Law & Medicine

Federal medical tort reform: Has its time come?

Publish date: August 7, 2017

S.Y. Tan, MD, JD

Question: Congressional proposals on medical tort reform can be expected to include the following, except:

A. A no-fault system akin to automobile no-fault insurance.

B. A cap on noneconomic damages.

C. “Safe-harbor” immunity against medical negligence.

D. Health courts in place of the judge/jury system to adjudicate claims.

E. Promotion of laws that encourage apologies and error disclosures.

Answer: A. Under the current Republican administration, one can expect legislative efforts at federal tort reform, especially given that Thomas E. Price, MD, the new secretary of the Department of Health & Human Services, is an orthopedic surgeon who has spoken passionately about defensive medicine, damage caps, health tribunals, and practice guidelines. As a former House representative for Georgia, Dr. Price has introduced several tort reform bills, so it is likely that any omnibus federal law will incorporate some of his proposals.¹

Over the decades, many states have gone ahead in enacting their own statutes while awaiting federal action. Iowa is the latest example. It recently passed legislation that included a noneconomic damages cap of $250,000, stronger expert witness standards, a certificate of merit in all medical liability lawsuits, and an expansion of its “candor” protections.² Additional reforms in other states include pretrial screening panels; arbitration; structured periodic payments in lieu of lump sum payments; penalties for frivolous suits; shortened statutes of limitations; making the loser bear all litigation costs; abolishing the collateral source rule, as well as joint and several liability; and limiting attorney contingency fees.

The best-known reform is a cap on noneconomic losses, such as pain and suffering, that doesn’t abridge compensation for economic losses, i.e., medical expenses and lost wages. This provides some predictability because noneconomic damages are difficult to quantify, and jury sympathy may result in unrealistically high payments.

Interestingly, Dr. Price himself has not pushed for a federal cap on noneconomic damages, but other Republican bills have proposed a cap of $250,000. Many states, such as California, Kansas, and Texas, have seen their cap statutes withstand constitutional challenge. However, other jurisdictions, notably Georgia, Illinois, and Missouri, have ruled them unconstitutional.

California’s law, popularly known as MICRA (Medical Injury Compensation Reform Act), came under renewed attack in 2015 with a wrongful death suit from hemorrhagic complications related to Coumadin (warfarin) use following heart surgery.³ The plaintiff’s constitutional challenges included violation of equal protection, due process, and the right to a jury trial, but these were essentially all grounded on an entitlement to recover additional noneconomic damages sufficient to cover attorney fees. The trial court had reduced her $1 million noneconomic damages to $250,000, as required under MICRA. A California court of appeal rejected her claim as being “contrary to many well-established legal principles.”

On the other hand, Florida’s Supreme Court recently held in a closely divided decision of 4-3 that the state’s caps were unconstitutional.⁴ The law limited noneconomic damages in malpractice cases to either $500,000 or $1 million if the injuries were catastrophic. The court ruled that the caps were arbitrary and unfairly hurt the most severely injured. It was unconvinced that they would reduce malpractice insurance rates; at any rate, there was no present crisis to justify the caps. The decision came 3 years after the court had struck down caps in a case of wrongful death.⁵

Three relative newcomers to the legal landscape – health courts, apology laws, and safe harbors – appear to be taking center stage in any forthcoming federal reform measures.

Health courts

Under this proposal, so-called health panels and tribunals would now adjudicate malpractice claims. Such health courts would dispense with the jury; further, regular judges would be replaced with specialized judges who would make binding determinations. In one version, a panel of medical experts would initially screen the complaint, followed by an administrative health care tribunal that would feature judges with medical expertise. These tribunals would issue binding rulings, but either party could appeal to a state court for a reversal.

In countries such as Scandinavia and New Zealand, these administrative compensation approaches are coupled to a no-fault system and appear to work well. However, unlike auto no-fault and workers’ compensation, the notion of medical no-fault has never caught on in the United States.

As currently construed, health courts evince dramatic departures from traditional rules of civil procedure. For one, the panels may render decisions before discovery has occurred, which would substantially limit a patient’s ability to learn the facts of what had happened to cause the injury. The panel may rely on a standard of “gross negligence” instead of “ordinary negligence,” requiring evidence not merely of substandard care but of recklessness. This would be a heavier burden on the victim, and could be expected to generate stiff opposition from the plaintiff’s bar. In addition, evidentiary rules may be modified, requiring that an appeal show with clear and convincing proof that the tribunal had erred.

Apology law

Disclosure of medical errors to the injured patient is believed to serve as an ethical and effective way of thwarting potential malpractice claims. Many states have enacted so-called apology laws that disallow statements of sympathy from being admitted into evidence. In some cases, these laws may assist the physician.

For example, the Ohio Supreme Court ruled that a surgeon’s comments and alleged admission of guilt (“I take full responsibility for this” regarding accidentally sectioning the common bile duct) were properly shielded from discovery by the state’s apology statute.⁶ Apology laws vary from state to state, and some do not shield admissions regarding causation of error or fault.

However, it is unclear if apology laws work. A recent study from Vanderbilt University reported that, for physicians who do not regularly perform surgery, apology laws actually increased the probability of facing a lawsuit.⁷ And for surgeons, apology laws do not have a substantial effect on the probability of facing a claim or the average payment made to resolve a claim.

Safe harbors

A proposal released by U.S. House Speaker Paul Ryan (R-Wis.) in June 2016 made reference to “safe harbors” from liability for those adhering to clinical practice guidelines. The Institute of Medicine defines practice guidelines as “systematically developed statements to assist practitioner and patient decisions about appropriate health care for specific clinical circumstances.”

There are thousands of guidelines that have been developed by medical organizations and governmental agencies, as well as by insurance carriers, managed care organizations, and others. They purport to define the best evidence-based medicine, and if they were arrived at by the consensus of an authoritative body of experts, courts will tend to view them as reflective, though not necessarily dispositive, of customary medical standards.

Theoretically, adherence to guidelines could reduce the practice of defensive medicine and improve the quality of care. However, the available evidence does not indicate that guideline-based safe harbors will prove very effective in reducing malpractice claims: They are inapplicable in 85% of cases, and they have been estimated to eliminate defendants’ payments in less than 1% of claims.

Whether any form of tort reform emerges from the current Congress is as much about politics as it is about justice. It comes at an inopportune time, given the impasse over the health care debate. Still, on June 29, 2017, the U.S. House passed a medical liability reform bill with a vote of 218-210 along party lines that would cap noneconomic damages at $250,000, shorten the statute of limitations to 3 years after the date of injury, and abolish joint and several liability.⁸ The outlook in the U.S. Senate, however, is anything but certain.

Dr. S.Y. Tan

Dr. Tan is emeritus professor of medicine and former adjunct professor of law at the University of Hawaii, Honolulu. This article is meant to be educational and does not constitute medical, ethical, or legal advice. Some of the materials have been taken from earlier columns in Internal Medicine News. For additional information, readers may contact the author at siang@hawaii.edu.