- MEDICAL LIABILITY: NEW IDEAS FOR MAKING THE SYSTEM WORK BETTER FOR PATIENTS

[Senate Hearing 109-710]
[From the U.S. Government Publishing Office]

S. Hrg. 109-710

MEDICAL LIABILITY: NEW IDEAS FOR MAKING THE SYSTEM WORK BETTER FOR
PATIENTS

=======================================================================

HEARING

OF THE

COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

EXAMINING ALTERNATIVES TO IMPROVE THE MEDICAL LIABILITY SYSTEM TO WORK
BETTER FOR PATIENTS, FOCUSING ON S. 1337, TO RESTORE FAIRNESS AND
RELIABILITY TO THE MEDICAL JUSTICE SYSTEM AND PROMOTE PATIENT SAFETY BY
FOSTERING ALTERNATIVES TO CURRENT MEDICAL TORT LITIGATION

__________

JUNE 22, 2006

__________

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Pensions

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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

MICHAEL B. ENZI, Wyoming, Chairman

JUDD GREGG, New Hampshire EDWARD M. KENNEDY, Massachusetts
BILL FRIST, Tennessee CHRISTOPHER J. DODD, Connecticut
LAMAR ALEXANDER, Tennessee TOM HARKIN, Iowa
RICHARD BURR, North Carolina BARBARA A. MIKULSKI, Maryland
JOHNNY ISAKSON, Georgia JAMES M. JEFFORDS (I), Vermont
MIKE DeWINE, Ohio JEFF BINGAMAN, New Mexico
JOHN ENSIGN, Nevada PATTY MURRAY, Washington
ORRIN G. HATCH, Utah JACK REED, Rhode Island
JEFF SESSIONS, Alabama HILLARY RODHAM CLINTON, New York
PAT ROBERTS, Kansas

Katherine Brunett McGuire, Staff Director

J. Michael Myers, Minority Staff Director and Chief Counsel

(ii)

C O N T E N T S

__________

STATEMENTS

THURSDAY, JUNE 22, 2006

Page
Enzi, Hon. Michael B., Chairman, Committee on Health, Education,
Labor, and Pensions, opening statement......................... 1
Kennedy, Hon. Edward M., a U.S. Senator from the State of
Massachusetts, opening statement............................... 3
Cornyn, Hon. John, a U.S. Senator from the State of Texas,
statement...................................................... 5
Letters from the Alliance for Justice, Center for Justice and
Democracy, USAction, Public Citizen............................ 8
Studdert, David, Associate Professor of Law and Public Health
Department of Health Policy and Management, Harvard University
School of Public Health; Philip K. Howard, Founder and Chair,
Common Good: William M. Sage, Professor of Law, Columbia Law
School; Richard C. Boothman, Chief Risk Officer, University of
Michigan Health System; Susan E. Sheridan, Co-founder,
President, Consumers Advancing Patient Safety (CAPS); Cheryl
Niro, American Bar Association, Standing Committee on Medical
Professional Liability; and Neil Vidmar, Russell M. Robinson II
Professor of Law, Duke University School of Law................ 12
Prepared statements of:
Mr. Studdert............................................. 15
Mr. Sage................................................. 36
Mr. Howard............................................... 41
Mr. Boothman............................................. 48
Ms. Sheridan............................................. 58
Ms. Niro................................................. 63
Mr. Vidmar............................................... 69

ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
Clinton, Hon. Hillary Rodham, a U.S. Senator from the State
of New York, prepared statement............................ 99
Questions of Senator Clinton for Mr. Boothman................ 100
Response to Questions of the Committee on Health, Education,
Labor,
and Pensions by:
Mr. Studdert............................................. 100
Mr. Sage................................................. 103
Mr. Howard............................................... 105
Ms. Niro................................................. 107
Mr. Vidmar............................................... 109
American College of Obstetricians and Gynecologists (ACOG)... 116

(iii)

MEDICAL LIABILITY: NEW IDEAS FOR
MAKING THE SYSTEM WORK BETTER
FOR PATIENTS

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THURSDAY, JUNE 22, 2006

U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The committee met, pursuant to notice, at 10:02 a.m., in
Room SD-430, Dirksen Senate Office, Hon. Michael B. Enzi,
chairman of the committee, presiding.
Present: Senators Enzi, Hatch, and Kennedy.

Opening Statement of Senator Enzi

The Chairman. Good morning, and thank you for coming to
this hearing of the Senate Committee on Health, Education,
Labor, and Pensions. I appreciate the time our witnesses have
taken to be with us and to be a part of this important
discussion.
Today, we'll be focusing on our medical liability system
and looking at new ideas for making the system work better for
patients. We are looking to our witnesses for suggestions, good
ideas, and observations based upon experience of how to make
our medical liability system more efficient and effective for
everyone involved.
As you know, Senator Baucus and I have introduced a bill to
encourage and support State efforts to develop new ideas for
resolving disputes over medical errors. Senator Clinton has
also introduced a bill, and Senator Cornyn is working on one as
well. I'm sure I speak for all of us when I say, we welcome
your thoughts on those bills today. There's no doubt that we
need a medical justice system that delivers quick and fair
compensation to injured patients. But it must also provide
consistent and reliable results so that doctors can eliminate
the practice of overly defensive medicine and learn from the
medical errors of colleagues.
Right now, our system fails to deliver on either of these
goals. Earlier this year, when the Senate debated legislation
to provide flexible caps on noneconomic damages, I noticed
something interesting: no one stood up to defend our current
system of medical litigation. In fact, even the lawyers in this
body agreed that our medical litigation system is broken and
needs to be fixed.
Now, why didn't we hear anyone defend the merits of our
current medical litigation system? It's because everyone knows
our current system doesn't work like it should. It doesn't work
for patients, and it doesn't work for healthcare providers.
Under our current medical litigation system, many patients who
are hurt by negligent actions receive no compensation for their
loss. Those who do receive compensation end up with only about
40 cents of every premium dollar after legal fees and other
costs are subtracted.
Outcomes of litigation may not bear relation to whether a
healthcare provider was at fault. Therefore, our current
litigation system masks underlying medical errors.
Consequently, we are not learning from our mistakes. It seems
clear that the medical litigation system can and must be
improved so that we can learn from the medical errors that
occur and use that knowledge to improve our delivery system.
Any new and improved medical litigation system should not
encourage the wasteful use of medical resources. It must
compensate injured patients in a fast and fair fashion. It
should keep more doctors in the operating and emergency room,
not testifying in the courtroom. When someone has a medical
emergency, they want to see a doctor, not a lawyer. Everyone on
this committee, I think, shares these important goals.
Now, the medical liability system is losing information
that could be used to improve the practice of medicine.
Although the goal of having zero medical errors is lofty, the
significant reduction of medical errors should be our true
objective in medical liability reform. The Institute of
Medicine, in its groundbreaking study, called ``To Err is
Human,'' found that preventable medical errors are responsible
for the deaths of between 44,000 and 98,000 Americans this
year.
In the 7 years since that study, little progress has been
made, as the practice of medicine has become more specialized
and complex, and the tort system has forced more and more focus
on individual blame than on the safety of the system.
Although we would expect our tort system to lead to fewer
medical errors, it has not. Perhaps we could live with this
flawed system if litigation served to improve quality or
safety, but it doesn't. Litigation discourages the exchange of
critical information that could be used to improve the quality
and safety of patient care.
The randomness and delay associated with medical litigation
does not contribute to timely, reasonable compensation for most
injured patients. Some injured patients get huge jury awards,
while others get nothing at all. It is important to patients
and doctors that our justice system is perceived as both
efficient and fair.
In addition, the constant threat of litigation also drives
the inefficient, costly, and even dangerous practice of overly
defensive medicine. Simply stated, overly defensive medicine
means the doctor has departed from doing what is best for the
patient because of a very real fear of a lawsuit. Defensive
medicine can mean ordering more tests or providing more
treatment than might otherwise be necessary; for instance, a
doctor might order an unnecessary and painful biopsy.
Some estimates suggest that Americans will pay $70 billion
for defensive medicine this year. While some have argued this
figure is overstated, even if it is half of that amount, it is
way too much. Several of our witnesses appearing before the
committee today will testify to the facts and figures that show
how our system fails to compensate patients quickly and fairly,
and as one of our witnesses will point out, injured patients
actually receive less than half of the compensation paid out.
Most of it goes to the lawyers, experts on both sides, court
costs or elsewhere.
Our medical litigation system is in need of repair. It
fails to achieve its two objectives: to provide fair and fast
compensation to injured patients and to effectively prevent
future mistakes. At its worst, it replaces the trust in the
provider-patient relationship with distrust.
Fortunately, the system can be repaired. We can make it
better, and with your help and support, we will. We have
several witnesses today who are experts on these issues, and I
look forward to hearing their testimony and recommendations on
how we should improve the system.
Senator Kennedy.

Opening Statement of Senator Kennedy

Senator Kennedy. Thank you very much. It is probably useful
at this time to mention the leadership that, Mr. Chairman, you
have provided the committee in our medical error legislation
that we have been able to achieve through the Senate in the
recent last year or two. That was very important. A lot of good
ideas went into that legislation to help in the reduction of
medical errors, and we certainly hope that that will be an
asset in terms of the kind of statistics that you mentioned
here in terms of the medical errors in our system.
Today's hearing is entitled, ``Medical Liability: The New
Ideas Making the System Work Better for Patients.'' Fair
treatment for seriously injured patients is certainly the
yardstick we should use to evaluate both the current system and
proposals that would dramatically change it. Under close
scrutiny, it becomes clear that many of the proposed reforms
would actually harm seriously injured patients and deprive them
of their basic rights.
The historic rights of injured persons, including the
victims of medical negligence, to have their claims for
compensation decided by a jury is a fundamental part of our
democratic process. It is the American way. The medical
liability system cannot be made to work better for patients by
denying them their basic guarantee of justice.
The right to a jury trial is important to ensure fair
treatment in practice as well as in theory. It is the best
assurance that an average citizen who has been injured will
receive a fair hearing when he or she brings a case against
often wealthy and powerful defendants. Numerous empirical
studies, including those conducted by two of the witnesses
today, Professor David Studdert the Harvard School of Public
Health and Professor Neil Vidmar of the Duke Law School, have
shown that most juries are conscientious and do render a
decision based on the evidence.
Even though only 1 medical malpractice case in 10 actually
goes to trial, the fact that defendants know their conduct will
be scrutinized by a jury is a major factor in producing fair
settlements. In many cases, without the imminence of a jury
trial, there would be no reasonable offer of a settlement made
by the defendant. The availability of a jury trial benefits
injured patients who settle their claims as well as those who
try their cases to verdict.
There are several myths that opponents of the jury system
rely on that are clearly false and should be rejected at the
start of the hearing. First myth is that medical malpractice
cases are somehow responsible for the high cost of healthcare.
There is no basis in fact for such a claim.
The cost of medical malpractice premiums constitutes less
than \2/3\ of 1 percent of the Nation's healthcare expenditures
each year. Malpractice premiums are not the cause of the high
rate of medical inflation. Legislation changing the medical
liability system will not make the healthcare more affordable.
We have gone up from spending $1.3 trillion a year, which was 5
years ago, up to $1.9 trillion, $600 billion more, on the
healthcare system. At the time, we had seen 6 million Americans
that had healthcare coverage through the employer-based system
who have lost their coverage, so those indicators are going
exactly in the wrong way, and we should address them. But this
isn't the problem.
The second myth is that restricting an injured patient's
right to recover compensation will reduce malpractice premiums.
This claim is also false, and comprehensive national studies
show that medical malpractice premiums are not significantly
lower on average in States that have enacted damage caps and
other restrictions on patients' rights than in States without
the restrictions. Insurance companies are merely pocketing the
dollars which patients no longer receive when tort reform is
enacted.
The third myth is that capping how much compensation a
seriously injured patient can receive will eliminate frivolous
lawsuits. This, too, is false. In reality, such a provision
only serves to hurt those patients who have suffered the most
severe life-altering injuries and who have proven their cases
in court.
One legitimate concern about the current medical liability
system is that in some jurisdictions, victims must wait for
years for their day in court before a jury. But the answer to
the problem of delay is certainly not to deprive the victims of
their right to that day in court. To do so would be both
unreasonable and unjust. The appropriate response is to provide
greater resources to our courts, so that cases, especially
those involving disabling injuries, reach trial more quickly.
Mediation programs that are truly voluntary and do not
deprive the victims of their right to a jury trial, should
efforts to quickly resolve the dispute fail, are also
worthwhile. A number of States are already using some form of
pretrial mediation and doing it very successfully. However,
there is an enormous difference between voluntary mediation
programs that can make the system work better for patients and
mandatory alternatives such as administrative tribunals and
health courts that deprive injured patients of their historic
right to a jury trial.
Voluntariness is the first and most fundamental standard by
which we should evaluate all alternate dispute resolution
proposals. We should reject any proposal that would deny the
injured patient the option of taking his malpractice claim
before a jury. The patient must be given a genuine choice
between a traditional court proceeding and the alternative
process.
That choice by the patient must be an informed choice with
a full understanding of the rights being relinquished, made
after the injury has occurred. That is important. Merely
obtaining the patient's signature on one more consent form at
the time that he or she visits the physician or enters the
hospital is not sufficient. Such pro forma procedures make a
mockery of informed consent, turning the principle of voluntary
participation into a sham.
Another important standard for evaluating proposed
alternatives is whether they permit an individualized
determination of the compensation that an injured patient
should receive. Imposing a defined compensation schedule will
deny the fact-finder the ability to consider the full impact of
the injury on the victim's life; will result in an arbitrary
ceiling on compensation for those who have suffered the most
severe and permanent damages. This would be grossly unfair. Any
proposal that will truly make the system work better for
patients must meet these standards. Proposed alternatives that
fail these basic tenets will only harm the patients they
purport to help and should be rejected.
I thank the Chair for having these hearings and look
forward to our witnesses.
The Chairman. Thank you, and I thank you for mentioning the
patient safety bill that we worked on together that passed both
houses unanimously and will make a difference. I also thank you
for your willingness to take a look at other ways that we might
expedite or help patients in one way or another. I think we
have about 28 healthcare bills that we're working on together.
It's quite a load for any committee.
We offered the two groups of people that are working on
bills in this area the opportunity to testify. Senator Cornyn
has taken us up on that, so it is my pleasure to have Senator
Cornyn here to make a statement. He's been drafting his own
legislation that will address the issue that we are discussing
today, and prior to becoming a U.S. Senator, Senator Cornyn was
a lawyer, a district court judge, and then a member of the
Texas Supreme Court. I welcome your testimony and look forward
to your observations.
Senator Cornyn.

Statement of Senator Cornyn

Senator Cornyn. Thank you, Chairman Enzi and Ranking Member
Senator Kennedy. I really appreciate the opportunity to discuss
alternatives to our current medical justice system, which I
believe has impaired access to healthcare on behalf of many of
our citizens. It is enormously inefficient, as Chairman Enzi
noted in his opening statement, with tremendous transactional
costs, and it is unreliable in terms of its ability to
appropriately compensate people who have genuine grievances. So
I think we need to look at other alternatives.
I do come to this with some background in the area.
Chairman Enzi mentioned my experience as a district court judge
and U.S. Supreme Court judge. Before that--I shudder to think;
it's 30 years ago when I graduated law school, but when I was
in private practice, I represented healthcare providers in
medical liability lawsuits, trying to do jury cases. And then,
of course, presiding over many of these cases as a judge, trial
judge, and then as an appellate judge on the Texas U.S. Supreme
Court.
And all of this experience leads me to believe that the
current system is irretrievably broken. The incentive structure
is perverse. When a mistake occurs, doctors and hospitals are
not persuaded or encouraged to come forward, admit the mistake,
and work out an amicable solution. Instead, our adversarial
civil justice system is corrupting the practice of healthcare
in our Nation.
Indeed, the current system fosters widespread errors and
decreases patient safety, causes overall healthcare costs to
skyrocket, drives up insurance premiums for doctors and
hospitals, and worst of all, causes doctors to simply retire
early or refuse to go to certain parts of the country that are
known as litigation hellholes, and that impairs access on
behalf of all of us to healthcare.
Consider the cost of defensive medicine. I think this is
really one of the hidden costs that no one really takes into
account. The cost of defensive medicine to the Federal taxpayer
is estimated to be roughly $28 billion a year. The additional
added cost to the health economy is roughly $100 billion a year
in unnecessary, preventable defensive medical care costs. And
if you think about the usual healthcare provider, let's say an
emergency room physician who has never met a patient before but
encounters them in a hospital emergency room, certainly, they
are going to provide every sort of diagnostic test that could
possibly be conceived by the mind of modern medicine, lest they
be held to account years later when this same patient, who they
perhaps helped, perhaps even saved their life, sues them and
challenges them for not exhausting every possibility, even
though that doctor's best healthcare judgment and the standard
of practice in the area would say that some of those tests were
not necessary.
Furthermore, according to the Department of Health and
Human Services, a majority of doctors say that they recommended
invasive procedures and painful tests they consider unnecessary
in hopes of avoiding litigation; in other words, too many of
our healthcare providers are not practicing their profession
based on what they consider to be sound medical judgments but
rather in fear of litigation; and adding to the costs, as I
say, of our healthcare services in this country.
As we know, one solution that's been offered is to cap
noneconomic liability damages. That's been one of the solutions
that my State has adopted with enormous success. We have added
nearly 4,000 physicians to our State who have come back into
areas where they had formerly refused to go and practice
because of these liability reforms, because the cost of medical
liability insurance has come down. But, medical liability caps
are just one piece in a much larger puzzle and frankly do not
address the systemic problems with our healthcare system. And
that is, to simply put it, unreliable, unpredictable, random
medical justice.
And that is why I have embraced the concept of specialized
health courts. I can tell you, as a former judge of a court of
general jurisdiction, I have sort of a built-in bias against
specialized courts, but as we all know, we do have specialized
courts in taxes, bankruptcy, just to name a couple, and I
believe the time for healthcare courts or at least a pilot
project to test this innovative idea could pave the way to a
medical justice system that would promote greater fairness and
reliability while also providing reasonable compensation on a
reliable basis to patients who are injured due to healthcare
treatment.
I know the Chairman of this committee, Chairman Enzi, has
joined Senator Baucus to introduce bipartisan legislation that
would authorize the Secretary of Health and Human Services to
award grants to States for the development of alternatives to
resolving disputes over medical errors, alternatives to the
current, broken status quo. This bill, your bill, Mr. Chairman,
specifically authorizes the creation of special health courts
and I welcome and embrace that idea. And really, the
legislation that I hope to introduce shortly will build on that
idea.
States should be encouraged to find alternative solutions
as the laboratories of democracy. The legislation that I am
working on would provide for a Federal pilot health court
system through the Department of Health and Human Services for
voluntary participating hospitals around the Nation. Responsive
to the concerns raised by Senator Kennedy, this would provide a
system, as I currently contemplate, that would require an
administrative process, but if someone is dissatisfied with the
administrative process, it would not cut off their right to
access the court system and a jury trial under appropriate
safeguards.
But these health courts would provide incentives for
providers to make early offers in order to promote quality
improvement and patient safety through early disclosure of
adverse medical events. It would call for the immediate
development of pilot alternatives to the current medical tort
litigation system and eligible institutions through
administrative health courts and provide for a hearing and a
written opinion from an administrative judge advised by neutral
experts. The judges would make written rulings in every case to
provide guidance on proper standards of care.
And I would say in conclusion, that's one of the areas that
in my experience both as a lawyer trying medical liability
cases and as a judge presiding over these cases is the greatest
source of random justice in our system. Everyone knows that for
a fee, you can hire an expert to come in and testify to just
about anything in a court of law. And it's one thing to have
competing witnesses testify who had the red light at an
intersectional collision. It is entirely another thing to have
experts for hire come in and testify to a standard of care that
is not recognized anywhere else in the country, have a swearing
match, and then ask a lay jury, without that expertise, to
resolve. And it provides no sort of reliable standard that can
be used by healthcare providers to determine what, indeed, is
demanded of them in our civil justice system.
I hope to introduce this legislation soon. Patients and
providers deserve access to care and access to a reliable
system of justice. The current system fails on both counts. I
support the efforts of this committee to explore alternatives
to this broken system and look forward along with you to
listening to the testimony. Thanks very much for allowing me to
come here today and offer these few words in support of the
committee's efforts.
The Chairman. Well, I thank you for being here and sharing
that with us, and if you have a longer statement you'd like to
submit for the record, please do so. I'll be making this offer
to the witnesses today, and also, to Senator Clinton and
Senator Obama, so that we can get their ideas and put them in
the record unless there is disagreement.
Senator Cornyn. Mr. Chairman, if I could just interject one
thing, I would be remiss if I did not acknowledge the great
contribution that Common Good has made in this effort, as you
know, to introduce this concept of specialized health courts,
and as you know, there is an ad in the New York Times today, a
half-page ad: it's time to create special health courts, noting
that Duke University School of Medicine, Emory Health Care,
Johns Hopkins Medicine, and the Yale Hospital Health Care
System have indicated their interest in participating in a
voluntary pilot project should Congress create a system whereby
they could do so.
Thank you very much.
The Chairman. Thank you.
Senator Kennedy. Chairman, could I just introduce a paper
also by the Alliance for Justice, Center for Justice and
Democracy, USAction, Public Citizen that is on this subject?
The Chairman. Sure.
[The information follows:]

Alliance for Justice, Center for Justice and
Democracy,
Public Citizen, USACTION,
June 20, 2006.

Hon. Michael B. Enzi, Chairman,
Committee on Health, Education, Labor, and Pensions
U.S. Senate,
Washington, DC. 20510
Hon. Edward M. Kennedy, Ranking Member,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC. 20510
Dear Chairman Enzi and Senator Kennedy: We understand the Health,
Education, Labor, and Pensions Committee will be holding a hearing this
week on several bills to promote patient safety and reduce litigation
stemming from medical error and injury.
We are supportive of the concept envisioned in S. 1784 of a
national patient safety database that would permit the comprehensive
collection and analysis of data about medical error. The disclosure and
compensation program also proposed in S. 1784, which draws on the
experience of existing voluntary programs including the Rush Mediation
Program in Chicago, appears to be a common sense reform in cases of
medical error where liability is clear. These programs have been
successful because the parties participate voluntarily using a mediator
to resolve compensation issues. They do not take away the claimant's
right to litigation if the parties fail to come to agreement.
The State demonstration programs proposed in S. 1337, on the other
hand, would eliminate medical litigation entirely. In order to apply
for the demonstration funding, States must ``develop an alternative to
current tort litigation for resolving disputes over injuries allegedly
caused by healthcare providers or healthcare organizations.'' Injured
patients would be subject to a mandatory alternative system for
resolving compensation claims, and their right to a jury trial would be
eliminated. Experience with other alternative compensation systems, on
which these programs are based, strongly suggests that they will
provide worse protection for patients than the civil justice system
currently provides.
While S. 1337 gives States a choice of three different
demonstration models, they all share the same characteristics. The jury
trial is replaced by a vaguely defined administrative bureaucracy run
by political appointees charged with developing uniform schedules of
compensation for specific medical injuries. These schedules in reality
act as the kind of damage cap that a number of State courts have found
unconstitutional. The development of a rigid payout schedule for
compensation is particularly problematic because it remains unclear
whether the schedule can be determined in a fair manner.
All three of these models may be unconstitutional under both
Federal and State law because they preempt all constitutional
guarantees to trial by jury without providing the constitutionally
necessary quid pro quo of eliminating the injured parties' burden of
proving fault. While the models appear to mimic the workers'
compensation no-fault administrative concept, injured parties would
retain the burden of proving fault.
Finally, we are deeply concerned about replacing State civil
justice systems, some of which have functioned for centuries, with what
are frankly unknown quantities lacking any kind of established
operating procedures. One key question is how patients will get access
to information regarding their claims and injuries. In civil
litigation, parties are entitled to discovery of facts from the other
side. With respect to the models in S. 1337, it is unclear whether
patients would be entitled to review medical records and interview
potential witnesses. It is also unclear how much information patients
will be entitled to obtain before filing a claim, how much information
patients will be provided after a claim is filed, what kind of evidence
will be allowed, whether expert witnesses may be called, and what
standards would be used to determine admissibility.
Given the dearth of information about how these models would work,
it is difficult to understand how S. 1337 achieves its purpose ``to
restore fairness and reliability to the medical justice system.'' The
civil justice system is not perfect, but like democracy, it's better
than the unknown alternative. Problems with the way medical injuries
are processed through the civil justice system can be resolved, and the
system improved, by common sense reforms, some of which are
conceptualized in S. 1784.
Thank you for taking time to understand our concerns. We look
forward to working with you on legislation to improve patient safety in
the healthcare system. Please do not hesitate to contact Dick Woodruff
at Alliance for Justice, 202-822-6070 if we may be of further
assistance.
Sincerely,
Nan Aron,
President, Alliance for Justice.
______

June 21, 2006.
Hon. Michael B. Enzi, Chairman,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC. 20510.

Hon. Edward M. Kennedy, Ranking Member,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC. 20510.
Dear Senators Enzi and Kennedy: As survivors of medical negligence
who once used the legal system to obtain compensation and justice, we
are strongly opposed to the establishment of ``Health Courts'' to
resolve malpractice claims. While ostensibly being for the benefit of
victims like us, the outline of this proposal shows misguided concern
for what is best for patients and, particularly, the most severely
injured patients.
First, please note that we have no problem with pre-trial
settlements, in which both parties voluntarily agree to take
malpractice cases out of the civil justice system. In fact, many of us
took advantage of a voluntary settlement process to resolve our cases.
However, schemes like Health Courts, which require that cases be
heard in an informal setting, without the option of having either
juries or unbiased judges make decisions, and with compensation
judgments determined by political bodies who can be lobbied by
insurance and health industry representatives, would be highly unjust.
Though promising to be a quick, fair and cost-effective method of
obtaining resolution, Health Courts will actually obstruct the most
seriously injured patients' path to justice, making it more likely that
he or she will drop a legitimate claim altogether. This is especially
true because the burden of proof on patients who are forced into the
Health Court process is little different than would be required in a
court of law. And, our experience with similar alternative systems,
like mandatory arbitration, shows that insurance defense lawyers can be
abusive toward patients when there is no unbiased judge to ensure
fairness.
Moreover, removing the possibility of litigation would disrupt
other critical functions of the legal system, most importantly the
deterrence of unsafe practices, especially in hospitals. On May 11,
2006, the New England Journal of Medicine published an article showing
how litigation against hospitals improves the quality of care for
patients. The article also confirmed that removing the threat of
litigation, as this proposal contemplates, would do nothing to improve
the reporting of errors since fear of litigation is not the main reason
doctors do not report errors.
Instead of taking compensation decisions away from juries and
putting them in the hands of those who may be biased against patients,
we should look for ways to improve the quality of healthcare services
in our country and to reduce preventable medical errors. It is well
established that State disciplinary boards do little to weed out the
small number of doctors responsible for most malpractice. This is not
the time to establish a new process, which will only protect
incompetent doctors even more from meaningful liability exposure and
scrutiny, including the most egregiously reckless healthcare providers.
Health Courts will not only fail to fully compensate patients, but
they will also undermine restraints the civil justice system now
imposes on dangerous conduct. Mechanisms that shield grossly negligent
doctors from accountability by intruding upon the legal system and
eliminating individual's right to sue should not be tolerated by a
society that believes in our constitution and democracy.
Sincerely,
Joanne Doroshow,
Executive Director, Center for Justice & Democracy.

;(For: Paula Andrasko, Akron, OH; Sheila Austin, St. Elmo, IL;
Barbara Becker, Evansville, IN; Michael Bennett, Baltimore, MD; Alan &
Christian Buckley, New York, NY; Bob Carmody, Chicago, IL; Diane
Carter, Galena, IL; Deborah K. Dick, Kenton, OH; Mark & Michelle Geyer,
Antioch, CA; Elie & Kathy Ghawi, St. Charles, IL; Deborah Gillham,
Gaithersburg, MA; Lisa & Michael Gourley, Valley, NE; Melinda Hause,
Palm Coast, FL; Marlene Jacobson, Omaha, NE; Garret & Julie Koleszar,
Fallbrook, CA; Leslie Lewis, New York, NY; Justin Mattes, Woodcliff
Lake, NJ; John J. McCormack, Pembroke, MA; Dianne K. Meyer, Las Vegas,
NV; Patricia Nelson, North Yarmouth, ME; Susan P. O'Bernier, Naugatuck,
CT; Patti O'Regan, Port Richey, FL; Tammy Schilt, West Salem, IL; David
& Patricia J. Skolnik, Centennial, CO; David Snow, Colchester, CT;
Kelly Spetalnick, Atlanta, GA; Sue & Jay Stratman, Chesterfield, MO;
Mary Steinberg, Chicago, IL; Debi Surlas, Aurora, IL; Stephen K. &
Karen E. Swain, Gahanna, OH; Pamela Thomas, Illiopolis, IL; Lisa
Waligorski, Albers, IL.)

Senator Kennedy. Could I ask one question?
On these courts that you mentioned, mediation, do you have
them in Texas? Are you personally familiar with them? I know
that they do exist in a lot of the States. I was just wondering
whether you had any familiarity with any of the ones.
Senator Cornyn. Senator Kennedy, I am very familiar with
the introduction of what has generally been known as
alternative dispute resolution, which is designed to address
the problems that we have identified here in a general context;
that is, the cost of people resolving their disputes in the
current court system, because we know that cost frequently
freezes some people out and the delays associated with our
civil justice system.
We don't have health courts or anything quite like that in
Texas now, but this is another effort to build on, I think, the
alternative dispute resolution approach to try to provide more
efficient, more timely, less expensive justice.
Senator Kennedy. Good, good. Thank you.
Senator Cornyn. Thank you.
The Chairman. Thank you very much for your testimony today
and for taking the time to be here. Thanks.
And we will now call to the table our panel of witnesses. I
will go ahead and introduce the panel as they're taking their
places. Again, I appreciate the time you've all taken to come
today to testify and answer some questions. And we do have a
vote that--actually, several votes that start at about 11:00,
so any help that you can give us by condensing your testimony
will be very much appreciated. Your full statement and any
other comments you want to expand on will be a part of the
record, and of course, we will ask that you answer any
questions that we submit to you in writing as well. Sometimes,
those are as beneficial as ones that we would get to ask in the
open hearing.
So on this panel of witnesses, from my left to right, we
have Professor David Studdert. Professor Studdert is an
associate professor of law and public health in the Department
of Health Policy and Management at Harvard University School of
Public Health. Professor Studdert will tell us about his most
recent study on the outcomes of medical malpractice.
Then, we have Philip Howard. Mr. Howard is a partner at the
law firm of Covington and Burling and is the chair and founder
of the organization Common Good. Mr. Howard is the author of
the book The Death of Common Sense. Mr. Howard will discuss the
health court model that Common Good has developed.
Then, we have Professor William Sage, who is a professor of
law at Columbia Law School. Professor Sage provides us with a
unique perspective on this discussion, as he is both a doctor
and a lawyer. Professor Sage will discuss alternatives to
medical litigation.
Next to Mr. Howard, we have Richard Boothman, who is chief
risk officer at the University of Michigan Health System. Mr.
Boothman has brought his son with him, whom I would also like
to welcome to the hearing.
Senator Kennedy. Can you stand up?
The Chairman. Yes, would you stand up?
[Laughter.]
Thank you, and thanks for being here.
Mr. Boothman will discuss the model that's been developed
at the University of Michigan and its applicability to other
places.
Then, we have Susan Sheridan, who is the cofounder,
President of Consumers Advancing Patient Safety, CAPS. Her
organization advocates for making changes to the medical
malpractice system in order to improve patient safety. Ms.
Sheridan will provide a personal account of our medical
litigation system and will share her views on how it might be
changed to better serve patients. I respect and thank her for
her willingness to speak today on an issue that has affected
her family so directly.
And then, next to her, we have Cheryl Niro, who is an
attorney for the law firm of Quinlan and Carroll. Ms. Niro is
the former president of the Illinois Bar Association. Today,
she's speaking on behalf of the American Bar Association, which
is the largest association of lawyers in America. At the ABA,
she is on the Standing Committee on Medical Professional
Liability. She will describe the ABA's concern about health
courts.
And finally, we have Professor Neil Vidmar, who is the
Russell M. Robinson II professor of law at the Duke University
School of Law. He is also the author of the book Medical
Malpractice and the American Jury. Professor Vidmar will share
his thoughts on the issue, specifically on the role of juries
in medical litigation.
At this time, I will ask for unanimous consent that the
testimony of the American College of Obstetricians and
Gynecologists be entered in the record. I thank each of you for
taking the time to join us today, and again encourage you to
condense as much as possible so that we will have time for some
questions.
Mr. Studdert.

STATEMENTS OF DAVID STUDDERT, ASSOCIATE PROFESSOR OF LAW AND
PUBLIC HEALTH DEPARTMENT OF HEALTH POLICY AND MANAGEMENT,
HARVARD UNIVERSITY SCHOOL OF PUBLIC HEALTH; PHILIP HOWARD,
FOUNDER AND CHAIR, COMMON GOOD; WILLIAM M. SAGE, PROFESSOR OF
LAW, COLUMBIA LAW SCHOOL; RICHARD BOOTHMAN, CHIEF RISK OFFICER,
UNIVERSITY OF MICHIGAN HEALTH SYSTEM; SUSAN E. SHERIDAN, CO-
FOUNDER, PRESIDENT, CONSUMERS ADVANCING PATIENT SAFETY (CAPS);
CHERYL NIRO, AMERICAN BAR ASSOCIATION, STANDING COMMITTEE ON
MEDICAL PROFESSIONAL LIABILITY; AND NEIL VIDMAR, RUSSELL M.
ROBINSON II PROFESSOR OF LAW, DUKE UNIVERSITY SCHOOL OF LAW

Mr. Studdert. Thank you, Mr. Chairman, for the privilege of
testifying, Senator Kennedy, on options for improving the
medical liability system in the United States. I'm honored to
be here, and I commend the committee for taking up this very
important issue.
I am an associate professor of law and public health at the
Harvard University School of Public Health. The chairman gave a
little bit about my background, so I won't say much more about
it. I've been conducting research on the malpractice system and
on medical injury for about 10 years. In the mid-1990s, I was
part of a research group at the Harvard School of Public Health
that did work in Utah and Colorado to try to estimate the
incidence of medical injury there. That work, together with our
earlier work in New York formed the basis of the Institute of
Medicine's 2000 report on medical error, ``To Err is Human.''
I believe that patients stand to benefit from improvements
to the way the legal system compensates and prevents injury. I
also believe that real improvements in this area depend on
moving the policy discussion, as this committee is doing,
beyond the debate over the pros and cons of traditional tort
reforms like caps on damages, screening panels, attorney fee
limits.
What these traditional reforms will achieve is
controversial and hotly disputed, including in this place.
However, two things that they will not achieve are relatively
clear and I would submit beyond serious debate. They will not
make healthcare safer, and they will not grapple seriously with
several fundamental problems that the system has. Those are
different goals, and they call for more creative solutions.
Last month, the New England Journal of Medicine published
results of a study by my research group on the performance of
the malpractice system. Our study involved review of about
1,500 medical records and claims files from five liability
insurers. We tackled two main questions: How often did
malpractice claims lack merit, and How often did claims which
lacked merit receive compensation?
What did we find? We found that nearly every claim involved
some kind of injury from medical care, but about a third of
these injuries could not be linked to errors in the care. In
resolving the claims, the system got it right about three-
quarters of the time; that is, about three out of four claims
that lacked merit were denied compensation, while three in four
meritorious claims got paid.
Now, one conclusion from the study is that the malpractice
system appears to be doing a reasonable job in the task of
directing compensation to the right claims. To infer that
study's message is that the liability system is working well,
however, as a number of commentators have done, is simply not
correct. Compensating litigated claims correctly is one item in
the overall systems scorecard. There are other important items,
and looking at the whole picture shows up some troubling
issues. I want to very briefly touch on four of those issues
that have emerged from our recent work, our previous work, and
also from the work of other researchers across the country over
the last 20, 25 years.
Problem No. 1, the process is just simply too costly.
Resolving malpractice claims is an expensive business. Our
recent study suggests that for every dollar paid in
compensation to plaintiffs, 54 cents goes toward administrative
costs; that is, the costs of lawyers, experts, insurers, and so
forth, and there are other studies to support a figure in that
range.
Compared to other compensation systems, this is a
tremendously high overhead rate. The equivalent figure for
workers compensation schemes, for example, is generally in the
20 to 30 percent range. For many disability insurance schemes,
it runs as low as 10 to 15 percent. The National Vaccine
Compensation Program spends around 15 percent of its budget on
administrative expenses and attorneys' fees. The system is also
slow, taking 4 to 5 years on average to resolve claims.
Problem No. 2, many patients who sustain injury due to
negligent care don't get compensated. In fact, this is true for
the vast majority of them. Only a tiny fraction of negligently
injured patients, about 3 to 5 percent, based on our research
in New York in the eighties and in Colorado in the nineties,
will have any contact with the legal system at all. The rest
either don't know they've suffered an injury or are unable to
navigate their way through the system. Consequently, they must
shoulder the financial burden themselves.
Now, in debating the merits of tort litigation and juries,
I would urge the committee not to lose sight of this invisible
population, literally thousands of people who suffer
preventable injuries every year and don't get help. The current
system doesn't serve them well. To be effective, reformers will
need to link more of them with compensation.
And I might digress for a moment and say what about juries.
I don't consider juries to be one of the chief vices of the
current system, and the reason is because of a couple of very
important statistics: we think that there are about 60,000
malpractice claims closed in the country every year. Now, about
3,000 to 4,000 of those will go before a jury, so for the rest,
55,000, 56,000 claims a year are resolved out of court.
Now, it is very important that the system work well for
that large body of claims, and I would urge discussion around
this issue not to hold the interests of the many hostage to the
interests of a few when there are questions, in fact, about how
well juries, patients, and plaintiffs sometimes--Professor
Vidmar will talk about the ways in which juries are not biased
in favor of plaintiffs, and I would readily agree with much of
what he has to say. I worry about the opposite, that they, in
fact, are biased against plaintiffs, and this is the other
statistic which I would urge the committee to consider:
plaintiffs lose four in five jury verdicts. They don't do well
in front of juries, and we need a system that will ensure that
they do well, however their claim is resolved.
Problem No. 3 is defensive medicine. That's been discussed,
so I won't go into it in any depth. We don't really know how
prevalent defensive medicine is. There are not good statistics
on that. We don't really know what its health impact is, and we
don't know how much it costs, but there is solid evidence that
it exists, and a number of studies have suggested that its
adverse impact may be quite substantial.
Problem No. 4, our liability system is not terribly
compatible with quality improvement and transparency about
error. This friction here between the malpractice litigation
system and healthcare system efforts to improve quality and
safety; trial attorneys believe that the threat of litigation
is needed to make doctors accountable and make doctors think
seriously about safety. Physicians and most patient safety
experts think it has the opposite effect.
Randall Bovbjerg has called this a problem of two cultures.
Which culture is right? This is the subtext, I would suggest,
in the ongoing debates between organized medicine and much of
the trial bar. In the absence of evidence from alternative
approaches to compensating medical injury, this is surely an
unending and unwinnable debate. Do injured patients do better
in healthcare environments where adversarial tort litigation
governs access to compensation? Or do they do better under
alternative arrangements? We simply do not know the answer to
that question, but we could find out. Innovative demonstration
projects would help us find out.
So I would suggest there is a need for reforms that address
these four problems. I believe that real and lasting
improvement in the system depends on it. The reforms should
have the following central goals: make compensation more
accessible to patients who are injured by preventable medical
errors; make the process faster and cheaper; ensure more
accurate and reliable decisions, more accurate and reliable
than we already have; and strive to make the system less
threatening to doctors if possible and compatible with
transparency about errors.
I believe that demonstration projects at the State level to
evaluate alternatives to medical tort litigation are a very
good place to start. How successful they are and how well they
deliver on the goals I mentioned will depend on the details of
their design.
With support from the Robert Wood Johnson Foundation and in
collaboration with Common Good, our research group at Harvard
has been working on the design of an alternative structure, one
that has the potential to deliver on the goals I enumerated and
to address these key shortcomings that I've mentioned. There's
a draft of that. It is a work in progress, but there is a draft
of that, and we hope it might be useful to States that take up
this type of experiment if, in fact, legislation is passed that
allows them to do that.
In summary, the key design features of the model we outline
are a focus on preventability rather than negligence; a
nonadversarial structure with an administrative law judge in
charge of compensation decisions to be made on the basis of
advice from a neutral panel of medical and scientific experts;
and ties to other agencies and actors engaged in patient safety
improvement activities.
For the model to work properly, I believe that it must
operate as an exclusive avenue for compensation among patients
and doctors who are covered by the program. Allowing opt-ins or
opt-outs after an injury has occurred would undercut the
program's ability to make a difference.
So in conclusion, besides health courts, there are a
variety of other innovative alternative dispute resolution
mechanisms. Some have been mentioned. There's the early offer
program, which has the potential to avoid the passion play of
litigation, and in general, I think that these ADR approaches
are good. I think they're less ambitious than health courts,
and in my opinion, they do not carry quite the same potential
for broad system improvement. Nonetheless, I think reducing the
time and cost would be a valuable step forward.
There are many unknowns about how well these alternatives
such as health courts and early offers will work, but they have
tremendous promise. Therefore, I think the appropriate next
steps are launching demonstration programs and carefully
evaluating how well these models have performed relative to
tort litigation.
[The prepared statement of Mr. Studdert follows:]

Prepared Statement of David Studdert, LLB, ScD, MPH

SUMMARY

I believe strongly that patients in the United States would benefit
from improvements to the way the legal system compensates and prevents
medical injury. I also believe that real improvements in this area
depend on moving the policy discussion beyond debate over caps on
damages.
One of the perplexing aspects of the tort reform debates of recent
years is that they rarely engage over the system's true failings.
Instead, they tend to fixate on the pros and cons of damages caps and
other traditional tort reforms, and ponder what these reforms might
accomplish. Even if these reforms are highly successful in
accomplishing their objectives--namely, reducing the number of claims,
the size of payments, and growth over time in the premiums physicians
pay for liability insurance--they will not make healthcare safer, nor
will they grapple seriously with the medical liability system's
fundamental problems. Those are different goals that call for more
creative solutions.
What are the medical liability system's fundamental problems? There
are good reasons to criticize the system's performance, but it is
important to do so for the right reasons. The diagnosis matters because
it informs the treatment. A considerable body of empirical research
into the workings of the medical malpractice system has highlighted the
following three problems as especially troubling:

1. Many patients who sustain injury that is both severe and
preventable do not receive compensation.
2. The process of deciding whether a claim is compensable is too
slow and expensive.
3. The threat of litigation provokes defensive medicine, but does
not stimulate improvements in the quality of healthcare services.

An alternative to medical malpractice litigation that focused on
preventable injuries (rather than negligence and provider fault) and
was nonadversarial (with an administrative body making compensation
decisions with advice from neutral experts) has tremendous potential to
address these ills. It could achieve significant advances in making:

Compensation more accessible to patients who sustain
preventable injuries;
The process of determining eligibility for compensation
faster and cheaper;
Compensation decisions more accurate and reliable (ideally
through incorporation of the best available clinical evidence into
decisionmaking);
Assessments of damages more accurate and reliable; and
The system less threatening to doctors, while encouraging
transparency about errors.

Much is unknown about how well such an alternative would work.
Therefore, the appropriate next steps are the launching of
demonstration programs followed by careful evaluation to assess how
well the alternative models perform relative to tort litigation. If
States are given latitude and incentives to do this, and the
alternative models are carefully and thoughtfully designed with the
interests of injured patients as their guiding principle, there is
tremendous potential to address the current system's fundamental
shortcomings and provide patients in the United States with a better
system for compensating medical injuries.
______

Thank you for the opportunity to testify before you today on new
strategies for improving the medical liability system in the United
States. I am honored to be here, and I commend the committee for taking
up this important issue.
I am Associate Professor of Law and Public Health at the Harvard
School of Public Health. I am a lawyer and health services researcher.
I have been conducting research on medical injury and the malpractice
system for more than 10 years. In the mid-1990s, I was part of a
research group at the Harvard School of Public Health that investigated
the incidence of medical injury in Utah and Colorado. Findings from
this work, together with the group's early work in New York, formed the
basis of the Institute of Medicine's 2000 report on medical error, To
Err is Human.
I believe strongly that patients in the United States would benefit
from improvements to the way the legal system compensates and prevents
medical injuries. I also believe that real improvements in this area
depend on moving the policy discussion beyond debate over the pros and
cons of caps on damages. Although there has been a good deal of
consideration of malpractice reform in Congress and State legislatures
over the last few years, damages caps and other conventional tort
reforms (e.g., screening panels, attorney fee limits) have tended to
dominate the discussion.
How well these conventional reforms work is controversial. The
empirical research evaluating their efficacy has produced conflicting
results.\1\ A generous interpretation of the results might concede that
a few (but not most) of these reforms return modest gains on their
objectives--namely, reducing the number of claims, the size of
payments, and growth over time in the premiums physicians pay for
liability insurance. What is clear about conventional tort reforms such
as damages caps, however, is that they will not make healthcare safer,
nor will they grapple seriously with the medical liability system's key
problems. Those are different goals that call for more creative
solutions.
In the first part of my testimony, I will outline a series of
problems with the performance of the medical liability system--problems
that, in my view, have been established as important and enduring
beyond any reasonable doubt by empirical research over the last 30
years. I will begin by reviewing findings from a recent study by my
research group at the Harvard School of Public Health. In the second
part of my testimony, I will discuss some promising reforms, including
ones currently before Congress, and their potential impact.
findings from recent harvard study of the malpractice system
Last month the New England Journal of Medicine published the
results of a study I conducted, with collaborators from the Harvard
School of Public Health and the Brigham and Women's Hospital, on the
performance of the medical malpractice system.\2\ The findings
generated considerable media interest, especially in the press. What
did we find? That may depend on which story you happened to read.
Some outlets ran headlines like, ``Most malpractice claims are
legitimate, study says.'' Others announced, ``Study asserts many
medical malpractice suits groundless.'' The American Medical
Association's response began, ``Today's study is proof positive that
meritless medical liability lawsuits are clogging the courts . . .''
The Association of Trial Lawyers for America (ATLA) declared, ``New
study shows courts not clogged with frivolous medical malpractice
lawsuits.''
These reactions are not surprising. The warring parties--typically
the medical profession and their liability insurers versus the
plaintiffs' bar and various consumer advocacy groups--are prone to
extreme claims about the system's vices and virtues. Often, these
claims are little more than partisan rhetoric, unsupported by hard
evidence about how the system actually performs. Even when that
evidence is at hand, each side tends to spin it to their own advantage.
What did we find? Our study involved review of nearly 1500
malpractice claim files from 5 liability insurers. Claim files consist
of documents gathered by defense insurers during the life of the claim.
They include descriptions of the allegation and outline what happened.
They usually include the testimony of experts from both sides. Each
plaintiff 's medical record was also examined. The reviews were
conducted by specialist doctors whose training matched the clinical
issues in the claims.
The study addressed two questions: How often did malpractice claims
lack merit? And how often did claims which lacked merit receive
compensation? Claims were classified as lacking merit if the reviewer
determined that, in his or her clinical opinion, the plaintiff had not
sustained an injury attributable to medical error.
We found that nearly every claim involved some kind of injury from
medical care, but that about a third of these injuries could not be
linked to errors in care. In resolving claims, the system ``got it
right'' about three quarters of the time--that is, three in four claims
that lacked merit were denied payment while three in four meritorious
claims got paid.
Do these results represent a passing grade for the system or a
failing one? The answer depends partly on one's expectations going in.
Those who believe the system should attract only legitimate claims and
reject every single illegitimate one will see red flags. But these are
unrealistic expectations. Sometimes patients and their attorneys don't
understand what has happened. They know a serious and unexpected
adverse outcome has occurred, but not why, and litigation may be the
only way they can find out. Also, the reviewers felt that some error
judgments were ``close calls.'' It seems wrong to label such claims as
frivolous.
The bottom line from the study is that the malpractice system
appears to be doing a reasonable job in two specific aspects of its
performance: (1) it is not consistently or predominantly attracting
claims that are patently spurious; and (2) it is usually directing
compensation to meritorious claims and denying compensation to
nonmeritorious ones. These findings are supported by a number of other
previous studies which suggests that the malpractice system does okay
in ``sorting the wheat from the chaff.''
To interpret this pair of findings as indicating that the medical
liability system ``works,'' however, would be wrong. Compensating
litigated claims accurately is just one item in the system's overall
performance scorecard. There are other important items, and an
examination of evidence regarding the system's performance in these
areas paints a more sobering picture.
Three additional findings from our recent study point to
shortcomings that are both serious and well-documented in malpractice
research.

