Mandatory or optional arbitration or mediation are sensible reform suggestions, as these methods of dispute resolution are less combative, more efficient, cheaper, and faster in bringing closure. Unfortunately, relatively few doctor-patient encounters incorporate a contract to submit disputes to arbitration, and these usually relate to disputes over fees rather than to injuries.
Other reform proposals that have been proposed include mandatory structured periodic payments in lieu of lump-sum payments, penalties for frivolous suits, shortened statutes of limitations, stricter standards for expert witnesses, making the "loser" pay all attorney fees and court costs, and limiting attorney contingency fees.
No-fault alternative?
Then there is the no-fault solution.7 In many instances, fault simply cannot be ascertained when an individual is injured during the course of medical treatment, as harm may be a natural and unavoidable consequence of the underlying illness or treatment. Medical no-fault must therefore embrace in some fashion the concept of compensating only avoidable injuries.
Herein lies the dilemma: How to identify the avoidable injury, or the so-called compensable event?
In 1974, New Zealand’s no-fault compensation system came into effect under its Accident Compensation Act. All accidental injuries, including medical injuries, were removed from the tort system and covered by this act. In practice, about 40% of malpractice claims were denied.
Because of escalating payout costs, however, a special Medical Misadventure Account was created in 1992 to specifically handle malpractice damages. Professional liability premiums, which are experience rated, fund this account.8
Under the initial scheme, injured patients did not have to prove fault but merely establish "medical, surgical, dental, or first aid misadventure." Although negligence was not necessary, what constituted medical misadventure was not defined. At the same time, the law stipulated that "not all medical negligence comes within the scope of medical misadventure," and common law tort actions for medical negligence remained available.
Despite this lack of both definitional and functional clarity, the Accident Compensation Commission was quite definite that it was not necessary to show negligence before a claim for medical misadventure would succeed.
However, the revised Act of 1992 now requires the claimant to show "medical error," which is defined as "the failure of a registered health professional to observe a standard of care and skill reasonably to be expected in the circumstances." With this definition, which is the legal language for negligence, the no-fault system of compensating medical injuries in New Zealand has effectively been subsumed by the fault-based tort system.
Fine-tuning no-fault insurance
At the height of the malpractice crisis in the 1970s, Jeffrey O’Connell, J.D., advanced a novel approach to address some of these no-fault concerns.9 His proposal gives the medical provider the option to tender payment to the patient for economic loss within 6 months of injury in exchange for foreclosure of future tort action by the injured victim. Compensation benefits for net economic loss include 100% of lost wages, replacement service loss, medical treatment expenses, and reasonable attorney’s fees. Noneconomic losses are not reimbursable, and payment is net of any benefits from collateral sources.
H.R. 5400, entitled the Alternative Medical Liability Act (AMLA), incorporated many of these features and came before the 98th U.S. Congress in 1984. Both the American Medical Association, which favors traditional tort reforms, and the Association of Trial Lawyers of America opposed the bill. The bill died in committee and was reintroduced the following year in the 99th Congress as the Medical Offer and Recovery Act, H.R. 3084. It was referred to five committees but no hearings were held. There has been no action on the proposal since.
The prognosis for comprehensive meaningful reform is guarded at best. It should be emphasized that not everyone believes the current tort system needs fixing.
As one observer put it nearly a decade ago: "Overall, the total payout for medical malpractice insurers in the United States is about $4 billion a year, which is about half of what we spend annually on cat and dog food."10
Dr. Tan is emeritus professor of medicine at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu. This column, "Law & Medicine," regularly appears in Internal Medicine News.
References
1. See Internal Medicine News, May 1, 2012, Defensive Medicine.
2. Medical Injury Compensation Reform Act of 1975, Cal. Civ. Proc. Code § 3333.2 (West 1982).
3. Lebron v. Gottlieb Mem’l Hosp., 930 N.E.2d 895 (Ill. 2010).
