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Home » Editor's Notebook

Pew reports raise more questions than answers

Submitted by on 07/01/2003 – 6:58 AM

By Jeffrey Barg


A recent report of the Project on Medical Liability in Pennsylvania, funded by The Pew Charitable Trusts, provides independent confirmation of many of the things physicians have been saying about the malpractice crisis.Understanding Pennsylvania’s Medical Malpractice Crisis: Facts About Liability Insurance, the Legal System and Health Care in Pennsylvania, released in June, documents the crisis in the availability and affordability of malpractice insurance. (The report is available online at http://medliabilitypa.org/research/report0603/) The report cites the CAT Fund as a contributing factor and identifies the largest driver of the increased cost of malpractice coverage as the unusually large cost of investigating, defending and paying legal claims in Pennsylvania.

The report, authored by leading malpractice researcher Randall R. Bovbjerg, J.D., and Anna Bartow, M.D., cites numerous problems with the CAT Fund. “In recent years, its pay-as-you-go financing necessitated large annual assessments to cover accumulating claims from prior periods,” states the report. “In addition, legislative cutbacks in the extent of the Fund’s future obligations have induced rate increases for private insurers.” Other problems with the CAT Fund cited in the report include:

• “Unlike other states with public compensation funds, such as Indiana, Pennsylvania has committed substantial resources to paying malpractice claims but has not instituted limits on those claims by adopting caps on damages, shorter statutes of limitations, or similar measures.”

• “Pennsylvania . . . is disadvantaged in attracting physicians because new doctors pay a high assessment to cover losses generated by their predecessors, a problem that continues under MCARE.”

• “Plaintiff’s lawyers . . . complain that the Fund often resists paying meritorious cases, while many providers and primary carriers opine that it is harder to mount a joint defense with the Fund than with another private insurer. These tendencies may help explain why malpractice cases in Pennsylvania are resolved so slowly.”

The report concludes that while problems in the insurance industry have contributed to the crisis, the primary causes of the crisis are the costs of investigating, defending and paying legal claims in Pennsylvania. Data show that Pennsylvania ranks high in terms of (1) malpractice filings and trial rates in urban counties; (2) the rate of claims paid; (3) average settlement amounts; (4) malpractice payouts adjusted for population; (5) the rate of growth in malpractice payouts per population; and (6) average time elapsed from incident to payment of the claim. Philadelphia plaintiffs were more than twice as likely to win jury trials as the national average and the number of awards plus settlements of $1 million or more in Philadelphia were only slightly less than for the entire state of California.

The report does not explain why, other than the influence of CAT Fund, Pennsylvania’s malpractice system is more costly than most other states’ or what the impact of the malpractice crisis is. This information gap is a significant impediment to the report’s usefulness to policy-makers. It does note that there is no data to suggest that Pennsylvania’s malpractice system is more costly than other states’ because of lower quality health care in the state. There is no evidence of the cost of health care rising because of the crisis, or of a shortage of physicians or hospital beds, according to the report.

The report does warn, however, that access problems may occur, in part because of the great financial strains physicians and hospitals are undergoing. These access problems may already be occurring in certain areas of the state such as rural areas and inner cities, for certain patient subgroups such as Medicaid patients and the uninsured, or in certain medical subspecialties such as obstetrics, orthopedics and neurosurgery — all of which may have been undetectable in the report’s aggregate and somewhat dated data, the report’s authors admit.

The issue of the malpractice crisis’ impact on access to physician services in Pennsylvania will be revisited in another Project report being done by Harvard’s School of Public Health, according to William Sage, M.D., J.D., principal investigator of the Project. Duke University will be doing a Project report on the impact of the CAT Fund as well. (The interview is available online at http://physiciansnews.com/spotlight/303.html)

The report concludes that “subsidies that allow health care providers to maintain coverage would seem to be the only practical approach to alleviating the current crisis.” Then it recommends that conventional tort and insurance reforms, as well as more systemic changes, be considered to control costs, improve predictability and attract malpractice insurers back to Pennsylvania in the longer term.

In the end, we’re left with little more than Gov. Rendell’s Malpractice Task Force’s recommended subsidies proposed back in December, reduced by Gov. Rendell, and still awaiting legislative approval.

Buried in the report, the authors write, “The legal system is intended to generate deterrence of substandard medical care by requiring compensation to patients wrongfully injured by health care providers through a dispute resolution process that offers justice. Assessing the performance of the legal system in achieving these social goals is beyond the scope of this report.”

One can only hope that the Project on Medical Liability in Pennsylvania will produce a report designed to assess the performance of the legal system, soon, with an author as well qualified for the task as Randall R. Bovbjerg. Bovbjerg addressed these issues in an interview published inPhysician’s News Digest in June. (The interview is available online at http://physiciansnews.com/spotlight/603.html)

In the interview, Bovbjerg says: “The big problem of the current system is that it’s not doing what it says it will do to make medical care safer. It’s also not really compensating people very well because most people who have injuries don’t know it or aren’t able to sue, and payouts are somewhat haphazard. I think it’s a significant problem of justice that the system pays out different amounts in quite similar cases.”