1. The process is too costly.

Resolving malpractice claims is an expensive business. Our findings
suggested that for every dollar paid in compensation to plaintiffs, 54
cents go toward administrative costs--that is, the costs of lawyers,
experts, insurers, and so forth. (A RAND investigation of the tort
system the mid-1980s found similar levels of administrative costs.\3\)
Compared to other compensation systems, this is a tremendously high
overhead rate. The equivalent figure for workers' compensation systems,
for example, is generally in the 20-30 percent range.\4\ For many
disability insurance schemes--public and private--it runs as low as 10-
15 percent.
If a more efficient system existed for determining eligibility for
compensation, the money currently absorbed by administrative costs
could be redirected toward compensation. A worthy target for that money
would be patients who experience medical injuries that are both severe
and preventable but don't receive a dime in the current system because
their claims never come forward. Thousands of patients each year face
this plight; it is a major problem to which I will return shortly.
Another telling feature of administrative costs in medical
malpractice litigation is where they get spent. Among the claims we
investigated in our recent study, 80 percent of the administrative
costs were absorbed in the resolution of claims that involved harmful
errors. In other words, most of the high overhead costs go toward
resolving legitimate claims, not unjustified aberrant claims. This
finding highlights the fact that the process of working through the
question of medical negligence in an adversarial framework is lengthy
and costly. It also suggests that reform efforts that focus on
whittling down the amount of frivolous claims will have limited
potential to reduce direct system costs. (Tallying the compensation and
administrative costs of claims without error, we estimated that
eliminating all of them would save no more than 13-16 percent of the
system's total direct costs.) Instead, major savings depend on reforms
that reconfigure the entire process in ways that improve efficiency in
handling reasonable claims for compensation.

2. Unpaid errors outnumber paid nonerrors.

Although the number of nonmeritorious claims that attracted
compensation in our study was fairly small, the converse form of
inaccuracy--claims with error and injury that did not receive
compensation--was substantially more common. One in six claims was an
unpaid error. Plaintiffs in such situations must shoulder the hardships
that flow from preventable injury.\5\ Moreover, unpaid errors among
litigated claims add to a larger phenomenon of underpayment generated
by the vast number of negligent injuries that never surface as claims
(see below).

3. Plaintiffs tend to do poorly in medical malpractice jury trials.

In a forthcoming paper, we have analyzed risk factors for the
discordant outcomes--that is, claims without errors that were paid and
claims with errors that were not paid--identified in our study.\6\ We
were particularly interested in whether claims involving unpaid errors
exhibited any distinctive characteristics.
We were somewhat surprised to find that one of the strongest
predictors of unpaid errors was resolution by jury verdict. The odds
that a claim involving error would be denied compensation were about 4
times higher in cases decided by juries. This finding held even after
controlling for some of the other factors that may have made claims
that went to trial different from their out-of-court counterparts. (For
example, litigation theory suggests that cases that proceed to trial
will involve closer calls about whether negligence occurred, so we
controlled for case complexity in our analyses).
What does this finding mean in the real world? It means that,
contrary to the popular wisdom, juries tend to be tough on plaintiffs.
Jury trials are an important part of our civil justice system in many
respects: they help set acceptable standards of care; they are free
from the influences of governments, businesses, and special interests
(in theory, at least); and they are truly democratic institutions.
However, none of these virtues should be confused with the evidence
that plaintiffs in malpractice litigation do not do well in front of
juries. Malpractice claims data indicate that plaintiffs lose about
four in five trials. Moreover, for plaintiffs who do win, trials are an
expensive way to obtain compensation because the substantial costs
incurred by plaintiff 's lawyer in moving the litigation to this point
are borne by the successful plaintiff, removed from their award through
contingent fees.
Finally, and perhaps most important to keep in mind evaluating
different reform options, the vast majority of medical malpractice
claims will not go before a jury. National statistics suggest that only
about 5-10 percent of claims reach trial, and this statistic has held
fairly steady over time. In other words, approximately 55,000 of the
60,000 patients who seek compensation for medical injuries each year
will resolve their claims out of court. It is imperative that the
system work well for them. Therefore, in designing and choosing among
reforms, we should be careful not to hold the interests of the many
hostage to the interests of the few, especially when serious questions
surround how well the interests of the few are served by the current
system.

PROBLEMS IDENTIFIED IN OTHER RESEARCH

The insights into the malpractice system that flow from our recent
study join those from other empirical research that has assessed how
well the system performs in its various functions. By and large, the
picture is not a positive one. Three shortcomings stand out.

1. Many patients who sustain preventable injury don't get compensation.

Although the spotlight usually shines on the malpractice system's
excesses, the reality is that the vast majority of patients who sustain
injury due to negligence never sue and never receive compensation. Only
a tiny fraction of patients injured seriously by medical care--about 3-
5 percent based on our research in New York in the 1980s and Utah and
Colorado in the 1990s--will have any contact with the legal system.\7\
The rest either do not know they have suffered injury, or are unable to
navigate through the system to get their claim filed and paid.
Consequently, these patients must shoulder considerable financial and
personal burdens.
Policy debates and research (including our own) tend to focus on
how well the system does in compensating patients who step forward with
legitimate claims. However, we should not forget the thousands of
injured patients who are invisible. The current system does not serve
them well. To be effective, reforms will need to link more of these
patients with compensation.

2. Defensive medicine is a problem.

Defensive medicine refers to changes in the way care is delivered--
the ordering of unnecessary tests, for example, or ceasing to perform
high-risk procedures--which are motivated by fear of litigation, rather
than good medical practice. It is not known with any reasonable degree
of certainty how prevalent defensive medicine is, what its health
impact is, or how much it costs the healthcare system. But there is
solid evidence that it exists, and its adverse impact may be very
substantial.\8\ Our recent research in Pennsylvania suggests that
doctors in specialties like orthopedic surgery and obstetrics are
especially prone to this behavior, and that it gets worse during so-
called ``malpractice crisis'' periods.

3. Our liability system is incompatible with quality improvement and
transparency about error.

There is friction between malpractice litigation and the quest to
improve the quality and safety of medical care.\9\ Trial attorneys
believe that the threat of litigation is needed to make doctors
accountable, and that it ultimately makes doctors practice more safely
(even though most empirical research has not found evidence of such a
deterrent effect.\10\) Physicians do not believe the litigation
contributes to the quality of care.\11\ On the contrary, they argue
that the malpractice system threatens quality, both by chilling
interest in openness and quality improvement activities and by
stimulating the kind of defensive medical practices described above.
Hospital executives appear to share this view, an outlook exemplified
by the fact that many hospitals continue to conceive of risk management
and quality improvement as substantively different enterprises.
Randall Bovbjerg has aptly called this a problem of two
cultures.\12\ Tort law's punitive, individualistic, adversarial
approach is antithetical to the nonpunitive, systems-oriented,
cooperative strategies espoused by patient safety leaders. Litigation
entails secrecy and blame, whereas modern quality improvement
strategies demand transparency and focus on systems of care, not
individuals.
Which culture is right? This is the subtext in ongoing battles
between organized medicine and the trial bar. In the absence of
evidence from alternative approaches to compensating medical injury,
this is surely an unending and unwinnable debate. Do injured patients
do better in healthcare environments, where adversarial tort litigation
governs access to compensation, or do they do better under alternative
arrangements? We simply don't know, but we could learn. The time to
test reforms that help us to find out is past due.

NEW REFORM OPTIONS

In summary, the medical liability system is plagued by five
fundamental problems: (1) the process is too slow and costly; (2) many
patients with severe injuries miss out on compensation, sometimes
because their legitimate claims are not paid but much more often
because they are unaware of their injury or are unable to bring a
claim; (3) juries do not decide the vast majority of claims, and when
they do, plaintiffs usually lose; (4) defensive medicine drives up
costs and reduces quality; and (5) the current system is in tension
with goals of quality improvement and transparency about error.
This set of problems strikes the malpractice system at its core.
They cannot be addressed by tweaks. Damage caps are a tweak. The same
is true of screening panels, which aim to weed out illegitimate claims
at an early stage. (Incidentally, studies consistently find that these
panels don't save much.)
What is needed are reforms that grapple seriously with the system's
fundamental problems. The goals should be to make:

I believe that State demonstration programs to evaluate
alternatives to medical tort litigation are a good idea. How promising
and successful these alternatives are will depend on their design
features.
With support from the Robert Wood Johnson Foundation, our research
group at the Harvard School of Public Health, in collaboration with
Common Good, has been working on the design of an alterative structure
that has the potential to deliver on the goals enumerated above and
address the current system's key shortcomings. We have sketched out the
structure of what we believe is a promising ``health court'' model. The
design was informed by extensive consultation with stakeholder groups.
It is described in the attached document (Appendix A).
In summary, the key design features of the model we have outlined
are: (1) a focus on preventability, as opposed to negligence or fault,
as the central criterion for determining eligibility for compensation;
(2) a nonadversarial structure, with an administrative decisionmaking
body in charge of compensation decisions to be made on the basis of
advice from a neutral panel of medical and scientific experts; and (3)
ties to other agencies and actors engaged in patient safety improvement
activities.
If legislation were passed allowing demonstration projects to go
forward, we hope this model will be useful to States that become
interested in testing an alternative approach.
Besides health courts, there are a variety of innovative
alternative dispute resolution (ADR) approaches that warrant serious
consideration. ADR approaches have the potential to avoid the passion
play and cost of full-blown litigation, and in so doing they promise
returns on a number of the goals set forth above. The ADR approach that
has enjoyed the widest appeal in recent years is the ``Early Offer''
program, in which patients and the healthcare organization would have
incentives to negotiate private settlements immediately after an event
occurs.\13\ Such a program is less ambitious than health courts and, in
my opinion, does not carry the same potential for broad system
improvement. Nonetheless, contracting the time and cost of litigation
in this way would be a valuable step forward.
Much is unknown about how well alternatives to traditional
malpractice litigation will work. Therefore, the appropriate next steps
are the launching of demonstration programs followed by careful
evaluation to assess how well the alternative models have performed
relative to tort litigation.

CONCLUSION

One of the perplexing aspects of the tort reform debates of recent
years is that they rarely engage over the system's true failings.
Instead, they tend to fixate on the damages caps and other traditional,
oft-tried reforms. From a long-term, system-wide perspective, the
problems these reforms seek to solve are quite narrow.
There are good reasons to criticize the system's performance, but
it is important to do so for the right reasons because the diagnosis
informs the treatment. To be effective, reforms must tackle the core
problems. The considerable body of research into the workings of the
medical malpractice system's over the last 30 years has highlighted the
following three problems as particularly serious:

Alternative approaches to compensating medical injury, such as the
health court model, have the potential to improve performance in each
of these areas and provide patients in the United States with a better
system for compensating medical injuries.

REFERENCES

1. Mello MM. Medical malpractice: impact of the crisis and effect
of State tort reforms. Research Synthesis Report No. 10 (Princeton, NJ:
The Robert Wood Johnson Foundation, 2006).
2. Studdert DM, Mello MM, Gawande AA, Gandhi TK, Kachalia A, Yoon
C, Puopolo AL, Brennan TA. Accuracy of the medical malpractice system:
relationship between claims, errors, and outcomes of litigation. N Engl
J Med 2006;354:2024-33.
3. Kakalik JS, Pace NM. Costs and compensation paid in tort
litigation. R-3391-ICJ. Santa Monica, CA: RAND, 1986.
4. Weiler PC, Hiatt HH, Newhouse JP, Johnson WG, Brennan T, Leape
LL. A measure of malpractice: medical injury, malpractice litigation,
and patient compensation. Cambridge, MA: Harvard University Press,
1993; Bovbjerg RR, Sloan FA. No-fault for medical injury: theory and
evidence. U Cincinnati Law Rev 1998;67:53-123.
5. Johnson WG, Brennan TA, Newhouse JP, Leape LL, Lawthers AG,
Hiatt HH, Weiler PC. The economic consequences of medical injuries.
Implications for a no-fault insurance plan. JAMA 1992;267:2487-2492;
Thomas EJ, Studdert DM, Newhouse JP, Zbar BI, Howard KM, Williams EJ,
Brennan TA. Costs of medical injuries in Utah and Colorado. Inquiry
1999;36:255-264.
6. Studdert DM, Mello MM. Predictors of discordant outcomes in
medical malpractice litigation (unpublished manuscript, 2006).
7. Localio AR, Lawthers AG, Brennan TA, Laird NM, Hebert LE,
Peterson LM, Newhouse JP, Weiler PC, Hiatt HH. Relation between
malpractice claims and adverse events due to negligence. Results of the
Harvard Medical Practice Study III. N Engl J Med. 1991;325:245-51;
Studdert DM, Thomas EJ, Burstin HR, Zbar BI, Orav EJ, Brennan TA.
Negligent care and malpractice claiming behavior in Utah and Colorado.
Med Care 2000;38:250-260.
8. Kessler D, McClellan M. Do doctors practice defensive medicine?
Q J Econ 1996;111:353-390; Studdert DM, Mello MM, DesRoches CM, Peugh
J, Zapert K, Brennan TA, Sage WM. Defensive medical practice by
physicians at high risk of malpractice litigation. Journal of the
American Medical Association 2005;293:2609-2617.
9. Studdert DM, Brennan TA. No-fault compensation for medical
injuries: the prospect for error prevention. JAMA 2001;286:217-223.
10 Mello MM, Brennan TA. Deterrence of medical errors: theory and
evidence for malpractice reform. Tex Law Rev. 2002;80:1595-1637.
11. Lawthers AG, Localio AR, Laird NM, Lipsitz S, Hebert L, Brennan
TA. Physicians' perceptions of the risk of being sued. J Health Polit
Pol Law. 1992;17(3):463-82.
12. Bovbjerg RR, Miller RH, Shapiro DW. Paths to reducing medical
injury: Professional liability and discipline vs. patient safety--and
the need for a third way. J Law Med Ethics 200 Fall-Winter;29:369-80.
13. O'Connell J. Offers that can't be refused: foreclosure of
personal injury claims by defendants' prompt tender of claimants' net
economic losses. Northwestern Law Rev 1982;77:589-632; Office of the
Assistant Secretary for Planning and Evaluation, Department of Health
and Human Services. Addressing the New Health Care Crisis: Reforming
the Medical Litigation System to Improve the Quality of Health Care.
March 3, 2003.

APPENDIX A

Design of a ``Health Courts'' System Demonstration--Executive Summary
(draft)

BACKGROUND

The Harvard School of Public Health and the advocacy organization
Common Good have been working to develop a proposal for the design and
operation of ``health courts''--special courts for resolving medical
injury cases and compensating injured patients. This document
summarizes the current proposal. The proposal is a work in progress,
and will continue to evolve as we conduct research and testing of
particular aspects of the system design.\1\
---------------------------------------------------------------------------
\1\ The Harvard School of Public Health and Common Good are
conducting this work during 2005-2006 with the support of the Robert
Wood Johnson Foundation, the Commonwealth Fund, and the Harvard Program
on Health System Improvement.
---------------------------------------------------------------------------
The Harvard-Common Good proposal starts from the point that
America's medical liability system works poorly for both providers and
patients. Substantial and growing malpractice insurance premiums strain
physicians and hospitals, threatening access to health services in some
areas. The system compensates few injured patients, and has very high
administrative costs. As the Institute of Medicine has noted, it also
adversely impacts healthcare quality, by discouraging reporting of
information about errors and near misses in treatment.
Notwithstanding the substantial and well-documented failings of the
current system, little political consensus for reform has developed. To
the contrary, debate over medical malpractice reform remains very
polarized, with most Republicans vocally calling for caps on
noneconomic damages and most Democrats equally vocal in protesting that
caps will hurt injured patients. Fresh policy approaches to malpractice
reform are needed, and health courts offer a new, bipartisan approach.

ELEMENTS OF THE HEALTH COURTS PROPOSAL

As currently envisioned, health courts would include the following:

Trained judges with expertise in adjudicating medical
malpractice disputes. These judges would consult with neutral medical
experts to determine the standard of care in medical injury cases.
Health court judges would issue written rulings of their decisions.
Compensation decisions based on ``avoidability,'' a
standard that is broader than negligence but does not approach strict
liability. In essence, injuries would be compensated if they could have
been avoided if care had been provided according to best practice. This
differs from the negligence standard, which focuses on whether care
fell below customary practice.
Evidence-based guidelines to aid decisionmaking. Medical
experts and key stakeholders would review the best available scientific
evidence about how adverse events occur and the extent to which they
are preventable, and develop compensability recommendations for health
court judges to apply. Clear-cut cases would be fast-tracked for
compensation, and efforts would be made to encourage early offers of
compensation.
Predictable damages paid to claimants. A schedule of
noneconomic damages would specify a range of values for specific kinds
of injuries.
Patient safety improvements facilitated by the system.
Information from the adjudication process would be made available for
root cause analyses, and standard event reporting would facilitate
development of preventive practices.

KEY DESIGN CHOICES

State policymakers interested in implementing health court pilot
projects face a number of design choices with respect to jurisdiction,
selection of judges and experts, and a range of other issues. The
following table summarizes the most significant of these choices, and
offers the current Harvard-Common Good recommendation.

------------------------------------------------------------------------
Current
Design Choice Options Recommendation
------------------------------------------------------------------------
Jurisdiction.................... 1. Federal A voluntary
mandatory system. demonstration
2. Statewide project covering
mandatory system. only medical
3. Voluntary, malpractice
insurer-based claims will
state likely be most
demonstration feasible. Federal
project. demonstrations
4. Possibility of through Medicare
covering medical may also be
malpractice possible. Claims
claims, or involving
broader scope of obstetrics and
coverage. anesthesia may be
particularly
appropriate
starting points
for demonstration
projects.
Decisionmakers and Experts...... 1. Expert panel at Resolution of
the involved claims should
hospital or begin with an
insurer, internal review
operating under at the involved
regulatory hospital or
oversight. insurer by an
2. Administrative expert panel
law judge using decision
supported by aids and
independent schedules to make
medical experts. early offers of
3. State-appointed compensation. If
judge with the internal
medical expertise. review did not
4. A combination lead to
of the above. resolution, then
an administrative
law judge would
make the
determination in
the health court,
assisted by
neutral experts
with appropriate
expertise.
Compensation Standard........... 1. Strict The avoidability
liability: all standard is
treatment desirable because
injuries are it reduces the
compensated. emphasis on
2. Avoidability: individual fault
injuries are and acknowledges
compensated if the role of
they were caused system failures
by treatment (or in contributing
lack of to injuries. To
treatment) and help define
they could have avoidable events,
been avoided had experts will
best practices generate a series
been followed. of ``accelerated-
compensation
events'.
Compensation
decisions will be
recorded in a
searchable
database that
health court
judges can refer
to in future
cases.
Claims Process.................. 1. Administrative Many cases will be
review of deemed eligible
relevant for compensation
documents. based on an
2. Live hearing... administrative
3. Combination of review of the
the above. medical record.
Disputed cases
will proceed to a
live hearing,
similar to an
administrative
law hearing.
Claimants may,
but need not, be
represented by an
attorney.
Damages......................... 1. Based on past Economic damages
jury awards. will be paid in
2. Scheduled...... full. Non-
economic damages
should be limited
to maximize the
predictability of
the system and
contain costs.
Noneconomic
damages will be
paid according to
a schedule tied
to severity of
injury and based
on decision
science research
about utility
losses and public
deliberation
about reasonable
compensation.
Collateral source
offsets and
restrictions on
subrogation will
also help to
control costs.
Appeals......................... 1. Judicial review A high standard of
if health court review--such as
judge's decision the ``arbitrary
was ``arbitrary and capricious''
and capricious''. standard--will be
2. Judicial review cost-minizing and
based on consistent with
``substantial the standard used
evidence'' in other appeals
standard. of administrative
agency decisions.
Financing....................... 1. Financed Financing through
through general the existing
tax revenues insurance system
(social insurance with state
model). assistance for
2. Financed start-up and
through existing administrative
private insurance expenses will
arrangements, likely be most
with state desirable. With
assistance for experience
start-up and rating, strong
administrative incentives can be
costs. provided for
organizational
safety
improvement. Fees
paid to attorneys
representing
claimants should
be based on a
multiple of hours
worked rather
than a
contingency.
Relationship to Patient Safety 1. A single agency Each of these
Initiatives. processes claims elements are
and is desirable.
responsible for
patient safety.
2. De-identified
information from
the adjudication
process is shared
with patient
safety regulatory
bodies, research
entities, and
quality
initiatives,
including JCAHO,
NCQA, Leapfrog,
and others.
3. Claims
information is
provided to
hospitals.
4. Drug/device
information is
shared with the
FDA..
------------------------------------------------------------------------

For more information about the health court proposal, please
contact Paul Barringer at Common Good [[email protected], or 202-
483-3760, x11].
Health Courts Proposal Skeleton (Version Date: 10/17/05)

CORE PRINCIPLES

1. Compensation decisions are made outside the regular court system
by trained adjudicators. An explicit record of decisionmaking is kept
in order to provide greater clarity in key areas (for example, expected
levels of compensation, what constitutes acceptable/optimal care) to
improve reliability of decisionmaking.
2. Compensation decisions are based on a standard of care that is
broader than the negligence standard, but does not approach strict
liability.
3. Compensation criteria are ``evidence-based,'' in the sense that
they are grounded in experts' interpretations of the leading scientific
literature. To the maximum extent feasible, compensation decisions are
guided by ex ante determinations about the preventability of common
medical adverse events made through a process of deliberation and
review of scientific evidence involving clinical experts and other key
stakeholders. Certain kinds of injuries would be ``fast-tracked'' for
expedited compensation.
4. Guidelines for compensating both economic and noneconomic losses
are created for the system and applied to each claim that is judged
eligible for compensation. Valuations of noneconomic damages are made
using methods that are explicit, rational, and consistent.
5. De-identified information from the adjudication process is made
immediately available to caregivers for root cause analysis and
development of preventive practices. Information is also extracted from
standardized event reporting for epidemiological analysis to understand
new prevention strategies.

KEY DESIGN CHOICES

1. Jurisdiction. Define the range of covered disputes, including
the scope of the demonstration project (government versus
institutionally based; all clinical areas or select clinical areas) and
the mandatory or voluntary nature of the system.
2. Decisionmakers and the role of experts. Explore qualifications
for ``judges'' and possible appointment processes. Explore methods for
using rulings on standards of care and compensation to provide guidance
to stakeholders going forward. Consider merits of designated panels of
experts from which judges can draw in each case. Define qualifications
for experts, possible compensation structure, and appointment process.
3. Claims process. Critically review the experiences of other
compensation systems, including procedural and structural methods for
increasing efficiency and reducing administrative costs. Understand the
method of disclosure used in countries with existing administrative
systems for medical injury compensation. Outline possible streamlined
procedures and timetable to final decision. Design appropriate notice
and consent procedures for patients covered by the system.
4. Compensation standard. Define and operationalize the
compensability standard. To the extent possible, pre-designate common
adverse events as compensable or noncompensable based on expert
consensus.
5. Damages. Select structures for determining economic and
noneconomic damages.
6. Appeal. Determine the scope of appeal rights and possible
structures for hearing appeals of the administrative health court's
decisions.
7. Financing. Determine how the system, including administrative
costs and claims costs, will be funded. What relationship will it have
with existing forms of liability insurance and the institutions that
write this insurance?
8. Relationship to other patient safety structures. Integrate the
system with other structures designed to promote patient safety, in
particular with hospital and medical group efforts to undertake root
cause analyses, and State or Federal reporting facilities to identify
epidemiological insights into patient safety. As well, outline the
future roles for the State medical licensure boards, and the National
Practitioner Data Bank.

PROPOSALS AND ALTERNATIVES

1. Jurisdiction
a. Administration
Alternatives.--(1) Federal mandatory system; (2) Statewide
mandatory system; and (3) State demonstration project with voluntary
participation of one or more liability insurers or hospitals.
Current recommendation.--A voluntary demonstration project is
probably most feasible as a starting point, although the possibility of
a Federal demonstration through the Medicare program is also worthy of
exploration. To some extent, political factors will determine the
choices made on this dimension of system design. At this point, there
might be some interest in a Medicare program that would serve all
Medicare beneficiaries. Alternatively, the Congress might make funds
available for a State demonstration. States will likely be more
comfortable with an approach in which insurers/provider organizations
elect to participate, rather than one in which participation is
mandatory statewide. This is the approach chosen by the inter-
governmental working committee in Pennsylvania currently exploring the
feasibility of a pilot administrative compensation program.
b. Covered Disputes
i. Nature of Claims
The demonstration project would cover ordinary medical malpractice
claims only. Intentional tort claims, medical product liability claims,
and mixed coverage/treatment claims against managed care organizations
would remain in the jurisdiction of the tort system.
ii. Clinical Areas
Alternatives.--(1) All clinical areas; (2) Select clinical areas
such as obstetrics and surgical/anesthesia.
Current recommendation.--If a demonstration project approach based
on voluntary participation is chosen, it would be possible to start
with just a few clinical areas in which the types, range, and causes of
adverse outcomes are relatively well understood. Ideally, we would also
like clinical areas that allow prospective consent on the part of the
patient, as the patient will have to be offered the opportunity to
participate. Anesthesia and obstetrics make the most sense based on
these two parameters. The claims arising from these two areas are
relatively homogeneous, and in many cases, there is ample time before
the event in which providers can seek informed consent from the patient
to participation in the demonstration project.
However, if an entire State, or the national Medicare system, opts
for a mandatory approach, it is probably not useful to start with a
partial approach, given the problem of boundary disputes.
2. Decisionmakers and the Role of Experts
Alternatives.--(1) A panel of medical and/or claims experts at the
involved hospital or insurer, operating under State oversight and with
discretion constrained by a legislative mandate to apply pre-
established decision aids and damages schedule; (2) An administrative
law judge who has no medical training, but who specializes in the
adjudication of medical injury claims, and who is supported by
independent medical experts; (3) A state-appointed judge with medical
expertise; and (4) A combination of #1 with #2 or #3.
Current recommendation.--The first level of review would be an
internal process at the involved hospital or insurer. This level of
review is not intended to be a neutral adjudicatory process, but rather
a formal mechanism for encouraging expeditious settlement of claims. A
panel of experts convened by the involved hospital or insurer would
review the event and, using decision aids and schedules make an early
offer of compensation within 4 weeks. This would be done in concert
with disclosure of the event by the caregivers. Counseling for patients
would proceed along the lines developed by the insurer COPIC (the ``3-
R's'' program) in an effort to resolve as many claims in this early
stage.
If the early offer did not lead to resolution, then a health court
hearing would be held on a prompt basis. As described in option 2
above, an administrative law judge who specializes in health court
claim adjudication would be assisted by medical experts with relevant
expertise who come from a panel constituted through volunteers or
selection by the court.
3. Claims Process
a. Locus of the System
Alternatives.--(1) Statewide, mandatory system; (2) Voluntary,
insurer-based program.
Current Recommendation.--This will be a political decision. A
statewide program would have fewer boundary issues, but would likely be
difficult to gain approval in a State legislature at present. The
latter would involve individual hospitals, or care systems, opting into
the program, along with their insurer (likely self-insurer) in an
enterprise liability format. We outline both below in detail in
Appendix 1.
b. Claimant Rights
Claimants would have full access to their medical records and the
right to be represented by an attorney, though representation would not
be needed in many cases as the health court process would be consumer-
friendly in design. The opinion of the hospital or insurer panel at the
first stage of review would also be part of the claim record available
to the claimant. Claimants would also have a right of appeal as
described in Section 6.
In the context of a system in which an initial decision about a
claim is made by the involved hospital or insurer, patients should have
access to any materials used in a peer-review investigation (as they do
under current law). In addition, since any peer-review committee report
would likely influence the decision made on the claim, patients should
also be able to access any sections of such a report that relate to
their own injury (a limited reduction in peer-review protection as
compared to present law).
4. Compensation Standard
a. Liability Rule
Alternatives.--(1) Strict liability for defined treatment outcomes
that are shown to be causally related to medical management; (2)
Avoidability, as determined by a general definition plus lists of
accelerated-compensation events (ACEs).
Current recommendation.--The notion of avoidability seems to be the
best choice. This criterion could be modified by additional criteria
based on the injury's severity, its rarity, or a focus on particular
types of outcomes (e.g. birth injuries).
Avoidable events are injuries that are caused by treatment (or
omission of treatment) and that could have been avoided had care been
provided according to best practice. In other words, an injury is
deemed avoidable if it might have been prevented had a better system of
care been in place. The decision as to whether the injury is avoidable
is made in light of the circumstances as known at the time care was
delivered.
To help define what events will be avoidable, a series of ACEs will
be generated. The ACEs lists will describe injuries that are
automatically deemed avoidable based on strong ex ante inferences about
the relationship between the treatment-outcome pair. Events that match
the specifications and clinical circumstances of an item on an ACE list
would be eligible for expedited compensation. The ACE lists would be
developed by an expert consensus process, relying on the best available
evidence.
The concept of avoidability occupies a middle ground between the
concepts of strict liability (in which all injuries caused by medical
care are compensable) and negligence (in which only those events due to
provider fault are compensable). To obtain compensation, claimants must
show that the injury would not have occurred if best practices had been
adhered to, but they need not meet the more exacting negligence
standard and show that a defendant acted as ``no reasonable
practitioner'' would have.
The avoidability standard is desirable because it moves away from
the notion of individual fault and the negative connotations that the
medical profession associates with negligence. It comports with the
notion of preventability, which is critical to the patient safety
movement's insistence on lack of blame. But it does not have the
onerous financial implications associated with a move to strict
liability. We recognize that delineating avoidable from unavoidable
events will not be straightforward in all situations. However, the
negligence distinction itself is not clearcut. Moreover, compensation
systems abroad have successfully made the avoidability/unavoidability
distinction in thousands of cases. In addition, the use of accelerated-
compensation events will facilitate appropriate decisionmaking.
b. Use of Guidelines
The system would incorporate guidelines and precedent by:

Recording compensability determinations made by the
administrative panels in a written decision and compiling decisions
into a searchable electronic database that can be accessed by
adjudicators in future cases involving similar injuries.
Preparing lists of accelerated-compensation events based
on expert reviews of the best available medical evidence about injury
causation, frequency, and preventability.

Current Recommendation.--Both developments are critical to an
efficiently functioning compensation system.
5. Damages
a. Economic Damages
Economic damages would be compensated in full except:

There might be a deductible period or out-of-pocket amount
(we suggest that eligibility begin when patients reach 4-6 weeks lost
work time or $3,000-$4,000 in medical expenses).
Payments would be made on a periodic basis.
Awards that include a future loss component would be re-
examined every few years.

Methods for valuing the different components of economic losses
would be based on those used in the tort system. The valuations would
be made by an expert employed by the decision panel, based on
information provided by the plaintiff. As outlined above, the insurer/
hospital would be subject to a financial penalty if it did not make a
damages assessment in good faith, with such a breach being determined
by reference to the extent of divergence insurer/hospital's offer and
the valuation subsequently made by the independent expert.
b. Noneconomic Damages
First, a matrix of levels of injury severity would be generated,
based on one of the following:

1. National Association of Insurance Commissioners' 199-point
disability scale;
2. AMA Guides to the Evaluation of Permanent Impairment;
3. Decision science research about utility losses associated with
different health states; or
4. Any of the above scales plus age categories.

Second, a dollar value range would be assigned to each cell in the
matrix. The adjudicator would select a value in the range depending on
the specific facts of the case compared to other like cases.
Alternatives.--(1) Values based on jury verdict data, with or
without an existing statutory cap.
(2) Values based on public deliberation about (1) reasonable
compensation for the various levels of noneconomic loss; and (2) what
the maximum total costs of the compensation system should be.
Current Recommendation.--Values should be based on decision science
research about utility losses and public deliberation about reasonable
compensation. Academic research into utility valuations can be used to
inform public deliberation.
c. Subrogation
Alternatives.--(1) Defendants in health court demonstrations pay
the full damages award and third party payers (e.g. health or
disability insurers) may exercise rights of subrogation. (2) Defendants
serve as secondary or tertiary payers paying the balance of damages
after contributions by collateral sources, and subrogation rights may
not be exercised by third party payers.
Current Recommendation.--Collateral source offsets and restrictions
on subrogation activities will help contain the costs of a health court
demonstration. Statutory amendments at the State level and possibly
also at the Federal level will be required, however, to preserve
defendants' status as secondary or tertiary payer. This is because
Medicare and Medicaid both enforce second payer rules of their own, and
the Employee Retirement Income Security Act may limit the ability of
States to place first-payer mandates on employment-based insurance
plans.
6. Appeal Standard
Alternatives.--(1) Judicial review based on ``arbitrary and
capricious'' standard. (2) Judicial review based on ``substantial
evidence'' standard.
Current Recommendation.--The judicial review is not intended to be
a de novo review. Anything but a rather high standard for review would
lead to large lawyering costs at the appeal level. Therefore, we
recommend an ``arbitrary and capricious'' standard for review from the
ALJ/appointed expert health court.
7. Financing
a. System Financing
Alternatives.--(1) Social-insurance model financed through tax
revenue from individual and/or corporate taxes. (2) Privately-financed
model utilizing existing insurance arrangements plus an annual
surcharge to the State to finance the administrative costs of the
system. An initial public appropriation would be required to cover the
costs of getting the system up and running.
Current Recommendation.--Privately-financed model with modest
annual surcharge for State administrative expenses. As noted above, the
financing would be based on an experience-rating system that gives
sharp incentives for improvement.
The participants would likely make participation contingent on some
protection against major losses in the early years of a demonstration
project. From an actuarial standpoint, the avoidability standard will
create an element of uncertainty that would limit voluntary
participation, especially if there were insufficient numbers of
participants to provide actuarial stability. Some type of stop-loss
guarantee from a re-insurance entity will be a key issue in securing
liability insurers' participation.
In a voluntary demonstration, large self-insuring systems might
choose to go wholly over to the new approach and underwrite based on
the avoidability standard. Commercial malpractice insurers might need
to set up a subsidiary to accommodate hospitals and physicians
interested in participating in the demonstration.
b. Attorney Fees
Because the health court system will be quicker and more efficient,
attorneys fees should be based on a multiple of hours worked rather
than a fixed percentage. This is fair to lawyers and will result in
patients keeping a much higher proportion of the damages.
8. Relationship to Other Patient Safety Structures
Alternatives.--(not mutually exclusive) (1) Create a single State
(or Federal) agency, the Administrative Compensation Agency (ACA),
which would have responsibility for both claims processing and
fostering safety improvement activities. (2) Share de-identified claims
data compiled by the ACA with other patient safety regulatory bodies,
including State offices of patient safety and the Joint Commission on
Accreditation of Healthcare Organizations, and research organizations;
and purchasing/quality initiatives such as the Leapfrog Group and NCQA.
(3) Share identifiable claims data organizations with responsibility
for physician discipline, licensure, and certification. (4) Feed
information on claims back to patient safety offices at hospitals. (5)
Share drug- and device-related information with the FDA.
Current Recommendations.--We suggest a combination of points #1,
#2, #4, and #5. We would suggest that the hospitals share de-identified
claims data with external patient safety organizations such as the
JCAHO. We would recommend that the State fund a claims database with
standard reporting and data fields which would facilitate
epidemiological analysis of the claims data by approved researchers.
Either a local staff, or experts identified through grants, would
analyze the data for new prevention strategies. We recommend that the
State fund at least a modest health court administrative staff to
maintain the database, liaise with researchers around data requests,
and disseminate analytical findings to hospitals and other healthcare
providers.
Information would also be fed back to patients safety teams at each
place of original occurrence so that they could undertake root cause
analyses at the same time that patients were being informed. This
marries the notion of disclosure to full information.
Additional specific recommendations include the following:

Patient safety activities.--In addition to relaying
critical and relevant information to the appropriate agencies, the
health court system administrative staff may undertake its own patient
safety improvement activities. Many of the current regulatory or
research organizations working to improve patient safety often can
issue only recommendations regarding best practices. In certain
instances where a more immediate benefit to patient safety and welfare
may be gained, consideration can be given to providing the health court
with the ability to require remediation or improvement in an underlying
contributing factor. Health court mandates for remediation or
improvement would be taken without placing blame on an institution or
provider and generally kept confidential. Disclosure would be made only
in circumstances of egregious patient harm or if there is a failure to
comply with a health court request. Potential patient safety activities
are provided.
Database maintenance.--For purposes of patient safety, the
health court administrative staff would maintain a database of all
claims filed and all claims paid. With the presence of proper patient
incentives for reporting, this database could serve as a repository for
information of all medical injury for covered providers. This database
would be searchable (many fields would be predetermined), permitting
epidemiological research and periodic reports on medical injury.
Medication- and device-related events.--The health court
administrative staff would be able to monitor for claims related to
medications and devices. Whether paid or not, claim patterns may
provide early warning on the dangers of medications and devices. If
related to specific products, notification could be provided to the
FDA.
Egregious professional misconduct.--In cases of egregious
provider misconduct, in which the health court determines that a risk
of significant harm continues to exist for other patients or that this
event was clearly outside of the bounds of professional behavior, the
health court may opt to notify the appropriate regulatory,
disciplinary, or licensing agency. Because the intent of this system is
to keep compensation decisions separate from decisions of
responsibility and blame, disclosure would be permitted only in narrow
circumstances where the danger to patient safety is clear, ongoing, and
significant.
Providers with multiple paid claims.--It may become
apparent to the health court that a certain provider (entity or person)
has a pattern of claims or repeated injury. In these circumstances, the
health court administrative staff may undertake an independent
investigation by reviewing all of the claims made. If the investigation
determines that the pattern rises to the level of egregious
professional misconduct, action may be taken as described above. If the
pattern of injury does not rise to that level, but demonstrates a need
for further training or, in the case of an entity, correction of a
certain practice or risk, the health court may order such remediation.
Reporting will not be made to a disciplinary or regulatory agency
unless the provider fails to comply with a request. Fines may also be
issued for repeated injuries for which the provider has been on notice
and has had sufficient time to remedy a contributing factor.
Nosocomial infections.--Due to patient incentives to file
claims, the health court administrative staff may be able to more
readily gather rates of nosocomial infection with significant patient
adverse outcomes. To encourage reporting of infections, the health
court could provide automatic or scheduled compensation for certain
types of infections which are considered highly preventable. If
repeated patterns are noted within a provider, action may be taken as
described above.
Prioritization of patient safety measures.--The health
court may help overcome the problem of prioritizing patient safety
measures. During investigations, questions regarding which specific
patient safety practices may have prevented the injury may be asked.
Practices could be taken from Leapfrog measures, NQF measures, AHRQ
practices, or JCAHO patient safety standards. Based on the data
gathered, recommendations could be made to individual institutions.
These recommendations may come with deadlines for implementation.
Provider-specific information.--At the request of a
healthcare organization, the health court administrative staff may
provide detailed claim and compensation information of that
organization compared with that of all other claims. This would permit
large organizations to initiate improvement activities in specific
areas and to learn from organizations with lower rates of injury.
Periodic publications.--The health court administrative
staff may periodically publish de-identified claims information for the
benefit of the public, researchers, providers, and/or payors. Some
examples are types and rates of injuries reported and percentages
compensated; relationships between volumes and rates of compensated
injury at medical centers; and rates of unexpected deaths.

Appendix One: Detailed Claims Process

STATEWIDE, MANDATORY SYSTEM (FIGURE 1)

1. When an adverse event occurs, the hospital makes an initial
determination whether the event falls within the class of adverse
events covered by the system. If so, the hospital is required by State
law to notify the patient and/or family of their right to seek
compensation under the system.
2. The patient or family files a claim with the hospital by
completing a simple form describing from their own perspective what
happened. Such forms are widely available at the point of care, and
displayed prominently. They have the option of involving legal counsel
if they wish, and they have the right to review their medical records.
3. The hospital is required to notify the health court system that
it has received a claim within the system's jurisdiction.
4. The hospital has responsibility to make an initial determination
on the disposition of the claim. An expert panel convened by the
hospital renders a judgment on the compensability of the event and with
claims adjusters' advice, makes an offer. This internal review is not
intended to be a neutral adjudicatory process, but rather a formal
mechanism for encouraging expeditious settlement of claims. The
decisionmaking process is guided by pre-established decision aids,
including a definition of avoidability and a compendium of accelerated-
compensation events that carry a presumption of avoidability. There are
three possible outcomes of the expert panel's decision: (1) clearly
compensable; (2) clearly not compensable; (3) uncertain compensability.
The claimant receives a written report from the panel including an
explanation of its reasons for decision, and has the right to review
the documents the panel consulted in reaching its decision.
5. If the hospital panel judges the claim to be clearly
compensable, the hospital makes an offer of compensation. The panel's
determination of the amount of compensation is guided by a schedule of
damages.
6. If the patient/family feels that the hospital did not correctly
apply the damages guidelines or failed to take into consideration some
factor in their case that affected damages, they may request a
redetermination of damages from the health court. If the health court
finds that the hospital had made a clear error in applying the damages
guidelines, it may assess a financial penalty on the hospital, in
addition to awarding the patient/family the correct amount of damages.
7. If the claim is judged to be clearly not compensable, the
patient/family has the option of appealing the hospital panel's
decision to the health court. The health court consists of an
administrative law judge assisted by court-appointed experts, and is
intended to be a neutral adjudicatory process. The health court reviews
the claim de novo using all available materials and a process similar
to that of the hospital panel. The health court holds a live hearing.
Basic but relaxed rules of evidence are observed, similar to an
administrative law hearing. The involved clinicians and the patient
appear and present information. The panel may invite experts to give
opinions in person or in writing. Patients and the providers may be
represented by counsel.
8. The same process occurs if the initial decision is that the case
is judged to be of uncertain compensability in the first stage. The
health court evaluation in this situation is automatic, and is not
conditioned on the patient's decision to appeal.
9. If the health court judges the event to be compensable, it
assesses damages using the same guidelines as the hospital panel. It
issues a written explanation of its reasons for decision which is
provided to the parties. If the health court overturns the hospital's
decision and makes a finding that the case was clearly compensable, it
may impose a financial penalty on the hospital. (A penalty would also
be imposed if it came to light that the hospital or its healthcare
providers failed to disclose information known about the injury to the
patient/family.)
10. The patient/family may appeal an adverse determination of the
health court to a judicial court, which would apply a deferential
standard of review. The claimant has the right to review the documents
the health court consulted in reaching its decision.
11. If the final determination in the case is that the patient/
family is entitled to compensation, the payments are made out of a
provider-financed, state-administered compensation fund on a periodic
basis. The final disposition of the case is recorded by the health
court administrative staff and all written decisions in the case stored
in health court's database. A health court administrator has
responsibility for periodically contacting the patient/family to query
whether any adjustment to compensation for future medical expenses,
rehabilitation, custodial care, home care, or other expenses is
required due to unforeseen circumstances. The patient/family may also
apply for such an adjustment directly.
12. An experience rating system is used for determining hospital
contribution to the health court system.

VOLUNTARY, INSURER-BASED DEMONSTRATION (FIGURE 2)

1. The State passes authorizing legislation establishing the
compensation system as the exclusive legal remedy for patients who
suffer medical injuries that are covered by the demonstration. The
statute has detailed requirements for notice and consent procedures for
patients.
2. Pursuant to the statutory requirements, the participating
hospitals or care systems compose informational materials for patients.
The brochures describe how the system works, explain the advantages and
disadvantages of the system from a patient's perspective, and inform
patients that the system will be their only remedy if they decide to
seek care from a covered provider. The brochures are widely available
and prominently displayed in participating healthcare facilities.
Patients are given a copy of the brochure at the time of first contact
or whenever they seek care from a hospital or provider covered by the
scheme.
3. The malpractice insurer for the hospital, doctor group or care
system acts as the initial decisionmaker on claims, much as it does
under the current liability system, although applying the new standard
and compensation approach.
4. When an adverse event occurs, the hospital determines whether it
falls within the class of events covered by the demonstration. If so,
the hospital must report the event to the insurer and notify the
patient or family of their right to seek compensation under the
demonstration. Just as above, the provider group, supported by the
insurer, would make an early offer. The insurer may impose a premium
surcharge on the hospital and/or its health care providers if it comes
to light that they failed to disclose information known about injury to
the insurer or the patient in a timely fashion.
5. The patient/family files a claim with the insurer by completing
a simple form describing from their own perspective what happened. They
have the option of involving legal counsel if they wish, and they have
the right to review their medical records.
6. The insurer submits the claim to its in-house panel of
clinicians and/or claims adjusters to render a judgment on the
compensability of the event. The decision procedures would be similar
to those described above for the hospital panel. As above, this stage
of review is intended to encourage settlement offers rather than serve
as a neutral adjudicatory process. The claimant receives a written
report from the insurer including an explanation of its reasons for
decision, and has the right to review the documents the insurer
consulted in reaching its decision.
7. If the insurer panel judges the claim to be compensable, the
insurer makes an offer of compensation. The amount of compensation is
determined with the aid of a schedule of damages. If the patient/family
feels that the panel did not correctly apply the damages guidelines or
failed to take into consideration some factor in their case that
affects damages, they may request a redetermination of damages from the
State health court. If the health court finds that the insurer panel
made a clear error in applying the damages guidelines, it may assess a
financial penalty on the insurer, in addition to awarding the patient/
family the correct amount of damages. The insurer would pay a surcharge
into a State fund that would be used to finance the administration of
the health court.
8. If the claim is judged to be not compensable, the patient/family
is given an explanation of the decision. They have the option of
appealing the decision to a State health court, which serves as a
neutral arbiter of the dispute. The health court reviews the claim de
novo using all available materials and a process similar to that of the
insurer panel. A live hearing is held. Basic but relaxed rules of
evidence are observed, similar to an administrative law hearing. The
involved clinicians and the patient appear and present information. The
panel may invite experts to give opinions in person or in writing.
Patients and the providers may be represented by counsel. The health
court issues a written explanation of its reasons for decision which is
provided to the parties. If the health court judges the event to be
compensable, it assesses damages using the same guidelines as the
insurer panel. If the health court overturns the insurer's decision of
noncompensability and makes a finding that the case was clearly
compensable under the rules and compensation guidelines of the
demonstration, this finding triggers a financial penalty for the
insurer. The insurer would pay a surcharge into a State fund that would
be used to finance the administration of the State health court.
9. The patient/family may appeal an adverse determination of the
health court to a judicial court, which would apply a deferential
standard of review. The claimant has the right to review the documents
the health court consulted in reaching its decision.
10. If the final determination is that the patient/family is
entitled to compensation, they receive periodic payments from the
insurer. The final disposition of the case is recorded in the health
court database and all written decisions in the case stored in the
database. An administrator at the insurance company, under guidelines
and oversight from the health court, periodically contacts the patient/
family to query whether any adjustment to her compensation for future
medical expenses, rehabilitation, custodial care, home care, or other
expenses is required due to unforeseen circumstances. The patient/
family may also apply for such an adjustment directly.
11. Again, experience rating is employed in determination of
premiums paid by participants to fund the system.

