The concept of tort reform is frequently tossed aroundthe political arena: this article addresses the opportunities for effective reform.
At the time of submission, Dr. Lee was Medical Director of
HealthHelp, Inc., a radiology MSO. He is now Chief Medical
Officer/Health Care Manager with the California Department of
Corrections, Salinas, CA.
Since the malpractice crisis of the 1970s, legislators,
physicians, attorneys, and patients have talked about medical
liability tort reform.
They probably were not sure what tort reform was or what it meant,
but it sounded like a nice, catchy phrase implying that something
was going to be done to reform attorneys and the law. As Weiler
describes it, "The goal of tort reform is to secure an optimal
blend of medical injury prevention and patient compensation while
containing the cost of administering the liability program." In
California, MICRA (Medical Injury Compensation Reform Act of 1975)
was a step in the direction of tort reform and was a joint effort
by the physicians and attorneys, with both groups compromising and
giving a little ground. There have been feeble attempts throughout
the nation to bring about tort reform, and some states have been
more aggressive than others have. But there have not been any
significant national steps toward tort reform.
Problems in the present medical liability system
The present system is unfair to patients who are injured in the
process of receiving medical care. According to Weiler
"hospital patients on average run about a four percent risk of an
adverse event and about a one percent risk of medical malpractice."
Statistics have shown that there are 4 disabling injuries for
every 100 hospitalizations, but only 1 tort for every 100
This means there is only 1 claim for every 4 serious injuries.
What happens to the other 3 out of 4 patients? Those three-quarters
of the patients injured are never compensated. The present system
does not include a proper correlation between patient compensation
and provider accountability, the two presumed goals of medical
In a study of patient injury in a New York system, it became
readily apparent that not only was there a surprisingly high number
of patients who sustained injuries as a result of their care but,
more importantly, the vast majority were not compensated. Reasons
given by attorneys for patients not being compensated were: (a) the
patient, or the patient's family, didn't realize that the patient's
outcome was related to a medical mishap; (b) the patient chose not
to seek legal redress because of the relationship between the
patient and the physician; and/or (c) the value of the case wasn't
worth the attorney's time.
The physician prevails in the vast majority of malpractice cases
that go to trial.
Admittedly, most of those that are difficult to defend and those in
which medical negligence is apparent are settled before going to
However, another inadequacy of the present system is the effect
that a legal suit has on a physician, even if the physician
ultimately prevails. This effect is complicated by the federal
requirement that any physician who has had a medical liability
payment made in his or her name must be reported to the National
Practitioners Data Bank,
and, depending on the state requirements, must be reported to the
state medical board. There are far-reaching implications of this
reporting system, particularly in today's setting of managed care,
and with the need for a physician to be on a hospital staff or an
HMO panel. This is coupled with the stigma, real or imagined,
associated with being accused of being incompetent and the
publicity that invariably is attached. There is a tremendous
disruption of a physician's practice with subpoenas, depositions,
meetings, trials, etc., no matter how valid or meritless the cause
of action may be. Although the malpractice insurance carrier pays
the attorney's fees and any liability, there is a hidden expense to
the physician in the form of the time away from the practice that
is spent attending to legal proceedings.
The tremendous financial inefficiency and waste is another
example of how bad the present system is. It has been demonstrated
that up to nearly 60% of the cost of the present system goes to
legal and administrative fees and only 40% to the injured patient.
These figures should be 10% and 90%, respectively.
Whereas the majority of patients are not compensated for their
injury, those who are compensated are compensated far beyond the
real extent of their injury. Awards out of proportion to the
injury, in the millions, have been made based on the decision of
lay juries (where awards of $50 million or more have been paid).
This may have come about due to sympathy for the victim or
exaggeration of the true value of the case by the plaintiffs'
The present system has a tremendous negative effect on the
medical profession. It causes defensive medicine, which results in
Defensive medicine results in more unnecessary procedures
performed, in turn resulting in increased complications, increased
healthcare costs, and increased radiation exposure to the
population. It has a tremendous disruption on a physician's
practice. As many as 10% of physicians are sued annually.
This results in an emotional trauma to a large number of
physicians, with the resultant effect on the delivery of healthcare
services. The present tort medical liability system creates an
adversarial relationship between doctor and patient, one that may
prevent providing effective care.
