAt least 15 States have passed legislation

giving the courts authority to force the losingparty in a medical malpractice case to pay theopposing party’s court costs and/or reasonableattorney fees if the suit was frivolous, fraudulent,or in bad faith. This applies to a very limitednumber of cases, if any, since a case may ulti-mately be nonmeritorious without being frivolous.These statutes are not to be confused with theso-called “English Rule, ” in which the loserpays the winner’s attorney fees, regardless ofthe merit of the suit (4). OTA knows of onlyone State that attempted to implement the"English Rule," and that statute was repealedby the legislature after it was discovered thatonly relatively wealthy losers (i. e.. defendants)were paying ( I 4).

Several tort reforms seek to limit physicianliability and create more predictability at theoutset as to what will constitute negligentbehavior. The most significant of these recentchanges is the development and use of practiceguidelines in determining the legal standard ofcare. In addition, States have also limited physi-cian liability by altering common law doctrinesof informed consent and res ipsa loquitur.

Judicial Limits on the Standard for InformedConsent

Physicians need a patient’s consent prior totreatment. For many years the adequacy ofthe consent was judged by professionalstandards (78). In 1972, two separate legal


,

‘=-----b--–” . —- ‘

Source: Office of Technolo~ Assessment, 1993

.--”’

opinions allowed a patient to recover damagesresulting from medical care that met thestandard of care, because it was determinedthat the patient would not have consented to thecare if all material information had beenprovided. 8

Several courts moved to a more patient-oriented standard for judging the adequacy ofinformed consent. Some legislatures respondedwith legislation that either codified a list ofinformation to be provided the patient, therebyenabling physicians to develop standard consentforms: or the legislation set forth the defenses aphysician could use when faced with claims

m “idngscdeMaximum Percentage

I No Statutory Limits

alleging failure to adequately inform the9 patient (78). The latter statutes often establish

professional or customary standards ofdisclosure as a defense and further requirethe plaintiff to establish that a reasonable personwould not have undergone the treatment if he orshe had been fully informed of the risks (78).(The plaintiff must also prove that the lackof informed consent was the proximate cause ofthe injury (78).

While the expansion of the informed con-sent doctrine in the 1970s may have led tomore claims, recent data indicate it is a minorissue today in liability claims. 10

Chapter 2--Approaches to Malpractice Reform: States' Experience and New Ideas -31

Restricting the Use of Res Ipsa LoquiturThe legal doctrine of res ipsa loquitur (“the

thing speaks for itself”) allows plaintiffs withcertain types of injuries to prevail without havingto introduce expert testimony of negligence. Theplaintiff must prove only that the procedure orincident causing the injury was under theexclusive control of the physician and that suchinjuries do not normally occur in the absenceof negligence (78). The classic case in whichres ipsa loquitur might be invoked is when aclamp or sponge is left in a patient’s body aftersurgery.

The doctrine of res ipsa loquitur is thoughtto be very unpopular with the medical profes-sion because it reduces the need for experttestimony, allowing the plaintiff to reach thejury without direct evidence of negligence(14,78). However, expert testimony is oftennot necessary because the doctrine largelyapplies when the negligent act can be inferredby common knowledge (66). When commonknowledge is not sufficient. the influence ofnegligence can be informed and rebutted byexpert testimony (66).

As of 1989, 13 States had passed legisla-tion either disallowing the application of resipsa loquitur in medical malpractice altogetheror limiting the circumstances under which itcan be applied (129).

Changing the Rules for DeterminingPhysician Negligence

The legal standard of care in a given caseis established through the expert testimony ofphysicians--thus, courts defer to professionaljudgment rather than some objective standardto determine what was appropriate care in agiven case. Over the last three decades. thecustomary standard has evolved from a “strictlocality” formulation (i.e.. only physicians in thecommunity could testify as to the standard ofcare) to an “expanded locality” formulation(i. e.. what a reasonable physician in a similar

specialty/community would do under the sameor similar circumstances). The exact legalformulation of the standard varies by jurisdic-tion. Part of the rationale for abandoning thestrict locality rule was the difficulty of findingphysicians willing to testify against their localpeers and concern that the locality rule couldinsulate a community of substandard care (79).As such, expanding the locality rule wouldtheoretically increase the number of successfulplaintiffs’ cases.

The use of professional judgment to estab-lish the legal standard of care often leads to acourtroom “battle” between experts testifyingfor the plaintiff and defendant. Critics contendthat lack of an objective and specific standardof care makes the outcome of medical malpracticeproceedings unpredictable and consequentlyencourages defensive medicine. Despite the factthat a number of States have codified the legalstandard of care in medical malpractice cases,these laws do not alter the existing standard ofcare, but instead merely document thatphysicians will be held to the standard of careprovided by their profession (1 15).

Using Clinical Practice Guidelines asEvidence of’ the Standard of’ Care--Clinicalpractice guidelines, published by physician groupsand, more recently, the Federal Agency forHealth Care Policy and Research, are increasinglybeing looked at as possible standards for medicalcare. Under the customary practice formulation,clinical practice guidelines based on a reasonabledegree of professional consensus would pre-sumably be valuable evidence of the applicablestandard of care. However, there are a numberof I imitations to the usefulness of guidelines indeciding medical malpractice cases. First, ex-isting rules of evidence limit the use of guide-lines in establishing the legal standard of care.Second, guidelines have only been written for asmall portion of medical practice; thus, not allmedical malpractice cases would be able toinvoke specific, relevant guidelines. In addition,


because guidelines often purposefully leave muchof the ultimate judgment to the physiciandiscretion, they may not be explicit enough tobe used as a rigid legal standard of care.

Under the current system, courts generallybar guidelines from being admitted as evidenceunder the “hearsay rule, ” which prohibits theintroduction of out-of-court statements as evi-dence (67). In these cases, guidelines wouldonly color the evidence to the extent that expertwitness testimony reflected their contents.However, guidelines or medical textbooks thatare considered to reflect comprehensive analy-sis of scientific evidence and broad consensusamong members of the profession may sometimesbe admitted as evidence under the “learned trea-tise” exception to the hearsay rule (158, 159).

If recognized under this exception, theguidelines generally have to be read into evi-dence in conjunction with expert testimony,

11rather than be admitted as exhibits (77). Once admitted, they carry no greater legalweight than other expert testimony (67). In otherwords, in the current system a guideline, ifadmitted as evidence, cannot conclusively estab-lish the standard of care in a particular case. Theguidelines can be rebutted by the expert witnessof the opposing party. However, if juries placemore weight on guidelines from authoritativesources than on conflicting testimony from expertwitnesses, guidelines may play a greater role indetermining the outcome of a case than thecourt’s legal instructions might suggest.

OTA has been unable to document howoften guidelines are actually used as evidencein medical malpractice litigation, although studiesare underway to answer this question. OTAknows of no studies that examine outcomes ofcases involving guidelines or the reactions ofjuries to the use of guidelines as evidence.

In order to increase the role of guidelinesin determining physician negligence, three States--Maine, Minnesota, and Vermont--have recentlypassed legislation that accords greater weightto certain guidelines in the litigation process.

In 1991, Maine began a five-year demonstrationproject that makes State-developed guidelinesadmissible as a defense in medical malpracticeproceedings (24 MRSA §§ 2972-2978 (1990)). 12The statute permits physicians who elect toparticipate in the demonstration to use theseguidelines as an affirmative defense in medicalmalpractice trials and in pretrial proceedings.Under the affirmative defense provision, use ofguidelines as evidence is no longer a matter of thejudge’s discretion. If a physician introduces theguideline as a defense, the plaintiff must either(a) prove that the physician did not follow theguideline or (b) prove. through expert testimony,that the guidelines are not applicable to the givencase. If the plaintiff is unable to do this, thephysician is not negligent.

Another provision of the Maine statuteprohibits a plaintiff from introducing the guidelineas evidence of the standard of care in an effort toprove that the physician’s performance was sub-standard (24 MRSA § 2977 ( 1990)). Thisprovision was included to allay fears on the partof physicians that the guidelines, instead ofserving to protect them from liability, would beused against them. Some critics, however, claimthat this provision may be subject to challenge onState and/or Federal constitutional groundsbecause it selectively denies plaintiffs the useof evidence that may be critical to provingmalpractice ( 132). A hearing of the constitutionalchallenge will probably not occur for severalyears. As of July 1993. the State’s largestmedical malpractice insurance carrier had notyet received any claims for which the adoptedguidelines were relevant ( 18).

Minnesota recently passed legislation thatallows guidelines developed and/or adopted bya special State commission to be used as anabsolute defense in malpractice litigation (95).13Like the Maine statute, Minnesota’s law also barsthe plaintiff from introducing the guideline asevidence that the physician failed to meet the stan-dard of care. As of August 1993. the first roundof guidelines had yet to be officially approved inMinnesota (45).


Some patient rights advocates may opposethe approach taken by Maine and Minnesotabecause it offers no safeguard against “bad”guidelines--i. e., the plaintiff cannot contest thereasonableness of the guideline itself (106).Some critics contend that the use of guidelinesas rigid legal standards may be problematic dueto the continual evolution of medical practiceand the inability of written guidelines to reflectchanges in a timely manner (56).

Vermont’s approach is more moderate,amounting to a change in the rules of evi-dence that will allow a wider variety ofguidelines--e.g., guidelines developed by healthcare professional groups, the Federal government,or health care institutions--to be directly admittedas evidence of the standard of care by either theplaintiff or the defendant in future mandatorymedical malpractice arbitration proceedings (18V. S. A.. part 9, chapter 21 § 1 (1992)). 14 Thisprovision would make it easier to introduceguidelines as evidence. but would not givethem any greater legal weight than other experttestimony.

In an interesting departure from the strategyembraced by Maine, Minnesota, and Vermont,legislation recently passed in Maryland mandatesthe development of State guidelines but explicitlyprohibits them from being introduced as evidenceby any party in a malpractice suit (80). Floridarecently adopted legislation authorizing the devel-opment of guidelines and encouraging consid-eration of their use in the future as legal stan-dards of care (43).

One concern that State guidelines initiativessuch as these raise is the potential for conflictbetween national, State, and even institutionalguidelines. Most of Maine’s guidelines weremodeled closely from nationally recognizedstandards, but others were developed de novoby Maine. physicians (36) and could be con-strued as setting a precedent for reconversionto a more local standard of care. Developersof guidelines in Minnesota anticipate using na-tional guidelines as models and amending them

if necessary to conform to the realities of healthcare delivery in the State (45). In Vermont, thestatutory description of guidelines could beinterpreted as including even written institu-tional protocols.

Guidelines in theory should be able to helpclarify the standard of care. However, therecent expansion of guideline-writing effortshas produced hundreds of new guidelines, someof which present conflicting information. Ifcourts and legislatures are not selective aboutwhich guidelines are introduced as evidence,these conflicts may find their way into thecourts and further confuse rather than clarifythe process of determining negligence.

Limiting Malpractice Awards

Many States have adopted reformslimit the amount the plaintiff can recover

thatin a

malpractice suit. These reforms may limit theabsolute amount that can be recovered. theamount of certain types of damages, the amountthat can be paid out in one lump sum, or limit asingle defendants liability

Collateral Source OffsetsUnder traditional rules

defendant may not introduceof evidence, theinto evidence the

fact that the plaintiff has insurance (health, dis-ability, etc. ) covering some of his or her losses.Consequently, the plaintiff may be able to recoverboth from the defendant and from other“collateral sources ” of compensation.

Very often the traditional collateral sourcerule does not result in double payment becausemost health and disability insurance policieshave a provision requiring the plaintiff to reim-burse the insurance company for any suchpayments received from the tort system (3,4).This provision is called a right of subrogation.For example, the Federal government requiresthat medical expenses paid by Medicaid andMedicare be reimbursed from tort awards


(42 U.S.C. § 2651 (1992)); however, SocialSecurity Disability Insurance, the primary publicdisability program, does not have subrogationrights (137).

If health and disability insurers collect thetort awards from plaintiffs, the net effect of thecollateral source rule is to make medicalmalpractice insurers responsible for the costsof medical injuries caused by physicians’ negli-gence. OTA has not examined whether healthand liability insurers exercise their right ofsubrogation in most cases.

When double payment does exist, it ap-pears to some to be a windfall. Yet, collateralsource payments result from the plaintiff’sinvestment in insurance. Decreasing the defen-dant’s liability in such cases would allow thedefendant to unfairly benefit from the plain-tiff’s investment, reducing the deterrence effectof the award. 15 In addition, plaintiffs mustpay attorney fees out of their awards, andjuries are not permitted to compensate success-ful plaintiffs for attorney fees.

Concern over rising malpractice insurancerates in the 1970s and 1980s led some States toamend the collateral source rule so as to shiftsome of the burden of paying for medicalexpenses from malpractice insurers to healthinsurers. The collateral source rule can beamended in one of two ways. First, the jurycan be permitted to hear evidence of the plain-tiff’s collateral sources and decide whether or notto reduce the award accordingly (discretionarycollateral source offset). Or, the judge or jurycan be required to offset the award by theamount available from collateral sources oncethose sources are entered into evidence(mandatory collateral source offset).

At least 30 States have amended the tradi-tional collateral source rule (table 2-1; figure 2-3). Approximately 19 States have a mandatorycollateral source offset, but these provisions areoften triggered only if the defendant entersevidence of the plaintiff’s collateral sources,

In the other 11 States that have amended therule, collateral source offset is discretionary(table 2-1; figure 2-l). In five additional States,collateral offset provisions were passed butlater overturned in the courts, but in two ofthese States a new statute was passed correctingthe constitutional deficiencies (table 2-1 ).A number of these statutes have significantexceptions; for example, excluding the plaintiff’shealth or disability insurance contract if thecontract already contains subrogation rights (15 1).In addition, OTA identified at least two Statesthat do not include as collateral sources mosttypes of insurance coverage, for example,disability insurance or insurance that is pur-chased by the plaintiff. 16

Caps on DamagesThe most direct way to limit the payment per

paid claim is to set limits on damage awards. Asmentioned earlier, malpractice damage awardshave three components:

direct economic losses, such as health careexpenses, job-loss expenses, and other di-rect consequences of the injury;

noneconomic damages (often referred to asdamages for “pain and suffering”) such aspayments for physical and emotional pain,suffering, emotional distress, mental anguish,disfigurement, loss of enjoyment, loss ofCompanionship, and other nonpecuniarylosses; and

punitive damages, awarded in cases wherethe defendant conduct is intentional,malicious. or outrageous, with a willfuldisregard for the plaintiff’s well-being.(Punitive damages are rarely awarded inmedical malpractice cases. )

There are two different types of damagecaps: those that cap noneconomic damages(i.e., damages for pain and suffering) alone; andthose that put a total cap on both economicand noneconomic damages. 17 Several States

.


,.‘(--=- .!

*#-*.C+

e+,. - * f.

I

L .- ——— -

Source: Office of Technology Assessment, 1993.

have capped punitive damages, but such damagesare rarely awarded in medical malpractice cases(3,4,94,107). Capping them is therefore unlikelyto have a significant impact on medical malprac-tice costs.

Statutory limits on damage awards arehighly controversial and have been declaredunconstitutional in some States. At least 15State supreme courts have overturned caps on

.damages on State constitutional grounds, 18 andthe State legislature in two other States re-pealed the provision (app. A, table A-2).A number of other States have upheld caps ondamages. 19 (See App. B for a detailed dis-cussion of constitutional challenges to State tortreforms. )

Total Damage Caps--Only eight Stateshave a cap on total damages (economic andnoneconomic damages combined) (table 2-1:figure 2-4). Permitted damages range from$500,000 to $1 million. Four of these Statesalso have PCFs.

Noneconomic Damage Caps--The mostfrequent type of damage cap is on the non-economic component of an award. Largenoneconomic damage awards are concentratedin a handful of what may be the more seriouscases. For example, in a 1984 study of paidclaims for which data on noneconomic losseswere available,20 2.1 percent of cases accounted


t ,’

,-., - J -L —.

Source: Office of Technology Assessment, 1993.

for 62 percent of pain and suffering damagesawarded for the entire sample of cases in whichan indemnity payment was made (142).

Losses for pain and suffering are very dif-ficult to quantify and juries are provided noclear standards for determining them, Criticscontend that the emotional desire of the jury todo something for the victim often causes un-duly high awards (15).

OTA identified 14 States that place somelimit on noneconomic damages (table 2-1; fig-ure 2-2). These limits range from $250,000 to$1 million dollars, and in a number of Statesthere are exceptions to the limit (see app. A).The Michigan cap on noneconomic damagesdoes not apply in cases in which the patienthas an injury to the reproductive system or

,---->.-..-.

—

$ , Patient Compensation., Fund

Economic &Noneconomic Cap

[ I No Statutory Limits

has lost vital bodily function. As a result ofthese exceptions, the cap has yet to apply toa single malpractice case ( 154). In Massa-chusetts, noneconomic damages are cappedat $500,000, but judges can grant excep-tions in extreme cases (Mass. Ann. Lawsch. 231 § 60 H). Finally, a number of Statesimpose separate damage caps on claims in whichthe defendant is a public facility or a publicfacility employee.

Florida has an unusual provision in whichthe cap is linked to the decision to arbitrate. Ifa defendant refuses a plaintiff’s request to arbi-trate, there is no limit on damages in a trial,but if the plaintiff declines a defendant’srequest to arbitrate. then the award at trial islimited to economic damages plus noneconomic

— ..—

damages of $350,000 per incident (Fla.Stats. § 766.209 (1991)). Florida also limitsnoneconomic damages in arbitration to only$250,000 (Fla. Stats. $766.207 (1991)).

Guidelines for Noneconomic Damages--Some malpractice researchers propose torationalize noneconomic damage awards byproviding the jury specific guidelines for deter-mining pain and suffering based on the age ofthe victim and severity of injury. 21 One proposal

would fix the level of damages once the jurydetermined severity and age. Alternatively, thejury could be given ranges within the categoriesand have the discretion to go outside theseranges ( 1 5). If the jury’s assessment deviatedsubstantially, it would provide reasons for itsdecision, thereby facilitating judicial review.Another proposal is to provide the jury withtypical injury scenarios and associated dollarvalues . These would be nonbinding bench-marks but could serve to guide the award andreview by trial and appellate judges. In each ofthese proposals, the proposed ranges would bederived from previous cases (15). None of theseproposals have been tried in the States.

Periodic PaymentsOne way to help reduce the impact of large

awards on malpractice insurers is to allowdamages to be awarded according to a scheduleof periodic payments. If a victim is severelyinjured, the damages are based on medical andother expenses that will be incurred over alifetime. If the insurance company can pay outthe award as the expenses are incurred, the netcost of the malpractice award will be lower.This approach to structuring awards also reducesthe risk that the plaintiff will deplete funds thatare intended to be used to pay future medicaland economic costs (152).

OTA identified 14 States with a provisionmandating periodic payments of futureeconomic damages if damages exceed a thresholdlevel (table 2-l). In most cases the threshold is

$100,000 to $250.000. Another 16 Statesallow for, but do not mandate, periodicpayments (table 2-1 ). In these States, periodicpayment can be requested by the par-ties; inothers, it can be imposed at the courtdiscretion. The remaining States (includingthe District of Columbia) have no provision forperiodic payments, although in two States provi-sions were passed and later overturned in Statecourts (table 2-1 ).

Reform of Joint and Several LiabilityTo ensure the plaintiff fully recovers dam-

ages for his injury, States have traditionallyheld tort defendants who are jointly responsiblefor an injury “jointly and severally ” liableregardless of their individual degree of respon-sibility (3,4). Joint and several liability meansthat a plaintiff can sue all responsible defen-dants and recover from each one in proportionto their fault (i. e., joint liability) or the plaintiffcan sue any one defendant and recover the totalamount of damages, even if the defendant is

only partially responsible (i. e., several liabil-ity) (78). This does not mean the defendantwill ultimately pay the entire amount becausehe or she can sue the other defendants for theirshare (78). This rule effectively allocates therisk of one defendant insolvency to the otherdefendants, rather than to the plaintiff. In medicalmalpractice, insolvency may not be a criticalconcern because most physicians are insured.

About two-thirds of the States have modi-fied the traditional joint and several liabilitydoctrine (151). In some States, several liabilitywas eliminated. More often, however, thestatutes require that several liability be limiteddepending upon the degree of the defendant’sor plaintiff’s fault or the ability of otherdefendants to pay the claim (151). In Iowa,for example, if the defendant is less than 50percent responsible for all damages, he or sheis liable only for his or her proportion ofdamages : however , i f the de fendan t ' sresponsibility exceeds that level he or she canbe held severally liable for the entire amount of


damages (Iowa Code § 668.4 (West 1987)).A number of States make several liabilityconditional on the defendant’s meeting a certainthreshold of responsibility (150,151).

ALTERNATIVE DISPUTE RESOLUTION

Although most malpractice cases do notreach trial, the civil litigation system is oftencriticized for being slow, expensive, andunpredictable. The best available estimate isthat plaintiffs receive roughly $0.50 for every$1.00 spent by insurers on processing amalpractice case, with a large portion of theadministrative costs being spent on legalfees. 22 The expense is likely to increase withthe length of the proceedings (127), and trialscan add significant costs. A recent review ofmalpractice defense costs in 45 malpracticecases that went to trial in North Carolina foundthat close to 53 percent of the expense wasspent preparing for the tr ial (pretrialconferences, preparation of trial exhibits,meeting with witnesses immediately prior totrial and related actions) or in trial (87). Theremaining money was spent in discovery(uncovering and analyzing evidence, interviewingexperts and witnesses, taking or defending depo-sitions, etc. ) (87).

The high cost of malpractice trials may alsoraise the amount a defendant is willing to offerin a settlement, because settlements reflect inpart the expected amount at trial minus thesavings possible from avoiding trial .23 Thehigh cost of a trial may create incentives forplaintiffs to settle for less in order to avoid thecosts and risks of a trial. In one study of 5,832claims closed between 1974 and 1976, smallerclaims (i. e., less serious injuries) were morefrequently dropped with no payment than werelarger claims (34). Plaintiffs with lower po-tential awards may not be able to afford thehigh fixed costs of pursuing a claim throughthe legal system (34).

As a broad remedy to these problems,States have established procedures that allowthe replacement of the trial and jury systemwith a less formal process involving profes-sional decision-makers. These approaches arecollectively referred to as alternative disputeresolution (ADR) procedures. In addition, theAMA and 31 national medical specialty socie-ties have proposed a sweeping reform thatwould remove malpractice claims from thecivil court system completely, substituting anadministrative process of dispute resolution(hereinafter “AMA/SSMLP administrative pro-posal”).

The goals of ADR are several: to use amore experienced decision-maker than a layjury (although a lay person may be chosen asone of the decision-makers), to reduce the costof resolving a dispute, to reduce the anxiety offormal legal proceedings, to reduce the costs ofresolving small claims, and to efficiently screenout nonmeritorious suits (88). The actual pro-cedures used to reach these goals are diverse.States have permitted several forms of ADR:voluntary binding arbitration, court-annexednonbinding arbitration, mediation, and, to a lim-ited extent, summary jury trials. Arbitration isthe form of ADR that has been the subject ofmost legislative activity. On the whole, how-ever, ADR has not been used extensively inmalpractice cases. In addition, the AMA/SSMLPadministrative proposal has yet to beimplemented by any State. Each of thesealternative approaches is discussed in the fol-lowing sections. Forms of alternative disputeresolution that have not been used extensivelyin malpractice or otherwise are summarized inbox 2-A.

Voluntary Binding Arbitration

Binding arbitration (i.e., where the arbitrationreplaces the trial) is typically a voluntary process.The alternative approach, to make binding arbi-tration mandatory, raises serious constitutional

Box 2-A--Selected Approaches to Alternative Dispute Resolution

Type of ADR Procedure Extent Used in Medical Malpractice

Neutral Evaluation Parties present cases to neutral attorney Used frequently in Federal courts andfor assessment of merits. If parties do therefore little impact on medicalnot settle as a result of assessment, they malpractice litigation, which is typicallycan proceed to trial and the neutral brought in State courts,evaluator’s opinion is kept confidential,

Court-annexed Court can require parties to submit their Most programs limit the use of thisNonbinding case to arbitration prior to proceeding to procedure to cases with expectedArbitration trial, The decision of the arbitrator(s) is damages below a certain threshold,

not binding on the parties, typically ranging from $10,000 to$50.000. Alleged damages in mal-practice cases are rarely so low, The oneexception is Hawaii, where court-orderedarbitration applies to all civil tort actionswith potential damages of $150,000 orless (Hawaii Rev, Stats, Sec. 601-20(1992)) However, medical malpracticecases may bypass arbitration if adecision is rendered under Hawaiimandatory medical malpracticescreening panel (Hawaii Rev, Stats. Sec.671-16.5 (1992)).

Summary Jury Trials An abbreviated trial (usually less than Not often used in medical malpractice,one day) using a summary of theevidence. Lay jurors render a decisionand make a finding for damages;however, their decision is not binding onthe parties, The parties have theopportunity to interview the jurymembers and assess the strengths andweaknesses of their case,

Mediation Parties bring their case before a Some States encourage mediation ofmediator whose role is to facilitate malpractice disputes: others makenegotiation, not to make a finding on mediation available for all civil cases.the merits, The mediator is not Mediation has been used extensively inconstrained by legal principles, but family law, but not in medicalstrives instead to find a practical malpractice, Wisconsin appears to besolution that both parties will accept, It the only State that requires pretrialis not an adversarial process mediation of medical malpractice cases

(Wis. Stat, Sec. 655 445).

SOURCES. T.B. Metzloff, “Alternative Dispute Resolution Strategies in Medical Malpractice, ” Alaska Law Review 9(2):429-457.1992; T.B, Metzloff, “Reconfiguring the Summary Jury Trial,” Duke Law Journal 41 (4):806-866, 1992

Issues because federal and State constitutions malpractice cases) to go through nonbindinggrant plaintiffs a right to a jury trial (see arbitration before proceeding to court (seeapp. B for discussion of constitutional issues). box 2-A). This is more analogous to pretrialSome States do require or allow courts to order screening, however, because the parties stillsmaller cases (rarely including medical have the option of proceeding to trial.


The agreement to arbitrate can be madeafter the injury occurs or before care has beenrendered. In all States, voluntary binding arbi-tration is available upon agreement after theinjury. The terms of the agreement will likelyspecify how arbitrators are to be selected andother procedural rules. The arbitrator(s) willhear evidence and render a decision in lieu of ajudge or jury. Typically, the decision of thearbitrator is final and is not appealable exceptin limited cases, such as fraud. 24

Few claimants agree to arbitrate after theinjury has occurred. This is not surprisingbecause the relationship between the parties hasbroken down and they may not want tonegotiate an arbitration agreement. For thisreason, having an agreement to arbitrate inplace prior to an injury may better promote theuse of arbitration.

Some State courts have been reluctant orunwilling to enforce pretreatment arbi-tration contracts because of the perceiveddifferences in bargaining power between the

.providers and patients (88). 25 California courtswere an exception, As early as 1965, theCalifornia Supreme Court upheld an HMO’spretreatment arbitration clause which the HMOimposed as a condition of membership (See Doylev. Guiliucci, 404 P.2d 1 (Cal, 1965)). More thana decade later, the California Supreme Courtupheld the application of Kaiser Permanence’sarbitration clause in the case of a member whoclaimed that he did not explicitly agree to theprovision when he selected his employer-basedhealth care plan (Madden v. Kaiser FoundationHospitals, 552 P.2d 1178 (1981)).26

Fifteen States have specific statutes thatauthorize voluntary binding arbitration specifi-cally for medical malpractice cases (table 2-1;figure 2-5). These statutes authorize pretreat-ment arbitration agreements but many havespecific disclosure requirements or allow thepatient to revoke the agreement within a certain

period after signing; in some cases after aninjury has occurred (143). OTA found onlytwo State statutes that specifically prohibit pre-treatment arbitration agreements for medicalmalpractice (Neb. R.R.S. § 25-2602 (Lexis1993); S.C. Code Ann. $15-48-10 (Lexis 1993)).In States without specific malpractice arbitrationstatutes, arbitration is still an option--either underUniform Arbitration Act (UAA) procedures (139)or under a general provision of the State’s owncrafting. The enforceability of pretreatmentagreements in these States is governed by thestatutory language and case law.

Whether having a specific statute for mal-practice arbitration promotes arbitration orinhibits it is unknown. The UAA provisionsare very genera], whereas some of the Statestatutes impose restrictive conditions--e. g., onthe number of arbitrators, the selection ofarbitrators, or the enforcement of arbitrationagreements. These restrictions are probablydesigned to protect plaintiffs, who may haveless bargaining power, but an unintended resultmay be to remove some of the flexibility ofarbitration (88.89).

Of the 15 States with specific malpracticearbitration statutes, only Michigan has a formalprogram to encourage arbitration. The Michiganlaw requires all hospitals that are not self-insuredto offer patients the opportunity to sign a pre-treatment arbitration agreement. The patient mustbe provided a booklet on arbitration and beinformed that by signing the agreement he or sheis waiving the right to a jury trial. The patient isalso given the right to revoke an arbitrationagreement 60 days after discharge (the hospitalhas no option to revoke) (78; Michigan Comp.Laws $$500.3051-3062, 600.5033-5065 (West1987)).

Participant ion has been disappointing .27Only one-half of Michigan hospitals must par-ticipate and the remaining hospitals apparentlysee no benefit in entering the program and

Chapter 2--Approaches to Malpractice Reform: States' Experience and New ideas -41

“e.+’”. ,/

1 — – – . – . - — — - - —————-

Source : OffIcc &Technology Assexment, 1993.

spending resources to train personnel to offerarbitration agreements and to learn the program’srequirements (143). While the administrativecosts of setting up an arbitration program maynot be significant in terms of total operatingcosts, the hospitals apparently concluded thatthe investment would not save money (143).Physicians say they are reluctant to offer patientspretreatment arbitration agreements because theyare uncomfortable discussing malpractice at thatpoint and are concerned that such a discussionmay undermine patients’ confidence in theirabilities (143).