The Chairman. If all of you can summarize with efficiency,
we will be able to have a shorter hearing. I appreciate all of
the information you gave us. All of it will be included in the
record, and as you can tell, we learn more from the record than
we do from the actual oral transmission of the information. So,
anything you can do to help condense would be very much
appreciated.
Mr. Sage.
Mr. Sage. Do you want to do Mr. Howard first, perhaps?
The Chairman. No, go ahead, Mr. Sage.
Mr. Sage. Thank you, Mr. Chairman, members of the
committee. I'm a law professor. I'm also a physician.
In 2002, when the third medical liability crisis of the
past 30 years was declared, the Pew Charitable Trusts asked me
to lead a project on medical liability research. That same
year, the Institute of Medicine invited me to serve on its
committee on Rapid Advance Demonstration Projects, for which I
helped design some of the malpractice reform models included in
S. 1337, which this committee is considering.
Four years later, political debate remains polarized,
mainly over the desirability of caps on noneconomic damages and
other traditional tort reforms. Despite the passage of time,
advocates of these measures have attempted to sustain a crisis
mentality, while their opponents have argued that the crisis is
ending and that reform is unnecessary.
I do not believe this is a productive debate. There is an
expression that aspiring surgeons learn in medical school and
residency: all bleeding stops. What matters, of course, is
whether the patient is still alive when the bleeding stops.
Similarly, all crises end. In communities across the United
States, healthcare providers and patients are struggling with
the shortcomings of the medical liability system that go far
beyond intermittent spikes in physician malpractice premiums.
Many good ideas have surfaced, and some are being tested, but I
believe Federal leadership is needed to stop the bleeding
quickly and to heal the malpractice system so that gaping
wounds will not reopen.
I'm greatly encouraged by this hearing, because the
committee of the U.S. Senate with the most direct jurisdiction
over healthcare is engaged with the malpractice system. To me,
the greatest challenge for liability reform is that little
connection has been made between the malpractice system and the
healthcare system. Malpractice reform should begin with
improvements in the processes of care that keep patients safe
and in the ways that providers help patients deal with injury.
Insurance mechanisms and legal standards are important, but I
believe that malpractice reform should focus more on the
bedside and less on the courtroom.
Current stresses to the malpractice system are the product
of the tremendous success of modern medicine, not its failure.
Technology has enabled physicians to detect and treat diseases
earlier but also far more expensively. The bleeding in the
malpractice system continues because it has not kept pace with
these trends in medicine. Periodic malpractice insurance crises
make liability seem epidemic to medicine when, in fact, it is
endemic.
The existing system potentially compromises healthcare in
this country for three principal reasons: first, there is a
two-sided mismatch between negligence and the threat or event
of litigation. Many claims turn out not to be justified, but
rates of medical error are disturbingly high, and most
avoidable injuries go uncompensated.
Second, the process for resolving medical injuries is
simply appalling. Intimate bonds between patients and
physicians are often shattered, with third party liability
insurers regarding those who file claims as both strangers and
adversaries. Information is routinely withheld, delays are
extreme, and complex relationships are reduced to dollars and
cents. Healthcare providers are also victims. Isolation, fear,
anger, and shame take a toll, while opportunities for learning
and improvement are rare.
Third, conventional malpractice litigation and conventional
malpractice insurance focus on individual physicians rather
than the systems of care in which they practice. The Institute
of Medicine made a compelling case for system-based safety
improvement. To rely exclusively on individual physician
accountability is to provoke gross misdeterrence, clinical
responses to perceived risks of liability that fail to advance
quality of care.
What are the paths to improvement? There is substantial
consensus among academic experts that the United States should
test comprehensive malpractice reforms. A better medical
liability system would have two core elements: no-trial dispute
resolution and a health system rather than individual physician
focus. Initial dispute resolution processes would be a routine
part of good clinical care. As in S. 1784, providers would make
immediate disclosure of errors and would apologize when
appropriate; mediated discussions would begin promptly, with
providers offering compensation in all clearly eligible cases
and transmitting information readily to internal patient safety
improvement processes. Only the relatively few cases that
cannot be resolved near the bedside would be referred to a
formal administrative system of adjudication.
There are several avenues for testing reforms of this type,
many of which are incorporated into S. 1337. In my opinion, the
key is to associate malpractice reform with and thereby
leverage existing regulatory and professional self regulatory
organizations charged with protecting healthcare policy.
Administrative health courts might be established under State
agencies that regulate healthcare or patient safety through
sponsorship of health coverage under ERISA, within governmental
systems such as the Veterans Health Administration, or within
the Center for Medicare and Medicaid Services, and I would like
to emphasize in my written testimony the desirability of
conducting some malpractice demonstration projects within the
Medicare program.
I believe that testing reforms on a demonstration basis in
a variety of settings is preferable to committing in advance to
a single national model. Debates over comprehensive malpractice
reform tend to get mired in the aggregate budgetary
implications of potentially surfacing and compensating a
greater number of claims. By testing reforms limited to
particular providers and locations, sponsors could make the
terms of reform attractive to patients, could hold providers
harmless for the financial burden exceeding their current
liability expense, if any, and could measure the actual costs
and benefits to the participants in society.
Let me conclude by mentioning my father, Dr. Harold Sage,
who is celebrating his 92nd birthday today, June 22. My father
graduated from medical school in 1937 and retired from surgical
practice about 20 years ago. He's alive today because of what
medicine can do, but he has also been a victim of medical
error. Now, the IOM, in its successor report to ``To Err is
Human'' called upon the healthcare system to become safe,
effective, patient-centered, timely, efficient, and equitable.
I would argue that the existing medical malpractice system
advances none of these goals.
Crises are definitional. The current malpractice crisis
will end. Premiums will fall, and lawsuits may even drop. But
errors are still frequent; compensation remains uneven; and the
litigation process is unacceptable. Change is possible with
Federal leadership, and for that reason, I ask you to help us
stop the bleeding by supporting innovative demonstrations like
S. 1337 and S. 1784.
Thank you.
The Chairman. Thank you very much.
[The prepared statement of Mr. Sage follows:]

Prepared Statement of William M. Sage

Mr. Chairman and members of the committee, I appreciate the
opportunity to speak with you about the role that medical liability
reform can play in U.S. health policy. I am a lawyer and law professor.
I am also a physician.
In 2002, when the third ``medical malpractice crisis'' in the past
30 years was declared, The Pew Charitable Trusts in Pennsylvania asked
me to head a comprehensive Project on Medical Liability. The same year,
the Institute of Medicine invited me to serve on its Committee on Rapid
Advance Demonstration Projects in Health Care, for which I helped
design the malpractice reform models included in S. 1337, the Fair and
Reliable Medical Justice Act. Since then, I have discussed medical
liability with physicians, patients, hospital administrators, lawyers,
and others; I have planned and conducted empirical research on the
performance of the medical malpractice system; and I have developed and
evaluated possible solutions to the problems that have been identified.
Four years later, political debate remains polarized, mainly over
the desirability of caps on non-economic damages and other traditional
``tort reforms.'' Despite the passage of time, advocates of these
measures have attempted to sustain a crisis mentality, while their
opponents have argued that the crisis is ending and that reform is
unnecessary.
I do not believe this is a productive debate. There is an
expression that aspiring surgeons learn in medical school or residency:
``All bleeding stops.'' What matters is whether or not the patient is
alive and stable when the bleeding stops. Similarly, all crises end. In
communities across the country, healthcare providers and patients are
struggling with the shortcomings of the medical malpractice system,
problems that go beyond intermittent spikes in physicians' liability
insurance premiums. Many good ideas have surfaced, and some are being
tested. But Federal leadership is needed to stop the bleeding quickly,
and to heal the malpractice system so that gaping wounds will not open
again.

MALPRACTICE REFORM AT THE BEDSIDE

I am greatly encouraged by this hearing, by the fact that the
committee of the U.S. Senate with the most direct jurisdiction over
American healthcare is engaging with the malpractice system. To me, the
greatest challenge for medical liability reform is that,
notwithstanding high public visibility, little connection has been made
between the malpractice system and the healthcare system. Malpractice
reform should begin with improvements in the processes of care that
keep patients safe and in the ways that providers help patients deal
with unanticipated injuries that occur nonetheless. Insurance
mechanisms to reduce and spread the financial risks from these injuries
are important, as are legal standards to frame and resolve disputes
over the causes and consequences of injury. But malpractice reform
should focus more on the bedside, and less on the courtroom.
An important insight is that current stresses to the malpractice
system are the product of the tremendous success of modern medicine,
not its failure. Technology has enabled physicians to detect and treat
diseases earlier and more effectively than was the case during the
first malpractice crisis of the 1970s, though also more expensively.
Similarly, length and quality of life have improved for patients with
chronic health conditions. To achieve these results, physicians
frequently practice in interdisciplinary teams, and depend on
increasingly sophisticated facilities and supplies. This process of
industrialization has brought corporate skills, and corporate risks,
into healthcare delivery. Public expectations of healthcare have risen
accordingly, as have salvage costs if something goes wrong. All of
these factors increase the likelihood of malpractice litigation and
worsen its financial implications for physicians.
The bleeding continues because the malpractice system has not kept
pace with these trends, in large part because medical liability tends
to hold the attention of policymakers only when problems surface in the
cost or availability of physicians' liability insurance. In other
words, malpractice insurance crises make liability seem epidemic to
medicine, when in fact it is endemic.
The existing malpractice system potentially compromises access to
healthcare, reduces its quality, and increases its cost for three
principal reasons. First, there is a two-sided mismatch between actual
negligence and the threat or event of litigation. Many claims turn out
not to be justified, but rates of medical error are disturbingly high,
and most avoidable injuries go uncompensated.
Second, the process for resolving disputes is appalling. Intimate
bonds between patients and health professionals are often shattered,
with third-party liability insurers regarding those who file claims as
both strangers and adversaries. Information is routinely withheld,
delays are extreme, and complex medical relationships are reduced to
dollars and cents. Healthcare providers are victims as well. Isolation,
fear, anger, and shame take a toll, while opportunities for learning
and improvement are rare.
Third, conventional malpractice litigation, and conventional
malpractice insurance, focus on individual physicians rather than the
systems of care in which they practice. In To Err is Human, the
Institute of Medicine made a compelling case for system-based safety
improvement. To rely exclusively on individual physician accountability
is to provoke gross ``misdeterrence''--clinical responses to perceived
risks of liability that fail to advance quality of care. Fear of harm
to personal reputation and financial stress over insurability not only
reduce responsiveness to patient injury should it occur, but also lead
physicians to practice ``defensive medicine'' on a daily basis. This
can manifest itself either as costly overtesting and overtreatment, or
as unwillingness to accept challenging cases and ``difficult''
patients.

PATHS TO IMPROVEMENT

There is substantial consensus among academic experts that the
United States should test comprehensive malpractice reforms that would
remove most medical injuries from conventional tort litigation, and
place them instead in a customized compensation system that is closely
connected to real-time patient care and clinical quality assurance.
Recent reform proposals draw on a rich literature of policy innovation
that emerged from previous malpractice crises, including early offers
in settlement, accelerated compensation events (ACEs), guidelines for
appropriate damages, specialized tribunals, fault-based and no-fault
administrative systems, and enterprise liability for hospitals or HMOs.
A better medical liability system would have two core elements:
``no-trial'' dispute resolution and a health system rather than
individual physician focus. The phrase ``no-trial'' (rather than ``no-
fault'') is used to denote procedures that are distinct from
conventional litigation but that retain, and in fact strengthen,
healthcare providers' legal accountability for error. Initial dispute
resolution processes would be a routine part of good clinical care.
Providers would make immediate disclosure to patients who have suffered
unexpected harm and would apologize when appropriate. Mediated
discussions with the patient or family would begin promptly, with
providers offering compensation in all clearly eligible cases, and
transmitting information rapidly to internal patient safety and injury
prevention systems.
Only the relatively few cases that cannot be resolved near the
bedside would be referred to a formal administrative system of
adjudication. ACEs--lists of adverse outcomes that are almost always
associated with error--would serve as a foundation for developing a
system that keys accountability to compliance with scientific ``best
practices.'' Patients who suffer avoidable injuries would receive
compensation for economic damages not covered by other sources, plus
capped non-economic damages using a sliding scale that takes into
account the severity and duration of injury.
There are several avenues for testing reforms of this type, many of
which are incorporated into S. 1337. In my opinion, the key is to
associate malpractice reform with, and thereby leverage, existing
regulatory and professional self-regulatory institutions charged with
protecting healthcare quality. Administrative health courts might be
established under the auspices of State agencies that regulate
healthcare or patient safety, through private employers acting as
sponsors of health coverage under ERISA, within governmental systems of
care such as the Veterans Health Administration, or within the Center
for Medicare and Medicaid Services.
There is also a role for private healthcare standard-setting bodies
in malpractice reform. The Joint Commission on Accreditation of
Healthcare Organizations, for example, could require hospitals to
improve their error detection, disclosure, and dispute resolution
processes. According to a 2005 JCAHO White Paper, a well-functioning
liability system would assure (1) prompt disclosure of medical errors
to injured patients, (2) apology, (3) analysis of the error to inform
future prevention efforts, (4) an early offer of compensation for
losses, and (5) alternative dispute resolution to bring disputed claims
to a swift, fair, and efficient conclusion.
I would like to emphasize the desirability of conducting some
malpractice demonstration projects within the Medicare program.
Medicare policy often sets the standard for the healthcare system
generally. Medicare is experienced at sponsoring demonstrations of
health policy innovations. Medicare is essential to the hospital
sector, and can foster voluntary enterprise liability within those
institutions. Medicare already operates contractor-based and external
systems of medical review, and utilizes an administrative law model for
resolving disputes over benefits that raise similar issues of
disability and valuation of injury. Medicare can connect malpractice
claims to consumer information, quality improvement, and patient safety
through various ongoing initiatives. Medicare is a pioneer in pay-for-
performance, which could include financial incentives to respond
effectively to unanticipated injury. Finally, conventional malpractice
litigation is unavailable or unattractive to many Medicare
beneficiaries, making their voluntary participation in experimental
reform more likely.
I believe that testing reforms on a demonstration basis in a
variety of settings is preferable to committing oneself in advance to a
single national model. The effectiveness of liability reform depends to
a considerable extent on the clinical and administrative capacities of
particular healthcare providers and on the reactions of both
malpractice plaintiffs and malpractice defendants to changed incentives
and procedures. For example, the Institute of Medicine recommended
Federal funding of demonstrations involving hospitals and other
institutional providers that meet safety-related criteria for
participation and that could assure their patients of a prompt,
compassionate response to unexpected injury.
Furthermore, debates over comprehensive malpractice reform tend to
get mired in the aggregate budgetary implications of potentially
surfacing and compensating a greater number of claims than currently
attract the attention of plaintiffs' lawyers. Proposals for large-scale
change that emerge under these constraints are often stacked against
claimants in order to guarantee overall affordability. By testing
reforms limited to particular providers and locations, sponsors could
make the terms of reform attractive to patients, could hold providers
harmless for any financial burden exceeding their current liability
expense, and could measure the actual costs and benefits to the
participants and to society.

CONCLUSION

Let me conclude by mentioning my father, Dr. Harold Sage, who is
celebrating his 92nd birthday today, June 22. My father graduated from
medical school in 1937. He retired from surgical practice about 20
years ago, and now experiences the healthcare system mainly as a
patient. He is alive because of what modern medicine can accomplish,
but he has also been a victim of medical error. And he understands that
today's complex and expensive healthcare system requires careful
governance, including with respect to medical liability.
The successor report to To Err Is Human called upon the healthcare
system to become safe, effective, patient-centered, timely, efficient,
and equitable. The existing medical malpractice system possesses none
of these qualities. I often receive inquiries from physicians and
hospitals asking if funding is available for the demonstrations that
the IOM recommended in 2002. In Pennsylvania, for example, the hospital
association has worked hard to develop a comprehensive reform program,
but it lacks the financing needed to test it.
Crises are definitional. The current malpractice crisis will end:
Premiums may fall, and lawsuits may even drop. But errors are still
frequent, compensation remains uneven, and the litigation process is
miserable. Yet change is possible with Federal leadership. Please help
us stop the bleeding by supporting innovative demonstration programs
like S. 1337.

The Chairman. Mr. Howard.
Mr. Howard. Thank you, Senator Enzi, and Senator Kennedy
for holding these hearings.
I think it is extraordinarily important to change the frame
of reference of the malpractice debate, as the other witnesses
have suggested, from focusing just on capping damages to making
the overall system of healthcare work better, including working
better for injured patients.
For 4 years, we have been hosting public forums jointly
with the AEI-Brookings Joint Center, and all constituents were
represented in these hearings: professional groups, large
consumer groups, patient safety experts, and such, and what we
found is that while premiums have risen dramatically, as
Senator Kennedy suggested, the overall cost of this was really
quite small in the healthcare system.
But what we also found was that that was a symptom of a
much worse disease in the healthcare system, which is that
there was a distrust that is literally pervasive in healthcare.
And this distrust has changed the way doctors in America and
hospitals practice medicine. It has chilled professional
interaction. It is sort of like an invisible wall not only
between patients and doctors but between doctors with each
other, because people are afraid to speak up and use their
peripheral vision and say are you sure that's the right
prescription, because they don't want to take legal
responsibility leading to tragic errors.
It has contributed--I agree it is not the main cause of the
rise in healthcare costs. However--we'll get back to that --it
has contributed to the skyrocketing cost. Only last month, I
had arthroscopic surgery on my knee. They said I had to have a
preoperative exam. I said, ``What's that?'' And they told me
what it was. I said, ``Well, I just went through that 2 months
ago at my annual physical; why don't we just use that?'' No, we
won't use it. ``I'll waive the legal requirements,'' I said.
``Any liability will be waived.''
It cost $1,500, not to me, to my insurer, and it was bad
for me. I had to go through all these exams all over again
because of defensive medicine. They wouldn't accept even a
legal waiver from me to do it. It is literally pervasive. And
it also doesn't provide effective accountability against bad
doctors. Go to licensing boards or the people who run
hospitals. When they try to get rid of a doctor, what happens
is the doctor threatens to sue, and there's generally a
settlement, because people don't want to go through 5 years of
litigation, and the settlement is generally to give that doctor
one more chance or to let him slide out the side door to
practice on some other patients who don't know what his record
is.
It's also not effective for patients, as Professor Sage and
Professor Studdert have said: ``slow, expensive, and
unreliable,'' and as Professor Sage has noted, in many
jurisdictions, you can't even get a lawyer for a malpractice
case unless it is worth several hundred thousand dollars, not
because the lawyers are bad people but because it's just too
expensive. It takes too many years to go through the process.
So we ask ourselves after six of these hearings over the
course of a number of years what system would best promote
safe, affordable healthcare and provide a fair compensation
system, and what we arrived at were several principles: it
needs to aspire to consistency. It needs to offer guidelines so
that people feel accountable if they keep up with good
practices, but they will be affirmatively protected if they do
keep up with good practices. And it means to have a mechanism
for us to learn from our mistakes, none of which the current
system does.
Now, America, as Senator Cornyn suggested, has a long
tradition of special courts in areas of complexity. In 1789,
there were special admiralty courts. There are bankruptcy
courts, tax courts, a number of administrative compensation
schemes, of which the largest is the workers compensation
system, which is different from this in a variety of ways but
not so different in others.
We entered into a joint venture with the Harvard School of
Public Health several years ago to try to develop and refine
the idea and, again, work with all of the interested groups,
and what we've come up with, and there are many ways to do
this, is the idea of experimenting with a pilot project with a
court system which would have the following key features:
judges dedicated to resolving malpractice cases advised by
neutral experts; parties could have their own experts as well,
but you would have a neutral expert who is actually trying to
do what he thought is best; with written opinions so that
people can see what the standards of care are, and if there is
an error, can appeal that written opinion, say this is wrong
for those reasons; a liberalized standard of recovery: it is
too hard for injured patients to recover now. If somebody goes
into a hospital with pneumonia and comes out with a staph
infection, they shouldn't have to prove any more. They ought to
get paid.
And so, we have an avoidability standard; so, we believe in
this system, many more people will recover with much lower
costs. It will be quicker; there will be a requirement of
transparency and penalties on providers if they don't open up
their records when there's a problem.
And finally, there would be schedules of noneconomic
damages, as virtually every other developed country in the
world provides. And the reason for this is not because it's
fair in the abstract, because no amount of money could
compensate me or any of us for a tragic loss or an injury. It's
because it dramatically turns down the heat on the process. It
reduces the fear of providers. It reduces the sense that I
might get rich by going all the way through the system and
saying how much would you give to lose a leg or the like?
It provides horizontal equity among patients. Today, you
know, 1 in 1,000 wins a huge verdict, and most people, again,
as the studies show, get almost nothing. We think it's a fairer
system to have it be scheduled depending on the injury, and
again, I think that schedule should be changed from time to
time and be determined by a base closing commission or the
Institute of Medicine or someone like that so that it's
trusted.
There's an understandable reluctance to change from what we
are so used to, the jury system. But I would suggest that what
we're proposing, first, is only pilot projects. Second, it's
not giving up the right to sue. It's changing it. It's creating
a new right to sue, which we believe the test project would
show is fairer for injured patients as well as dramatically
better for the system of healthcare.
Everyone knows that there's a looming crisis in healthcare,
crisis of affordability, crisis in quality. Judgments need to
be made to fix it: what's good care; what's not? What can we
afford to provide? We cannot make those judgments, I submit,
until we have a system of justice that's reliable to uphold
them.
And so, going back to Professor Studdert and Professor
Sage's point, the goal here is to try a pilot of a system that
could be the foundation from which this body can begin to make
choices to bring order to a healthcare system that is rapidly
trending toward a kind of nervous breakdown in this country,
where people can't afford it and no one trusts anyone else.
The reason--and I would just end by saying a broad
coalition is behind us: many patient safety experts, the most
prominent patient safety experts in the country; large consumer
groups such as AARP have called for pilot projects. This is not
the tort reform community. The providers support it as well,
but this has been led by people who have not supported tort
reform but are supporting a better system of healthcare.
Thank you very much.
The Chairman. Thank you.
[The prepared statement of Mr. Howard follows:]

Prepared Statement of Philip K. Howard

SUMMARY

The debate over medical malpractice has focused on one symptom--the
rise in insurance premiums--without addressing the underlying systemic
flaws.
Distrust of justice is tearing at the fabric of American
healthcare, chilling open professional interaction and causing doctors
to squander billions in unnecessary tests and procedures. The distrust
stems from the fact that justice today tolerates inconsistent results
for similar conduct, and appears to be inaccurate in over a quarter of
the cases. Nor does the system work well for injured patients:
meritorious cases often take 5 years, and consume 33 percent-40 percent
of the recovery in lawyers' fees.
Making the choices needed to fix American healthcare--improving
quality, containing costs and providing predictable accountability--
requires a reliable system of justice. That's why a broad coalition of
consumer and patient advocates, as well as healthcare providers, have
come together behind the idea of creating special administrative health
courts. The goal is to create a system of justice reliable for patients
and doctors alike, and to act as a foundation for other choices needed
to bring order to American healthcare.
Defenders of the system cling to the orthodoxy that each case be
tried by a jury. But America has a mounting crisis in healthcare, and
the goal of law is to support society, not the other way around. There
is also a flaw in the current orthodoxy: The core idea of the rule of
law--that like cases be decided alike--is not satisfied when juries
make decisions in an ad hoc manner without consistent legal rulings on
standards of care. America has a long tradition of special courts for
disputes needing consistency and special expertise--admiralty courts,
bankruptcy courts, workers compensation systems, to name just a few--
and special health courts fit squarely within that tradition.
______

Thank you for providing this opportunity to discuss alternatives to
the current medical malpractice system.
I appear as the Chairman of Common Good, a not-for-profit
organization founded in 2002 to advocate reforms to restore reliability
to American law. We are bipartisan--for example, former Senators Howard
Baker and Bill Bradley recently joined our Advisory Board--and derive
most of our funding from private and public foundations (our largest
funder is the Robert Wood Johnson Foundation). The proposal to do
demonstration projects for administrative health courts, which I will
discuss today, follows six public forums, hosted jointly with the AEI-
Brookings Joint Center, and hundreds of meetings with affected parties.
The proposal was developed and refined in a joint venture between
Common Good and a team from the Harvard School of Public Health, led by
Professors Troy Brennan and David Studdert.
Special health courts are intended not simply to provide a better
dispute resolution mechanism, but to provide a foundation from which
deliberate choices can be made to restore order to American healthcare.
The current ad hoc system, in which cases are decided jury by jury,
without guidelines or precedent, has contributed to a debilitating
distrust that makes reforming healthcare almost impossible. Special
health courts, by contrast, can offer guidance on standards of care and
the predictability needed for trust. It is almost impossible to contain
costs, for example, until there is a system of justice that is trusted
to reliably uphold the costs contained.
Key features of special health courts would include administrative
judges dedicated to malpractice disputes, advised by neutral experts
and providing written opinions; liberalized standards of recovery; an
expedited process with incentives for providers to make ``early
offers''; scheduled noneconomic damages, depending on the injury; and a
coordinated patient safety department to collect and disseminate
important information. We believe special health courts could serve
three goals: first, to eliminate the distrust of justice that impedes
quality and contributes to skyrocketing costs; second, to provide
affirmative incentives to improve the quality of care; and third, to
provide a reliable, efficient and quick compensation system for
patients injured by faulty care.
A broad coalition has come together calling for demonstration
projects of administrative health courts. The coalition includes
leading organizations devoted to patient safety and healthcare quality,
including the Joint Commission on Accreditation of Healthcare
Organization, many medical societies and physician organizations,
including the American College of Physicians and the American College
of Obstetricians and Gynecologists, large consumer groups, including
AARP, large corporate providers and payers, and dozens of university
presidents and medical school deans.
Six of America's leading hospitals announced today their strong
interest in participating in a health court pilot project: New York-
Presbyterian, Johns Hopkins, Yale-New Haven, Duke Medical Center, Emory
University Hospital and Jackson Health System at the University of
Miami.
Many of the organizations supporting special health courts have not
been supporters of ``tort reform.'' But they support this effort to
restore reliability because the goal is not just to provide relief to
physicians but to create a system that is reliable for doctors and
patients alike. The proposal enjoys broad editorial support in
publications including USA Today, The Economist, Newark Star-Ledger,
the Detroit News, and the St. Louis Post-Dispatch, among others. The
public also seems to like the idea: a Harris Interactive survey found
that two out of three Americans support the creation of special health
courts.\1\
---------------------------------------------------------------------------
\1\ Poll, Harris Interactive, Inc., June 14, 2004, available at:
http://cgood.org/healthcare-reading-cgpubs-polls-7.html.
---------------------------------------------------------------------------
Because this proposal involves a major shift, not only in how
healthcare disputes are resolved, but in our approach to healthcare
choices more broadly, we believe it is important to test and refine the
concept. That's why we seek pilot projects. With the crisis in
healthcare looming before our country, we hope that Congress will
provide the authority and means to test this constructive approach to
bringing order to healthcare.
The Context of Reform. The debate over medical liability reform has
not focused sufficiently, in our view, on the relationship between the
legal system and daily choices in America's hospitals. There is little
dispute that America's healthcare system is suffering from ill health:

While the system provides miracle cures admired across the
world, it tolerates too many avoidable errors--causing upwards of
100,000 unnecessary deaths annually, according to the Institute of
Medicine.\2\
---------------------------------------------------------------------------
\2\ Kohn, Linda T., Corrigan, Janet M. and Donaldson, Molla S.
Editors, Committee on Quality of Health Care in America, Institute of
Medicine, To Err is Human, National Academic Press, 2000.
---------------------------------------------------------------------------
Accountability is inconsistent: inept doctors often keep
their licenses while good doctors find themselves liable on baseless
claims; 1 out of 4 baseless claims result in payment, according to a
recent study by Professor Studdert and others in The New England
Journal of Medicine.\3\
---------------------------------------------------------------------------
\3\ Studdert, David M., et al., ``Claims, Errors, and Compensation
Payments in Medical Malpractice Litigation,'' New England Journal of
Medicine, vol. 354; May 2006, p. 2029.
---------------------------------------------------------------------------
Skyrocketing costs--now approaching twice that of other
developed countries, with no better outcomes--make healthcare insurance
unaffordable for 1 out of 7 Americans.\4\
---------------------------------------------------------------------------
\4\ Income, Poverty, and Health Insurance Coverage in the United
States: 2003, U.S. Census Bureau Report, August 2004, available at:
http://www.census.gov/prod/2004pubs/p60-226.pdf.

In these key respects, American healthcare is, more or less
literally, out of control. No one seems to have the capacity to make
the choices needed to restore order or to reign in crippling costs.
The Effects of Law on Healthcare. The debate over liability has
focused on the rise in malpractice insurance premiums, and whether
noneconomic damages need to be ``capped.'' Doctors in certain
specialties, such as obstetrics, desperately need relief. But the total
cost of the malpractice system, about $28 billion, while huge,
represents only about 1.5 percent of total healthcare spending.\5\ If
doctors' premiums were the only problem, surely we could come up with a
solution. The debate has generated more heat than light, with each side
arguing about the fairness either to doctors or to injured patients. A
strong case can be made, as will be discussed shortly, that the current
system is fair to neither.
---------------------------------------------------------------------------
\5\ Tillinghast-Towers Perrin, ``U.S. Tort Costs and Cross-Border
Perspectives: 2005 Update,''
p. 20, available at: http://www.towersperrin.com/tp/
getwebcachedoc?webc=TILL/USA/2006/
200603/2005_Tort.pdf; Smith, Cynthia, et. al., ``National Health
Spending in 2004,'' Health Affairs, Vol. 25, Issue 1; 2005, p. 186-196.
---------------------------------------------------------------------------
The first goal of justice, however, is to provide incentives and
conditions for a sound healthcare system. The important question is
this: Does the system of justice promote patient safety and effective
use of resources?
Without room for serious debate, the current system is destructive
of both goals. Distrust of justice is nearly universal among physicians
and other providers. The overwhelming majority of physicians (83
percent) and hospital administrators (72 percent) do not feel that
physicians can trust the current system of justice to achieve a
reasonable result if sued.\6\ This distrust has led to a culture of
defensiveness that diminishes quality, raises costs and corrodes human
dealings throughout the healthcare system:
---------------------------------------------------------------------------
\6\ Poll, Harris Interactive, Inc., The Fear of Litigation Study--
The Impact on Medicine, 2002,
p. 39. available at: http://cgood.org/healthcare-reading-cgpubs-polls-
6.html.

The effect of law on quality. Many tragic errors occur,
according to the Institute of Medicine and others, because doctors and
nurses, fearful of legal responsibility, are reluctant to intercede
when they suspect something is amiss. More broadly, distrust of justice
is a powerful disincentive to reporting errors and near misses.
The theory of tort liability is that it encourages safer practices.
But this doesn't happen in healthcare. Leading experts agree that the
current malpractice system does a poor job of policing bad providers
and promoting patient safety. Professor William Sage notes that ``the
malpractice system fails to send clear signals for quality
improvement.'' \7\
---------------------------------------------------------------------------
\7\ Sage, William, ``Medical Liability and Patient Safety,'' Health
Affairs, Vol. 22; 2003, p. 26-36, available at: http://
content.healthaffairs.org/cgi/content/full/22/4/26?ijkey=f437af2d1c6
ff94a693fl60a23e55bf82b3de843.
---------------------------------------------------------------------------
The effects of law on healthcare costs. ``Defensive
medicine''--the practice of ordering tests and doing other unnecessary
activities--is nearly universal. Although the costs of defensive
medicine are almost impossible to quantify--estimates range from a few
tens of billions to over $100 billion--no person who has encountered
the healthcare system has not experienced it.\8\ I was not allowed to
have minor surgery recently until I'd gone through a complete pre-
operative examination, complete with chest X-rays and other tests, at a
cost to my insurer of $1,500. This was basically the same exam I had
undergone a few months before at my annual physical, but the hospital
would not accept those results, or indeed, even allow me to waive any
claim. This was $1,500 not available for some person who needed care.
Nor is the cost just monetary--unnecessary tests reduce immunity and
increase the chance of complication.
---------------------------------------------------------------------------
\8\ In a major study on the effects of liability reforms,
researchers found that hospitals reduced their expenditures by 5 to 9
percent within 3 to 5 years after the adoption of such reforms without
increasing bad outcomes, leading the authors to conclude that this 5 to
9 percent went toward defensive medicine tasks and procedures. Kessler,
D. and McClellan, M., ``Do Doctors Practice Defensive Medicine,'' The
Quarterly Journal of Economics, May 1996, p. 386-88. The U.S.
Department of Health and Human Services has estimated that the 5 to 9
percent figure amounts to $60 to $108 billion nationwide spent on
defensive medicine each year. U.S Department of Health and Human
Services, Confronting the New Health Care Crisis: Improving Health Care
Quality and Lowering Costs by Fixing our Medical Liability System, July
24, 2002, p. 7. Although there may be disagreement about the actual
cost of defensive medicine, there is overwhelming evidence that it is
ubiquitous. For example, a 2002 Harris Interactive poll of physicians
found that 91 percent of physicians had noticed other physicians
ordering more tests that they would base solely on professional
judgment of what is medically needed, and 79 percent reported that they
themselves do this due to concerns about malpractice liability. Poll,
Harris Interactive Inc., The Fear of Litigation Study--The Impact on
Medicine, 2002, p. 9, available at: http://cgood.org/healthcare-
reading-cgpubs-polls-6.html. A recent survey of specialist physicians
as part of the Project on Medical Liability in Pennsylvania found that
nearly all (93 percent) reported practicing defensive medicine.
``Assurance behavior'' such as ordering tests, performing diagnostic
procedures, and referring patients for consultation, was very common
(92 percent). Defensive practice correlated strongly with respondents'
lack of confidence in their liability insurance and perceived burden of
insurance premiums. Studdert, D.M., Mello, M.M., Sage, W.M. et al,
``Defensive Medicine Among High-Risk Specialist Physicians in a
Volatile Malpractice Environment,'' Journal of the American Medical
Association, vol. 293, 2002, p. 2609.
---------------------------------------------------------------------------
Hospitals have become a kind of slow motion zone where no choice is
not accompanied by forms in triplicate and precautionary procedures and
discussions that are tangential to the healthcare decision at hand. A
pediatrician in Charlotte recently told me that on a routine visit of a
healthy child he used to write three lines on the patient chart. Now he
writes 20 or 30 lines describing all the things which indicate that the
child is not sick. Multiply these procedures by over 3 million doctors
and nurses, and you have a system that is unaffordable.\9\
---------------------------------------------------------------------------
\9\ U.S. Department of Labor: Bureau of Labor Statistics, May 2005
National Occupational Employment and Wage Estimates for the United
States, available at: http://www.bls.gov/oes/current/oes_nat.htm.
---------------------------------------------------------------------------
Let me also acknowledge that legal fear is not the only driver of
unnecessary tests and procedures. Hospitals can also make money on
them. But not on my unnecessary physical exam (it was not provided at
the hospital doing the surgery), or the extra lines on the
pediatrician's patient chart, or, I suspect, with most decisions by
dedicated professionals.

The effects of law on accountability. All people,
including doctors, make mistakes, and they should fairly compensate
those injured. The most important accountability, however, is
licensure--bad doctors shouldn't be allowed to continue practicing.
Although it is often stated that 5 percent of the doctors result in a
majority of all claims, this number is misleading because high-risk
specialties attract a disproportionately high number of claims.\10\ The
current system makes it hard to hold bad doctors accountable--they hire
a lawyer, threaten to drag the hospital or licensing board through
years of litigation. A typical result is a settlement that allows the
doctor to continue practicing.
---------------------------------------------------------------------------
\10\ U.S. Department of Health and Human Services, National
Practitioner Data Bank, 2004 Annual Report (for September 1, 1990 to
December 31, 2004), available at: http://www.npdb-hipdb.com/pubs/stats/
2004_NPDB_Annual_Report.pdf.

The Sources of Distrust of Justice. Distrust drives down the
quality of care and drives up costs, but why is there so much distrust?
Studies over the years on the effectiveness of justice tend to vary in
their results, but they tend to show that, if the case goes to a jury
trial, most juries come to a reasonable result. A recent study led by
Professor Studdert found that almost two out of five medical
malpractice claims were baseless, and that one out of four of these
baseless claims resulted in payments.\11\ On the one hand, this
indicates that the system is reasonably effective in sorting the good
from the bad. On the other hand, from the standpoint of a doctor, one
out of four resembles Russian Roulette. People aren't willing to take
the risk. In the case of tragic circumstances, moreover, studies
indicate that juries are more prone to error, as with babies born with
cerebral palsy.\12\
---------------------------------------------------------------------------
\11\ Studdert, David M., et al., ``Claims, Errors, and Compensation
Payments in Medical Malpractice Litigation,'' New England Journal of
Medicine, vol. 354; May 2006, p. 2031.
\12\ MacLennan, A., Nelson, K.B., Hankins, G., Speer, M., ``Who
Will Deliver Our Grandchildren?: Implications of Cerebral Palsy
Litigation,'' Journal of the American Medical Association, vol. 294;
2005, p. 1688-1690.
---------------------------------------------------------------------------
Distrust of justice is driven not just by the chance of error, but
by the years-long process--an average of 5 years to get to settlement,
in Professor Studdert's study. Even where the doctor ultimately
prevails, a lawsuit is a horrible life-changing experience. For years
the doctor goes to bed each night trying to figure out how to justify
some choice made. I commend to the committee the recent essay in The
New Yorker, ``The Malpractice Mess,'' by Dr Atul Gawande.
Nor does the system work well from the standpoint of the injured
patient. First, as Professor Sage has observed, it is hard to get a
lawyer unless the claim is worth at least several hundred thousand
dollars.\13\ Next, the litigation drags on for years for injured
patients as well as for doctors. It is probably accurate to suggest
that the system favors whoever is in the wrong--they gain an advantage
merely by threatening to drag the other side through interminable
proceedings. Most shocking is the cost--the injured plaintiff typically
pays 33 to 40 percent of any award or settlement to lawyers.\14\ Over
half the total cost of the malpractice system--$15-17 billion out of
$28 billion--goes to lawyers and administrative costs.\15\
---------------------------------------------------------------------------
\13\ Sage, William, online discussion at PointofLaw.com, ``Why
Flatter The Trial Lawyers?,'' Dec. 6, 2005, available at: http://
www.pointoflaw.com/feature/condition_critical1205.php
\14\ U.S. Dept. of Health and Human Services, ``Confronting the New
Health Care Crisis: Improving Health Care Quality and Lowering Costs by
Fixing Our Medical Liability System,'', July 24, 2002, p. 10, available
at: http://aspe.hhs.gov/daltcp/reports/litrefm.pdf.
\15\ In a recent study, Harvard School of Public Health researchers
found that the cost of litigating claims in the study sample consumed
54 percent of plaintiffs' awards. Studdert, David M. et al., ``Claims,
Errors, and Compensation Payments in Medical Malpractice Litigation,''
New England Journal of Medicine, vol. 354; May 2006, p. 2031.
Tillinghurst-Towers Perrin has estimated that only 22 cents of a dollar
moving through the U.S. tort system compensates a plaintiff for
economic loss. 54 percent of that dollar never even reaches the victim
(21 percent goes to administrative costs; 19 percent goes to the
plaintiff 's attorney fees; and 14 percent goes to defense costs.)
Tillinghast-Towers Perrin, ``U.S. Tort Costs, 2003 Update,'' December
2003, p. 17.
---------------------------------------------------------------------------
Overall, while justice today eventually gets to the right result
about three quarters of the time, this would not be considered a
tolerable risk in other comparable professional activities (certainly
not in healthcare). The combination of the risk of error, the harrowing
process and growing costs has resulted in nearly universal distrust of
American justice. This distrust, in turn, acts as a kind of acid
corroding American healthcare. Quality, cost, professionalism, patient
empathy, accountability and effective compensation for injured patients
are all adversely affected by the defensive culture.
Special Health Courts. What's required, I believe, is a system of
justice that aspires to reliability. Doctors need to believe that a
dispute will be resolved based on accepted standards of effective
healthcare. Patients need a system that can not only distinguish right
from wrong, but will do so without an agonizing 5-year process. Most
importantly, the system of justice must provide a foundation for a
healthcare culture that is open, aspires to continual improvement and
does not encourage (or permit) providers to squander billions in
unnecessary tests.
Achieving these goals, we believe, requires creation of special
administrative health courts. Our country has a long tradition of
specialty courts in areas that are complex. In 1789, there were
Admiralty Courts. We have Bankruptcy Courts, Tax Courts, and numerous
administrative compensation systems including the Workers Compensation
System and the Vaccine Injury Compensation Program. None of these areas
are as complex as modern healthcare, and none is more important to our
society.
Creating new courts is an ambitious undertaking, and we believe it
is prudent to test the assumptions in pilot projects. While the pilots
could take many forms, we believe they should incorporate the following
features:

(1) Administrative law judges who handle only medical malpractice
disputes, with written opinions on standards of care.
(2) Neutral experts, drawn from approved lists, would advise the
court.
(3) Noneconomic damages paid according to a schedule depending on
the injury. This achieves horizontal equity among injuries of the same
kind, and also eliminates the incentive to keep litigating in the hopes
(or threats) of a windfall award.
(4) A liberalized standard of recovery based on whether the injury
should have been avoidable. Someone who comes into the hospital with
pneumonia and comes out with a staph infection should be able to
recover without having to prove how it happened.
(5) A requirement of transparency and preliminary procedures
designed to resolve claims with a minimum of time and legal cost.
Lawyers fees should be based on the time and investment they commit to
the case, not a flat percentage of recovery.
(6). Connection to a regulatory department focused on patient
safety and disseminating lessons learned.

The potential advantages of this system are enormous. A court that
writes opinions based on accepted medical standards not only holds the
promise of overcoming the debilitating distrust, but can provide
affirmative guidelines for improving care. The regulatory body can
collect and disseminate information to improve care. The incentives for
defensive medicine will be sharply reduced. Moreover, affirmative cost
containment is only possible when there is a court that will reliably
defend the costs contained. Finally, patients will receive settlements
much sooner, paying only a fraction of what they now pay in legal fees.
The constitutional authority to create an administrative
compensation system in place of a traditional jury trial is clear where
it is part of a regulatory plan to improve healthcare. Congress has
broad powers to authorize pilots for specialized health tribunals under
the Spending Clause, see South Dakota v. Dole, 483 U.S. 203 (1987); and
under the Commerce Clause because medical injury litigation is economic
activity that is in and affects interstate commerce. See Gonzales v.
Raich, 125 S.Ct. 2195 (2005); United States v. Lopez, 514 U.S. 549
(1995). Contrary provisions of State law, if any, would be pre-empted
under the Supremacy Clause. See Silkwood v. Kerr-McGee Corp., 464 U.S.
238 (1984); Pennsylvania v. Nelson, 350 U.S. 497 (1956). Moreover,
similar Federal administrative compensation systems have been upheld
against constitutional challenge. Colaio v. Feinberg, 262 F. Supp. 2d
273 (S.D.N.Y. 2003), aff 'd Schneider v. Feinberg, 345 F.3d 135 (2d
Cir. 2003).
Law is essential to a free society because it provides guidelines
for reasonable conduct. Contracts will be enforced by their terms, and
people injured by negligence will be compensated for their injuries.
But law undermines freedom when it fails to offer predictable
guidelines, and when it tolerates claims against reasonable conduct.
Because law today offers no guidelines or predictability in healthcare
disputes, physicians, nurses and other dedicated healthcare
professionals no longer feel free to act on their best judgment. This
in turn has tragic effects on the quality and affordability of
healthcare in our country. By restoring reliability to healthcare
disputes, special health courts hold the promise of bringing order and
good sense to the vital decisions needed for effective, safe and
affordable healthcare in America.
Thank you.

The Chairman. Mr. Boothman.
Mr. Boothman. Thank you, Chairman Enzi, and thank you to
the committee members, especially Senator Clinton, with whom
I've worked already on her proposed bill. My name is Rick
Boothman, and I am the chief risk officer for the University of
Michigan. We have gotten some notoriety over the years, and I
guess it's safe to say I bring you the view from the trenches,
not from the ivory towers.
I am not a scholar. I was a trial lawyer and represented
doctors and hospitals in Ohio and Michigan for 22 years before
coming to the university in 2001, mainly because I believed we
could handle our claims better.
I will depart from the witnesses you have heard already in
one way and probably with my own constituency: I don't believe
that the system needs radical change. I do believe it needs
some fixing. But I think our experience has proven that we can
reduce medical malpractice risk without major revisions and
abandonment of a system that has developed over hundreds of
years just by adhering to some principal ethics and by making
one observation that is a little bit sidetracked from the
direction of this committee, and that is this; and I say this
out of the deepest respect and love for the profession that
I've served for over a quarter of a century. I think the
malpractice problem is stubborn in part because the medical
profession has concentrated so hard on lawyers and the legal
system that it has not paid attention to its own complicity in
this problem.
Patients in every study that I'm aware of that's looked at
why patients sue their doctors really want three things:
accountability, answers, and assurance that the mistake won't
happen again. And built on that realization, we've created a
claims system which has caused our claims to drop from almost
three-quarters of our claims in less than 4 years; we're down
to three-quarters. Our costs are less than half what they were
before. Our reserves, the cost, the actuarial estimate of our
claims portfolio went from $70 million in 2001 to less than $20
million.
And nothing's changed in Michigan. Tort reform happened in
Michigan in 1994, not lately, and our claims have only changed
since 2001. Our disposition time, from notice of a patient
injury to disposition of that, has gone from 20.7 months to 9.5
months, and it's all been based on simple changes that I think
mostly arise out of ethics and common sense.
The first thing we did was pass three simple principles and
get agreement on these. First, as a system, we committed to
compensating people who were injured by unreasonable medical
care at the University of Michigan. Second, we committed to
defending ourselves aggressively when the care was reasonable
regardless of the medical outcome, because doctors and nurses
operate in an inherently dangerous environment, where even the
most reasonable decision can still result in catastrophic
illness. It cannot be just about the outcome. And third, we
committed to learning from our patients' experiences whether
there was a medical mistake or not.
Having made those commitments, we have designed a system
that is relatively fearless in the medical community. We have
committed to moving forward, because essentially what we have
said is we will not say anything differently in court than
we're saying to ourselves. If we've concluded that our care was
unreasonable, then, what's the harm in talking to the patient?
So the key is getting to that conclusion first and then
having the guts, if you will, to step forward and talk to the
patient. Our staff is encouraged to, in an unvarnished way,
talk with honesty and credibility to patients at the point of
complication. We, in our claims mechanism, talk to our
patients, whether they are represented or not, openly and
honestly at the point of claim.
If the claim is defensible, we explain to them why we think
it is, because the interesting realization is at that moment in
time, before a lawsuit has been filed, the patient and the
patient's lawyer have exactly the same interests we do: nobody
wants to make a mistake. If they have a belief that a medical
mistake has happened, and we think that's not true, why not sit
down and talk about it?
So we have discussions, and I have included in my written
materials a copy of the flow of our claims management program.
But we open the table to discussions openly and honestly
regardless, confident in our conclusions about whether the
medical care was appropriate or not, and that has resulted in a
dramatic decrease in all of our claims.
There are some points I want to make, and I understand my
time is brief. Changes to the system I don't think have to be
wholesale, but I do think there need to be changes. We need to
deal with scientific uncertainty, junk science, and testimony
from outright charlatans. Medical careers and millions of
dollars are at stake, and too often, it becomes a beauty
pageant of experts, not hard science, and judges need to do
their job in dealing with that. When we select juries, we
disqualify those with any knowledge of the subject matter and
then expect them to recognize who's lying and who isn't when
the experts take the stand. There has to be some mechanism for
ferreting out what we know scientifically and what we don't.
All parties benefit from a healthy insurance industry. Caps
on noneconomic recovery, whether personally I find them
abhorrent or not, allow for some predictability in the
business, and even patients benefit from a healthy insurance
industry. I think we have to consider that.
Catastrophic injury insurance plans are possible. I've
worked with some insurance folks, and I don't understand why
States don't pull together a catastrophic injury insurance plan
that would serve as an umbrella plan. Even low-risk specialties
like dermatologists, at the right price, would love to have
that kind of coverage, and it's possible. Punitive damages, on
the other hand, have absolutely no place in this discussion.
They feed the hysteria and are overkill.
Speaking from experience, patients crave honesty and
transparency. The problem is that it is a heck of a lot easier
to be honest and transparent if you are not worried about
financial ruin. We have to find a way to allow that discussion
to occur without penalizing our caregivers unnecessarily.
Litigation was never meant to be the first resort to
resolve disputes between people. Unfortunately, it has become
that. I think our system works because we have caused it to be
the last resort. We say to our patients and to our staff both,
we will do everything we can to avoid litigation without
sacrificing our principles but reach an agreement and then use
litigation to handle intransigent disagreements.
I think alternatives loosely characterized as no-fault
systems will not work. To know the difference between
reasonable and unreasonable care, to understand whether a
patient's outcome has changed because of the medical care still
is going to require the kind of litigation we see anyway. Deny
and defend is the enemy of transparency. Doctors need to
understand how their own behavior feeds this problem, and by
opening up and talking to patients, I think we can intercept a
lot of people who end up going to lawyers in the first place.
The medical community has got to ask themselves a different
question, and that is: Why do my patients feel the need to see
a lawyer in the first place? And I think that there are ways,
and we are exploring those all the time at the University of
Michigan and intercepting those things.
Last, focusing on patient safety and patient communication
rather than whether to discard our litigation system I think is
the key here. And getting, and moving that discussion to how
can we be safer is really all the answer here. How can we be
safer, and how can we improve patient communication?
The medical community sets itself up for failure all too
often by establishing unreasonable expectations in its patients
and not talking about problems that happen afterwards.
Thank you.
The Chairman. Thank you.
[The prepared statement of Mr. Boothman follows:]

Prepared Statement of Richard C. Boothman

SUMMARY

In 2001, the University of Michigan Health System changed the way
it responded to patient injuries, complaints and claims. Its approach
was predicated on three simple, inarguable principles:

1. We will compensate quickly and fairly when inappropriate medical
care causes injury.
2. We will defend medically appropriate care vigorously.
3. We will reduce patient injuries (and therefore claims) by
learning from mistakes.

Adherence to these principles fostered transparency and honesty in
the health system's approach to patients and their attorneys which has,
in turn, caused a steady drop in malpractice claims and expense. In the
process, what started as an effort to reduce claims cost has evolved
dramatically into more substantive initiatives to improve patient
safety and communication.
The University of Michigan's experience yields lessons for wider
discussion of tort reform:

A. Medical care cannot be judged simply on outcome. The system must
do a better job of making the distinction between reasonable and
unreasonable care.
B. Scientific uncertainty, junk science and testimony from outright
charlatans must be filtered out.
C. All parties benefit from a healthy insurance industry.

a. Caps on noneconomic recovery. Caps on noneconomic recovery
(elements of damage not subject to calculation) are one way to blunt
the wide swings.
b. Catastrophic injury insurance plans. Are possible and should be
explored.
c. Punitive Damages. There is simply no place for punitive damages.