Bovbjerg also has provocative things to say about caps: “Amazingly, doctors argue fiercely that the current system is broke, it causes defensive medicine, it doesn’t help patients — but they turn around and say it’s just fine if we cut it back with caps. That doesn’t make a lot of sense to me. The biggest problem is preventable injury, but the big battle is imposing or preventing caps. It’s a very narrow debate in the short run. In the long run, I suggest to your readers, caps will not be sustained if they are perceived as being unfair takeaways — part of that zero-sum, winners vs. losers game. Judges and jurors will get around such caps, and eventually legislators will vote them out. I think that a better system would focus on preventing injury and making payments more fair, predictable and fast. That is win-win for both patients and doctors, and that will be more successful in the long run.”

Bovbjerg favors the two approaches proposed in the Institute of Medicine report, Fostering Rapid Advances in Health Care: Learning from System Demonstrations, published in November of 2002. (The report is available online at http://www.nap.edu/openbook/0309087074/html/81.html) Option one is a provider-based early payments system that would offer predetermined limits on noneconomic damages and federally subsidized reinsurance to self-insured provider groups that promptly identify and compensate patients for identifiable classes of avoidable injuries. Option two is an administrative resolution that would grant all health care professionals and facilities within a state immunity from tort liability in exchange for mandatory participation in a state-sponsored system under which providers would need to disclose errors to patients, while providers or their liability carriers would be responsible for paying amounts determined by a publicly administered adjudication system.

Another Project report released in June addresses some of these broader issues. Resolving the Medical Malpractice Crisis: Fairness Considerations by Case Western Reserve University law and bioethics professor Maxwell J. Mehlman, J.D., is an interesting introduction to the philosophical underpinnings of the nation’s medical malpractice system as well as various reforms. (The report is available online at http://medliabilitypa.org/research/mehlman0603/)

Mehlman’s method is to begin with a set of abstract fairness principles, which he then applies to the current malpractice system, to a wide variety of reforms, and to the reform process itself. I found the questions raised by his analysis to be interesting and important, while his concluding determinations of whether something is “fair” or “unfair” seemed to be inadequately supported and to detract from the report’s value, making it too easy for it to be reduced to a selective recitation of the fairness determinations that suit an advocate’s agenda.

Mehlman identifies the following as the most serious fairness objections to the current system: (1) it only purports to compensate victims of medical negligence, while a fairer system would compensate for all medical injuries; (2) the punishment objective conflicts with the deterrence objective; (3) it lacks validity and consistency; (4) compensation is inconsistent and only somewhat proportional; (5) financing mechanisms are unfair and undependable; (6) it may leave some patients without adequate access to necessary health care services; (7) its lack of predictability sends erratic deterrent signals; (8) it operates by rules that providers feel are unfair; (9) some injured patients cannot obtain adequate representation; and (10) parties are not treated with dignity and respect.

News coverage of the report tended to focus almost exclusively on Mehlman’s assessment that caps are unfair, which comprises three paragraphs of a 105 page report. Mehlman’s reason for the assessment is that caps violate the cardinal principle of distributive justice: “Welfare must not be taken away from those who are worse off and given to those who are better off.” In this case, Mehlman contends that wealth would be transferred from the most seriously injured patients to all patients, who could benefit from strengthening the malpractice financing system, from maintaining access, and possibly even from restraining increases in health care costs stimulated by higher premiums.

Earlier in the report, however, Mehlman details the difficulties in valuing non-economic damages and acknowledges that, currently, “awards for non-economic damages fall short of optimal fairness.” He acknowledges that providers and insurers believe that injured patients receive unfairly generous compensation for pain and suffering without addressing whether or not this is the case. His reliance on the cardinal principle of distributive justice seems to lock him into the status quo, even if by some valid measure non-economic awards are inflated.

In the end, Mehlman is so committed to not reducing compensation to the most seriously injured patients that he is leery of other reforms that by his own estimation correct major unfairness in the current tort system and could reduce future injuries. Nonetheless, he does provide provisional support for scheduling the amounts or capping damages for identifiable classes of avoidable injuries if based on average jury awards in states without caps.

Taken together these two reports of the Project on Medical Liability in Pennsylvania raise more questions than answers, which is frustrating for Pennsylvanians, especially Pennsylvania physicians, in the midst of a malpractice crisis. Sage acknowledges in his PND interview that much of the Project’s work will not be completed in time for the decisions that have to be made to address the current crisis. Nonetheless, these reports can and should inform our discussion and debate as we search for a durable and fair solution to the problem.

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