In sum, despite the fact that arbitration isspecifically authorized for medical malpractice bystatute in 15 States and is allowed in all others,very few medical malpractice cases are re-solved through arbitration (88, 143),28 Whythe reluctance to arbitrate? Some critics attribute

.-”

Specific I%wkkrnfor hkdcd Malpractice

I Geneta.1 Pmvkion that am be appliedI ‘w Medul Malpractice

the reluctance to plaintiffs attorneys, whobelieve the choice of forum is a strategic decisionand may think arbitration is appropriate only forsmaller claims (69). Defense attorneys mayalso have strategic reasons for preferring trials.For example, arbitrated decisions are notgenerally appealable, except in cases of fraud.The ability to appeal an adverse decision maybe an opportunity that both the plaintiff and thedefense counsel are reluctant to relinquish (69).

AMA/SSMLP ProposedAdministrative System

The AMA/SSMLP administrative proposalwould remove malpractice cases from the civiljury system and set up an administrative boardto hear malpractice claims (5). To date, no Statehas adopted such a system.


Under the AMA/SSMLP’s proposal, Statemedical boards would be established to disciplinedoctors and resolve medical malpractice cases.The AMA/SSMLP’s proposal has several possibleadvantages over the present system. First, filinga claim would be greatly simplified, and legalcounsel would be provided to claimants whocould not afford counsel. Second, the boardswould be given authority to change certain legalrules, for example, change the definition of thestandard of care, limit attorneys’ fees, and useguidelines to promote consistency in damageawards. Finally, the proposed system would tiemedical malpractice to the physician licensing anddisciplining process, thereby using the medicalmalpractice system more directly to monitorphysician quality,

Hearing examiners and the medical boardscould be given significant control over the processand could create strong incentives for not acceptingsettlement offers and pursuing oral hearings.Review by the judiciary would be very limited (5).Such a system might facilitate hearings on manymore claims, but the nature of the process wouldbe greatly abbreviated and might interfere withthe full development of the plaintiff’s case.

Questions have been raised whether theAMA/SSMLP proposal would, instead ofincreasing efficiency, create a new bureaucracyand require a massive expenditure of public funds(90). Consumer advocates express concern abouthaving quality control be left largely to Statemedical licensing boards (46). To date, StateMedical Licensing Boards have little experiencewith disciplining doctors with respect to theirclinical competence.29 A new formal systemwould also likely be subject to legal challenges(91). In addition, such an agency could becometoo responsive to physicians’ viewpoints, giventhat physicians are likely to be the agency’smost organized constituency (156).

NO-FAULT MEDICAL COMPENSATION

Every malpractice case requires a deter-mination of whether or not the physician’streatment fell below the standard of care of his

or her peers and whether the physician’s actionscaused the patient's injury. This fault-basedsystem is expensive and subject to error.Furthermore, a significant number of peoplewho are injured as a result of negligent medicalcare do not seek redress in the legal system(17,29). The time and expense of pursuing aclaim may be a factor in this decision (see ch. 1).

Almost all of the reforms described earliertinker with certain aspects of the process ofdetermining fault. However, some critics ofthe existing system question whether it isnecessary and/or appropriate to base compensa-tion for medical injury on a finding of negligentfault. These critics advocate eliminatingnegligence as a criterion for providing compen-sation to victims injured by medical care.Under a no-fault system, some or all injuriescaused by medical care (iatrogenic injuries)would be compensated regardless of whetherthe physician’s conduct fell below a standard ofcare. The intent of a no-fault system is tocompensate as many victims as possible forharm done as a result of medical care. Byeliminating the cost of determining fault andrestricting damages, such a system may be ableto compensate more victims at a lower cost.To compensate for the loss of the deterrenteffect of the fault-based system, a no-faultsystem would be coupled with an enhancedquality control system to monitor and minimizephysician error.

No-fault eliminates the question of negli-gence, but the question of causation (i.e., wasthe injury caused by medical care?) remains.As discussed in chapter 1, causation in thelegal sense means that the physician’s conductwas more likely than not to have caused theinjury. This must be proven with a preponder-ance of the evidence. This may not always bea simple question to answer, however, becauseadverse medical outcomes are not necessarilycaused by medical treatment, but rather mayresult from an underlying medical condition (65).By comparison, in workers’ compensation, thelargest no-fault injury compensation scheme in


the United States, the fact the injury was causeby the work environment is often moreobv ious .30 As a result, few medical no-fault

proposals are pure no-fault proposals. Instead,they attempt to identify a prescribed set ofmedical injuries that can be addressed througha no-fault compensation system.

State Experience with Limited No-FaultSystems

To date, only two very limited no-faultprograms have been established--in Virginiaand Florida.31 Both programs were designedto address only birth-related neurologicalinjuries. The cause of neurological damage ininfants is not always clear,32 and it may beeven more difficult to establish whether or notthe injury was preventable. Yet according to theAmerican College of Obstetrician and Gynecolo-gists, such injuries accounted for 31 percent ofclaims against obstetricians (103).33 Obstetricproviders, who see these claims as unpredict-able, may take a number of defensive measuresof debatable efficacy in the hope of reducingtheir risk of suit (60). These reasons, coupledwith high malpractice insurance premiums,make obstetric cases a good testing ground forno-fault programs.

Virginia--The Virginia Birth-RelatedNeuro-logical Injury Compensation Act waspassed in 1987. The medical societies inVirginia had been working on a no-fault proposalfor several years; however, the impetus forlegislation came from a Federal district court’sruling (later overturned) that Virginia’s cap ondamages was unconstitutional, thereby lettingstand an $8.3 million verdict against anobstetrician, 34 That decision led malpracticeinsurers in the State to place limits on mal-practice insurance coverage for obstetricians andother practitioners (38, 136). In addition, there

were reports of obstetricians limiting theirinvolvement in high-risk cases or withdrawingfrom obstetric practice altogether (38).

To be eligible for compensation underVirginia’s system, the claimant must establish thatthe infant’s injury:

was to the spinal cord or brain;

was caused by a deprivation of oxygen ormechanical injury that occurred in the courseof labor, delivery, or resuscitation in theimmediate post-delivery period in a hospital;

rendered the infant permanently “motoricallydisabled” and developmentally or cognitivelydisabled such that assistance in all activitiesof daily living is required: and

was not caused by congenital or geneticfactors, degenerative neurological disease,or maternal substance abuse (Va. CodeAnn. § 38.2-5001 (1992)).

The injury must have been caused by a physi-cian who participates in the program (seebelow) or at a participating hospital (Va. Code.Ann. $38.2-5008 (1992)).35

Physicians and hospitals participate in theprogram by their own choice. As of 1992, 75percent of obstetricians and 38 percent of hospi-tals in Virginia were participating (44, 122),Claims for compensation are filed with theVirginia Birth-Related Neurological InjuryCompensation Fund (hereinafter the “Fund”),which is funded through annual assessmentson physicians (primarily obstetricians) andhospitals .36

A claimant files a claim with the Workers37 The claimant alsoCompensation Commission. -

serves a petition on the Fund, which administersthe program. The Fund has 30 days fromreceiving notice of the claim to respond to theWorkers Compensation Commission on theissue of whether the injury falls within thedefinition. The Fund investigates the claim


itself, sending it to its medical experts. If theFund determines that the injury is compensableunder the act, the Workers CompensationCommission Board will issue an order without ahearing .38 The case is also sent by theWorkers Compensation Commission to amedical review panel consisting of threequalified and impartial physicians. The panelreviews the case and makes a recommendation tothe Workers Compensation Commission as towhether the injury falls within the statutorydefinition. If the Fund does not determine thatthe case falls within the act, the Commissionholds a hearing in which the panel’s recom-mendation is likely to be given significantweight. although it is not determinative (Va.Code Ann. § 38.2-5008(6)(B) (1992); (38)).

Once it is determined that an injury fallswithin the definition, compensation is deter-mined and payment made in accordance withstatutory provisions. The plaintiff does nothave the option of an alternative remedy if thedelivery was performed by a participatingphysician in a participating hospital .39 Thereis opportunity to request that the Commissionreview the evidence, and final appeal may bemade to the Virginia Court of Appeals (Va.Code Ann. § 38.2-5011 (1992)).

Claimants have up to 10 years to initiate aclaim, but once a claim is brought, a hearingmust be held within 120 days. The process isdesigned to take a maximum of 5 months.Compensation is limited to economic damages,collateral sources of payment are offset, andpayments are made periodically (rather than ina lump sum). By the end of 1992, only fourclaims had been brought under Virginiaprogram (1 13), well below the 40 per yearoriginally predicted by the Virginia StateMedical society (44). The balance of the Fundin 1993 was approximately $53 million (122).

To ensure continued quality assurance inobstetrics cases, the Virginia statute requiresthat all cases reported to the Commission beautomatically referred to the Board of Medicineand the Department of Health, which have

licensing and disciplinary authority (respectively)over physicians (Va. Code Ann. § 38.2-5005(1992)). The Medical Board may (but is notobligated to) examine the patterns of claimsbrought and may use these cases to developprofessional standards (38).

Florida--Legislation authorizing the FloridaBirth-Related Neurological Injury CompensationFund was passed a year after Virginia’s and issimilar to Virginia’s in many respects. Florida’sprogram, however, applies only to live infantsover 2500 grams who are both “rendered perma-nently and substantially mentally and physicallyimpaired. ” Unlike Virginia, it is not requiredthat the infant need assistance in all activitiesof daily living. Florida limits the time to tile aclaim to 5 years. As in Virginia, compensationis limited to medically necessary economicdamages that are paid as incurred. Florida,however, provides for periodic payment of upto $100,000 to the parent or legal guardian ofthe infant.

Participation in the program is optional forphysicians, but about 90 percent of all Floridaobstetricians were participating as of January1993 (37). All private hospitals are required tocontribute to the Fund through a tax assess-ment, but they only benefit from its protectionwhen the physicians practicing in the hospitalare participants. If a delivery in the hospital ismade by a participating physician and theinfant’s injuries fall under the statute. the exclu-sive remedy is against the physician; thehospital, or any other person or entity thatparticipated with the labor, delivery, or post-delivery resuscitation, cannot be sued (Fla.Stat. § 766.303 ( 1991)). If the physician is notparticipating, however, the hospital is notprotected from liability. Not surprisingly, somehospitals pay the assessments of the physiciansdelivering in their hospitals or require theirphysicians to participate (37)--a fact that may ex-plain the relatively higher level of participationin Florida compared with Virginia.

The Fund was seeded with $40 million inappropriations at the outset and is maintainedthrough annual assessments on physicians and

—.——— —

Chapter 2--Approaches to Malpractice Reform: States Experience and New Ideas -45

hospitals .40 Currently the Fund receivesapproximately $16.3 million in premiumsannually. Only $3.6 million comes from obstetri-cians; $7.7 million comes from nonparticipatingphysicians and approximately $5 million comesfrom hospitals (37). As of August 1993, 69claims had been filed under the program (37).

Accelerated Compensation Events

Both the Virginia and Florida no-faultprograms base eligibility for compensation on anarrow, adverse, clinical outcome. Oneno-fault proposal would take this approach--defining specific medical outcomes that arecompensable--and apply it to many other areasof medical practice. Under this proposalcertain kinds of adverse medical events orinjuries, called “Accelerated CompensationEvents” (ACES), would be compensated undera no-fault system. ACES are defined asadverse patient outcomes that are generallyavoided by good medical care (1 34). Usingdefined, specific, clinical outcomes in a no-fault compensation system should eliminate theneed to determine causality (134). ACESwould be handled as if they were part of acompensation insurance system, thus reducingthe costs of the disposition.

A clear example of an ACE would be thediscovery of a foreign object left in a patientwho had recently undergone surgery. In othercases, the question of avoidability is not soclear, and judgments would have to be made atthe outset as to which injuries would be eligiblefor compensation (1 34).

As proposed, injuries that fall outside ofthe ACE system could be pursued under thetort system or another alternative dispute proc-ess. Thus, the overall impact on the medicalmalpractice system of using ACES woulddepend on their ability to move asignificant number of adverse events into theno-fault compensation system.

One way to maximize the impact of anACE system is to target it to high-litigation areasof medical practice. Tancredi and Bovbjerg de-veloped a list of ACES for obstetrics/gynecology.general surgery. and orthopedic surgery (133)--three specialties that accounted for 33percent of medical malpractice claims in1984 and approximately 48 percent ofpayments (142). The list includes 48 ACESfor obstetrics/gynecology, 62 for generalsurgery, and 36 for orthopedic surgery. The listwas developed using actual claims data.41

NEW REFORM PROPOSALS

Enterprise Liability

Recent attention has centered on theconcept of “enterprise liability” as a mal-practice reform that might be incorporated intoa larger health care reform initiative. Underenterprise liability, responsibility for defendingmalpractice claims is placed on institutions ororganizations that provide care instead of onindividual doctors. Enterprise liability hasbeen suggested as a reform that is compatiblewith a system of managed competition. inwhich comprehensive health plans areresponsible for all care delivered to theirenrolled patients. or with a no-fault system inwhich the hospital or HMO pays for all injuriesthat occur within the institution (156). Yet ithas also been suggested as a malpractice reformthat makes sense even without these reforms.About 80 percent of malpractice claims arisefrom care given in hospitals ( 142), and thehospital could be the “enterprise” responsiblefor this care (1).

Enterprise liability is not a new concept.Pieces of the idea are in practice today in somelarge health care organizations. HMOs thatemploy physicians directly (as in staff-mode]HMOs) bear legal responsibility for their staffphysicians, 42 although claims can still be


instituted against the specific physician.Typically, HMOs indemnify their staff physiciansand purchase malpractice insurance on theirbehalf. Some large hospitals have joined withtheir physician staffs to buy a malpracticeinsurance policy that requires a unifieddefense (84).

But the distinguishing feature of enterpriseliability is that the plaintiff would not be ableto name an individual physician in a suit.Although it is likely the physician would stillbe called to testify should the case go to trial,his or her role would be more limited, both intime and expense, than it is presently. Moreover,not being personally named in a suit may removesome of the anxiety or stigma that a malpracticesuit reportedly causes. Yet, because a finding ofnegligence on the part of the physician wouldstill be made, enterprise liability may preservesome of the deterrent effect of a medicalmalpractice suit.

According to its proponents, the potentialbenefits of enterprise liability are three-fold.First, it would create stronger incentives forinstitutions (be they hospitals, HMOs, or healthplans) to expand their already existing qualityassurance and risk management programs toincorporate risk management activities for doctorspracticing under their plans.43 Institutions are ina stronger position than small medical practices toimprove the quality of care through qualityassurance and risk management programs, andinsurance premiums can be experience-rated atthe institutional level. Reduction of medicalinjuries could save both malpractice andgeneral health care costs.

Second, enterprise liability might reduceinsurers’ administrative costs by reducing thenumber of individual policies that must bewritten and the number of separate claims thatmust be resolved .44 Reducing the number ofdefendants in a case may also make it easier tosettle or use alternative dispute resolutionprocedures (69, 156).

Third, enterprise liability instituted in anenvironment of managed competition couldpotentially reduce defensive medicine, as healthplans establish practice guidelines reelecting thetradeoff between cost-effectiveness andmalpractice risk.45 Again, this may begin tohappen even in the absence of enterprise liability.

Enterprise liability also has limitations.Perhaps the most important is that, in the existinghealth care system, enterprise liability would notcover all patients. Thus, physicians would stillbe required to carry malpractice insurance forthe portion of claims arising from care givenoutside the purview of the organization. Thiscould eliminate potential savings from consoli-dating insurance. Also. the location of thealleged negligent care (or failure to render care)would sometimes be unclear, possibly leavingthe door open for expensive proceedings,Enterprise liability could lead to an increase insuits if patients are more comfortable suing acorporation instead of their physicians.

In addition. the potential reduction ininjuries due to enhanced quality controlmay be overstated. Because many largeHMOs and hospitals are already buyingpolicies that cover physicians practicing inthose institutions,46 incentives already exist toimplement strong risk management programs.Even if the hospital is not purchasing insurancefor attending physicians, hospital insurancepremiums are experience-rated, and limitingthe number of adverse events in the hospitallimits the hospital exposure to suit.

The AMA has opposed enterprise liabilitybecause physicians fear the encroachment onprofessional authority by health plans orhospitals (84). In essence, enterprise liabilitywould mean the end of physicians as“independent agents” under the law. Otherexperts believe it is very unlikely that hospitalsand HMOs will impose strict guidelines aimedat limiting malpractice by physicians, Limits

on physician autonomy are more likely to arisefrom efforts to control overall health carecosts, rather than malpractice (27).

Although elements of enterprise liability havebeen introduced in HMOs and some hospitals,a regime of enterprise liability does notcurrently exist in any State; consequently, theeffects of such an approach on malpracticeindicators have not been tested.

Contracting for Liability

Just as arbitration is implemented bycontract, some legal scholars and economistsclaim that all tort reforms can be implementedthrough contracts between patients and healthcare providers, rather than by legislativeaction. 47 Theoretically, contract reforms would

allow consumers to structure malpracticeliability to suit their own needs, balancingprice and quality (53).48 According to itsproponents, contracts would allow individualsto choose the amount of risk they are willingto assume with respect to medical injuries.Moreover, contracting would allow tort reformsto be implemented without a political battle.

In analyzing proposals for malpracticereform through contracts, it is useful toseparate contracts that would alter the pro-cedure for resolving a malpractice suit fromthose that would alter substantive rules ofmalpractice liability, such as the properstandard of care or level of damages. Whileboth types of contracts are based on the viewtha t the marke t fo r health care canaccommodate different arrangements to addressphysician liability, procedural changes arelikely to be given greater deference by the courtsthan substantive changes because of the differ-ential impact on consumers.

Procedural ContractCont rac t s fo r

Revolution--Plaint iffscan always agree

ReformsAlternative Dispute

and health care providersto alternative dispute

resolution procedures (e. g.. arbitration) afteran injury occurs, but this is rarely done. Thereal issue for contracting is whether patientscan enter contracts in which they agree prior totreatment to submit any future malpracticeclaim to binding alternative dispute proceduresrather than pursue that claim in court.

The courts have specifically allowedcontracts requiring patients and providers toengage in arbitration to resolve any futuremalpractice claims; but they general lyscrutinize these contracts carefully to insurethat they were freely negotiated and that thepatient was not pressured into an agreement asa condition of treatment. 49 Because arbitrationand other alternative dispute resolutioncontracts change the procedure for determiningliability, but do not limit the plaintiff’ssubstantive right to compensation for negligence,concerns about unequal bargaining powerbetween patient and provider may not be asgreat for this class of contracts as they are forthe others (88).

Contracting for Enterprise Liability--Allowing providers, health care institutions,and patients to contract for enterprise liabilitymay be a more feasible way than legislation toimplement this reform ( 156). The contractbetween the provider and the institution wouldplace all liability for the physician’s actions withthe health care institution, and there wouldlikely be a provision governing the institution’sright to discipline the physician. The courtswould probably not scrutinize the fairness ofthis contract because physicians and health careinstitutions are on relatively equal bargainingground. HMOs and some large hospitals havealready contracted with their providers to pay fortheir liability costs (l). However, the plaintiffwould retain his or her right to sue the physicianunless an additional contract among the patient,physician, and the health care institution wasexecuted. Under this contract, the consumerwould agree that all complaints about the qualityof care received would be brought solely against


the institution. Again, a court’s response tosuch a contract is difficult to predict, but if theconsumer’s right to sue is still preserved, thecontract is likely to be seen as procedural innature and there wouldfavor of enforcing it.

Contracts That ChangeMedical Malpractice

be strong arguments in

the Substantive Law of

Contracts that Alter the Standard ofCare--When health care providers haveattempted to eliminate their liability throughcontracts with patients, the courts haveuniformly invalidated these contracts on thebasis of unequal bargaining power and public

. Rather than eliminating allpolicy concerns. 50-liability. advocates of contract reforms arguethat consumers have ample power through theirrepresentatives---employ ers, labor unions, HMOs,and PPOs--to bargain with providers and alter thestandard of care in re tu rn fo r p r i ceconcessions (46(a)). This argument assumes.however, that the interests of employers,HMOs and PPOs coincide with those ofconsumers. Given the number of uninsuredpersons and the evidence that many Americansfeel vulnerable about their medical coverage,consumer bargaining power may be overstated(23, 148). Further, there is no evidence thatconsumers desire to contract with theirproviders for a new standard of care (7).

It may prove very difficult to define a newstandard of care with enough specificity so asto avoid litigation over the meaning of thecontract. From a practical perspective, to de-velop a legally enforceable contract for a morelimited standard of care, the provider wouldlikely need to transfer “excessive quantities ofi nform at i o n” on all possible risks, bothanticipated and unanticipated (39). This bur-den of information led one early advocate ofcontract reform to later conclude that contractsfor the standard of care may not be an im-provement over the present standard of careused in malpractice cases (39).

Finally, providers might open themselvesto the criticism that they are asking consumersto submit to an unreasonably risky standard ofcare, if the standard developed in the contractwere to differ materially from the prevailing legalstandard, which reflects medical custom (7, 156).An alternative, however. is to contract for theapplication of specific clinical guidelines. Thecourts might be more comfortable with enforcinga standard of care that reflects medical consensus.The court would likely focus on the process usedto develop the applicable guideline.

Contracting for Damages--Plaintiffs enterthe malpractice system with different financialmeans; consequent y, some consumers mightprefer to contract for limited liability damagesbefore services are rendered in return for lowerhealth care costs. Such contracts could addressissues such as collateral source payments, periodicpayments, and calculation of economic losses orpain and suffering awards. Whether suchcontracts could withstand legal challenge isdebatable, but they may have better prospectsthan contracts involving changes in the standardof care. While consumers differ in terms offinancial resources, they do not differ in theirneed for quality medical care. For this reason,the courts are likely to be more comfortable withconsumers limiting their potential compensation.especially if they have other financialresources. 51

Currently, there is little agreement on theproper level of pain and suffering damages,Courts provide juries with very little guidance,if any, on calculating pain and suffering damages,and such assessments appear to be inconsistent(15). Consequently, agreements on guidelinesgoverning pain and suffering awards might beacceptable to both courts and policymakers.52

To date, however, such contracts betweenpatients and providers are extremely rare (ifthey exist at all), and OTA has not found anycase law testing their feasibility.


CONCLUSION

Almost all of the malpractice reforms thathave been considered to date are in place in atleast a few States. (Table 2-1 provides a grossState-by-State summary of selected reforms.Appendix A provides further detail on specificState programs and provisions. ) Over half theStates have amended the traditional collateralsource rule, allowed for periodic payments ofdamage awards, shortened or modified the statuteof limitations, implemented pretrial screening,and/or placed some type of limit on attorneyfees. In some States these provisions arevoluntary (i. e., left to the discretion of thecourt or involved parties), while in others theyare mandatory.

In addition, just under half of the Stateshave set statutory caps on noneconomic or totaldamage awards. The actual limits on awardsrange widely. In reality. damage caps addressonly a small minority of claims--in general,those claims by patients with the most severeinjuries. It is for this reason that caps ondamages have been the most controversial.

A recent approach that attempts to clarifythe standard of care to which physicians areheld involves using clinical practice guidelinesin determining physician negligence or non-negligence. Increased development andadoption of these guidelines, regardless ofwhether their role in the medical malpracticetort system is further formalized, may lead tomore uniform jury and court decisions inmedical malpractice cases and help physiciansavoid future instances of malpractice.However, a number of problems inherent in thestructure of clinical practice guidelines maylimit their usefulness or appropriateness asdefinitive legal standards of care. The debateover guidelines development methodology hasin a sense just begun; hence, adoption ofclinical practice guidelines as definitive legalstandards may be premature, Only three States

have attempted to formalize the role ofguidelines in malpractice litigation and theseefforts have yet to yield even anecdotal results.

More comprehensive reforms of themalpractice system, such as mandatory ADRmeasures, have not been widely adopted,largely because of concerns over potentialconstitutional challenges (see app. B). To date,ADR procedures such as arbitration have beenimplemented only on a voluntary basis andhave not been used extensively in medicalmalpractice cases. Fifteen States have specificstatutes author i z ing voluntary, bindingarbitration for medical malpractice, but onlyMichigan has actively encouraged arbitration,with limited success. As long as ADR remainsa voluntary adjunct to the civil jury system, itssuccess will depend upon the State’s willing-ness to promote the process and convinceplaintiffs and defendants that it is in theirinterest to elect it. Some critics contend thatADR could be promoted to a greater extent ifcourts would be more willing to allow patientsto contract for arbitration in advance oftreatment (by focusing on whether the alternativedispute resolution procedures are fair) ratherthan scrutinizing the circumstances surroundingthat waiver of r ight to t r ia l . However ,

perhaps the largest road block to ADR is theunwillingness of plaintiffs and defendants touse available alternative dispute resolutionprocedures in the 10 to 20 percent of cases thatgo to trial.

An extension of voluntary contracts forADR is to allow all aspects of medical mal-practice--e, g. awards, standards of liability,forum, etc.--to be negotiated by contractbetween patients or businesses and health careinsurers. To date, judicial suspicion of thefairness of such contracts has been one barrierto such an approach (118).

Limited no-fault programs have beenimplemented in only two States (Virginia andFlorida). Both of these programs apply only to


very particular types of birth-related neurologicalinjuries. The number of claims processedthrough both systems combined in their first 5years of operation is less than 100.

More comprehensive proposals, such asACES, attempt to address the issue of causalityin a no-fault system but have yet to be tried.The potential costs of no-fault programs arelikely to be a stumbling block, because thefocus of legislatures has been largely to limitthe cost of the malpractice system.

The fact that some State courts have beenwilling to overturn malpractice reformmeasures has important implications for futureFederal malpractice reform. Statutory caps ondamage awards have been particularly vulner-able to challenge under State constitutions. Ingeneral, courts have been reluctant to supportprovisions they view as depriving individualsof their right to judicial recourse, unlessthese provisions can be reasonably expectedto further a legitimate legislative purpose.Selective no-fault programs in two States mayhave passed a limited challenge to their

constitutionality, but a specific challenge on theconstitutionality of removing these claims fromthe judicial system has yet to be brought.

As mentioned earlier, most of the reformsimplemented to date have been passed toaddress a perceived activity “crisis” in malprac-tice claims or tort liability in general (14). As aresult, they have focused on limiting suits, andhence have not attempted to increase injuredparties’ access to fair compensation. Recent dataon the rate of negligent injury and the corre-sponding claim rate for those injuries hassomewhat refocused the debate. The morerecent reform proposals--no-fault and expandedADR proposals--now address patient’s accessto compensation, as well as the cost ofresolving claims. The new theme that runsthrough these recent proposals is to increaseaccess by injured patients, limit damages, andlook to quality control mechanisms other than themedical malpractice system. However,any reform that is effective in streamliningthe existing process for resolving medicalmalpractice cases could indirectly improveaccess to the system.

Chapter 2--Approaches to Malpractice Reform: States Experience and New Ideas -51


I FOr ~ dc=crip(ion of ~rOpOSed malpractice reform legislation in the 102d and losd Congresses, Scc (146)”

20thcr strategies for addressing the malpractice problem include malpractice insurance industry rcf~rms, suchas the establishment of joint underwriting associations. These approaches, although discussed briefly in anhistorical context in chapter 1, are not the focus of this background paper.

sTab]eS in appendix A provide further detail on specific State provisions.

~his classification of tort reforms is largely taken from (14).

5Hardy V, verMeu]en, 512 N.E.2d 626 (Ohio 1987) cert. denied 484 U.S. 1066, 108 S. Ct. 1029 (1988)(overturning restriction on discovery rule); Schwan v, Riverside Methodist Hospital, 452 N.E,2d 1337 (Ohio1983) (overturning 1 year limitation that applied to minors over 10 years of age); Neade v. Nelson, 685 S.W.2d11 (Tcx, 1985); Nelson v. Krusen, 678 S.W.2d 918 (Tex. 1984) (statute of limitation cutting off cause of actionbefore discovery held unconstitutional); Barrio v. San Manuel Div. Hosp. for Ma~ma Comer Co., 692 P.2d 280(Ariz. 1984) (limitations for minors violates fundamental right to recover for tort); Kenvon v, Hamrncr, 68SP.2d 961 (Ariz. 1984); Austin v. Litvak, 682 P.2d 41 (Colo. 1984); Shessel v. Stroup, 316 S,E.2d 155 (Ga. 1984);Strahlcr v. St. Luke’s Host)., 706 S.W.2d 7 (Me. 1986) (statute of limitations for minors violates right of accessto courts).

~A]though ~rctria] Screening panels are regarded by some as a form of alternative dispute resolution (ADR),wc discuss them separately because they add a preliminary step to the existing system for deciding malpracticecases rather than replacing the judicial system. Other forms of ADR arc discussed below.

7 1n F]orida and Pennsylvania th e p~ctrial screening panel was nOt fOUnd UllCOtlStitUtiOIlid in and of itself, but

instead, the long delays in bringing cases through the pretrial screening process made it unconstitutional inpractice (Mattes v. Thom~son, 421 A.2d. 190 (Pa. 1980); Aldana v. Holub, 381 So.2d. 231 (Fla. 1980)).

8~ce Canterbury v. s~cncc, 464 F.2d. 772 (D.C. Cir. 1982); Cobbs V. Grant, 502 p,2d. 1 (Cal. 1972).

9Lcgally recognized exceptions to informed consent requirements include: (1) Iife-threatening cmcrgencysituations, (2) situations where divulging the information could threaten the patient’s medical condition, and(3) situations where the patient indicated he/she did not want to know the risks of treatment (62).

locational data from 1985-1989 show that “failure to instruct or Conlmunicate with the patient” was the

principal alleged departure from accepted medical practice in only 2 percent of claims (11 1).

1 IThc rationale for this is that lay juries may not be able to interpret the scientific Ianguagc of the guidelineswithout the assistance of an expert. Some States have exceptions that give cour[s discretion to allow learnedmedical treatises to be admitted into evidence without accompanying expert testimony (67,77).

12(~uidc]incS for selected areas of practice in obstetrics/gynecology, cmcrgency medicine, r~dio~ogy, andanesthesia were developed by four medical specialty advisory committees appointed by the Maint Board ofRegistration in Medicine,

13A]though Minnesota’s statutory language describes the provision as an “absolute defense,” the ICW1 mcanin~

is essentially the same as Maine’s “affirmative defense” provision--i, c,, in order to establish the physician’sncgligcncc the plaintiff must prove that the physician did not follow the guideline or that the guideline is notapplicable to the specific case.

