Wednesday, July 15, 2009

RTRP: Health Care Reform, Tort Reform

As we wait for more details to emerge about Obamacare, let's talk about reforms that can actually fix the problems with our health care system. . . call it CommentaramaCare.

Over the next three or four posts, we will lay out the entire reform package. Today we begin with tort reform. Next time, we’ll address structural reforms for the medical profession. Then, we’ll talk about the coverage plan and the program’s costs. Read on. . .

Tort Reform

As we’ve discussed, tort reform is not THE answer to the problems with our health care system, but it is necessary. With that in mind, CommentaramaCare proposes the following:

1. Health Care Must Be Federalized

Alright, calm down, nobody said “nationalize.” We said “federalize.” There is a big difference. Nationalize means to take over the industry. Federalize means to subject the industry to federal regulation rather than state regulation.

Even though health care in the United States accounts for 16% of our GNP (with the federal government spending the lion’s share of those dollars), health care is basically regulated at the state level -- though there are some federal requirements. This means that our health care system is run by fifty different regimes, each with different rules and different interests.

This complex framework of state regulations imposes significant administrative costs on providers, makes it extremely difficult for providers to move between the states, and is highly susceptible to manipulation by local politics -- not to mention that the government’s health care bureaucracy is duplicated fifty times.

States have shown that they are poor managers of the health care system and programs like Medicaid are breaking their budgets, even with federal support.

The only way to fix this is to federalize health care, to remove states from this process. Under the commerce clause, Congress has the power to regulate the health care industry. When Congress speaks, it can supplement state law or it can replace state law in its entirety. In this instance, Congress should replace state law entirely by passing one set of regulations for health care providers. In this way, the complex net of regulations would be eliminated, the burden on state coffers removed, and medical providers would gain the same freedoms that virtually every other industry in America enjoys.

Moreover, if this is not done, then none of the reforms proposed here can be effective because state law would continue to dominate.

Federalizing also will allow Congress to require that medical malpractice actions be brought in federal court. Unlike federal courts, state courts are subject to intense political pressures. State judges often run for election, and those that do require the financial support of local organizations like trial lawyers or hospital groups. Federal judges, by comparison, are appointed for life (hence no need to satisfy contributors) and are generally considered to be higher quality judges. Similarly, federal juries are drawn from much larger pools and thus are less likely to be subject to local influence.

2. Stopping Bad Lawsuits

Now that we’re federalizing health care, let’s talk about specific changes to tort law. The first goal of tort reform should be to discourage bad lawsuits. In that regard, CommentaramaCare proposes:

1. Requiring Certificates of Merit: Prior to filing any malpractice suit, the plaintiffs must obtain a certificate, under oath, from a medical expert of similar or greater qualification to the defendant doctor(s), stating both that the medical expert has reviewed the record and has concluded to a reasonable degree of medical certainty that the defendant doctor failed to satisfy the appropriate standard of care. Without such a certificate, the plaintiff cannot file suit. In my experience with medical malpractice suits, this requirement more than any other eliminates bad lawsuits.

2. Fee Shifting: Fee shifting (making the loser pay the winner’s attorneys fees) actually does little to deter bad lawsuits. Indeed, it is common knowledge among plaintiffs’ attorneys that even where fees are shifted to losing plaintiffs, they are rarely paid. Nevertheless, fee shifting is a good idea, because it does have some deterrent effect and because it is fair to legitimate plaintiffs whose awards are often largely eaten up by attorneys fees.

3. Stopping Outrageous Awards

The second goal of tort reform should be to reduce outrageous awards, without reducing the ability of plaintiffs to obtain fair compensation for their injuries. In that regard, CommentaramaCare proposes:

1. Eliminating Punitive Damages: Punitive damages are intended to discourage truly egregious behavior that affects society at large by allowing juries to punish defendants far beyond the specific harm caused in that instance. However, there is little reason to believe that punitive damages encourage doctors to take greater care, and there are other mechanism in place to punish doctors for misconduct. Thus, there is no justification for continuing to allow punitive damages and they should be banned.

