Pew wanted, in particular, to do something helpful for the Commonwealth, as opposed to just working on the issue nationally.

WMS: When I’m not teaching law students, I spend my time working on health policy and I’ve been interested in a wide range of issues, not just malpractice. Recently, I’ve worked on access to health insurance, managed care, competition and antitrust, and patient safety. What Pew got by coming to me was someone who sees the liability problem in the context of overall health policy rather than through a narrow lens.

The common theme to the way we’ve designed the Pew research is examining how medical malpractice fits into more general health system issues. Specifically, we’re looking at the way changes in the health care system since the last liability insurance crisis in the1980s may have changed the "malpractice problem" and its possible solutions.

WMS: One example concerns cost containment. Twenty years ago, if a doctors’ liability costs went up, those increases were quickly passed through to health insurers. Although doctors have always disliked the malpractice system, often with good reason, they didnreally bear the costs of it. This time they do. Medicare payments have been reduced, and managed care companies are reluctant to renegotiate contracts and fees. This time around, the cost of liability is not just political rhetoric. It hits doctors in their wallets and hospitals on their bottom lines.

Another example pertains to medical progress. There was a malpractice case last year in Texas where a jury awarded $8 million to a child who was born prematurely. He received care in a neonatal intensive care unit, but there were allegations that some procedures - intubations and exchange transfusions - were done negligently. The child is now blind and suffers from spastic paraplegia.

About $6.5 million of the damages were awarded for payment of future medical expenses, involving high-tech procedures such as intrathecal Baclofen. The child’s estimated life expectancy is 53 years.

To me this is an incredibly clear illustration of how medical liability is a product of the success of medicine, not its failure. Twenty-five years ago, a child this premature probably wouldn’t have survived birth, the procedures that allegedly were performed negligently were not even available, and much less could be done to prolong life or improve quality of life for someone as severely disabled as the child became.

This tells me that the more the health care system can do, the higher people’s expectations are, and the more it costs, the more potential liability will be in the system. You can cap non-economic damages - some cap is a good idea, I suspect - but you’re still left with the problem of financing very large economic damages. This problem is not going to go away.

WMS: It’s roughly a $3 million grant, funding two years of work. The core of the grant is for lasting research, but the grant also includes funding for outreach and communications. Last summer and fall, we went on a "listening tour" to meet with as many stakeholders as we could, as well as several state legislators and their staffs, and officials in state agencies, such as the departments of health and insurance. We did our best to get a sense of both the public side and the private side.

As part of that, in the summer of 2002, we commissioned a survey of the general public and small business owners to find out their views on malpractice. At that time, it wasn’t clear that medical malpractice was really an issue the public cared about, notwithstanding the extensive lobbying campaigns that had preceded the passage of the MCARE Act. We learned that the public did care - that malpractice was a serious issue and not just a superficial political one. We learned that most people care about the malpractice system because of its potential effect on health care costs and access to services. The reasons we surveyed the general public and small businesses is that we’re hoping to bring new constituencies into the debate.

The grant was finalized in April and May of last year so we’re working toward the end of the first year right now. All of our research projects are established and in progress but without any specific findings yet.

WMS: The Pew research has two overall goals which we try to balance. The primary goal is to do lasting gold-standard research on the implications of medical liability for the health care system.

Understandably, it is mainly during crises that private foundations like Pew and the government fund health policy research. That means the research base for the current political discussion comes from the medical malpractice crises of the 1970s and 80s. It’s therefore important for us to gather information that reflects the health system of 2003. Hopefully, this will be useful to policymakers for many years to come.

A challenge is that much of this work will not be finished and available for today’s decision makers to make the decisions they must make to address the current crisis.

Therefore, a second goal for the project is to offer immediate assistance in Pennsylvania, even though that assistance is based more on our overall expertise than our ongoing research.

We’re therefore trying to be responsive when we are asked by policymakers or the media to provide informed opinion about the current crisis. But people must be aware that informed opinion is not the same as data.

We are lucky to have many of the best researchers on malpractice in the country doing work on the Pew project. If we can make their expertise available in some way, we think that might be of great service.