~~hc arbitration and Practice guideline provisions of the Vermont statute will not gO into effect unless and

until a legislatively crcatcd board implements a universal access plan for the S[atc--cxpcctcd (o happen in July1994.


15Thi~ rationale for the tradition] Collateral source rule is undermined by the fact that malpractice insurers,

not individual physicians, pay the vast majority of malpractice awards and there is little cxpcriencc rating ofmalpractice insurance premiums.

1 61n North Dakota, for examp]e, collateral sources do not include any life insurance or o~h~r d~alh or

retirement benefits or any other insurance or benefit that was purchased by the party recovering economicdamages (N. D.C.C. $ 32-,03.2.06 (1993)). Washington excludes information on insurance payments from allinsurance policies purchased by the plaintiff or purchased by an cmploycr for the plaintiff (R.C.W. ~ 7.70.080(Lcxis 1991)).

17Four of the eight States that have caps on total damages also have State Patient Compensation Funds (PCFS),which provide additional insurance beyond that guaranteed by the defendant’s malpractice insurance policy. Inthe typical PCF, the physician is required to carry insurance to pay for the first $100,000 to $200,000 of theaward, and the PCF pays the remainder of the award up to a set amount (typically $350,000 to $1 million).PCFS in and of themselves do not place a cap on damages but are a form of additional State-supportedinsurance. The cap on total damages, however, limits the fund’s exposure (see app. A, table A-2). Three ofthe five States that have a PCF without an explicit cap on total damages limited their fund’s liability to $800,000or $1 million.

l~Barbara Moore v. Mobile Infirmarv Association, 592 S.2d 156 (Ala. 1991); Brannigan v. ustilat~, 587 A.2d1232 (N.H. 1991); Morris v. Savoy, 576 N.E.2d 765 (Ohio 1991); Truiillo v. The Citv of Albuqueruuc, 798 P.2d571 (N.M. 1990) (cap on damages applied only to suits against government health care facilities); Sofic v.Fibreboard, 771 P.2d 711 (Wash. 1989); Condemarin v. University Hos~ital. Univcrsitv of Utah, 775 P,2d 348(Utah 1989) (cap on damages for suits brought against government health care facilities); Kansas Malt) racticcVictims Coalition v. Bell, 757 P.2d 251 (Kan. 1988); Lucas v. United States, 757 S.W.2d 687 (Tcx. 1988); Smithv. Dept. of Insurance, 507 So.2d 1080 (Fla. 1987); Baptist Hospital of S.E, Texas v. Barber, 672 S.W. 2d 296(Tex. App. 1984) aff’d. 714 S.W. 2d 310 (Tex. 1986); White v. State, 661 P.2d 1272 (Mont. 1983) (cap appliedonly to governmental tort liability) ovemlled Meech v, Hillhaven West 776 P.2d 488 (Mont. 1989); Carson v.Maurer, 424 A.2d 825 (N.H. 1980); Arneson v. Olson 270 N.W. 2d 125 (N, D. 1978); Jones v. State Bd. ofMedicine, 555 P.2d 399 (Idaho 1976) (remanded to dctcrminc whether cap bore fair and substantial relation tolegislative objective) cert. de~zied State Board of Medicine v. Jones, 431 U.S. 914 (1977); Wri~ht v, CentralDupage Hosp. Assn., 347 N.E.2d 736 (111, 1976).

19Scholz v. Metro~oli[an Pathologists, 851 P.2d 901 (Co. 1993); Vincent v. Vernon Johnson ~ss S.w.zd 859(Me. 1992); Samsel v. Wheeler Transportation Service Inc., 789 P.2d 541 (Kan. 1990) (cap applied to allpersonal injury suits); Etherid~e v. Medical Ctr. Hospitals, 376 S.E.2d 525 (Va. 1989); Williams v. Kushncr,549 So.2d 294 (La. 1989); Fein v. Permanence Medical Grour), 695 P.2d 665 (Cal. 1985) cert. denied 474 U.S.892, 106 S. Ct. 214 (1985); Johnson v. St. Vincent HOSP.. Inc., 404 N.E.2d 585 (Ind. 1985); Siblev v. Board ofSupervisors, 477 So.2d 1094, request for appeal denied 496 So.2d 325 (La. 1986) modified otl rchcatitg 477 So.2d585 (La. 1985) (conditional remand on equal protection grounds); Prendcr~ast et al. v. Nelson, 256 N.W.2d 657(Neb. 1977).

200f the sample of claims, only AS percent resulted in a payment to the plaintiff. of those with a Paynlcnt, data

on noneconomic damages were provided for less than one-half of the claims. In addition, bccausc most suitswere settled, data on noneconomic damages are based on insurers’ estimates. The spm-sity of data onnoneconomic damages from the insurers may be a result of insurers not being able to provide accura[cestimates (68,142).

21Agc and severity of injury were chosen because in a regression ana]ysis Of IIOllCCOIIOmiC d~mafjc ~w~rds in

personal injury cases, severity of injury was the strongest explanatory variable, followed by agc of the victim(15). A study of 6,612 medical malpractice closed claims from Florida, including jury verdicts and settlements,.found that severity of injury accounted for 40 percent of the variation in payments (128).

Chapter 2--Approaches to Malpractice Reform: States' Experience and New ldeas -5.3

2~Thi\ ~~[imalc inc]udc~ ~)n]y ~]aintiffs’ and ins~rers’ ]~ga] fees and Cxpcnscs in prO~~Ssing cl:~inls and ‘~)cs ‘CJ[. .include court expenditures, the cost of the defendant’s time, or the plaint ifl’s time (61 ). I n 1‘)78, (1IC NationalAssociation of Insurance Commissioners reported that the average cxpcnscs ft~r insur-iincc c~jnl panics w’crc 2Spcrccnt of total indcmnity paid. If onc adds the plaintiffs’ attorney fees, usuall) t~nc-third t~l the aw:ircl, [hen[hc plaintiff is rccciving approximately $0.50 of mwry dollar spent by tht mtilprac(icc insurer L)II pr~)ccssing andpaying the claim (97).

~~Thc cla~fic Cconomic modcl~ Predict that C]aims will bc sctt]cd when th~ d~~~t’1”(’)1~(’ l~~t~~’~~11 th~ ~~~ ‘) P~rli~s’. .

valuation of the case (taking into account the pcrccivcd likelihood of winning and cxpcc(cd d:imagcs :it [rial) isIcss than the cxpcnsc of taking the cases to trial (16). Scc (127) for a discussic~n of [hu cc(~nt~n]ic Ii[cr:i[urc onscttlcmcnt of claims.

2~hc California Suprcmc Court, for example, rcccntly issued a (iccisi,)n [h:i[ :irbitratit,n dccisi,,ns :irc n,,tgenerally rcvicwablc even if there is cvidcncc that the arbitrator’s error will cause su}w[;in[i:i] ill,ju~[icu ttl theparties (Moncharsh v. HcilV Blase, 832 P.2d 899 (Cal. 1992)).

251n general, contracts bctwccn two parties may bc held uncnforccablc if (I1c hiirg;iining p(~wcr ~~f the p:ir[ics isdisparate and the party with greater power unfairly limits the rights of [hc wciikcr p:irt) (24,25,()()).

20BI[(, see Brocmmcr v. Abortion Scrviccs of Phoenix. Ltd., 840 P.2d 1013 (Ari~. l“~)2) (~irbi[rtiti(~n :igrccmcntm~idc bctwccn high school graduate, w h o w a s 1 6 to 18 wtcks prcgn;in[, and :ih~~ rt i (1 n c1 i n i c Wr:is n ()(cnforccablc).

28 Thcrc arc exceptions. Kaiser Pcrmancntc, a health maintenance organization, has manda(cd arhi[r:iti{~n f~~rall health care claims in California, Colorado, Hawaii, and Washington; h(n~v~cr, Kaiser rcccn[ l} dr[)ppcd thearbitration rcquircmcnt in orcgon (82). As of 1992, Kaiser enrolled apprt~xi m iit cly 5.5 m i lli~~n pct~plc in theseS[atcs (including orcgon) (14-4). Ross-Loos, an HM() ]ocatcd in Southern ~’:ilif~>rnia wi[h :ippr[~ximatcly 1million cnrollccs, also makes arbitration a condition of its H M() contract ( 144).

20MIJst disciplinary actions have in~wlvcd charges of substance abuse, inappr(~pria[ c w’ri[ ing of prescriptions,con~ictiori of felony or fraud, and other unethical bcha~’ior ( 102,147,153).

~OHowcv,cr” W o r k e r s ” ~ompcnsation cl~ims invo]ving difficult judgmunts iihout cdusa[i~)n (C.g., iil!C~ii[i(JllS of

occupational diseases) arc often disputed (3).

31 Bi[]\ t~) Crca[c \imi]ar Pr[)grams for bir(h. rc]atcd ncurol~gic~l injuries \\CI”C [lrc\cn[cd in ~LJI”[h ~’~il (~lill~i LIndL

Ncwf York in 1991 and 1990, rcspccti~cly (13,101).~2Thcrc is ~omc c~ridcncc that manY bir th-related injuries at t r ibuted IL) ];i~k of t~~~’g~n d~ll”in~ ~h~’ l~ir~hing. .

process have prenatal causes that ar~ yet unexplained (57,99,100,104,13 [)).

~S]n 1992 in California, b i r t h injury c a s e s ~ccountcd for 16 pcrccnt of ~]] mcdica] nlii]pr:iclicc CLiSCS iiI~~ so

pcrccnt of all indcmnity (86).

~~BOYd v. Bu]ala, 647 F.supp. 781 (W-D. v~. 1988). The decision on the c~ip Wlis C~VCrtUrnCd ~Jn ~lPPC:Il (_.!h!b

Bulala, 877 F.2d 1191 (4th Cir. 1990); Bovd v. Bulala, 905 F.2d 1190 (4th (-’ir. 1°(A))). The Fcdcr~il court reliedlargely on the Virginia Suprcmc Court’s decision to uphold the cap on damages in 19X() (EthcridUc t. MedicalCenter Hospitals, 376 S.E.2d 525 (Va. 1989)).

~5Thc dcfiniti[)n of nCur{)]Ogic~l injury was ~][crcd Slight]v in 1990 [t) idcnlif~r c]if&ib]c illfiill[S I1lcJI”C CiisilJ’ dn~.

earlier (113,1 23). Howe\’cr, the severity of injury required did n[~t change ( 122).

S6par[icipating physicians and midwi~,cs pay $5,~~~ pcr year, and particip;i[ing h(M])i[;ilS i~~l>’ $~() ~~~r d~li~’~r}’, Ul)

(o a m~ximum of $150,000. Non-participating physicians originiill} p:iid $250 pcr ~ciir; h(~~~c~cr, bccuust theFund has rcmaincd actuarially sound, this assessment was w:ii}ed f~~r l~Y)3 (3S,1 13). A[ prcjcn[. li:ibility

.54- Impact of Legal Reforms on Medical Malpractice Costs

insurance carriers do not contribute; however, the statute authorizes the fund (o assess thcm a[ up to 0.25percent of each carrier’s net direct premiums (Va. Code Ann. $38.2-5020 (1992)).

~7Th~ claimant must provide a brief statcmcnt of the facts and circumstances surrounding th~ birth-related

neurological injury, and include all medical records, relevant documentation from medical cva]uations,prognoses, and documentation of expenses and services incurred to date (Va. Code Ann. $38.2-5004 (1992)).

381n three Cases, the Fund accepted the liability and there was no hearing (123).

391f the birth was attended by a nonparticipating physician or occurred in a nonparticipating hospital, the

claimant may decide to sue the nonparticipating doctors or hospital. If the claimant makes this election, he orshe cannot name the participating physician or hospital in the legal suit and the clairnan[ loses his or heropportunity to receive compensation from the Fund (Va. Code Ann. $ 38.2-5002 (1992)).

~Nonparticipa[ing physicians contribute $250 annually, participating physicians COtltribUtC $s,o~)o ~nnu~lly, and

private hospitals contribute $50 per live birth (excluding infants born to charity patients or certain Medicaidpatients) (Fla. Stat. $766.314 (1991)).

41Thc ~uthors ~xamined 2,3~o cloSCd Claims from Florida for these spCCia][ics from 1985 ~~~ loss ( 13~).

42Thc HM() can be held liable under the doctrine of rcspondeal superior, which protrides lha[ all Cn~plOyCr is

directly liable for the negligent acts of his or her cmployccs (8). Hospitals, too, arc dircc[ly responsible fortheir physician employees, such as medical residents and salaried hospi[til physicians. In rcccnt yctirs hospita]shave increasingly been held liable for incidents duc to actions of noncmploycc physicitins with admittingprivileges under several different legal doctrines (8). Courts have concluded tha( the hospital htis ti legal dutyto the patient to insure a certain quality of care.

43T() be accredited by the JOin( commission for the Accreditation of Hca][hcarc organizations (a r~ql.lir~m~nt

for receiving Medicare reimbursement), hospitals must establish risk management programs, and at least 10States require risk management as a condition of hospital Iicensurc (96).

4 41n 1984, appro~matcly 25 percent of medical malpractice claims involved rnu]tiplc dcfcnddnts, with manY

naming hospitals or HMOS as well as physicians (142).

451f ~ntcrprise liability were implemented without managed competition, hospitals’ inccn[ives [o reducedcfcnsivc mcdicinc might be no greater than they are today.

461t is not uncommon for a large hospital t. purchase insurance for the institution and then allow physicians

who practice in the institution to purchase under a single policy (40,63).

47 For a rcviCw of the proposals and scvcra] critiques, sec (70),

48what constitutes “quality” medical care is difficult to define. Proponents of using contrac[s to define a newlegal standard of care argue that professional custom, which is currently used to dctcrminc the proper standardof care, may not necessarily be good practice. Medical custom has developed in a health care systcm with fcwcost constraints, and may therefore be highly inefficient and not promote quality care. Advocates of contractsquestion the legal system’s implicit assumption that a single standard ft)r go(d medical care ciin be derivedfrom medical custom (52). Opponents note that the legal standard of care reflects the care tha[ would bcprovided by the average skilled physician, and includes cxccp[ions ft)r minority opinions ~~r m istakcs injudgment, and is therefore more accurately characterized as a “reasonable carc(( standard (7), As such, it isbasically the same standard used in all tort actions. Nonetheless, if it is pro}en [hat [he existing lcgtil standardfor “reasonable care” far exceeds what is reasonable, then the medical malpractice liability standtircl should bechanged rather than having some malpractice claims subject to an incfficicn( standard (7).

‘%(?, e.g., Broemmer v. Abortion Services of Phoenix. Ltd., 840 P.2d 1013 (Ariz. 1992) (agreement to arbitratesigned by plaintiff at abortion clinic was unenforceable because of failure to adequately explain to the plaintiffthe implications of the waiver and that the arbitrator would bc a physician; (Madden ~. Kaiser Foundation

—

Chapter 2--Approaches to Malpractice Reform: States Experience and New Ideas - 55

Hospitals, 552 P.2d 1178 (1981); Wheeler v. St. Joser)h HosDital, 133 Cal. Rptr. 775 (Cal. Ct. App. 1976). .!!ccgenera/Iy (19).

5OTunk] v. Rc~ents of [hc university of Cal., 383 P,2d 441 (Cal. 1963); Tatham V . Hokc, 469 F.SUPP. 914

(W. D.N.C. 1979) affd. wi~}zou( opinion 622 F.2d. 584 (4th Cir. 1980) (agrccmcnt requiring plain[iff to submitclaim to arbitration within 30 days or Iosc right for recovery and providing for $15,[)00 limitation on rcco~crywas invalid); (53).

51A ~ontrac[ may bc Uncnforccab]c if a court determines there is a disparity in bargaining power such th~l oncof the parties docs not have a realistic opportunity to bargain (Broemrncr v, Abortion Services (>f Phoenix,~., 840 P.2d 1013 (Ariz 1992)). An agreement to limit malpractice damages made by a patient with financialrcsourccs to pay for medical injuries may not raise as many concerns about unequal bargaining p(~wc r as anagrccmcnt by a patient with few financial resources. Of course, any analysis of the contract will also dependon the concessions made by the provider.

52 For ~ Possib]c mode] on scheduling pain and suffering damages, see (15).

Chapter 3Impact of State Tort Reforms

INTRODUCTION

Several studies have addressed theimportant issue of whether various medicalmalpractice reforms adopted by certain Statesduring the mid-1970s and mid-1980s (discussedin depth in the preceding chapter) helpedrestrain the apparent surge in malpracticecosts during those periods. This chapterexamines studies that employed systematicempirical methods to address the question ofwhether these reforms reduced the frequencyof medical malpractice claims, the amount ofpayment per paid claim, and/or the levels ofmedical malpractice insurance premiums(hereinafter collectively referred to as the“malpractice cost indicate. Most of thesestudies used data derived from companiesthat sold medical malpractice insurance toproviders in one or more States during theperiods in which the reforms were adopted. Aswill be summarized in the subsections thatfollow, however, the studies’ methods andfindings differed greatly.

Certain empirical studies in the field ofmedical malpractice were not included inthis review. Some studies have focused onsingle States that have adopted various tortreforms, and a few of these studies haveincluded comparisons of one or more of themalpractice cost indicators before and afteradoption of these reforms. Our review herecovers only studies that examined the impactsof tort reforms in two or more States. 1 Wealso excluded studies whose data predatedthe major wave of State medical malpracticereforms adopted in the mid- 1970s (e. g., 42)and those that used data for only a few yearsfollowing those reforms (28.34,124). Some ofthese studies were subsequently updated bythe same authors, and those later studies(30. 129) are included in our review. Finally,we excluded studies that only used datadescriptively and/or reviewed other

empirical studies (32.33.94, 142) or developedtheoretical models of the malpractice costindicators (31 ).

The following summary describes sixstudies that employed multiple regressionanalysis or similar statistical methods toanalyze the impact of various State tortreforms on one or more of the malpracticecost indicators (2,9, 12,30.129,161 ).2 Thesestudies provide analytical as well asdescriptive information on the impacts ofState tort reforms while controlling for theeffects of other important influences onmalpractice cost indicators. For example, allof the studies reviewed here controlled forthe independent effect of interest rates onmalpractice insurance premiums, whichreflects insurance companies expected ratesof return from investment income.

STUDY METHODS

Definitions of’ Reforms

The six empirical studies reviewed inthis chapter employed quite differentdefinitions of a given malpractice reform;and even when they used commondefinitions, each combined widely differingspecific reforms into a single category.None of the studies examined the impact ofany alternative dispute resolution (ADR)reforms except for voluntary, bindingarbitration. Nor did they investigate theeffects of the recent no-fault programs forcompensating newborn neurologic injuries inFlorida and Virginia.

The usual approach to measuring Statetort reforms was to record whether or not agiven type of reform was in effect in agiven State at a given point in time. Themalpractice reforms examined in these studiescan be classified into 16 categories. Table3-1 shows which reforms were addressed in

- 5 7 -

58- Impact of Legal Reforms on Malpractice Costs

Table 3-l--State Tort Reforms Examined in Six Empirical Studieson Medical Malpractice Reform

Study

Reform Adams Barker Blackmon Danzon Sloan Zuckerman

Restrict the statute of limitations:

Use date of event, notdiscovery

Shorten basic statute oflimitations for medicalmalpractice

Shorten statute of limitationsfor minors

Shorten extension of statute

a.

b.

c.

d.

x

x

—

— — — — —

x x x x

— — — —

x

x

of limitations from dateof discovery

Establish pretrial screening panels:

a. Mandatoryb. Results admissible in trialc. Any type

Limit attorney fees

Modify the standard of care:

a. Codify the standard of careb. Do not adopt the “expanded

locality rule”c. Establish qualifications for

expert witnesses

Require or allow awardsto be reduced by amountof collateral payments:

a. Requireb. Allow

c. Either require or allow

Impose caps on damage awards:

— — — x x—

— — x— — —— — x

xxx

——

——

x

— x x x x—

x —

— . —

— — —

— —

—

—

—

x

—

—

x

— — x— — —x x x

x xx x— —

—

—

— x -— — —— — —

x xx xx-

Total damagesa.b.c.d.

e.

———

Noneconomic damages onlyPunitive damages onlyNoneconomic or punitivedamages — x -

x — x——

— —— —Any type

Chapter 3--Impact of State Tort Reforms -59

Table 3-l--State Tort Reforms Examined in Six Empirical Studieson Medical Malpractice Reform (Continued)

Study


Require or allow periodic payments:

a. Requireb. Allow


Restrict the joint and severalliability doctrine

Allow voluntary, binding arbitration:

a. Codify the option of arbitrationfor medical malpractice

b. Allow pre-injury agreements toarbitrate

Restrict the use of res ipsaloquitur

Restrict the use of ad damnumclauses

Limit the doctrine of informedconsent

Allow costs awardable infrivolous suits

——

—

—

x

—

x

———

—

x

—

x

—

—

—

— x -— — x-x - -

x — —

— x - -

— x x

— — x -

— x -

— — x -

— x x

SOURCES: E.K. Adams, and S. Zuckerman, “Variation in the Growth and Incidence of Medical Malpractice Claims,(’Journal of Health Politics, Policv and Law 9(3):475-488, Fall 1984; D.K. Barker, “The Effects of Tort Reform onMedical Malpractice Insurance Markets: An Empirical Analysis,’{ Journal of Health Politics, Policy and Law,17(1): 143-161, Spring 1992; G. Blackmon, and R. Zeckhauser, “State Tort Reform Legislation: Assessing OurControl of Risks,” in Tort Law and the Public Interest, Peter H. Schuck (cd.) (New York: W.W. Norton & Co.,1991); P.M. Danzon, “The Frequency and Severity of Medical Malpractice Claims: New Evidence, ” Law andContemporary Problems 49(2):57-84, Spring 1986; F,A. Sloan, P.M. Mergenhagen, and RR. Bovbjerg,“Effects of Tort Reforms on the Value of Closed Medical Malpractice Claims: A Microanalysis,’( Journal ofHealth Politics, Policy and Law 14(4):663-689, Winter 1989; S. Zuckerman, RR. Bovbjerg, and F. Sloan,“Effects of Tori Reforms and Other Factors on Medical Malpractice Insurance Premiums, ” Inquiry 27(2):167-182, Summer 1990.


each study (referenced by the first author’slast name). Each kind of reform was usuallymeasured as a binary variable whosevalue was set equal to 1 if the reformwas in place in the State, and O if it was not.In the only departure from this approach,three studies measured the length of a State’sbasic statute of limitations as a continuousvariable (i. e., number of years) (30,129, 161).

Malpractice Cost Indicators

The focus of all six empirical studieswas to measure the impact of different Statemalpractice laws on one or more of themalpractice cost indicators: (a) the frequencyof malpractice claims, (b) the payment perpaid claim, and (c) malpractice insurancepremiums or losses. In general, the reformsstudied would be expected to reduce theseindicators. Table 3-2 contains a summaryof the measures used in each study:

■ Claim Frequency : The numberof medical malpractice claims,typically measured as the averagenumber of claims per insured physician(or per 100 physicians).4 Claimsagainst several defendants involvingthe same alleged malpractice event areusually treated as a single claim.

■ Payment Per Pa id Cla im: Theamount of payment for medicalmalpractice claims, usually measuredas an average payment per paidclaim. One study used both paymentamounts for individual claims and ameasure of the probabilityindividual claim resultedment to the plaintiff (129).

s Insurance Premiums orThe premium charged for

that anin pay-

Losses:medical

malpractice insurance, measured eitherin total or as an average per insuredphysician. Two studies used insurancecompany losses, or funds placed inreserve to pay current and future

medical malpractice claims (excludingexpenses for underwriting. sales, andclaims adjustment) (9, 12). Lossescan be interpreted as an indicator ofexpected insurance premiums.

Data

The malpractice claims and premium dataused in the six empirical studies fall intofour general categories:

■ Physician-Reported MalpracticeClaims: One study used informationon the malpractice claims experiencefrom 1976 to 1981 recalled by 3,817self-employed physicians in a singlesurvey conducted by the AmericanMedical Association (2).

■ State-Level Malpractice Premiumsand Losses: Two of the studiesobtained insurance company data onmedical malpractice premiums andlosses from the A.M. Best Company,5

and aggregated those data to the Statelevel. Blackmon and Zeckhauserused the percentage change inpremiums and losses from 1985 to1988 (before and after adoption ofselected tort reforms by certain Statesin 1986) (12), Barker used the meanof each State’s ratio of losses topremiums (loss ratios) over a 10-yearperiod (1977-1986) (9).

■ Company-State-Year Claims Data:Two studies aggregated claims datafrom seven insurance companiesoperating in 49 States for the years1975 through 1984, supplemented inthe later study by data for 1985 and1986 (30,161). When more thanone company operated in a givenState, Danzon aggregated the com-panies’ data to the State-year level,yielding about 450 observations (30),(Data were missing for somecompanies in certain States and


Table 3-2--Summary of Data and Methods Used in Six Empirical Studies on State MedicalMalpractice Reform


Malpractice cost indicators:Claim frequency x - — x xPayment per paid claim:

Amount of payment — — x x xProbability of payment — — — — x —

Insurance premiums or losses - x x x

Unit of Observation:Physicians x - — — —States- X x — —Company-State-year

combinations — — — x xClaims — — — x —

Data sources:AMA/SMS surveya x - — — —A.M. Best Companyb — x x - -Insurance companies —

NAICC and GAOd

— x x— — — x —

aAmerican Medical Association Socioeconomic Monitoring SUfVeYbA M Best Company Is a private insurance rating servicecNatiOnal Association of Insurance Commissionersdu s, General Accounting mice

SOURCES: E.K. Adams, and S. Zuckerman, “Variation in the Growth and Incidence of Medical Malpractice Claims,’(

Journal of Health Politics, Policv and Law 9(3):475-488, Fall 1984; D.K. Barker, “The Effects of Tort Reform onMedical Malpractice Insurance Markets: An Empirical Analysis, ” Journal of Health Politics, Policy and Law,17(1 ): 143-161, Spring 1992; G, Blackmon, and R. Zeckhauser, “State Tort Reform Legislation Assessing OurControl of Risks,” in Tort Law and the Public Interest,, Peter H. Schuck (cd.) (New York: W.W. Norton & Co.,1991); P.M. Danzon, “The Frequency and Severity of Medical Malpractice Claims: New Evidence,” Law andContemporary Problems 49(2):57-84, Sprint 1986; F.A. Sloan, P.M. Mergenhagen, and R R, Bovbjerg, “Effectsof Tort Reforms on the Value of Closed Medical Malpractice Claims: A Microanalysis, ” Journal of HealthPolitics, Policy and Law 14(4):663-689, Winter 1989; S. Zuckerman, RR. Bovbjerg, F. and Sloan, “Effects ofTort Reforms and Other Factors on Medical Malpractice Insurance Premiums, ” Inquiry 27(2)’ 167-182,Summer 1990.


years.) In contrast, Zuckerman,Bovbjerg, and Sloan retained separatecompany-State-year observations,yielding 713 such observations (161).The largest multistate insurancecompany (the St. Paul Company)supplied Zuckerman, Bovbjerg, andSloan (16 1 ) with corrected data forthe years covered in Danzon’sstudy (30). The degree of inaccuracyin the original data supplied toDanzon is unknown.

■ N a t i o n a l S a m p l e s o f C l a i m s :One study (129) used a sample ofclosed medical malpractice claimscollected nationwide by the NationalAssociation of Insurance Com-missioners (NAIC) from 1975 through1978 and another such sample collectedby the U.S. General AccountingOffice (GAO) for 1984 (142). Thesesamples yielded about 1,700 claimsfor each of the 5 years.

Methodological Issues

All six of the empirical studies sufferfrom methodological problems and limitationsthat make interpretation and comparison oftheir results difficult. Below we discusssome general problems with the way State tortreforms and the malpractice cost indicatorswere measured.

Tort Reform MeasuresThe studies identified State tort reforms

either from direct examination of therelevant State statutes and regulations orfrom various published surveys of thoselaws, The specificity and accuracy of thesesurveys may have varied, and most did notreflect whether a reform had beenchallenged in court, as many had been. Acourt challenge can delay the actual

implementation of a reform and affect theaccuracy of the study findings. For example,the California tort reform package, whichincluded a cap on noneconomic damageawards, was not upheld by the StateSupreme Court until 1985, 10 years after itwas enacted into law (Fein v. PermanenceMedical Group, 695 P.2d 665 (Cal. 1985)).

For simplicity, the studies usuallygrouped often complex reforms into singlecategories, thereby obscuring importantvariations in those reforms. For example,most of the studies examined the effects ofchanges in State statutes of limitations. Stateshave taken widely differing approaches to thisreform (see ch. 2), For example. some Stateshave limited the period of time within whichinjured minors have to file suit, while otherStates allow the suit to be brought manyyears after the incident. Similarly, someStates allow suits involving foreign bodies leftin a patient following surgery to be broughtyears after the incident, while other Statesdo not. Many of the reforms that shortenedstatutes of limitations carved out suchexceptions, which may significantly limit theeffects of the reform (1 15),

States have taken equally diverseapproaches to other tort reforms. includingpretrial screening panels and voluntary,binding arbitration (see ch. 2 and app. A fordetails). These nuances cannot be fullycaptured in simple binary variables. Theinferences that can be derived from the resultsof the empirical studies are thus limited togeneral patterns associated with the presenceor absence of broad categories of reforms.

More importantly, collapsing differentapproaches to the same reform into a singlebinary variable will bias (toward zero) theestimated impacts of the truly effectiveapproaches, because the weaker approacheswill “water down” the effects of the strongerones. Consequently, finding a significanteffect of such a watered-down variable

—.—


suggests that the stronger approaches mighthave had even greater impacts than thefinding indicates. However, it is impossibleto deter-mine, based on these studies, whichspecific approaches might have had themore significant impacts.