2. Capping Non-Economic Harm: Non-economic harm is better known as pain and suffering. Capping these damages at a reasonable level is a decent way to prevent juries from being swayed by emotion. However, you need to establish the cap level carefully.

If the cap is too low, old people and poor will be unable to find lawyers, because their economic harm will be too small to justify the expense. A medical malpractice suit typically costs a plaintiff’s attorney around $100,000 (out-of-pocket) to bring to trial. If there are few economic damages and the non-economic damages are capped around $250,000, as they are now in many states, it is not worth the risk for the attorney to take the case.

Moreover, you must ask if this cap is just. Consider the case of a 20 year old computer programmer who loses both legs as a result of medical malpractice. Because the programmer does not need his legs to continue in his profession, there is limited economic harm. Thus, his damages will primarily be pain and suffering. Would $250,000 compensate this person for being legless the rest of his life?

For these reasons, the cap should be set at $1,000,000.

3. Bad Faith Surcharge: To counter balance the changes above, judges should be allowed to impose an additional sanction of up to 20% of the final award, if the judge finds that the insurer denied the medical malpractice claim in bad faith. This is necessary because certain medical malpractice insurers have begun refusing to settle any claims, even where the doctor wishes to settle, because they believe they benefit from litigating all claims. This clogs the court system, wastes time and effort, abuses injured plaintiffs, and needlessly harms doctors. And this will get worse as the potential verdicts shrink in size.

4. Removing Legal Considerations From Medical Decision Making

The third goal of tort reform should be to remove the threat of lawsuits from the day to day practice of medicine -- reducing the need for so-called “defensive medicine.” In that regard, CommentaramaCare proposes adopting each of the defenses commonly allowed in common law, plus specifically guaranteeing the following two by statute:

1. Standard of Care: As will be discussed in the next article, a new Federal Medical Board must be established to regulate the medical profession. That Board will be responsible for establishing national standards of care for most conditions. Where such a standard is established, doctors may not be sued for failing to go beyond that standard.

2. Failure To Comply With Recommendations: If a patient refuses to comply with a doctor’s order/ recommendation, the patient may not base their suit in any way on that order/ recommendation; the doctor, however, may raise the patient's refusal as a defense (where relevant). In other words, if the doctor recommends a test/ procedure and the patient does not have it done, the patient cannot use that test/ procedure to prove malpractice, but the doctor can use the refusal to prove that the patient interfered with the doctor's ability to render adequate treatment -- although, such refusals will need to be noted in writing in the patient’s records, with a clear explanation that the patient was advised that the particular treatment or test is required by the standard of care.

5. Reviving Hospital Oversight

The final goal of tort reform should be to reconstruct the relationship between doctors and hospitals, which has been severed by prior tort reform.

As we noted previously, hospitals have lobbied states to change the law to allow them to avoid liability for the actions of doctors who practice at the hospital by treating the doctors as independent contractors.

This is a form of protection that other fields of commerce do not share, and it has destroyed the role of hospitals in overseeing doctors. In fact, under the current system, hospitals have an incentive to keep doctors at arms length and to avoid taking any role in supervising those doctors.

To reverse this, hospitals must again be held jointly responsible for the actions of any provider who practices within the hospital. This change will give hospitals an incentive to again oversee doctor conduct. This should lead to increased oversight by hospital staff and likely will result in physicians again being made into employees of the hospital, which will result in cost savings (to be discussed in next article).

Moreover, to encourage hospitals to conduct thorough oversight, we must remove the fear that their efforts will be used against them. Thus, the work of any oversight committee must be made inadmissible at court and not discoverable by patients/plaintiffs. In other words, it remains confidential.

However, to obtain that protection, the results of these reports must be disclosed to the new Federal Medical Board, which will oversee medical licensing. This will encourage full voluntary disclosure. (Federal Medical Board records also must be treated as inadmissible and not discoverable by patients/plaintiffs.)

Finally, in addition to protecting records from patient suits, the oversight committees/hospitals must be granted immunity from suit by the doctors they oversee and/or discipline. This is to prevent physicians from avoiding discipline by threatening to sue the committee or hospital.