WMS: As the principal investigator, I help design and oversee the entire research process. We are funding several projects. The individual researchers are all experienced and have independence with respect to their own projects. The most important work being done is at Harvard’s School of Public Health, where researchers are studying the impact of liability costs on access to physician services in Pennsylvania. This is the area we’ve devoted a large percentage of our grant resources to investigating because the principal different between this crisis and the crisis of the 1980s is that physicians can no longer pass rising liability costs on to health insurers. Therefore, a real possibility exists that certain medical services in certain parts of the Commonwealth - or for certain types of patients - are being compromised. Documenting that is a very good use of our expertise.

Another project is being done by researchers at Duke University who are studying government involvement in liability insurance markets. Their principal example is the Pennsylvania CAT Fund - now MCARE Fund - and they’re looking at intended and unintended consequences of the government’s role.

In addition, a group based here at Columbia Law School is working on something very exciting: helping a group of hospitals find the right ways to communicate with patients when medical errors occur. Pennsylvania’s MCARE Act, passed last spring, requires hospitals to disclose "serious events" in writing to patients. But just passing a law will not necessarily help patients or advance patient safety. Doctors and hospitals have to believe in disclosure, and have to work out the details. Out of respect for the hospitals’ willingness to participate, I don’t want to name them but most are in the Philadelphia area.

WMS: We try to help when asked, but we do not have a formal role in the Task Force. We were happy to be asked by Mr. Rendell when he was governor-elect to provide some information to the Task Force. But we are doing so with the clear understanding that the Pew project will maintain our independent research role. I’m sure that the Task Force will come to a good set of recommendations for the Commonwealth and we are acting as a resource when needed.

After the Rendell Task Force made its short-term recommendations in December, it turned to the long-term issues. The Task Force chair asked the Pew project to help the Task Force members organize the issues they might want to consider in formulating long-term recommendations. Two obvious problems are the high level and volatility of medical malpractice insurance premiums and the effect of that on access to medical services. But other problems include the fact that compensation for injured patients is generally inadequate and that too many avoidable medical injuries occur, in other words, the patient safety issue.

That no one likes the way adversarial litigation plays out in medicine is also a real problem. It’s a slow and nasty process that focuses on hindsight. Finally, there is the serious problem of the overall medical economy. In the current recession, health care is one of the bright spots. Lots of people worry about the liability climate slowing down health care as a source of economic development.

The Task Force asked me to lead them through what I thought personally were the big issues so they could have them on the table and decide what to do with some or all of them. I don’t think anyone working in the heat of a crisis as intense as the present one is going to be able to address all of those problems but I do think people should be aware of them.

WMS: Gathering data and working with health care providers as we study how the health system today changes the malpractice debate from the debate that occurred in the malpractice crisis of the 1980s. We are living with the mixed blessing of operating in a political crisis. We’re very grateful people want to talk with us but it’s hard to do research in this type of spotlight.

The research group at the Harvard School of Public Health is going to be surveying Pennsylvania physicians in March or April, gathering specific information about how the malpractice situation is affecting them.

The project with hospitals involving communications around the occurrence of medical errors is also making good progress. We’ve been very gratified that hospitals and doctors are so interested in this. Although the political debate is often about self-interest and who is a hero or villain, I don’t see villains anywhere in the health care 1

system. Instead, I find people wanting to make the situation better.

WMS: The IOM is the health policy arm of the National Academies of Science, and their committee process is well established. The report was prepared by a special committee chaired by Gail Warden (head of the Henry Ford Health System in Detroit) in response to a request from Secretary (of Health and Human Services) Thompson, and I was one of the people invited to participate, largely because of my malpractice background.

The first of the two alternatives in the report is called "provider-based early payment." The basic idea is that provider organizations - hospitals working with physicians, large group practices or other institutions - would voluntarily decide to adopt a new way of dealing with avoidable medical errors. They would commit to identifying the errors, telling patients about them, working to improve quality, and paying early compensation. In exchange, their liability exposure would be capped and they would be protected from subsequent litigation. They would also receive subsidies from the federal government to help cover liability costs. The essence of it is this: if you feel as a provider organization that you want to leave the old world of liability and enter a reformed system, that choice is available to you. This is what you get and what you promise in exchange.