Malpractice Cost IndicatorsIt is difficult to measure malpractice claim

frequency accurately on a State-by-Statebasis. It is not known to what extent thedifferent States and insurance companiesthat supplied the claims data for thesestudies may have used varying standards indefining a “claim. ” First, in addition toclaims filed in court. insurers may alsoinclude reports of adverse events fromproviders to insurers, informal complaintsfrom patients to insurers or providers, ornotices of intent to sue from attorneys toinsurers or providers. Second, the“opening” date of a claim is ordinarily usedin measuring claim frequency for a given timeperiod. However, different States andinsurance companies may have specified the“opening” date as being the date of injury,the date of initial contact with the insurer.or the date a lawsuit was filed. Third, formalpractice claims against institutions (i. e.,hospitals), States and insurers may not al-ways distinguish between claims for generalliability (unrelated to health care -- e.g., anaccident in the parking lot or a wrongfultermination of employment) and claimsfor professional (physician and nurse)malpractice (51 ).

In addition, measuring trends inmalpractice claim frequency may bedistorted by changes in State malpracticelaws. Certain tort reforms themselves mayhave led to changes in the way malpracticeclaims were recorded and counted, therebycreating illusory trends in claim patterns.6

All of these variations in the nature ofmalpractice claims may have reduced thereliability of the studies’ malpractice costindicators, particularly claim frequency.

A final issue regarding three of theseselected studies is the potential impact ofother influences on malpractice insurancepremiums. notably interest rates. Althoughthey directly affect insurance companiesinvestment income (which augments theirpremium income), at any given point in timeinterest rates tend to affect all companiesequally. That is, the variation in interest ratesoccurs mainly over time rather than acrosscompanies or States. By using either cross-sectional research design or direct statisticaladjustment, the studies examined hereeffectively control led for the effects ofinterest rates on malpractice premiums.

Another important determinant of thevariation across States in malpracticepremiums is State regulation of insurancepremium increases. Of the three studies ofinsurance premiums or losses examined here.only one statistically controlled for this factor(161); the other two studies did not (9,12).Along with the other methodologicallimitations discussed above, this problemshould be kept in mind when interpreting theresults of these studies.

RESULTS

Based on the findings of these sixempirical studies, OTA assessed the impactof each reform on the malpractice costindicators: claim frequency, payment perpaid claim. and insurance premiums orlosses. Across the six studies, paymentper paid claim and insurance premiumsor losses were studied more compre-hensively than was claim frequency.

Consequently, claim frequency had less ofan opportunity to show statistically significantresults than did the other measures. That is,the more often the effect of a givenreform is assessed (using separate butsimilar measures), the more likely it is thata significant effect will be found.Unless adjustments are made for suchmultiple comparisons, the results arebiased in favor of finding a statisticallysignificant effect.


The collective results of these sixstudies, detailed in appendix C, aresummarized in table 3-3. In the table, thefollowing symbols are used to represent thestatistically significant findings of the sixstudies. (Two or more symbols separatedby slashes indicate that two or more studiesfound significant results .)7

■ A minus sign (–) means that a Statetort reform showed the expectedeffect of reducing the malpracticecost indicator.

■ A plus sign (+) indicates that thereform showed the unexpectedeffect of increasing the malpracticecost indicator.

■ A zero (0) denotes results that werenot statistically significant.

■ A dot (.) means that the relation-ship was not examined in any ofthe six studies.

Caps on Damage Awards

Overall, caps on damage awards werethe only type of State tort reform thatconsistently showed significant results inreducing the malpractice cost indicators.The most consistently observed effects ofdamage caps were in reducing payment perpaid claim, observed in three studies thatemployed several different variables for thetort reform of damage caps and differentmeasures of payment per paid claim(30, 129, 161). However, the only studythat examined the impact of damage caps on

8 found no significantclaim frequencyeffect of either a cap on total damages or acap on noneconomic damages only (161).

Even though caps on damages directlyaffect only a small minority of cases, thisminority often accounts for a dispropor-tionate share of total malpractice payments(49, 142). In addition, it is the large,

unexpected claim that makes it difficult forinsurers to plan reserves. Minimizing theselarge awards may allow insurers to bettermatch premiums to risk.

Sloan, Mergenhagen, and Bovbjergfound that, among the many State reformsthey examined, caps on damage awards--whether for total damages or only fornoneconomic damages--had the greatestimpact on reducing payment per paid claim(129). However, neither type of damagecap affected the probability that a claimwould result in payment. Caps on punitivedamages alone showed no significantimpacts on either payment per paid claim orthe probability that the claim would resultin payment.

Curiously,Sloan founddamages signpayment per

Zuckerman, Bovbjerg, andthat caps on noneconomicificantly lowered malpracticepaid claim, whereas caps on

total damages did not (161). One possibleexplanation is that statutes enacting a totalcap on damages were most likely to beimmediately challenged in court becauselimiting economic damages (e.g., medicalexpenses) regardless of the severity ofinjury has a potentially greater adverseimpact on plaintiffs than does limiting onlydamages for pain and suffering.9 O n l yeight States have passed caps on totaldamages (see ch. 2). If these statutes werechallenged immediately after enactment,they might not have had their full potentialeffect.

Zuckerman, Bovbjerg, and Sloan alsofound that a cap on total damages was themost effective reform in reducing malpracticeinsurance premiums (161). Similarly,Blackmon and Zeckhauser found that limits onoverall liability significantly reducedpremiums as well as malpractice insurers’losses (12). The results for caps onnoneconomic damages were less consistent,however. Blackmon and Zeckhauser found

.


that limits on only noneconomic andpunitive damages significantly reducedmalpractice premiums as well as insurers’losses (12). 10 In contrast, Zuckerman,Bovbjerg, and Sloan found no significanteffect of noneconomic damage caps onpremiums (161). Barker, however, found thatany cap on damages significantly reduced themean of the malpractice insurance loss ratioin the State (an indicator of expectedpremiums) (9).

To summarize. these five studiessuggest that caps on damages are effectivein lowering payment per paid claim and,hence, malpractice insurance premiums.The only study that assessed the effects of adamage cap on the frequency of claimsfailed to find such an effect.

Statutes of Limitations

The evidence regarding the impact ofshorter statutes of I imitations on medicalmalpractice claim frequency was mixed.Danzon found that shortening the basicstatute of limitations significantly reducedclaim frequency (30). In contrast, bothAdams and Zuckerman (2) and Zuckerman,Bovbjerg, and Sloan (161) found that shorterstatutes of limitations raised claim frequency.A possible explanation is that shorter statutesof limitations force more plaintiffs to file theirsuits earlier, thereby raising claim frequencyin the short run. In addition, Zuckerman,Bovbjerg, and Sloan found no significanteffects of shorter “discovery periods” orshorter statutes of limitations for minors(161). Adams and Zuckerman examined theproblem from the opposite perspective. i.e.,whether the use of the discovery rule--which lengthens the time period for bringing asuit--affected claim frequency (2). Theyfound no significant effect.

Adams and Zuckerman also comparedthe frequency of claims before 1976, whenstatutes of limitations were generally longer,

to the frequency of claims brought between1976 and 1981 (2). The initial upsurgein frequency in the first five years is not onlyconsistent with the findings of Zuckerman,Bovbjerg, and Sloan (161), but it is alsoconsistent with one of the objectives oflowering the statute of limitations: to forceplaintiffs to tile claims closer to the date ofinjury. Whether shortening the statute oflimitations reduces the overall number ofclaims filed in the long run, however, hasnot been adequately studied.

Reform of statutes of limitations showedno significant effect on payment per paidclaim in the two studies that examined thisquestion (129, 161 ).11 Also, the claim-levelanalysis by Sloan, Mergenhagen, andBovbjerg found no significant effect of shorterstatutes of limitations on the probability thata claim would result in payment (129).

Two studies examined whether shorterstatutes of limitations lowered malpracticeinsurance premiums, with mixed results.Zuckerman, Bovbjerg, and Sloan found thatshorter statutes of limitations (except thosefor minors) significantly reduced suchpremiums (161 ). Blackmon and Zeckhauser,on the other hand, found no significanteffect of shorter statutes of limitations oneither premiums or losses for malpracticeinsurance (12), In addition, Barker foundno significantlimitations oninsurance loss

impact of shorter statutes ofthe mean of the malpracticeratio in the State (9).

Pretrial Screening Panels

As mentioned earlier, the numerousvarieties of pretrial screening panels cannoteasily be lumped into a single binaryvariable, so it is not surprising that theresults of the empirical studies were somixed regarding this reform. The twostudies that examined the impact ofscreening panels (of any type) on thefrequency of medical malpractice claims


Table 3-3--Summary of Results of Six Empirical Studies on State Medical Malpractice Reforma

Claim Payment per InsuranceReform frequency paid claim premiums

Restrict the statute of limitations:a.b.

;:

Use date of event, not discoveryShorten basic statute of limitations

for medical malpracticeShorten statute of limitations for minorsShorten extension of statute of

o ●

- / + / +o

0/0o

- / 0 / 0o

limitations from date of discovery

Establish pretrial screening panels:a. Mandatoryb. Results admissible in trialc. Any type

Limit contingent attorney fees

Modify the standard of care:a. Codify the standard of careb. Do not adopt the “expanded locality rule”c. Establish qualifications for expert

witnesses

Require or allow awards to be reducedby amount of collateral payments:a. Requireb. Allow


Impose caps on damage awards:a. Total damagesb. Noneconomic damages onlyc. Punitive damages onlyd. Noneconomic or punitive damagese. Any type

Require or allow periodic payments:a. Requireb. Allow


Restrict the joint and several liability doctrine

o 0/0 —

o

0;0

0/+—

0/0/ +

0 /0 /+0/0 0/0

o●

●

o

o● ●

- / - / -0/0

0/00

—

00

0/0—

- / 0

- / -0●

00●

—

0●

●

● —

00●

●

●

0

● ●

.


Table 3-3--Summary of Results of Six Empirical Studies on State MedicalMalpractice Reforma (Continued)

Claim Payment per InsuranceReform frequency paid claim premiums

Allow voluntary, binding arbitration:a. Codify the option of arbitration for

medical malpractice + - / 0 / 0 ob. Allow pre-injury agreements to arbitrate o 0 0

Restrict the use of res ipsa loquitur o 0 0

Restrict the use of ad damnum clauses ● o ●

Limit the doctrine of informed consent — o ●

Allow costs awardable in frivolous suits o - / 0 o

aKey to symbols:– Results statistically significant and in expected direction (reducing direct malpractice costs)+ Results statistically significant and in unexpected direction (increasing direct malpractice costs)O Results not statistically significant. Not examined in the studies reviewed here

NOTE: Each symbol (-, + ,0, or ,) corresponds to the result of a single study. For example, “ +/-/0” means that the reformwas examined by three studies. Symbols based on the study by Danzon (Danzon, 1986) refer to her two-stageleast-squares (TSLS) regression analysis (see text).

SOURCES: E.K. Adams, and S. Zuckerman, “Variation in the Growth and Incidence of Medical Malpractice Claims,”Journal of Health Politics, Policv and Law 9(3):475-488, Fall 1984; D, K. Barker, “The Effects of Tort Reform onMedical Malpractice Insurance Markets: An Empirical Analysis, ” Journal of Health Politics, Policv and Law,17(1 ): 143-161, Spring 1992; G. Blackmon, and R. Zeckhauser, “State Tort Reform Legislation: Assessing OurControl of Risks,” in Tort Law and the Public Interest, Peter H. Schuck (cd.) (New York W,W. Norton & Co.,1991); P.M. Danzon, “The Frequency and Severity of Medical Malpractice Claims: New Evidence,” Law andContemr20rarv Problems 49(2):57-84, Spring 1986; F.A. Sloan, P.M. Mergenhagen, and RR, Bovbjerg,“Effects of Toti Reforms on the Value of Closed Medical Malpractice Claims: A Microanalysis,” Journal ofHealth Politics, Policy and Law 14(4):663-689, Winter 1989; S. Zuckerman, R.R. Bovbjerg, and F. Sloan,“Effects of Ton Reforms and Other Factors on Medical Malpractice Insurance Premiums,” Inquiry 27(2):167-182, Summer 1990.


found no significant result (30,161).However, one of those studies found that suchpanels significantly increased payment perpaid claim (161). Sloan, Mergenhagen,and Bovbjerg found that pretrial screeningpanels--whether their use was mandatory orvoluntary, or whether the screening resultscould be admitted as evidence in asubsequent trial--had no significant impacton the probability that a claim would resultin payment (129). However, mandatoryscreening panels significantly increasedpayment per paid claim, whereas voluntaryscreening panels significantly reduced onemeasure of payment per paid claim (amount ofindemnity payment only, without “loss-associated expenses”).

A possible explanation of these mixedfindings is that pretrial screeningsuccessfully weeds out smaller malpracticeclaims. perhaps because of the added costof taking the claim through the pretrialscreening procedure, leaving only caseswith higher potential awards in the universeof cases. Some defense attorneys believethat pretrial screening panels may result inbetter trial preparation, thereby allowingplaintiffs to better develop their cases,hence leading to larger awards (48,121).On the other hand, such panels could raisethe cost of pursuing a claim and therebyforce the plaintiff to settle for less.

The difference in results depending onwhether the use of screening panels wasmandatory or voluntary is more difficult tointerpret. however, First, of the 26 States thathad pretrial screening panels in 1980, onlyeight made the use of such panels voluntary.Many of these were relatively small States,and when screening is discretionary it tendsto be used infrequently (20). Consequently,the sample size of paid claims from Stateswith voluntary panels was probably small.

Only one study examined whetherpretrial screening panels (of any type)reduced malpractice insurance premiums,finding a significant effect only on

obstetrics/gynecology premiums, but not ongeneral practice or general(161). 12

Standard of’

During the 1970s, apassed laws codifying

surgery premiums

Care

number of Statesthe standard of

medical care. These laws did not reallyalter the legal standard used in medicalmalpractice cases but instead merelydocumented that physicians’ conduct mustmeet the customary care provided in theirprofession, as defined in the physicianslocality or similar localities (see ch. 2). SomeStates also set qualification requirementsfor expert witnesses who testify as towhat is the prevailing standard of care.In addition, some States allowed the standardof care to be established by practices outsidethe immediate locality where the defendantphysician practiced (the “expanded localityrule”).

None of the empirical studies examinedthe impact of codifying the standard of careon the frequency of medical malpracticeclaims. One study examined the effect onclaim frequency of adopting an expandedlocality rule, but found no significant results(2). Regarding payment per paid claim,Sloan, Mergenhagen, and Bovbjerg found nosignificant impact of establishing qualificationsfor expert witnesses on either payment perpaid claim or the probability that the claimwould result in payment (129). Finally, in theonly study related to malpractice insurancepremiums, Barker found no significant effectof codifying the standard of care on the meanof the malpractice insurance loss ratio in theState (9).

The measures of standard of carereforms used in these three studies, however,may not have been accurate enough todetect any significant effects. First, withrespect to adopting an expanded localityrule, by the time these reforms wereenacted, many courts were already usingsuch a rule (see ch. 2). Furthermore, moving


to an expanded locality would probably haveaffected rural areas to a greater extent thanurban ones, because rural localities hadmuch more limited expert witness poolsunder the strict locality rule. Because ruralareas have fewer malpractice cases, thestudies would have had difficulty detectinganything but very large effects. Second,codification of the existing standard of caredid not alter the legal definition of negligence,and it is debatable whether mere codificationhad a significant impact on malpracticeclaim activity.

Collateral Source Offsets

The adoption of collateral source offsetsshould reduce average awards; and if theexpected payment declines, fewer claimsshould be filed. Together, lower awardsand fewer claims should reduce premiums.

The two studies that examined the effectof collateral source offsets on the frequencyof medical malpractice claims (30, 161) foundthat mandatory offsets had no significantet’feet . However, Danzon’s measure thatincluded discretionary as well as mandatoryoffsets showed a significant reduction inclaim frequency. Both of these studies alsofound that mandatory collateral source offsetssignificantly reduced payment per paidclaim. Danzon’s more general measure(including discretionary as well asmandatory offsets) also showed a significantimpact in reducing payment per paid claim.

Sloan, Mergenhagen, and Bovbjerg foundthat one measure of payment per paid claim(indemnity payment plus “loss-associatedexpenses") was significantly lower in Stateswith mandatory collateral source offsets(129). However, that study foundsignificant impacts of either mandatorydiscretionary collateral source offsets onprobability that a claim would resultpayment.

noor

thein

Blackmon and Zeckhauser (12) as wellas Zuckerman, Bovbjerg, and Sloan (161)found no significant impact of collateralsource offsets on malpractice insurancepremiums. Nor did Blackmon andZeckhauser find any significant effect ofsuch offsets on insurers losses (12).Moreover, Barker found no significantimpact of collateral source offsets on themean of the malpractice insurance lossratio in the State (9).

Limits on Attorney Fees

Neither of the two studies thatexamined the impact of limitations onattorney fees on the frequency of medicalmalpractice claims found significant effects(30,161). Ironically, one of these studiesfound that limits on attorney fees resulted insignificantly higher levels of payment perpaid claim (161 ). This could reflect atendency for plaintiffs attorneys to turndown cases with low expected paymentwhich would increase the average paymentper paid claim. However, Danzon found nosignificant effect of attorney fee limits onpayment per paid claim (30). Moreover,the claim-level ana lys i s by Sloan,Mergenhagen, and Bovbjerg found nosignificant impact of such limits on eitherpayment per paid claim or the probabilitythat the claim would result in payment(129).

Studies of the impact of these limitson malpractice insurance premiums alsofailed to find significant effects. NeitherZuckerman, Bovbjerg, and Sloan (161)nor Blackmon and Zeckhauser ( 12) foundany significant effects of limiting attorneyfees on premiums. and Blackmon andZeckhauser found no significant impactof such 1 imitations on insurers losses(an indicator of expected malpracticepremiums) (12).


These results do not necessarily meanthat limits on attorney fees won’t affectmalpractice claims or premiums. Many ofthe specific reforms of this type have notplaced absolute limits on attorney fees,but instead give the courts discretion inadjusting contingent fees. As onecommentator noted, lawyers may haveexpected judges to be liberal (1 15). Theempirical studies, however, present noevidence as to how the courts regulatedattorney fees. Even where courts set limits,in certain cases those limits were close to33 percent, the average contingency feewithout a limit. 13

Voluntary, Binding Arbitration

Arbitration is rarely used in medicalmalpractice cases. Therefore, it is difficult todraw conclusions regarding this type ofreform from the studies reviewed here,especially since they produced mixedresults. Danzon found that arbitrationprovisions significantly increased thefrequency of malpractice claims, butsignificantly reduced payment per paidclaim (30). In contrast, Zuckerman,Bovbjerg, and Sloan found no significantimpact of allowing pre-injury arbitrationagreements on the frequency of malpracticeclaims, the amount of payment per paidclaim, or the level of malpractice insurancepremiums (161). Similarly, Sloan,Mergenhagen, and Bovbjerg found nosignificant impact of such provisions on eitherpayment per paid claim or the probability thata claim would result in payment (129).Finally, Barker found no significant effectof codifying the option of arbitration on themean of a State’s loss ratio for medicalmalpractice insurance (9).

Because arbitration as implemented inthe States has been voluntary and rarelyused, the power of the studies to pick upsignificant effects is severely restricted. Also,the details of an arbitration scheme may be

important in determining its effect on paymentper paid claim (and, hence, frequency andpremiums). Danzon recognized that herfindings regarding claim frequency may havebeen anomalous. “since arbitration wouldprobably only be adopted by a minority ofpatients and providers even in states withenabling legislation” (30). Her measurecaptured only those 15 States that developedspecific legislation governing arbitration ofmalpractice claims. In most other Statesarbitration was already an option once aninjury occurred. The enforceability ofpre-injury arbitration contracts was thU S

addressed in some States by malpracticearbitration statutes, but in others it wasoften governed by case law (see ch. 2),

the

Res Ipsa Loquitur

The only empirical study that examinedeffects of restricting the use of res ipsa

loquitur on malpractice claim frequencyfound no significant results (2). Similarly,Sloan, Mergenhagen, and Bovbjerg found nosignificant impact of restricting this doctrineon either payment per paid claim or theprobability that the claim would result inpayment (129). And Barker found no effectof this reform on the mean malpracticeinsurance loss ratio in the State (9).

Informed Consent

The study by Adams and Zuckermanwas the only one that examined the effectson malpractice claims frequency of usingan expansive (i. e., patient-oriented) doctrineof informed consent (2). It found that, inStates that required physicians to givepatients sufficient information to enablethem to make an informed decision, 14 therewas a significantly greater number ofmedical malpractice claims. However,Sloan, Mergenhagen, and Bovbjerg foundthat statutory limits on this broader doctrine(i.e., specifying the type of information that


must be disclosed or mandating that therequirements for disclosure be determinedby professional custom) did not have asignificant impact on either payment perpaid claim or the probability that a claimwould result in payment (129). None of theempirical studies examined the impact ofchanges in informed consent requirementson malpractice insurance premiums or losses.

Costs Awardable

Only two studies examined the effect ofState laws that allowed the judge in medicalmalpractice suits to make the losing partypay all attorney fees when the suit isfrivolous or fraudulent. Zuckerman,Bovbjerg, and Sloan found no significantimpacts o f such “ costs awardable”provisions” on medical malpractice claimfrequency, payment per paid claim, orpremiums (161). Sloan, Mergenhagen,and Bovbjerg found no significant impactof this type of reform on the probabilitythat a claim would result in payment (129).However, that study did find that paymentper paid claim was significantly lower inStates that had enacted such a provision( 129). With the exception of this onefinding, the results are predictable becauseit is likely that few suits were judgedfrivolous or fraudulent.

Periodic Payments

Only two empirical studies examinedthe impact of mandatory or discretionaryperiodic payments on payment per paidclaim (12. 129). Sloan, Mergenhagen, andBovbjerg found no significant impact either onpayment per paid claim or on the probabilitythat the claim would result in payment (129).Similarly, Blackmon and Zeckhauser foundno significant impact on malpractice insurancepremiums or insurers’ losses (12). Neitherstudy examined the effect of this type ofState tort reform on medical malpracticeclaim frequency.

Other Reforms

Each of the remaining State tortreforms 15 was examined by only one study,so no corroboration of results is possible.These one-study results are summarizedbriefly below.

■ Blackmon and Zeckhauser foundthat restr ict ing a State’s lawregarding joint and several liability(which traditionally allows a winningplaintiff to recover damages fromall defendants or the entire amountfrom a single defendant) significantlyreduced medical malpracticeinsurance premiums ( 1 2).

■ Sloan, Mergenhagen, and Bovbjergfound that restricting the use of addamnum clauses (which specify atthe outset of a lawsuit the amountof damages demanded by theplaintiff) had no significant impacton either payment per paid claim orthe probability that the claim wouldresult in payment ( 129).

SUMMARY

Our review demonstrates that empiricalevidence regarding the impact of State tortreforms on the malpractice cost indicatorsis quite limited. We focused on sixstudies that used empirical methods tosystematically analyze the impacts of Statetort reforms while controlling for nontortinfluences on the malpractice cost indicators.All of these s tud ie s had se r iousmethodological flaws. For example, two ofthe three studies of malpractice premiums orlosses failed to control for State regulation ofinsurance premium increases. Moreover, asusually happens when multiple measures ofthe same concepts are used in one or morestudies, significant results tended to occurmore often among the measures that wereexamined more often. Not surprisingly. the


six studies often produced conflictingresults. Nevertheless, the limited availableevidence suggestsconclusions.

Reforms that

the following tentative

Significantly ReducedDirect Malpractice Costs

The following tort reforms showedconsistent, significant impacts in reducingone or more of the malpractice cost indicators:

■ Caps on damage awards■ Mandatory collateral source offsets.

Reforms with Mixed or Isolated Effects

The following reforms showed eithermixed effects (i. e., some significant resultsin the positive direction and some in thenegative direction) or isolated effects (i. e.,only one significant result) on one or moreof the malpractice cost indicators:

■ Restricting the statute of limitations■ Establishing pretrial screening panels■ Limiting the doctrine of informed

consent■ Allowing costs awardable in frivo-

lous suits.

Reforms that Were Not Found toSignificantly Reduce Direct

Malpractice Costs

The following tort reforms showed nosignificant impacts in reducing one or moreof the malpractice cost indicators:

■ Limits on attorney fees16

Modifying the legal standard of care■ Mandatory or discretionary periodic

payments■ Restricting the use of res ipsa loquitur

Reforms Examined Only by SingleStudies

As noted earlier, each of the followingreforms was examined by only one study,so no corroboration of results is possible:

■ Restricting the joint-and-severalliability doctrine

■ Restricting the use of ad damnumclauses.

Reforms Not Yet Systematically Studied

None of the empirical studies reviewedin this report examined the impact of two ofthe more recent types of State tortreform on the malpractice cost indicators:(a) alternative dispute resolution (althoughfour studies examined the effects ofvoluntary, binding arbitration); and (b) theuse of practice guidelines as legalof care.

Alternative Dispute ResolutionAlternative dispute resolution

an approach to avoiding formalthat includes both voluntary,

standards

(ADR) islitigationbinding

arbitration (see the preceding section) and avariety of nonbinding approaches. Thelatter include neutral evaluation, court-annexed arbitration, summary jury trials(SJTs), and mediation (see ch. 2 for adescription of ADR approaches). None ofthese approaches has been extensively usedin medical malpractice cases. Thus, fewopportunities are likely to arise in the nearfuture for using systematic empiricalmethods to examine the effects of ADR onmedical malpractice claim frequency,payment per paid claim, and insurancepremiums or losses.

Of course, the fact that ADR has notbeen extensively used does not preclude thepossibility that it could have a significantimpact on the malpractice cost indicators ifit were used. The direction of that impact,however, is unknown, Arbitration mayreduce the administrative costs of resolvingcertain claims, but a reduction in the cost ofresolving a claim could lead to an increasein malpractice claim frequency. For now,the reluctance to use ADR when it is not

Chapter 3--Impact of State Tort Reforms~ -73

mandatory, coupled with questions about itsconstitutionality when mandatory, suggeststhat binding ADR is unlikely to have muchof an impact on direct malpractice costs.

Use of Practice Guidelines as the LegalStandard of Care

It will be some time before evenanecdotal evidence is available regarding theimpact of guideline-oriented tort reforms inMaine, Minnesota. and Vermont on themalpractice cost indicators. However,given the limited number of guidelinesl ikely to be adopted and the smallpercentage of claims they would be likelyto affect. a significant impact of thesereforms on overall malpractice costs doesnot seem likely.

A number of factors involved in guide-lines development and use may limit boththe feasibility and potential impact of tortreforms that adopt specific guidelinesas legal standards of care (see ch. 2).However, as their development continues,guidelines are likely to play an increasinglyimportant role in determining the standardof care under the existing system, absentspecific tort reform.

CONCLUSION

Based on the six empirical studiesreviewed in this chapter, only caps ondamage awards and collateral source offsetsappear to consistently reduce one or moreof the malpractice cost indicators. Aspredicted, both reforms reduce payment perpaid claim, and caps on damages also leadto lower insurance premiums. Thehypothesized effect that limiting potentialclaim payments would discourage medicallyinjured patients from filing suit is notsupported by these studies. It may be

surprising that other reforms did not showthe predicted effect of reducing one or moreof the malpractice cost indicators.Problems with malpractice claims datamake any conclusions on claim frequencytentative at best. However, the paucity ofevidence regarding other approaches to tortreform, particularly novel alternatives tothe present litigation system, suggests thatthese conclusions on other reforms shouldbe tempered with a good deal of caution.

In this paper, OTA focused itsassessment of the impact of tort reforms onthe indicators that best reflect directmalpractice costs. They may also act asmalpractice “signals” that influencephysicians’ practice patterns. However, it isby no means certain that these measuresinfluence health care costs indirectly, throughsignals to physicians. OTA’s larger studyof “defensive medicine” will address thisbroader question of whether physicians altertheir clinical choices (most importantly, byordering more diagnostic tests than may bemedically indicated) at least in part out offear of malpractice suits. It will alsoattempt to shed more light on whichmalpractice signals affect physicianbehavior and the potential impact of tortreform on these signals.

Even if tort reforms do reduce medicalmalpractice costs, does this mitigate thedeterrent effect on physician behavior,removing the incentive for more thoroughdiagnostic assessment of patients? If so,does this jeopardize the overall quality ofpatient care? And finally, do reducedmalpractice costs really contributesignificantly to restraining overall healthcare costs? These are the ultimatequestions to be addressed in assessing thevariety of tort reforms that have been triedin the States or proposed for nationalaction.



IThe final report of OTA)s assessment of defensive medicine will contain a review of the m~JOr s@le-

State studies. That review will include the recent study by Gronfein and Kinney (49), which comparesthree States but focuses on the impact of a single tort reform (a cap on total damage awards coupledwith a patient compensation fund) in Indiana.

2Th e study by Adams and Zuckerman did not examine tort reforms, but instead asked whether certain

common-law doctrines -- which were used more frequently in malpractice cases during the 1970s --were associated with higher claim frequency during that same period (2). For the sake of consistency,our tables that summarize the results of these six studies have recast Adams and Zuckcrman’smeasures so that the expected result would be to reduce malpractice claim frequency.

3Barker used a binary variable to indicate whether or not the State’s Sla[UIC Of lil_Ilita[iOnS was greater

than 3 years (9).

4We excluded another measure employed bY Dan~on: the logarithm of [hc raw number of malpracticeclaims filed (30). This measure of the sheer volume of claims tends to be higher in larger Statesbecause it does not take into account the number of insured physicians in the State as a denominator.

5Th e A.M. Best Company is a private insurance rating service.

61n several States (e.g., California, New York, Indiana, and Florida), the rnalpracticc reform packageincluded a requirement that malpractice insurers report all malpractice claims to the State departmentof insurance or the medical licensing board (141).

7Although Danzon used both ordinary least-squares (OLS) and two-stage Icast-squares (TS~)regression analysis, she noted that the latter results “were probably more reliable” (30), Accordingly,our summary of her results here are based only on hcr TSLS analysis. However, both hcr OLS andTSLS results are presented in appendix C.

8Danzon examined the impact of damage caps on payment pcr paid claim, but not on claim frequency

(30).

9caps on tota] damages have been Ovcrru]ed more often than CapS on noncct)non~ic danl~g~s (105).

IOBccause punitive damages arc rarely awarded in malpractice suits (SCC Ch. ~), this reduction is

probably duc to caps on noneconomic damages.