D. Honesty and transparency are easier to achieve if caregivers do
not believe they are risking their financial lives by talking to their
patients.
E. Litigation was never meant to be the first resort for resolving
disputes. Reform must offer the opportunity, incentive or if necessary,
impose a requirement that the parties talk to each other before
resorting to litigation as a means for resolving disputes.
F. Alternatives loosely characterized as ``no fault'' systems will
not work.
G. ``Deny and defend'' is the enemy of transparency. Mainstream
medicine must turn its attention to its own complicity in this problem
and stop blaming trial lawyers or the system for the crisis.
H. Gaps in the social safety net drive some litigation.
I. Focusing on patient safety and patient communication rather than
whether or not to discard our legal system is absolutely essential.
J. As long as this issue is treated as a battle to be won or lost,
it will not be fixed. I applaud the work of this committee and
specifically, the efforts of Senators Enzi, Baucus, Clinton and Obama
in this regard.
______

INTRODUCTION

I want to thank you, Chairman Enzi, Ranking Member Senator Kennedy
and members of this committee, especially Senator Clinton, for the
opportunity to appear today. I am the Chief Risk Officer for the
University of Michigan and in that capacity, I have responsibility for
overseeing the manner in which the University of Michigan responds to
patient injuries, patient complaints and patient claims.
I came to the University in July 2001 as Assistant General Counsel
after 22 years of trial work, defending doctors, hospitals and other
healthcare providers in Michigan and Ohio. In private practice, I
represented a wide variety of care givers, from individual physicians
to large group practices, from small inner city, minority-owned
hospitals to a chain of osteopathic community hospitals to large
academic medical centers like the University of Michigan and the
Cleveland Clinic Foundation. I left trial practice and the law firm I
founded because I believed the University could improve the way it
handled patients' complaints, claims and litigation.
In 22 years of practice, not a single client ever asked me what
they could learn from the cases I handled for them. Driven by that
realization, I was convinced that the University could not only save
money in the short run through smarter claims management, but reduce
future patient claims by learning from our patients' complaints. I
could not have imagined that our experience would garner the national
and even international attention it has, and I certainly never
envisioned our work would lead to an opportunity to appear before a
committee of the U.S. Senate. Thank you.
I am not a scholar. I have not had much time to research and read
what has been written on the issues this committee has undertaken to
study. My opinions arise from my experiences representing doctors and
hospitals in malpractice cases, my experiences with the University of
Michigan's program and frankly, from common sense. I am not an advocate
for a particular interest group or point of view--indeed, some of my
views elicit vigorous disagreement from UM doctors. I am well aware
that my opinions do not sit entirely well with either end in this
discussion and there are those in the medical and insurance communities
who view some of my opinions as treasonous. My trial lawyer's instincts
strongly suggest that if my views please neither side entirely, we very
well may be on the right track.
What started as a focused effort to reduce claims costs at the UM
has evolved to reveal the roles that inadequate commitment to patient
safety and unmindful patient communication play in the stubborn problem
which has plagued the medical community for decades. I appear today,
not to ``win'' a fight, but to help fix this problem.

IDENTIFICATION OF THE PROBLEM

This committee's interest is identification of new ideas to make
the system, (presumably the litigation system) work better for patients
and physicians. I suggest that clarification of the problem is a
necessary first step. I am convinced that the problem stubbornly
persists despite past attempts to address it in large part because the
treatment to date has targeted the wrong diagnosis.
Few involved in the medical malpractice arena would argue with
Professor Sage's assessment in his March 2005 DePaul Law Review Journal
article:

``For over a century, American physicians have regarded
malpractice suits as unjustified affronts to medical
professionalism, and have directed their ire at plaintiffs'
lawyers . . . and the legal system in which they operate.''\1\
---------------------------------------------------------------------------
\1\ Sage, William, Medical Malpractice Insurance and the Emperor's
Clothes 54 DePaul Law Review 463, 464 (24 March 2005).

We ask a lot of our doctors, nurses and other healthcare providers.
They are by nature, an unbelievably committed group, driven mostly by a
strong sense of personal reward derived from helping sick people. Yet,
they spend every working day in an inherently dangerous environment, a
world in which the simplest decision, like prescribing antibiotics for
a child's first ear infection, can have devastating consequences. We
clearly need to better understand the trauma to the caregiver when such
a catastrophe occurs, but it should come as no surprise that physicians
reflexively blame the messenger when a patient asserts a claim.
Understandable human emotions may feed the ``deny and defend''
response to patient's complaints, but few believe the strategy has been
effective. More importantly, that strategy has exacted a heavy cost.
Simplistically blaming the legal system and plaintiffs' lawyers for
patient complaints has stunted earnest efforts to improve patient
safety and skirted recognition that many complaints could have been
avoided by more thoughtful patient communication. Improving patient
safety and patient communication honestly and openly is treatment more
likely to cure the malpractice crisis than defensiveness and denial.
The University of Michigan's approach is effective in my opinion,
because we have focused our efforts more accurately on the primary
causes for most patient litigation: a failure to be accountable when
warranted and a reluctance to communicate. Isolating the factors that
comprise our approach can inform a broader debate on ``making the
system work better for patients and doctors.''

BACKGROUND

The State of Michigan's last tort reforms took effect in April
1994. (See attached) Among other provisions, those statutes,

Created a compulsory 6-month pre-suit notice requirement;
Created a two-tiered cap on noneconomic recovery, a lower
general cap and an upper cap applicable to central nervous system
injuries and injuries to reproductive organs rendering the patient
incapable of procreation;
Tightened qualifications necessary for experts testifying;
Required an affidavit of merit by qualified experts to
support any Complaint and Answer to Complaint filed.

The reforms had little effect on the UM's claims experience and
almost no impact on the way in which the University responded to
claims. Our claims rose, modestly but steadily from 1994 to 2001 and
our costs rose with them. Pro activity was a fairly foreign concept and
I was aware of no hospital or insurance company in southeastern
Michigan that systematically utilized the pre-suit notice period to
resolve claims or even, for that matter, prepare for litigation. The
University, for the most part, still responded in the traditional
``deny and defend'' mode. Coupled with a distinct aversion to the risk
of trial, the combined strategy, typical for mainstream medicine even
today, virtually guaranteed that resolution of patients' disputes would
take a long time and would cost a lot, financially and otherwise. Like
all of my other clients at the time, the University had no systematic
way to learn from its claims.
In August 2001, the UMHS had 262 open claims, varying from pre-suit
notices to active litigation. Actuaries valued the portfolio for
reserves at more than $70 million. For an institution of our size and
complexity, ours was actually an enviable record. Though no public
disclosures exist to my knowledge, other institutions of similar size
in our area reportedly had two and three times as many claims.

UNIVERSITY OF MICHIGAN CLAIMS EXPERIENCE SINCE 2001

Claims numbers fluctuate as existing cases are settled or dropped
and new cases arrive. But using the month of August as a benchmark, the
UMHS's claims numbers have dropped steadily despite a considerable
increase in clinical activity over the same period.

In August 2001, we had 262 total claims;
In August 2002, we had 220;
In August 2003, we had 193;
In August 2004, we had 155;
In August 2005, we had 114;
Since August 2005, we have dropped below a hundred.

Our average claims processing time dropped from 20.3 months to 9.5.
Total reserves on medical malpractice claims dropped by more than two
thirds. Average litigation costs have been more than halved.
Our approach may have achieved the unthinkable: it pleases doctors
and trial lawyers. Surveys conducted in early 2006 of our medical
faculty and the plaintiff's bar in southeastern Michigan yielded
approval from both sides. In our physician survey, more than 400 UMHS
faculty physicians responded, and:

87 percent said that the threat of litigation adversely
impacted the satisfaction they derived from the practice of medicine;
98 percent perceived a difference in the University of
Michigan's approach to malpractice claims after 2001;
98 percent fully approved of the approach;
55 percent said that the approach was a ``significant
factor'' in their decision to stay at the University of Michigan;
The only consistent criticism was that they wanted more
attention from Risk Management to assist them in reducing the threat of
malpractice.

At the same time, we surveyed members of the plaintiff 's bar in
southeastern Michigan, all specializing in medical malpractice:

100 percent rated the University of Michigan ``the best''
and ``among the best'' health systems for transparency;
90 percent recognized a change in the University of
Michigan Health Systems approach since 2001;
81 percent said that they had changed their approach to
our Health System in response;
81 percent said their costs were lower;
71 percent admitted that when they settled cases with the
University of Michigan, the settlement amount was less than
anticipated;
86 percent agreed that the University of Michigan's
transparency allowed them to make better decisions about the claims
they chose to pursue; and
57 percent admitted that they declined to pursue cases
after 2001 they believe they would have pursued before the changes were
employed.
university of michigan health system changes between 2001 and 2005
A Principled Approach
Initially, a simple set of principles, (in my opinion, inarguable),
were constructed and we began to make claims decisions immediately in
the context of that framework:

These principles were publicized to our staff, our trial attorneys,
the courts and directly and personally to plaintiff 's lawyers in
southeastern Michigan. Adherence to these principles created
consistency in our response to claims and began to build confidence
among our staff.
Distinguishing Reasonable From Unreasonable Medical Care
Commitment to these principles was, and remains essential to every
other aspect of our approach. Key to honoring these principles is
understanding the difference between reasonable and unreasonable care
and an infrastructure and system for hard claims analysis was
constructed to utilize whatever pre-suit period we would have to arrive
at the pivotal determination.
The Benefits of Transparency
Flowing directly from this commitment is transparency. Decades of
lawyers' admonitions not to talk about claims until the cases were
resolved disappeared when we committed to acting in accordance with our
conclusions about the reasonableness of our care. Concerns for
compromising litigation virtually disappeared--if we concluded that our
care was unreasonable and harmed a patient, we would be moving to
resolve the claim. If we concluded that our care was reasonable, did it
really matter if those conversations were revealed through discovery?
It became immediately apparent that our interests and the patient's
interests at that point were exactly the same: as both faced the
prospect of litigation, neither side wanted to make a mistake. We did
not want to defend a claim for years only to decide the claim warranted
settlement and the patient and his lawyer obviously do not want to
engage in expensive, time consuming and emotionally draining litigation
only to lose the case. Discovery eventually leads to full disclosure
anyway; so why not simply share our conclusions early and
inexpensively? If our conclusions prove to be wrong, we want to know
that before litigating. We discovered that nearly every plaintiff 's
lawyer came to the same conclusion.
Our process then lead to open dialogue with our patient and if
represented, the patient's lawyer. Open, honest, and robust,
discussions occur between patients and their doctors, doctors and the
lawyers threatening to sue them. Expert opinions are exchanged and
agreements are reached: sometimes agreements to drop the claim,
sometimes to settle, sometimes to apologize and occasionally, to
disagree. Constructive engagement allows the parties to mutually
understand what they are facing with litigation and both sides can move
forward with ``informed consent.'' In the dynamic created, the decision
to litigate becomes a mutual one and litigation is relegated more and
more frequently to the role it was meant to play: a last resort for
resolving intransigent disputes.
Claims at the UM follow this flow:

Commitment to these principles opens the door to immediate and
decisive quality improvement measures and peer review opportunities. We
are routing our patient's complaints, even those deemed without
substance, through a process that asks in every single instance: Could
we have done better? What improvements could be undertaken to avoid
these kinds of complaints in the future? Why did this patient complain
and how can we avoid the same thing happening again? Are there lessons
to be learned? And we are not waiting until the claim is resolved.

Commitment to these principles stimulates a more robust
communication between our doctors and patients at the point of care and
complication. Our staff, essentially ``finally granted permission by
the lawyers'' as one of our doctors characterized it, to speak openly
is also principle-based and I believe this openness, intelligently and
sensitively accomplished, will prove to be effective at intercepting
patients before they feel the need to see a lawyer.
Despite widespread convictions that patients see lawyers because
they are looking for a financial windfall, studies done to understand
why some patients hire lawyers all yield the same results: patients are
actually seeking accountability, answers and assurances that the same
complication will not befall anyone else. My own experience cross-
examining probably thousands of witnesses and litigants confirms the
studies' findings. Rather than demonizing lawyers and the legal system,
physicians need to ask a more difficult question: ``Why would my
patient feel the need for an advocate?''
None of these changes could have been implemented or accomplished
without strong and committed leadership and robust participation by our
physicians, nurses and other healthcare providers. Openly acknowledging
that patient safety is at the heart of many patient complaints, our
Chief of Staff, Skip Campbell, M.D. has undertaken bold initiatives in
systemwide peer review and patient safety improvement with the avowed
goal of becoming the ``safest hospital in the United States''.\2\ The
UMHS's chief executive officer, Doug Strong, recently observed at a
board meeting that though we may be realizing significant savings
through more prudent claims management, real savings lies in improving
patient safety and that would be a driving force in the future.
---------------------------------------------------------------------------
\2\ Anstett, Patricia, U-M Hospital's Goal: Safest in the Nation.
The Detroit Free Press, February 24, 2004.
---------------------------------------------------------------------------
What began as a set of strategies to save costs of litigation has
evolved dramatically in a different direction: by focusing on patient
safety and improved communication, we are now confident that medical
malpractice will be relegated to background noise.

LESSONS FROM THE UM EXPERIENCE

A. Healthcare professionals work in an inherently and unpredictably
dangerous environment in which the simplest decision can have
catastrophic consequences for their patients. Medical care cannot be
judged simply on outcome. The system must do a better job of ensuring
that the distinction between reasonable and unreasonable care is made
with clarity and based on sound medical and scientific knowledge. All
too often, these conclusions turn on an expert's ``performance'' in the
courtroom and not on scientific and medical substance. The failure of
our system to ensure this is a major contributor to physicians' belief
that the system does not provide justice for them.
B. Scientific uncertainty, junk science and testimony from outright
charlatans must be filtered out. This may mean a role for ``medical
courts,'' but there exist in probably every jurisdiction in the country
tools for courts to ensure claims are not based on shaky scientific and
medical grounds. Evidentiary hearings, court-appointed masters,
bifurcation of trials are all currently available to trial courts and
though employed in other fields like real property litigation, are
almost never used in medical malpractice suits. (Interestingly, the
medical specialties have also failed to address this problem, though
there are budding efforts underway to censure specialty board members
that render clearly dishonest and unsupported testimony in Neurosurgery
and Ob/Gyn.) At a minimum, judges must accept their role as gatekeeper
of the evidence and robustly screen complicated expert opinions before
allowing them to go the jury.
C. An inconsistency continues to plague trial practice in this
specialty: historically, opinion testimony deemed an infringement on
the province of the jury and witnesses were restricted to factual
testimony. As issues became increasingly complex, rules of evidence
relaxed and expert opinion testimony was allowed where the court deemed
the issues outside the experience of the average juror. We select
juries by disqualifying those with knowledge of the subject matter,
then expect these people to recognize which expert is lying and which
one is accurate. With physicians' careers and millions at stake, the
``battle of the experts'' all too often becomes a beauty pageant.
D. We submit these complicated issues to the very people the court
has acknowledged cannot understand them and still expect doctors to
feel that they are being judged by a jury of their peers.
E. All parties to the issue are benefited by a healthy insurance
industry. No patient's lawyer wants to find out that the doctor
involved is un- or under-insured. Hospitals for years have served as
excess carrier to physicians with too little insurance protection. Like
it or not, the insurance industry requires some measure of loss
predictability in order to remain financially healthy and in order to
attract companies to offer this coverage. There are measures which can
be taken to assist in this regard:

a. Caps on noneconomic recovery. Caps on noneconomic recovery
(elements of damage not subject to calculation) are one way to blunt
the wide swings. They are by definition arbitrary and will pose a
hardship on some injured patients, but may be a necessary evil. Though
remedies to runaway verdicts like remititur and new trials also are
available to trial courts, those remedies are rarely used, are not
reliable nor predictable.
b. Catastrophic injury insurance plans. There is no reason States
could not pull together catastrophic injury insurance plans which would
provide catastrophic injury protection over a base primary insurance
policy. The physicians could subscribe for very attractive premium
costs, the lower risk physicians would subsidize the higher risk
specialists if constructed properly. Participation would be conditioned
on the physician's agreement to peer review, quality audits and other
requirements.
c. Punitive Damages. In my opinion, there is simply no place for
punitive damages. Invariably, the anomalous case reports arise in
States with punitive damages. The existence of this form of recovery
invites lawyers to speculate on high value--low liability cases.
Adequate measures exist to punish physicians who deserve punishment.

F. Honesty and transparency are much easier to achieve if
caregivers do not believe they are risking their financial lives or
their insurance coverage by talking to their patients. Catastrophic
injury protection is one way to address this problem.
G. Litigation was never meant to be the first resort for resolving
disputes. Reform must offer the opportunity, incentive or if necessary,
impose a requirement that the parties talk to each other before
resorting to litigation as a means for resolving disputes. The Michigan
scheme offered the opportunity and it is now increasingly used, but for
the first 10 years few insurance carriers or hospital systems availed
themselves of that opportunity. Perhaps more than any other feature to
the UM's approach, we have found that the free and credible exchange of
information is responsible for the UM's success. All parties deserve to
know that every opportunity to resolve the misunderstanding, dispute,
or claim has been made before litigation is invoked.
H. Alternatives loosely characterized as ``no fault'' systems will
not work. The medical and insurance communities will not be fairly
served by creating an entitlement not based on the reasonableness of
care. Physicians championing these alternatives and anxious to
eliminate confrontation will not feel that justice has been served if a
check is written on their account every time a patient's outcome is
less-than-optimal. And the theoretical underpinning of these proposals
is inherently flawed: whether you seek to determine if the outcome
resulted from negligence, or preventable, or avoidable error, the net
effect from a litigation perspective is the same. All require expert
testimony, discovery and the rest and the legal costs allegedly saved
by these proposals are lost in the determination.
I. ``Deny and defend'' is the enemy of transparency. Mainstream
medicine must turn its attention to its own complicity in this problem
and stop blaming trial lawyers or the system for the crisis. All of the
evidence suggests that changes in our approach to patients may
alleviate this problem, yet as long as Medicine is in denial, those
changes will not occur. Hospitals and doctors must confront the ways
their own behavior actually drives patients to feel the need for an
advocate to deal with them. This problem cannot be fixed without active
participation and leadership from physicians.
J. Gaps in the social safety net drive some litigation. Families
faced with the results of catastrophic outcomes sometimes are driven to
consider litigation as a means of financial survival. This driver needs
to be addressed.
K. Focusing on patient safety and patient communication rather than
whether or not to discard our legal system is absolutely essential. The
best way to deal with the medical malpractice crisis is to turn our
attention in those directions which requires bold and focused
leadership from physicians and nurses.
L. As long as this issue is treated as a battle to be won or lost,
it will not be fixed. The polemics must be set aside in recognition of
the fact that we are all in this together, that persistence of this
problem continues to cost every American money and more. Radical
proposals like scrapping our tort system must give way to detailed,
focused efforts designed to reach the real problems. I applaud the work
of this committee and specifically, the efforts of Senators Enzi,
Baucus, Clinton and Obama in this regard.

[Editor's note--Due to the high cost of printing, previously
published materials submitted by the witness (i.e., Appendix-Michigan
Malpractice Laws) may be found in the files of the committee.]

The Chairman. Ms. Sheridan.
Ms. Sheridan. Good morning; thank you.
First, I'd like to begin by thanking Senators Enzi and
Baucus for their courage to jointly propose bold, new territory
and to challenge the longstanding stalemate on tort reform. I
also thank you for valuing the contribution of real life
experiences in the tort system.
I think I was further down in the trenches than Richard
here. My family has experienced two medical errors with
devastating impact, one that resulted in the death of my
husband, Patrick, due to the failure to communicate a malignant
spinal cancer which resulted in a delay in treatment for 6
months. The tumor penetrated Pat's spinal cord, severed it,
paralyzed him, and he died in 2002.
The other error resulted in the permanent brain damage of
our newborn son Cal in 1995 from the failure to test and treat
newborn jaundice. This condition is known as kernicterus, and
today, Cal has cerebral palsy. He is hearing impaired, speech
impaired, and he has uncontrollable movements of his legs and
arms.
My family has learned from experience that the legal system
does not serve the needs of families who have been harmed, and
I say that even though in the end, many would say we won our
medical malpractice cases. Cal's litigation took 8 years. Pat's
case took 4 years. We were left on our own to take care of Pat
and Cal with our own resources. I maxed out two credit cards
and our home equity line to take care of both of them during
that time.
During those 8 years, we were in a 7-week trial that we
lost. We were in a State U.S. Supreme Court hearing, three
mediations, hundreds of depositions, hundreds of thousands of
dollars, and finally settlements that amounted to a fraction of
the total amount spent by all.
Unfortunately, in media and tort conversations, patients
are always characterized as greedy and eager to sue when
medical error occurs. We sued in Cal's case because we had to.
Cal's life care plan is several million dollars, and as
parents, we had the responsibility to provide the best care for
our son. In Pat's case, we made it very clear to the hospital
and doctor that we did not want to sue, because we found the
system dishonorable. Initially, we had sincere conversations;
however, after the insurance companies and the legal counsel
became involved the communication came to a screeching halt.
After being told not to contact them anymore, we filed a
lawsuit on the last day of the statute of limitations and
entered into a 4-year litigation process. During that time, my
husband Pat died, never knowing if his son's case would ever
result in justice or if Cal would be financially taken care of.
He also died feeling betrayed by a doctor who was once his
hero, who disappeared instead of sitting down and talking with
us.
Now, as a widow and a mom to a disabled little boy and an
8-year-old little girl, I have gained a unique insight into the
reality of our current tort system. What I have learned from my
position as chair of Patients for Patient Safety at the World
Health Organization and President of Consumers Advancing
Patient Safety, where we work for patients from all over the
world, is that medical error is an incredibly human phenomenon
regardless of geographical phenomenon, economic condition, or
language, but sadly is treated in a tragically in-human manner.
In my late husband's words, we witnessed the intolerable
absence of integrity and honor in medical malpractice. Indeed,
the errors caused tremendous sadness, and loss of life that I
never would have imagined as a woman or mother. But the errors
were undoubtedly unintentional and truly mistakes, and Pat and
I knew that. But what happened after the medical errors and how
my family was treated through the litigation process, a process
that we did not want to enter and tried in every manner to
avoid, was very calculated, deliberate, and by far the most
disturbing experience in my life.
But Pat and I trusted the wisdom of the jury, the integrity
of professionals, and the long history of our judicial system.
But what we witnessed was a system in deterioration, a system
that we naively believed would be based on the truth, fair
compensation, and what was right. We learned, with great
disappointment and even alarm, that litigation is a win-at-all-
costs blame game that is wildly inconsistent, is deviously
strategic, and rarely makes our healthcare system safer.
Today, kernicterus and lost pathologies happen over and
over and over again. Our lawsuits had nothing to do with
creating a safer healthcare system, unfortunately. We learned
that the system where patients who file lawsuits are vilified,
abandoned, and sometimes even denied healthcare. In Cal's case,
there is one pediatric neurologist in the State of Idaho, and
he sent us a registered letter stating that he will not treat
my son, even in the event of an emergency.
The biggest lessons learned and opportunities of the future
include, first, we witnessed a legal system infested with
expert witnesses able to offer unscientific and fictional
testimony known as junk science for handsome fees. Now,
typically, you hear about this on the other side of the fence.
This happens to plaintiffs as well. And there are no
consequences to those expert witnesses. Our judge stated, in a
memorandum declaring a mistrial when we lost our first trial
for our son that the expert witness testimony was offered for
the mere purpose of obscuring the actual circumstances and
misleading the jury. This is wrong, and this needs to be
investigated.
Second, I also witnessed a system that pressures patients
to sign gag clauses so we can't speak openly about the case,
which ultimately could help prevent future injuries. With
regard to kernicterus, all but a few cases have been
effectively buried by confidentiality agreements, a condition
of settlement insisted upon by doctors and hospitals. They are
just wrong, and they are very dangerous to the public health.
Gag clauses are nothing short of bribes and intimidation. I
can only ask myself if Cal would have kernicterus now if he
could walk, if he could speak clearly, if some of the cases
before his injury had been made public before his birth. We
must incentivize transparency. Finding a way to declare
confidentiality agreements contrary to public interest is an
excellent place to start.
Third, something very disturbing to me about the
traditional tort system is the tremendous variation between
awards for patients and families with similar needs. There has
been a kernicterus verdict in this country of close to $90
million. Cal got a tiny fraction of that, and I know families
who got a fraction of what Cal got. Their children will
inevitably become a burden to the Medicaid system, and most,
including my son, Cal, already are. Justice should be
equitable.
It is my understanding that the tort system was created for
powerful, honorable reasons, and that was for the people. So I
ask all of you involved in tort reform to follow these
guidelines. Do it for the right reason. Remember that people
who experience medical error are not just dollar figures. We
are your loved ones. We are you.
And closing, I invite you and I challenge you to envision a
system that is fair and reliable and ask you to use your power,
your courage, and your sense of justice to shape innovative
programs that mark a return to integrity and honor. For those
of you who believe the current tort system works, it does not.
I have witnessed the dark side and the underbelly of the tort
system. For those of you who believe that arbitrary caps on
noneconomic damages are the answer, well, first of all, we know
it hurts the most severely injured, and second of all, it is a
cowardly solution that is unwilling to drill down to the real
problems. But most importantly, let's truly serve the people
who are relying on you, like dads and babies.
Thank you.
The Chairman. Thank you very much.
[The prepared statement of Ms. Sheridan follows:]

Prepared Statement of Susan E. Sheridan, MIM, MBA

Good morning. I would like to begin by thanking Senators Enzi and
Baucus for their courage and foresight in developing S. 1337, the
``Fair and Reliable Medical Justice Act.'' It is my pleasure to be here
today to share with you the experiences of my family with the medical
litigation system, and those of other consumers who I have come to
know.
My name is Susan Sheridan. I live in Boise, Idaho. I am a mother
and a widow. I also am the President of a nonprofit organization called
Consumers Advancing Patient Safety--or CAPS--which was established in
2003 by healthcare consumers and providers working together to create a
healthcare system that is safe, compassionate and just. I also serve as
the chair of a World Health Organization (WHO) initiative called
Patients for Patient Safety, one of six programs launched in 2004 that
together make up the WHO's World Alliance for Patient Safety. Our
program recruits consumers from around the world to bring their wisdom
and experience to health ministers and policymakers interested in the
real interests of patients and families. In the past 6 months, we have
convened workshops for proactive, partner-oriented consumers and
healthcare leaders in the United States and the United Kingdom, with
similar events planned in the next 6 months in Canada, Argentina,
Africa and the Middle East.
Through my own experience and my interaction with others, I have
become acutely aware of the importance of aligning the signals and
incentives of the tort system with patient safety goals. We will not
achieve safer, more compassionate healthcare if our legal systems
continue to tolerate and encourage behaviors that hide lessons learned
from medical error, that convert patients and their providers into
enemies when they need to heal, and that reduce trials into jousting
matches between exorbitantly paid medical experts. Tort reform, as it
is usually understood, remedies none of these problems. For these
reasons, we applaud the fresh, forward-looking, bipartisan approach
represented by S. 1337.
My family has experienced two medical errors with devastating
impact. My husband, Pat, died in 2002 due to the failure to communicate
a malignant cancer of the spine. His pathology tests showed an
aggressive cancer, but they seem to have been lost between the hospital
and his surgeon's office for a few weeks, and then inserted in my
husband's medical record without being reviewed. When the tumor
recurred 6 months later, it had grown into his spinal cord and it was
too late to save his life.
In 1995, our first child, Cal, suffered permanent brain damage
during his first week of life from the failure to test and treat
newborn jaundice. This condition, known as kernicterus, is highly
preventable by exposure to a spectrum of light, a process known as
phototherapy. Today Cal has cerebral palsy, is hearing and speech
impaired and has uncontrollable movements of his body.
My family has learned from experience that the legal system does
not serve the needs of families who have been harmed, and I say that
even though in the end many would say we ``won'' our malpractice cases.
In Cal's case, we sued because we believed in the legal system . .
. and because we had no other choice but to seek compensation. Cal's
lifetime medical, rehabilitative and special needs costs are estimated
to be in the millions of dollars. As parents we had the responsibility
to care for our son who, despite extreme physical disabilities, is not
cognitively impaired. In fact, Cal is a bright, creative boy with both
great potential and an extraordinarily challenging future.
From the beginning, the hospital and doctor defendants pursued a
two part strategy in Cal's case: vilify Pat and me by suggesting that
we were trying to get rich off our son's injury and challenge Cal's
diagnosis. Although we produced national experts who testified that Cal
had classic kernicterus, the defense got past a summary judgment motion
by producing an expert who said he was only 49 percent sure that Cal
had kernicterus. Another stated that perhaps I had passed a virus to
Cal through the placenta. After a 7-week trial, the jury found for the
defense, a verdict that was subsequently set aside by the trial court
judge based on his determination that the expert testimony offered was
unsound. In his memorandum opinion, the judge wrote:

The syntactical contortions which counsel and the witnesses
wound through to deliver these opinions were wondrous to
observe. One expert conceded that he was only 49 percent sure
that the collection of symptoms established kernicterus, this
therefore justified his opinion that more probably than not,
Cal did not have kernicterus, although he could not identify
through differential diagnosis any other condition or disease
with the same constellation of symptoms which might exist.

He went on to observe,

I have great difficulty when the expert appears to be
straining an opinion to meet the requirement of advocacy.
Unfortunately in my experience, this latter spectre occurs far
too frequently in medical malpractice cases, where it appears
to me that medical witnesses are willing to bend their
testimony . . .
All of the experts, on both sides, viewed this case as a
competition--a verbal jousting match between lawyer and
witnesses. The thrust and parry between witness and examiner
was wondrous to behold . . .
Although technically superb, the cross examination of these
experts truly offered little opportunity for the jury to plumb
the depths of the expert's opinion, and measure the technical
differences between the views offered.

(Sheridan vs. Jambura et al, Memorandum Decision, District Court of
the Fourth Judicial District of the State of Idaho, in and for the
County of ADA, Case No. CV-PI 97-00266-D, July 19, 1999, attached as
Exhibit 1.) The judge's order setting aside the jury verdict was
appealed, ultimately to the Idaho U.S. Supreme Court, which affirmed
and ordered a new trial. Discovery started again, but this time the
hospital's defense strategy completely changed. They no longer
challenged the diagnosis; the theory this time was that Cal had
kernicterus, but it was completely his pediatrician's fault.
I know among lawyers it is considered normal to plead alternative
theories of causation. But I ask you to put yourself in the shoes of
the injured party and look at that practice again. The hospital's ``win
at all costs'' attempts to deny that Cal had kernicterus cost us
hundreds of thousands of dollars and delayed justice for years. The
costs of the first trial were expenses we owed to our attorneys, in
addition to a 40 percent contingency fee. That is just not right, and
as his mother, I worry every day that Cal just will not be taken care
of as he should be from the net award he received.
After more discovery and two mediations, we settled Cal's case. The
process took 8 years. In the settlement process, I came under enormous
pressure from my lawyers as well as the defendants' to sign a
confidentiality agreement. I couldn't bring myself to do it. From the
time Cal was diagnosed, I had been writing letters to the public health
leaders in our country, trying to alert them to the fact that my son
suffered what was then thought to be a freak accident in a hospital
that delivers more than 5,000 babies a year. In the end, I promised not
to name the hospital or discuss the amount of Cal's settlement in any
communications, but retained the right to discuss his injury.
My husband's medical problems occurred after Cal's first trial. He
had a tumor on his spine. We sought out one of the foremost spinal
surgeons in the country to help us. After surgery, he gave us the good
news that Pat's tumor was benign, congratulated us for dodging a bullet
and told us to ``Go home and live your lives.'' When another tumor
grew, we returned to him immediately for a second surgery 6 months
after the first. He was our hero; our hope and trust was in him.
As we prepared for the second surgery, we were met with strange
questions about why Pat had not gotten follow up care for the first
tumor. We explained our understanding that there was no need as Pat's
tumor had been successfully removed and had been benign. In the
conversations that ensued, we were led to believe that Pat's benign
first tumor had somehow become cancerous. I am the one who discovered
the pathology report that said Pat's first tumor was a sarcoma.
When Pat came to, I explained all that had happened and assured him
that we were not going to relive the same experience we had in our home
town, where we had been shunned by the healthcare system once we'd
filed suit. But the truth was that we never saw Pat's surgeon again. We
were discharged by a nurse, who stuck her head in the door and said,
``You can go now.''
When I called the pathologist who had signed the report to discuss
what it meant, and why the pathology report was dated several weeks
after the first surgery, he referred me to the patient ombudsman. I
explained to this man that our family had been through litigation
before, that we thought it was a dishonorable process and that whatever
was to happen, we did not want to litigate. This approach was initially
welcomed, and we agreed to continue to talk.
I believed the first response of this hospital to my request for
open communication was sincere. However, after the insurance companies
and legal counsel became involved, communication came to a screeching
halt. We think the hospital and the surgeons' group, which had
different insurers, wanted to preserve the right to point the finger at
one another. Perhaps they wanted to wait to see if Pat would die. After
being told not to contact them anymore because they could not talk to
us, we filed a lawsuit on the last day of the statute of limitations
period and entered into a 4-year litigation process.
Pat was subsequently treated at University of Texas M.D. Anderson
Cancer Center, where everything was done to save his life. He died
feeling betrayed by a doctor who was once his hero--who disappeared
instead of sitting down and talking with us.
Our claim against the hospital and surgeon also ended in
settlement. Throughout the negotiation, I indicated that I would not
sign a confidentiality agreement, and that I sincerely wanted to work
with this hospital to prevent critical test care results from being
lost for other patients. I think it is fair to say that my lawyers, and
probably theirs, thought this was a naive request. From their point of
view, this was about money. We were numbers, that was it.
I'm not sure that Pat's surgeon felt that way, however. As a
condition of settlement, I asked to meet with the surgeon and the
hospital CEO. I wanted to renew my request that we work together to
prevent failures like this one from happening again. At the beginning
of our meeting, I was told the surgeon would not be attending. His wife
had called the CEO to say that he was too upset to talk to me.
As a result of my letter writing, I was invited to testify here in
Washington at the first Agency for Healthcare and Research and Quality
National Summit on Medical Errors and Patient Safety Research in
September 2000 (accessible at http://www.quic.gov/summit/
wsheridan.htm). USA Today wrote a story about my family. Within days, I
was hearing from parents around the country who also had children with
kernicterus. We connected some dots and figured out something the
public health authorities had not--that kernicterus had re-emerged in
the United States in the early 1990s after having been essentially
eradicated. Public health officers at Centers for Disease Control and
Prevention (CDC) were stunned. Hundreds of children had experienced
kernicterus since the early 1990s, a function in part of early
discharge and failure to educate providers and parents alike about the
dangers of jaundice. All but a few cases had been effectively buried by
confidentiality agreements--a condition of settlement insisted upon by
doctors and hospitals that didn't want the bad publicity.
Within weeks, other moms and I were working together with anyone we
could recruit to build a campaign to educate parents, change practice
guidelines, increase public health surveillance and put kernicterus
back in the history books where it belongs. The Joint Commission on
Accreditation of Healthcare Organizations (JCAHO) issued a Sentinel
Event Alert in 2001, the first ever generated as the result of a
consumer-identified problem, (Kernicterus threatens healthy newborns,
Sentinel Event Alert, Issue 18, April 2001, accessible at
www.jointcommission.org/SentinelEvents/SentinelEventAlert/sea_18.htm).
CDC followed shortly thereafter with a report in Morbidity & Mortality
Weekly, (Kernicterus in Full-Term Infants--United States, 1994-1998,
MMWR, June 15, 2001/50(23);491-4, accessible at www.cdc
.gov/mmwr/preview/mmwrhtml/mm5023a4.htm). CDC has now identified
kernicterus as one the three most serious emerging risks to newborns in
the United States (See, www.cdc.gov/ncbddd/dd/kernichome.htm).
Through partnership with the Centers for Disease Control, the Joint
Commission, the March of Dimes, National Institutes of Health (NIH),
Health Resources and Services Administration (HRSA) and leaders in
other countries, I believe we can accomplish that soon.
The expert witness who had 51 percent doubt about the cause of
Cal's injuries was paid $34,000 for his half day of trial testimony. He
was a member of the American Academy of Neurology, which is one of a
handful of specialty medical societies that have a program to peer
review its members' expert witness activities. I filed a grievance and
was notified that I could attend as a silent observer the
``nonadversarial'' peer review process where this physician's conduct
was to be reviewed. I did so, accompanied by another CAPS co-founder
who was a former medical association attorney.
To our amazement, the physician brought as his counsel the hospital
attorney who had hired him to be the expert in Cal's case. While I was
prevented from saying a single word, the panel put no restrictions on
the hospital attorney, who painted my family as calculating strategists
trying to neutralize the doctor as a witness in Cal's new trial. Mind
you, this was after the hospital had already dumped this expert's
theory of the case and was preparing for the second trial on the
assumption that Cal did have kernicterus. We could have brought out
this duplicity if allowed to speak. Rather than being nonadversarial,
this peer review process became a one-sided, duplicitous smear campaign
unfolding before my eyes. It was a travesty. After the hearing, my
colleague and I asked for a meeting with the American Academy of
Neurology Board of Trustees to share with them our concerns about their
peer review process. Numerous phone calls and three certified letters
to their general counsel went unanswered.
I'm going to turn now from stories of the past to hopes for the
future.
First, one of the mantra's of the patient safety movement is the
need for transparency. It's ironic, but safety scientists refer to
errors as ``treasure'' because they reveal the inherent weaknesses of
our very complex healthcare delivery processes. As a mom, I cannot help
but wonder whether Cal and many other kids like him could have been
saved or can be still saved if our legal system was not so intent on
burying its treasure. We must incentivize transparency. Finding a way
to declare confidentiality agreements contrary to the public interest
is an excellent place to start.
Second, we have done significant research and cannot find a single
instance where medical societies or State licensing boards have
disciplined an expert testifying on behalf of a defendant. The same
financial incentives apply whether a physician is bending science for a
hefty fee from the plaintiff or the defense. Our expert witness
oversight is patchy at best, and apparently extremely one-sided. This
is wrong and needs to be investigated. If specialty societies are going
to take on the role of peer reviewing experts, they should be held
accountable for doing it fairly. In addition, I know some of the
specialized medical courts proposals anticipate an approach whereby
experts will be called by and paid by the court, not the parties. That
is an approach worth investigating.
Third, one of the by-products of the hand-to-hand combat approach
to medical malpractice litigation is the tremendous variation between
awards for patients and families with similar needs. There has been a
kernicterus verdict in this country for close to $90 million dollars.
Cal got a small fraction of that, and I know families who got a
fraction of what Cal was awarded. Their children will inevitably become
a burden to the Medicaid system. Justice should be equitable, and our
case-by-case system does not work that way. So, whether it is a
schedule of benefits or some other mechanism for giving juries or
judges guidelines for reasonable awards, this fairness gap needs to be
addressed.
If medical courts have rulemaking power and if they are overseen by
those focused on consumer interests, I believe we could see damages
reform that is much fairer than an arbitrary cap on pain and suffering.
Medical associations that advocate arbitrary damage caps know that they
disproportionately impact those claimants with the most severe
injuries. We can come up with better solutions if we approach damages
reform in a patient-centered way.
Fourth, the trial judge in Cal's case characterized our trial as a
competition. Our own lawyers repeatedly told us it's a game. One of the
mediators--a retired judge--referred to the jousting and sparring as a
dance. At the mediation, several of the ``dancers'' were insurance
actuaries and claims agents, complete with calculators. At every step,
we were expected to go along, because this is the way it is done. As a
mom--and a wife--and a citizen, I worry that too many people use these
analogies to distance themselves from what is really supposed to be
going on here: helping a family that has been harmed. To make justice a
game is to dehumanize the people who seek it.
It is my understanding that the tort system was created for
powerful, honorable, reasons--for the people. So I ask all of you
involved in tort reform to follow these guidelines as you reshape the
future of our tort system:

Do it for the right reasons.
Do not compromise the real interests of injured patients,
which are fair compensation and honest investigations of what happened.
Avoid the pressure to serve the interests of those
professionals and organizations who are concerned more about their own
finances than meeting the needs of the patients and clients they serve.
Remember that people who experience medical error are not
just dollar figures. We are your loved ones. We are you.

In closing, I ask you to use your power, your courage and your
sense of justice to shape innovative programs that mark a return to
integrity. Let's craft a system that uses our hard won treasure as a
learning tool. Most importantly, let's truly serve the people who are
relying on you, like daddies and babies.
Thank you. (Attachment: Exihibit 1: Sheridan vs Jambura et al.
Memorandum Decision, district court of the foruth Judicial District of
the State of Idaho, in and for the County of ADA, Case No. CV-PI 97-
00266-D, July 19, 1999.)

[Editor's Note: Due to the high cost of printing, previously
published materials submitted by witnesses are not reprinted in the
hearing. You may see the attachment referred to above at
www.patientsafety.org]

The Chairman. Ms. Niro.
Ms. Niro. Good morning, and thank you for the opportunity
to present the views of the American Bar Association, the ABA.
My name is Cheryl Niro. I am one of the first lawyers in
Illinois to become a mediator and arbitrator.
I learned my skills at various institutions across the
country, beginning with the Atlanta Justice Center, which was
one of the first mediation programs in the country. I have been
both a student and a teaching assistant at the Harvard Law
School Mediation and Negotiation Training Programs. Over the
years, I have mediated hundreds of cases successfully and
trained both lawyers and judges to use those methodologies.
I have, more importantly, trained healthcare professionals
to use negotiation and mediation skills to resolve medical
disputes with patients and their families at bedside, a program
which has great potential to lower subsequent filing of
malpractice claims. I have never filed a plaintiff 's medical
malpractice case in my long career as an attorney.
Mediation, by definition, is a voluntary process, whereby
disputants work together with the assistance of a trained
mutual facilitator to resolve disputes. Mediators, by ethical
requirements, are prohibited from imposing a resolution on the
parties. The ethical use of arbitration must also be premised
on a knowing agreement to arbitrate as well.
The ABA has reviewed proposals related to the area of
healthcare liability. One such proposal is the creation of
health courts. As we understand it, an administrative agency
would oversee these courts. Judges and juries would be replaced
by persons experienced in healthcare. Injured patients would
then have no access to the court system or a trial by jury or
the rules of procedure and the rules of evidence. Expert
witnesses would be hired by the health court, and injured
patients would be compensated according to a schedule of
awards.
Proponents say that the health court scheme is modeled
after workers compensation. There is a significant difference,
however. Injured workers do not have to prove liability. This
legal burden was removed by the workers compensation system to
balance their loss of right to bring an action in court, and it
is that balance that provides the integrity and the fairness to
our national system of caring for citizens who have been
injured in the workplace.
No such balance or appearance of fairness is present in a
health court scheme. Injured persons lose their
constitutionally protected right to a trial by jury, but they
retain the legal burden of proving negligence, as if they were
in a court. If they meet the burden, they are compensated
according to a schedule of awards, which would treat all
injuries the same. The ability of all judges and juries to
fashion an award based on the unique facts of each case would
be lost.
It's sad to me that what makes proven alternative dispute
resolution methods like mediation so very attractive is that
the parties who use those methodologies actually get to
participate in crafting a unique agreement to resolve it. In
health courts, I believe and fear that the exact opposite would
result. The great potential of mediation as an alternative to
litigation would be lost to a system that wouldn't possess the
ability to see the injured patient as a person, a very unique
person.
There is something not quite humane about a healthcare
program that would treat us only as a collection of similar
injuries and body parts. Moreover, I fear that predetermined
awards are just caps in disguise and are just as unfair. Caps
have been found unconstitutional in at least 13 States, and
they work to disadvantage women and children and the elderly,
typically our most vulnerable citizens.
That situation only becomes more disturbing when one
imagines that some of these patients may be forced to agree to
submit their dispute to a health court before they receive
treatment, or even worse, as a condition for receiving
treatment.
The ABA opposes any health court proposal that would
prevent an injured patient from having access to a trial by
jury presided over by an independent judiciary and would place
an arbitrary cap on damages. We do support the ethical use of
other alternatives to litigation, such as negotiation,
mediation, and settlement agreements, and believe that great
potential for innovation would be enhanced by our legal and
medical communities working collaboratively to create new
methodologies that preserve the constitutional rights of our
citizens.
Thank you.
The Chairman. Thank you very much.
[The prepared statement of Ms. Niro follows:]

Prepared Statement of Cheryl Niro

SUMMARY

The American Bar Association has supported the use of and
experimentation with voluntary alternative dispute resolution
methodologies as welcome components of the justice system, provided the
disputant's constitutional and other rights and remedies are protected.
The appropriate use of these voluntary alternatives to litigation is
growing across the country and is becoming an important part of our
system of justice. The ABA has contributed to the growth of this field
by creating ethical standards, conducting training in ADR skills, and
convening ADR professionals in ABA-sponsored programs.
Specific to the area of medical malpractice, the ABA endorses the
use of voluntary negotiation, mediation, and settlement agreements. In
addition, the ABA recognizes the use of arbitration as an option for
resolving these types of disputes under circumstances whereby the
agreement to arbitrate is entered into only on a voluntary basis after
a dispute has arisen and only if the disputant has full knowledge of
the consequences of entering into such an arrangement. In order to
protect the rights of injured patients, alternative dispute resolution
must be voluntary.
The American Bar Association opposes the creation of ``health
courts'' as proposed in recent legislation. Under this proposal,
medical malpractice cases would be removed from the court system and
placed in health courts operated by an administrative agency. Judges
and juries would be replaced by fact-finders with training in science
or medicine. No procedural protections have been defined. Injured
patients would be forced to give up their right to a jury trial.
In the ``health courts'' proposal, a schedule of awards would be
established, similar to the Workers' Compensation system. But unlike
the Workers' Compensation system, injured patients would still be
required to prove liability, whereas injured workers obtain a
guaranteed award in a no-fault system for waiving their right to a jury
trial. The schedule of awards is a de facto cap on noneconomic damages
and, for that reason, could well be found unconstitutional. The ABA
opposes legislation that places a dollar limit on recoverable damages
and operates to deny full compensation to a plaintiff in a medical
malpractice action. The ABA recognizes that the nature and extent of
damages in a medical malpractice case are triable issues of fact (that
may be decided by a jury) and should not be subject to formulas or
standardized schedules. The ABA also opposes the creation of healthcare
tribunals that would deny patients injured by medical negligence the
right to request a trial by jury or the right to receive full
compensation for their injuries.
The ABA supports the tradition of trial by jury. Empirical studies
have demonstrated that juries are competent in handling medical
malpractice cases.
The court system can improve the management of medical malpractice
cases and make appropriate voluntary use of alternative dispute
resolution methodologies while protecting the rights of injured
patients to access the courts. The ABA requests that Congress reject
the proposed health court legislation.
______

Mr. Chairman and members of the committee, I appreciate the
opportunity to present the views of the American Bar Association (ABA)
on ``Medical Liability: New Ideas for Making the System Work Better for
Patients.'' My name is Cheryl Niro, and I am an incoming member of the
Standing Committee on Medical Professional Liability and a member of
the House of Delegates of the ABA. I am appearing on behalf of the ABA
at the request of its President, Michael Greco.
I was an early proponent of alternative dispute resolution and
sought the best education possible in the areas of mediation,
negotiation and arbitration. I have been certified and trained by the
founders of these fields. I began at The Atlanta Justice Center, one of
the first three mediation programs in the Nation. I was a student and
teaching assistant at the Harvard Law School mediation and negotiation
training programs.
In 1992, I was a founding director of a dispute resolution training
program funded by a joint grant from the U.S. Departments of Education
and Justice. That program became the National Center for Conflict
Resolution Education and trained thousands of educators, teachers,
parents and students to create Peer Mediation Programs in schools and
other youth-serving organizations across the country.
I have served on the ABA Section of Dispute Resolution Council and
have conducted skills-based training programs for hospital
professionals so that they may use these skills to resolve medical care
disputes cooperatively with patients and their families. I have never
filed a plaintiff 's medical malpractice claim in my career.
I testify here today as a proud representative of the ABA, a lawyer
interested in improving our legal system and an American citizen
committed to our tradition of fairness and justice.
For decades the ABA has supported the use of, and experimentation
with, voluntary alternative dispute resolution techniques as welcome
components of the justice system in the United States, provided the
disputant's constitutional and other legal rights and remedies are
protected. The ABA strongly supported the alternative dispute
resolution movement in the United States through committees and in 1993
it created a Section of Dispute Resolution. The Section promotes
efforts that focus on education, experimentation and implementation of
alternatives to litigation that resolve disputes economically and
without taxing limited courtroom resources.
As a result of the work of our Dispute Resolution professionals,
and leaders in that field across the country, the number of courts
utilizing these methods increases daily. Successful programs are
replicated, new understanding of the potential offered by these
voluntary processes is achieved, and greater numbers of judges, lawyers
and clients find these alternatives acceptable tools with which legal
disputes may be resolved. Over the past 15 years, the ABA has
contributed significantly to the development of the field by creating
ethical standards, best practices training and scholarship to this
emerging practice. Additionally, the ABA House of Delegates has adopted
policy directed at ensuring the efficacy and integrity of these
voluntary alternatives to litigation.
Mediation, by definition, is a voluntary process whereby disputants
may work together, with the assistance of a trained neutral
facilitator, to resolve their dispute. Mediation, as it is known and
practiced worldwide, is not a mandatory process. Where disputants are
compelled to mediate, the compulsion is only to engage in a mediation
process in good faith. Agreements cannot be compelled. Likewise, the
ethical use of arbitration requires that parties knowingly agree to
engage in the process.
Specific to the area of medical malpractice, the ABA endorses the
use of voluntary negotiation, mediation, and settlement agreements. In
addition, the ABA recognizes the use of arbitration as an option for
resolving these types of disputes under circumstances whereby the
agreement to arbitrate is entered into only on a voluntary basis after
a dispute has arisen and only if the disputant has full knowledge of
the consequences of entering into such an arrangement.
The American Bar Association has reviewed, as part of ongoing
efforts to improve the operation of our legal system, proposals related
to the area of liability of healthcare providers. One such proposal is
the creation of ``health courts.'' Under the proposed ``health court''
system, an administrative agency would oversee the operation of
specialized ``courts'' where medical malpractice cases would be heard
by persons possessing experience in the healthcare field rather than
judges and juries. Under this proposal, medical negligence litigation
cases would be removed from the court system and the protection of the
time-tested rules of procedure and evidence. The parties would be
allowed to be represented by attorneys. There would be no juries.
Expert witnesses would by hired by ``health courts,'' not by the
injured patient. Injured patients would be compensated according to a
schedule of awards. Patients injured by medical negligence would be
denied the right to request a trial by jury and the right to receive
full compensation for their injuries.
Proponents of the ``health courts'' proposal say it is modeled on
the Workers' Compensation system. But there are major differences
between the two systems. It is unlike the Workers' Compensation system
in that injured patients would still be required to prove fault on the
part of a defendant. A similar burden to prove fault is not imposed on
an injured worker in a Workers' Compensation case. Importantly, the
Workers' Compensation system balances the loss of the right to bring an
action in court with a guaranteed award that is not fault-based. In the
``health court'' scheme, injured patients are forced to give up the
right to bring an action in a court with no guarantee of an award.
Injured patients would be required to prove that their injuries are
``the result of a mistake that should have been prevented.'' Proponents
call this the ``avoidability standard,'' which includes injuries ``that
would not have happened were optimal care given.'' This is not a ``no
fault'' standard as in the Workers' Compensation field, nor is it a
strict liability standard.
The ``health court'' scheme and other proposals for administrative
tribunal schemes also include the creation of a schedule for the
assessment of damages and would cover both economic and noneconomic
damages. Such a schedule is inappropriate in medical malpractice cases
where a fixed, rigid assessment would treat all patients with similar
injuries the same. Would it be fair to award a pre-determined award for
negligence that results in a paralyzed hand for a surgeon, or the loss
of vision for an artist? The plan assumes that consensus would produce
an annually adjusted schedule based upon research on similar schedules
in the U.S. legal system and abroad. Proponents urge the comparison to
Sweden and Denmark for regularizing the value of American injuries. The
efficacy of that approach is doubtful, because those nations have
health and welfare benefits that are paid for by their governments
before consideration of the injury claim take place.
By establishing a schedule of injuries/pay-outs, the ``health
court'' scheme would impose a de facto cap on noneconomic damages in
injury claims. The plan contemplates Presidential and congressional
appointees to establish the schedule, but there is no guarantee that
the Commission would be balanced, nor that the schedule would provide
fair and just compensation for the injured patients. Caps on
noneconomic damages work to the disadvantage of women, children and the
elderly. Thirteen States have found caps unconstitutional. Courts and
juries have a long tradition of fashioning individualized, customized
damage awards to fit the unique circumstances of each case.
Thus, in February 2006, the ABA adopted as policy the following
resolution:

RESOLVED, That the American Bar Association reaffirms its
opposition to legislation that places a dollar limit on
recoverable damages that operates to deny full compensation to
a plaintiff in a medical malpractice action.