Taken together, these reforms should (1) greatly reduce non-legitimate suits, (2) prevent outlandish jury awards, (3) greatly reduce the practice of defensive medicine, and (4) revive the system of supervision, thereby reducing medical errors.


Tennessee Jed said...

Andrew - I would vote for your plan. Certainly, massive awards have been part of the problem in medical malpractice litigation. It is very hard for an insuror to properly set premiums when there is no predictability. To the extent that awards can be standardized is also important in achieving that goal. You often see that in Workers' Compensation, as an example (schedule of benefits or at least range of benefits.)

As you say though, this is not where the real action is in healthcare costs, but every little bit helps. My comments are a bit rambling, but it is still pre-8:00 a.m. here in East Tennessee, which is tough on a retiree to be too cogent. Good stuff; am eagerly awaiting next piece.

freedom21 said...

Andrew, as I don't believe in doctor voodoo and tend to steer clear of hospitals, clinics and,for that matter,ambulances, I really have no leg to stand on when it comes to the health care debate (one caveat: I have first hand knowledge that the British system sucks. After my mother found out that she had cancer, her GP told her she would have to wait six months to see the specialist. She promptly got on a plane back to Texas and received stellar care in record time).

SO, even though I am not a health care user, I am a thinker. One of your suggestions is "the plaintiffs must obtain a certificate, under oath, from a medical expert of similar or greater qualification to the defendant doctor(s)". you would know better than I, but I can't imagine that this would work. Wouldn't it just turn into to one big pay-off scheme or a nice retirement plan for doctors? Although I understand that doctors are hesitant to turn on each other, some of them would no doubt see this is as a money making opportuningty. Do you think this requirement would just turn the process of getting a valid claim to the courts more pricey?

Great Article! It's good to see that people are acutally creating alternatives that make sense :)

AndrewPrice said...

Jed, I'm glad you like it. I think these changes would help. I think they would help with predictability, but would still allow injured people to get fair compensation. But most importantly, I think these changes would reduce the sense that doctors are more worried about getting sued than treating their patients.

Unfortunately, these are the types of changes that neither party in Washington is willing to puruse for various reasons.

freedom21 said...

Wow. I'm sure you all saw this on Drudge, but this is NUTS. T

AndrewPrice said...

Freedom21, I've practiced in a jurisdiction that added the certificate of merit requirement and I've seen it work extremely well.

They were intended to stop attorneys from filing meritless med-mal suits in the hopes of getting a quick settlement. And they've done that.

But they aren't really a problem for legitimate cases.

If you have a legitimate medmal case, you need to consult a medical expert anyway before you file your case (at least if you're a competent attorney). Basically, a good attorney finds an expert, has the records reviewed, and learns what went wrong before they ever file suit.

If you've done that, then the certificate isn't a problem because you just get your expert to write their opinion before you sue rather than preparing the report after you sue. The cost is the same, the level of effort is the same.

What's different is that the attorneys who file suits without worrying about the merits of the suit, but hoping to scare or annoy the doctor into a settlement can't do that anymore. Those are the guys who are the problem.

As for costs, medical experts are super expensive already. But I haven't seen any increase in costs. I have seen, however, that the experts are much more concerned about being able to back up their opinions once they learn about the certificate requirement.

AndrewPrice said...

Freedom21, I saw that story. I will update my review of Obamacare when it becomes clear exactly what they are talking about.

Writer X said...


My question was similar to Freedom21's: How easy would it be for a plaintiff to obtain a certificate from another doctor that basically disses another doctor's medical care? Wouldn't that then create a whole industry of paid "medical experts" like we have today?

I think you're right about federalizing the regulation, although that still gives me pause too (I have an ugly picture of Barney Frank and Chris Dodd overseeing yet another worthless committee), even though the different state regulations have become cumbersome and complicated.

Last, since most of the politicians in Washington are lawyers and the lawyers have powerful lobbyist groups, how optimistic are you that we would one day see $$ caps?

I wish we could see such thoughtful solutions from our politicians as you've outlined here. All we hear about are people who attend fancy summits but then leave with nothing to show for it.


freedom21 said...

Writer X: Ha! Good to know that we both believe people are capitalist in nature and always looking to create a money making opportunity.