I IDanzon examined the effect of statutes of limitations on ma]practicc claim frequency, but not on

payment per paid claim (30).

12Zuckerman, Bovbjcrg, and Sloan hypothesized that pretrial screening may bc particularly good at

screening out nonmeritorious obstetric cases or encouraging settlement (161). obstetric cases areunique because of the emotional impact of having a severely impaired baby and the tendency toassume that the birthing process was to blame, especially if there was no prior indication of anyimpairment.

13[3A0 found that in 52 percent of claims the average attorney fcc was bctwccn 31 and 40 pcrccnt. In

about 96 percent of claims, attorney fees reprcscntcd 40 pcrccnt or Icss of the indemnity payment(142), See also (127).

Chapter 3--Impact of State Tort Reforms -7.5

141t is not ~lcar from the study whether this is an objcctivc (i.~., reasonable patient) standard or asubjective (i.e., particular patient) standard, or whether medical custom is rclc~rant in determiningadequacy of consent.

150nc study did not examine tort reforms, but instead asked whether certain common-law doctrines

8

■

■

were associated with higher malpractice claim frequency (2). That study found no significant impactsfor the following doctrines:Allowing the usc of the respondeal superior doctrine (under which a hospital can be sued for theactions of the physicians who practice at that hospital);Restricting the use of charitable immunity as a defense by hospitals based on [heir non-profit status;andRestricting the usc of government immunity as a dcfcnsc by hospi[als h:iscd on their publicownership.

160ne study found that limits on attorney fees significantly increased malpractiw payment per paidclaim (161).

Appendix AState Medical Malpractice Reforms

EXPLANATION OF METHODS USEDBY OTA TO COMPILE DATA

The tables, figures, and accompanyingnotes in appendix A were derived from avariety of sources and synthesized by OTAto reflect the most recent information availableon selected State medical malpractice reforms.

The primary published sources were 1991and 1993 editions of a compendium developedfor the Federal Agency for Health Care Policyand Research (AHCPR), 1 selected State stat-utes. and judicial cases. Two additionalsources were used to update. cross-check, andsupplement the AHCPR compendia.2

After compiling information from thesesources into summary tables, OTA sent draftcopies of the information to the attorneysgenera] in all 50 States on March 24, 1993,

for confirmation or amendment. Informationwas changed to reflect respondentscomments. Where conflicts arose between

the attorney general response andinformation found elsewhere. the attorneysgenerals responses were favored.Unresolved questions were addressedthrough follow-up phone conversationswith attorney general respondents andstatutory research. The revised drafts weresent again to all 50 State attorneys general onJune 25, 1993, for a final review and anycorrections were incorporated.

For States that responded to the firstsurvey only. information is current toMarch 1993. For States that responded tothe second survey. information is current toJune 1993. For the 10 States3 that did notrespond to either review and the District ofColumbia, information was cross-checked andsupplemented through followup telephonecalls and/or review of the relevant State codeswhere possible. Where confirmation wasnot possible, information in this appendixreflects that presented in the 1993 edition ofthe AHCPR compendium.

1 us Dcpar(mcnt of Hca]th and Human SCrViCCs, Agency for Health Care Policy and Research,‘( Conlpcndium of State Systcms for Resolution of Medical Injury Claims,” prepared by S.M. Spernak,Center for Health Policy Research, The Gctorgc Washington University (Rockville, MD: AHCPR,April 1993), AHCPR Pub. No. 93-0053; U.S. Department of Health and Human Services, Agency forHealth Care Policy and Research, “Conlpcndium of State Systems for Resolution of Medical InjuryClaims,” prepared by S.M. Spcrnak and P.P. Budc[ti, Center for Health Policy Research, The GeorgeWashington Univcrsi[y (Rockvillc, MD: DHHS, February 1991), DHHS Pub. No. (PHS)91-3474.

2Thcsc sources were: Fisk, M. C., “The Reform .Juggcrnau[ Slows Down,” The National Law Journal15(10): 1,.34-37, NOV. 9, 1992; Amcriczm Nurses Asst~cia{ion, “Rcpor[ [o ANA Board of Directors onTort Reform, Part 3: Prcscnta[ion of Sclcctcd Summary of State and Local Legislation Related toTort Reform and Rc\icw of Insurance Company Practices and Policies Related to NursingNcgligcncc with Rccom-mcndations,(’ D~ccml]cr 19[)1.

~DE, FL, HI, KS, KY,Mf$, NJ, NM, TX, Wv.

- 7 7 -


Table A-l--Collateral Source Offset Provisions,a by State, 1993

Mandatory Discretionary No provision

co*CTFL1AIL*IDKSO*

MA*MEMlMN*MT*NJNMNYOH*RI*TNUT

AK*ALAZCADEINKYMD*N DO*

ORSD

ARDCGAO

HILAMO*MSNCNEN Ho

NV*OKP Ao

SCTXVAv-rWA*WIWV

aThe traditional collateral source rule forbade evidence of the plaintiff’s Collateral sOurCes of incomeand reimbursement (e.g., medical insurance, disability payments) from being entered into evidence,States classified as “mandatory” or “discretionary” in this table have modified the traditional evi-dence rule to allow certain types of collateral sources to be admitted as evidence. Statutes whichrequire that the plaintiff’s award be offset by certain collateral sources are classified as mandatory,Statutes that leave the decision of whether to offset to the jury or judge are classified as discretion-ary, States with no provision have not modified their traditional collateral source rules, It is of notethat a number of States reduce the malpractice award by the collateral source payments, but creditthe plaintiff with any premiums he or she has paid or will pay to obtain the insurance (e.g., MN, Ml,CT, Rl, IL and NY).

O = provision overturned,

* See additional notes on following pages.


Appendix A--State Medical Malpractice Reforms -79

ADDITIONAL NOTES FOR TABLE A-1

Cases Overturning Collateral Source Offset Rules:

Georgia--Denton v. Con-Way Southern ExpressInc,, 402 S.E.2d 269 (Ga. 1991) (statutemandating evidence of collateral sourcesviolates guarantee of impartial and completegovernmental protection).

Kansas--see explanation below.

New Hampshire--Carson v. Maurer, 424 A.2d.825 (N.H. 1980).

Selected Additional Information:

Alaska--Collateral source offset determined bythe court (Alaska Stat. Supp. Sees.9.55.548; 9.17.070 (1992)).

Colorado--Collateral source offset determinedby the court (Colo. Rev. Stat. Sec. 13-64-402 (1992)).

Illinois--Reduction of collateral source is for 50percent of collateral payments for lostwages or disability benefits and 100 per-cent of medical benefits (with exceptions),but no more than 50 percent of the totalverdict (735 ILCS 5/2-1 205 (West 1992)).

Kansas--When claimant demands $150,000 ormore, evidence of collateral sources ad-missible. Reduction of award by collateralsource amount is subject, however, tocertain limitations (KSA Sees. 60-3801 -3807 (Supp. 1992)). This statute applies toall personal injury suits. The original statuteabrogating collateral source for medicalmalpractice suits only was struck down(FarleV v. Enqelken 740 P.2d 1058 (1987)).Also, in Wentlinq v. Medical AnesthesiaServices, P. A., 701 P.2d 939 (Kan. 1985),court held that collateral source offsetswere unconstitutional in wrongful deathmedical malpractice cases.

Maryland--An award of damages by a medicalmalpractice arbitration panel may be re-duced by the amount of damages reim-bursed by certain collateral sources

North Dakota--Arneson v. Olson, 270 N.W.2d125 (N. D. 1978) held an earlier statute forcollateral source offsets unconstitutional.

Pennsylvania--The Pennsylvania SupremeCourt struck down as unconstitutional theState statute providing for pretrial screen-ing panels. The collateral source provisionwas a part of that statute and was nullified.Mattes v. Thommon 421 A.2d. 190 (1980).

(Md. Cts. & Jud. Proc. Code Ann. Sec. 3-2A-05(h) (Michie 1989)). (See table A-5and Additional Notes to table A-5 for de-scription of Maryland’s arbitration panelprovision.)

Massachusetts--Collateral source offset de-termined by the court (Mass, Gen. LawsAnn. ch. 231, Sec. 60G (Lexis 1992)).

Minnesota--Offset is mandatory if defendantbrings in evidence of payments made toplaintiff by collateral sources (Minn. Stat.Sec. 548.36 (1992)).

Missouri--Damages paid by defendant (or hisinsurer or any authorized representative)prior to trial may be introduced as evi-dence. Such introduction shall constitute awaiver of any right to a credit against ajudgment (R. S. MO. Sec. 490.715 (1991)).

Montana--Collateral offset determined by judgeafter jury verdict (Mont. Code Ann. Sec. 27-1-308 (1992)).

Nevada--In actions against providers of healthcare, damage awards must be reduced bythe amount of any prior payment made byhealth care provider to the injured personor claimant to meet reasonable expensesand other essential goods or reasonableliving expenses (Nev. Rev. Stat. Sec.42.020 (SUPP. 1991 )).


ADDITIONAL NOTES FOR TABLE A-1 (Continued)

North Dakota--Under North Dakota law,collateral source “does not include life in-surance, other death or retirementbenefits, or any insurance or benefit pur-chased by the party recovering economicdamages” (N. D.C.C. Sec. 32-03.2-06 (Lexis1991). (An earlier collateral source offsetprovision was overturned in the courts--seeabove.)

Ohio--Collateral sources do not include insur-ance benefits paid for by plaintiff or em-ployer (Ohio Rev. Code Ann. Sec. 2305.27(Baldwin 1992)).

Rhode Island--Collateral source is mandatory ifevidence is admitted (R. i. Gen. Laws Sec.9-19-34 (1992)).

Washington--Washington’s statute allows in-formation on collateral source to be en-tered into trial, except the collateral sourcerule excludes insurance purchased by theplaintiff or insurance purchased by theemployer for the plaintiff (RCW Sec.7.70.080). However, offset of collateralsources is governed by case law, and inpractice there is no offset for collateralsources. See Sutton v. Shufelberaer, 643P.2d 920 (Ct. App. Wash. 1982); Bowmanv. Whitelock, 717 P.2d. 303 (Ct. App. Wash.1986).



Table A-2--Caps on Damagesa and State Patient Compensation Funds, by State, 1993

Economic and No statutory PCF (PatientNoneconomic cap noneconomic limits Compensation Fund)

AK: $500,000’

CA: $250,000

FL:O $350/250,000

Hl: $375,000

ID:o $400,000’

KS:O $250,000’

MD: $350,000

MA: $500,000

MO: $465,000’

OR: $500,000

UT: $250,000

WV: $1,000,000

Wl: $1,000,000

AL::

O Total recoverycapped at $1mill ion.*

co: Total recoverycapped at $1million.$250,000 cap onnoneconomic. *

IN: $750,000

LA: $500,000’

NE: $1,250,000

NM: $500,000’

SD: $1 ,000,000’

VA: $1,000,000

ARAZCTDCDEGA1AI LO

KYMEMNR

MSMTNC*NDO

NHO

NJNVNYOHO

OKR

PARISCTN*TXo

v-rWAO

WY

FL: Physicians may participate infund by obtaining Iiabilitycoverage of $250,000 perclaim and $500,000 per oc-currence. Fund will paymalpractice awards exceedingmaximum physician liability of$250,000 per claim, up to $1million per claim and $3 millionaggregate per policy.

IN: Provider not liable for thatportion of any malpracticeaward which exceeds$100,000 Any amount duethe plaintiff which is in excessof the total liability of allhealth care providers, shallbe paid from the PCF, withtotal payments from the PCFnot to exceed $750,000.

KS: Physicians must carry$200,000 in malpractice in-surance per claim ($600,000per annum) then can chooseone of three options for ex-cess coverage from PCF.For each, option, the physi-cian pays the initial $200,000in damages and then thefund will pay some portion ofthe remainder dependingon how the physicianchooses to distribute fundliability across potentialclaims: 1) fund liable fornext $100,000 per claim($300,000 aggregate perprovider); 2) fund liable fornext $300,000 ($900,000aggregate per provider);and 3) fund liable for up to$800,000 per claim.

82. Impact of Legal Reforms on Medical Malpractice Costs

Table A-2-Caps on Damagesa and State Patient Compensation Funds, by State, 1993 (Continued)

Economic and No statutory PCF (PatientNoneconomic cap noneconomic limits Compensation Fund)

LA: Provider liability limited to$100,000 for injuries or deathto plaintiff. Fund will pay totalamount recoverable for allinjuries or death of a plaintiffexclusive of future medicalcare and related benefits, up to$400,000 for private providers.The State pays all damagesup to $500,000 for Statehealth care providers.

NE: The PCF shall cover liabilityexceeding $200,000 up to$1.25 million.

NM: Health care provider liability is

PA:

SC

Wl:

capped at $100,000, with theremainder to be paid by thePCF. Total payment from PCFnot to exceed $500,000 peroccurrence per year.

The fund shall pay any amountexceeding $100,000 per occur-rence, up to $1 million perclaim.

The fund will pay awards inexcess of $100,000 per claim(no upper limit).

Physicians must have $400,000of malpractice coverage perincident and $1,000,000 incoverage per annum. Thefund will pay for damagesexceeding the physician’scoverage. Each health careprovider is also assessed anannual fee to help finance thefund.

aNOTE: OTA’s review did not include caps that apply only, or separately, to claims against State-employed or State-

owned health care providers.

O = provision overturned,R = provision repealed.

*See additional notes on following pages.




Cases Overturning Caps on Damages:

Alabama--Moore v. Mobile Infirmary, 592So.2d 156 (Ala. 1991) ($400,000 cap onnoneconomic and punitive damagesoverturned, but $1 million cap on totalrecovery not challenged--see notes be-low).

Florida--Smith v. Department of Insurance,507 So.2d 1080 (Fla. 1987).

Idaho--Jones v. State Board of Medicine 555P.2d 399 (Idaho 1976) cerl denied 431us. 914 (1977).

lllinois--Wriaht v. Central DuPaue Hospital,347 N.E.2d 736 (Ill. 1976).

Kansas--Kansas Malpractice Victims Coalitionv. Bell, 757 P.2d 251 (Kan. 1988) (cap on


Alabama--Total recovery in medical mal-practice cases must not exceed $1 mil-lion. If jury returns a verdict in excess of$1 million, judge must reduce it to $1million or lesser amount as deemed ap-propriate. Mistrial declared if jury is in-formed of cap beforehand. Total cap isadjusted annually to reflect changes inthe consumer price index. (Ala. Rev.Stat. Sec. 6-5-547 (1987)) Separate capon noneconomic damages was over-turned (see above).

Alaska--Limit does not apply to damages fordisfigurement or severe physical impair-ment (Alaska Stats. Supp. Sec. 9.17.010(1992)).

Colorado--Court has some discretion to ex-ceed cap limit (Colo. Rev. Stat. Sec. 13-64-302 (1992)).

Florida--In arbitration, noneconomic dam-ages limited to $250,000 per incident.Economic damages limited to 80 percentof wage loss and loss of earning capac-ity and medical expenses, offset by col-lateral sources, If defendant refuses to

total damages and noneconomic damagesin medical malpractice cases overturned).

New Hampshire--Branniaan v. Usitalo, 587A.2d 1232 (N.H. 1991).

North Dakota--Arneson v. Olson, 270 N. W.2d.125 (N.D. 1978).

Ohio--Morris v. Savoy, 576 N.E.2d 765 (Ohio1 991).

Texas--Lucas v. U. S., 757 S.W.2d 687 (Tex.1988); Ba~tist Hospital of S.E. Texas v.Barber , 672 S.W.2d 296 (Tex. App.1984), afl’d. 714 S.W.2d 310 (Tex. 1986).

Washington--Sophie v. Fibreboard Ca-poration, 771 P.2d 711 (Wash. 1989).

arbitrate, the claim will proceed to trialand there will be no limit on damages. Inaddition, if plaintiff wins at trial, ~he willbe awarded prejudgment interest andattorney fees up to 25 percent of award.If claimant rejects arbitration, none-conomic damages at trial limited to$350,000. Economic damages limited to80 percent of wage losses and medicalexpenses (Fla. Stat. Sees. 766.207-209(1993 Supp.)). This provision was re-cently challenged. The trial court foundthe provision unconstitutional, as did theDistrict Court of Appeals. However, theSupreme Court of Florida reversedholding the limitation on damages im-posed if the plaintiff does not acceptarbitration is not unconstitutional.University of Miami v. Ec~larte, 585 So.2d293 (Fla. App. 3 Dist. 1991) reversed arm’remanded University of Miami v. Echarte,618 So.2d 189 (Fla. 1993).

Idaho--Original cap applied to malpracticesuits only and was overturned (seeabove). Existing cap applies to all torts.Cap increases or decreases yearly ac-



cording to the State’s adjustment of theaverage annual wage (Idaho Code Sec.6-1603 (Lexis 1993)).

Kansas--Original cap for malpractice suitsonly was overturned (see above). Existingcap applies to all personal injury suits.

Louisiana--The total amount of damages fora medical malpractice claim against a“qualified provider” may not exceed$500,000, plus interest and costs, exclu-sive of future medical care and relatedbenefits. Qualification under the patientcompensation fund requires a privatehealth care provider to pay into the fundand provide evidence of insurance up to$100,000 per claim. “Qualified providers”exclude State health care providers. Forqualified providers, the provider is liablefor up to $100,000 and the State patientcompensation fund for the remainingamount not to exceed $400,000 exclu-sive of future medical care and relatedbenefits. For State health care providers,total damages, exclusive of future medi-cal care and related benefits, may notexceed $500,000 (WR.S. Sec. 40:1299.42-45; IA-R.S. Sec. 40: 1299.39-39.1) Futuremedical expenses and related benefits inexcess of $500,000 are paid as submitted.

Massachusetts--Pain and suffering cappedat $500,000 unless there is substantial orpermanent loss or impairment of bodilyfunction or substantial disfigurement orother circumstances making limitationunfair (Mass. Gen. Laws Ann. ch. 231,Sec. 60H (Lexis 1992)).

Michigan--Noneconomic damages limited to$225,000 unless there has been a death,intentional tort, injury to reproductivesystem, foreign body wrongfully left in-side the patient’s body, concealment ofinjury by health care provider, limb ororgan wrongfully removed or patient haslost vital bodily function. The limit ondamages increases each year by the in-crease in Consumer Price Index (M.C. L.


Sec. 600.1483 (1990)). The exceptionsto the cap are so extensive that, as ofAugust 1993, the cap had yet to be ap-plied to a single case (154).

Missouri--Noneconomic damages recover-able by injured party capped at $465,000per defendant per occurrence (1993limit). Original limit was $350,000, butthis is adjusted annually to reflectchanges in the implicit price deflator forpersonal consumption published by theU.S. Department of Commerce (R. S.MO.,Sec. 538.210 (1986)).

New Mexico--The limitation on caps ondamages does not apply to past and fu-ture medical care and related benefits(N.M. Stat. Ann. Sec. 41-5%,41-5-7 (Michie1989)). These expenses will be paid onan ongoing basis. In 1995, the cap ondamages will be increased to $600,000and the Patient Compensation Fund willrequire the physician to be responsible forthe first $200,000 of a malpractice claim(N.M. Stat. Ann. Sec. 41-5-6 (Michie 1989)).

North Dakota--Awards in excess of $250,000may be reviewed for reasonableness(N.D. C.C. Sec. 32-03.2-08 (Lexis 1991)).

South Dakota--South Dakota’s medical mal-practice cap is currently being challengedin the court on constitutional grounds(Schultz, J. S., Legal Counsel, Division ofAdministration, Office of AdministrativeServices, Department of Health, SouthDakota, letter to the Office of TechnologyAssessment, U.S. Congress, Washington,DC, April 2, 1993).

Texas--The $500,000 limit on damages inmedical malpractice (Vernon’s Texas CivilStat. Art. 4590i, Sec. 16.02-11.03 (Supp.1992)) was struck down as unconstitutionalin Lucas v. U. S., 757 S.W.2d 687 vex.1988). The Texas Supreme Courtsubsequently decided that the damagelimitation was constitutional in wrongfuldeath cases only (Rose v. Doctors HOSP.,

801 S.W.2d 841 (Tex. 1990)).

—. —


Table A-3--Periodic Payment of Awards,a by State, 1993

Mandatory Discretionary No provision

AL > $150,000’AZCA > $50,000co >$150,000IL > $250,000’LA > $500,000’ME > $250,000MlMO >$1 00,000’NMOH >$200,000SD >$200,000UT >$100,000WA >$100,000’

AK*AR >$100,000CT > $200,000*DEFL >$250,0001AID >$100,000INMDMN >$100,000MT >$100,000ND*NY > $250,000’ORRI > $150,000’SC >$100,000

DCGAHIKSO

KYMAMSNCNENHO

NJNVOKPATNTXVAVTWI

aperiodic payment provisions are often not triggered unless the award reaches a threshold amount The specificthresholds are noted parenthetically in the table, Periodic payment provisions apply only to future damages. Theschedule of payments is either negotiated by the parties or determined by the court. Some statutes offer guidelines fordetermining the schedule, The mandatory category includes statutes in which periodic payment is mandatory uponreaching the threshold or upon unilateral request by defendant or plaintiff.

O = Provlslon overturned,

* See additional notes on following page.

SOURCE Office of Technology Assessment, 1993



Cases Overturning Periodic Payment Provisions:

Kansas--Kansas Malpractice Victims Coalitionv. Bell, 757 P.2d 251 (Kan. 1988).


Alabama--A recent Alabama Supreme Courtcase overturned a periodic paymentprovision that applied to personal injurysuits, excluding malpractice. This provi-sion was similar to the medical malprac-tice periodic payment provision, therebycalling its constitutionality into question(Clark v. Container Corp., 589 So.2d 184(Ala. 1991)).

Alaska--Periodic payment of future damagesis discretionary in personal injury casesexcept if requested by injured party(Alaska Stat. Supp. Sec. 09.17.040(1992)).

Connecticut--When award reaches $200,000or more, parties have 60 days to negoti-ate periodic payment agreement. If noagreement reached, a lump sum awardwill be awarded (Corm. Gen. Stat. Sec.52-225 d).

Florida--Mandatory periodic payment of fu-ture losses exceeding $250,000, but de-fendant may elect to pay lump sum forfuture economic loss and expenses, re-duced to future present value (Fla. Stat.Sec. 766.78 (1986)).

Illinois--Both parties can agree to elect peri-odic payment, or, if future damages ex-ceed $250,()()(), plaintiff can Unk3tWi31!y

elect periodic payment. Defendant canelect periodic payment if: 1 ) the futureeconomic damages are in excess of$250,000, 2) defendant can produce asecurity (e.g. bond, annuity) in theamount of the claim for both past or fu-ture damages, or $500,000, whichever is

New Hampshire--Carson v. Maurer, 424A.2d 825 (N.H. 1980).

less, and 3) future damages likely to oc-cur over a period of more than one year(735 ILCS Sec. 5/2-1705 (West 1992)).

Louisiana--If damages exceed $500,000, thePCF or the State pays future medicalcare and related benefits as they aresubmitted. (See table A-2 for a descrip-tion of Louisiana’s cap on damages pro-vision. )

Missouri--Mandatory periodic payment offuture damages at request of any party(R. S. MO. Sec. 538.220, (1991)).

New York--Any requirement to pay periodi-cally applies to no more than the portionof future damages in excess of $250,000.The parties may agree to lump sumpayments of future damages otherwisepayable periodically (N.Y. CPLR Sec.5031 (McKinney 1992)).

North Dakota--The court has discretion topermit the trier of fact to make a specialfinding regarding future economic dam-ages if an injured party claims futureeconomic damages for continuing insti-tutional or custodial care that will be re-quired for a period of more than twoyears (N. D.C.C. Sec. 32-03.2-09 (1989)).

Rhode Island--Mandatory conference forpurposes of determining viability of vol-untary agreement for periodic damage(R.1. Gen. Laws Sees. 9-21-12; 9-12-13(Lexis 1991 )).

Washington--Mandatory at the request ofparties (Wash. Rev. Code Sec. 4.56.260(1986)).



Table A-4--Statutes of Limitations,a by State, 1993

Years within Years within Maximum number Foreign objectdate of injury date of discovery of years exception**

AL:AK:AR:AZ:CA:co:CT:DC:DE:FL:GA:Hl:ID:IN:IL:1A:KS:KY:LA:MA:ME:MD:Ml:MN:MS:MO:

2 years 6 months*2 years

2 years1 year2 years2 years

4 years

1 year2 years

3 years3 years3 years

3 years 1 year2 years

3 years2 years2 years2 years*

3 years2 years 4 years

5 years6 years

1 year2 years

2 years2 years2 years2 years1 year1 year

1 year*2 years

4 years6 years4 years5 years3 years7 years3 years

6 years

2 years

1 year*3 years3 years5 years2 years*2 years*

General ExceptionUpon “reasonable discovery”

Exception for minors only6 months

3 years6 months

2 years2 years 10 years 2 years after discovery

10 years max.MT:NE:NV:NH:NJ:NM:NY:NC:ND:OH:OK:OR:PA:Rl:SC:SD:TN:TX:UT:

3 years2 years4 years3 years

3 years*2 years, 6 months3 years

3 years1 year2 years3 years2 years*

5 years10 years

1 year1 year after discovery, 10 year max4 years

6 years2 years1 year2 years2 years2 years3 years3 years

3 years 0’

5 years2 years3 years3 years2 years

2 years*

6 years 2 years

3 years1 year 1 year

1 year2 years 4 years


Table A-4--Statutes of Limitations,a by State, 1993 (Continued)

Years within Years within Maximum number Foreign objectdate of injury date of discovery of years exception**

VT: 3 years 2 years 7 years 2 yearsVA: 2 years 10 years 1 yearWA: 3 years 1 year 8 years 1 yearWV: 2 years 2 years 10 yearsWI: 3 years 1 year 5 years 1 yearWY: 2-2.5 years 2 years

Column 1: Statutorytime limit for bringing asuit is measured fromthe time the injury oc-curs or from the date oftermination of the medi-cal treatment that led tothe claim.

Explanatory Notes for Table A-4

Column 2: The statu-tory time limit for bring-ing suit is measuredfrom the time at whichthe plaintiff could havereasonably discoveredthe injury. Often Statesallow the time limit torun from either the timeof injury or the time ofdiscovery, dependingon the nature of the in-jury.

Column 3: The maxi-mum period in which aclaim can be brought,regardless of whether thelimit is measured fromthe date of injury or act orthe date of discovery. Inmost States, this max-imum does not apply tothe foreign body ex-ception (see column 4).

Column 4: Because ofthe difficulty of discover-ing a foreign body (e.g., asurgical sponge) leftinside a patient duringinvasive procedures, anumber of States makespecial exceptions to thestatute of limitations forthese cases.

aThis table does not cover special provisions for minors, disabled plaintiffs or cases involving fraud Or concealment on the Pan ofthe healthcare provider,

O = provision overturned.


** Wdhin year of discovery, maximum number of years do not apply unless stated,

SOURCE: Office of Technology Assessment, 1993,




Alaska--General statute of limitations is twoyears from date the “cause of action” ac-crues (Alaska Stat. Sec. 09.10.070 (1962)).Cause of action does not accrue until per-son discovers or reasonably should havediscovered injury. (Dalkovski v. Glad, 774P.2d 202 (Alaska 1989); Cameron v. State,822 P.2d 1362 (Alaska 1991)).

Georgia--The statute of limitations in a medi-cal malpractice action may be tolled (i. e.,does not accrue) in cases where theparties agree to submit the case to arbi-tration (0. C.G.A. Sec. 9-9-63).

Louisiana--Time limitation is suspendedupon filing a request for review by amedical review panel until 90 daysfollowing issuance of the panels opinion(lA-R.S. 40:1299.391A ( 2 ) ( a ) ; LA-R.S.40:1299.47A (2)(a)).

Michigan--Special exceptions made in casesinvolving undiscovered injuries to repro-ductive system or the presence of a for-eign body wrongfully left inside the pa-tient, and in cases where the discoveryof basis for claim was prevented by thefraudulent conduct of the health careprovider (M.C. L. Sec. 600.5838a(2) (a-c)and (3) (1990)). Claims may be broughttwo years from injury if discoverable orsix months from discovery, whichever islater (M.C.L. Sec. 600.5805(4) (1990)).

Minnesota--Statute of limitations is 2 yearsfrom termination of treatment (Minn. Stat.Sec. 541.07 (1992)). Discovery rule hasbeen rejected (Francis v. Hansing 449 N.W.

2d 479 (Minn. Ct App. 1989); Willette v.MaVo Foundation, 458 N.W. 2d 120 (Minn.Ct. App. 1990)).

New Jersey--Years within date of injury applyafter accrual of claim (N.J. Rev. Stat. Sec.2A: 14-2 (1986)). Claim accrues uponreasonable discovery of injury.

New Mexico--The statute is tolled uponsubmission to pretrial screening paneland shall not run until 30 days after panelmakes final decision (N. M. Stat. Ann.Sec. 41-5-22 (Michie 1989)).

Ohio--Suit must be brought within one yearfrom the date of a “cognizable event” ortermination of the physician-patient rela-tionship, whichever occurs later (Flowersv. Walker, 589 N.E.2d 1284 (Ohio 1992);Frvsinqer v. Leech, 512 N.E.2d 337 (Ohio1987)).

Oklahoma--Oklahoma’s statute includes alimitation on damages brought 3 yearsafter the injury, but limitation declaredunconstitutional. Wofford v. Davis, 764P.2d 161 (Okla. 1988); Revnolds v. Porter,76o P.2d 816 (Okla. 1988).

Texas--Statute has been held unconstitu-tional by the Texas Supreme Court whenthe injury was not discoverable (See e.g.Neaale v. Krusen, 678 S.W.2d 918 (Tex.1984); Neaqle v. Krusen, 678 S.W.2d 11(Tex. 1985); Deluna v. Rizkallah, 754S.W.2d 366 (App. 1st Dist. 1988); but seeRascoe v. Anablawi, 730 S.W.2d 460(App. 9th Dist. 1987)). The courts haveessentially modified the statute into adiscovery standard.