RESOLVED, That the American Bar Association recognizes that the
nature and extent of damages in a medical malpractice case are
triable issues of fact (that may be decided by a jury) and
should not be subject to formulas or standardized schedules.

FURTHER RESOLVED, That the ABA opposes the creation of
healthcare tribunals that would deny patients injured by
medical negligence the right to request a trial by jury or the
right to receive full compensation for their injuries.

The ABA firmly supports the integrity of the jury system, the
independence of the judiciary and the right of consumers to receive
full compensation for their injuries, without any arbitrary caps on
damages. It is for these reasons that the ABA opposes the creation of
any ``health court'' system that undermines these values by requiring
injured patients to utilize ``health courts'' rather than utilizing
regular State courts in order to be compensated for medical negligence.
As stated above, ABA policy has long endorsed the use of
alternatives to litigation for resolution of medical malpractice
disputes only when such alternatives are entered into on a voluntary
basis and only when they are entered into after a dispute has arisen.
Instead of creating and mandating the use of ``health courts,'' the ABA
advocates the use of voluntary arbitrations, mediations, and settlement
conferences, all of which are appropriate means of alternative dispute
resolution.
There are exciting new programs that demonstrate the efficacy of
the use of alternative methodologies. One such program is at the Rush
Presbyterian Hospital in Chicago, run by former judges and personal
friends of mine. The Rush Mediation Program has successfully resolved
more than 80 percent of filed claims. It is a voluntary and
confidential mediation program. The mediator has no power to force the
parties to agree on settlement. The mediator (or team of two mediators)
has no interest in the outcome and is purely neutral. The program has
demonstrated that voluntary mediation can save money for all parties,
save time, settle cases and preserve the patient's right to a trial by
jury.
Our legal system, the most respected in the world, has procedural
safeguards that have evolved over centuries. The proposals for ``health
courts'' contain little information on how the system would actually
work. Unanswered are questions about how patients would obtain
information and/or what kind of discovery would be permitted. The plan
does specify that the ``health court,'' not the injured patient, would
hire expert witnesses, which is another departure from current
practice. It appears that healthcare providers get an ``opt in''
opportunity, but patients have no corresponding right to ``opt out.''
Patients may be in the position of being forced to sign agreements to
use the ``health court'' with their HMO or healthcare provider before
they receive treatment. More information is clearly required to obtain
any clarity on the basic fairness that may be present or lacking under
the ``health courts'' proposal.
I would be remiss if I did not mention the obvious problem
contained within our Constitution in the seventh amendment. ``In suits
at common law, where the value in controversy shall exceed $20, the
right of trial by jury shall be preserved, and no fact tried by a jury
shall be otherwise re-examined in a Court of the United States, than
according to the rules of the common law.'' Proponents argue that
because the Workers' Compensation system is Constitutional, that the
``health courts'' proposals would be as well. The problem with this
reasoning, as pointed out above, is that the Workers' Compensation
system was effectively balanced in providing a certain award without
the burden of establishing that a mistake has been made that should
have been prevented. The schedule of benefits may also be found
unconstitutional if it is deemed to be caps on damages in disguise.
Proponents of ``health courts'' argue that juries are not capable
of understanding medical malpractice cases. There is no evidence that
this is the case. In fact, empirical studies have demonstrated that
juries are competent in handling medical malpractice cases. Duke
University School of Law Professor Neil Vidmar's 1995 extensive study
of juries found that:

[o]n balance, there is no empirical support for the
propositions that juries are biased against doctors or that
they are prone to ignore legal and medical standards in order
to decide in favor of plaintiffs with severe injuries. This
evidence in fact indicates that there is reasonable concordance
between jury verdicts and doctors' ratings of negligence. On
balance, juries may have a slight bias in favor of doctors.\1\
---------------------------------------------------------------------------
\1\ Neil Vidmar, Medical Malpractice and the American Jury:
Confronting the Myths about Jury Incompetence, Deep Pockets and
Outrageous Damage Awards 182 (Univ. of Michigan Press 1998) (1995).

In addition, he concludes at page 259 of his 1995 publication that
research ``does not support the widely made claims that jury damage
awards are based on the depth of the defendants' pockets, sympathies
for plaintiffs, caprice, or excessive generosity.'' A survey of studies
in the area by University of Missouri-Columbia Law Professor Philip
---------------------------------------------------------------------------
Peters, Jr., published in March 2002 likewise found that:

[t]here is simply no evidence that juries are prejudiced
against physician defendants or that their verdicts are
distorted by their sympathy for injured plaintiffs. Instead,
the existing evidence strongly indicates that jurors begin
their task harboring sympathy for the defendant physician and
skepticism about the plaintiff.\2\
---------------------------------------------------------------------------
\2\ Philip G. Peters, Jr., The Role of the Jury in Modern
Malpractice Law, 87 Iowa L. Rev. 934 (2002).

A May 2005 Illinois study conducted in my home State by Professor
Vidmar also concluded that there was no basis for the argument that
runaway verdicts were responsible for increases in malpractice
premiums.\3\
---------------------------------------------------------------------------
\3\ Neil Vidmar, Medical Malpractice and the Tort System in
Illinois, 93 Illinois Bar Journal 340 (2005).
---------------------------------------------------------------------------
Our legal system has served our Nation well. Our lawyers and judges
have been protecting the Constitution and the rights it contains, and
have made our democracy the envy of the world. As a bar president, I
have had the opportunity to visit nations where lawyers do not have the
role and function of the American lawyer. I have been to Zimbabwe and
Zambia, and witnessed first-hand countries where citizens can have no
expectation of fairness, justice or equal treatment. I have seen the
result of decades of unchecked power in the hands of leaders more
interested in their own wealth than the well-being of their nations.
Our system is not perfect, but our founders understood that perfection
in human endeavor is not likely to be possible. I believe that is why
our Constitution speaks of our national mission to create a union that
is always trying to be more perfect, closer to the ideal. It is our
legal system, our Constitution and our steadfast adherence to the
rights of our citizens that make ours a Nation of hope above all
others. Lawyers strive every day to do their best work to achieve
justice. Legislators have a similar duty to create laws that will
produce just outcomes.
In accordance with our duty to preserve and protect our system of
justice, the ABA opposes the ``health courts'' proposal currently being
discussed. We support the use of alternatives to litigation in medical
malpractice cases only when such alternatives are entered into on a
voluntary basis, and only when they are entered into after a dispute
has arisen. We also oppose the Workers' Compensation model in medical
malpractice cases as proposed, because an injured patient loses the
right to bring an action in court, but receives no guaranteed award.
Injured patients and healthcare providers have access to a
respected court system and fair processes to resolve disputes. Any
proposal that would deny access to that court system should offer a
better system than our current civil justice system. The ``health
courts'' proposal fails to meet that standard and it should be
rejected.
Thank you for the opportunity to appear before you today to present
the views of the American Bar Association. I would be happy to answer
any questions you may have.

The Chairman. Mr. Vidmar.
Mr. Vidmar. Thank you very much, Senator. Let me suggest--
--
The Chairman. I don't think your microphone is on. There;
thank you.
Mr. Vidmar. Thank you very much, Senator, and the rest of
the committee for this opportunity to speak.
I want to introduce my comments with two points. One is my
position on these matters is almost, well, not almost, is
synonymous with that of the American Bar Association, which Ms.
Niro has just spoken. I support ADR as long as it is voluntary
with full awareness of the consequences and after a dispute has
occurred, and in fact, I should indicate that I started Duke's
program on negotiation and mediation at the law school, which
most of our students then take; in fact, 80 percent of them, so
I am a strong supporter of mediation and alternative ways of
handling disputes.
I have been studying medical malpractice litigation for 2
decades. I have sat through trials, interviewed jurors, and the
lawyers and the plaintiffs and the defendants in these cases. I
have conducted jury experiments. I have had access to closed
claims files from insurers and interviewed insurance adjusters.
Recently, work that I have done with Florida, closed claims
from the Florida Department of Insurance, has been conducted
with a colleague who is an M.D. in the Duke medical school.
I have also had a unique opportunity to observe real juries
in operation. The Arizona U.S. Supreme Court allowed an
experiment that will never be repeated again, probably, in
which I have actually videotaped the deliberations of 50 civil
juries. I have seen those juries deliberating and the way that
they operate, so I have some unique experience in this.
In this regard, Senator, I will stand up and defend the
tort system. It is not perfect. It has a lot of costs, but I
agree with the New England Journal of Medicine study which
Professor Studdert has talked about, that the claims of
frivolous litigation are vastly overblown; that the tort system
performs reasonably well.
And those conclusions, and I have a 31-page document that I
have submitted in my written testimony for this, in which I try
to summarize at least many of those findings are totally
consistent with those conclusions from the New England Journal
of Medicine.
What I can tell you is that juries, from the research that
I have done, are intelligent, conscientious, follow the legal
rules and instructions, and it is trial by jury, and judge and
jury, and the judges who sit on the side of those trials every
day have the greatest respect for the jury. The studies that
have been done with them show those kinds of consistencies, and
the judges give them very high marks.
The research also shows that verdicts correlate with the
judgments of medical professionals; the New England Journal of
Medicine study, which is the most recent and probably the very
best study, but there are previous studies that have also shown
that same kind of correlation.
Now, I have covered a lot of topics in my written
testimony, and let me just touch on two here. One is that the
caps that have been discussed to me are unfair for the reasons
that have already been discussed. They discriminate against the
most severely injured patients. They discriminate against
women, children, and the elderly, and they are also unfair in
another sense. If an individual is hurt in an automobile
accident this afternoon, they are entitled to fair and just
compensation, individualized justice, by the right to trial by
jury if, in fact, they cannot settle the case.
Under the proposals that are being set forward now, the
person who is injured by medical negligence, who is just as
injured as anyone else, does not have the same right, and this
seems to be ignored in so much of this discussion about the
medical negligence system, and lots of people are deeply hurt.
And in fact, this morning, in preparation for coming here,
I arrived early, and I sat on the steps of the U.S. Supreme
Court, and I looked up at the heading, individualized justice
under law [sic]. And that's what our jury system provides,
because when you have caps, you can't really describe all of
the kinds of variations that go on in these cases. Somebody who
is injured in one way or another way, the range of hurt is very
difficult, and that's why we have relied upon those systems. So
individualized justice under law is what is actually provided
by the jury system, which we've relied on before we even had a
Constitution.
The proponents of streamlined procedures, I want to comment
on, really have failed in many ways to realize the complexity,
because I have worked in the trenches and studied the trenches.
I am a social psychologist by training, and I have talked to
lawyers. These are not easy cases, the serious ones that
really, you know, the very serious injuries, these are not easy
cases to resolve, because each side disputes what is going on.
And I think that when we look at these alternative systems, one
of the things that we have to ask ourselves is: Can they do it
in these very efficient ways, especially if the system is
designed to be fair?
So I think we need to look at it very carefully. The
assumption seems to be that these other systems will be fair,
but when you have experts appointed by judges, you have people
who are administrative judges who can become cynical in the way
they handle these things, because you can also have changes
that these administrative systems will be subjected to
potential political pressure, including the pain and suffering.
And this is one of the things that I want to make a comment
about: the defined payment schedules under these healthcare
systems, and I can elaborate that later in other comments in
the healthcare courts, are very similar to the problem with
caps on pain and suffering. You have exactly the same kind of
problem that they do not provide that individualized justice,
and scheduling will just not solve the problems.
Finally, again, I covered a lot of material in my lengthy
submission here. I want to just make one final comment about
the doctors' exodus and so forth. You know, these are political
kinds of problems on both sides, and I am sympathetic to
doctors. In fact, I feel strongly that the cutbacks in Medicare
and Medicaid have really harmed our doctors, and I think
Congress bears some responsibility for this, and I talk to
doctors a lot, and it really has affected the healthcare
system, and that has not been discussed here today, and I think
that plays an important part, and in fact, I think as a
taxpayer, I would be willing to pay a little bit more taxes to
help out the doctors.
But these claims that there's a big doctor's exodus, the
judicial hellholes from near my hometown of Gillespie,
Illinois; that is Edwardsville and St. Clair, you know, the
comment was that doctors are leaving; 26 percent of the doctors
have left the area. Research that I did for the Illinois State
Bar Association, I went and looked at the data. I used the
statistics from the American Medical Association and actually
found that the area had actually gained doctors, not lost
doctors, and just recently, a report that was just released
this week, I looked at the same issue in Pennsylvania, and
surprise? No, I am not surprised that Pennsylvania has actually
gained doctors despite the claims that Pennsylvania lost one
quarter of their doctors.
And I think we need to look at this in the whole context of
things, and that also hasn't been discussed today, that these
things get very clouded, the attacks on the jury system and the
tort system. It's not perfect, but many of the claims, I think,
are misdirected.
Thank you for your attention.
The Chairman. Thank you very much.
[The prepared statement of Mr. Vidmar follows:]

Prepared Statement of Neil Vidmar

SUMMARY

Empirical research contradicts mythology about the tort
system in medical malpractice litigation.
Medical injuries resulting from medical negligence are a
serious problem and have high economic and emotional costs for injured
patients.
The tort system performs well in separating meritorious
and nonmeritorious claims.
Research shows that jury verdicts are not biased against
doctors, that they are consistent with judgments of medical experts,
the opinions of trial judges that they are not ``overwhelmed'' by
plaintiff 's experts and that awards positively correlate with
plaintiffs injuries and economic losses.
Caps on so-called ``noneconomic'' damage awards are unfair
and do not reduce medical liability insurance premiums. ``Defined
payment schedules'' in some proposed alternatives to jury trial suffer
from the same problems as caps.
Claims about ``frivolous litigation'' are not supported by
empirical research.
Research on closed claims show that allegations about
increased litigation costs are not supported.
Claims about a ``doctor exodus'' from States alleged to
have ``an abusive litigation climate'' are contradicted by official
statistics of he American Medical Association.

MY BACKGROUND

I am Neil Vidmar, I hold the Russell M. Robinson II Professor of
Law chair at Duke Law School. I received my Ph.D. in Psychology from
The University of Illinois (1967). At Duke I also have a joint
appointment in the Department of Psychology. I have published over 100
articles in scholarly journals and several books. A new book, American
Juries, will hopefully be completed this summer.
I have been conducting empirical research on medical malpractice
litigation since I came to Duke Law School in 1987. Under support from
the Robert Wood Johnson Foundation, The State Justice Institute and
other sources, I published a number of articles on medical malpractice
in the 1990s. This research and other studies were combined into my
book, Medical Malpractice and the American Jury: Confronting the Myths
about Jury Incompetence, Deep Pockets, and Outrageous Damage Awards.
(University of Michigan Press, 1995).
I have continued to conduct research on that subject and have
published the following articles and reports since that book was
published: Vidmar, N., Gross, F., & Rose, M. Jury Awards for Medical
Malpractice and Post-verdict Adjustment of Those Awards. 48 DePaul Law
Review 265 (1998); Vidmar N. and Brown, Leigh Ann, Tort Reform and the
Medical Liability Insurance Crisis in Mississippi: Diagnosing the
Disease and Prescribing a Remedy 22 Mississippi College Law Review 9-46
(2002); Neil Vidmar, Juries and Jury Verdicts in Medical Malpractice
Cases: Implications for Tort Reform in Pennsylvania, January 28, 2002;
Vidmar, (Book Review) First, Do No Harm: The Cure for Medical
Malpractice, 352 The New England Journal of Medicine 521 (2/3/2005);
Vidmar, Lee, MacKillop, McCarthy and McGwinn, Uncovering the
``Invisible'' Profile of Medical Malpractice Litigation: Insights from
Florida, 54 DePaul Law Review 315 (2005); Vidmar, Medical Malpractice
Lawsuits: An Essay on Patient Interests, the Contingency Fee System,
Juries and Social Policy, 38 Loyola Los Angeles Law Review 1217 (2005);
Vidmar, Medical Malpractice and the Tort System in Illinois: A Report
to the Illinois Bar Association, May 2005; Vidmar, Medical Malpractice
and the Tort System in Illinois, 93 Illinois Bar Journal 340 (2005);
Vidmar, MacKillop and Lee, Million Dollar Malpractice Cases in Florida:
Post-verdict and Pre-suit Settlements, Vanderbilt Law Review (in press,
2006); Vidmar and MacKillop, ``Judicial Hellholes:'' Medical
Malpractice Claims, Verdicts and The ``Doctor Exodus'' in Illinois,
Vanderbilt Law Review (in press, 2006); Vidmar. Medical Malpractice
Litigation and Tort Reform in Pennsylvania: A Report for the
Pennsylvania Bar Association, May 2006.
I am appearing here today to provide this committee with my
professional knowledge of medical malpractice litigation. I am
receiving no remuneration for my testimony. My travel expenses are
being reimbursed from my Duke Law School faculty account. The opinions
that I offer are, however, my own and are not necessarily those of Duke
Law School or Duke University.
______

In May of this year the New England Journal of Medicine published
an article authored by researchers associated with the Harvard School
of Public Health that closely examined 1,452 closed medical malpractice
claims in four areas of the United States.\1\ Their main conclusions
merit direct quotation:

Our findings point toward two general conclusions. One is
that portraits of a malpractice system that is stricken with
frivolous litigation are overblown. Although one-third of the
claims we examined did not involve errors, most of these went
unpaid. The costs of defending against them were not trivial.
Nevertheless, eliminating the claims that did not involve
errors would have decreased direct system costs by 13 percent .
. . to 16 percent. In other words, disputing and paying for
errors account for the lion's share of malpractice costs.
A second conclusion is that the malpractice system performs
reasonably well in its function of separating claims without
merit and compensating the latter. In a sense our findings lend
support to this view: three-quarters of the litigation outcomes
were concordant with the merits of the claim.\2\

These conclusions are a good starting point to address issues about
medical malpractice litigation. They are consistent with my own
research findings and that of other researchers.\3\
some proposals for alternatives or changes to the tort system would
abolish or severely curtail the constitutional right to trial by jury
Some of the proposed experimental programs in the proposed Fair and
Reliable Medical Justice Act (S. 1337), 109th Cong. (2005) would force
patients to enter into an administrative scheme without the right to
trial by jury: e.g. The Administrative Determination of Compensation
Model and the Special Health Care Court Model.
The proposal for Health Courts developed by Common Good and the
Harvard School of Public Health \4\ also raise issues about
constitutional rights.
Voluntary resolution procedures, such as those discussed by
Senators Clinton and Obama in the New England Journal of Medicine \5\
do not raise these constitutional issues.
I will not address the constitutional issues in my testimony,
though I do want to call attention to the fact that the Seventh
Amendment to the U.S. Constitution and the constitutions of the 50
States provide all citizens the right to jury trial for all common law
civil claims.
Rather I want to address the commonly held myths that have been
raised about the tort system and in particular the jury system.
Empirical research evidence strongly goes against these myths.

MYTHS ABOUT THE TORT SYSTEM IN MEDICAL MALPRACTICE CASES

The commonly perpetrated myths about the tort system, in no
particular order, are as follows:

Jury verdicts constitute the major source of costs for
medical liability payments and defense expenses.
Jury verdicts drive the settlement process.
Jury verdicts are biased against doctors on the issue of
liability, either due to prejudice against doctors or because juries
are confused and misled by plaintiff medical testimony.
Juries are driven by sympathy for plaintiffs rather than
the evidence.
Jury damage awards are excessive and not rational.
The major portion of jury damage awards are for ``general
damages'' (also, inappropriately labeled ``noneconomic damages'' or
simply ``pain and suffering.''
Caps on pain and suffering will reduce health providers'
liability insurance premiums.
Jury awards and their fallout are driving doctors from
States without caps on ``pain and suffering.''
Many lawsuits are frivolous and driven by the expectation
that a jury will award mega damages.
The cost of defending frivolous cases has increased.

I want to address these myths by describing what research findings
demonstrate.

MEDICAL INJURIES FROM NEGLIGENCE ARE A SERIOUS PROBLEM

The Harvard study of medical negligence examined hospital records
of 31,000 patients and concluded that 1 out of every 100 patients
admitted to hospitals had an actionable legal claim based on medical
negligence.\6\ Some of these patients' injuries were minor or
transient, but 14 percent of the time the adverse event resulted in
death and 10 percent of the time the incident resulted in
hospitalization for more than 6 months. Significantly, 7 of those 10
persons suffered a permanent disability. Generally, the more serious
the injury the more likely it was caused by negligence.\7\ Subsequent
research involving Utah and Colorado found rates of negligent adverse
events that were similar to the New York findings.\8\
There are reasons to believe that the Harvard study may have
underestimated the incidence of medical negligence because the data
were based solely on hospital records. Andrews conducted a study in a
large Chicago-area hospital and studied actual incidence of negligent
events in hospital wards.\9\ Andrews discovered that many injuries were
not recorded on the records as required, especially when the main
person responsible for the error was a senior physician. Other research
is consistent with the Andrews's findings.\10\
In 2000, the Institute of Medicine produced a report that relied on
these studies and other data.\11\ The report concluded that each year
98,000 persons died due to medical error and that many other patients
sustain serious injuries.
In 2004, HealthGrades, Inc., a company that rates hospitals on
healthcare for insurance companies and health plans, studied Medicare
records in all 50 States for the years 2000 to 2002.\12\ HealthGrades
concluded that the Institute of Medicine's figure of 98,000 deaths was
too low and that a better estimate was 195,000 annual deaths. In
addition the HealthGrades report estimated that there were 1.14 million
``patient safety incidents'' among 37,000,000 hospitalizations.
HealthGrades further concluded that ``[o]f the total 323,993 deaths
among Medicare patients in those years who developed one or more
patient-safety incidents, 263,864, or 81 percent, of these deaths were
directly attributable to the incidents'' and that ``[o]ne in every four
Medicare patients who were hospitalized from 2000 to 2002 and
experienced a patient-safety incident died.''
In 2005 HealthGrades released another annual report that found 1.24
million total safety incidents.\13\ The report concluded that ``for the
second year in a row, patient safety incidents have increased--up from
1.14 and 1.18 million reported in HealthGrades' First and Second Annual
Patient [reports].'' The report further concluded that ``Of the 304,702
deaths that occurred among patients who developed one or more patient
safety incidents, 250,246 were potentially preventable.''
It is important to note that the patient error rates reported in
the IOM and the Healthgrades reports do not always mean that negligence
was involved. Additionally, some critics have charged that the various
estimates in these studies are too high.\14\ However, there is no
serious question that medical negligence not only occurs, but that it
occurs at a substantial rate.

INJURIES DUE TO MEDICAL NEGLIGENCE HAVE HIGH COSTS

More than a dozen years ago, Frank Sloan and Stephen van Wert, two
economists, conducted systematic assessments of economic losses
(medical costs, income losses, and other expenses) in Florida cases
involving claims of medical negligence that occurred as a result of
birth-related incidents.\15\ Even though those researchers offered the
caution that their assessment procedures probably underestimated
losses, severely injured children's economic losses were, on average,
between $1.4 and $1.6 million in 1989 dollars. If adjusted for
inflation using the consumer price index, these figures in 2005 dollars
translate roughly to $2.3 million per case. In the same study, the
losses of persons who survived an emergency room incident were
estimated at $1.3 million per case, or $ 2.1 million in 2005 dollars.
For persons who died in an emergency room incident, the loss to their
survivors was estimated at $0.5 million, which translates to $0.8
million in today's dollars. It is important to note that there was
considerable variability in these estimated averages: some patients had
much higher economic losses and, conversely, others had lesser economic
losses.
Sloan and van Wert's estimates, moreover, did not consider
``noneconomic'' losses, such as pain and suffering, disfigurement or
loss of enjoyment of life's amenities. So-called ``noneconomic'' losses
in fact often have economic consequences as State courts have
recognized.\16\ Disfigurement or ``loss of a normal life,'' for
example, may affect employment or marriage opportunities.
A more recent study of Florida closed claim data that I and my
colleagues conducted \17\ indicated that the average payout for a
permanent significant injury such as deafness, loss of a limb, loss of
an eye or one kidney or lung in 2003 dollars was $601,828. For a
permanent major injury such as paraplegia, blindness, loss of two limbs
or brain damage, the payout was $601,828. For a grave injury such as
quadriplegia, severe brain damage, lifelong care or a fatal prognosis,
the average payment was $694,427. The range of payments within these
categories was considerable; sometimes the payments were many times the
average payment. This should not be surprising. A young person
requiring lifelong care will cost more than an aged person requiring
lifelong care. A professional or a business executive will have greater
lost income than an unskilled worker.

ONLY ONE OUT OF SEVEN INJURED PATIENTS SUES

There is a widespread belief that injured patients sue at the drop
of a hat or because they are persuaded to do so by rapacious plaintiff
lawyers. In fact, the opposite appears to be true. One of the most
striking findings from the Harvard medical malpractice project is that
seven times as many patients suffered from a medical negligence injury
as filed a claim.\18\ Put in different words, for every seven patients
who suffered a negligent injury, just one claim was filed. Claims were
also filed in cases in which the research team of healthcare providers
concluded that there was no negligence. However, the bottom line is
that for every doctor or hospital charged with a claim where no
negligence was found, there were as many as seven valid claims that
were not filed.\19\
There are a number of explanations as to why the rate of claiming
for negligent medical injuries is about one in eight. The plaintiff may
never suspect that negligence has occurred or may never be told that
the outcome was due to negligence. The patient may be told that an
error occurred, but that the medical provider corrected the injury.
Even if the error cannot be corrected, the patient, or his or her heirs
in the case of a wrongful death, may be reluctant to sue because the
medical provider is well-liked or offers an apology.
Another important reason is that a patient may not be able to find
a lawyer to represent him. Sloan and Hsieh studied 220 childbirths in
Florida in 1987 that involved death or permanent injury to the
child.\20\ The researchers had physicians independently review the
files and determine if negligence had taken place. The families of the
children were interviewed. Of the 220 cases, 23 parents sought legal
advice. These tended to be cases in which the child suffered very
serious injuries and independent reviewing physicians had concluded
that negligence was probably involved. However, not a single suit was
filed in any of the 220 cases. Sloan and Hsieh concluded that:

The lack of claimants among the 220 women whose babies had
serious birth-related injuries and the failure of 23 women to
obtain [legal] representation runs counter to the
``conventional wisdom'' that patients sue when they obtain less
than a ``perfect result.'' In fact, lawyers filter out many
potential claims that injury victims might lose.\21\

Research by Herbert Kritzer examined the decisions of plaintiff
lawyers to take or decline cases.\22\ Kritzer found that because
lawyers working on a contingency fee basis have their own time and
money at stake, they tend to very carefully screen cases and weed out
those that have minor injuries, low damages potential, or that have a
low potential of winning at trial. In ordinary cases, lawyers may
decline as many as 9 cases in 10; in medical malpractice cases, the
proportion of declined cases may be even higher. Economic reality
drives lawyers' decisions to accept or reject cases. Kritzer's research
findings are consistent with those of Sloan and van Wert.
Combined with the factors of patients not discovering that they are
victims of negligence or patients' reluctance to sue even if negligence
is discovered, plaintiff lawyers' screening of cases helps explain the
low-claiming rates found in the Harvard study and subsequent studies.
Patients who find a lawyer and file lawsuits are more likely to have
suffered a serious injury and have a reasonable likelihood of
prevailing on liability and demonstrating serious economic damages.

MYTHS THAT ARE PERPETUATED ABOUT JURIES

Are juries as irresponsible and incompetent as tort reform critics
say they are? Are jury decisions responsible for medical malpractice
insurance premium hikes? The results of more than 3 decades of
systematic research by many scholars are not consistent with these
claims. Critics of juries usually make their charges through anecdotes
that are nothing more than urban legends. They ignore many research
findings that doctors win between 6 or 7 out of 10 cases that go to
trial, that damage awards are related to the severity of the patient's
injury and that only a small percentage of malpractice payments result
from jury trial.

TRIAL BY JUDGE AND JURY

``Trial by jury'' is misleading. It is ``trial by judge and jury.''
The trial judge presides over the trial, determines which evidence is
allowed and which is not. The judge hears and sees the same evidence as
the jury. Before the jury's verdict can be recorded as a legal
judgment, the trial judge must agree that the evidence was sufficient
to support the verdict. If the judge disagrees on the issue of
negligence, he or she can set aside all, or parts, of the verdict. If
the judge believes that the amount of damages is too high, the amount
can be reduced through the legal device called ``remittitur.'' If the
plaintiff is unwilling to accept the judgment, the judge can order a
new trial.

PLAINTIFFS LOSE MOST JURY TRIALS

Many studies have examined win rates in medical malpractice trials.
The findings contradict widespread beliefs about jury verdicts. For
example, the Bureau of Justice Statistics systematically sampled jury
verdicts in 1992, 1996, and 2001 in courts representing the 75 most
populous counties in the United States.\23\ There were 1,156 medical
malpractice cases in the sample, and 96 percent of these were tried
before juries. In 1992, plaintiffs won 30.5 percent of jury trials, but
in 2001, the win rate had dropped to 26.3 percent, roughly one case in
four. Win rates vary slightly by State and by counties within States.
The fact that doctors win two-thirds of the cases filed is not evidence
that these suits are frivolous cases. These are cases where a judge
concluded that a legitimate triable issue, a factual dispute, existed
between the parties.

JURORS VIEW PLAINTIFF CLAIMS WITH SKEPTICISM

The assertion that jurors decide cases out of sympathy for injured
plaintiffs rather than the legal merits of the case is one of the most
persistent claims of opponents of civil jury trial. Research finds
little support for these claims.
Interviews with North Carolina jurors who decided medical
malpractice cases showed that jurors viewed the plaintiffs' claims with
great skepticism.\24\ Jurors expressed their attitudes in two main
themes: first, too many people want to get something for nothing, and
second, most doctors try to do a good job and should not be blamed for
a simple human misjudgment. This does not mean that in every case
jurors held these views. Sometimes, evidence of the doctor's behavior
caused jurors to be angry about the negligence. However, even in these
latter cases the interviews indicated that the jurors had approached
the case with open minds. Hans interviewed jurors who decided tort
cases, including medical malpractice, and obtained similar
findings.\25\ Hans concluded that jurors often penalized plaintiffs who
did not meet high standards of credibility and behavior, including
those who did not act or appear as injured as they claimed, those who
did not appear deserving due to their already high standard of living,
those with pre-existing medical conditions, and those who did not do
enough to help themselves recover from their injuries.

NO EVIDENCE FOR THE ``DEEP POCKETS'' CLAIM

Closely related to the claim of ``jury sympathy'' verdicts is the
claim that juries are more likely to render verdicts against doctors,
hospitals, and corporations, not because they are seen as negligent,
but only because the jurors perceive them as having the ability to pay
large awards--a so-called ``deep pockets'' effect. A number of research
studies have assessed this hypothesis and find no support for it.\26\

JURY VERDICTS AGREE WITH JUDGMENTS OF NEUTRAL MEDICAL EXPERTS

An important study of medical malpractice litigation by Taragin et
al. compared jury verdicts with the opinions of doctors hired by an
insurance company to review the medical records to provide a neutral
assessment of whether they believed medical personnel had acted
negligently.\27\ The review decisions were confidential and could not
be obtained by the plaintiff or used at trial. The research team
compared the doctors' ratings with jury verdicts. The verdicts tended
to be consistent with these assessments. Moreover, the study also found
that juries' decisions on liability or negligence of doctors were not
correlated with the severity of the plaintiff 's injury. The results,
therefore, contradict the claim that juries decide for the plaintiff
out of sympathy rather than apply the legal standard of negligence.
The New England Journal of Medicine study that I referenced at the
beginning of my testimony is consistent with the Taragin et al.
research. Juries tended to reject claims that had no merit.\28\

JUDGES AGREE WITH JURY VERDICTS

Some studies asked trial judges to make independent assessments of
who should have prevailed in civil cases over which they presided.\29\
The judgments were made while the jury was still deliberating and,
therefore, were not contaminated by knowledge of the outcome. The
judge's decision was then compared to the jury verdict in that case.
Although the research did not specifically focus on malpractice juries,
the findings indicate that there was high agreement between the judge
and the jury. Moreover, in instances when the judge would have decided
differently than the jury, the judge usually indicated that,
nevertheless, the jury could reasonably have come to a different
conclusion from the trial evidence. Other studies asked large national
samples of judges to draw on their professional experience with juries
and give their opinions about jury decisions.\30\ The surveys uncovered
a general consensus that jurors accept and take very seriously their
civic responsibility. The overwhelming number of the judges gave the
civil jury high marks for competence, diligence, and seriousness, even
in complex cases.

JURIES ARE NOT ``OVERWHELMED'' BY PLAINTIFF 'S EXPERTS

An often-repeated charge is that the plaintiff 's experts in
medical malpractice cases overwhelm jurors.\31\ This confusion and
deference to experts, it is alleged, plays to the advantage of
plaintiffs because the jury simply defers to the plaintiff 's experts
and allows juror sympathies for the plaintiff to be the basis of their
verdict. There is fuzzy logic in this claim, however, because it
ignores the fact that defendants also cross-examine plaintiff 's
experts and call their own experts who offer opinions contrary to the
plaintiff 's experts. Moreover, the defendants often call more experts
than the plaintiff.
Systematic studies of jury responses to experts lead to the
conclusion that jurors do not automatically defer to experts and that
jurors have a basic understanding of the evidence in malpractice and
other cases.\32\ Jurors understand that the adversary system produces
experts espousing opinions consistent with the side that called them to
testify. Moreover, jurors carefully scrutinize and compare the
testimony of opposing experts. They make their decisions through
collective discussions about the evidence.

DAMAGE AWARDS CORRELATE WITH SEVERITY OF INJURY

Bovbjerg et al. found that the magnitude of jury awards in medical
malpractice tort cases positively correlated with the severity of the
plaintiffs' injuries, except that injuries resulting in death tended to
result in awards substantially lower than injuries resulting in severe
permanent injury, such as quadriplegia.\33\ I and two colleagues
conducted a study of malpractice verdicts in New York, Florida, and
California. We also found that jury awards of prevailing plaintiffs in
malpractice cases were correlated with the severity of the injury.\34\
In these studies, there was variability of awards within levels of
injury. However, economic losses vary by patient. The economic loss for
a quadriplegic who is 40-years old with a yearly income of $200,000 and
a family of three young children would ordinarily be much greater than
an identical quadriplegic who is retired, widowed, 75-years old, has no
dependents, and whose annual income never exceeded $35,000. Moreover,
losses can vary by a given location because the costs of living,
including the costs associated with medical care and treatment, are
higher in urban areas compared to rural areas.

JURY DAMAGE AWARDS HAVE INCREASED, BUT THERE ARE PLAUSIBLE,
RATIONAL REASONS

The Bureau of Justice Statistics study found that in 2001 the
median verdict in medical malpractice trials when plaintiffs prevailed
was $431,000, compared to $253,000 in 1992.\35\ Punitive damages were
awarded in 4 percent of cases, and those tended to involve cases of
gross malfeasance, such as sexual assaults on patients. Most State laws
proscribe punitive damages in malpractice cases except for cases
involving fraud, or wanton and willful behavior. My own research in
Florida, involving a study of closed claims compiled by the Florida
Department of Insurance also showed that awards increased between 1990
and 2003.\36\ Claims have been made that this increase is due to
increased jury profligacy, but there are very plausible alternative
explanations.
A study of the Texas closed claim data base over a 15-year period
by Charles Black and his co-authors found the medical malpractice
system was largely stable and generated few significant changes in
claim frequencies, payments, or jury verdicts. The authors concluded
that ``Average payments on medical malpractice claims rose because
small claims were squeezed out of the system over time, not because
payments on larger claims increased.'' \37\
Patients may have sustained more serious injuries. Due to medical
advancements, patients can survive negligent injuries for longer
periods of time than in the past, and thus their medical bills have
increased. For example, only a few years ago many brain injured babies
died. Today, thanks to medical advancements those babies now live, but
at enormous medical expense. Our society must and should support those
children, but the costs can sometimes be astronomical.
Another explanation may lie in the possibility that plaintiff
lawyers have become more adept at ``proving'' damages by using experts
who document economic losses better than in the past.\38\ An additional
possible cause is that the cost of negligent medical injuries and lost
income may have increased. During the 1990's, medical costs, and
consequently cost for needed medical care, increased 51.7 percent and
general inflation, which is reflected in lost wages, increased 26.2
percent.
Another explanation for the increase in costs is that cases with
claims of more serious injuries may be tried to juries in 2001,
compared to 1992. This last possible explanation needs elaboration. The
study of medical malpractice litigation in Florida that I and my
colleagues conducted found that, compared to the first 3 years of the
1990s, during the first 3 years of the 2000-decade, there were more
settled cases involving claims of negligent deaths and fewer cases
involving less serious injuries. The change in types of cases is
unlikely to explain all of the increase in awards, but it does appear
to be a possible partial explanation.
In short, like many other parts of the medical malpractice
controversy, the questions about damages are complex, and at present
there are not satisfactory answers to all of these questions.

SOME EXAMPLES OF INJURIES FROM MEDICAL NEGLIGENCE

Statistics do not tell stories of injuries as well as case
examples. I offer some recent examples of jury verdicts from
Philadelphia, although I can equally provide other examples from
Florida and Illinois. The examples provide graphic illustrations of the
sometimes catastrophic injuries suffered by patients as a result of
medical negligence.

Table 1.--Sample of Claims and Awards in Philadelphia's Million Dollar
Cases Occurring Between July 2003-December 2004
------------------------------------------------------------------------
Verdict
Case Number Date Injury Claim Verdict
------------------------------------------------------------------------
10400199..................... 9/18/03 In 1984, at 3 $1,000,000
weeks old this
female had
surgery for hip
dysplasia and
suffered damage
to her femoral
nerve. At age
19, she suffers
permanent
physical pain,
disability,
disfigurement
and has had to
spend money for
hospitalization
, medication,
treatment and
rehabilitation.
10301115..................... 9/30/03 Doctor failed to $1,500,000
diagnose an
intra-cranial
tumor in
female,
resulting in
loss of hearing
in one ear,
resulting in
additional
surgery,
diminution of
earning
potential, pain
and emotional
distress;
$37,500 to
husband for
loss of
services,
companionship.
10201487..................... 10/02/03 Female lupus $8,178,350
patient with
dialysis in
severe pain,
but doctors
failed to
conduct tests
and gave
improper
medication and
discharged
patient who
became a
quadriplegic
plus multiple
hospitalization
s and future
medical costs.
10402583..................... 10/28/03 Male, age 19, $10,015,000
was in hospital
after suicide
attempt.
Intensive care
nurses failed
to respond in
timely manner
to bedside
monitor alarm,
resulting in
severe brain
damage.
$600,000 in
past medical
expenses and
life care
estimated at $6
to $12 million.
Punitive
damages of
$15,000 for
nurse altering
records.
10600976..................... 11/17/03 Male, age 37, $2,910,000
with two
children,
earning $60,000
per year;
elective
surgery for
hearing loss
and died almost
immediately
upon
administration
of anesthesia.
10601622..................... 11/25/03 Female, age 61, $1,000,000
examined for
gastrointestina
l bleeding, but
doctors failed
to diagnose
cancerous tumor
until 2 years
later and woman
dies.
10800103..................... 12/03/03 Female, age 55, $1,800,000
claimed failure
to diagnose and
treat liver
disease that
resulted in
liver cancer.
Plaintiff
underwent four
hospitalization
s, had end-
stage liver
disease at time
of trial, and
was seeking a
liver
transplant.
10500659..................... 12/23/03 Female, age 48, $1,000,000
dies after
failure to
diagnose and
treat adrenal
insufficiency
over an 8-year
period despite
more than 40
visits to
doctor.
10702977..................... 1/30/04 Pregnant female, $15,000,000
age 34, in auto
accident
causing injured
ankle; surgery
performed after
birth with bone
graft and
screws. Claims
of lack of
informed
consent and
result of
severe,
permanent
injuries to
bones, muscles,
nerves and
blood vessels
in right leg
with permanent
pain,
depression, and
inability to
care for her
child plus
additional
surgeries and
nursing care.
10300103..................... 2/06/04 Female, age 39, $20,500,000
suffering
gastrointestina
l problems had
bowel surgery
and surgeon
severed her
bile duct that
could not be
repaired,
resulting in
permanent pain
and spasms,
gastroparesis,
motility and
risk of
progressive
liver disease,
possibly
needing a liver
transplant.
98060057..................... 2/11/04 Female, age 30, $9,000,000
had corrective
surgery to
ureter which
was
accidentally
severed and
repaired
improperly;
ureter placed
on top of
bladder instead
of side
resulting in
reflux
disorder,
chronic kidney
infection and
will probably
require kidney
removal.
10402642..................... 3/10/04 Female, age 49, $3,200,000
claimed that a
neurosurgeon
inappropriately
recommended
implantation of
a device to
treat multiple
sclerosis and
failed to
obtain informed
consent.
Patient now a
paraplegic with
loss of bowel
and bladder
control.
10601566..................... 3/12/04 Male, age 39, $2,800,000
with six
children had
abdominal
complaints, but
doctor did not
order
diagnostic
tests, which
would have
shown gastric
cancer. Cancer
went from stage
1 to stage 2
requiring
radiation and
chemotherapy.
Two-thirds of
stomach removed
and increased
risk of
recurring
cancer.
10902569..................... 3/25/04 Male, age 61, $1,151,028
died after a
misdiagnosis
with regard to
a drug
interaction
between Lopid
and Lipitor.
Doctors
improperly
prescribed the
medications
together and
failed to
discontinue
them when he
showed signs of
a debilitating
muscle
condition.
10600854..................... 3/25/04 Female had $2,05,000
mammogram and
doctors failed
to detect
cancer allowing
carcinoma to
advance
resulting in
mastectomy,
reconstructive
surgeries,
chemotherapy,
severe pain,
and prospect of
future medical
expenses.
------------------------------------------------------------------------

Cases go to trial because patients and doctors disagree about
whether negligence occurred or because they disagree about the values
of the damages resulting from the negligent injury. The above sample of
cases were ones in which the juries ruled in favor of the plaintiff.
Certainly on their face the damage awards seem reasonable, given the
degree of injury.
outlier awards tend not to withstand post-verdict adjustments
Despite the substantial evidence indicating that juries are
ordinarily conservative in deciding damages in malpractice cases, there
are exceptions resulting in what are commonly labeled ``outlier
awards.'' There are a number of reasons for outlier awards that I have
discussed elsewhere and I need not detail here.\39\ The important point
is that research evidence indicates that outlier verdicts seldom
withstand post verdict proceedings.
Post-trial reductions have been documented in a number of
studies.\40\ I and two colleagues found that some of the largest
malpractice awards in New York ultimately resulted in settlements
between 5 and 10 percent of the original jury verdict.\41\ A study that
I conducted on medical malpractice awards in Pennsylvania \42\ and a
study of Texas verdicts \43\ found similar reductions.
My recent research on medical malpractice verdicts in Illinois
found that, on average, final payments to plaintiffs were substantially
lower than the jury verdicts.\44\ This does not mean that the original
verdict was too high. Rather, needing money immediately and wanting to
avoid a possibly lengthy appeal process, the plaintiffs settled for the
health providers' insurance policy limit. Generally speaking, the
larger the award, the greater the reduction in the settlement following
trial.

CAPS ON PAIN AND SUFFERING

Advocates of change in the tort system claim that the jury system
is broken. In addition to seeking an alternative court some have
advocated for a cap of $250,000 for noneconomic damages that presumably
includes not only pain and suffering, but also disfigurement and loss
of society.\45\
The basic assumption for caps is that juries are too generous with
their pain and suffering awards. Consequently, it is assumed that in
many instances jury awards need to be reduced to some ``reasonable''
figure.
No one disputes the fact that caps reduce the awards to injured
persons. For example, a study of California jury trials occurring
between 1995 and 1999 by RAND's Institute for Civil Justice showed that
California's MICRA cap of $250,000 on noneconomic damages reduced
awards about 25 percent in cases involving an injury and over 51
percent in cases involving death.\46\
But questions abound regarding the fairness of caps and about their
effectiveness in reducing insurance premiums.

THE FAIRNESS OF CAPS

David Studdert et al. examined the effects on injured patients of
California's $250,000 cap on noneconomic damages.\47\ Their findings
indicate that reductions under the cap affected the patients with the
most severe injuries. Those researchers concluded:

Imposition of greater reductions on more severe injuries may
be justified if compensation for this particular group of
injuries were especially prone to excess. In fact available
evidence suggests the reverse is true: Plaintiffs with the most
severe injuries appear to be at the highest risk for inadequate
compensation. Hence, the worst-off may suffer a kind of
``double jeopardy'' under caps.\48\ (Italics added)

In another study, Lucinda Finley systematically examined jury
verdicts in California, Florida and Maryland to determine if caps had a
disparate effect on the monetary recoveries of women, and elderly
persons.\49\ She found that to be the case. Finley's research pointed
out that cap laws tend to ``place an effective ceiling on recovery for
certain types of injuries disproportionately experienced by women,
including sexual assault and gynecological injuries that impair child
bearing or sexual functioning.'' In wrongful death cases women were
shown to be disadvantaged in awards they would receive compared to men.
Finley separately analyzed gynecological malpractice cases
involving misdiagnosed breast cancer, negligence in prenatal care that
caused pregnancy loss, negligent injuries during hysterectomies, and
malpractice resulting in infertility. Finley showed that over 70
percent of women's awards were for noneconomic losses. When men
suffered sexual injuries during medical treatment (e.g. partial removal
of a bowel and scrotum, leaving a man, age 28, impotent and infertile;
a 54-year-old male treated for genital warts with undiluted ascetic
acid on the scrotum and penis causing severe burns, scarring and severe
pain if sexual intercourse was attempted) the pain and suffering awards
were similar to those of women with roughly comparable sexual injuries.
However, women are statistically far more likely to suffer such sexual
injuries than men. She also pointed out that elderly people, both men
and women, tend to be disadvantaged by caps. Finley also observed that
because of the reduced likelihood of recovery, plaintiff lawyers are
less able to take such cases because the amount that can be recovered
under the caps often does not justify litigation expenses.
In 2005, the Wisconsin U.S. Supreme Court overturned that State's
$350,000 cap on pain and suffering in medical malpractice cases.\50\
The court reasoned that plaintiffs ``with the most severe injuries
appear to be at the highest risk for inadequate compensation'' (italics
added). For example, a patient suffering a severe infection for a
period of months, but who eventually recovered, could receive $350,000
for pain and suffering in a jury award. In contrast, a patient who was
so badly injured that she will suffer excruciating pain the rest of her
life would be limited to the same amount. In the Wisconsin U.S. Supreme
Court's words, ``[t]he cap's greatest impact falls on the most severely
injured persons.''
The plaintiff in the Wisconsin case was a boy who was severely
deformed at birth due to medical negligence; he can be expected to live
for another 69 years. He was awarded $10,000 per year for pain and
suffering. Under the cap, the U.S. Supreme Court concluded that amount
would be almost halved. The Court further concluded that many cases
that would be affected by caps involve children.
In summary, two systematic studies by respected researchers and the
Wisconsin U.S. Supreme Court arrived at the same conclusion. Caps on
pain and suffering have a disproportionate negative impact on the
fairness of compensation for persons injured through medical
negligence.