ISadly, I could definitely see Congress trying to regulate the amount an "expert doctor" is allowed to take though.

AndrewPrice said...

Writer X, Thanks! Good questions.

There are two things to keep in mind about federalizing this issue. First, by and large, that will vastly reduce the amount of regulation, not increase it. Everything that the Feds would do is currently being done 50 times over.

Secondly, most of the regulation will be done at the agency level -- not the Congress. And as you will see in the next article, that agency should be staffed by medical experts -- not lawyers/Congressmen.

What are the chances of getting the caps? I'd say that's probably the easiest thing to get out of the Congress. Most states now have caps, and it would probably be more controversial to eliminate them than keep them.

The biggest problem with getting reform is that everyone in Washington benefits from the current system -- the lawyers, the doctors, the insurance industry, and the hospitals. So they all make big noises about reform, but then simply end up proposing minor tweaks.

In terms of finding doctors to testify against other doctors, it's true that few doctors will testify against other doctors. But where there really was malpractice, I've found that you can usually find doctors who will testify for plaintiffs. It's the close cases where it gets really difficult to find someone, but that's not a bad thing.

Writer X said...

Thanks, Andrew. I wasn't aware that most states had caps, probably because I haven't been sued/had to sue lately. And hope I never do.

If Obamacare passes (I shudder at the thought), I wonder how much the lawsuits increase--e.g. if someone has to wait 3 years for surgery, and then dies while waiting, wouldn't his family have the right to sue, in this case, the doctor AND the federal government? What a nightmare.

AndrewPrice said...

Writer X, You won't be able to sue the Feds (immunity) and you can't sue a doctor for not seeing you, unless they were running an ER and turned you away.

The caps have actually been a problem where they have been set too low. What I said about old people and poor people is happening. In one state, where the caps went to $250k, I have spoken with several attorneys who will no longer take cases without significant economic loss, and they won't touch cases involving old people, no matter how egregious. The reward just isn't worth the risk. The caps have become like a license to mistreat old people.

StanH said...

I know this is an anecdote but is relevant to your discussion.

"The John Edwards we know crushed [obstetrics, gynecology] and neurosurgery in North Carolina," said Dr. Craig VanDerVeer, a Charlotte neurosurgeon. "As a result, thousands of patients lost their health care."

One of my best friends is an attorney, and recently he had some electrical work done at his home. It turns out that the guy was a MD, an OB/GYN to be specific and has quit being a doctor to become and electrician, “because of malpractice insurance ran at $10,000.00 per month,” maybe he was a bad doctor? This was directly related to the Breck girl …John Edwards. Another good article with good suggestions, I hope it’s not all mute?

AndrewPrice said...

Stan, It's hard to know the specifics of any one case, but it is true that malpractice insurance is by far the highest for neurosurgeons and OB/GYNs.

To give you a sense of how these reforms will help.

(1) The Medical Board will set up a clear standard of care -- this will bot improve quality and give the doctos a legal "safe harbor" -- do this an you'll be ok;

(2) The certificate of merit means you need to find another neurosurgeon/ OB/GYN who will certify under oath that the doctor violated the standard of care before you can even sue;

(3) The cap means that the damages will be limited to economic harm plus $1m, which reduces the ability of guys like Edwards to make money by appealing to the jury's emotions; and

(4) OB/GYNs likely will end up back under the hospital system, which means increased supervision (which will improve quality and it makes it harder to sue because it's hard to prove to juries that multiple doctor's screwed up).

LawHawkSF said...

Andrew: Like all human endeavors, this part of your plan has some nuts and bolts which may need tweaking. But so far, this is quantum leaps better than anything I've seen coming out of either party. As you know, I have a visceral dislike for the personal injury legal industry because of what it has done to the quality of lawyers and the transformation of the law into a money machine instead of a field where justice is done. For those reasons, my favorite changes are in capping damages (in a manner somewhat like yours), eliminating punitive damages entirely and reinstating the much older and more reasonable concept of "exemplary" damages, with a "sliding scale" of lawyer's fees in contingency medical malpractice cases to eliminate the incentive to file frivolous lawsuits on behalf of young people while ignoring the needs of older people. Again, these are only matters of nuts and bolts, not philosophy.