90 - Impact of Legal Reforms on Medical Malpractice Costs

Table A-5--Pretrial Screening Panels, by State, 1993

Pretrial Screening Panelsa

Mandatory Voluntary No provision

AK*HI*ID*INLA*MA*MD*MEMlMTNE*NM*NVTNUTVT*

AR ALCT AZR

DE* CAKS* co*NH* DCVA FLO

GA1AI LO*

KYMNMOO

MSNC*

N DR

N JR

N YR*

OHOKORPAO*R lo

ScSDTXWA@ *

WYO

a“Mandatory” includes provisions that allow a waiver of the pretrial screening process upon the request of one or both parties.“Voluntary” refers to provisions that allow but do not require parties to submit their claim to pretrial screening panels.

R = Provision repealedO = provision over-turned

* See additional notes on following pages.



ADDITIONAL NOTES TO TABLE A-5

Cases Overturning Pretrial Screening Panels:

Florida--Aldana v. Holub, 381 So.2d 231 (Fla.1980).

lllinois--Bernier v. Burrio, 497 N.E.2d 763 (Ill.1986).

Missouri--State ex rel. Cardinal GlennonMemorial Hospital v. Gaertner, 583 S.W.2d107 (Me. Bane. 1979).

Pennsylvania--Mandatory nonbinding arbi-tration panel provision struck down by


Alaska--Mandatory unless the parties agreeto arbitrate or the court determines anadvisory panel is not necessary (AlaskaStats. Sec. 09.55.536 (Lexis 1992)).

Colorado--Court may refer cases for media-tion at its discretion (Colo. Rev. Stat.Sec. 13-22-301 et. seq. (1992)). In addi-tion, the State requires in every actionagainst a licensed professional that theplaintiff file a “Certificate of Review” de-claring that the plaintiff has consulted aperson with expertise in the area of thealleged conduct and the expert hasconcluded that the filing of the claimdoes not lack substantial justification(Colo. Rev. Stat. Sec. 13-20-602 (1987)).

Delaware--Any party can demand that aclaim be submitted to a “malpracticescreening panel. ” Results are admissibleas prima facie evidence at any subse-quent trial. Expert witness testimonymay be required for panel (Del. CodeAnn. tit. 18, Sees. 6801-6814 (1976)).

Hawaii--Mandatory submission of claim to“medical conciliation panel” but deci-sions, conclusions, findings, or recom-mendations of panel are not admissibleat trial (Hawaii Rev. Stat. Sees. 671-11 et.seq. (Lexis 1992)).

Idaho--Proceedings of informal pretrialscreening are confidential and not ad-missible at any subsequent trial (IdahoCode Sees. 6-1001-1011 (1976)).

Pennsylvania Supreme Court in Mattes v.Thompson, 421 A.2d 190 (Pa. 1980) andHeller v. Frankston, 475 A.2d 1291 (Pa.1984).

Rhode island--Boucher v. Saveed, 459 A.2d87 (R.1. 1983).

Wyoming--Hoem v. State, 756 P.2d 780(wyO. 1988).

Illinois--The State requires medical malprac-tice plaintiffs to file an affidavit and reportof a reviewing health care professionalsupporting his or her determination thata meritorious cause of action exists.This may be referred to as a “certificateof review” (735 ILCS 5/2-622 (West1992).

Kansas--Decision of panel is admissible atsubsequent trial (Kan. Stat. Ann. Sees.60-3501-3509 (1987)).

Louisiana--Pretrial screening mandatoryunless both parties agree to waive it (La-R.S. Sec. 40:1299 .47 B(C).

Maine--Mandatory pretrial screening, exceptif parties agree to waive. Decision isadmissible in subsequent trial only ifunanimous and unfavorable to claimantas to negligence or causation (24 Me.Rev. Stat. Ann. Sec. 2857 (1990)).

Maryland--All medical injury claims must besubmitted to a “health claims arbitrationpanel” for review prior to trial, unless allparties agree in writing to waive the re-quirement (which rarely occurs). Althoughthis is called an arbitration panel, itoperates more like a pretrial screeningpanel, with very formal rules of discoveryand procedure. The Panel’s decision onfault and is admissible at subsequent trialand is “presumed to be correct” (Md. Cts.& Jud. Proc. Code Ann. Sec. 3-2A43 to 46(Michie 1989)). The statute was un-


ADDITIONAL NOTES TO TABLE A-5 (Continued)

successfully challenged by plaintiffs onconstitutional grounds, Attorney Generalv. Johnson, 385 A.2d 57 (Md. 1978)appea/ dismissed 439 U.S. 805 (1978).

Massachusetts--If the panel finds for thedefendant and the plaintiff goes to court,they must first file a bond of at least$6000 that will be payable to the defen-dant if plaintiff ultimately loses bond cov-ers court costs and fines. For indigentplaintiffs, the amount of the bond may bereduced, not eliminated (Mass. Ann.Laws ch. 231, Sec. 60B (Lexis 1992)).

Nebraska--Parties can agree to waive thepanel (Neb. Rev. Stat. Sec. 44-2840(4)(1988)).

New Hampshire--Decision of panel not ad-missible at subsequent trial (N. H. Rev.Stat. Ann. Sec. 519-A:l to -A:1O (1972)).

New Mexico--Decision of panel not admis-sible at subsequent trial (N. M. Stat. Ann.Sec. 41-5-20 (Michie 1989)).

New York--A precalender conference in eachmalpractice case is mandated by law inorder to promote settlement, simplify is-sues and set a timetable for discoveryand further judicial proceedings. Thereis no formal hearing on the merits of thecase (N.Y. CPLR Sec. 3406 (McKinney1985)).

North Carolina--Pilot program (ends in1995) in which parties to Superior Courtcivil litigation may be required at thecourt’s discretion to attend a pretrial set-tlement conference conducted by a me-diator (N.C. Gen. Stat. Sec. 7A-38(1991)).

Pennsylvania--Panels providing “mandatorynonbinding arbitration” were ruled un-constitutional (see above). However,these panels continued to exist and hold“voluntary nonbinding” settlement con-ferences. In addition, some jurisdictionshave standing judicial orders for pretrialsettlement conferences for all medicalmalpractice cases.

Vermont--[ implementation of the followingprovisions (part of a law passed in 1991)is contingent on future passage of a uni-versal health care coverage plan.]Requires all medical malpractice claims besubmitted to nonbinding arbitration prior toa trial. Parties may agree in advance thatthe arbitrator’s decision will be limited tomatters of law. If parties do not agree tomake the arbitration decision binding,they can proceed to trial. Arbitrationdecision is admissible at trial but is notdefinitive (12 V.S.A. Sees. 701 et seq.(1991 )).

Washington--Mandatory mediation of allmedical malpractice claims prior to trial.Results not admissible at subsequent trialunless both parties agree (State ofWashington, Engrossed Second SubstituteSenate Bill 5304, 53rd Legislature, 1993Regular Session).

Wisconsin--Repealed VOI untary pretrialscreening provision and replaced withmandatory mediation for all medical in-jury claims ((Wis. Stat. Sees. 655.01-.03(1977--repealed in 1986; Wis. Stat. Sees.655.42 et seq. (1985--amended 1989)).



Table A-6--Attorney Fee Limits,a by State, 1993

Court-determined/Sliding scale Maximum % court approved No statutory limits

CA: 40% of first $50,00033.33% of next $50,00025°/0 of next $50,00015°/0 damages that exceed $600,000

CT: 33.33% of first $300,00025°/0 of next $300,00020% of next $300,00015% of next $300,00010% damages that exceed $1.2 million

DE: 35% of first $100,00025% of next $100,00010% of damages that exceed $200,000

IL: *33.33% of first $150,00025% of next $850,00020% of damages exceeding $1 million

MA: 40% of first $150,00033.33% of next $150,00030% of next $200,00025% of damages that exceed $500,000*

ME:33.33% of first $100,00025°A of next $100,00020% of damages that exceed $200,000

NJ: 33.33°4 of first $250,00025°A of next $250,00020°A of next $500,000Amount shall not exceed 25°/0 for aminor or an incompetent plaintiff

NY: 30°/0 of first $250,00025°/0 of next $250,00020°/0 of next $500,00015% of next $250,00010% of damages exceeding $1.25 million

IN-15%* AZMI-33.33% HIOK-500/o 1ATN-33.33% KSUT-33.33°A MD*

NEN HO*

WA

AKALARcoDCFLR

GAIDKYLAMNMOMSMTNCNDNMNVOHORR

PAO

RISCSDTXVAVT


Table A-6--Attorney Fee Limits,a by State, 1993 (Continued)

Court-determined/Sliding scale Maximum % court approved No statutory limits

Wl: 33.33% of first $1 millionOR 25% of first $1 million recovered ifliability is stipulated within180 days, and not later than 60days before the first day of trial and

20% of any amount exceeding $1 million

aNoTE. Most attorney fee limits are not direct limits on the amount attorneys can charge their ClientS. Rather, they are limits onthe portion of the damage award that may go toward attorney fees,

O = Provision overturned,R = Provision repealed.





Cases Overturning Limits on Attorney Fees:

Pennsylvania--Mattos v. Thompson (421 A.2d190 (Pa. 1980)) and Heller v. Frankston(475, A.2d 1291 (Pa. 1984)) declared theHealth Care Services Malpractice Actunconstitutional because of its mandatoryarbitration provision. These rulings also


Illinois--Where attorney performs extraordi-nary services involving more than usualparticipation of time and effort, the attor-ney may apply to the court for additionalcompensation (735 ILCS Sec. 5/2-1 114(1992)).

Indiana--For compensation paid from StatePatient Compensation Fund, attorneyfees may not exceed 15 percent of pay-ments (Burns Ind. Code Sec. 16-9.5-5-1.(Lexis 1992)). However, there are no limitson attorney fees for funds not paid out ofthe Patient Compensation Fund.

nullified the attorney fee limitations of theAct.

New Hampshire--Carson v. Maurer (424 A.2d825 (N. H. 1980)) overturned an earlierprovision. Another provision has sincebeen implemented.

Massachusetts--Court will reduce attorneyfees further if they cause plaintiff’s finalcompensation to be less than unpaid pastand future medical expenses (Mass. Gen.Laws Ann. ch. 231 Sec. 601 (1986)).

Maryland--Only when legal fees are in dis-pute must the court or pretrial screeningpanel approve fees before lawyer collects(Md. Cts. Jud. Proc. Code Ann. Sec. 3-2A-07 (Michie 1989)).

New Hampshire--Court determined attorneyfee limits apply only if fees are greaterthan $200,000 (N.H. Rev. Stat. Ann. Sec.508:4-e (1986)).

SOURCE: Office of Technology Assessment, 1993,


Table A-7--Arbitration Provisionsa by State, 1993

Specific provision for General arbitrationmedical malpractice claims provision

AK AL NCCA AR NDR

co* AZ NE*FL* CT NHGA DC NMHI* DE NVIL 1A OKLA* ID ORMl IN PANJ* KS RINY* KY SC*OH* MA TNSD MD TX*UT* ME VTVA MN WA

MO WI*MSMT WY

aNOTE: voluntary, binding arbitration provisions only, unless otherwise noted. This table clo= not indiCa@statutory provisions for court-annexed, nonbinding arbitration. Several States have provisions authorizingmandatory, nonbinding arbitration for civil suits where expected damages are below a certain threshold (mostthresholds range from $10,000 to $50,000). However, because the vast majority of medical malpractice casesinvolve expected awards in excess of these thresholds, the provisions are rarely relevant to medicalmalpractice, One exception is the State of Hawaii, which requires court-ordered nonbinding arbitration for allcivil tort actions having a probably jury award (exclusive of costs and interest) of $150,000 or less (Hawaii Rev.Stats. Sec. 601-20 (Lexis 1992)). However, medical malpractice claimants may elect to bypass court-orderedarbitration if a decision has been rendered under the State’s mandatory medical malpractice pretrial screeningprovision (Hawaii Rev. Stats. Sec. 671-16,5 (Lexis 1992)).

bMany States have adopted the Uniform Arbitration Act (UAA) (Uniform Arbitration Act, Uniform Laws Annotated

(Vol. 7) (St. Paul, MN: West Publishing Company, 1992)).

R = provision repealedO = provision overturned

* See additional notes on following pages,


.—




Colorado--A medical malpractice insurer cannot require a physician to utilize arbitra-tion agreements with patients as a con-dition of malpractice insurance (Colo. Rev.Stat. Sec. 13@403 (1992)). Mandatoryarbitration pilot program for all claimsended July 1, 1990 (Colo. Rev. Stat. Sec.13-22-402).

Florida--In any arbitration, noneconomicdamages limited to $250,000 and eco-nomic damages limited to past and fu-ture medical expenses and 80 percent ofwage loss and loss of earning capacity.Defendant will pay claimant’s reasonableattorney fees up to 15 percent of award,reduced to present value. Defendant willalso pay all costs of arbitration proceed-ings and fees of arbitration. If defendantrefuses to arbitrate, the claim will pro-ceed to trial and there will be no limit ondamages. In addition, if plaintiff wins attrial, she will be awarded prejudgmentinterest and attorney fees, up to 25 per-cent of award. If claimant rejects arbitra-tion, non-economic damages at trial lim-ited to $350,000. Economic damageslimited to 80 percent of wage losses andmedical expenses (Fla. Stat. Sees. 766.207,766.209 (1993 Supp.)). This provision wasrecently challenged. The trial court foundthe provision unconstitutional, as did theDistrict Court of Appeals. However, theSupreme Court of Florida recently heldthe limitation on damages imposed if theplaintiff does not accept arbitration is notunconstitutional. Un”Nersitv of Miami v.Echarte, 585 So, 2d. 293 (Fla. App. 3 Dist.1991 ) reversed and remanded Universityof Miami v. Echarte, 618 So.2d 189 (Fla.1 993).

Hawaii--Mandatory nonbinding arbitration forall civil actions in tort having probablejury award value exclusive of costs and

interest of $150,000 or less (Hawaii Rev.Stat. Sec. 601-20 (1986)). Medical mal-practice claims may bypass court or-dered arbitration after the claim has beensubmitted to a medical claim conciliationpanel that has rendered a decision (HawaiiRev. Stat. Sec. 671.16.5 (Lexis 1992)).

Louisiana--No arbitration for claims againstState (public) health care providers (LA-R.S. Sec. 40:1299.39.1A(1 )). No arbitra-tion for claims against health care providerswho are not “qualified” under the PCFrequirements (lAR.S. 40:1299.41 (D)).

Nebraska--Pre-in jury arbitration agreementsare not presumed to be valid, enforce-able and irrevocable (R. R.S. Neb. Sec.25-2602 (Lexis 1992)).

New Jersey--Voluntary arbitration of medicalinjury claims upon written agreement ifgreater than $20,000. Applies to all per-sonal injury torts except certain auto-mobile claims (NJ Stat. Sec. 2A:23A-20(1991)).

New York--Allows defendant to concede li-ability if the plaintiff agrees to arbitrate. Ifplaintiff refuses, defendant’s concessionof liability cannot be used for any otherpurpose (N.Y. CPLR Sect 3045 (McKinney1991)). HMOS can put arbitration clausesin contract, but cannot require arbitrationas a condition of joining HMO (N.Y. PublicHealth \ 4406-2 (McKinney 1991)).

Ohio--The Ohio statute permits parties tosubmit a claim to nonbinding arbitrationor to enter an agreement to submit theclaim to binding arbitration. Suchagreements may be made pre-injury.(Ohio Rev. Code Sees. 2711.21-271.24(1992)). The former provision which re-quiring submission to arbitration prior totrial and allowed the arbitration decisionto be entered into subsequent judicial



proceedings was declared unconstitu- attorneys sign written opinionstional by a lower court. Simon v. St. effect (Vernons Ann. Tex. Civ. St.Elizabeth Medical Center 355 N.E.2d 903 (1992)).(Ohio Ct. Common Pleas 1976).

South Carolina--Statutory provision that setsforth conditions under which arbitrationagreements for existing and future con-troversies will be considered valid, en-forceable and irrevocable, does not ap-ply to arbitration agreements for per-sonal injury claims (S. C. Code Ann. Sec.15-48-10 (1991)).

Texas--Uniform Arbitration Act proceduresonly apply to personal injury if upon ad-vice of counsel to both parties and both

Utah--Upon written agreement by all

to thisart. 224

parties,the mandatory prelitigation hearing panelproceeding may be considered a bindingarbitration hearing and proceed underthe provisions of the general arbitrationstatute (Utah Code Ann. Sec. 78-14-16(1985).

Wisconsin--Mediation required prior to in-itiating or continuing court action (M/is.Stat. Sec. 655.465 et. seq. (1989-1990)).Therefore, general arbitration provisionunlikely to be used.


Appendix BConstitutional Challenges to Malpractice Reforms: Implications for Federal Reform

The fact that certain tort reforms havebeen found to violate State constitutions isimportant when considering whether andhow to implement malpractice tort reformat the Federal level. A number of the re-forms examined in this report have beenchallenged in State courts, and in somecases they have been overturned or repealed(see app. A). OTA has not undertaken anextensive review of these cases; however,caps on damages and pretrial screening panelsappear to have been particularly vulnerable tosuccessful constitutional challenges (138).The following provides a brief discussion ofthe Federal and State constitutional harriersto tort reform.

Federal Constitutional Review

Medical malpractice tort reform legis-lation is typically challenged under the equalprotection and due process clauses of theFifth amendment and the right to jury trialguaranteed by the Seventh amendment ofthe U.S. Constitution. Very few Federal courtshave overturned malpractice tort reform andit is highly unlikely the Supreme Court wouldoverturn federal malpractice tort reform be-cause the lowest level of scrutiny is applied inreviewing the constitutionality of tort reformstatutes ( 1 38).

The due process and equal protectionclauses act to protect individuals and groupsof individuals from being unfairly singled outand discriminated against by a legislativeaction. Analysis of economic legislation, suchas tort reform, under the due process clauseonly examines whether the legislature hasbeen arbitrary or irrational in achieving itslegislative purpose (Duke Power Company v.Carolina Environmental Study Group, Inc.438 U.S. 59 ( 1978)). The equal protectionclause requires that a law apply equally to allpersons within a class and that differing treat-ment be based on differences that have areasonable tendency to further the objectives

of the statute. Malpractice tort reforms arechallenged under equal protection becausethey treat people injured by medicalmalpractice differently than people injuredby other tortious conduct: they single outcertain plaintiffs in medical malpractice andlimit their damages (e. g., caps on dam-ages), or defendants in other tort actions aretreated differently than defendants in medi-cal malpractice (105).

The determinative factor in constitutionalreview of a statute is the level of scrutiny ap-plied by the court. When evaluating tortreform under the due process clause theSupreme Court applies the lowest level ofscrutiny -- the “rational basis test” -- whichonly requires that the statute have a rationalrelationship to a legitimate legislative ob-jective. Under this standard, a reform will beheld constitutional provided the legislaturehad a reasonable basis for passing the statute,even if in retrospect their assumptions aboutthe effect of the reform prove to be incorrect.The court does not judge whether the statutewas “wise or desirable, ” and “misguidedlaws” can also be held constitutional (Jamesv. Strange, 407 U.S. 128 (1972)). For exam-ple, if a tort reform is passed because thelegislature believes it is necessary to lowerhealth care costs or avoid an insurance crisis,the reform will be upheld if it is at leastdebatable that such a crisis could exist andthat the reform could help abate it (138).

The Supreme Court also uses minimalscrutiny in examining tort reform under the

1 This low level ofequal protection clause.scrutiny almost guarantees that a reform willbe held constitutional. Again, the statute willnot declared unconstitutional unless “theclassification rests on grounds wholly irrelevantto the achievement of the State’s objective”(McGowan V. Mary land, 366 U.S. 420 (1%1)).The court will uphold the statute even thoughthe legislative determination may be disputed:debated or even opposed by strong contraryarguments (Vance v. Bradley, 440 U.S. 93(1979)).

-9 9 -

. . .


The Seventh amendment guarantees aperson the right to jury trial for all suits inwhich the amount of the controversy ex-ceeds $20 and the legal claim is of a typethat could have been tried at common law,which includes certain tort actions (138).Pretrial screening panels are one reformthat is often challenged under the Seventhamendment. The Federal courts have uni-formly rejected these challenges, holding thatdelays produced by administrative remediesthat must be completed before proceeding totrial do not deprive a plaintiff of their right totrial (138). In addition, the admissibility ofthe panel’s decision does not deprive theplaintiff of the right to jury trial since thedecision is not dispositive, but merelyadditional evidence (138).

State Constitutional Review

Most State constitutions contain equalprotection and due process clauses that areeither identical or very similar to the thosefound in the U.S. Constitution. In addition,State constitutions guarantee a right to trial inthe State court (138). However, wheninterpreting their own constitutions, the Statecourts are not bound by the Federal standardsfor review (138). It is for this reason thattort reforms have been held unconstitutionalunder the equal protection and due processclauses of State constitutions. In most cases,the statute is overturned on equal protectiongrounds because the State court uses a stricterscrutiny standard than the Federal courts.

A number of State courts have applied aheightened scrutiny and overturned mal-practice reform.2 As one court explained,State courts are generally much less defer-ential than Federal courts to economiclegislation that singles out one group ofindividuals or rights, especially when thatlegislation infringes on the right to trial(Condemarin v. University Hospital. Universityof Utah 775 P.2d 348 (Utah 1989)). A numberof courts that have applied an “intermediate

level of scrutiny”3 to malpractice reformhave found the provisions unconstitutionalon equal protection and in a few cases ondue process grounds.4 At least two courtshave even applied the strictest level ofscrutiny, holding that the right to a judicialremedy for medical malpractice is a fund-amental right.5

State courts have overturned reformsbecause under intermediate scrutiny thecourt evaluates the assumptions made by thelegislature in passing the legislation. Anumber of courts have found these assump-tions lacking. For example, in Arenson v.Olson the court struck down a cap on dam-ages that was intended to reduce malprac-tice insurance premiums, noting evidencefrom another State that malpractice insur-ance rates were not related to claims involv-ing large damages. The court concludedthat either the legislature was misinformedor the situation had changed dramatically(Arenson v. Olson. 270 N.W.2d 125 (N.D.1978)). In Kenyon v. Hammer, the court foundno evidence supporting the legislature’sassertion that elimination of the discoveryrule for the statute of limitations was nec-essary in order to reduce either malpracticepremiums or the cost of medical care (Kenyonv. Hammer, 688 P.2d 961 (Az. 1984)), InHoem v. State of Wyomin g, the court wrotethat, in reviewing malpractice tort reforms,courts should take a more “skeptical attitudetoward the evidence presented by themedical profession and the insurance industryand toward the conclusion reached by theState legislature” that a crisis exists (Hoemv. State of Wyoming, the University ofWyoming, 756 P.2d 780 (Wyo. 1988)).

Some reforms have been found to vio-late State constitutional provisions guaran-teeing the right to trial or the State’s broaderguarantee of access to the courts. 6 Inaddition, some State constitutions havespecific provisions guaranteeing rights totort plaintiffs. For example, State constitu-tions in Arizona, Pennsylvania, and Montana

Appendix B--Constitutional Challenges to Malpractice Reforms: Implications for FederalReform -101

specifically limit the legislature’s right torestrict damages recoverable in tort actions(138).

Not all challenges to medical malprac-tice reforms have been successful. SomeState courts have rejected arguments forheightened scrutiny and have upheld mal-practice reforms.7 Some of these more re-cent cases involve reforms that apply to alltorts, not just medical malpractice. These“generic” reforms may be better able towithstand a challenge on equal protectiongrounds (14). Moreover, while casesoverturning caps on damages have receivedsignificant attention, most reforms in theStates have survived, either by judicial de-cision upholding the reform or from lack ofa judicial challenge ( 14). Indeed, bothCalifornia and Indiana courts upheld verycomprehensive reform packages, both ofwhich included caps on damages.8 In ad-dition, recent decisions indicate that someState courts are less likely to subject tort re-form legislation to heightened scrutiny (15).

Alternative Dispute Resolution, No-Fault,and State Constitutions

While a number of States have beenwilling to enact reforms that change therules that apply in civil trials, few Stateshave embraced broader procedural reformsthat would remove malpractice disputesfrom the civil judicial system. This may bedue in part to the fact that it is difficult tomake alternative dispute resolution (ADR)procedures binding and mandatory withoutrunning afoul of constitutional protectionssuch as the right to trial, equal protection,access to courts, and due process (47).Nonjudicial schemes could be set up as al-ternatives to the tort system, analogous tothe workers’ compensation programs.However, to pass constitutional muster, thereform must provide a benefit that offsets

the plaintiff’s loss of the right to a judicialproceeding (156). Several States have al-ready begun to employ a “quid pro quo”reasoning in evaluating tort reform underthe due process clause (138) (Fein v.Permanence Medical Group, 474 U.S. 892(1985) (White, dissent)).

To date. the only no-fault reforms thathave been implemented are the Virginia andFlorida birth-injury, no-fault programs. Theconstitutionality of these statutes with respectto nonparticipating physicians has been upheldin both States; however, the constitutionalityof removing those cases from the judicialprocess has not yetchallenged.9

Federal MalpracticeConstitutional

been specifically

Reform and StateChallenges

Tort reform initiated at the Federallevel could face a challenge under Stateconstitutions depending on how the Federalgovernment would choose to implementsuch reforms. If Federal monies were tiedto the requirement that certain reforms beimplemented, challenges would almost cer-tainly be brought in State courts and may bebrought in Federal courts as wel l .10 A sdiscussed above, tort reforms are likely towithstand Federal challenge, but may notwithstand all State challenges. This im-plementation approach could give rise to theawkward situation in which a State courthas declared a particular type of reform un-constitutional, thereby making it difficultfor the State to qualify for the federalfunds. This is a policy issue that wouldneed to be addressed if the federal govern-ment chose to encourage States to adoptspecific reforms. The alternative, passingFederal medical malpractice reforms, maybe equally sensitive from a States’ rightsperspective.


Footnotes for Appendix B

IHjghcr levels of scrutiny are reserved for Statutes that discriminate against p~OplC on th~ basis of ra~~,

alienage, national origin, sex, and illegitimacy, or which impinge upon fundamental rights, such asprivacy, voting, or the right to interstate travel (117).

2At least one court overturned Caps on noneconomic damages using the 10WCS1 ICvCl of scrutiny. In

Morris v. Savoy the Ohio Supreme Court found no evidence demonstrating a rational connectionbetween limiting awards and reducing malpractice insurance rates (Morris v. Savoy (576 N.E.2d 765(Ohio 1991)).

~Undcr intermediate scrutiny, the statute will be upheld if it is determined the State’s in[crcst is

“important” and the means adopted to serve that interest has a fair and substantial relationship to theobject of the legislation (Kenvon v. Hammer, 688 P.2d 961 (Ariz. 1984)). Strict scrutiny requires thatthe statute serves a compelling State interest and is necessary to achieve the legislative objective(Kenvon v, Hammer, 688 P.2d 961 (Ariz. 1984)). Very few statutes can withstand [his level ofscrutiny (138).

4Far]ev v. Englckcn, 740 p.2d 1058 (Km. 1987) ; A r e n s o n V . O1son, 270 N.W.2d 125 (ND. 1~7’$);

BranniEan v. Usitalo 587 A.2d 1232 (N.H. 1991); Carson v. Maurer 424 A,2d 825 (N.H. 1980);Condemarin v. University Hos~ital. University of Utah, 775 P.2d 348 (Utah 1989); .Joncs v. S[atcBoard of Medicine, 555 P.2d 399 (Idaho 1976) cert. denied 431 U.S. 914 (1977). The court in Jonesdid not overrule the statute, but instead remanded the case with instructions to [hc court to scrutinizethe cap in light of the heightened standard of review. The court on remand found the limitationunconstitutional (Jones v. State Board of Medicine, Nos. 55527 and 55586 (4th Dis. Idaho, Nov. 3.1980) as cited in (105).

5White v. State, 661 p.2d 1272 (Mont. 1983) (applying “strict scrutiny” tO damage cap) ~~’eflltnlcd

Mecch v. Hillhaven West. Inc., 776 P.2d 488 (Mont. 1989) (held that strict scrutiny did not applywhen reviewing the constitutionality of a limit on damages in personal injury suits); Kcnvon v.Hammer, 688 P.2d 961 (Ariz. 1984) (overturning statute of limitation).

6~See e.g., Smith v. Dept. of Insurance, 507 So.2d 108O (Fla. 1987) (overturning cap on damages); we

C X. rel. Cardinal Glennon Memorial Hosr.), for Children v. Gacrtncr, 583 S.W.2d 107 (Mo. 1979)(overturning pretrial screening panel); Mattes v. Thompson, 421 A.2d 190 (Pa. 1980) (overturningpretrial screening panel); Sofie v. Fibreboard Corp., 771 P.2d 711 (Wash. 1989) (overturning cap ondamages).

7State ex. rcl, Strvkowski v. Wilkie, 261 N.W.2d 434 (Wis. 1978) (upholding patient compensation fund>

including periodic payments for future damages); Fein v. Permanence Medical Group, 695 P.2d 665(Cal. 1985) (upholding California’s package of tort reforms); Johnson v. Sain[ Vincent Hospital Inc.,404 N.E.2d 585 (Ind. 1980) (upholding $500,000 total cap on damages); Samscl v. WheelerTransportation Serv.. Inc., 789 P.2d 541 (Kan. 1990) (upholding $250,000 cap on noneconomicdamages for all personal injuries); EtheridRe v. Medical Center Hosp., 376 S.E.2d 525 (Vir. 1989)

(cap on total damages constitutional); Murphy v. Edmonds, 601 A.2d 102 (Ct. App. Md. 1992) (capon noneconomic damages of $350,000 constitutional); Adams v. The Children’s Hosr)ital, 832 S.W.2d898 (Me. 1992) cert. denied 113 S. Ct. 511 (1992) (upholding $430,000 cap on noneconomic damages,periodic payment provision and modified joint and several liability); Murphv v. Edmonds 601 A.2d102 (Md. 1992) (upholding $350,000 cap on noneconomic damages applicable to all persona] injurycases including malpractice); Scholz v. Metrot)olitan Patholo~ists. P. C,, 851 P.2d 901 (Colo. 1993)re}z’g. denied Scholz v. Metropolitan Pathologists, P. C., 1993 Colo. Lcxis 502 (Co]o. June 7, 1993)(upholding $1 million cap on damages in medical malpractice of which no more than $250,000” couldbe attributable to pain and suffering); Prender~ast v. Nelson, 256 N.W,2d 657 (Ncb. 1977).

