Posts Tagged ‘policy’

4
Sep

Thoughts on Medical Tort Reform

   Posted by: Robert    in Law, Politics

I have been spending a bit of time lately thinking about what I would like to see from a medical tort reform package.  Along with a couple of other things, tort reform seems, to me, like one of the most important and powerful ways to reduce the cost of health care in America.  America’s tort system is unique in the world (not only in medicine, but throughout the civil arena) because of the high damage awards possible in US courts.  Cutting these awards would reduce the need for and cost of malpractice insurance, which imposes a significant burden on doctors.  Changing the system of punishment in general would also offer a greater opportunity for targeting misbehavior and ensuring a more fair system overall.

Punitive damages are a form of non-economic damage that courts, through juries, are able to award to a victorious plaintiff.  In general, punitive damage awards are large, often several times the actual damages suffered by the plaintiff.  The logic of punitive damages is twofold: They serve as a way to compensate plaintiffs for injuries to which no dollar value can be easily attached, and they punish defendants for misbehavior in the hope that people in the future will not behave the same way.

The reality is that malpractice punitive awards tend to compensate lawyers and the IRS, and punish the doctor’s insurance company which is otherwise unrelated to the case.  The insurance companies, in turn, effectively punish all doctors by raising premiums to offset the huge losses that they suffer as a result of the lawsuits.  An individual doctor who loses may suffer a higher rate increase than the rest of his insurance company’s customers, but he will not suffer all or even most of the punitive damage cost.  After all, that’s why he bought insurance in the first place.  The result is that parties who were not injured reap most of the reward from insurance companies while doctors face very few consequences for their misbehavior, but have to charge patients more money to cover insurance premiums raised by other doctors’ mistakes.

Is there anything about this system that isn’t broken?

A better system, it seems to me, would be to do away with punitive damages entirely and, instead, expose doctors to non-economic punishments which cannot be insured away.  In particular, what I propose is that any doctor found liable would have their case referred to an oversight panel composed of practicing physicians and patient advocates.  The oversight panel would have the option to assign no additional punishment, to suspend the doctor’s license for a period of time, or to revoke the doctor’s license entirely.  The expert composition of the panel more accurately reflects a doctor’s peer group than does a lay jury, so they would be more likely to understand a doctor’s thought process and less likely to be swayed by hindsight bias in deciding an appropriate punishment.  Selecting both practitioners and patient advocates would ensure that both interests are fairly represented.  Finally, affecting a doctor’s license affects the misbehaving doctor directly, ensuring that he and he alone is punished for his misdeeds, that he is punished significantly by affecting his livelihood, and that other patients are made safer by removing a potentially harmful doctor from the market.

Tort reform is often opposed by people who believe it would prevent plaintiffs from bringing claims for certain types of injuries regardless of their claim’s merit.  Indeed, many tort reform proposals do exactly that.  Mine does not.  While this assumption may be questionable, I am willing to assume that every plaintiff who wins a case did receive an injury in fact and deserved to be compensated.  However, when compensation turns to punishment, I am convinced that there are more fair and cost effective solutions available than the punitive damage system we have today.

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