That said, it was a wise decision for you to address medical malpractice suits in the early going. They are a serious problem, but they are part of the picture largely because of their frequent notoriety. In terms of dollars wasted and rises in health care costs, they are ripples on the pond compared to the other factors which must be corrected. Keep up the good work, and we may get a plan yet--and then we can storm the halls of Congress.

AndrewPrice said...

Lawhawk, I think that these changes would go a long way toward freeing the medical profession from the threat of legal interference, while simultaneously allowing patients to receive compensation for injuries.

Stan, let me add. Right now, there is no one in DC who would trumpet this plan because they're all stuck in the same old debate. But that can change. At some point, the Republicans will need to finally come up with a real plan. This one should appeal to them. I think moderate Democrats also would be interested in this plan. So, when we're done, if you like the plan, call your reps and tell them to take a look.

StanH said...

It’s far to sensible for our show pony Washington politicians to embrace. Another great article from Commentarama.

patti said...


your well thought out posts next to my nanny-nanny boo-boo entries, balance the universe.

party on garth.

AndrewPrice said...

Universal balance. . . the next democratic entitlement?

Party on Wayne.

USS Ben USN (Ret) said...

Hi Andrew,

Excellent post! The hardest part, if this plan were to be initiated would be keeping the feds out of deiding what "standard" care should be and keeping it in the hands of doctors.

No doubt the powers that be will want to control it like they control Medicare, which is an unmitigated disaster and is fast approaching insolvency.

Leave it to the Democrats to wanna start another massive healthcare plan when they can't afford the one they have, which is run poorly and inefficiently at best.

At any rate, when we speak of establishing standards, which is necessary, there must be some built in flexibility, I think.

For example, a doc shouldn't be penalized if he/she has a hunch and does do more tests than may be necessary under most conditions, say in order to rule out various factors to make the best diagnosis they can based on the symptoms.
Unless the doc always has "hunches."

But for the most part, I wouldn't wanna cause over-regulation in the guise of too stringent standards, because even if doctors are making the decisions about the standards of care, they don't personally know the patients, or perhaps they aren't always up on the latest trials or research.

My doc knows me well, and knows all about my health (or lack of, at times) since he's been treating me for nearly twenty years. And he's among the best. When he has gotten hunches they almost always were proven correct, bypassing a lot of red tape the VA is usually known for and getting me the critical treatment I needed more efficiently.

IOW's, I would hope that any standards agreed upon would take into account RESULTS.

Certainly, I think doctors who bilk patients should be taken to task, or docs who are negligent or grossly negligent should be held accountable, but something should be said for docs who consistently make the right calls but don't always follow all the rules (or, more precisely, red tape) to get there.

Kinda like good teachers who don't need the approved text books to teach the kids what they need to know.
However, I'm not sayin' docs shouldn't have to explain themselves should there be any significant problems.

Very thought-provoking post! :^)

USS Ben USN (Ret) said...

I would also add that, obviously, many standards are cut n' dry, such as what docs do during a code blue.

I'm talking mainly about afflictions that may have several treatment options, including experimental if it comes to that, and weighing the side effects of those treatments, which can be worse than the malady itself sometimes.

Also, if your doc knows what to do in any given situation, why should he have to refer you to another doc if it will benefit the patient more when time is of the essence?

I'm sure there are more examples, but this kinda stuff will need to be hashed out.
Of course, docs should always communicate with their patients to the fullest extent possible, and patients need to know that they have responsibilities as well. Doctors aren't mind readers, and neither are nurses.
Patients should inform themselves as much as they are able. It can literally save your life.

AndrewPrice said...


Standards are coming up next. One of the problems with patient care is the lack of clear standards for many common ailments, AND a lack of knowledge about those standards.

Right now "standards" really are "sort of" taught in med school, but are ultimately set in the court room after the fact by juries. That needs to change.

Also, I wouldn't be worried about Congress because we're talking about the technical aspects of doctoring, but let's leave that until the next post.

