Government Relations Report
Why Handling Medical Malpractice Like Workers’ Comp Won’t End Lawsuits
Most can agree that civil litigation is not an efficient way to compensate patients who are harmed by negligence. Legal fees, expert testimony, and court costs eat up enormous sums. Healthcare providers spend significant portions of their careers defending their actions against liability claims, 80 percent of which result in no payment to the claimant. Cases that go to trial may result in large awards even when liability is speculative at best. Defensive medicine spurred by sincere intent to avoid litigation adds to the burdens on an unsustainably stressed health system.
A group calling itself Patients for Fair Compensation is promoting a plan to scrap civil litigation for medical liability claims and replace it with an administrative system more like workers' compensation. In almost identical legislative proposals introduced in Florida, Georgia, Maine, Montana, and Ohio (and nearly in Tennessee—the legislator who offered the draft bill reconsidered before it could be formally introduced), patients would have no legal remedy outside an administrative process. All claims would be submitted for review by a panel of medical experts. If the panel found that the injury was avoidable, administrators would issue payment according to a schedule of average values by type of injury. Depending on the circumstances, they may also report the provider to licensing and/or healthcare quality regulators. Funding for the entire system, including payments to patients, would come from healthcare providers. Total costs could not exceed current system costs per an explicit prohibition in the bill.
According to the proponents, neither patients nor healthcare providers would need attorneys. Physicians would never get sued. They also promise that, because payments to patients would not be in response to court actions, they would not be reported to the National Practitioner Data Bank (NPDB). Even though more patients would receive payments, they argue, overall system costs would be lower because litigation costs and defensive medicine would disappear.
Unfortunately, putting dramatic statements into a bill doesn’t make them come true, even if the bill is enacted. Many state constitutions guarantee the right to a jury trial for civil damages, so this alternative model cannot be installed as an exclusive remedy. Physicians, hospitals, and other healthcare providers will continue to be sued in state court. The anticipated savings from a reduction in litigation costs and defensive medicine—savings the proponents are counting on to balance the increase in payments to patients—simply won't materialize.
Federal law, not a state statute, determines whether payments are reportable to the NPDB. A recent decision issued by the U.S. Department of Health and Human Services (HHS) regarding Oregon’s early discussion and resolution statute makes this clear. The Oregon bill enacted in 2013 states explicitly that the Oregon process does not involve written claims or demands for payment, so it shouldn’t be reportable to the NPDB. HHS disagreed, pointing out that “the NPDB has no history of allowing states to define requirements for reporting,” and also noting that “Florida and Georgia are examining similar models.” The implication is clear: Enacting the Patients for Fair Compensation proposal will result in a dramatic increase in the number of claims and a corresponding dramatic increase in reports to the NPDB.
Language in a statute can’t hold total costs to a level at or below current year levels. The number of claims and the severity of those claims are the factors that determine losses and direct and indirect costs. Paying far more claims will result in far more losses. Either total costs will rise dramatically, requiring additional resources, such as new assessments on healthcare providers or taxpayer subsidies, or payments per claim must decrease, meaning systematic underpayment of qualifying patients.
It isn’t clear from the group’s brochures and presentations how much money needs to be collected from providers to cover the costs of handling claims and compensating patients. They do say that fees paid by providers will fund the entire system. They also say that costs for this replacement system will not exceed the costs of the current system, taking into account anticipated savings once defensive medicine disappears. According to a recent presentation by the group, current system costs include $31 billion per year for litigation and $650 billion in defensive medicine.
What is clear is that the group figures its piece of the overall amount is 20 percent. Patients for Fair Compensation estimates that 80 percent of the money collected from healthcare providers would be distributed to patients, with the remaining 20 percent devoted to administration. Presumably that administrative cost would accrue whether or not any of the benefits of the plan actually come to pass.
Behind the Patients for Fair Compensation campaign is a Georgia entrepreneur with a number of healthcare staffing companies. He has said publicly that his vision for this change to patient compensation includes providing the administrative processing and claims review for a fee.
The Doctors Company does not support the proposal advanced by Patients for Fair Compensation. The proponents’ own study shows that both claims for insignificant injuries and overall system costs will increase dramatically. The proponents’ claim that payments don’t have to be reported to the NPDB is simply untrue, as is the promise that doctors and hospitals will no longer be sued. The former Georgia attorney general has issued an opinion that the plan is unconstitutional. In short, the proposal will cost more, is constitutionally suspect, and can’t live up to its promises. Worse, it appears that the proponents are taking advantage of legitimate frustrations with the civil justice system to create a moneymaking opportunity for themselves.
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