CONSIDERING CALIFORNIA'S MICRA CAP AND FAIRNESS

An issue of fairness also arises about California's MICRA cap of
$250,000. The MICRA bill was passed in 1975. In 2005 dollars, that cap
was worth $899,281. In short, the MICRA cap at the time it was passed
was almost nine-tenths of a million dollars. However, during the past 3
decades the cap has never been adjusted for inflation. Thus, patients
with pain and suffering awards in California have progressively lost
ground due to inflation. What the California legislature decided was
fair compensation in 1975 has, in real terms, been reduced by 72
percent. This insight adds to the issue of whether the cap is fair.

THE INEFFECTIVENESS OF CAPS

Research on the effectiveness of caps in reducing medical
malpractice premiums lends, at best, equivocal support to the argument
that they are effective.
In 2003 a U.S. Government Accounting Office (GAO) report concluded
that there are no data to establish the proposition that damage caps
have an effect on the number of malpractice claims, losses by medical
insurers, litigation expenses, or the rates charged doctors for
insurance.\51\
In the same year, Weiss Ratings, Inc., a highly respected insurance
rating company, also concluded that caps do not have an effect on the
physicians' insurance premiums.\52\ Indeed, Weiss found that in
comparison to States without caps, States with caps had greater
increases in median annual insurance premiums for practices involving
internal medicine, general surgery and obstetrics-gynecology.
An analysis of statistical information for 2003 by the Kaiser
Family Foundation, another highly respected organization dedicated to
healthcare, showed that the number of paid claims per 1,000 active
physicians was unrelated to whether a State had caps on pain and
suffering.\53\
Catherine Sharkey analyzed medical malpractice jury verdicts from
22 States for the years 1992, 1996 and 2001 that were collected by the
National Center for State Courts.\54\ Sharkey found no statistically
significant relationship between the presence or absence of caps and
compensatory damages in jury verdicts and trial court judgments.
I analyzed a sample of Illinois jury verdicts that provided
breakdowns of the verdicts into their specific components, including
pain and suffering.\55\ My analysis showed that a proposed $500,000 cap
on pain and suffering would functionally affect very few cases.
The Wisconsin U.S. Supreme Court decision analyzed a substantial
body or empirical research bearing on caps with specific reference to
the State of Wisconsin.\56\ The Court drew a number of conclusions that
included:

``Based on the available evidence from nearly 10 years of
experience with caps on noneconomic damages in medical
malpractice cases in Wisconsin and other States, it is not
reasonable to conclude that the $350,000 cap has its intended
effect of reducing medical malpractice insurance premiums.
The available evidence indicates that healthcare providers do
not decide to practice in a particular State based on the
State's cap on noneconomic damages.
We agree with those courts that have determined that the
correlation between caps on noneconomic damages and the
reduction of medical malpractice premiums or overall healthcare
costs is at best indirect, weak and remote.''

The company also said that a provision in Texas law allowing for
periodic payments of awards would provide a savings of only 1.1
percent. Medical Protective eventually raised the rates on its
physician policyholders.\58\
In California in 2003, despite the cap of $250,000, GE Medical
Mutual sought an increase of 29.2 percent in liability insurance
premiums. Thus, the cap did not prevent insurers seeking a major
increase in liability insurance rates.\59\

EXPLANATIONS FOR THE INEFFECTIVENESS OF CAPS

The rationale for caps is predicated on the following two
assumptions: (1) juries are irresponsible and excessive in awarding
pain and suffering; and (2) the fear of large jury awards for pain and
suffering cause doctors and hospitals to settle cases for more than
they are actually worth.
The first problem with the caps rationale is that it ignores the
fact that most cases with large jury awards are settled for much less
than the verdict, often for amounts close to the plaintiff 's economic
losses. Functionally, the plaintiff does not typically receive the
large award for pain and suffering.
The second problem with the rationale is that it assumes that jury
awards directly drive settlements. More than 90 percent of cases are
settled without jury trial, with some estimates indicating that the
figure is as high as 97 percent. In my study of 831 Florida malpractice
cases between 1990 and 2003, more than 92 percent of claims with
million-dollar payments were settled without a jury trial. Thirty-seven
cases resulted in payments over $5 million. Only two of these cases
were decided by a jury. Five of the 831 cases exceeded $10 million
dollars, but only one was the result of a jury trial. Of the remaining
four cases, one settled in pre-litigation negotiations.
A study of closed claims in Texas from 1966 through 2002 showed
that plaintiff verdicts averaged only 3 percent of paid claims over
$10,000.\60\ In any year, jury verdicts never accounted for more than 5
percent of paid claims.
To be sure, the prospect of a jury award is possible if the case is
not settled before trial, but if the case does go before a jury, data
from many studies show that at trial, doctors win between 6 and 8 times
out of 10. Defense lawyers and their insurers are aware of these odds
because they are repeat players in the litigation process. They also
know that when there is a jury award, the case frequently settles for
less than the verdict amount. Research on why insurers actually settle
cases indicates that the driving force in most instances is whether the
insurance company and their lawyers conclude, on the basis of their own
internal review, that the medical provider was negligent.\61\ If they
conclude negligence occurred, an attempt is made to settle; the case
proceeds to trial only if the plaintiff monetary demand is unreasonable
or if there is a strong disagreement over whether liability exists.
Payments are typically not made in cases in which the defense concludes
there is no liability.
Finally, the rationale for caps ignores problems associated with
the insurance business cycle that may be responsible in whole or in
part for the costs of liability insurance premiums.

CAPS AND ``DEFINED PAYMENT SCHEDULES''

The fairness problems of caps as detailed above are endemic in any
system that proposes ``defined payment schedules'' for so-called
noneconomic damages.\62\ My study of actual medical malpractice cases
shows there is a great deal of variation among injured persons. For
example, one person with a leg amputation may experience mild or no
pain whereas another may experience constant excruciating ``phantom
pain'' for the rest of his or her life.
Even when some leeway is built into compensation schedules, they
cannot take into account the number of factors and extreme variability
of pain and suffering, physical impairment, mental anguish, loss of
society and companionship, and other elements of damages that fall
under the rubric of noneconomic damages. That is why these matters have
been entrusted to juries. They provide justice on an individualized
basis.
Moreover, there is another form of fairness problem that involves
types of claims. A person injured in an automobile accident will have a
full right to have his or her damages decided by a jury. A person with
exactly equal injuries resulting from medical negligence will not have
this right. What possible rationale can be given for treating medical
patients differently?

TOO MUCH EMPHASIS ON JURIES! MOST CASES SETTLE BEFORE TRIAL

In testimony before the Illinois General Assembly in 2005, Lawrence
Smarr, President of The Physician Insurers Association of America
presented data indicating that jury verdicts for plaintiffs constituted
only about 3 percent of medical malpractice payments.\63\
In recent research, I and my colleagues have been studying closed
medical malpractice claims in the State of Florida.\64\ Florida has
required medical liability insurers to file detailed reports of closed
medical malpractice claims with the Department of Health since 1975. In
this research we centered on cases closed between 1990 and 2003. A
total of 21,809 claims were closed with a payment to the claimant
during those 14 years. We found that 20.2 percent of paid claims were
settled without the claimant even resorting to a lawsuit, 6.3 percent
of claims were settled in arbitration and 70.8 percent settled before a
jury verdict, leaving just 2.7 percent of paid claims that resulted
from a jury verdict.\65\
To pursue this insight further we singled out cases involving a
million dollars or more.\66\ We found that 10.5 percent were settled
without a lawsuit and 4.6 percent were settled in arbitration, 77.4
percent were settled before or during trial and only 7.6 percent
resulted from a jury verdict. Put in the obverse, more than 92 percent
of claims with million dollar payments were settled without a jury.
Going further, we found that 37 of the 831 million dollar cases
resulted in payments over $5 million. Only two of these cases were
settled following a jury trial. Five of the 831 cases exceeded $10
million dollars but only one was the result of a jury trial; of the
remaining four cases one was settled in pre-litigation negotiations,
and three settled before a trial had commenced.
Perhaps Florida is different than other States. It is hazardous to
generalize because each State has its own unique set of laws and legal
culture. Nevertheless, it is interesting to observe that data from
North Carolina seems roughly consistent with the Florida findings. I
compared Carolina data on verdicts and settlements.\67\ The data tended
to show some interesting patterns. As early as the first part of the
1990s decade there were verdicts and settlements exceeding $1 million.
Over the period from 1990 through 2002, the number of million-dollar-
plus settlements exceeded the number of million-dollar-plus jury
verdicts by a factor of over 3 to 1. The average amounts of $1 million-
plus settlements were comparable to the jury awards. A statistical test
on the data indicated that the distributions and the magnitudes of
payments for jury verdicts and non-jury settlements were not
statistically different from one another. In short, the North Carolina
findings also indicated that most of the payments exceeding a million
dollars involved settlements rather than jury trial.
These findings have a major implication. Whether we are talking all
cases or just million dollar cases the process by which claims are paid
in Florida (and, it appears, also in North Carolina) involves the
negotiation table, not the jury room. In Florida settlements exceed
jury trials by a factor of more than 9 to 1 for million dollar cases.

A LOOK AT FLORIDA MILLION DOLLAR SETTLEMENTS WITHOUT LAWSUITS

Our Florida research on million dollar cases allow further insights
into the losses incurred in medical negligence cases. Recall again,
that in these cases the health providers did not contest liability, and
settled to avoid the expenses of a lawsuit they were almost sure to
lose. Through 1998, the Florida closed claim files contained
information on ``structured settlements.'' The details of these cases
provide insights about the nature of the injury, the long-term costs
and about the collateral losses such as children left without the
services of a parent.\68\

Table 2.--Year, Case Name, Injury and Details of Settlement
--------------------------------------------------------------------------------------------------------------------------------------------------------
Settle Year Case Sex Age Injury Settlement Structured
--------------------------------------------------------------------------------------------------------------------------------------------------------
1991............................. BMH................. M.................. 0.................. Spastic quad; $1,887,044 $1 million cash
cerebral plus $887,044
palsyriplegia. annuity yielding
an expected total
payment to child
of $13,855,826.
1992............................. WCD................. M.................. 1.................. Sever brain damage, $1,000,000 $640,000 cash plus
blind, deaf, $540,000 annuity
immobile. yielding $2,557/
month for child
plaintiff.
1992............................. UMS................. F.................. 0.................. Severe mental, $3,000,000 No details except
emotional as estimate that
impairment. the annuity would
yield $5,914,774.
1993............................. CRH................. F.................. 2.................. Severe cerebral $6,000,000 $4,922,115 cash;
palsy secondary to plus $1,077,885
hypoxia. present value for
structured trust
expected to yield
$3,179,273 (Note
medical expenses
incurred to date
of the settlement
= $989,164).
1993............................. TGP................. M.................. 43................. Renal cell $2,000,000 $1,389,542 cash
carcimona. plus $610,459 for
structured
settlement for 3
surviving minor
children.
1993............................. AHP................. F.................. 0.................. Paraplegia......... $3,750,000 $2,300,000 plus
$1,450,000 present
value for annuity.
1994............................. AR.................. M.................. 0.................. Profound brain $1,000,000 $440,178 cash plus
damage. $559,822 annuity
yielding a total
of $2,912,000.
1994............................. GBP................. F.................. 39................. Vegetative state, $3,000,000 $1,500,000 cash
non-reversible. plus $1,500,000
annuity expected
to yield an
expected payment
to the plaintiff
of $8,783,183 for
plaintiff and four
minor dependants.
1995............................. FHH................. M.................. 25................. Spinal cord injury. $2,647,617 $1,156,000 cash
plus $1,491,000
for structured
annuity expected
to yield
$5,291,937.
1995............................. CHM................. M.................. 0.................. Canavan's Disease $2,383,900 $1,092,209 cash
(degenerative plus $1,291,691
disorder of for annuity
central nervous yielding lump sum
system). payments at 5 and
10 years totalling
$2,000,000.
1995............................. HBM................. F.................. 32................. Coma............... $7,250,000 Cash and annuity
cost unknown but
annuity estimated
to yield
$16,129,528.
1996............................. RLC................. UK................. UK................. Death.............. $1,500,000 $1,429,808 cash
plus $70,192 for
annuity yielding a
total payment to
plaintiff 's
family of
$1,422,239.
1996............................. CPC................. M.................. 0.................. Required $2,500,000 $1,187,940 cash
resuscitation; plus $1,312,060
neurological for annuity,
damage. yielding
$3,307,824 for the
child.
1996............................. ORH................. F.................. 0.................. Brain damage....... $7,300,000 $5,100,000 cash
plus paid on
behalf of four
defendants plus
$2,200,000 for an
annuity. Total
yield of annuity
unknown.
1996............................. GMI................. F.................. 0.................. Severe brain damage $6,379,322 $5,529,332 cash
plus $850,000
annuity yielding
$8,066/mo for life
of the child.
1996............................. DCH................. M.................. 0.................. Cerebral palsy..... $3,000,000 $2,600,000 cash
plus $800,000
annuity expected
to yield
$13,783,483 over
the child's life.
1996............................. CKR................. F.................. 30................. Brain herniation... $3,000,000 $1,800,000 cash
plus $1,200,000
from three
insurance carriers
for an annuity
expected to yield
a total of
$7,816,824.
1996............................. FHA................. M.................. 0.................. Cerebral vasculitis $6,500,000 $4,500,359 cash
and bilateral plus $1,999,641
thalamic infarcts. for an annuity
yielding $7,855/mo
for life plus
periodic cash
payments
graduating from
$50,000/yr to
balloon at $25
years to $250,000.
1997............................. SVC................. M.................. 52................. Brain damage....... 1,000,000 $582,935 cash plus
$417,065 for
annuity, yielding
expected total of
$1,572,935.
1997............................. HCP................. M.................. 49................. Death.............. $5,000,000 $4,000,000 cash
plus $1,000,000
annuity yielding
projected
$3,976,503 for
decedent's minor
daughter.
1997............................. KCM................. F.................. 37................. Paraplegia and $3,520,160 $1,845,160 cash
cauda equina plus $1,675,000 to
syndrome (spinal two annuity
cord ends). companies yielding
an expected total
of $8,157,597.
1998............................. GJL................. F.................. 52................. Paraplegia......... $1,000,000 $500,000 cash plus
$500,000 annuity
starting at $2,500
per month and then
adjusted for
inflation.
1998............................. COR................. M.................. 56................. Death.............. $1,000,000 Payout of
approximately
$2,000 per month
over 35 years.
1997............................. LMG................. M.................. 39................. Death.............. $1,250,000 $553,359.60 cash
plus annuities
purchased at
$354,456,
$11,048.20 and
$111,048.20
yielding a total
of $1,129,912.
1998............................. UM.................. F.................. 56................. Right ankle, left $1,625,000 $700,000 cash
below knee annuity providing
amputation. $4,000 per month
for 5 years and
$1,000 per month
for 7 years.
1998............................. GSHI................ M.................. 62................. Quadriparesis, $1,449,032 $675,000 cash and
neurogenic bladder. annuity providing
$9,750 per month
for 5 years or
life.
1998............................. UCH................. M.................. 2.................. Profound brain $5,000,000 $2,500 per month,
damage. increase 3 percent
per year. 20 years
guaranteed, plus
life.
1997............................. CKMC................ F.................. 37................. Paraplegia and $3,520,000 Cash payments of
cauda equina $1,845,160 and two
syndrome (spinal annuities
cord ends). purchased with
present value of
$1,675,000: total
payments estimated
at $8,157,597.
1999............................. SPGH................ F.................. 0.................. Severe cognitive $5,500,000 Total annuities
delays, requires yielding
occupational $12,754.31 per
therapy, physical month.
therapy, speech
therapy.
1999............................. PRMC................ F.................. 21................. Death.............. $2,250,000 Cash of $1,809,709
plus annuity for
surviving child
purchased at
$440,291.
1999............................. PRMC................ F.................. 1.................. Hemorrhagic $3,300,000 Cash of $907,829
periventricular plus annuity
leukomalacia, purchased for
hypoxic ischemic $2,392,171 for
injury resulting life care of
in motor child.
development delay,
cognitive defects.
--------------------------------------------------------------------------------------------------------------------------------------------------------

In some instances the estimated payments were staggering,
reflecting medical costs to the patient, income losses, and/or
financial support for surviving minor children. Case BMH (1991) was
estimated at over $13 million; Case GBP (1994) was estimated at almost
$9 million; case DCH (1996) was estimated at almost $14 million. In
case CKR (1996), which the insurer rated only a 7 in level of injury
seriousness, the estimated cost was almost $8 million, suggesting that
the medical injury was more serious than reported, that the claimant
had a large income loss or a combination of both of these factors. Case
HBM (1995) was estimated at over $16 million; and Case KCM (1997) was
estimated at over $8 million.
There is one additional matter to consider about these data. We
compared these nonlawsuit settlements with the final settlements of
cases that were settled following a jury verdict. The verdict
settlements were comparable to the cases in which negligence was
conceded. These data provide further confirmation that the ultimate
outcome of jury verdicts tends to reflect actual losses incurred by
severely injured patients.

THE SHADOW EFFECT OF JURY TRIALS IS MISLEADING

Was it a fear of large jury awards--the ``shadow effect''--that
caused defendants to settle? Alternatively, was the negligence and
severity of loss so clear in most of the cases that it made no sense to
go to trial because defendants' liability insurers would incur heavy
litigation costs in the face of a likely win for the patient? Without
question the threat of a jury trial is what forces parties to settle
cases. The presence of the jury as an ultimate arbiter provides the
incentive to settle but the effects are more subtle than just
negotiating around a figure. The threat causes defense lawyers and the
liability insurers to focus on the acts that led to the claims of
negligence.
Research by Peeples et al. on a sample of insurers' medical
malpractice files indicated that insurers tend to settle cases
primarily based on whether their own internal reviews by medical
experts indicate the provider violated the standard of care.\69\ If
they decide the standard has been violated they attempt to settle.
Those authors concluded that claims proceed to trial only when the
plaintiff cannot be convinced that there was no violation of the
standard and cannot extract a reasonable offer from the insurer. An
earlier study by Rosenblatt and Hurst examined 54 obstetric malpractice
claims for negligence.\70\ For cases in which settlement payments were
made there was general consensus among insurance company staff, medical
experts and defense attorneys that some lapse in the standard of care
had occurred. No payments were made in the cases in which these various
reviewers decided there was no lapse in the standard of care.
I used some of the same closed claim files from medical insurers in
my book, Medical Malpractice and the American Jury. I reached a similar
conclusion.
At the very least the findings strongly suggest that all of the
emphasis on jury verdicts appears misplaced.

RISING CLAIMS AND RISING COSTS: A COMPLICATED ISSUE

The Florida data also allow us to address the question of whether
the frequency of malpractice claims have been rising and whether
simultaneously so have the costs of payouts. We found that the number
of claims involving payments to the claimant had increased between 1990
and 2003. However, Florida's population also increased at the same time
as did the number of licensed physicians. When we adjusted for
population growth, the number of paid claims per 100,000 residents in
2003 was no higher than in 1990. Similarly, we found the paid claims
per 100 licensed physicians also were no higher. This would seem to
support consumer groups who say there has been no increase.
Doctors and insurers say that the number of claims began to rise
steeply around the year 2000 and continued through 2003. Claims with no
payment also incur transaction costs to defend. It is noteworthy, that
data collected by the National Center for State Courts on a national
sample of cases showed that while there was an overall decline in
medical malpractice case filings between 1992 and 2001, filings did
rise in 2002.\71\
Our Florida closed claims data also revealed that between 1990 and
2003 the inflation adjusted cost of the average paid claim showed a
modest upward increase over the 14-year period. Part of the explanation
might be that medical costs, which have increased at rates greater than
the Consumer Price Index, are the cause. But there are other
explanations. Our data also showed that on average the paid claims,
beginning in 2002, included a greater proportion of serious injuries,
including death.

FRIVOLOUS LITIGATION

Claims about frivolous litigation are based, in part, on findings
that in medical malpractice cases doctors prevail in approximately 70
percent of cases that go to trial and that as many as 50 percent of
cases filed against healthcare providers ultimately result in no
payment to the plaintiff.\72\ Additionally, opponents of medical
malpractice litigation argue that jury verdicts, especially those
involving larger awards, encourage lawyers to file lawsuits in cases
that are not meritorious because doctors and liability insurers will
settle claims, not out of merit, but rather out of fear of a large and
unjustified award if the case goes before a jury.\73\ These claims are
not supported by research evidence.

LIABILITY INSURERS TEND TO NOT SETTLE FRIVOLOUS CASES

In interviews with liability insurers that I undertook in North
Carolina and other States, the most consistent theme from them was:
``We do not settle frivolous cases!'' \74\ The insurers indicated that
there are minor exceptions, but their policy on frivolous cases was
based on the belief that if they ever begin to settle cases just to
make them go away, their credibility will be destroyed and this will
encourage more litigation.
cases dropped by claimants before trial are not necessarily frivolous
In Medical Malpractice and the American Jury,\75\ I reported that
despite up-front screening by plaintiff lawyers, there is still a lot
of uncertainty about whether negligence has occurred. This can usually
only be determined after a lawsuit is filed, depositions are taken and
expert opinions are obtained. As documented in that book, research into
the files of liability insurers showed that this is as true of the
defense side as it is of the plaintiff side: lawyers for the defendants
and their insurers get conflicting opinions as to whether negligence
has occurred. Sometimes, after an extensive process of consulting with
experts and the taking of depositions, it becomes reasonably apparent
that no legal negligence has occurred, or that, in any event, the case
is ``not winnable'' because of the costs that would be entailed in
pursuing it. At this juncture plaintiff lawyers tend to drop the case.
In North Carolina nearly 40 percent of filed cases were dropped on
these grounds. Again, the point to be made is that it makes little
economic sense for a plaintiff lawyer to continue to invest time and
money in a case that he or she is unlikely to win. It is true that
occasionally lawyers misjudge the merits of cases and continue to
pursue them, but far more often they are dropped.
Thus, given the fact that both plaintiff and defendant are faced
with uncertainty, it is inappropriate to call the vast majority of
dropped cases ``frivolous.'' Rather, they should be labeled
``nonmeritorious'' cases in recognition of the fact that both sides
took them very seriously at the beginning of the lawsuit.

DOCTOR'S HIGH ``WIN RATES'' AT TRIAL DO NOT MEAN THE LAWSUIT WAS
FRIVOLOUS

As I discussed earlier, statistics indicate that, nationwide,
doctors prevail in about 70 percent of cases that go to trial.
Nevertheless, a plaintiff loss at trial is not grounds for
concluding that the litigation was ``frivolous.'' \76\ Cases that go to
trial are ones where negligence is uncertain. As discussed above, when
pretrial investigation shows that the case is clearly not winnable,
lawsuits tend to be dropped before trial. On the other hand cases with
clear negligence tend to be settled, particularly if the parties can
negotiate the amount of damages. Thus, only ``close cases'' tend to go
to trial.
There are a number of possible explanations, other than nonmerit,
as to why doctor win rates at trial are so high.\77\ One reason is that
jurors generally tend to be skeptical of plaintiff claims and
essentially place a burden on the plaintiff that is greater than the
legally appropriate ``balance of probabilities'' standard. Another is
that plaintiffs often have a more difficult time obtaining and hiring
the experts, relative to the defense. It is also important to observe
that my research showed that in many instances, plaintiffs who lost at
trial against one doctor nevertheless obtained settlements from other
doctors who had been named in the lawsuit.\78\ This might suggest that
medical negligence had occurred in the case, albeit at trial the jury
did not think that the evidence against the remaining defendant or
defendants was sufficient to find liability. On the other hand it is
certainly possible that despite insurers' insistence that they do not
make settlements for nonmeritorious claims, in some instances they may
decide that a modest and confidential settlement payment avoids bad
publicity for the doctor and saves expensive litigation costs. Such
decisions could explain why some doctors settle.\79\

CLAIMS ABOUT INCREASING LITIGATION COSTS

Insurers have made claims about increasing litigation costs and
blamed them on frivolous litigation.\80\ However, there are two studies
that have provided data on these transaction costs.
The Florida closed claim files that we examined in our research
also contained insurers' reports on their litigation expenses.\81\ The
data on no-payment claims were reliable only for the years 1990 through
1997. The mean, or average, litigation expense, adjusted to 2003
dollars, was $22,205 per claim. It is again important to re-emphasize
my findings that nonpaid claims should not necessarily be characterized
as frivolous. Many unfounded claims begin as credible claims in both
the eyes of the plaintiff and the defendant. It is only after sometimes
lengthy periods of depositions of experts and other investigation that
the evidence indicates that it is unlikely that negligence occurred. To
be sure these are unfortunate transaction costs to insurers--as well as
plaintiff lawyers.
Our research also examined insurers' litigation costs for pain
claims over a 14-year period covering 1990 through 2003. The litigation
costs for these claims in the years 2000 through 2003, when adjusted
for inflation were not statistically greater than a comparable period a
decade earlier (1990-1993).
Research by Bernard Black and his co-authors on closed claim files
from Texas showed that one defense costs per each large claim that was
paid rose steadily from 1988 through 2002.\82\ The ratio of defense
costs relative to payout increased from about 8 percent to about 15
percent. However, the data showed that defense costs rose gradually,
and the absolute size of these costs remain[ed] small relative to
payouts.'' \83\
Litigation costs may vary from State to State depending on a number
of factors. Nevertheless two independent studies using data supplied by
insurers to the States of Florida and Texas do not support extreme
claims of rising litigation costs.

``JUDICIAL HELLHOLES:'' THE DOCTOR EXODUS CLAIM

The American Medical Association has identified a number of
``crisis States'' in which it is alleged that because of the ``abusive
litigation'' climate doctors were leaving certain areas or certain
States.\84\ One of those areas involved Madison and St. Clare counties
in Illinois.\85\ Indeed President Bush traveled to those counties in
January 2005 after being informed that these were two counties in deep
trouble because of medical malpractice litigation. Reports of the
number of doctors leaving those counties as reported in the Wall Street
Journal and other sources ranged as high as 180 doctors. That figure
would amount to more than 26 percent of the total doctors in those
counties. I checked those claims by using official American Medical
Association statistics reported in its annual publications of Physician
Statistics and Distribution in the U.S.
I considered only doctors described as ``treating non-Federal
physicians,'' thus centering only on the doctors whose liability
insurance rates would be affected by the alleged crisis. Contrary to
the wild assertions, these statistics showed a steady increase in the
number of doctors in the combined from 1994 through 2003. In comparison
to 2000 the number of physicians increased by 4 percent in 2003.
Similar claims were made for the whole State of Illinois
particularly with respect to Cook and Du Page counties.\86\ When I
checked the AMA statistics I again found steady increases in the number
of doctors, both in absolute numbers and in relation to Illinois'
population growth. Because obstetrician-gynecologists and neurosurgeons
are alleged to be two groups most affected in the alleged exodus, I
found that their numbers, relative to Illinois' population had remained
relatively steady since 1994.
Pennsylvania is another State alleged to be experiencing a doctor
exodus.\87\ A media release by the Pennsylvania Medical Society claimed
that a survey:

``. . . discovered one in four Pennsylvanians lost their
doctors due to the rising costs of liability insurance.
According to the poll, 26 percent said they saw their doctors
move, give up certain procedures, or stop practicing medicine
as liability insurance costs skyrocketed.''

Once again I went to the official American Medical Association
statistics. Similar to Illinois I found that the number of patient care
physicians increased at an average annual rate of about 1 percent per
year in proportion to the population. The number of obstetricians
declined slightly, but so had Pennsylvania's birth rates, strongly
suggesting that the drop may have been a result of fewer needs for this
medical specialty. There was a slight decline in the number of
neurosurgeons but Pennsylvania still had more neurosurgeons per capita
than the rest of the Nation.
In short the doctor exodus claims received no support in studies of
the American Medical Associations' own statistics.

HEALTH CARE COURTS: BE CAREFUL FOR WHAT YOU WISH FOR!

Finally, I wish to offer a brief commentary on the proposed Special
Health Care Courts. Consumer Interest groups, such as the Center for
Justice and Democracy, have raised serious criticism about such health
courts.\88\ They argue that the proposed courts deprive citizens of the
constitutional right to jury trial because they provide no right to
appeal the court's decision. They also argue that the probable schedule
of payments to injured persons is likely to ignore the unique
circumstances of losses of claimants. They further argue that the
courts, the experts likely to be appointed by the courts and the
amounts of payments under the schedules are likely to not consider the
factual circumstances. Additionally, they identify the danger that
those courts, as proposed, are very likely to be subject to many
political pressures that could affect the rights of persons injured
through medical negligence. I agree with those criticisms!
However, I wish to add an additional problem. The Health Court
proposal assumes that cases can be handled more efficiently than the
current tort system. To be sure there are inefficiencies in the tort
system. However, those inefficiencies have to be weighed against
inefficiencies that will be endemic to health courts as well. As I have
pointed out in my discussion of so-called frivolous litigation in my
testimony today and in my book, Medical Malpractice and the American
Jury, medical malpractice cases involve complex issues that can only be
sorted out after considerable investigation and discovery. When
patients make claims of negligence the process of discovering whether
negligence occurred requires investigating medical records,
interviewing the involved parties (through sworn depositions), fording
experts, sorting out conflicts between the opinions of experts,
reinvestigating the records and testimony as new insights are uncovered
and then reaching some kind of consensus, if possible, about what
actually occurred and whether those facts meet the definition of legal
negligence. This process takes considerable time as well as money. For
complex cases the process of finding competent experts and getting them
to review cases under their busy, over-booked schedules means that
cases cannot be resolved in weeks, indeed even in months. Sometimes it
takes years. Any competent defense or plaintiff lawyer who works in
this area will confirm my assertions. To be fair to both sides, health
courts will have to do the same thing. Health courts will also have to
bear these transaction costs.
As I have pointed out in my testimony today, under the current tort
system many of these investigative costs are borne now by plaintiff
lawyers. They screen cases and eliminate many cases before legal claims
are made. Under a Health Court System, if those claims are to be fairly
adjudicated, most of the costs will be borne by the health courts and
the American taxpayers who underwrite the costs of those courts.

CONCLUSION

I will not reiterate the many points I have made in my testimony.
The bottom line is that most of the claims made about juries and the
tort system do not stand up to empirical scrutiny.
Finally, I want to close with a statement that I am strongly in
favor of measures that improve the quality of healthcare. I am strongly
in favor of voluntary measures such as the Medical Error Disclosure
Program at the University of Michigan. Such programs should be
voluntary on the part of patients and they should retain the right to
trial by jury.

Endnotes

1. David M. Studdert et al., Claims Errors, and Compensation
Payments in Medical Malpractice Litigation, 354 New England Journal of
Medicine 2024 (May 11, 2006).
2. Id. at 2031.
3. See, e.g. Thomas Baker, The Medical Malpractice Myth (2005) for
an outstanding review of the literature.
4. See, e.g., http://cgood.org/healthcare.html; http://
www.hsph.harvard.edu/press/releases/press001102005A.html.html.
5. Hillary Clinton and Barack Obama, Making Patient Safety the
Centerpiece of Medical Liability Reform, 354 New England Journal of
Medicine 2205 (2006).
6. Harvard Medical Practice Study, Patients, Doctors, and Lawyers:
Medical Injury, Malpractice Litigation and Patient Compensation in New
York (1990). See also Paul C. Weiler et al., A Measure of Malpractice:
Medical Injury, Malpractice Litigation, and Patient Compensation
(1993).
7. Id. at 44, Table 3.2.
8. Eric J. Thomas et al., Incidence and Types of Adverse Events and
Negligent Care in Utah and Colorado, 38 Medical Care 261, 261 (2000).
9. Lori Andrews, Studying Medical Error in SITU: Implications for
Malpractice Law and Policy, 54 DePaul Law Review 357 (2005).
10. See Lucian Leape, Institute of Medicine, Medical Error Figures
Are Not Exaggerated, 284 Journal of the American Medical Association 95
(2000) [citing R. W. DuBois and R. Brook, Preventable Deaths: Who, How
Often and Why? 109 Annals Internal Medicine 582 (1988)]; Kathryn B.
Kirkland et al., The Impact of Surgical-Site Infections in the 1990s:
Attributable Mortality, Excess Length of Hospitalization, and Extra
Costs, 20 Infection Control & Hosp. Epidemiology 725 (1999); Thomas M.
Julian et al., Investigation of Obstetric Malpractice Closed Claims:
Profile of Event, 2 AM. J. Perinatology 320 (1985).
11. Institute of Medicine, To Err Is Human: Building a Safer Health
Care System (Linda Kohn et al., eds. 2000), http://books.nap.edu/
catalog/9728.html?onpi_news
doc1 12999; Lucian L. Leape, Institute of Medicine, Medical Error
Figures Are Not Exaggerated, 284 Journal of the American Medical
Association 95 (2000).
12. Reuters, Report Says 195,000 Deaths Due to Hospital Error, WL
Reuters Eng. News Serv., July 27, 2004, 22:23:11.
13. HealthGrades, Third Annual Patient Safety in American Hospitals
Study, April, 2006.
14. For criticism of the Harvard study or controversy over some of
the findings, see Rodney A. Hayward and Timothy P. Hofer, Estimating
Hospital Deaths Due to Medical Errors, 286 Journal of the American
Medical Association 415 (2001); Clement J. McDonald et al., Deaths Due
to Medical Error Are Exaggerated, in Institute of Medicine Report, 284
Journal of the American Medical Association 93 (2000).
15. Frank A. Sloan and Stephen S. VanWert, Cost of Injuries, in
Frank A. Sloan et al., Suing for Medical Malpractice 123, 139-40
(1993).
16. See generally, Ill. Pattern Jury Instr.-Civ. 30.04.03 (2005
ed.); Ill. Pattern Jury Instr.-Civ. 34.02 (2005 ed.); West's Smith-Hurd
Illinois Compiled Statutes Annotated and cases cited in the
annotations. Chapter 740. Civil Liabilities, Act 180. Wrongful Death
Act, 180/1. Action for damages.
17. Neil Vidmar et al., Uncovering the ``Invisible'' Profile of
Medical Malpractice Litigation: Insights from Florida, 54 DePaul Law
Review 315 (2005).
18. Harvard Medical Practice Study, Patients, Doctors, and Lawyers:
Medical Injury, Malpractice Litigation and Patient Compensation in New
York (1990).
19. Michael Saks, Medical Malpractice: Facing Real Problems and
Finding Real Solutions, 35 William & Mary Law Review 693, 702, 703
(1994), presents one of the clearest expositions of these findings. In
further calculations, Saks points out that the probability of a
healthcare provider being sued for a negligent injury is 0.029 whereas
the probability of being sued for a nonnegligent injury is 0.0013.
20. Frank A. Sloan and Chee Ruey Hsieh, Injury, Liability, and the
Decision to File a Medical Malpractice Claim, 29 Law & Society Review
413 (1995).
21. Id. at 430.
22. Herbert M. Kritzer, Risks, Reputations, and Rewards:
Contingency Fee Legal Practice in the United States 289 n. 20 (2004).
23. Carol J. DeFrances et al., Civil Justice Survey of State
Courts, 1992: Civil Jury Cases and Verdicts in Large Counties Bureau of
Justice Statistics, No. NCJ-154346, (1995); Carol J. DeFrances and
Marika F.X. Litras, Civil Justice Survey of State Courts, 1996: Civil
Trial Cases and Verdicts in Large Counties, 1996 Bureau of Justice
Statistics, No. NCJ 173426, (1999); Thomas H. Cohen, Civil Justice
Survey of State Courts, 2001: Tort Trials and Verdicts in Large
Counties, 2001 Bureau of Justice Statistics, No. NCJ 206240, (2004).
24. Neil Vidmar, Medical Malpractice and the American Jury (1995).
25. Valerie P. Hans, Business on Trial: The Civil Jury and
Corporate Responsibility 127-29 (2001).
26. For a review of this research, see Hans, Business on Trial;
Neil Vidmar, Empirical Evidence on the Deep Pockets Hypothesis: Jury
Awards for Pain and Suffering in Medical Malpractice Cases, 43 Duke
L.J. 217 (1993).
27. Mark I. Taragin et al., The Influence of Standard of Care and
Severity of Injury on the Resolution of Medical Malpractice Claims, 117
Annals Internal Med. 780 (1992).
28. David M. Studdert et al., Claims, Errors, and Compensation
Payments in Medical Malpractice Litigation, 354 New England Journal of
Medicine 2024 (May 11, 2006) at 2029.
29. Harry Kalven, Jr. and Hans Zeisel, The American Jury (1966);
Larry Heuer and Steven Penrod, Trial Complexity: A Field Investigation
of Its Meaning and Its Effects, 18 Law & Hum. Behavior 29 (1994).
30. These surveys are reviewed in Brief of Amici Curiae Neil Vidmar
et al., at Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) (No. 97-
1709), 1998 WL 734434.
31. See Neil Vidmar, Are Juries Competent to Decide Liability in
Tort Cases Involving Scientific/Medical Issues? Some Data from Medical
Malpractice, 43 Emory L.J. 885, 885-91 (1994).
32. Neil Vidmar and Shari Seidman Diamond, Juries and Expert
Evidence, 66 Brooklyn Law Review 1123 (2001); Sanja Kutnjak Ivkovic and
Valerie P. Hans, Jurors' Evaluations of Expert Testimony: Judging the
Messenger and the Message, 28 Law & Soc. Inquiry 441 (2003).
33. Randall R. Bovbjerg et al., Valuing Life and Limb in Tort:
Scheduling ``Pain and Suffering'', 83 Northwestern University Law
Review 908 (1989).
34. Neil Vidmar et al., Jury Awards for Medical Malpractice and
Post-Verdict Adjustments of Those Awards, 48 DePaul L. Rev. 265, 287
(1998).
35. Thomas H. Cohen, Civil Justice Survey of State Courts, 2001:
Tort Trials and Verdicts in Large Counties, 2001 Bureau of Justice
Statistics, No. NCJ 206240, (2004).
36. Neil Vidmar et al. Uncovering the ``Invisible'' Profile of
Medical Malpractice Litigation: Insights from Florida, 54 DePaul Law
Review 315 (2005).
37. Charles Black, et al., The Myth of the Medical Malpractice
Claims Crisis, 2 Journal of Empirical Legal Studies 207 (2005).
38. See Catherine Sharkey, Unintended Consequences of Medical
Malpractice Damages Caps, 80 New York University Law Review 391 (2005).
39. See Neil Vidmar, Medical Malpractice Lawsuits: An Essay on
Patient Interests, The Contingency Fee System, Juries and Social
Policy, 38 Loyola of Los Angeles Law Review 1217 (2005). There are four
processes by which awards are reduced. The judge reduces the award
verdict through remittitur. An appeals court reduces the award.
Sometimes the sides agree that there was negligence, but disagree about
the amount of damages and set a high-low agreement prior to trial or
during trial: they agree that if the jury verdict is above a certain
limit, the plaintiff will only get the high limit and if it is below
the bottom limit or even if the defendant prevails at trial, the
plaintiff will receive the minimum payment. Most common of all, the
plaintiff and the defendant negotiate a post-trial settlement that is
less than the jury verdict, often for the amount of the doctor's
liability coverage.
40. Earlier studies involving nonmedical malpractice as well as
malpractice verdicts include: Ivy E. Broder, Characteristics of Million
Dollar Awards: Jury Verdicts and Final Disbursements, 11 Justice System
Journal 349 (1986); Michael G. Shanley and Mark A. Peterson, RAND: The
Institute for Civil Justice, Post-Trial Adjustments to Jury Awards
(1987); Brian Ostrom et al., So the Verdict Is In--What Happens Next?:
The Continuing Story of Tort Awards in the State Courts, 16 Just. Sys.
J. 97 (1993); Deborah Jones Merritt and Kathryn Ann Barry, Is the Tort
System in Crisis? New Empirical Evidence, 60 Ohio St. Law Journal. 315,
353-55 (1999).
41. Neil Vidmar, Felicia Gross and Mary Rose, Jury Awards for
Medical Malpractice and Post-Verdict Adjustments of Those Awards, 48
DePaul Law Review 265 (1998).
42. Neil Vidmar, Medical Malpractice Litigation in Pennsylvania.
Report Commissioned and Funded by the Pennsylvania Bar Association, May
2006.
43. David Hyman and Charles Silver, Medical Malpractice Litigation
and Tort Reform: It's the Incentives Stupid, Vanderbilt Law Review (in
press, 2006).
44. Neil Vidmar and Kara MacKillop, ``Judicial Hellholes:'' Medical
Malpractice Claims, Verdicts and the ``Doctor Exodus'' in Illinois,
Vanderbilt Law Review (in press, 2006).
45. See Howard Richter, Statement of the Pennsylvania Medical
Society Liability Insurance Company before the Pennsylvania Senate
Banking and Insurance Commission Regarding the Medical Malpractice
Market in Pennsylvania, March 26, 2003; David Wenner, Lawsuits
Illuminate Debate over Malpractice!, The Patriot News, April 10, 2005.
46. Nicholas Pace et al., Capping Non-economic Awards in Medical
Malpractice Trials: California Jury Verdicts Under Micra, RAND
Institute for Civil Justice (2004).
47. David Studdert, Tony Yang, and Michelle Mello, Are Damage Caps
Regressive? A Study of Malpractice Jury Verdicts in California, 21
Health Affairs 54 (2004).
48. Id. at 61.
49. Lucinda Finley, The Hidden Victims of Tort Reform: Women,
Children and the Elderly, 53 Emory Law Journal 1263 (2004).
50. Ferdon v. Wisconsin Patient Compensation Fund et al.,, Case
2003 AP 988 (2005 WI 125).
51. U.S. General Accounting Office, Medical Malpractice:
Implications of Rising Premiums on Access to Health Care, GAO-03-836
(August 2003).
52. Martin D. Weiss et al., Medical Malpractice Caps: The Impact of
Noneconomic Damage Caps on Physician Premiums, Claims Payout Levels and
Availability of Coverage, Weiss Ratings, Inc. (2003), available at
http://www.weissratings.com/malpractice.asp.
53. The Kaiser data for individual States can be found at http://
www.state
healthfacts.org/r/malpractice.cfm.
54. Catherine Sharkey, Unintended Consequences of Medical
Malpractice Damages Caps, 80 New York University Law Review 391 (2005).
55. Neil Vidmar, Medical Malpractice and the Tort System in
Illinois, A Report to the Illinois State Bar Association, May 2005
available at http://www.isba.org/medmal05.html
56. Ferdon v. Wisconsin Patient Compensation Fund et al.,, Case
2003 AP 988 (2005 WI 125), at paragraphs 129, 166 and 175.
57. See http://www.consumerwatchdog.org/insurance/rp/rp004689.pdf.
58. The Nation, October 26, 2004.
59. Id.
60. Bernard Black et al., Stability, Not Crisis: Medical
Malpractice Claim Outcomes in Texas, 1988-2002 2 Journal of Empirical
Legal Studies 207 (2005).
61. Ralph Peeples et al., The Process of Managing Medical
Malpractice Cases: The Role of Standard of Care, 37 Wake Forest L. Rev.
877 (2002); R.A. Rosenblatt & A. Hurst, An Analysis of Closed Obstetric
Malpractice Claims, 74 Obstetrics & Gynecology 710 (1989); See also
Neil Vidmar, Medical Malpractice and the American Jury (1995), at
Chapter 8, page 83.
62. E.g. http://www.theorator.com/bills109/s1337.html.
63. Lawrence E. Smarr, Testimony before the Illinois General
Assembly, House Judiciary--Civil Law Committee Hearing, April 7, 2005
at http://www.ihatoday.org/issues/liability/talk/smarrtest.pdf This
interpretation of Smarr's data is taken from Exhibit B of his
testimony. The exhibit shows that paid claims constituted 25.2 percent
of all claims and that plaintiff verdicts constituted .8 percent of
this total.
64. Neil Vidmar et al., Uncovering the ``Invisible'' Profile of
Medical Malpractice Litigation: Insights from Florida, 54 DePaul Law
Review 315 (2005).
65. Trial rates for medical malpractice cases usually range between
7 and 10 percent of lawsuits. These include cases in which defendants
prevail, approximately 7 or 8 trials in 10, see Vidmar, supra note 2 at
39. The data reported here do not include plaintiff verdicts at trial
but they do include cases that never became lawsuits. In short our data
are using a different numerator and different denominator than previous
studies.
66. The payments were adjusted for inflation so that we could
compare earlier cases with later cases.
67. Testimony of Neil Vidmar before the North Carolina House Blue
Ribbon Task Force on Medical Malpractice, Raleigh, NC, January 7, 2004.
The same data have been used by the North Carolina Trial Lawyers
Association and by Medical Mutual of North Carolina, a doctor-owned
liability insurer.
68. See Neil Vidmar, Kara MacKillop and Paul Lee, Million Dollar
Medical Malpractice Cases in Florida: Post-verdict and Pre-suit
Settlements, Vanderbilt Law Review (in press, 2006).
69. Peeples et al., The Process of Managing Medical Malpractice
Cases: The Role of Standard of Care, 37 Wake Forest Law Review 877
(2002),
70. Rosenblatt and Hurst, An Analysis of Closed Obstetric
Malpractice Claims, 74 Obstetrics and Gynecology 710 (1989).
71. National Center for State Courts, Examining the Work of State
Courts, 2002: A National Perspective from the Courts Statistics Project
25 (2002), available at .
72. See Neil Vidmar, Medical Malpractice Lawsuits: An Essay on
Patient Interests, The Contingency Fee System, Juries and Social
Policy, 38 Loyola of Los Angeles Law Review 1217 (2005).
73. See, e.g. http://www.sickoflawsuits.org.
74. See Neil Vidmar, Medical Malpractice Lawsuits: An Essay on
Patient Interests, The Contingency Fee System, Juries and Social
Policy, 38 Loyola of Los Angeles Law Review 1217 (2005); Neil Vidmar,
Medical Malpractice and the American Jury (1995).
75. Id. Frank Sloan et al., Suing for Medical Malpractice (1993) at
164-185 reports systematic data that are consistent with my
conclusions.
76. See Neil Vidmar, Medical Malpractice Lawsuits: An Essay on
Patient Interests, The Contingency Fee System, Juries and Social
Policy, 38 Loyola of Los Angeles Law Review 1217 (2005); Neil Vidmar,
Medical Malpractice and the American Jury (1995).
77. Id.
78. Id. at 33-34.
79. Many doctors want to avoid the publicity, the emotional
pressures and the time from her practice that a trial would entail.
However, in other cases the doctor may insist on going to trial to
clear her reputation, Id.
80. See Neil Vidmar, Medical Malpractice Lawsuits: An Essay on
Patient Interests, The Contingency Fee System, Juries and Social
Policy, 38 Loyola of Los Angeles Law Review 1217 (2005); Neil Vidmar,
Medical Malpractice and the American Jury (1995).
81. Neil Vidmar et al., Uncovering the ``Invisible'' Profile of
Medical Malpractice Litigation: Insights from Florida, 54 DePaul Law
Review 315 (2005) at 350-352.
82. Bernard Black et al., Stability, Not Crisis: Medical
Malpractice Claim Outcomes in Texas, 1998-2002 2 Journal of Empirical
Studies 207 (2005).
83. Id. at 252.
84. See AMA website at http://www.ama-assn.org/ama/pub/category/
7861.html.
85. See Neil Vidmar and Kara MacKillop,'' Judicial Hellholes;''
Medical Malpractice Claims, Verdicts and the ``Doctor Exodus'' in
Illinois. Vanderbilt Law Review (in press, 2006)
86. Id.
87. See Neil Vidmar, Medical Malpractice Litigation in
Pennsylvania: A Report Commissioned and Funded by the Pennsylvania Bar
Association, May 2006.
88. Center for Justice and Democracy, Why Health Courts are
Unconstitutional, Pace Law Review (in press).