The existence of standards should not prevent any type of treatment. What it should do is to guanarantee that doctors don't ignore basic treatment methods that have been proven to have positive benefits. In other words, if BP pills are called for, it should be in the standard so that all doctors know to give BP -- that was one of the problems found in some of the studies, that doctors often didn't know what they should have done.

Moreover, standards should provide some degree of safety to doctors. For example, if a standard calls for having an MRI done, a patient could not sue the doctor for failing to order a half dozen other tests that also could possibly, maybe, might-have found the problem.

But none of that should keep the doctor from going beyond or doing experimental treatments.

USS Ben USN (Ret) said...

Thanks, Andrew for clarifying.
I was sure you meant that, but I just wanted to throw out a few examples of how even a group of doctors could possibly throw wrenches in the works without realizing it.
I'm glad you'll be getting into more detail.

Speaking of which, will the plan you're proposing (which is great, thus far) also touch on psychiatric health?

If so, that would be far more complicated irt standards than regular medical care since there is many schisms in the mental health community, or perhaps I should say schools of thought, and differing philosophies and theories of the best courses of treatment (Freud, Jung, crackpots, etc.).

In any event, should I ever require mental health services, I would do everything I can to find a conservative/classical liberal psychiatrist, because leftism is a pathology in and of itself, and I wouldn't want a leftist psychiatrist/psychologist that enables a victim attitude, which is counter to good mental health.
Or that doesn't value liberty.
Just sayin'. But that's a can of worms you probably don't wanna open yet, lol.

AndrewPrice said...


Glad you like it so far. I'll be interested to hear your thoughts as we go forward (did you see the Obamacare report card I did a few days ago?)

I would definitely include mental health, because we need to address all aspects of the health care system.

Without getting too far ahead, I am looking to replace state licensing boards with a Federal licensing board -- for a variety of reasons.

That same "agency" would also be charged with determining if standards of care exist and to outline those standards where they are found.

If no single standard can be found in a particular area, then no standard would be issued. Something like a best practices guide could be issued, but no standard.

Thus, the Board should not be able to impose one theory of medicine over another.

Moreover, these standards are meant only to outline some minimum levels of treatment, they are not meant to define every aspect of treatment.

Thus, just because a standard exists, does not mean that is all the doctor is allowed to do. For example, if the standard requires giving aspirin, the doctor could also choose to give some other additional treatment.

In an area like mental health, I suspect that few standards will be found, though I think that there probably could be room for standards with regard to medications provided, minimum testing requiring, etc.

BUT, keep in mind, this will be determined by medical experts, not me and not politicians.

Right now, doctors basically create the standards by teaching them in school and then arguing about them in court. What I'm proposing here is that for areas where it is fairly clear, that process be handed over to a panel of experts to determine in advance, rather than as a response to jury verdicts.

CrispyRice said...

Very interesting, Andrew!

I look forward to reading the rest. In fact, I feel a bit like I'm watching a tv show that just left me with a cliff hanger. Argh.

And actually, I've already forwarded the link to this to both my senators and congressman when I e-mailed them to tell them NO on ObamaCare.

"CommentaramaCare" - I dig it.

AndrewPrice said...


Excellent . . . you get another invisible t-shirt for that! :-)

I like the idea that this is a cliff hanger, LOL!

CrisD said...

Another great post.

Come from lots of doctors and lawyers in families who complain that both professions are in ruins. Am comfortable with getting things "right."

On a side note--I have been listening to a little more radio and TV lately and it is difficult to tell whether the government is listening to the large negative reaction to Obamacare that I hear.
President is claiming he will get HIS reforms and news says that people KNOW we are broke and can not afford boondoggle.

What say you?
(Friday July 17)

AndrewPrice said...

CrisD, I think the whole Obamacare is a fraud. His rhetoric isn't even close to what the bills provide.

I think they are listening, which is why they're so skittish about the whole thing, and why the Senate and House bills are so completely incompatible ($600 billion v. $1.5 trillion).

I think what they are trying now is to just pass anything, so that they can get it into a joint committee where they can meld it all into one bill and then present it for a straight up and down vote.

That's sneaky and I doubt it will work.

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