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. ¹ 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 ¹ 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) ² 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 , ³ "hospital patients on average run about a four percent risk of an adverse event and about a one percent risk of medical malpractice." ^3,4

Statistics have shown that there are 4 disabling injuries for every 100 hospitalizations, but only 1 tort for every 100 hospitalizations. ⁵ This means there is only 1 claim for every 4 serious injuries. ⁵ 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 malpractice litigation. ⁶

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. ⁷

The physician prevails in the vast majority of malpractice cases that go to trial. ⁵ Admittedly, most of those that are difficult to defend and those in which medical negligence is apparent are settled before going to trial.

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, ⁸ 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. ^4,7 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). ⁵ This may have come about due to sympathy for the victim or exaggeration of the true value of the case by the plaintiffs' attorneys.

The present system has a tremendous negative effect on the medical profession. It causes defensive medicine, which results in increased costs. ⁵ 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. ⁵ 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, ⁵ 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 due.

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. ⁹ 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). ^3,10,11

Conclusion

The idea of no-fault medical liability has been bandied about for more than 25 years since an article by Bush et al ¹² (titled No-Fault Malpractice Insurance ) was written in 1975. There have been variations proposed, such as a Medical Injury Compensation Fund, ¹³ similar to the now-existing Florida Birth-Related Neurological Injury Compensation Association, and the legal doctrine of strict liability. ¹⁴ 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 defendent.

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 suffer.

Does everyone agree on this issue? Obviously not. Starr ¹⁵ 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. AR