The Chairman. I am about 20 minutes late for voting. I may
not get this vote in, but I did want to hear all of the
testimony. I'll be back to ask some questions. I know that we
have imposed on your time. Any of you who wish to stay, I think
perhaps Senator Clinton and Senator Kennedy wanted to ask some
questions, too. If you need to leave, we'll submit some
questions in writing, even if you stay, we'll probably do the
same, because there are some that are fairly technical
questions that we usually want to have as part of the record.
So, thank you for your testimony, and I will be back.
[Recess.]
The Chairman. Well, I see we didn't lose anybody from the
panel. I really appreciate your tolerance of the time that it
takes for us to vote. There were three different votes, and I
did make it back in time for the first one. They held it open a
few extra minutes so I could do that, but I appreciated getting
all the testimony in one block. It's a tremendous amount to
digest. I appreciate the submitted comments, which I have
looked over, and that's been very helpful.
I do have a few questions that I'll ask here and then we'll
submit others in order to obtain more detailed answers as we
get into the real heart of the issues. I also had a great
conversation with Senator Clinton on the floor, who will
probably be submitting some questions as well. She has a
statement regarding a bill she's been working on that probably
could have some incorporation into the base bill that we're
talking about.
We are actually looking for solutions. We want to find some
way that people can be compensated fairly, hopefully
compensated more quickly, and hopefully, more of the
compensation will go to the person who has actually been harmed
or to the family of that person. And for that, Ms. Sheridan, I
particularly want to thank you for your testimony. You know,
there's a city in Wyoming that's probably named after your
family. That's where I graduated from high school.
But you've been through this process. You've seen it from a
position that many of us have not. And so, what I would ask, is
that, as we move through this process, you would help us to
evaluate and to see from your standpoint whether you think
we're touching on something that would have helped in your
situations and others that you know of.
You've heard the testimony today. I don't know if there's
any of it that you'd particularly like to comment on at this
point, but I would ask for your help as a reviewer of what
we're doing.
Ms. Sheridan. Well, I think that something--I mean, I like
all of the ideas, and of course, I don't have the answer. But I
think something that would help me is when people say that
certain interventions have been successful. For example, I
think it was--Richard, did you mention Texas, that they were
able to bring back physicians into Texas. Was that because of
the caps or--who mentioned that? Oh, it was the Senator; that's
right.
And so, my question is: Is that really a successful
program? Do we measure success by retaining doctors in States,
or do we measure success by talking to patients who have really
been harmed? And so, when people talk about successful
interventions that have come to the tort system, we need to
evaluate both sides of the coin and not just by, have we
reduced the number of lawsuits by saying we're sorry or by the
numbers paid out. Have we asked the patients are they satisfied
with this? And this usually gets eliminated and not done when
we look at some of these interventions. So as we talk about
successful strategies, that is the one point that I would like
to clarify is how do we define successful or success when we're
looking at other interventions?
You know, whether or not we keep the court system as it is
but refine it is another question. Do we completely abandon the
court system as, you know, and do health courts? That's another
good question. But as I mentioned, I think that other people
agree, that the way the tort system currently exists, it has
lost its integrity and honor. And can we bring that back into
the current system? I don't know, but it will take a lot of
very bold policymakers to implement changes with regard to gag
clauses, especially expert witness testimony oversight, and
other tools that are incredible strategic mechanisms that are
used in the tort system.
The Chairman. I thank you for that. You've certainly hit on
a real key there: What is success? I would mention that the
bill that I've drafted is a demonstration project which would
allow a number of different mechanisms to be tried on a limited
basis to see if they work before imposing them on the whole
Nation. And, we'll be interested in your evaluation of success
on that as well. Thank you.
Mr. Studdert, in your testimony, did your data indicate
that there were any particular issues; that injuries with
particular problems--for instance, did juries have lower
accuracy in dealing with, maybe, obstetrics as opposed to
dermatology or other fields of medicine? Did you see that more
complex cases were most often misinterpreted by a jury versus
the straightforward cases, or did it get into that level of----
Mr. Studdert. Well, we did to some extent. We have a
follow-up analysis which will be published probably later in
the year that tries to look more closely at the claims that
were resolved we think wrongly; that is, either errors that
were not paid or claims that didn't involve errors that were
paid; those two types of discordant outcomes.
I should stress that only about 10 percent of the cases we
looked at actually went to trial, so there were wrongly decided
cases in both settings. But our preliminary findings in this
area are quite interesting. So, on the question of which types
of claims involved error but didn't get paid, we look at a
number of different predictors on that, and interestingly, one
of the predictors is decision before a jury. And I think it
comes back--so it was more likely that a claim that involved
error would be decided against the plaintiff inside a courtroom
than outside a courtroom.
And I think it goes back to the earlier point I was making:
this doesn't suggest that juries are consistently doing a bad
job, but what it suggests is that it is very difficult for them
to understand these issues sometimes, and in general, I don't
believe that juries serve plaintiffs well. I think plaintiffs
have a really hard time in front of juries. It's a long process
to get there, and even if plaintiffs are successful in front of
juries, they then have to pay substantial amounts of money to
move the case to that point to their attorneys in the event of
a win.
On the other side of the ledger, these were cases that did
not involve error but that were paid, we found the strongest
predictor of that type of discordance is a case involving an
infant, and the reasons for that, we think, are that attorneys
are just not willing to put these cases in front of juries when
they involve infants and have very sympathetic plaintiffs in
that way. So merit, to some degree, is irrelevant in those
settlements. There are cases that need to be paid because
nobody is really willing to roll the dice with that court
decision.
The Chairman. Thank you.
Mr. Howard, one of my biggest concerns about the current
malpractice system is that it fails to capture information that
I think could improve the medical delivery system. How does
your proposal address that shortcoming of the current system?
Mr. Howard. Well, a key aspect of our proposal is to have
the health court attached to an administrative body that would
capture information not only from trials but also from
settlements and sort through it to see what the lessons learned
are and then disseminate the information that's important to
disseminate to the medical community about things that are
going wrong and possible fixes, not unlike the FAA, you know,
when things go wrong; many more instances.
So there is a vital patient safety component trying to
collect information and sort through it and then disseminate it
to learn from our mistakes. And again, part of our proposal
involves transparency, so, you know, I think it is important
to--it's a vital part of the proposal.
Could I also comment, Mr. Chairman, about some other
things, one thing that was said that I sort of mis-stated but--
--
The Chairman. We will give you a chance, give everybody a
chance at the end to have a little wrap-up comment----
Mr. Howard. All right.
The Chairman [continuing]. On any of the things, and all of
you can put any response to any question in writing for us, and
we'll make that a part of the record, too, because we don't
always have the time to collect all those thoughts, but we want
all those thoughts.
In your healthcare proposal, you would have the courts hire
experts to testify on the complex medical issues. Can't courts
currently bring in independent experts to guide the courts, and
if not, why isn't it used?
Mr. Howard. Well, courts can do it today, but they
infrequently do it, and I think part of the problem is who pays
for it? And so, part of the funding for this proposal would
have to include a budget for neutral experts. But I would also
like to point out that our proposal does not preclude parties
from having their own experts. But we think having a neutral
expert will substantially decrease the probability of the kind
of thing that happened to Susan Sheridan, where someone comes
in with junk science, you know, in that case on the side of the
doctor, because you have someone picked off a panel of approved
experts who will be coming in with the best science.
The Chairman. For Ms. Niro, we've heard from other
witnesses on the panel that most people injured by negligence
don't receive any compensation. Under our current medical
litigation system, we seem to be missing quite a few of them.
Probably, they're less substantial cases, or the people are
confused, or they don't have good representation. Does the ABA
have a position on whether that's an acceptable aspect of the
system?
Ms. Niro. Senator, I'm not aware of any specific statement
of ABA policy that directly responds to your inquiry. I do know
that the ABA shares the concern that legal services be
available to all of our citizens, and it is one of our major
goals to ensure that that is, in fact, the case. Current
situations now often prevent needy people from receiving the
services of attorneys, and there is existing today a difficulty
in assuring that attorneys are available to those cases that
are most needy.
The Chairman. Thank you.
Kind of the same question for Mr. Vidmar, because in your
written statement, you said that only 1 out of 7 patients who
actually suffers a negligent injury files a claim. That seems
to suggest that the current system is missing something, that
it's failing in some way. And it seems to me to say that
something needs to be done.
Mr. Vidmar. Well, I agree; I agree with that response, and
it is difficult to say. I don't know what the solution is for
these kinds of cases. I am offering the view that the one thing
that the tort system does do is that it sets up a standard
which causes people to negotiate reasonably because of the
ultimate threat of the jury trial.
For those people who are missing, I think it's a very sad
set of circumstances that we have, and it may be that some of
those injuries are relatively minor. I don't think anybody's
really tested this in the sense of, you know, the 1 out of 7
that actually end up that closely, how seriously they were
injured or whether, in fact, they had alternative resources.
And that's not been looked at carefully, so that's just one of
the pieces that's missing in the puzzle.
The Chairman. But would you say that a schedule of damages
might bring more attention to less serious injuries, maybe even
get the attention of physicians a bit more, even send a more
consistent message?
Mr. Vidmar. Absolutely, and I think maybe the Michigan
standard which we've been talking about here has been
presented, I'm all in favor of that, because I think that we
should be providing some compensation. And my feeling is it's
probably cheaper in the end. I'd like to see statistics on how
well that works out, because you don't have all the major
litigation expenses, and I think a lot of people who get this
say, ``Look, you know, maybe I've got some advice from a
lawyer, but I don't have to pay for the depositions and the
travel to different parts of the country and all of those
expenses.''
It would be cheaper to do it that way, and yet, you are
still protecting, if the parties can't agree, you are still
protecting the right, the ultimate right, to trial by jury.
Ms. Niro. If I may, the difficulty, I think, is assessing
accurately what are those kinds of injuries that would be well
addressed by the schedule. It's very difficult without looking
at the individuals involved to say what is a minor problem,
what is a major problem.
If we just thought about the difference in a person losing
the operation of their hand, if it's, for example, my 79-year-
old mother or a world-famous surgeon who has developed new
operating techniques and taught the world's surgeons a better
and faster and more efficient way to cure pain and suffering. I
think that whenever we generalize any kind of injury, what is
lost is our ability to appreciate that not all people have the
same needs, and not all people will be compensated fairly when
we generalize the approach.
The Chairman. That's why we're suggesting a medical court
model.
Yes, Ms. Sheridan.
Ms. Sheridan. You know, in response to the data that shows
that most people who experience medical error or harm don't end
up with any award or don't end up even suing, I think a lot of
it has to do with the fact in the United States, it's not
mandatory to disclose medical errors, and a lot of people don't
know that a medical error has taken place. For example, in
Pat's situation, after he went in for his second surgery, and
they took out the tumor, and they said this time, ``it is a
sarcoma; it's cancer,'' we were led to believe that it was a
benign tumor that became cancerous.
But because of a series of doctors asking Pat why he never
got treated for his first tumor, after the third doctor came in
and said, ``Wait a second, what was his pathology on the first
one?'' And they said, ``Well, we don't know?'' I went down to
medical records. I checked out his file. And I found the
pathology that got lost that indicated that it was a malignant
synovial sarcoma.
Pat was discharged from the hospital with no one ever
telling him that that error had taken place. I discovered the
error. So I think that so many errors take place that are never
honestly disclosed to patients, and therefore, if they don't
know that an error takes place, and they had some type of
adverse outcome, they're not going to file a lawsuit. So I
think that in talking about solutions, you know, when there is
a known, and sometimes there are gray areas undoubtedly, but
when there is a known medical error that especially creates
harm, I think that we need to look at a law that mandates full
disclosure.
The Chairman. Which brings me to Mr. Boothman, who is an
advocate of people admitting when they did something wrong, and
obviously, testimony to doctors willing to do that and that
there are some good outcomes to it; I think most doctors in the
country would be afraid to do that, but Mr. Boothman, what do
you see as the obstacles to applying the system a little bit
more broadly, especially in systems that are less uniform, like
small, independent pediatric practices in New York City or
rural Wyoming?
Mr. Boothman. I think the single biggest obstacle is the
fear of financial ruin and/or losing insurance coverage because
the physician makes a decision to disclose something, not
knowing what the ramifications are going to be. I do have a
luxury that a lot of people in my position don't: I have the
luxury of being able to say to our physicians, the State of
Michigan will stand behind you. You don't face financial ruin
in doing the right thing. And I think that's the single biggest
obstacle that prevents most physicians from doing what they
really want to do.
You know, one of the most interesting experiences we've had
is once we got past the initial shock and awe of the suggestion
that the doctor would actually sit down with a lawyer who is
threatening to sue him and just have a conversation, what we've
really found is most of our physicians welcome the opportunity.
They don't shy away from it. But they needed permission, and
they needed assurance that it wasn't going to somehow ruin
them.
I suggested to the State of Ohio, which has been through
some insurance crises, and I mentioned this in my opening
remarks; I don't understand why States have not pulled together
a catastrophic injury protection. I think it can be done. I've
spoken with insurance people who believe that an umbrella
policy that can be created with very attractive premium rates,
and I would, if I were doing it, I would key that, key
participation in that fund to an agreement to submit charts for
quality assurance reviews or submit themselves for peer reviews
should there be any claims.
I think what you'll find is similar to our experience: that
the big cases drive the numbers. The catastrophic injury fund
would have widespread participation but would only be tapped by
a minority of doctors who needed to do that. And if I were
designing a system to foster that open and honest disclosure,
I'd first take care of that. I'd get an umbrella policy that
would take care of the catastrophic loss. I would make the
premiums attractive. I think you'd get widespread buy-in. I'd
connect that up with some peer review and quality assurance
participation and then require physicians to disclose those
errors.
Our experience at the University of Michigan is that it's
been embraced across the board once they got permission, and
frankly, permission from a lawyer. Lawyers like me have been
telling doctors for a very long time not to say anything, and
it's deeply ingrained. The number of doctors I've spoken with
who believe they can even lose their insurance coverage just by
talking to their patient is surprising to me and troubling.
The Chairman. You also mentioned in your testimony that you
learned the difference between appropriate and negligent care.
Can you describe how you developed that knowledge?
Mr. Boothman. Actually, I haven't developed it. We have
created a pretty nice infrastructure which allows us to
understand, come to an understanding on our own. You know, when
a pediatrician decides that he or she is going to prescribe an
antibiotic for a patient with a first ear infection, there is
no way that that doctor knows whether that patient is going to
be back 2 days with a catastrophic reaction to that, and we've
had those cases, frankly.
The practice of medicine is inherently dangerous, and
that's why I think you can't treat it like you might a worker
compensation scheme. It's inherently dangerous, and it involves
a complex set of judgments. What we do is we get reviews when
we have a patient injury come to our attention, whether it's a
claim or whether it's just a patient injury. And we interview
the staff involved; we have internal and external reviews, and
we have a system by which that case is actually reviewed by a
medical committee, and that gives me guidance as to what
direction we should go.
We always open the issue up for discussion after that, and
sometimes, I find myself explaining to patients why their
complication is simply not the result of medical negligence,
and other times, we sit down, and we say right up front we're
sorry; this should not have happened, and let's move to a
discussion of compensation.
I have seen it both ways. One of the things I've seen is
that I think that the American public is much more forgiving if
given a chance, if given a chance to understand the challenges
doctors have faced in that care. And that's something that's
been missing, that conversation, that sharing of how difficult
this surgery was.
As an example, we have a cardiac surgeon on faculty who
probably does more heart valve surgeries than anyone, and he
takes the hopeless cases. And after his third patient
complaint, he said to me, ``I don't get these people: they
think that after I do my surgery, they're going to be running
in the Olympics, when they've really abused themselves for 50
years, and they've got compromised hearts.'' And I said to him,
``Do you realize why? Because you walk in, and you say `hi',
I've done more of these than anyone else; you can have
infection, bleeding, or damage, but it's not going to happen to
you,'' and that's the message that they hear.
The communication part of this is really important both
before medical care and then after a catastrophic injury
occurs. And if we stay in the saddle with people, people are a
lot more forgiving than we think.
But one of your earlier questions was how do we handle the
problem of patients with--the huge number of patients who have
medical errors and never get compensated. And I had two
responses to that. One of them was, first, you're assuming that
everybody believes they should be compensated, but that's not
our experience. We've had people who have even had loved ones
die, but when they understand that we are accountable, and they
understand that their questions got answered, and they
understand that we've made changes so that it won't happen
again, they don't all believe they need compensation. They're
satisfied at that point.
And second, it depends on how you define medical errors. In
our institution, for instance, probably the most prevalent
medical error is medication administration. And yet, the
incidence of injury from inappropriate medication
administration is exceedingly low. It depends on how you define
that. So if a physician says you should get a medication every
4 hours, and it comes 4 hours and 15 minutes later, we
characterize that as a mistake, but that 15-minute delay
probably made no difference in the care.
So I think you have to be careful when you ask those
questions and understand how to process that information.
The Chairman. Thank you.
Mr. Sage, some people have criticized the health courts and
other ideas similar to that as inappropriately denying patients
the right to a jury trial and have said that it would lead to
inadequate compensation for injured patients. In light of the
studies that you've seen that show how our current court system
and jury trials perform and the amount of money that goes to
the lawyers on both sides, how valid do you find the concern?
How would you comment on that?
Mr. Sage. Well, let me start, Mr. Chairman by saying that I
think everyone who is testifying here as an academic researcher
does superb work: Dr. Studdert, Professor Vidmar. But there is
somewhat of a difference in perspective between the way I've
looked at these issues and the way that Dr. Vidmar, for
example, presents his work. His book, as he told you, is called
Medical Malpractice and the American Jury, and my book is
called Medical Malpractice and the U.S. Health Care System.
I tend to look at these issues not as issues of whether or
not to dismantle a jury system or curtail its use but as
opportunities to build something into the healthcare system
that has never been in the healthcare system before, which is a
way of dealing promptly and compassionately and fairly with
injury as well as preventing injuries that occur.
I don't have good empirics on this, but I have good
anecdotes in the sense that most plaintiffs' lawyers that I've
talked to have suggested that a plaintiff who does not have at
least $200,000 in recoverable damages won't be a case that that
attorney will accept. That leaves a lot of room, I think, for
people to participate in a much, much better system who would
never benefit at all from the existing system of civil justice.
The Medicare population, for example, falls squarely into
that distribution. These are people who file malpractice claims
far less frequently than younger patients, who recover less
money if they do file a claim. In Texas, we looked at all of
the malpractice payments, both trials and settlements, over a
15-year period, and I could give you the regression analyses,
but I'll content myself with one piece of information, which is
that if you list out the 100 largest malpractice payments over
a 15-year period in Texas, only one involved a person over age
65. There is a population that is really not seeing benefits
from the existing system.
I also think that in bills such as yours that fund Federal
demonstrations of all of these approaches, you're not stacking
the deck against claimants. You're saying let's create a system
that we think is going to work well for everybody, and let's
test it and see how much it costs and what benefits it
provides. And under those circumstances, I really don't see
that any of these proposals is taking anything away from
anyone.
The Chairman. Thank you. I have a number of other questions
here, but I was just handed kind of an emergency note, and I
had said that I would let you each have a wrap-up comment.
Could I get you to put those wrap-up comments in writing for
us? I will look at them, and I'll distribute them to the rest
of the committee, too, but I am going to have to leave. And I
apologize profusely.
This is one of the most valuable panels that I've ever had,
some of the most diverse opinions that I've ever had assembled,
and a body of knowledge that I think Senator Kennedy and I can
use to perhaps put something useful together. It probably won't
be the original concept, but it might be. It will have some
variations. But the record will be open for 10 days, so you
don't have to do that immediately, and the 10 days is also so
that members of the committee can submit questions, and
hopefully, you'll answer those, too. My appreciation for your
time and your answers, and I look forward to more information
from you.
So this meeting is adjourned.
[Additional material follows.]

ADDITIONAL MATERIAL

Prepared Statement of Senator Clinton

I'd like to thank Chairman Enzi and Senator Kennedy for
convening this hearing today to examine alternative proposals
in the medical liability reform debate.
Today, I hope that we can begin to move past the
traditional divisions in this debate to discuss ways that will,
in the long run, serve patients, physicians, and the healthcare
system as a whole.
I hear first hand, from families who've experienced errors
in their care and from doctors who have experienced escalating
insurance costs. This is a real problem that deserves both
serious consideration and realistic solutions.
We all know the statistic from the landmark 1999 Institute
of Medicine Report that as many as 98,000 deaths per year
result from medical errors. But what you hear far less is that
the vast majority of these errors are not due to the negligence
of physicians, but to failed systems and procedures.
We need to reduce medical errors for patients and
physicians by incentivizing and designing better systems. We
need to shift our attention from blaming doctors and hospitals
and focus our efforts on modifying and improving systems to
reduce medical errors and to enhance patient safety.
Instead of ending up on the court house steps, we need to
find a way to prevent and resolve problems proactively, not
reactively.
Understanding the root causes of these systemic errors
requires, first of all, their disclosure and analysis. Herein
lies the fundamental tension between the medical liability
system and the goal of providing high quality care and
improving patient safety.
Studies have consistently shown that healthcare providers
are understandably reluctant to engage in patient safety
activities and be open about errors because they believe they
are being asked to do so without appropriate assurances of
legal protection.
Senator Obama and I co-authored S. 1784, the National
Medical Error Disclosure and Compensation Act, or MEDiC Act, to
address this fundamental tension. The bill is designed to
bridge the gap between medical liability and patient safety
systems for the benefit of both patients and physicians.
With better communication, more cooperation and protection
from liability within the context of the MEDiC program, we
provide doctors and patients with options to find solutions
outside of the courtroom, which the vast majority of patients
say they are looking for.
The MEDiC Act will improve patient safety and the quality
of healthcare while protecting patient's rights and providing
liability protection for healthcare providers who participate
in the program, to reduce both medical errors and lower
malpractice costs.
The MEDiC Act is based on successful programs operating
around the country in places like a Children's Hospital, a
private insurance company, a Veteran's Affairs hospital in
Kentucky, and the one we will hear about from Mr. Rick Boothman
at the University of Michigan Health System.
These programs have improved systems to not only prevent
future medical errors, but also to lower malpractice costs and
claims.
Through this model we can meet the four fundamental goals
that I believe must be a part of any successful medical
liability reform:

Reduce the rates of preventable patient injury;
Ensure that patients have access to fair
compensation for legitimate medical injuries;
Reduce liability insurance premiums for
providers; and
Encourage open and safe communication between
providers and patients.

I look forward to hearing from our expert panel with
special thanks to Rick Boothman whose program is largely the
basis for the MEDiC Act. I hope that with his input, we can
begin considering common-sense alternatives to medical
liability reform.

Questions of Senator Clinton for Mr. Boothman

Question 1. Mr. Boothman, in your written testimony, you briefly
mention the importance of distinguishing between reasonable and
unreasonable care. Based on your experience with the University of
Michigan's program, why have you found this to be important and why is
it so difficult to know the difference between reasonable and
unreasonable care? Can you contrast this concept in the context of your
program with other alternatives discussed during the hearing?

Question 2. Mr. Boothman, your written testimony states, ``radical
proposals like scrapping our tort system must give way to detailed,
focused efforts designed to reach the real problems.'' Can you
summarize these problems? Based on your experience, what changes do you
suggest that would maintain our current system while addressing these
problems?

Question 3. Mr. Boothman, why in your opinion does the University
of Michigan program work? What factors contribute to its success and
are they reproducible elsewhere? How?

Question 4. Mr. Boothman, your written testimony asserts that
alternatives explored during the hearing will not work. Can you
elaborate? Why do you think these models are not in the best interest
of the medical community?

Question 5. Mr. Boothman, how important is it that those involved
feel that they have gotten justice from whatever system is employed to
address patient complaints and patient injuries?

Question 6. Mr. Boothman, how have the changes in the University of
Michigan Health System's approach been received by your physicians and
patients?

[Editor's Note-Responses to Senator Clinton's questions were not
available at time of print.]

Responses to Questions of the Committee by David Studdert

Question 1. I reviewed the recent article in the New England
Journal of Medicine outlining your research findings with great
interest. In that article, you and your fellow researchers state:

``Our findings point toward two general conclusions. One is
that portraits of a malpractice system that is stricken with
frivolous litigation are overblown . . . A second conclusion is
that the malpractice system performs reasonably well in its
function of separating claims without merit from those with
merit and compensating the latter.''

Your study also determined that:

. . . nonpayment of claims with merit occurred more
frequently than did payment of claims that were not associated
with errors or injuries.''

You elaborated on this point in your written testimony to the
committee, stating,

. . . claims with error and injury that did not receive
compensation was substantially more common. One in six claims
was an unpaid error.''

I think those findings are very significant. They contrast sharply
with the negative stereotypes we often hear about the jury system. In
essence, your research shows that most of those injured patients who
are recovering compensation in the current judicial system, both
through judgments and settlements, deserve the compensation that they
receive. The problem that you identify is that other injured patients,
who also deserve compensation, are not receiving it.
I agree that is a legitimate concern. Interestingly, it is exactly
the opposite of what most tort reformers claim the problem is. They
claim that too many injured patients are being compensated. Assuming
that your findings are correct, the last thing we should be doing is
considering alternatives that would take rights away from injured
patients or that would limit the amount of compensation they receive
for their injuries. We need to expand the number of injured patients
who receive compensation, while not reducing the level of compensation
that the most severely injured patients receive.
Many of the proposals to replace the jury system with some version
of an administrative system are not designed to expand compensation to
more injured patients, but to arbitrarily reduce cost at the expense of
victims. What safeguards would you propose to protect the rights of
injured patients to receive the full and fair compensation that they
deserve?
Answer 1. The general finding from our recent study was that in
approximately 75 percent of claims the litigation outcomes were
concordant with their underlying merits. How far one can take this
result in inferring that the system's accuracy is adequate is
disputable. (Discordant outcomes in 25 percent of cases may, for
example, still cause substantial unpredictability.)
The first part of the question is a fair summary of one of the more
specific findings from the study, and from earlier work we have done on
the issue of ``under-compensation.'' \1\ There is strong evidence from
epidemiological studies \2\ that many patients--in fact, most
patients--who experience negligent injury do not obtain compensation.
This population consists of both unsuccessful claimants (the ``1 in 6''
figure referred to in the question) and patients who never come forward
with a claim.
---------------------------------------------------------------------------
\1\ Studdert DM, Mello MM, Gawande AA, et al. Claims, errors, and
compensation payments in medical malpractice litigation. N Engl J Med
2006;354:2024-2033.
\2\ Localio AR, Lawthers AG, Brennan TA, Laird NM, Hebert LE,
Peterson LM, Newhouse JP, Weiler PC, Hiatt HH. Relation between
malpractice claims and adverse events due to negligence. Results of the
Harvard Medical Practice Study III. N Engl J Med. 1991;325:245-51;
Studdert DM, Thomas EJ, Burstin HR, Thar BI, Orav EJ, Brennan TA.
Negligent care and malpractice claiming behavior in Utah and Colorado.
Med Care 2000;38:250-260.
---------------------------------------------------------------------------
I believe the current system's inability to address the needs of
this deserving yet underserved population is a serious blight on its
record. We can and should do better for these patients.
The proposal for an administrative alternative that I am familiar
with has done better in this regard as one of its central goals. I am
therefore unsure about the ``many proposals'' to which the question
refers which are not designed to do this, and which aim to
``arbitrarily reduce costs.'' I am not familiar with these proposals
and so cannot comment on them.
The health court model that our research group has been developing
\3\ certainly does not fit this description, and I would oppose any
proposal that did. Indeed, in previous work, I have criticized some
tort reform measures for precisely this reason.\4\ The model proposal
aims to compensate more patients than the current system does in three
main ways:
---------------------------------------------------------------------------
\3\ A detailed outline of the model appears as an attachment to my
written testimony.
\4\ Studdert DM, Yang YT, Mello MM. Are damages caps regressive? A
study of jury verdicts. Health Affairs 2004;23:54-67.

(1) By incentivizing providers to be forthright in informing
patients when a potentially compensable injury occurs (and penalizing
them if they do not).
(2) By creating a pathway to claiming that is simpler, more user-
friendly, and easier to navigate than the current system's.
(3) By using a more generous standard of compensability, namely
``avoidability'' instead of negligence. An avoidability standard would,
by definition, render every claim that meets the negligence standard
eligible for compensation, plus some claims that would not be eligible
under a negligence standard, thereby expanding the pool of injured
patients who would qualify for compensation.

Question 2. Thank you for your testimony and for providing us with
a novel perspective on how we might approach medical injury from the
perspective of improving patient safety. I could not agree with you
more that the current system is not accomplishing these most important
goals for fair compensation and reduction in errors. A lot of informed
people think that the true number of medical errors and injuries is far
greater than the current number of malpractice law suits. Have you had
an opportunity to do cost projections for your proposal. If we provide
compensation for every injury will this increase or decrease the
overall amount spent on medical malpractice?
Answer 2. In a previous study of medical injury in Utah and
Colorado, our research group estimated the costs of compensating
avoidable injuries (as opposed to negligent injuries) in an
administrative compensation model.\5\ The bottom line of these
projections was that the administrative model, which is similar in many
ways to the health court model we have proposed, would cost around the
same or slightly more than the current tort approaches in those States,
while compensating a much larger number of injuries. How is this
possible? Savings in administrative costs, as well as some savings in
the size of some large awards, would free up moneys to be distributed
to more injured claimants.
---------------------------------------------------------------------------
\5\ Studdert DM, Brennan TA. No-fault compensation for medical
injuries: the prospect for error prevention. JAMA 2001;286:217-223;
Studdert DM, Thomas EJ, Zbar BI, Newhouse JP, Weiler PC, Brennan TA.
Can the United States afford a no-fault system of compensation for
medical injury? Law Contemp Probs 1997;60:1-34.
---------------------------------------------------------------------------
Our research group is in the process of calculating new cost
estimates specifically tailored to the health court model we have
proposed. We hope to have the work completed by Fall, 2006. We
hypothesize that this work will produce similar results to the research
in Utah/Colorado--namely, it will not cost less than the current system
and may well cost a little more. But the issue of value is important:
how many patients will be compensated under the alternative approach,
how accurately, how quickly, and how efficiently, compared to the
current system? And how stable and predictable will the system be? On
all of these measures, I think there is a good chance the health court
will come out ahead.
The last part of the question raises one additional point. It is
unrealistic to expect that any compensation system will compensate
every eligible injury. No existing system does that--not even pure no-
fault models like auto injury compensation schemes. There will always
be some injured persons who simply don't want compensation, or who
choose not to come forward, for whatever reason. And sometimes a
compensation system will ``get it wrong'' and deny compensation when it
should have awarded it. But again, the question is what proportion of
eligible persons will find their way to compensation and how often will
the system ``get it right.'' We believe that an administrative model,
such as a health court, could surpass the status quo on both counts.
Indeed, it would be tough to do worse than the current malpractice
system, where about 3-5 percent of eligible patients obtain
compensation.

Question 3. As a follow-up, you also propose an entirely new
nationwide court system for adjudicating medical injury issues. This
seems unusually complex and costly. Do you have a fall-back plan to
achieve your goals without such a specialized change in the structure
of our court system?
Answer 3. The proposal to which I have testified--and which I
understand is on the table--is for a demonstration project, or group of
demonstration projects, to test the efficacy of alternatives to the
current tort liability system, not a new nationwide system. To roll out
an alternative approach nationwide overnight would be premature. There
needs to be an opportunity to test the potential advantages of an
alternative against the current system.
I agree that the health court model we have developed is not
simple. Compensating medical injury in a fair and consistent way, and
ensuring that the interests of patients are safeguarded in the process,
is not a straightforward undertaking. A bare-bones proposal would
therefore leave important issues unaddressed. The appropriate
comparison, however, is to the current system, which I believe is much
more complex than the type of alternatives under consideration.
I addressed the issue of costs and cost estimates in a previous
question. We believe that the proposed alternative would cost about the
same, or slightly (not dramatically) more than the current system. It
is unlikely to cost much less. But additional costs, if there are any,
should be assessed in terms of their value. Does the system compensate
more patients and is it predictable in ways that allows the wider
healthcare system to operate more efficiently?
With respect to reforms besides the health court, I mentioned in my
oral and written testimony that there are a variety of innovative
alternative dispute resolution (ADR) approaches. I believe a number of
these warrant serious consideration. The ``Early Offer'' concept, for
example, has the potential to avoid the passion play and high cost of
full-blown litigation. In general, these ADR approaches are less
ambitious than health courts because they merely overlay the existing,
dysfunctional negligence system, with attempts to streamline the
adjudication process. Thus, in my opinion, they do not carry the same
potential for broad system improvement. Nonetheless, reducing the time
and cost of litigation in this way would likely be a useful step
forward, and in this regard, they are likely to be productive reforms.

Question 4. One of my biggest concerns is that doctors are not
learning from medical malpractice cases. In other words, doctors have
lost so much faith in the reliability of our system that it no longer
serves as an effective deterrent to mistakes. In your study did you
find that the variability of the verdicts made people less willing to
study and learn from their mistakes?
Answer 4. Our study did not address the issue of deterrence or the
quality improvement dimensions of the tort system. I agree that this is
a serious concern with the tort system. In a previous study, however,
my colleagues, Michelle Mello and Troy Brennan, conducted what is
widely-recognized as the seminal review of the evidence relating to
deterrence in the medical malpractice context.\6\ Their basic
conclusion is that there is virtually no evidence of a deterrent or
quality improvement effect. This is unfortunate, given that deterrence
is one of the system's founding rationale.
---------------------------------------------------------------------------
\6\ Mello MM, Brennan TA. Deterrence of medical errors: theory and
evidence for malpractice reform. Tex Law Rev. 2002;80:1595-1637.
---------------------------------------------------------------------------
Clearly, any significant reforms in the area of medical injury
compensation must address patient safety. This is a critical issue. We
do not know for sure whether an alternative approach to compensation,
such as health courts, will do better in terms of deterring substandard
care and promoting high quality care. There is good reason to think it
might, and in a recent paper we outlined a variety of ways this may
occur, ranging from collection and analysis of critical data on
injuries to dissemination of ``best practice'' guidelines derived from
adjudicated cases.\7\ A health court approach, along the lines we have
described, offers considerable promise in this area. But once again,
the proof will be in the pudding. Only the launching of demonstration
projects, time, and careful evaluation can reveal the extent to which
the promise is realized.
---------------------------------------------------------------------------
\7\ Mello MM, Studdert DM, Kachalia A, Brennan TA. Health courts
and accountability for patient safety (in press: Milbank Quarterly,
2006).
---------------------------------------------------------------------------
Response to Questions of the Committee by William M. Sage
Question 1. Dr. Sage, your comment on one of the problems with the
current tort system is that it focuses on the individual physician and
not on the environment, the team or the process that may lead to a
medical error. Modern healthcare is clearly a sophisticated and complex
process that involves multiple inputs from a variety of health
professionals, institutions and technologies and the cause of errors
and bad outcomes is not always individually attributable. Given this
diffusion of blame, who should shoulder the cost of medical malpractice
and medical error under the systems envisioned by you and other
panelists today?
Answer 1. As an empirical matter, rising liability costs during
malpractice insurance crises tend to be absorbed by patients, private
health insurers, and government payers such as Medicare, much as those
parties absorb cost increases in other inputs to medical care. In the
1980s crisis, Professors Mark Pauly, Patricia Danzon, and Raynard
Kington studied the economic incidence of rising malpractice premiums,
and found that physicians quickly passed those costs on to patients and
payers through fee increases. In a study I co-authored, Professor Pauly
recently revisited that question with respect to the current crisis,
and found that physicians today still pass premium increases on to
patients and payers, but through increasing the volume of services
because government fee schedules and private managed care prevent them
from simply raising fees. What we do not know, however, is whether the
additional services are mainly necessary ones or mainly unnecessary
ones.
I believe that the financial burden of medical malpractice is
largely determined by the demands we place on our healthcare system and
the value we ascribe to that system's various features. The cost of
malpractice therefore should mirror the burden of general health
expenditures. This is a difficult social decision, on which no
consensus has yet been reached.
Whatever our beliefs about the role that government should play in
the healthcare system, we can agree that waste in the malpractice
system, whether from unnecessarily high rates of medical errors or
excessive administrative costs, should be reduced just as waste in the
healthcare system should be reduced. We can also agree, I hope, that it
is inefficient to ask physicians, who capture at most 15 percent of
overall healthcare revenues, to finance liability insurance for the
entire healthcare system, and to burden a few ``high-risk'' physician
specialties with the lion's share of those costs when all that does is
increase the volatility of malpractice premiums and the dual threats
that physician exit and defensive medicine pose to healthcare access
and quality.
Because of these issues, I believe that a better malpractice system
would rely for liability coverage more on the insurance purchasing
decisions of large, diversified providers of healthcare services, such
as hospitals, that can also more effectively prevent medical errors. A
better system also would ask the public, through government, to
shoulder the burden, after open debate, of caring for severely impaired
newborns and other patients whose tragic situations are not really
about medical error. And a better system would take advantage of the
Federal Government's strength as a reinsurer, making stop-loss coverage
available at reasonable cost to healthcare providers when commercial
reinsurance markets tighten.

Question 2. It often stated that the current litigation climate
leads to defensive medicine that contributes to the rapidly rising cost
of healthcare. Do you think that reforms of our approach to medical
liability will change such practice or has it been incorporated into
our medical curriculum and into the apprenticeship of internship and
residency such that it will not reverse or will do so only very slowly?
Answer 2. I think it is important to distinguish defensive medicine
that exists as a background constraint in the healthcare system between
malpractice insurance crises from defensive medicine that spikes along
with spikes in insurance premiums during malpractice crises. I believe
that background defensive medicine is a significant factor in the long-
term cost and structure of healthcare, but that it is so deeply
entwined in issues of medical culture, healthcare reimbursement, and
patient preferences that there is no single quick fix.
By contrast, I believe that the current malpractice insurance
crisis has resulted in particularly worrisome defensive practices that
require immediate attention. Physician perceptions of the malpractice
system during crisis periods affect patients. Research published in
JAMA, reflecting work I did with Dr. David Studdert and his colleagues
at Harvard, revealed very high levels of self-reported defensive
medicine among ``high-risk'' specialists in Pennsylvania. These
physicians explained in great detail how their fear of losing
malpractice coverage led them to overtest and overtreat some patients,
while refusing care to others. One major concern is the effect on
women's health of having ob-gyns limit access to high-risk obstetrics
while surgeons and radiologists perform large numbers of mammograms and
biopsies they consider medically unnecessary. Another major concern is
that a hostile malpractice environment seems to disadvantage assertive
patients who are involving themselves in their care exactly as patient
safety advocates urge them to. In our study, physicians often reported
refusing to care for assertive patients because they viewed them as
litigious, or else simply indulged their initial requests for
expensive, sometimes invasive, tests and procedures rather than working
in partnership with them.
These shorter-term trends can be reversed, I believe, if marketing
and rating practices for malpractice insurance are placed on a more
secure footing than has been the case since the 1970s, and if
physicians see that more predictable and compassionate systems than
conventional malpractice litigation are possible. Physicians'
skepticism about malpractice liability is deep-seated, however, and any
commitment to meaningful reform must be credible to them. This is why I
believe that demonstrations of malpractice reform must include systems
of early disclosure and fair compensation to which patients commit
themselves prior to treatment, rather than after injury has occurred.

Question 3. You mentioned in your testimony that Pennsylvania might
apply for a demonstration grant if S. 1337 was enacted. Are there any
other impediments that need to be removed prior to trying an
alternative in a State like Pennsylvania?
Answer 3. I think that a Federal ``hold-harmless'' assurance is the
most important incentive for healthcare providers testing malpractice
reform at the State level. Malpractice experts agree that any
successful demonstration must identify more errors and offer
compensation to more patients than currently occurs in litigation, and
States and providers reasonably worry that this will increase their
costs. With a Federal assurance that any excess costs will be covered
during the test period, States can design fair tests. Without such an
assurance, I fear that demonstrations will be biased against patients,
and will seldom gain acceptance for that reason either from patients or
from the political process.
Other impediments exist that, while smaller, might endanger a
successful demonstration program. For example, State law varies in its
protection of mediation proceedings and voluntary apologies from
exploitation in subsequent litigation. Both of these procedural
innovations are central to a successful malpractice demonstration.
Participating providers might also want assurances that State health
regulators fully support a demonstration and would not engage in heavy-
handed enforcement activities in response to greater provider openness
about errors. And participating States might also want to sort out in
advance any objection that the State judiciary might have to
legislatively enact reform of litigation procedures. All of these
issues have had some relevance to Pennsylvania's reform experience,
though I do not think that any of them would prevent a successful
demonstration in Pennsylvania if Federal funding became available.

Response to Questions of the Committee by Philip K. Howard

Thank you for the opportunity to respond to questions by members of
the committee and to provide supplemental testimony.

Question 1. As a follow-up, you also propose an entirely new
nationwide court system for adjudicating medical injury issues. This
seems unusually complex and costly. Do you have a fall-back plan to
achieve your goals without such a specialized change in the structure
of our court system?
Answer 1. Our proposal is for pilot projects only, to test the
possible benefits of an administrative compensation system. If the
benefits prove to be great--for example, (1) providing a fairer and
more efficient compensation system for injured patients (2) improving
transparency and aligning incentives toward patient safety and (3)
starting to overcome the culture of defensiveness and waste--Congress
might conclude that shifting to special health courts is, indeed, worth
the effort. Again, many important agencies concerned with the quality
of healthcare--including the Institute of Medicine and Joint Commission
on Accreditation of Healthcare Organization--have called for pilot
projects.
Rather than a nationwide system, we expect that Congress might
impose requirements for a system that met certain criteria (for
example, consistent rulings on standards of care instead of ad hoc
verdicts) and let the States meet these requirements in their own way.

Question 2. I appreciate the work that you have been doing with Mr.
Studdert and Dr. Brennan. While much more sophisticated, there are some
parallels of your proposed health courts with a variety of arbitration
panels that have been set up and tested for addressing medical injury.
Yet these arbitration panels and boards have not achieved widespread
utilization or success. Why have they failed? Are any elements of these
concerns relevant to the success of your health court proposal?
Answer 2. The core feature of the health court model is that it
provides written rulings on standards of care as a matter of law. Only
when an official body takes this authority can we aspire to the
consistency needed to restore trust and align incentives. In this
critical respect the health court model differs from both screening
panels and arbitration panels.
Screening panels do not have the authority to adjudicate claims.
Evidence suggests that screening panels do not reduce, and may
increase, the number of claims filed.\1\ They also have little or no
impact on the incentive to file claims for the purpose of obtaining a
settlement. Screening panels are used by some lawyers as a way to
evaluate the claim. In tragic situations, such as babies born with
birth defects, lawyers ignore the opinion of the panel and sue anyway.
By contrast, health courts would diminish the incentive to file invalid
claims by establishing and enforcing reliable standards of care.
---------------------------------------------------------------------------
\1\ R. Hanson, B. Ostrom, and D. Rottman, ``What Is the Role of
State Doctrine in Understanding Tort Litigation'' Michigan Law and
Policy Review 1, no. 1 (1996): 43-72; S. Shmanske and T. Stevens, ``The
Performance of Medical Malpractice Review Panels,'' Journal of Health
Politics, Policy and Law 11, no. 3 (1986): 525-535; P.M. Danzon, ``The
Frequency and Severity of Medical Malpractice Claims: New Evidence,''
Law and Contemporary Problems 49, no. 2 (1986): 57-84. (cited in C.T.
Struve, ``Improving the Medical Malpractice Litigation Process,''
Health Affairs 23, no. 4, 35).
---------------------------------------------------------------------------
Arbitration can be a productive way of resolving disputes, but
there is little empirical evidence to support that finding for medical
malpractice cases.\2\ Arbitration does little or nothing, however, to
provide guidance to improve healthcare or otherwise align incentives
toward better quality and avoidance of waste. As with jury verdicts,
arbitration is an ad hoc system, without written rulings or any
aspiration for consistency.
---------------------------------------------------------------------------
\2\ E. Rolph, E. Moller, and J.E. Rolph, ``Arbitration Agreements
in Health Care: Myths and Reality,'' Law and Contemporary Problems, 60
(Winter & Spring): 153-184, 1997. See also T.B. Metzloff, R.A. Peeples,
and C.T. Harris, ``Empirical Perspectives on Mediation and
Malpractice,'' Law and Contemporary Problems, 60 (Winter & Spring):
107-152, 1997.

Question 3. One component of your written testimony points to the
role of health courts in developing legal standards of medical care. Do
you really think they are the most appropriate group to define such
standards? Will these standards be regional or national in application?
Answer 3. In our proposal, health court judges would define the
standard of care in medical injury cases. They would do so in reliance
on neutral experts--retained and compensated by the court--who would
provide unbiased testimony on the standard of care. In general, there
is a national standard for most medical practices. But in certain
situations the circumstances can be important as well--for example, a
general practitioner treating a head trauma victim in rural setting may
not be held to the same standards as, say, a neurosurgeon in Boston.
There might be differences among health courts in different States. But
we expect that these variations will be minor. To help health court
judges reach consistent decisions from case to case, judges would
consider past health court decisions as well as clinical practice
guidelines based on evidence-based practice standards, such as those
disseminated by the National Guideline Clearinghouse at the U.S. Agency
for Healthcare Research and Quality.

Question 4. One of my biggest concerns about the current
malpractice system is that it fails to capture information that could
improve the medical delivery system. How does your proposal address
this shortcoming of the current system?
Answer 4. The health court proposal is designed to work in tandem
with patient safety agencies which would capture and disseminate
information about mistakes and errors, and develop recommendations on
improving practices. De-identified information from the adjudication
process would be transferred to patient safety authorities, providing
the basis for analysis about adverse events and near misses that could
aid in the development of strategies to prevent errors from occurring
in the future. Information from the adjudication process would also be
provided to healthcare providers so that they could conduct root cause
analyses of what went wrong, and why.
Changing the culture of defensiveness and concealment is also a
critical link toward improving patient safety. Creating a court which
aspires to reliability will significantly reduce the fears that drive
counterproductive behavior. Liberalizing the standard of recovery
toward one of avoidability rather than error also lessens the emphasis
on individual fault and better takes into account the role of system
failures in leading to injuries.

SUPPLEMENTAL TESTIMONY

The distinguished panel of witnesses at the June 22 hearing
provided a range of perspectives. Two witnesses offered opinions which
reflected misunderstandings about the proposal for health court pilot
projects, which I would like to correct.
Cheryl Niro from the American Bar Association stated that the
health court proposal includes ``the creation of a schedule for the
assessment of damages and would cover both economic and non-economic
damages.'' Several other times both she and Senator Kennedy made
statements that implied that patients injured by medical mistakes would
not get an ``individualized determination of compensation'' or ``fair
and just compensation.'' Ms. Niro suggested that the surgeon who lost a
hand would get the same damages as people who did not rely upon their
hands for their livelihood.
While there are many ways of structuring damages for pilot
projects, our recommendation is for the victim to receive 100 percent
of all monetary losses, including lost wages--thus, a surgeon who lost
his hand and could no longer operate might receive millions, while a
politician or a lawyer who could continue to practice would receive far
less. Because lawyers fees would be dramatically lower in the expedited
health court proceedings than the standard 33-40 percent (fees would
probably be calculated as a multiple of actual investment in hours and
costs), the actual damages that many injured patients take home is
likely to be greater than under the current system. Health courts are
also expected to provide compensation to many more injured patients,
who are today shut out from the system because of the exorbitant cost.
As Professor Studdert observed, over half of the malpractice dollars
today goes to lawyers and administrative costs.\3\ This is a shocking
figure, nowhere addressed in the testimony on behalf of the American
Bar Association.
---------------------------------------------------------------------------
\3\ D.M. Studdert, Testimony before the Senate Committee on Health,
Education, Labor, and Pensions, ``Medical Liability: New Ideas for
Making the System Work Better for Patients,'' June 22, 2006, p. 4; D.M.
Studdert, et al., ``Claims, Errors, and Compensation Payments in
Medical Malpractice Litigation,'' New England Journal of Medicine,
354;19 (May 2006): 2031.
---------------------------------------------------------------------------
For ``pain and suffering'' damages over and above monetary losses,
we recommend creating a schedule depending on injury, as other
industrialized nations do. The advantages of the schedule would be to
create ``horizontal equity'' among patients with similar harms--would
the surgeon who lost his hand have more pain than the worker on the
assembly line, or the elderly retiree? Scheduling pain and suffering
has the advantage of ``turning down the heat'' in disputes--reducing
the uncertainty of what's at stake and alleviating the fears of
catastrophic verdicts that skew physician behavior in ways that
undermine quality and raise costs.
Professor Vidmar stressed the lack of evidence supporting the
proposition that limitations on noneconomic damages would make
malpractice insurance more affordable. But our goal is not to limit
claims--we believe many more injured patients will receive compensation
in our health court proposal--but to align incentives for better
quality and avoidance of wasteful ``defensive medicine.'' Only by doing
pilot projects can we demonstrate what the actual effects will be.
That's why we need them.

Response to Questions of the Committee by Cheryl Niro

Question 1. Ms. Niro, thank you for your testimony representing the
American Bar Association. You have suggested that many of the concerns
brought forward today can be addressed by various voluntary alternative
strategies such as arbitration panels. Yet despite being around for
more than 3 decades, such approaches have not become widespread. Why do
you think that is the case?
Answer 1. I would not wish to endorse the idea that alternative
dispute resolution methodologies are not widespread. I believe that
they are used extensively across the country. Statistics demonstrate
that an extraordinarily small number of cases filed proceed to a judge
or jury finding. They are resolved at some point prior to a trial court
conclusion. And, of course, a percentage of trial courts are reversed
and/or modified on appeal. Professor Vidmar's specific research in
Illinois showed that only two cases in the counties he examined
resulted in jury verdicts over $1 million in 2 years and one of those
overturned was on appeal. I would refer you to the study he did using
the records of the Madison/St. Clair County court records. See http://
www.isba.org/medicalmalpracticestudv.pdf.
It is also important to remember that negotiation, mediation and
arbitration are generally private and confidential proceedings by
agreement of the parties. These options are often sought by the parties
because they will not result in a public record. Some court systems do
offer court annexed mediators and arbitrators, but even in those
programs the parties are usually given the option to find an ADR
process and ADR professional on their own, rather than using what is
made available by the court.
There are a number of competing factors which affect the decision
to use ADR in medical malpractice cases. After a series of meetings
with the leaders of the medical community and their insurers, I have
learned that there is little willingness to resolve these cases via any
settlement procedure. The medical community is quite reluctant to have
to report any dollars paid out in malpractice payouts to injured
patients because of the national database that compiles and publishes
that information. Competition in the healthcare industry makes any such
reporting ``bad for business'' understandably, and there is an inherent
conflict present in the decision to settle or litigate due to this
factor.
Lawyers are ethically bound to present all options for resolving
disputes with their clients and may be prosecuted in a disciplinary
proceeding for failing to do so. Injured patients would rarely wish to
prolong any adversarial proceeding, nor would their lawyers. Costs and
time present difficulties for injured patients.
Insurers have an entirely different set of issues affecting their
participation in these cases. They must reserve the moneys that could
be awarded to an injured patient. But, the longer the moneys are
preserved in the reserve account, the company continues to benefit from
the interest accrued. On the other hand, some insurers are quite open
to quick resolution, and may show reduced payouts over time because the
injured patient and their lawyers have not had to pay out enormous sums
in preparing for trial.
I firmly believe that there are a number of reforms to improve the
collection and reporting of data, such as the data bank on dollars paid
by the medical institutions in malpractice claims, which would result
in positive change.