All of these factors create a deficiency of the present system
and emphasize the need for tort reform. Who wins and who loses in
the present tort system? Attorneys win; few patients win; most
patients lose; physicians lose; insurance carriers lose; and
society loses. There must be a better way! No-fault medical
liability is a form of tort reform that addresses all of these
above problems with the present system.
How a no-fault system would work
In a no-fault system,
the insurance would be held by an enterprise. This enterprise could
be a hospital, a health maintenance organization (HMO), an
independent practice association (IPA), or a medical group. If a
physician or medical group does not formally belong to one of the
above systems, then an election could be made to be a part of a
system for insurance purposes, or the carrier could form a separate
group for insurance purposes. The enterprise would be responsible
for the quality of medical care provided within the enterprise. The
physicians comprising the group would have the responsibility of
overseeing the member physicians' performance. The overseeing would
be in the form of quality audits, outcome measurements, peer
review, and educational processes. The insurance premiums would be
contributed by both the enterprise and the physicians in proportion
to their exposure to liability.
Any patient who sustains an injury related to his or her care
would file an initial report, much as in a workers' compensation
setting. This report would go to a panel of healthcare
professionals, economists, and community lay persons who would make
a decision as to whether there was a relationship between the
patient's illness and any medical mishap. The panel would determine
what degree of the final condition was the result of the patient's
original disease process, and what degree was the result of the
medical treatment. This would prevent unjustly high payments if the
patient's condition is related to the original illness. Existing
actuarial tables would assist the panel in making these decisions
as well as in making determinations of the amount of payment
This panel would also determine if the medical mishap was a
result of gross negligence. If so, it would be reportable to the
state and the federal data banks. Input would be received from both
patients and physicians. Otherwise, any payment made to a patient
would be made in the name of the enterprise, thereby avoiding the
necessity of data bank reporting when there is no evidence of
physician negligence or incompetence.
All cases would be treated in this manner, with limited appeal
processes and limited administrative and legal interference. The
monies would be paid periodically to meet the real needs for
medical care of the patient. This process would decrease insurance
costs, because of the allowance of collateral payments by regular
health insurance, with decreased administrative and legal costs,
and lower deductibles for the enterprise.
In a system such as this, there would be minimal disruption of
the physician's practice, and patients who are injured as a result
of medical care who then have a significant disability would be
compensated. Also, there would be minimal financial waste, which
would result in reduced insurance costs.
This system is in effect in many of the Scandinavian countries and,
in a limited fashion, in Virginia and Florida. New York, North
Carolina, Utah, and Colorado are studying the system (Utah Medical
Board, personal communication, August, 1995; they have since
abandoned the idea).
The idea of no-fault medical liability has been bandied about
for more than 25 years since an article by Bush et al
No-Fault Malpractice Insurance
) was written in 1975. There have been variations proposed, such as
a Medical Injury Compensation Fund,
similar to the now-existing Florida Birth-Related Neurological
Injury Compensation Association, and the legal doctrine of strict
Other than a few scattered attempts at tort reform, very little has
been done on a national scale. Why? The answer is political.
The majority of legislators are, or were, lawyers. The proposed
no-fault system would trim off the legal fat and waste of the
present system--the legal and administrative fees. Those
legislators are not about to bite off the hand that feeds them. The
system would decrease the legal fees for both the plaintiff and
Also, this issue is not a big societal concern. Politicians are
not going to "waste" their time on issues that don't highly concern
the voters. Society assumes that the burden of the present system
falls on the malpractice insurance companies and, to a lesser
extent, on the medical profession. Because of concerns about rising
healthcare costs, healthcare insurance premiums are relatively
stable, and as a result of managed care, providers cannot raise
their fees. Consequently, there is not much financial interest on
society's part to change the situation. People are generally
comfortable letting the healthcare profession and their insurance
companies worry about the problem. In fact, they don't even see it
as a problem. Meanwhile, the majority of patients injured in
medical mishaps remain uncompensated; the trial awards are
escalating out of proportion to the damage done; and healthcare
providers and malpractice insurance companies continue to
Does everyone agree on this issue? Obviously not. Starr
points out the problems associated with a no-fault plan: not
knowing "...how broad such a scheme should be," being unsure of
"the design of simple entry criteria," the "financial
uncertainties...[and] constitutional and political challenges...."
However, the time has come for organized medicine to revisit this
problem. The American Medical Association, the American Osteopathic
Association, the American Hospital Association, Patient Bill of
Rights advocates, the insurance industry, and other interested
parties should join together in a legal and political effort toward
real medical liability tort reform.