Appendix B--Constitutional Challenges to Malpractice Reforms:Implications for FederalReform -103

8Fein “e permanence Medical Group, 696 P.2d 665 (Cal. 1985) appeal dismissed 474 us, 892 (lg~$;Johnson v. St, Vincent Host)ital. Inc. 404 N.E,2d 585 (Ind. 1980).

91n reviewing the constitutionality of the statute, the Virginia Supreme Court applied the least stringentreview standard (King v. Virginia Birth-Related Neurological Iniurv Compensation Program, 410S.E.2d 656 (Va. 1991)). Therefore, the statute is likely to withstand a challenge by plaintiffs as WCII.The review in the Florida court was somewhat more limited, focusing more specifically on thefinancing mechanism provision (James F. Cov v, Florida Birth-Related Neurological lniuryComDcnsation Plan, 595 So.2d 943 (Fla. 1992) cert. denied McGibonv v. Florida Birth-RelatedNeurological Iniury Comr)ensation Plan, 113 S. Ct. 194 (1992)). Currently several cases brought byplaintiffs challenging the constitutionality of the Florida program arc pending in State courts (37).

IOThe Supreme court has held that congress may attach conditions to the receipt of Federal fundsprovided that the conditions are intended to serve general public purposes, arc unambiguous, arcrelated to a Federal interest in a national project or program, and are not barred by other Federalconstitutional provisions (South Dakota v. Dole, 484 U.S. 203 (1987)).

Appendix CResults of Six Empirical Studies on State Medical Malpractice Reform

This appendix presents more detailedresults of the six empirical studies of theimpact of State tort reforms on the mal-practice cost indicators reviewed inchapter 3. Appendix tables C-1 throughC-3 summarize the studies’ results for eachmalpractice cost indicator, respectively:claim frequency, payment per paid claim,and insurance premiums or losses. In eachtable (i. e., for each indicator), the resultsfor each study that used that indicator(referenced by the first author’s last name)are listed for each of the State tort reformmeasures that the study employed. (Table3-3 in the text summarizes the contents ofthese three tables. )

Because the nature of the data used fora given indicator differed greatly amongthe studies (see the ch. 3 subsection on“Malpractice Cost Indicators”), tables C-1through C-3 depict only the direction ofthe studies results, and not their specificquantitative values. A minus sign (–) meansthat the results were in the expecteddirect ion--i .e., presence of that tort reformreduced the malpractice cost indicator.

A plus sign (+) means that results were inthe unexpected direction--i. e., presence ofthat tort reform increased the malpracticecost indicator. A dot (0) means that thestudy did not examine the impact of that tortreform on that malpractice cost indicator.

To gauge the relative importance of thefindings, the tables also indicate the levelof statistical significance reported for eachresult: The greater the number of asterisksshown beside a given plus or minus sign,the higher was the level of statistical sig-nificance reported for the result. To indi-cate overall trends in the direction of theresults, plus and minus signs are shown forevery reported coefficient, regardless ofhow large or small they were in absolutemagnitude. However, we must emphasizethat results that were not statistically sig-nificant at all (i. e.. with no asterisks besidethem) should be interpreted as being essen-tially zero. Unlike in text table 3-3, nozeros appear in appendix tables C-1through C-3: Every result has a plus orminus sign. and a dot means “ not examinedin the study. ”

-105-


Table C-l--Results of Empirical Studies on the Impact of State Tort Reformson Medical Malpractice Claim Frequencya

Studyb

DanzonReform Adams OLS TSLS Zuckerman

Restrict the statute of limitations:a. Use date of event, not discoveryb. Shorten basic statute of limitations

for medical malpracticec. Shorten statute of limitations for minorsd. Shorten extension of statute of



Limit attorney fees

Modify the standard of care:a. Codify the standard of careb. Do not adopt the “expanded locality rule”c. Establish qualifications for expert

witnesses




Require or allow periodic payments:a. Requireb. Allow


— ●

☞ ☛☛☞

●

●

●

●

●

●

●

�

●

●

●

●

●

●

●

●

●

●

●

●

●

●

☞

●

☞

☞

●

●

●

☞ ☛☛

●

☞ ☛☛

●

●

●

●

●

●

●

●

● ●

� ☛ ☛☞ ☛

●

●

�

●

�

�

●

●

●

�

●

� ☛

●

●

●

●

●

●

●

●

—

+

●

●

☞

☞

●

●

●

☞

�

●

☞

�

●

●

●

●

●

●

Appendix C --Results of Six Empirical Studies on State Medical Malpractice Reform -107

Table C-l--Results of Empirical Studies on the Impact of State Tort Reformson Medical Malpractice Claim Frequencya (Continued)

Study b

DanzonReform Adams OLS TSLS Zuckerman

Restrict the joint and several liability doctrine ● ● ● ●


medical malpractice ● + ** + ** ●

b. Allow pre-injury agreements to arbitrate ● ● ● —

Restrict the use of res ipsa loquitur — ● ● ●

Restrict the use of ad damnum clauses ● ● ● ●

Limit the doctrine of informed consent — ***● ● ●

Allow costs awardable in frivolous suits ● ● ● —

aKev to svmbols:– Result in the expected direction (reducing malpractice claim frequency)+ Result in the unexpected direction (increasing malpractice claim frequency)

● Not examined in the studies reviewed here* significant at the .10 level** Significant at the .05 level*** significant at the .01 level

b$tudv measures:Adams: Number of malpractice claims for 1976-1981 reported by physicians in a 1982 survey,Danzon (OLS): Number of claims filed per insured physician, reported by insurance companies for 1975-1984, claims-

made policies only, ordinary least-squares regression.Danzon (TSLS): Number of claims filed per insured physician, reported by insurance companies for 1975-1984, claims-

made policies only, two-stage least-squares regression.Zuckerman: Number of claims filed per insured physician, reported by insurance companies for 1975-1986, claims-

made policies only.

SOURCES: E. K. Adams, and S. Zuckerman, “Variation in the Growth and Incidence of Medical Malpractice Claims,(’Journal of Health Politics, Policy and Law 9(3):475-488, Fall 1984; P.M. Danzon, “The Frequency andSeverity of Medical Malpractice Claims: New Evidence,(’ Law and Contemporary Problems 49(2):57-84,Spring 1986; S. Zuckerman, RR. Bovbjerg, and F. Sloan, “Effects of Tort Reforms and Other Factors onMedical Malpractice Insurance Premiums, ” Inquiry 27(2): 167-182, Summer 1990.


Table C-2--Results of Empirical Studies on the Impact of State Tort Reforms on MedicalMalpractice Payment Per Paid Claima

Study b

SloanDanzon Prob. of Amount of Amount

Reform OLS TSLS payment payment + LAE Zuckerman

Restrict the statute of limitations:a. Use date of event, not discoveryb

c

d

Shorten basic statute of limitationsfor medical malpractice

Shorten statute of limitationsfor minors

Shorten extension of statute oflimitations from date of discovery


Limit attorney fees

Modify the standard of care:a. Codify the standard of careb. Do not adopt the “expanded

locality rule”c. Establish qualifications for expert

witnesses




Require or allow periodic payments:a. Requireb. Allowc. Either require or allow

●

●

●

●

�

●

�

�

●

●

●

� ☛☛

●

� ☛

●

●

●

●

� ☛ ☛

●

●

●

●

●

●

●

☞

●

☞

�

●

●

●

� ☛☛

●

� ☛

●

●

●

●

� ☛ ☛

●

●

●

●

●

—

+

●

●

✎

—

+●

—

+●

●

☞

●

—

+ **–*—

+

●

●

☞

●

☞

●

—

+*——

+

●

●

☞

●

�

☞

☞

+ ***

●

●

●

— –* –*

+ —● ● ●

— ** — *** ——** –* –*

+ — ●

● ● ●

● ● ●

— — ●

☞ � ●

● ● ●

Appendix C--Results of Six Empirical Studies On State Medical Malpractice Reform -109

Table C-2--Results of Empirical Studies on the Impact of State Tort Reforms on MedicalMalpractice Payment Per Paid Claima (Continued)

Studyb

SloanDanzon Prob. of Amount of Amount

Reform OLS TSLS payment payment + LAE Zuckerman

Restrict the joint and several liabilitydoctrine


medical malpracticeb. Allow pre-injury agreements

to arbitrate

Restrict the use of res ipsa loquitur

Restrict the use of ad damnum clauses

Limit the doctrine of informed consent

Allow costs awardable in frivolous suits

●

� ☛ ☛

●

●

●

●

●

● ● ● ● ●

●

�

— **● ● ●

● � � �

● � � ☞ ●

● ☞ ☞ � ●

● ☞ � � ●

● ☞� ☛ ☛ � ☛ ☛

☞

aKey to symbols:– Result in the expected direction (reducing payment per paid claim)+ Result in the unexpected direction (increasing payment per paid claim)

● Not examined in the studies reviewed here* Significant at the ,10 level** Significant at the ,05 level*** significant at the .01 level

bStudy measures:Danzon (OLS): Average payment amount per paid claim for all claims (i.e., under both claims-made and occurrence

policies), 1975-1984, ordinary least-squares regressionDanzon (TSLS): Average payment amount per paid claim for all claims (i.e., under both claims-made and occurrence

policies), 1975-1984, two-stage least-squares regressionSloan: Probability that the claim would result in payment, 1975-1978 and 1984

Amount of indemnity payment for the claim, 1975-1978 and 1984Amount of indemnity payment plus “loss-associated expense” (mainly defense attorneys’ fees) for the claim, 1975-1978 and 1984

Zuckerman: Average payment amount per paid claim for all claims (i. e., under both claims-made and occurrencepolicies), 1975-1986

SOURCES: P.M. Danzon, “The Frequency and Severity of Medical Malpractice Claims, New Evidence, ” Law andContemporary Problems 49(2):57-84, Spring 1986; F.A, Sloan, P.M. Mergenhagen, and R.R. Bovbjerg,“Effects of Tort Reforms on the Value of Closed Medical Malpractice Claims: A Microanalysis,” Journal ofHealth Politics, PolicV and Law 14(4):663-689, Winter 1989; S, Zuckerman, R.R. Bovbjerg, and F, Sloan,“Effects of Tort Reforms and Other Factors on Medical Malpractice Insurance Premiums,” Inquiry 27(2): 167-182, Summer 1990,


Table C-3--Results of Empirical Studies on the Impact of State Tort Reforms on MedicalMalpractice Insurance Premiums or Lossesa

Studyb

Zuckerman (premiums)GeneraI GeneraI Blackmon Barker

Reform practice surgery Ob/Gyn Premiums Losses Premiums

Restrict the statute of limitations:a.b.

c.

d.

Use date of event, not discoveryShorten basic statute of limitations

for medical malpracticeShorten statute of limitations

for minorsShorten extension of statute of



Limit attorney fees

Modify the standard of care:a. Codify the standard of careb. Do not adopt the “expanded

locality rule”c. Establish qualifications for expert

witnesses




Require or allow periodic payments:a. Requireb. Allowc. Either require or allow

●

✍ ☛☛☛

☞

� ☛☛☛

●

� ☛

☞

� ☛☛☛

● ●

● ●

� �

—

●

●

●

—

+●

— ***

+●

●

●

●

●

●

●

++

●

— ***

+●

●

●

●

●

●

● ● ● ●

� ☛ ☛☞ ☞ �

+ ● ● ●

� ☛☛☛● ● ●

●

●

� ☛

—

●

●

●

—

+●

●

●

●

—

●

●

●

●

●

☞

● ●

● ●

● ●

— ●

● �

● ●

● ●

● ●

● ●

� ☞

— *** ● ● ●

☞ ● ● ●

● ● ● ●

● � ☛☛☛ � ☛☛☛●

● ● ● � ☛☛☛

● ● ● ●

● ● ● ●

● ☞ � ●

Appendix C --Results of Six Empirical Studies on State Medical Malpractice Reform -111

Table C-3--Results of Empirical Studies on the Impact of State Tort Reforms on MedicalMalpractice Insurance Premiums or Lossesa (Continued)

Study b

Zuckerman (premiums)General General Blackmon Barker

Reform practice surgery Ob/Gyn Premiums Losses Premiums

Restrict the joint and severalliability doctrine ● o ● – * — ●


medical malpractice ● ●

b. Allow pre-injury agreementsto arbitrate — —

Restrict the use of res ipsa loquitur ● ●

Restrict the use of ad damnumclauses

●

�

●

●

●

●

● ☞

● ●

● ☞

● ●

Limit the doctrine of informedconsent ● ● ● ● ● ●

Allow costs awardable in frivoloussuits — + ● ● ●

aKey to symbols:- Result in the expected direction (reducing malpractice premiums or losses)+ Result in the unexpected direction (increasing malpractice premiums or losses)

. Not examined in the studies reviewed here* Significant at the ,1O level** Significant at the .05 level*** Significant at the ,01 level

bStudy measures,Zuckerman: Malpractice insurance premiums for general practice, 1975-1986

Malpractice insurance premiums for general surgery, 1975-1986Malpractice insurance premiums for obstetrics/gynecology, 1975-1986

Blackmon: Change in malpractice insurance premiums between 1985 and 1988Change in malpractice insurers’ losses from 1985 to 1988

Barker Mean loss ratio, malpractice insurance industry total, 1977-1986

SOURCES: D.K. Barker, “The Effects of Tort Reform on Medical Malpractice Insurance Markets: An Empirical Analysis, ”Journal of Health Politics, PolicV and Law, 17(1):143-161, Spring 1992; G, Blackmon, and R Zeckhauser,“State Tort Reform Legislation: Assessing Our Control of Risks,” in Tort Law and the Public Interest, Peter H,Schuck (cd. ) (New York: W.W. Norton & Co., 1991); F.A. Sloan, P.M. Mergenhageni and RR, Bovbjerg,“Effects of Tort Reforms on the Value of Closed Medical Malpractice Claims: A Microanalysis, ” Journal ofHealth Politics, Policy and Law 14(4):663-689, Winter 1989; S. Zuckerman, RR, Bovbjerg, and F. Sloan,“Effects of Tort Reforms and Other Factors on Medical Malpractice Insurance Premiums, ” Inquiry 27(2): 167-182, Summer 1990,

Appendix DAcknowledgments

OTA would like to thank the following individuals for their assistance:

Laura-Mae Baldwin, M. D.. M.P.H.Assistant ProfessorUniversity of WashingtonDepartment of Family MedicineSeattle, WA

Walter Beckham, Jr., J. D.ConsultantMiami, FL

Bill BodifordActuarial AnalystBureau of Property and Casualty Rates

and Reserve AnalysisDivision of Insurance ServicesFlorida Dept. of InsuranceTallahassee. FL

Elizabeth Brandt, J.D.Chief Council and Deputy DirectorCalifornia Department of Health ServicesSacramento, CA

Milton I. CooperMedical Legal SectionRegional Legal DepartmentKaiser Permanente MedicalOakland, CA

Philip H. Corboy, J.D.Corboy & DemetrioChicago, IL

Lynn B. DickinsonExecutive DirectorBirth-Related Neurological

Care Program

InjuryCompensation Association

Florida Department of InsuranceTallahassee, FL

Polly EhrenhaftConsultantLake Oswego, OR

Lillian Gaskin, J. D.Senior Legislative CounselAmerican Bar AssociationWashington, DC

Peter Glassman, M.D.Physician ResearcherRANDSanta Monica, CA

Jona Goldshmidt, J. D., Ph.D.American Judicature SocietyChicago, IL

Ralph W. Hale. M.D.Executive DirectorAmerican College of Obstetricians

and GynecologistsWashington, DC

Mark Hall. J.D,Professor of Law and Public HealthWake Forest School of LawBowman Gray School of MedicineWinston Salem, NC

Tricia Hunter. R.N.Special AssistantMedical MalpracticeOffice of Statewide Health Planning

and DevelopmentSacramento, CA

Peter Jacobson, J. D., M.P.H.Senior Behavioral ScientistRANDSanta Monica. CA

Robert LemboDirector, State RelationsAssociation of Trial Lawyers of AmericaWashington. DC

Russell Localio. J. D.. M.P.H.Research AssociateCenter for Biostatistics and EpidemiologyPenn State University School of MedicineHershey, PA

Harold Luft, Ph.D.Professor of Health EconomicsInstitute for Health Policy StudiesUniversity of California, San FranciscoSan Francisco, CA

-113-


Tom Metzloff, J.D.Professor of LawDuke University School of LawDurham, NC

Don Harper Mills. M. D., J.D.ConsultantLong Beach, CA

C. M. Kinloch Nelson, M.D.The Urology CenterRichmond, VA

Micheal A. Nocero, Jr., M.D.Chairman, Board of GovernorsAmerican College of CardiologyOrlando, FL

Elinor J. PylesExecutive DirectorVirginia Birth Related NeurologicalCompensation FundRichmond, Virginia

John S. Schroeder, M.D.Professor of MedicineDivision of Cardiovascular MedicineStanford University School of MedicineStanford, CA

David Shapiro, M. D., J.D.Senior AnalystPhysician Payment Review CommissionWashington, DC

Janice M. Sigler, J.D.Assistant Attorney GeneralOffice of the Attorney GeneralRichmond, VA

Stephanie Spernak, J.D.Senior Research ScientistCenter for Health Policy ResearchGeorge Washington UniversityWashington, DC

Jeremy Sugarman, M.D.Assistant ProfessorDivision of General Internal MedicineDuke University Medical CenterDurham, NC

Mark I. Taragin. M. D.. M.P.H.Assistant ProfessorDivision of General Internal MedicineRobert Wood Johnson Medical SchoolNew Brunswick, NJ

Sandy Ulsaker, J.D.Government Affairs LiaisonSt. Paul Fire and Marine Insurance CompanySt. Paul, MN

Walter Wadlington, J. D.Professor of LawUniversity of VirginiaCharlottesville, VA

Paul Weiler, J.D.Professor of LawHarvard Law SchoolCambridge, MA

Steve Zuckerman. Ph.D.Senior Research AssociateUrban InstituteWashington, DC

Lois Snyder, J.D.ManagerHealth and Medical/Legal Policy DevelopmentAmerican College of PhysiciansPhiladelphia, PA

— —

Appendix D--Acknowledgments -115

OTA would like to express its appreciation to the following Attorneys General and their staff:

James H. Evans, J.D.Attorney GeneralOffice of the Attorney GeneralMontgomery, AL

Lynda K. Oswald, J.D.Assistant Attorney GeneralOffice of the Attorney GeneralMontgomery, AL

Charles E. Cole, J.D,Attorney GeneralDepartment of LawJuneau. AK

Stephanie E. Joannides, J.D.Assistant Attorney GeneralDepartment of LawJuneau, AK

Winston Bryant, J. D.Attorney GeneralOffice of the Attorney GeneralLittle Rock, AR

Dinah M. Dale, J.D.Assistant Attorney GeneralOffice of the Attorney GeneralLittle Rock. AR

Grant Woods, J.D.Attorney GeneralOffice of the Attorney GeneralPhoenix, AZ

Mark F. Aceto, J.D.Assistant Attorney GeneralOffice of the Attorney GeneralPhoenix, AZ

Daniel E. Lungren, J.D.Attorney GeneralDepartment of JusticeSacramento, CA

Thomas A. Blake, J.D.Deputy Attorney GeneralDepartment of JusticeSacramento CA

Gale A. Norton, J.D.Attorney GeneralOffice of the Attorney GeneralDenver, CO

William Higgins. J.D.Assistant Attorney GeneralOffice of the Attorney GeneralDenver, CO

Richard Blumenthal, J.D.Attorney GeneralOffice of the Attorney GeneralHartford, CT

Jane D. Cornerford, J.D.Assistant Attorney GeneralOffice of the Attorney GeneralHartford. CT

Michael J. Bowers. J.D.State of GeorgiaDepartment of LawAtlanta, GA

Julia B. Anderson, J.D.Assistant Attorney GeneralDepartment of LawAtlanta. GA

Bonnie J. Campbell, J.D.Attorney GeneralDepartment of JusticeDes Moines, IA

Craig Kelinson. J.D.Special Assistant Attorney GeneralDepartment of JusticeDes Moines, IA

Larry EchoHawk. J.D.Attorney GeneralOffice of the Attorney GeneralBoise, ID

Donald L. DeleskiExecutive DirectorIdaho State Board of MedicineOffice of the Attorney GeneralBoise. ID


Roland W. Burris, J.D.Attorney GeneralOffice of the Attorney GeneralSpringfield, IL

Karen J. Steele, J.D.Assistant Attorney GeneralOffice of the Attorney GeneralSpringfield. IL

Pam Carter, J.D.Attorney GeneralOffice of the Attorney GeneralIndianapolis, IN

Daniel B. Dovenbarger, J.D.Chief CounselOffice of the Attorney GeneralIndianapolis, IN

Richard P. Ieyoub. J.D.Attorney GeneralDepartment of JusticeBaton Rouge. LA

Athena B. Piedrahita, J.D.Assistant Attorney GeneralDepartment of JusticeBaton Rouge, LA

Michael E. Carpenter, J.D.Attorney GeneralDepartment of the Attorney GeneralAugusta. ME

Thomas D. Warren, J.D,Deputy Attorney GeneralDepartment of the Attorney GeneralAugusta. ME

Margaret J. ReinschLegislative Analyst

Office of Policy and Legal AnalysisState House Station 13Augusta, ME

J. Joseph Curran, Jr., J.D.Attorney GeneralOffices of the Attorney GeneralBaltimore, MD 21202

C.J. Messerschmidt, J.D.Assistant Attorney GeneralOffices of the Attorney GeneralBaltimore MD 21202

Scott Harshbarger, J.D.Attorney GeneralOffice of the Attorney GeneralBoston, MA

Stuart T. Rossman, J.D.Assistant Attorney GeneralOffice of the Attorney GeneralBoston, MA

Frank J. Kelley, J.D,Attorney GeneralDepartment of the Attorney GeneralLansing, MI

Hubert H. Humphrey 111, J.D.Attorney GeneralOffice of the Attorney GeneralSt. Paul, MN

Jeremiah W. (Jay) Nixon. J.D.Attorney GeneralOffice of the Attorney GeneralJefferson City, MO

Elizabeth A. Hess, J.D,Assistant Attorney GeneralOffice of the Attorney GeneralJefferson City, MO

Joseph P. Mazurek, J.D.Attorney GeneralDepartment of JusticeHelena, MT

Michael Easley. J.D.Attorney GeneralDepartment of JusticeRaleigh, NC

E. H. Bunting. Jr., J.D.Special Deputy Attorney GeneralDepartment of JusticeRaleigh, NC

Heidi Heitkamp, J.D.Attorney GeneralOffice of the Attorney GeneralBismarck, ND

Don Stenberg, J.D.Attorney GeneralOffice of the Attorney GeneralLincoln. NE

Sam Grimminger, J.D.Deputy Attorney GeneralOffice of the Attorney GeneralLincoln, NE

Jeffrey R. Howard, J.D.Attorney GeneralDepartment of JusticeConcord, NH

Douglas N. Jones, J.D.Assistant Attorney GeneralDepartment of JusticeConcord, NH

Frankie Sue Del Papa. J.D.Attorney GeneralOffice of the Attorney GeneralCarson City, NV

James C. Smith, J.D.Deputy Attorney GeneralOffice of the Attorney GeneralCarson City, NV

Robert Abrams, J.D.Attorney GeneralDepartment of LawAlbany, NY

Donald P. Berens, Jr., J.D,Assistant Attorney GeneralDepartment of LawAlbany, NY

Lee Fisher, J.D.Attorney GeneralOffice of the Attorney GeneralColumbus, OH

Simon B. Karas, J.D.Deputy Chief CounselOffice of the Attorney GeneralColumbus. OH

Susan B. Loving, J.D.Attorney GeneralOffice of the Attorney GeneralOklahoma City. OK

Guy L. Hurst, J.D.Assistant Attorney GeneralOffice of the Attorney GeneralOklahoma City. OK

Theodore R. Kulongoski, J.D.Attorney GeneralDepartment of JusticeSalem, OR

Rodney K. Norton, J.D.Assistant Attorney GeneralDepartment of JusticeSalem, OR

Ernest D. Preate, Jr., J.D.Attorney GeneralOffice of the Attorney GeneralHarrisburg, PA

Jessie L. Smith, J.D.Chief Deputy Attorney GeneralOffice of the Attorney GeneralHarrisburg, PA

Jeffrey B. Pine, J.D.Attorney GeneralDepartment of the Attorney GeneralProvidence, RI

Lisa Dinerman, J. D.Special Assistant Attorney GeneralDepartment of the Attorney GeneralProvidence, RI

T. Travis Medlock, J.D.Attorney GeneralOffice of the Attorney GeneralColumbia. SC


Strom T. JohnstonManagerProfessional Liability DepartmentSouth Carolina Insurance Reserve FundColumbia, SC

Mark Barnett, J.D.Attorney GeneralOffice of the Attorney GeneralPierre, SD

James S. Schultz, J.D.Legal CounselDivision of Administrative ServicesDepartment of HealthPierre, SD

Charles W. Burson, J.D.Attorney GeneralOffice of the Attorney GeneralNashville, TN

Eleonor Owen Kerr, J.D.Assistant Attorney GeneralOffice of the Attorney GeneralNashville. TN

Dan Morales, J.D.Attorney GeneralOffice of Attorney GeneralAustin. TX

Nelly R. Herrera, J.D.Assistant Attorney GeneralTort Litigation DivisionOffice of the Attorney GeneralAustin, TX

Jan Graham, J.D.Attorney GeneralOffice of the Attorney GeneralSalt Lake City, UT

James R. Soper, J.D.Assistant Attorney GeneralOffice of the Attorney GeneralSalt Lake City, UT

Stephen D. Rosenthal, J.D.Attorney GeneralOffice of the Attorney GeneralRichmond, VA

Jane A. Perkins, J.D.Legal AssistantOffice of the Attorney GeneralRichmond, VA

Jeffrey L. Amestoy, J.D.Attorney GeneralOffice of the Attorney GeneralMontpelier, VT

Geoffrey A. Yudien, J.D.Assistant Attorney GeneralOffice of the Attorney GeneralMontpelier, VT

Christine Gregoire, J.D.Attorney GeneralOft-ice of the Attorney GeneralOlympia, WA

Michael E. Tardif, J,D.Division ChiefTort Claims DivisionOffice of the Attorney GeneralOlympia, WA

James E. Doyle, J.D.Attorney GeneralDepartment of JusticeMadison, WI

David T. Flanagan, J.D.Assistant Attorney GeneralDepartment of JusticeMadison, WI

Joseph B. Meyer, J.D.Attorney GeneralOffice of the Attorney GeneralCheyenne, WY

John Rennison, J.D.Assistant Attorney GeneralOffice of the Attorney GeneralCheyenne, WY

References

1.

‘7e.

3. .

4.

5.

6.

7.

8.

9.

Ahraham, K. S.. and Weiler, P. C.,“organizational Liability for MedicalMalpractice: An Alternative to Individ-ual Health Care Provider Liability forHospital Related Malpractice, ” sup-p~~rted by a grant from The RobertWtxKI J~)hns~~n Foundation, Princeton,NJ, December 1992.Adams, E. K., and Zuckerman, S.,“Variation in the Growth and Incidenceof Medical Malpractice Claims, ” Journalof Health Politics. Policv and Law9(3):475488. 1984.American Law Institute, Reporter’sstudy: Enterprise Rewmnsibilitv forPers(lnal [niurv : Volume 1. The Institu-ti~lnal Framework (Philadelphia, PA:199 1).American Law Institute, Re~orter’sStlldv: Enterprise Resr)onsibilitv forPersonal Iniurv : Volume 11. Amx-oachestt) LeRal and I n s t i t u t i o n a l Change(Philadelphia, PA: 1991).American Medical Association/SpecialtySt~ciety Medical Liability Project, “AProposed Alternative to the Civil JusticeSystem f~~r Rewlving Medical LiabilityDisputes: A Fault Bawd. AdministrativeSystem.” prepared by the AMA/SpecialtySociety, Chicagt~. IL: 1988.American Medical Association, Centerti~r Health Policy Research, Socioeco-nt)mic Characteristics of Medical Prac-@ (Chicago, IL: 1992).Atiyah, P. S., “Medical Malpractice andthe C(~ntract/Tort Boundary, ” Law andCt~ntempt~rarv Prthlems 49(2):287-303,1986.Bales, J. F.. and DeMarco, L. A., “RecentTrends in Medical Malpractice Litigation, ”Health Law Handhx~k (New York, NY:C. Boardrnan CtJ., 1989).Barker, D. K., “The Effects of Tort Re-ti)rm t~n Medical Malpractice InsuranceMarkets: An Empirical Analysis, ” Jour-nal ~~f Health Politics, Policv and Law17(1 ): 143-161, 1992.

10.

11.

12.

13.

14.

15.

16,

17.

Bell, P. A., “Legislative Intrusions intothe Common Law of Medical Malprac-tice: Thoughts about the Deterrent Ef-fect of Tort Liability, ” Svracuse LawReview 35(3):939-993, 1984.Bernzweig, E.. Special Assistant forMalpractice Research and Prevention,Ofilce of the Director of CommunityHealth, Department of Health Educa-tion and Welfare, Washington, DC,“Statement.” Medical Malpractice: ThePatient Versus the PhVsician. hearingbefore the Subcommittee on ExecutiveReorganization, Committee on Govern-ment Operations, Senate, U.S. Con-gress, Nov. 20, 1969. (Wmhingon, DC:U.S. Government Printing Office. 1%9).Blackmon, G. , and Zeckhauser, R . ,“State Tort Refbrrn Legislation: Assess-ing Our Control ~~f Risks. ” Tt~rt Lawand the Public Interest, P.H. Schuck(cd.) (New York, NY: W.W. N(~rtt)n &co., 1991).Bobbitt, Jr., J. D., O’Conncw. M. K., andEasley, H.A. “North Car~~lina’s ProposedBirth-Related Neurological ImpairmentAct: A Provocative Alternative, ” Wake

Forest Law Review 26(4):837-877, 1991.Bovbjerg, R. R.. “Legislation on Medi-cal Malpractice: Further Developmentsand a Preliminary Rept~rt Card, ” Uni-versitv of Davis Law Review 22:499-556, 1989,Bovbjerg, R. R.. Slt)an, F. A., and Blum-stein, J. F., “Valuing Life and Limb inTort: Scheduling ‘Pain and Suffering’, ”Northwestern University Law Review83(4):908-976. 1989.Bovbjerg, R. R.. Sloan. F. A.. Dor, A.,et al., “Juries and Justice: Are Malprac-tice and Other Persona] Injuries CreatedEqual’?” Law and Cc~ntemporarV PrL~b-lems 54(1):5-42, 1991.Brennan, T. A.. Leape L. L., Lair-d N. M.,et al., “Incidence of Adverse Events andNegligence in Hospitalized Patients:Rewlts of the Harvard Medical Practice

- 1 1 9 -


18.