Question 2. A great deal of testimony today by some very thoughtful
people has suggested that the current medical litigation system does
not begin to deal with true patient safety and instead, often works in
the opposite direction by preventing open reporting and open
discussion. How do you counter the vivid evidence and testimony
presented today?
Answer 2. Forward thinking medical institutions, such as the model
in place in Ann Arbor, Michigan dramatically demonstrate that early,
open discussion and reporting produce significant bottom line savings,
and undoubtedly, improved relationships among all parties involved in
this arena. Ombuds programs, bedside mediations and consensus-driven
decisionmaking involving the medical staff and family of the patient,
and other models all present tremendous opportunities to reform our
current system. I am confident that the committee could obtain
information and testimony from hospital administrators using these
programs. The healthcare industry would benefit from broader
experimentation with these models, and should be strongly urged to find
and implement these programs and give them a chance to prove their
efficacy.

Question 3. If a health court system was voluntary or opt-in, as
you suggested, how could we ensure that a consistent standard of care
was upheld across the board in the civil and health court system? How
could an opt-in system address the issue of varying standards of care
within the medical malpractice system?
Answer 3. A ``health court'' system, as I understand the proposals
that are currently pending, would not provide for voluntary
participation or even provide for a party to opt-in only after a
dispute has arisen. I would like to clarify my testimony if I was
understood to have suggested that participation was voluntary in some
proposals. Mediation is a time-tested, equitable alternative to
litigation, when it is voluntary and the fully informed choice to
mediate occurs after the dispute arises. Likewise, arbitration is
another available alternative to litigation when a fully informed
injured party decides to use that dispute resolution method on a
voluntary basis after a dispute have arisen.
We know, as a nation of laws, that providing justice is a difficult
thing. Every day, in courts across our Nation, our system is being
challenged to be more fair and more responsive to the problems of our
day. The process for the opportunity to do that was built into the
system in the beginning. It is self correcting, and its rules have had
over two centuries of refinement. The ``health courts'' proposal does
not demonstrate a better alternative to our existing court system, and
it possesses none of the checks against abuse of process that are
present in our courts.

Question 4. You have a great deal of experience with mediation and
other forms of alternative dispute resolution. Based on that
experience, you emphasize the importance of voluntary participation of
parties. The consent of the injured patient must be truly informed, he
or she must understand what rights are being given up and what benefits
are being received in return. That can only take place after the injury
has occurred.
Would you elaborate on this point, and explain why such truly
voluntary participation is so important to the fairness and
effectiveness of any alternative dispute resolution system for medical
malpractice cases?
Answer 4. Our court system is designed to provide an even, fair
process for resolving disputes. The most vulnerable may have their
grievances against the most powerful heard in a forum that treats them
as equals. The use of any alternative to that system must be considered
very carefully, because the other alternatives lack the infrastructure
of the court system and thereby present a greater opportunity for
inconsistent and perhaps, unjust outcomes. ADR processes of mediation
and arbitration are desirable when highly trained, highly skilled and
highly experienced neutrals are in place.
The underlying principle of alternative dispute resolution is that
these other methodologies may provide a more desirable process when
their use can be shown to have a greater likelihood of meeting the
needs of the disputants. And the array of reasons to opt for an ADR
process, such as mediation, is extensive and often unique to the
dispute. There may be urgency in resolving a case (i.e., to replace the
earnings of an injured patient for a family; the injured patient is not
going to survive; the practice which led to the injury must be halted).
The injured patient may present unique needs that may be more
meaningfully addressed in a cooperative forum, rather than an
adversarial proceeding. Injured patients need professional advice about
the pros and cons of each option. Most importantly, they must
understand what they stand to gain and what they stand to lose with
every forum.
The only way for an injured patient to make a meaningful choice of
forums is to be fully knowledgeable of their needs and of which method
provides the greatest opportunity to have their needs meaningfully
addressed. They should have ethical counsel to help them make the
choice, to represent them in the process, and to work with them to
achieve the desired outcome. Proponents of ADR are committed to the
promise of these methods as a component of our legal system only when
all of the safeguards of knowledge and understanding are in place. For
us to do any less would be unfair, unjust, and (if I may say so) un-
American.

Question 5. Proponents of replacing the right to a jury trial with
an administrative system or with health courts often point to workers'
compensation laws as a model. You state in your testimony that an
administrative compensation system would not work for medical injuries
because it would not be a true no fault system. Injured patients would
lose the right to a jury trial, but still need to prove that the doctor
did something wrong. Please elaborate on the reasons that workers'
compensation is not an appropriate model for medical injury cases.
Answer 5. As I stated in my testimony at the hearing, Workers'
Compensation was designed to provide injured workers a process to
compensate them for injuries that take place in the workplace. In
exchange for their access to the court system, workers are guaranteed a
certain award based on the injuries they suffered on the job.
``Health courts'' are unlike the Workers' Compensation system in
that, under a ``health court'' proposal, injured patients would still
be required to prove fault on the part of a defendant. A similar burden
to prove fault is not imposed on an injured worker in a Workers'
Compensation case. Thus, under the ``health court'' scheme, injured
patients are forced to give up the right to bring an action in a court
with no guarantee of an award. Injured patients would be required to
prove that their injuries are ``the result of a mistake that should
have been prevented.'' Proponents call this the ``avoidability
standard,'' which includes injuries ``that would not have happened were
optimal care given.'' This is not a ``no fault'' standard as in the
Workers' Compensation field, nor is it a strict liability standard.

Question 6. Would you describe the type of voluntary mediation
process that you believe would be appropriate for medical malpractice
cases? Are you familiar with mediation programs in place today that you
believe are performing well?
Answer 6. Medical malpractice mediation is proving to be a viable
alternative to litigation in appropriate cases. Mediation is generally
easier to schedule and complete than litigation.
Mediation is by definition voluntary, and often provides the
opportunity to custom-design an agreement that meets the unique needs
of the disputant. The opportunity to reduce adversarial behavior and
promote cooperation is always present. Mediation is forward looking,
while litigation and fact finding tend to be less so. Mediated
agreements are usually easier to enforce, because the parties have
entered into them voluntarily. There are many more reasons that
mediation, when used appropriately and practiced ethically, is a very
desirable component of the legal system for many types of cases,
including some medical malpractice cases.
The program at Rush Hospital in Chicago is a wonderful
demonstration of successful, appropriate and ethical use of mediation.
Mediations are often facilitated by a team of co-mediators, and these
co-mediators are selected because they have been lawyers or judges in
the medical malpractice area. The process is entirely voluntary and
great care is taken to assure that the sessions take place in a
cooperative, nonadversarial setting. Appropriate case analysis is
completed and conferences of the representatives of the parties are
held. A meaningful assessment of discovery takes place, and ample
opportunity for counsel and extended sessions are part of the program.
This model has proven successful in my home city, a city that took a
step toward mediation thoughtfully and carefully. It has been widely
respected. It is one of many successful programs across the country.

Response to Questions of the Committee by Neil Vidmar

Question 1. Dr. Vidmar, thank you for balancing the discussion
today with your broad testimony supporting the current medical
litigation system. You point out on page 6 of your written testimony
that only 1 of 7 injured patients sues, and therefore receives
compensation for injury. Isn't this a failure of the current system to
provide fair compensation and to truly address the needs of patients?
Answer 1. The issue is complicated and many people want to simplify
it. The question assumes that patients who are negligently injured from
negligence are aware of the negligence or, if they are aware, they want
to sue their doctor, or that they desire or need compensation.
Many patients may be unaware that their injury is a result of
negligence. The studies of injuries in the Harvard study and others
that have followed, including the recent New England Journal of
Medicine study by Studdert et al., are based on reviews of completed
hospital records. The researchers have the advantage of hindsight that
was not necessarily available to the injured patient. The data provide
no indication that the patients were aware of the negligence.
Most injuries occur in hospital settings. Patients enter hospitals
because they are sick or need an operation. Often, it is difficult for
the patients to determine if the injury or illness they experience
following negligent medical treatment is the result of the condition
for which they sought treatment or negligence. In one of the very first
cases I studied when I began my research on medical malpractice a woman
with cancer died in the hospital. Her husband assumed it was a natural
result of her cancer. However, 2 months later when he received
documents bearing on his wife's death he discovered that the hospital
pathologist had concluded that her death was the result of negligent
medical treatment. He was not told of the pathology report by the
hospital. Thus, what the medical profession calls ``co-morbidity,''
often prevents the patient from recognizing that negligence may have
been involved in the treatment.
As far as I know we do not have data on the frequency and degree to
which patients are aware that negligence has occurred in their case. I
do draw attention to research by Professor Lori Andrews, Studying
Medical Error In Situ: Implications for Malpractice Law and Policy 54
DePaul Law Review 357 (2005). She documented quite strikingly that many
medical errors do not even appear in the hospital records. This is
additional evidence bearing on patient ignorance of negligence. In
short, if the patient ascribes post-medical condition to the
``presenting'' (prior to treatment) illness or injury, there is no
reason to enter a complaint or seek the advice of a lawyer. The failure
to claim for this reason would also be true under a health court
scheme.
Still another reason that people do not make claims is that even
when they learn that a negligent error has occurred, they are willing
to accept that any negligence was not malicious on the part of the
healthcare provider, e.g., ``We all make mistakes and the doctors were
trying.'' I think that this factor probably additionally suppresses
claiming rates. My mother was suffering from dementia due to advanced
age and was living in a nursing home. She suffered a ruptured bowel and
was at death's door. A surgeon in St. Francis Hospital in Litchfield,
Illinois performed surgery and saved her life. My sister and brother
and I had agreed to a post-surgery ``do not resuscitate order'' on her
medical chart. (Prior to her dementia she had quietly said several
times to each of us that this would be her wish). Suppose she had died
after the surgery and we learned that some form of negligence had
occurred. I can say with almost 100 percent certainty that I and my
siblings would not have sued. The doctor and the hospital were doing
their best.
Too often patients and American people are characterized as greedy
and willing to sue on any occasion. Research evidence indicates the
contrary. Professor David Engle, The Ovenbird's Song: Insiders,
Outsiders and Personal Injuries in an American Community, 18 Law &
Society Review 551 (1984) documented this reluctance to make claims in
what many scholars consider a classic study of disputing behavior. May
and Stengle, Who Sues Their Doctors? How Patients Handle Medical
Grievances, 24 Law & Society Review 105 (1990) found similar results in
a study bearing specifically on medical errors. People have high regard
for their doctors and are willing to accept many errors and forgive.
The findings have been supported by other studies. Indeed, I have
myself published peer-reviewed articles bearing on this reluctance to
sue. I think Richard Boothman's testimony before this committee
strongly supports my position on this issue as well. The failure to
claim for this reason would be true under a health court system as
well.
Still another reason for not seeking compensation is that some
injured patients may have alternative sources of support. These include
private health insurance or Medicare or Medicaid or income support from
employers or welfare. There is no need to sue for health costs or lost
income. The failure to claim for this reason would be true under a
health court system as well.
Now, it is true that the present tort system is expensive. Some
people are possibly kept out of the tort system simply because a lawyer
cannot afford to litigate the case. Professor Herbert Kritzer's
research on plaintiff lawyers, Herbert Kritzer, Risks, Reputations and
Rewards: Contingency Fee Legal Practice in the United States (2004),
clearly shows how carefully plaintiff lawyers screen cases because they
cannot afford to take on a case that is going to cost too much to
litigate or has a poor likelihood of success or that the potential
returns are too small. Plaintiff lawyers are sometimes castigated for
this, but you do not need a business degree to understand that taking
on cases in such circumstances would quickly put a lawyer into
bankruptcy. On the other hand, some of the problem of the costs lies
with defendants who obstruct and fight cases rather than acknowledge
negligence. I think Ms. Sheridan made an important point in her oral
testimony before this committee. In her son's first trial the ``junk
science'' was brought by the defense, not the plaintiff. This is
consistent with my observation of malpractice cases over the past 20
years. I also note that because the proposed health courts are not no-
fault courts and require instead that a patient prove negligence the
problems of transaction costs will deter lawyers taking cases for the
same reasons, perhaps even more so if the health courts are subject to
bias in favor of healthcare providers as many of us fear.

Question 2. As you know, it often takes several years to achieve a
verdict or a settlement in medical malpractice cases. The personal pain
and suffering related to such prolonged solutions, let alone the cost
seems inappropriate and may provide compensation much too late after an
injury. Isn't this a sign of the failure of the current system to be
efficient or effective? Have you had a chance to read the two Institute
of Medicine reports on patient safety and quality? Do you see the
concerns raised and approaches now being taken to address these issues
as being less effective than the current litigation approach?
Answer 2. This question poses a ``compared to which alternatives''
issue for me.
My own research indicates an average of 3 to 6 years to resolve
medical malpractice cases. I have written about the litigation process
in my book, Medical Malpractice and the American Jury (1995), and in a
recent essay in 38 Loyola of Los Angeles Law Review 1217 (2005). My
insights on this issue were especially aided when I had access to a
sample of three different liability insurers' closed claim files. I
supplemented the file data with interviews with plaintiff and defense
lawyers and insurance adjusters.
Non-lawyers (and some academic lawyers) assume that the process of
obtaining evidence bearing on negligence when it is contested by the
defense is something that can be accomplished in a matter of weeks. The
reality is different. Records have to be obtained, but health providers
do not receive a letter from a plaintiff 's lawyer and send the records
out in the next day's mail. Sometimes they resist until a lawsuit is
filed and they are compelled to produce the records. Even those
providers who do agree to provide records first consult with their
lawyers and department head and the personnel and obtain opinions on
both medical and legal issues, etc. It may be weeks or months before
the records are sent to the plaintiff 's lawyer. Then the plaintiff 's
lawyer must conduct an in-house screen of the records before attempting
to find a medical expert to review the files. This may take some time
because the lawyer has to do his or her own research on the topic
before seeking an expert. Then, the plaintiff 's expert must find time
in her busy schedule to write an evaluation and send it to the
plaintiff 's lawyer. Then the lawyer must write the pleadings and wait
for a reply from the defendant--or defendants, each of whom may have
their own lawyer. Most medical malpractice cases initially have
multiple defendants because it is not clear at the early stages of
investigation that might bear responsibility. Then the defendants have
to seek their own experts to review the records--more weeks or months
pass. Then lawyers for both sides have to arrange their busy
schedules--they each have a portfolio of cases and perhaps upcoming
trials in other cases--and fly to some distant location to depose the
experts. And so on, and so on.
If the process of evidence discovery is to be fair health courts
will encounter the same problems. There is a suggestion that the health
court will provide the experts. This too will take time. Moreover, the
proposals seem to indicate that the plaintiff and the defendants can
have their own independent expert witnesses. It is possible that health
courts could actually increase transaction time and costs.

Question 3. In your written statement you state that only 1 out of
7 patients who actually ``suffered a negligent injury'' files a claim.
As it stands today, some meritorious claims are kept out of the system
altogether because of the skyrocketing costs of the current system. In
your opinion, how might patients with more minimal injuries caused by
possible physician negligence benefit if their cases were heard in
health courts?
Answer 3. First of all, my own research with Florida closed claims
data submitted by liability insurers, Vidmar et al. 54 DePaul Law
Review 315 at 352 (2005) indicated that in Florida transaction costs,
when adjusted for inflation, had not increased over a 14-year period:
``The mean transaction cost for paid claims from 1990 to 1993 was
$40,853, compared to $39,158 for the 2000-2003 period, a difference
that is not statistically significant.'' Our data were derived from
public records and I invite anyone to check the figures. While the data
pertain only to Florida, claims about increasing costs in that State
are contradicted by the insurer's own data. A study of similar data
from Texas, Charles Black et al. Stability, Not Crisis: Medical
Malpractice Claim Outcomes in Texas, 1988-2002 Journal of Empirical
Legal Studies (2005) yielded similar findings. I suggest that some of
the claims made about ``skyrocketing costs'' need to be treated with
some skepticism.
I am strongly in favor of resolving cases on a voluntary basis
through negotiation or mediation. The Michigan program discussed by
Richard Boothman and similar programs are going a long way to fairly
and efficiently address problems with more minimal injuries. As I have
suggested in preceding questions, I have doubts about both the fairness
and presumed greater efficiency of the proposed health courts.

Question 4. For less severe injuries, especially, might a schedule
of damages send a more consistent message to physicians regarding the
accepted and expected standards of care?
Answer 4. Truly, I do not see how a schedule of damages could--or
should--have an effect on physician care. I cannot believe--I refuse to
believe--that physicians are influenced in their caregiving by the
remote prospect of potential damage awards. I do not see how a
connection can be made between schedules of payments and medical care.
I am not a physician, but as an educated layperson I believe that
the solution to care--and avoidance of medical error--lies in better
understanding of the sources of error and how to prevent error. I have
recently read the annual reports of the Pennsylvania Safety Reporting
Commission established by the Pennsylvania Safety Authority. While in
its infancy I believe this endeavor begins to show the way to better
standards of care.

Question 5. Based on your own substantial research and numerous
other studies of jury verdicts that you have reviewed, you state in
your written testimony that most juries decide medical malpractice
cases based on legal merit, not sympathy for the victim or the
perception that the defendant is a deep pocket. Jurors are able to sort
through the competing testimony of dueling experts. You also point out
that the extensive case reviews have shown that jury determinations on
liability closely track the conclusions of objective medical experts.
In other words, juries are good fact finders.
This is an extremely important finding because it effectively
rebuts negative stereotypes of the jury system that we often hear.
Would you elaborate on the basis for your conclusion that most juries
reach accurate verdicts consistent with the evidence?
Answer 5. I am delighted to respond to this question. This summer I
am finishing a book on the subject, American Juries, with my colleague
Valerie Hans.
Underlying most of the claims about the tort system for medical
malpractice cases are claims that juries are the main problem. They are
characterized as incompetent, anti-doctor, prone to sympathies for
injured parties rather than legal facts, etc. As just one of many, many
examples I refer to a statement made by the American Medical
Association before this very committee on February 11, 2003:

``The primary cause of the growing liability crisis is the
unrestrained escalation in jury awards that are a part of a
legal system that in many States is simply out of control.''

I have been conducting empirical research on civil and criminal
juries since for more than three and a half decades. Many colleagues
have as well. There are literally hundreds of studies using different
methodologies and published in peer-
reviewed scientific journals. Based on this research, here is my
conclusion that I will state in an intemperate way:

The many thousands of American citizens who have honorably
served on civil juries should ask a court to certify them as a
class and file a class-action lawsuit for defamation of
character. The American Medical Association and the National
Chamber of Commerce can be named as the lead defendants, along
with a host of others.

I suspect that no Senator or Congressman would dare publicly call
his or her constituents ``incompetent,'' ``irresponsible,''
``rapacious,'' ``gullible'' and all of the other terms and phrases used
to characterize juries. Yet, these very same constituents are the
persons who are conscripted as jurors and comprise the juries that are
so vilified in testimony before legislatures, in testimony before
legislators, and occasionally by legislators themselves.
With respect to medical malpractice juries I will summarize what I
offered in my written testimony. Empirical evidence by many researchers
indicates that doctors win between 75 and 80 percent of jury trials. At
minimum this is some pretty good indirect evidence that juries are not
biased against doctors. Research also shows that when jury verdicts on
liability are compared with the ratings of medical experts on whether
negligence occurred there is a very high correspondence. When severity
of injury and economic losses are taken into account, jury damage
awards are, on the whole, very reasonable. Trial judges who sit with
juries on a daily basis and hear the same evidence--and who are thus in
a better position to judge jury performance than anyone--are
overwhelmingly supportive of juries.

Question 6. You also point out that studies of damage awards show
that ``plaintiffs with the most severe injuries appear to be at the
highest risk for inadequate compensation.'' Damage caps affect
primarily the most severely injured patients, such as those with
paralysis or brain injuries, because they are the only victims who
would be likely to receive an award above the level of the cap. They
are the last ones whose compensation should be arbitrarily limited.
Would you explain what the research shows about the impact of caps?
Answer 6. I have reviewed this literature in several sources, e.g.,
38 Loyola of Los Angeles Law Review 1217 (2005). Here are the basic
findings: Research on the effectiveness of caps in reducing medical
malpractice premiums lends, at best, equivocal support to the argument
that they are effective.
A United States Government Accounting Office (GAO) report in 2003
showed that States with caps on medical malpractice damages tended to
have lower premiums for doctors and that rate increases were lower in
States with caps. However, the report also concluded that it is not
possible to show a direct link between caps and premiums because there
are other factors that distinguish States with and without caps.
Moreover, some States without caps had the lowest premiums of all.
Importantly, the GAO concluded that there are no data to establish the
proposition that damage caps have an effect on the number of
malpractice claims, losses by medical insurers, litigation expenses, or
the rates charged doctors for insurance.
In the same year, Weiss Ratings, Inc., a highly respected insurance
rating company, also concluded that caps do not have an effect on the
insurance premiums that they charge doctors. Indeed, Weiss found that
in comparison to States without caps, States with caps had greater
increases in median annual insurance premiums for practices involving
internal medicine, general surgery and obstetrics-gynecology.
An analysis of statistical information for 2003 by the Kaiser
Family Foundation, another highly respected organization dedicated to
healthcare, showed that the number of paid claims per 1,000 active
physicians was unrelated to whether a State had caps on pain and
suffering.
Professor Catherine Sharkey analyzed medical malpractice jury
verdicts from 22 States for the years 1992, 1996 and 2001 that were
collected by the National Center for State Courts. Sharkey found no
statistically significant relationship between the presence or absence
of caps and compensatory damages in jury verdicts and trial court
judgments.
Kessler, Sage and Becker studied the impact of malpractice reforms
on the number of physicians in States with malpractice reforms and
States without such reforms. The study did not specifically separate
caps from other reforms. Overall, a combination of tort reforms was
associated with a slightly greater number of physicians. The study did
not examine the effects of reforms on malpractice premiums or on the
frequency of claims or the amounts of awards. The authors of the study
acknowledged that malpractice climate is one of many determinants of
the physician workforce and that the reforms they studied had only a
``modest impact'' on the number of physicians. Moreover, the authors
acknowledged that there were possible alternative explanations for
their findings.
I analyzed a sample of Illinois jury verdicts that provided
breakdowns of the verdicts into their specific components or elements,
including pain and suffering. The analysis showed that a $500,000 cap
on pain and suffering would functionally affect very few cases.
The Wisconsin U.S. Supreme Court decision analyzed a substantial
body or empirical research bearing on caps with specific reference to
the State of Wisconsin. The Court drew a number of conclusions that
included:

``Based on the available evidence from nearly 10 years of
experience with caps on non-economic damages in medical
malpractice cases in Wisconsin and other States, it is not
reasonable to conclude that the $350,000 cap has its intended
effect of reducing medical malpractice insurance premiums.''
``The available evidence indicates that healthcare providers
do not decide to practice in a particular State based on the
State's cap on non-economic damages.''
``We agree with those courts that have determined that the
correlation between caps on non-economic damages and the
reduction of medical malpractice premiums or overall healthcare
costs is at best indirect, weak and remote.''

In 2003, GE Medical Protective Company, the Nation's largest
medical malpractice insurer, reported to the Texas Department of
Insurance as follows: ``Non-economic damages are a small percentage of
total losses paid. Capping non-economic damages will show loss savings
of 1.0 percent.''
The company also said that a provision in Texas law allowing for
periodic payments of awards would provide a savings of only 1.1
percent. Medical Protective eventually raised the rates on its
physician policyholders.
In California in 2003, despite the cap of $250,000, GE Medical
Mutual sought an increase of 29.2 percent in liability insurance
premiums. Thus, the cap did not prevent a major increase in liability
insurance rates.

Question 7. The proposals to impose what the Enzi bill calls a
``defined compensation schedule'' would also deny the fact finder the
ability to consider the full impact of the injury on the victims' life.
It would set an arbitrary limit on compensation for a particular type
of injury. Wouldn't this have an impact similar to damage caps,
reducing the amount of compensation that the most severely injured
patients could receive?
Answer 7. Yes. In addition to serious questions about who is to set
these standards, there are questions about whether the amount would be
sufficient in specific cases. My own research on Florida cases that
were settled without a lawsuit even being filed offered some unique
insights into the variability of the actual economic losses. Many of
the losses can only be described as catastrophic. The files contained
information on ``structured settlements,'' that is, money that was
invested to ensure the economic well-being of the negligently injured
patient and often their dependents. I reported some of these data in a
table in my written testimony on June 22, 2006 but it is useful to
reproduce that table again. The data show very clearly the great
variability in the amount that the defendants--who acknowledged
negligence--paid badly injured patients as well as how much was
believed to be necessary to keep the patient and any dependents
economically independent. I think that this single table is the
equivalent of a picture being worth a thousand words. I suggest readers
examine this picture carefully. A careful examination will raise
questions about how any schedule can be designed to provide individual
justice for patients such as these. Moreover, the most badly harmed
individuals will be treated most unjustly.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Settle Year Case Sex Age Injury Settlement Structured
--------------------------------------------------------------------------------------------------------------------------------------------------------
1991............................. BMH................. M.................. 0.................. Spastic quad; $1,887,044 $1 million cash
cerebral plus $887,044
palsyriplegia. annuity yielding
an expected total
payment to child
of $13,855,826.
1992............................. WCD................. M.................. 1.................. Severe brain $1,000,000 $640,000 cash plus
damage, blind, $540,000 annuity
deaf, immobile. yielding $2,557/
month for child
plaintiff.
1992............................. UMS................. F.................. 0.................. Severe mental, $3,000,000 No details except
emotional an estimate that
impairment. the annuity would
yield $5,914,774.
1993............................. CRH................. F.................. 2.................. Severe cerebral $6,000,000 $4,922,115 cash;
palsy secondary to plus $1,077,885
hypoxia. present value for
structured trust
expected to yield
$3,179,273 (Note
medical expenses
incurred to date
of the settlement
= $989,164).
1993............................. TGP................. M.................. 43................. Renal cell $2,000,000 $1,389,542 cash
carcinoma. plus $610,459 for
structured
settlement for 3
surviving minor
children.
1993............................. AHP................. F.................. 0.................. Paraplegia......... $3,750,000 $2,300,000 plus
$1,450,000 present
value for annuity.
1994............................. AR.................. M.................. 0.................. Profound brain $1,000,000 $440,178 cash plus
damage. $559,822 annuity
yielding a total
of $2,912,000.
1994............................. GBP................. F.................. 39................. Vegetative state, $3,000,000 $1,500,000 cash
non-reversible. plus $1,500,000
annuity expected
to yield an
expected payment
to the plaintiff
of $8,783,183 for
plaintiff and four
minor dependants.
1995............................. FHH................. M.................. 25................. Spinal cord injury. $2,647,617 $1,156,000 cash
plus $1,491,000
for structured
annuity expected
to yield
$5,291,937.
1995............................. CHM................. M.................. 0.................. Canavan's Disease $2,383,900 $1,092,209 cash
(degenerartive plus $1,291,691
disorder of for annuity
central nervous yielding lump sum
system). payments at 5 and
10 years totaling
$2,000,000.
1995............................. HBM................. F.................. 32................. Coma............... $7,250,000 Cash and annuity
cost unknown but
annuity estimated
to yield
$16,129,528.
1996............................. RLC................. UK................. UK................. Death.............. $1,500,000 $1,429,808 cash
plus $70,192 for
annuity yielding a
total payment to
plaintiff 's
family of
$1,422,239.
1996............................. CPC................. M.................. 0.................. Required $2,500,000 $1,187,940 cash
resuscitation; plus $1,312,060
neurological for annuity,
damage. yielding
$3,307,824 for the
child.
1996............................. ORH................. F.................. 0.................. Brain damage....... $7,300,000 $5,100,000 cash
paid on behalf of
four defendants
plus $2,200,000
for an annuity.
Total yield of
annuity unknown.
1996............................. GMI................. F.................. 0.................. Severe brain damage $6,379,322 $5,529,332 cash
plus $850,000
annuity yielding
$8,066/mo for life
of the child.
1996............................. DCH................. M.................. 0.................. Cerebral palsy..... $3,000,000 $2,600,000 cash
plus $800,000
annuity expected
to yield
$13,783,483 over
the child's life.
1996............................. CKR................. F.................. 30................. Brain herniation... $3,000,000 $1,800,000 cash
plus $1,200,000
from three
insurance carriers
for an annuity
expected to yield
a total of
$7,816,824.
1996............................. FHA................. M.................. 0.................. Cerebral vasculitis $6,500,000 $4,500,359 cash
and bilateral plus $1,999,641
thalamic infarcts. for an annuity
yielding $7,855/mo
for life plus
periodic cash
payments
graduating from
$50,000/yr to
balloon at 25
years to $250,000.
1997............................. SVC................. M.................. 52................. Brain damage....... $1,000,000 $582,935 cash plus
$417,065 for
annuity, yielding
expected total of
$1,572,935.
1997............................. HCP................. M.................. 49................. Death.............. $5,000,000 $4,000,000 cash
plus $1,000,000
annuity yielding
projected
$3,976,503 for
decedent's minor
daughter.
1997............................. KCM................. F.................. 37................. Paraplegia and $3,520,160 $1,845,160 cash
cauda equina plus $1,675,000 to
syndrome (spinal two annuity
cord ends). companies yielding
an expected total
of $8,157,597.
1998............................. GJL................. F.................. 52................. Paraplegia......... $1,000,000 $500,000 cash plus
$500,000 annuity
starting at $2,500
per month and then
adjusted for
inflation.
1998............................. COR................. M.................. 56................. Death.............. $1,000,000 Payout of
approximately
$2,000 per month
over 35 years.
1997............................. LMG................. M.................. 39................. Death.............. $1,250,000 $553,359.60 cash
plus annuities
purchased at
$354,4560:
$111,048.20 and
$111,048.20
yielding a total
of $1,129,912.
1998............................. UM.................. F.................. 56................. Right ankle, left $1,625,000 $700,000 cash and
below knee annuity providing
amputation. $4,000 per month
for 5 years and
$1,000 per month
for 7 years.
1998............................. GSHI................ M.................. 62................. Quadriparesis, $1,449,032 $675,000 cash and
neurogenic bladder. annuity providing
$9,750 per month
for 5 years or
life.
1998............................. UCH................. M.................. 2.................. Profound brain $5,000,000 $2,500 per month,
damage. increase 3 percent
per year. 20 years
guaranteed, plus
life.
1997............................. CKMC................ F.................. 37................. Paraplegia and $3,520,000 Cash payment of
cauda equina $1,845,160 and two
syndrome (spinal annuities
cord ends). purchased with
present value of
$1,675,000: total
payments estimated
at $8,157,597.
1999............................. SPGH................ F.................. 0.................. Severe cognitive $5,500,000 Total annuities
delays, requires yielding
occupational $12,754.31 per
therapy, physical month.
therapy, speech
therapy.
1999............................. PRMC................ F.................. 21................. Death.............. $2,250,000 Cash of $1,809,709
plus annuity for
surviving child
purchased at
$440,291.
1999............................. PRMC................ F.................. 1.................. Hemorrhagic $3,300,000 Cash of $907,829
periventricular plus annuity
leukomalacia, purchased for
hypoxic ischemic $2,392,171 for
injury resulting life care of
in motor child.
development delay,
cognitive defects.
--------------------------------------------------------------------------------------------------------------------------------------------------------

There is another important matter regarding the proposed schedules.
I acknowledge that Professor Studdert's Draft Proposal on his proposed
health court that was appended to his testimony is a work in progress.
I do not want to be unfair in that regard. Yet, I took a close look at
that proposal regarding how damage award schedules are currently being
considered. I contend that the ``current recommendations'' of his
Design of a ``Health Court `` System on page 3 helps to illustrate the
problems with schedules.
First consider economic damages: ``Economic damages will be paid in
full.'' Ask any practicing plaintiff or defense lawyer how contentious
economic losses can be. Two experts will offer estimates of the cost of
future medical care that vary by literally millions of dollars. Similar
problems attend with income loss, especially if the injured party has a
business that one expert will estimate enormous growth potential and
the other expert will estimate stagnation in sales leading to no
growth. There is no truly right answer on economic losses. That is why
for more than 200 years we have relied on a group of citizens to apply
their logic and local community standards to make the decision. Jury
decisions are not about absolute truth because there is no absolute
truth. The only criterion is fairness.
However, I find the most problematic issue to be with regard to so-
called ``noneconomic'' damages. On page 3 the Studdert proposal states:
``Noneconomic damages will be paid according to a schedule tied to
severity of injury and based on decision science research about utility
losses and public deliberation about reasonable compensation.'' (Bold
added for emphasis).
I am not sure exactly what is meant by ``decision science''
although I am a trained social scientist. Is the proposal referring to
those economic theory studies that ask people in the abstract how much
money they would require to allow someone to amputate one of their arms
or take away their eyesight? With all due respect to some economic
scholars, I think the general public would find this criterion very
unacceptable!
But what about ``public deliberation about reasonable
compensation'' that is another criterion set out on page 3? Isn't
deliberation what juries already do? Or does public deliberation refer
to town hall meetings with votes about appropriate ranges or possibly
statewide referenda? If either, how do you get an informed public
decision when these votes will be made in the abstract?
In contrast under our present system, juries see the patient, hear
about the suffering and hear from experts about the future health and
employment prospects of the specific individual. They make informed
decisions based on the individual case.
The Studdert draft also considers basing the schedules on ``past
jury awards.'' Which past awards? Is not the aim of health court
proponents to avoid jury awards altogether?
Schedules deny individual justice. They hurt the persons most
severely injured. They are inconsistent with American law and American
tradition. They are unfair.

Prepared Statement of the American College of Obstetricians
and Gynecologists

On behalf of the American College of Obstetricians and
Gynecologists (ACOG), representing 49,000 physicians and partners in
women's healthcare, thank you for holding this important hearing on
alternatives to the current medical liability system.
America's broken medical liability system fails both injured
patients and their physicians. Many patients with legitimate injury
claims never enter the civil justice system, while as many as half of
the claims that do enter the system are without merit. The system fails
to do what it is supposed to do: accurately and efficiently identify
cases of negligence, fairly compensate injured patients, and promote
patient safety. The current medical liability system is random,
unpredictable and ineffective.
Obstetrician-gynecologists pay the price through the meteoric rise
in medical liability premiums that is threatening women's access to
healthcare. Good doctors who have been so important to their patients
and their communities are dropping obstetrics, ending their surgical
practice, or closing their medical practices completely. Medical
students who love the idea of ushering tiny lives into this world are
turning away from the litigious culture that surrounds ob-gyn. And
America's women are left asking, ``Who will deliver my baby?''
ACOG strongly supports comprehensive Federal legislation to reform
the system, including placing a reasonable cap on non-economic damage
awards, as has been accomplished in California and Texas. We'll
continue working toward this goal until it's won.
At the same time, we believe there is enormous benefit in exploring
promising alternatives that would more fundamentally fix America's
broken liability system, including healthcare courts and early offers
demonstration programs, as S. 1337 would provide. ACOG has supported
healthcare courts and early offers for many years. These alternatives
would help guarantee that injured patients are fairly, quickly, and
fully compensated for their economic and noneconomic damages. These
alternatives take injury claims out of the adversarial tort system
where facts are often poorly understood, and put them into the hands of
experts whose goals are fairness and patient safety.

OUR PRESENT MEDICAL JUSTICE SYSTEM FAILS ITS OWN OBJECTIVES

Unable to Define Medical Negligence
In the United States today, patients harmed by medical care
generally have one legal option to get compensation for their injuries:
they can bring a tort claim alleging medical negligence in a State
civil court system.
To prove negligence, in general the patient must show that his or
her physician failed to act reasonably under the circumstances, i.e.,
to provide a reasonable standard of medical care as ordinarily provided
in the specialty, resulting in harm to the patient.\1\
Experts say that all parties to medical litigation--patients,
doctors, insurers, and attorneys for both sides--can be unclear as to
what medical negligence really means and what's required as proof.\2\
When it comes to medical care, civil courts do a poor job of
distinguishing between negligence and non-negligence, or between poor
and good care.\3\
Many injured patients do not have access to civil courts. The
landmark Harvard Medical Practice study of 1991 estimated that while 5-
6 percent of patients are harmed by negligence each year, fewer than 2
percent ever file a claim.\4\ The elderly and the poor are
disproportionately left out.\5\ And only 1 in 14 people with a serious
injury resulting in a disability of 6 months or more is ever
compensated.
Conversely, the civil justice system also fails to adequately
screen out patients who don't belong there. Studies from 1991 to 2006
find that from 37 percent to over 50 percent of claims filed each year
have no merit, and from 13 percent to 25 percent of cases filed where
no negligence occurred still receive compensation. Cases with no merit
also bring other costs to our justice system: a 2006 study of medical
liability cases found that baseless claims accounted for 21 percent of
administrative costs and 16 percent of total liability system costs.\6\
That's the mark of a system that fails to do what it's supposed to
do: accurately and efficiently identify cases of negligence, fairly
compensate injured patients, and promote patient safety.
For patients injured by negligence, the civil justice system fails
to provide fair and timely compensation. For physicians, it fails to
provide guideposts for behavior, be a fair and effective deterrent
against substandard care or accurately distinguish between negligent
and non-negligent care. For insurers, the unpredictability and
randomness of the current system creates an unstable medical liability
insurance market and skyrocketing premiums.\7\
Doesn't Help Patients
The current tort system is not easy for patients to navigate.
Medical liability cases are among the most unpredictable and complex to
litigate, and proving fault can be difficult.\8\
The system is lengthy and expensive for patients. The average
liability claim takes 3 to 5 years to resolve and attorney fees and
court costs can be high.
Many attorneys take cases on a contingency fee basis, taking a
percentage of any fees won, but this arrangement also has its
limitations. Often the plaintiff has to pay upfront to cover their
attorney's out of pocket costs. The system eats away at any
compensation eventually won. About 50 cents of each dollar in the
liability system goes to attorneys' fees and costs.\6\ \9\ And the
arrangement makes attorneys more inclined to take particular types of
cases and exclude others, favoring cases that promise large rewards or
a plaintiff sympathetic to jurors.\10\ Patients whose cases may be
meritorious, but small-value, are often left out. Many injured patients
don't meet the negligence standard at all.
Patient safety experts believe that most cases of patient injury in
the U.S. healthcare system are not due to physician negligence, but to
system errors in healthcare institutions. This can include the
misreading of prescriptions by hospital staff, lost records, or poor
communication between departments.\11\ The tort system is a poor fit
for evaluating, preventing, or compensating the nature of their
injuries.

Patient Care is Harmed
Although physicians prevail in most claims, the litigation process
can be lengthy, expensive, and psychologically draining. The average
case against ob-gyns takes 4 years to resolve, with 13 percent of cases
taking 7 or more years.\12\ In 2006, it cost ob-gyns an average of
$35,000 to defend a medical liability case, including claims that were
later dismissed, and claims without physician error accounted for 13-16
percent of the liability system's total monetary costs.\6\
An estimated 13 percent to 25 percent of all cases not involving
negligence still receive compensation.\6\ Negligence is poorly
understood, and the tort system reaches beyond negligence and awards
malpractice damages even when there was no malpractice. In some cases,
jurors may be trying to squeeze what are really systems errors into the
physician negligence ``box.''
Some juries find fault even if no mistakes or wrong-doing occurred,
but instead the cases involved bad, sometimes heart-breaking,
outcomes.\14\ Cerebral palsy cases (neurologically impaired infants) in
particular are susceptible to this type of verdict. Research shows that
less than 10 percent of neurological impairment cases are the result of
events occurring in labor and, of these, the majority were not
preventable.\15\ Yet, these cases account for 1 in 3 obstetric-related
claims and the median award for ``medical negligence in childbirth''
cases is $2.3 million.\12\ \16\
The negligence standard--the heart of the medical tort case--has
become meaningless. For physicians, litigation has been divorced from
the quality of care they provide and a source of increasing stress and
frustration.
This leads to poorer patient-doctor communication, with doctors
less willing to express anything that might be construed as an
expression of ``fault.'' It increases defensive medicine practices, as
doctors perform unnecessary procedures, tests, or referrals to
specialists, to lessen their chances of being sued.\17\ Some estimates
of defensive medicine costs run as high as $60-100 billion a year.
Defensive medicine increases the cost of a healthcare system that now
accounts for nearly one-sixth (16 percent) of the Nation's gross
domestic product.\18\ \19\
Physicians have endured three crises in liability insurance rates
in the last 25 years, with cyclical skyrocketing premiums. Physicians
have trouble affording or even finding insurance, which results in a
reduction in services, and hurts patients' access to care. According to
a 2003 survey of ob-gyns, over 1 in 4 have reduced their number of
obstetrics cases and 1 in 7 stopped practicing obstetrics altogether
due to liability insurance concerns. The scenario is likely to continue
unless something changes in the medical justice system.\12\

THE HEALTH COURT MODEL

Researchers at the Harvard School of Public Health are studying the
successful use of health courts in other countries and have pinpointed
some key reasons why specialized health tribunals may correct serious
deficiencies inherent in our tort system.\20\

1. Health courts would be separate, distinct forums from the general
civil courts, speeding up adjudication and reducing costs.

Specialized judicial courts exist within the State judicial court
system, but hear only certain types of cases. Family law, domestic
violence, probate, or mental health courts are examples of specialized
State judicial courts. Specialized tax, patent, and admiralty courts
are also found in Federal law.
Administrative courts or tribunals hear disputes before an
administrative judge or officer, with a limited right of review in the
regular court system. Worker's compensation cases are examples of
administrative hearings.
Key benefits of this approach would be:

faster adjudication of medical claims,
lower costs of litigation,
faster compensatory relief to injured patients,
more accurate determination of negligence and/or fault,
more expert consideration of science and clinical
considerations, and
improved patient safety.

2. Trained adjudicators would hear cases, setting clearer and more
consistent standards than under the civil jury system.

A judge or administrative hearing officer trained to hear medical
cases would resolve disputes with greater reliability and consistency
than in cases decided by untrained judges or juries. In contrast to
juries, trained adjudicators could issue opinions that define standards
of care or set legal precedent.
Medical cases--involving scientific and ethical questions about
disease, biology, and appropriate medical treatment--can be highly
complex. The United States is nearly alone among developed nations in
using mostly juries rather than expert judges to decide medical
liability cases. In England, Canada, France, Germany and Japan, medical
liability disputes are decided by judges, not civil juries.\22\

3. Judges would be guided by panels of neutral medical experts, using
evidence-based standards of care.

The U.S. tort system needs impartial medical experts to guide
decisionmakers on complex medical questions and on the issue of what is
``reasonable care'' under the circumstances: to establish what
standards of medical care apply in a given situation, or, as is
frequently the case in medicine, what factors would guide physician
behavior when no clear standards exist.
Instead, plaintiffs and defendants in the United States today hire
their own medical experts, so juries often hear conflicting testimony
about the quality of care. All too often, plaintiffs' experts have no
specific expertise in the medical issues related to the case, or even
the area of medicine involved. In many European civil law systems,
judges may examine or select medical experts or choose a panel of
neutral experts for guidance.\23\

4. Damage awards would be more predictable, consistent and fair,
through guidelines for compensating intangible factors.

The amount of damage awards in U.S. medical negligence cases are
random and unpredictable.
Damage awards for economic damages, such as past and future medical
costs or lost wages, are fairly predictable. These awards depend on the
plaintiffs individual circumstances and do not depend on a plaintiff
being a wage-earner: injured infants or housewives, for example, are
eligible for economic damages based on loss of potential future
earnings or their economic value to the family.
Noneconomic damages, awarded for intangible factors including pain
and suffering, fluctuate wildly for similar injuries and contribute to
the high cost of medical liability insurance. In approximately half of
the States in the United States there is no limit on these awards.\7\
In contrast, under a worker's compensation model, noneconomic
damages are based on a schedule of award amounts that reflect the
severity of the injury or extent of incapacitation. Even with upper
limits on these damages, the system gives adjudicators flexibility to
adjust damages based on individual circumstances.
In countries that use a schedule of damages to set awards--such as
Denmark, Sweden or Great Britain--the even-handedness of the approach
seems to contribute to a greater public satisfaction with the medical
justice system, in marked contrast to the situation in the United
States.\24\ \25\
health courts could also improve patient safety
Any new system that corrected the inequities in our current medical
justice system would be worth pursuing. But what if it could also help
reduce health system errors and improve patient safety? Some proposals
for health courts aim to achieve both goals.
A 2000 Institute of Medicine study estimated that thousands of
medical errors occur each year in the U.S. healthcare system, most due
to system errors rather than to physician negligence or malpractice.
System errors can include miscom-
munication between hospital departments, loss of charts in hospitals,
or misreading of prescription information. As our healthcare system
becomes more complex, opportunities for error increase.\11\
Currently, the U.S. tort system and the patient safety movement
``function in separate worlds.'' \26\ In fact, our litigation system
often thwarts systematic efforts to improve patient safety.
Fear of litigation shuts down communication between doctors and
patients and between personnel within medical institutions. Open
sharing of information and learning from mistakes reduce the risk of
errors. The aviation industry, for example, reduced its rate of error
by switching from a culture of individual blame to a culture of data-
sharing on the cause of mistakes.\27\
Many patients want more openness as well. Surveys show that
patients harmed by medical care are less likely to sue if the physician
apologizes and shows a willingness to correct such action in the
future. The ``I'm Sorry'' movement is an effort to allow physicians to
apologize when things go wrong without the apology exposing the
physician to increased liability.\28\
Under our current litigation system, institutions and physicians
cannot learn from mistakes. Often records are sealed in settlements of
medical claims, keeping information that might be helpful to preventing
future harm off-limits, even within the same hospital or institution.

HELPING JUSTICE AND REDUCING ERRORS

Researchers at the Harvard School of Public Health have summarized
a model that could help join a better patient compensation system to
improved patient safety efforts.\20\
An administrative health court process would promote open
communication and patient safety measures.
1. A patient files a claim at the facility level. This could
encourage discussions, I'm Sorry efforts, mediation, or early offers of
compensation. Facilities could also use claims to help track data on
system safety.
2. A Reviewing Panel (a facility, insurer, or administrative panel)
would determine if the injury is compensable, in which case it would
make an offer. If non-compensable, the panel would explain why.
3. Patients dissatisfied with the panel's decision could pursue the
case before an Administrative Health Court for a hearing.
4. Using a high standard of review, a judicial Appellate Court
would hear any appeals from the Health Court decision.
The second idea, proposed in the Harvard Model and earlier
Institute of Medicine proposals, is to use a lesser standard of
evidence for patients to prove harm: the avoidability or preventability
rule. Under this standard, used in the Scandinavian system, injured
patients prove only that such an injury should not have happened under
optimal medical care.\20\
This standard requires a patient to show more evidence of medical
wrongdoing than under a strict liability test, but is a more flexible
standard of evidence than the current negligence standard, which is
poorly understood and often misapplied. Among its benefits, the
avoidability or predictability rule is more likely to:

Compensate patients harmed by mistakes or system errors;
Correct the abuse and misuse of the negligence rule; and
Remove the stigma and blame of the negligence label,
often attached to individual doctors who acted appropriately and were
not negligent.

The focus is less on assessing blame, and more on helping harmed
patients. And the interests of physicians and patients would once again
be united in a common goal--better patient care.

QUESTIONS REMAIN, BUT PILOT PROJECTS SHOULD GO FORWARD

The status quo has become intolerable for both doctors and
patients. Pilot projects to study health courts would investigate a
potentially better system and, at a minimum, provide helpful
information in evaluating medical justice models. There is much to gain
and little to lose in going forward.
Research and clinical trials are essential to the development of
advances in medicine. Advances in our medical justice system are no
less deserving of investigation. Pilot projects to evaluate the merit
of health courts can only improve the status quo and should be put in
place as early as possible. A good start to investigate this and other
alternatives to the current medical liability system is the ACOG-
endorsed bill S. 1337, The Fair and Reliable Medical Justice Act, which
was introduced in June 2005 by Senator Michael Enzi (R-WY) and Sen. Max
Baucus (D-MT). We applaud Senator Enzi's leadership on this important
issue and we pledge to work with the Senate and House toward speedy
passage of this bill.
The Nation cannot afford to postpone correcting its deeply flawed
medical justice process. We must begin today.

References

1. Black's Law Dictionary (West/Thompson, Eighth Edition, 2004),
pp. 978, 1061-1063.
2. Udell N. and Kendall D. Health Courts: Fair and Reliable Justice
for Injured Patients. Progressive Policy Institute, Washington, DC.
Feb. 2005 Policy Report.
3. Barringer P. Health Courts: A Better Approach to Malpractice
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Hospitalized Patients: Results of the Harvard Medical Practice Study.
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2003.
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Brookings Institution 1991, p. 64.
23. Schwartz G., op cit., at p. 66.
24. Erichsen M. The Danish Patient Insurance Scheme. Presentation
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http://cgood.org/assets/attachments/Martin_Erichsen USA.pdf Espersson
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[Whereupon, at 12:42 p.m., the committee adjourned.]