The second is a statewide administrative resolution option. Defining avoidable injuries and determining appropriate compensation would be done through a state-based system that would substitute for litigation. This is a more sweeping approach that would apply to all physicians and hospitals without any sense of voluntary participation.

Each option has advantages and disadvantages. These are options that states might want to avail themselves of, hopefully with federal funding if the federal government decides to sponsor the IOM’s recommended demonstration projects. There’s no perfect answer. What’s important is designing a liability system that matches the health care system.

Something overall that doctors should understand about malpractice reforms is that they’re extremely complex and the devil is in the details. Therefore, I think everyone needs rules-of-thumb to help them judge whether a complicated proposal would do good or harm.

Here are five things to observe about the IOM proposal:

1. It is integrated with general health reform proposals. It is something that is specifically designed to improve health care rather than stating a general opinion about whether lawyers are a good or bad thing for society.

2. It recognizes that there is an immediate need for financial assistance, which the IOM proposal meets through a federal subsidy for malpractice coverage. The Rendell Task Force’s first instinct - let’s fund this from somewhere - was a good one, regardless of how one feels about the specific mechanism they proposed.

3. Anything that speeds up the process of resolving claims is good. The quicker people recognize an avoidable error, talk to the patient, offer reasonable compensation, the better the whole system works. The patient gets information, the climate is less adversarial and the amount paid could be far more reasonable. When you resolve things in a period of months, people can come away with ideas to help avoid the same error from happening again. If you litigate for five years, there’s no way to take anything useful from that.

Volatility in liability insurance markets is also largely a product of the time it takes to settle cases - quicker resolution means more predictability, less dependence by insurance companies on investment income, and more stable premiums.

4. Patient involvement is key. Many lawsuits get brought because patients don’t understand what happened to them, and patients can also help make the system better. As excited as I am about innovations in patient safety, I’m always a little concerned when only "experts" are involved. Having patients involved as well is very important.

5. Any intelligent malpractice reform proposal has to allow for some variation and some choice. You can’t just mandate one system for all ways of medicine. In the first IOM option, for example, hospital and doctor organizations that have the capacity to step up and identify injuries, offer fair compensation and improve patient safety receive malpractice relief in exchange. Even if we reach a political impasse on overall tort reform, we should allow patients and providers to choose these types of arrangements voluntarily.

WMS: They are certainly applicable to Pennsylvania. But whether a particular state might adopt the IOM’s approach depends on the politics of the state and the particular problems it faces. Experts differ on whether a state in an acute liability crisis is the best state to pursue comprehensive reform.

I personally think that states such as Pennsylvania whose constitutions have been ruled incompatible with flat, across-the-board caps on damages might find the courts much more receptive to programs that take a systematic approach. That way it looks like you’re not just taking something away from the plaintiff, but you’re reworking the whole system in a balanced way to achieve broader goals.

Pennsylvania has unfortunately many of the features that would make a liability crisis more acute. It does not have a cap on damages. It has a sharp urban-rural division, which affects the geographic distribution of malpractice premiums within the state and patient access implications of losing physicians in particular areas. It has low Medicare and low private reimbursement rates. It has had the CAT Fund in place since the first malpractice crisis in the 1970s and the CAT Fund, however well intentioned, has had a lot of unintended consequences. It has resulted in high unreseved liabilities accruing and its presence has kept private liability markets from evolving. One can understand why Pennsylvania is having such serious trouble.

WMS: The CAT Fund is a very difficult problem. The MCARE Act phases it out over a period of years, but exactly how that will happen is unclear. The CAT Fund was introduced to solve an acute problem: unavailability of private coverage. Like all public programs, its proponents hoped it would be less costly to administer and more equitable than a private system. But public systems can also be less adaptable and efficient than private ones. One huge problem with the CAT Fund is that it’s not an insurance program. It looked inexpensive initially because it did not need to reserve for future liability. It also imposes a daunting newcomer’s tax on physicians who come to Pennsylvania. They are paying for someone else’s prior malpractice exposure. But overall it has pros and cons, which is always the case when the government gets involved in doing something that the private sector has done previously.