A Cheaper, Better Alternative to Tort Reform

In the previous articles, on tort reform, we have considered the criticisms that tort reformers level at our tort system. We showed that, even if frivolous lawsuits have costs, which no one can verify or prove that they do or how much, those costs are relatively small compared to the profit-taking by corporations. Then we showed that litigious states did not actually suffer in terms of either a loss of economic growth or the exodus of doctors. Now, we will consider a better alternative to tort reform for improving the environment for medical malpractice claims in the United States.

Why Lawsuits Are so Expensive?

According to a New England Journal of Medicine (NEJM) study, the majority of costs (54%) for litigation go to administrative costs, including the lawyers, the experts employed by both sides, and courts. This fact is commonly cited by critics of the tort system, but what they are less likely to say is that the majority (78 %) of the administrative cost involved is related to resolving cases in which the physician actually did make an error that resulted in injury.

There are two main reasons for this. First, according to the NEJM study, nearly all medical malpractice claims (97 %) involved an injury suffered by the plaintiff, and the majority of those (63 % (61 % of total claims)) involved injuries caused by an error made by a doctor, nurse, or other hospital personnel. But these claims are also more expensive because they involve the calling of numerous medical experts on both sides and extensive research and discovery (all of which, incidentally, are actually increased by tort reforms, although asymmetrically, putting more of the burden on the injured party). As a result, cases involving actual error cost nearly 30 percent more per case in administrative costs than claims that did not involve error.

Sorry Seems to Be the Hardest Word

Since in the majority of cases where medical error is responsible for injury the doctor knows the error occurred, the hospital is in the unique position of being able to avoid the entire litigation process by admitting the error and either offering an immediate settlement or compensation package, or agreeing to arbitration up front. The admission of error has been said to expose doctors to more medical malpractice lawsuits, but the truth of the situation is far different.

Doctors first started admitting errors in 1987 at the Veterans' Administration hospital in Lexington, Virginia, and they discovered that, far from resulting in more lawsuits, it actually led to a significant decrease in lawsuits. In many cases (as much as 43 %), plaintiffs injured by medical malpractice pursue a lawsuit because they perceive it is the only way to find out information that the hospital is concealing about the cause of their injury.

Positive Results

The policy of full disclosure and apology was quickly adopted by the entire VA hospital system. Other hospitals have also adopted this policy, and many of them have seen significant improvements in their payments for medical malpractice. The flagship proponent of this approach is the University of Michigan's Health Systems. In a speech to a conference of OB/GYNs, considered one of the high risk specialties because they are susceptible for lawsuits related to birth injury, the risk manager of the UMHS stated that since beginning the full disclosure policy in 2001, the number of claims pending against the system have decreased by 2/3. Their costs have reduced by half, and their processing time has also been cut in half. All of these results, as good or better than those promised by tort reformers, have been achieved without denying anyone access to the courts, forcing outrageous standards of proof, or increasing the profits of insurance companies.

A Model?

If this system works for medical malpractice, can it also work for other areas of litigation? Consider product liability. A company sells several hundred thousand cribs, of which a relatively small number malfunction, leading to injury of one or two infants. If the manufacturer admitted fault and came to the families with an apology, they might find that the families were less likely to seek punitive lawsuits. No amount of money can compensate the parents for their loss, but a willingness on the part of manufacturers to admit fault can go a long way toward healing the wounds of the accident.

Tort reformers pretend that all the antagonism in the court system is the result of greedy lawyers whipping up the fury of plaintiffs, but in many cases the majority of the antagonism is on the side of the defendants, who seek to deny or defray costs resulting from their actions. If we had a more civil conduct system, perhaps we would have less need of recourse to the civil justice system.