When President Obama addressed the American Medical Association (AMA) in Chicago on June 15, the President told the crowd of physicians that he recognized that his health care plan could not succeed unless doctors were freed from their fear of lawsuits. While the President did not go into details about how this would be accomplished, he did say that he was not proposing a cap on jury damage awards in medical malpractice suits.
The President’s speech to the AMA highlighted one of the central debates in the Obama administration’s struggle to push health care reform: Will the reform also include tort reform, and if so, in what capacity?
Whether or not to put a federal cap on medical malpractice damage awards has been an issue of intense debate between the legal community and the medical community. Doctors blame soaring medical malpractice insurance premiums on large jury awards in med mal cases and argue that the costs of health care will not decrease until there is significant tort reform. Tort reform proponents claim the high cost of medical malpractice insurance has led to an exodus of physicians in states with the highest premiums, resulting in some communities having little to no access to doctors or specialists without traveling hours from their homes.
Physicians also argue that the fear of being sued forces them into practicing defensive medicine, which results in doctors ordering more tests and performing more diagnostic procedures than they otherwise would if not for the fear of being sued. In turn, these additional tests and procedures then raise the overall costs of providing health care.
Attorneys representing victims of medical negligence, on the other hand, believe that physicians have severely overestimated how much defensive medicine actually contributes to the overall costs of the American health care system. Lawyers point to the lack of empirical evidence showing a direct correlation between rising health care costs and medical malpractice damage awards.
A 2004 report issued by the Congressional Budget Office stated that med mal costs represented as little as 2% of the country’s overall health care costs. Another report issued by Wellpoint Insurance found that the three biggest reasons for the rising costs of health care did not include rising medical malpractice insurance premiums and the practice of defensive medicine, but the costs for advances in medical technology, increasing federal regulation on the health care industry and a growing obese population that requires more medical care.
Many opposing tort reform also argue that there is no evidence that tort reform actually results in lower medical malpractice premiums for physicians. There have been studies conducted in some of the states that have passed caps on non-economic damages – damages for pain and suffering, mental anguish and other non-monetary losses – which have shown that even though the amount of jury awards had gone down, there has not been a correlating decrease in the costs of med mal insurance. In order to lower the insurance rates for doctors, there must be reform of the insurance industry, rather than the tort system. Despite the philosophical differences between the legal profession and medical profession when it comes to how to solve the health care crisis, many commentators believe the Obama administration will not be able to pass their health care bill without keeping at least some physicians on board. And in order to do this, the administration will have to make some attempt to alleviate physicians’ fears that medical malpractice lawsuits are increasing the costs of health care.
There have been two proposed ways of accomplishing this goal without passing federal legislation to cap med mal injury awards. The first option would shield physicians from liability arising from a potential medical malpractice lawsuit so long as the doctor followed “best practices” guidelines in providing for the patient’s care and treatment. These guidelines would be developed by physicians. The second option would require hospitals to implement the “Sorry Works” program. This program would require hospital staff and physicians to determine the cause of every bad treatment outcome and then take remedial steps to ensure the bad outcome is not repeated. The program would also require physicians and the hospital to apologize to the patient and family and offer upfront compensation for the injury, akin to a settlement offer. The Sorry Works program believes it can lower the costs of protracted litigation if a fair offer is made early on in the process. This program currently is in use in several states. A less extensive version has been in effect in Illinois for several years passed into law at the urging of the medical profession and insurance industry. Interestingly, however, this writer is unable to identify a single settlement having ever been reached by this program, which basically requires the medical provider to come forth and admit negligent conduct.
There are many questions remaining about how either of these programs would work in practice – particularly the best practices model – and whether physicians will be on board for anything less than a federally imposed cap on non-economic damage awards. The Obama administration had promised to pass sweeping legislation to reform health care before the summer ended, but it appears that the battle over how best to lower costs of the bloated industry may take much longer than that to settle. The voter anger and frustration apparent in many recent small town debates with local politicians illustrates that our health care issues run much deeper than tort reform concerns.