19,

20.

21.

TJ .

23.

24.

25.

26.

27.

28.

29.

30.

study 1,” New En~land Journal ofMedicine 324(6):370-376, 1991.Briggs, T.. Chief Operations Otllcer,Medical Mutual Insurance Company,Portland, ME, personal communication,Aug. 2, 1993.Calamari, J. andContracts Sees.(St. Paul, MN:pany, 1987).

Perillio, J. The Law of9-39, 9-44, 3d editionWest Publishing Com-

Carlin, P. E., Medical Malpractice Pre-Trial Screenin~ Panels: A Review ofEvidence (Washin~~t~n, DC: Intergov-e r n m e n t a l Health Policy Prt)ject, TheGtiwge Wmhingt(ln University, 1980).Carter, C.. and Cr[~n~well. J., “Variationsin Ht)spital Malpractice Cc~sts, 1983-1985. ” Inauirv 24:392-404. 1987.Cohn, B., Chairman of the Board,Medical Insurance Exchange of Cali-fornia, personal communication. June29, 1993.Colburn. D., and Morin. R.. “AmericansGrade Their Health Care, ” WashingtonP~~st, p.6,7,9. December 31.1991.Corbin, A. L.. Ct~rbin t~n Contracts:V()] . 3, $559 (St. pau], MN: West Pub-lishing C~~., 1960).Corbin. A. L., Corbin on Contracts:Vol. 6A, $1433 (St. Paul, MN: WestPublishing Co., 1962).Crane, M., “Could a Malpractice SuitWipe Out Your AsseL\?” Medical Eco-nt)mics. p. 146-153. July 6. 1992.Cremey. D.. President, Harvard RiskManagement F~mnd.atit~n t~f the HarvardMedical lnstituti~~ns, Cambridge, MA,perst~nal c(~mmunicati~~n, Aug. 11, 1993.Danzon, P. M., “The Frequency andSeverity of Medical Malpractice Claim,”Rand Corporation, The Institute forCivil Justice. Santa Monica, CA, 1982.Danzon, P. M.. Medical Malpractice:Thtxlrv. Evidence. and Public PolicV(Cambridge. MA: Harvard UniversityPress, 1985).Danzon, P. M.. “The Frequency andSeverity t)f Medical Malpractice Claims:

31,

32.

33.

34.

35.

36.

37.

38.

39.

40.

41.

New Evidence, ” Law and ContemnorarvProblems 49(2):57-84, 1986.Danzon, P. M.. “Alternative LiabilityRegimes for Medical Injuries, ” The Ge-neva Papers on Risk and Insurance15(54):3-21. 1990.Danzon, P. M., “Liability for MedicalMalpractice, ” Journal of Economic Per-scwtives 5(3):51%9, 1991.Danzon, P. M., “Malpractice Liability:Is the Grass on the Other SideGreener?, ” Tort Law and the public In-terest, P.H. Shuck (cd. ) (New York,NY: W.W. Norton & Company, 1991).Danzon, P . M. , and Lillard, L . A . .“Settlenmnt Out of CtMrt: The Disposi-tion of Medical Malpractice Claims, ”Journal of Lejzal Studies 12:345-377,1983.Danzon, P. M.. Pauly, M. V. , andKington. R. S., “The Effects of Mal-practice Litigation on Physicians’ Fewand Incomes. ” American EconomicReview 80(2): 122-27, May 1990.David, E., Chairman, Maine Board ofRegistratit~n in Medicine. Augusta, ME,personal communication, June 24.1992.Dickinson, L. B.. Executive Director,Birth-Related Neurological Injury Com-pensation Association, Florida Depart-ment of Insurance, Tallahassee, FL, per-sonal communications, Jan, 11, 1993,Aug 25, 1993.Duff, D. G., “Compensation for- Neu-rologically Impaired Infants: MedicalNo-Fault in Virginia, ” Harvard Journalof Ltwislation 27:391-45 1. 1990,Epstein, R.A. “Medical Malpractice,Imperfect Information. and the Contrac-tual Foundations f~~r Medical Service. ”L a w and Contemrm-arv Problems54(1):201-212, 1991.Fabian, J.. Vice President. Deputy Gen-eral Counsel. The New York HospitalOftIce ~~f Legal Affairs, New York, NY,personal communicati~~n. Aug. 9, 1993.Farber, H. S., and White, M. J., “MedicalMalpractice: An Empirical Examinatic~n

of the Litigation Process, ” NationalBureau of Economic Research. Inc.,working paper No. 3428, Cambridge,MA, September 1990.Feldman. R., “The Determinants ofMedical Malpractice Incidents: Themyof Contingency Fees and Empirical Evi-dence, ” Atlantic Economic Journal7(2):59-65, 1979.Fla. Laws Ch. 129 (Adv. Leg. Serv.Lexis 1993).Gehshan. S., and Hill, I.. “State Mal-practice-Related Initiatives Designed toIncrease AcceM to Obstetric Care, ”Handou~f presented at “Issues in Medi-cal Liability and Health Care, ” confer-ence sponsord by the User LiaisonPr~~gram, Center for Reswch and Dis-semination and Liaison. Agency forHealth Care Policy and Rmearch, con-ducted by Health Systems Research,Inc., Boston. MA, Aug. 3-5, 1992.Gitli~rd, G. , Staff Director, PracticeParameters Advisory Committee, Min-newta Department of Health. St, Paul,MN, personal communication, July 12,1993.Gilbert, P., Director, Public Citizen’sCongress Watch, Washington. DC, per-sonal communicatit~n. July 1993.

46(a) Ginsburg, W. H., Kahn, S. J., Thornhill,

47.

48.

49.

M. C.. et d., “Contractual Revisions toMedical Malpractice Liability, ” Law andContempt~rar~ Problems 49(2):253-264.1986.Gc~lann, D., “Making Alternative Dis-pute Resolution Mandatory: The Consti-tutional Issues, ” Ore~t~n Law Review68:487-568, 1989.Gt)ldschmidt, J., “Where Have all thePanels Gone? A History of the ArizonaMtii~~] Liability Review panei, ” &

zona State Law Journal 23: 1013-1109,1991.Gr~~nfein. W. P., and Kinney, E. D.,“Controlling Large Malpractice Claims:The Unexpected Impact of Damage

50.

51.

52.

53.

54.

55.

56.

57.

58.

Caps, ” Journal of Health Politics. Policyand Law 16(3):441483, 1991.Hall. M. A., “The Defensive Efl”ect ofMedical Practice Policies in MalpracticeLitigatit~n, ” Law and ContemporaryProblems 54(2): 119-146.1991.

Harvard Medical Practice Study. PatientDoctors and Lawyers: Medical IniurY.Malpractice Litigation, and Patient Com~-ensation in New York a report of theHarvard Medical Practice Study to theState of New York (Cambridge, MA:President and Fellows of HarvardCollege. 1990).Havighurst, C. C., “Altering the Appli-cable Standard of Care. ” Law and Con-ternporarv Pr[~blems 49(2): 265-286,1986.Havighurst. C. C,, “Private Reform ofTort-Law Dogma: Market Opportunitiesand Legal Obstacles. ” Law and Con-temporm Problems 49(2):143-172, 1986.

Health Insurance Association of Amer-ica, “Medical Malpractice: Crises, Re-sponse and Effects, ” research bulletin,p repared by F.A. Sloan. and R.R.Bovbjerg, Wa~hington, DC, May 1989.Hickson. G. B., Claytt)n. E. W., Githens,P. B., et al., “Factors That PromptedFamilies tt~ File Medical MalpracticeClaims Following Perinatal Injuries, ”Journal of the American Medical Asso-ciation 267(10): 1359-1363, 1992.

Hirshfeld. E. B.. “Should Practice Pa-rameters Be the Standard of Care InMalpractice Litigation, ” Journal of theAmerican Medical Association 266(20):2886-2891, 1991.

Helm, V.A. “The Causes of CerebralPalsy: A C~~ntemporary Perspective, ”Journal of the American Medical Asso-ciation 247(10): 1473-1477, 1982.

Hugh~~. J. W., and Snyder, E. A.,“Ev~luating Mtiical Malpractice Re-forms, ” ContemptJrary Policy Issues7:83-98, 1989.

59.

60.

61.

6~

63.

64.

65.

66.

67.

68.

69.

Hunter, T.. Special Assistant, MedicalMalpractice. Office of Statewide Health,Planning and Development, personalu~mmunication, August 4, 1993.Institute of Medicine, Medical Profes-sit~nal Liabilitv and the Deliverv of Ob-stetrical Care (Washington, DC: Na-tit~nal Academy Press, 1989).Kakalik. J., and Pace, N., Costs andComixmsation Paid in Tort Liti~ation(Santa Monica, CA: Rand Corporation,1986).Katz, J., The Silent World of Doctorand Patient (New York, NY: The FreePrms, 1984).Kaynor, M., Underwriting Manager,Harvard Risk Management Foundation,Camhridge. MA. persona] communica-tion, Aug. 8, 1993.Keett~n W. P.. Dobbs. D, B,, Keeton,R. E., et. al., Presser and Keeton onThe Law of Torts, 5th Edition (St. Paul,MN: West Publishing Company, 1984).King, J. H.. “In Search of a Standard ofCare for the Medical Profession: TheAccepted Practice Formula, ” VanderbiltLaw Review 28(6): 1213-1276, 1975.King, J. H., The Law of Medical Mal-practice. 2nd Edition (St. Paul, MN:West Publishing Company, 1986).Kinney, E. D., and Wilder, M. M,,“Medical Standard Setting in the CurrentMalpractice Environment: Problems andPossibi] ities, ” University of California atDavis Law Review 22(2): 421-450,1989.Klwliva, S., Assistant Director, HumanRestwrces Division, Health FinancingIssues . Genera l Acccmnting Ofllce,Wa.~hingtt~n, DC. personal communica-tit~n. Aug. 17. 1993.Ladimer. I., St~k)man, J. C., and Mulvihill,M.. “Experience in Medical MalpracticeArbitrati~~n, ” The Journal of LegalMedicine 2(4):433-467, 1981.

70.

71.

72.

73.

74,

75.

76,

77.

78.

Law and Contemporary Problems, Lawand Contemr)orarv Problems: MedicalMalpractice Can the Private Sector FindRelief? R.R. Bovbjerg, C.C. Havighurst(special eds.) 49(2): 1-348, 1986.Lawthers, A.G, Localio, A. R,, Laird,N. M., et al., “Physicians Perceptions ofthe Risk of Being Sued, ” Journal ofHealth Politics, Policv, and Law17(3):463482, 1992,Letsch, S. W., Lazenby, H. C., Levit,K. R., et al., “National Health Care Ex-penditures, 1991, ” Health Care Financ-ing Review 14(2): 1-30, 1992.Lewin-VHI, Inc. “Estimating the Costsof Defensive Medicine. ” contract reportprepared for MMI Companies, Inc.,Fairfax. VA, Jan. 27, 1993.Localio. A, R.. Lawthers A, G,, Bengt-son J. M., et al., “Relationship BetweenMalpractice Claims and Caesarean De-livery, ” Journal of American Medicine269(3):366-373, 1993.Localio, A. R., Lmvthers, A. G., Bren-nan, T. A., et al., “Relationships Be-tween Malpractice Claims and AdverseEvents Due to Negligence: Results ofthe Harvard Medical Practice Study III, ”New England Journal of Medicine325:245-251, July 25, 1991.LouiseIl. D. W,. and Mueller, C. B.,Federal Evidence. $$91- 102 (Rochester,NY: The Lawyers Co-Operative Pub-lishing Company, 1977) (San Francisco,CA: Bancrofi-Whitney, 1977).Louisel], D. W., and Mueller, C, S.,Federal Evidence: Vol. 4, $466(Rochester NY: The Lawyers Co-Op-erative publishing Co. 1980) (SanFrancisco. CA: Bancrofi-Whitney, 1980).Ludlum, J. E.. “Reft~rming the T o r tSystem, ” reprinted fix~m Procee4iin~s ofthe Treatise on Health Care Law(New York, NY: Matthew Bender &Company, Inc., 1991).

79.

80.

81.

82.

83.

84.

85.

86.

87.

88.

89.

MacDonald, M. G., Meyer, K. C., andEssig, B., Health Care Law: A PracticalGuide (New York, NY: Matthew Bender.1991 ).Maryland, State of, House of’ Reprafen-tativa$, House Bill 1359, enacted April13, 1993.May, M. L., and Stengel, D. B., “WhoSUM Their Doctors? How PatientsHandle Medical Grievances, ” Law andSocietv Review 24(l): 105-119, 1990.Mayaji, R., Regional Counsel for theKaiser Permanence Northwe..t Region,Kaiser Permanence Medical Care Pro-gram, Oakland, CA. personal communi-cation, 1993.McCormick. B., “In the Face of DoctorOnslaught: Enterprise Liability BackersStand Firm, ” American Medical News.p. 1.35-37, June 21, 1993.McCormick. B. “Reformers Willing,Critics Wary t)n Alternative Tort Sys-tern, ” American Medical News, pp.63-67, April 26, 1993.Medical Liability Monitor. “ManyCompanies Report Claims FrequencyUp and Severity is Rising Faster than inRecent Years, ” Medical Liabilitv Monitor17(2): 1, 1992.Medical Underwriters of California,“ 1992 California Mdical MalpracticeLarge Loss Trends Study, ” MedicalUnderwriters of California. Oakland,CA.Metzloff, T. B., “Resolving MalpracticeDisputm: Imaging the Jury’s Shadow, ”L a w and Conterntx)rarv Problems54(1):43-130, 1991.Metzlotf, T. B., “Alternative DisputeResolution Strategies in Medical Mal-practice. ” Alaska Law Review 9(2):429-457, 1992.Metzltff, T. B., Protkssor of L a w ,Duke University School of Law, Dur-ham, NC, personal communications.December 17, 1992 and June 5, 1993.

90.

91.

92.

93.

94.

95.

96.

97.

98.

99.

Metzloff, T. B.. “Defensive Medicineand the Use t~f Medical Techntll(~gy:Physician Inv~~lvement in Medical hl~l-practice Litigation, ” c~lntract report pre-pa red ft~r the Office t~f Technt~lt~gy As-sessment. U.S. Ct)ngress, Wa.\h ingjon.DC. June 7, 1993.

Metzloft’. T. B.. “Understimding t h eMalpractice Wars. ” Harvard LawI Re-view 106(5): 1169-1196, 1993.Meyers. A. R., “ ‘Lumping It’: The Hid-den Denominatt)r t~f the Medical Mal -practice Crisisl ” American J(mrnal ~~fPublic Health 77(12): 154-4-1548. 1987.

Milliman and R(~berls~~n Inc.. “ActuarialAnalysis tf American Medical Ass~lcia-t i o n Tort Reform Prt~p[)sals, ” NewYork. NY, Septemlwr 1985, its cited inJ.S. Kakalik ml N.hl. Pace. Costs andComPensati~~n Paid i n Tt~rt Litigatit~n(Santa M~~nic:i. CA: Rand C’t~rpt)rati~~n.1986).Minnesota, Department t~f Ctjmmerce.“Medical Malpractice Claims Study:1982 -87.” St. paul. MN, 1989.Minnest~ta. Minnes~~ta Health RiuhtsA c t : Conference Ct~nlnlittee ReptJrt t~nH F No.200, Ct~nference Rept)rt ( S t .Paul, MN: 1992).Morlock, L.L. “Risk Management andClaims Experience, ” Law) and Ct~ntenl-porarv Prt~blenls 54(2): 143, 1991.National Ass(wiatit~n ~)t’ I n s u r a n c eCommissioners. Malnractiue Claims:M e d i c a l Malpractice Cltwd Clainls=1975-1978 (Brtx~ktield, WI: 1980).National Insurance Ct~nsunwr Organiza-tion. “Medical Malpractice Insurance1985-1991 Calendar Ye;~r Experience,”Natit~nal Insurance Ct~nsunler Organiza-tion, Alexandria, VA, March 1993.Nels~~n. K. B., and Ellenberg. J. H..“Antecedents t~f Cerebral P:ilsy: hlulti-Variate Analysis of Risk, ” New EnglandJt~urnal of Medicine 3 15(2):81-86, 1986.


100.

101

102.

103.

104.

105!

106.

107,

108.

Nelson, K. B., and Ellenberg, J. H., “TheAsymptomatic Newborn and Risk ofCerebral Palsy, ” American Journal ofDiseases of Children 141(12): 1333-1335, 1987.New York State, Senate, S.8771, an Actto amend the public health law, in rela-tion to compensation of neurologicallyimpaired infants, introduced by SenatorM.J. Tully, May 18, 1990, Albany,NY.Office of Analysis and Inspections, Of-fice of the Inspector General, Depart-ment of Health and Human Services,“Medical Licensure and Discipline: AnOverview, ” Boston, MA, June 1986.opinion Research Corporation, Wash-ington DC, “Professional Liability andIts Effects: Report of a 1987 Survey ofACOG’s Membership, ” survey preparedfor American College of Obstetriciansand Gynecologists, Washington, DC,March 1988.Paneth, N., and Stark, R. I., “CerebralPalsy and Mental Retardation in Rela-tion to Indicators of Perinatal Asphyxia,An Epidemiologic Overview” AmericanJournal of Obstetrics and Gynecology147(8):960-966, 1983.Parson, J. A., “Medical MalpracticeDamage Caps: Navigating the Safe Har-bors, ” Washinmon University Law Re-view 65:565-587, 1987.Peters, D., Charfbos and Christensen,Detroit, Ml, personal communications,March 3, 1993 and June 8, 1993.Peterson, M. A,, “Punitive Damages:Preliminary Empirical Findings, ” Rand,Institute for Civil Justice, N-2342 -IOJ,Aug. 1985.Peterson, M.A, and Priest, G. L., ~Civil Jury Trends in Trials and Verdicts,Cook County. IL. 1960-1979 (SantaMonica, CA: The Rand Corporation,1982).

109.

110,

111

112.

113.

114.

115.

116.

117.

Peterson, M.A. The Civil Juries in the80’s: Trends in Jury Trials and Verdic~sin California and Cook County Illinois(Santa Monica, CA: The Rand Corpora-tion, 1987).Peterson, M. A., Sarma, S., and Shan-ley, M. G,, “Punitive Damages: Empiri-cal Findings, ” Rand Corporation, SantaMonica, CA. 1987. as cited in Saks, M.“Do We Really Know Anything Aboutthe Behavior of the Tort Litigation Sys-tem--and Why Not?” University ofPennsylvania Law Review 4(140): 1147-1292, 1992,Physician Insurers Association ofAmerica, “Data Sharing Reports, Cumu-lative Reports, January 1, 1985-June 30,1989. Lawrenceville. NJ, Physician In-surers Association of America DataSharing Committee, 1989,Posner, J. R., “Trends in Medical Mal-practice Insurance, 1970- 1985,” Lawand Contemporaryv Problems 49(2):37-56, 1986.Pyles, E., Executive Director, VirginiaBirth-Related Neurological Injury Com-pensation Program, Richmond, VA,personal communication, December 1992.Reynolds, R, A., Rizzo, J. A., and Gon-zalez, M. L,, “The Cost of Medical Pro-fessional Liability, ” Journal of theAmerican Medical Association257(20):2776-2781. 1987.Robinson, G. O.. “The Medical Mal-practice Crisis of the 1970s: A Retro-spective, ” L a w a n d ContemrmrarvProblems 49(2):5-36, 1986.Rolph, J. E., Kravitz, R. L., and McGui-gan, K., “Malpractice Claims Data as aQuality Improvement Tool: II. Is Target-ing Effec~ive, ” Journal of the AmericanMedical Association 266(15):2093-2097,1991.Rotunda, R.D. and Nowak, J.E. Trea-tise on Constitutional Law: Substance

118.

119.

120.

121.

] ~~

123.

124.

125.

126.

127.

and Procedure. 2nd Edition. VolumeThree (St Paul, MN: West PublishingCo.. 1992).Rubin, P. H.. “Tort Reform by Con-tract. ” Emory University, Emory. GA,1992.Saks, M. “Do We Really Know Any-thing About the Behavior of the TortLitigation System--and Why Not?” Uni-versity of Pennsylvania Law Review4(140): 1147-1292, 1992.Schwartz, W. B,. and Mendelson, D. N.,“The Role of Physician-Owned Insur-ance Companies in the Detection andDeterrence of Negligence”, Journal ofthe American Medical Association262(10): 1342-1346. Sept. 8.1989.Shmanske. S., and Stevens, T., “ThePerformance of Medical MalpracticeReview Panels. ” Journal of Health Poli-t ics . Pt~licv and Law 11(3):525-535,1986.Sigler, J., Assistant Attorney General,Office t~f the Attorney General, Rich-mt~nd, Commonwealth of Virginia,Letter tt~ the OftIce of Technology As-sessment, Wmhington, DC, June 24,1993.Sigler, J., Assistant Attorney General.OftIce of the Attorney General, Rich-mc~nd. Commonwealth of Virginia, per-sonal communicati[)n, Aug. 19, 1993.Sloan, F. A.. “State Ruponses to theMalpractice Insurance ‘Crisis’ of the1970s: An Empirical Assmsrnent,”Journal of Health Politics, Policv. andLaw 9(4):629646, 1985.Slt)an, F. A., “Experience Rating: DowIt Make Sense for Medical MalpracticeInsurance?” American Economic Re-\/iew 80(2): 128-133, 1990.Slt~an, F. A., Bovbjerg. R. R. , andGithens. P. B.. lnsurin~ Medical Mal-practice (New York: Oxford UniversityPress, 1991).Slt)an, F. A., Githens. P, B., Clayton,E. W.. et al., Suin~ for Medical Mal-

128

129

130.

131

132.

133.

134.

135.

practice. (Chicagt) IL: University ofChicagt~ Press. 1993).Sloan, F. A., and Hsieh, C.. “Variabilityin Medical Malpractice Payments: Is theCompensatit)n Fair?” Law & S(wietvReview 24(4):997-1039. 1990.Sloan, F. A., Mergenhagen. P. M., andBovhjerg. R. R.. “Eftkcts of Tort Re-ti~rms ~~n the Value t~f CltNed MedicalMalpractice Claims: A Micrt~analysis, ”Journal t)f Health P(~licV, Pt)litics andLaw 14(4):663-689, 1989.Stanley. F.J. and Watson, L . “ T h eCerebral Palsies in Western Australia:Trends, 1968 to 1981 ,“ American Jour-nal clf Obstetrics and Gvnect)l~~m158(1):89-93, 1988.St. Paul Fire and Marine InsuranceCtJmpanj, “The St. Paul Ct~mpanies.Physicians and Surgtx)ns PrtJtkssitJnalLiability: Frequency per 100 PhysiciansEva]uated as (Jf 12/3 1/92. ” chart SUP-

plied to OTA hy lllsaker. S., C(mnsel.Insurance Law Department. St. PaulFire and Marine Insurance C(~mpany,June. 1993.Stolt, R., Atttmwy. Litman and Katz.Augusta. ME, pers~~nal c(~mmunicatit~n,June 24. 1992.Tancredi, L. R.. and B(~vbjerg. R. R.,“Rethinking Reyxmsihility f~~r Patient[njury: Acceleratti-Ctln~13 ensatit~n Events:A Malpractice and Qua] ity Reform Ripefor a Test, ” LawI and C~~ntemmmuvprt~blems 54(2): 147-178, 1991.Tanmdi, L. R.. and B(wh,jerg, R. R.,“Creating Outctlmes-Based Systems f~~rQuality and Malpractice Retimn: Meth-(xlol~~gy t~t’ Accele[-atd-Ct~ [llpensatic~nEvents, ” Millkmk ouarterly 70: 183-216, 1992.Taragin. M.1., Willett. L. R., Wilczek.A.P. et al., “The Intluence t~f Standard~~f Care and Severity ~)f Injury on theRL~~~luti[~n t)f Malpractice Claims, ” knals ~Jf Internal Medicine 117(9):780-784. 1992.


136.

137.

138.

139.

140.

141.

142.

143.

144.

145.

Thomas, M. D., Assistant GeneralCounsel, Office of General Counsel,Virginia State Corporation Commission,Richmond, VA, Jan. 4, 1993.Troy, J., Analyst, Office of Disability,Disability Procedurcx Policy Branch,Social Security Administration, Balti-more, MD, personal communication,Aug. 11, 1993.Turkington, R. C., “Constitutional Lim-itations on Tort Reform: Have the StateCourts Placed Insurmountable Obstaclesin the Path of Legislative Responses tothe Perceived Liability Insurance Crisis?”Villanova Law Review 32:1299, Nov.1987.Uniform Arbitration Act, Uniform LawsAnnotated Vol. 7 (St. Paul, MN: WestPublishing Company, 1992).U.S. Congress, Congressional BudgetOfllce, Economic Im~lications of RisingHealth Care Costs (Washington, DC:U.S. Government Printing Ofke, 1992).U.S. Congress, General AccountingOff-ice, Medical Malmactice: Six StateCase Studies Show Claims and Insur-ance Costs Still Rise Dm~ite Reforms,GAO/HRD-87-21 (Washington, DC:December 1986).U.S. Congress, GeneraI AccountingOffice, Medical Maltwactice: Character-istics of Claims Closed in 1984,GAO/HRD-87 -55 (Washington, DC:April 1987).U.S. Congress, General AccountingOffice, Medical Malpractice: FewClaims Resolved llrou~h Michigan’sVoluntarv Arbitration Program,GAO/HRD-91 -38 (Washington, DC:December 1990).U.S. Congress, General AccountingOffice, Medical Mabractice: Alterna-tives to Litigation, GAO/HRD-92 -28(Washington, DC: January 1992).U.S. Congress, House of Representa-tives. Committee on Ways and Means,Medical Malpractice, prepared by theCongressional Research Service, Comm.

146.

147.

148,

149.

150.

151.

Print No. 101-26 (Washington, DC:U.S. Government Printing Office, April26, 1990).

U.S. Congress, Library of Congress,Congressional Research Service, “MedicalMalpractice, ” Issue Brief Health %c~ion,Education and Public Welfare Division,Jennifer O’Sullivan, July, 1 1993.

U.S. Congress, Office of TechnologyAssessment, The Oual itv of MedicalCare: Information for Consumers, OTA-H-386 (Washington, DC: U.S. Gov-ernment Printing Office, June 1988).

U.S. Congress, OftIce of TechnologyAssessment, Does Health InsuranceMake a Difference? (Background Paperfor OTA’s Project on Technology, In-surance. and the Health Care System)OTA-BP-H-99 (Washington, DC: U.S.Government Printing Office, September1992).

U.S. Department of Health Educationand Welfare. “The Medical MalpracticeLegal System, ” Report of the Secre-tary’s Commission on Medical Mal-practice, Appendix, DHEW Pub. No.73-89 prepared by S,K. Dietz, C.B.Baird, L. Berul (Washington, DC: U.S.Government Printing OftIce, 1973),

U.S Department of Health and HumanServices, U.S. Public Health Service,Agency for Health Care Policy and Re-search, Comr)endium of State Systemsfor Resolution of Medical Injury Claims,prepared by S.M, Spernak, P.P. Budetti,DHHS Pub. No. 91-3474 (WashingtonDC: U.S. Government Printing Ofilce,199 1).

U.S. Department of Health and HumanServices, U.S. Public Health ServiceAgency for Health Care Policy and Re-search, “Compendium of Selected StateLaws Governing Medical Injury Claims, ”prepared by S.M. Spernak, AHcPRPub. No. 93-0053 (W~~hington, DC:U.S. Government, Printing Otlice, April1993).

15~

153

154

155<

156

157,

U.S. Department of Justice, An U~dateon the Liabil itv Crisis: Tort PolicvWorkirtg Group (Washington, DC: March1987).VanTuinen. 1,, McCarthy, P., Wolfe,s., et al., “Comparing State MedicalBoards, ” (Washington, DC: Public Citi-zen, January 1993).Warner, K. J., Governmental AffairsRepresentative of Physicians InsuranceCompany of Michigan, Okemos, MI,perst~nal communication to the Office ofTechnology Assessment, Aug. 9, 1993.Washington Post, “The Presidential De-bate, ” Transcript of presidential debate,Washinmon Post, Oct. 12, 1992.Weiler, P. C., Medical Mal~ractice OnTrial (Cambridge, MA: Harvard Uni-versity Press, 1991).Weiler, P. C., Newhouse, J. P., Hiatt,H. H., “Proposal for Medical LiabilityRefer m,” Journal of the AmericanMedical Association 267(17):2355-358,1992.

158.

159.

160.

161.

162.

Wigmore, J. H.. Evidence in Trial atCommon Law. Vt~l. 6 (Boston MA:Little, Brown and Company, 1976).Wigmore, J. H., Evidence in Trial atCommon Law, 1990 Pocket Supplement(Boston MA: Little, Brown and Com-pany, 1991).Zaremski, M. J., Goldstein, L. S., Medi-c a l a n d Hospital NediRence ~25:09(Deertleld, IL: Callaghan & Company.1991).Zuckerman, S.. B~wbjerg, R. R.. andSloan, F., “Effects of Ttn-t Reforms andOther Factpors on Medical MalpracticeInsurance Premiums. ” x 27: 16’7-182, 1990.Zuckerman, S., Norton, S., Wadler, B..“A State-Based Survey of MalpracticePremiums: Implications for MedicarePhysicians Payment Policy, ” Report6090-02, The Urban tnstihlte, Wmhing-ton. DC, March 1993.

Date post:	15-Jul-2020
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times