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Federal Grant Program Will Test Medical Liability Alternatives

Like most physicians, neurologists are enthusiastic about a federal initiative to help test a variety of medical liability models.

Sarah Austin, MD, a private practitioner in Texas, believes the grant program, announced by President Obama in his health care reform address to Congress earlier this year, might be a path toward ending physicians' longstanding frustration with the current tort system.

“You could say it's a step forward, which implies that they're starting on a journey to try to make tort reform happen,” she said. “Or it might be like that kid's game where you put your right foot in and take your right foot out. It's not for sure that we are actually starting on the journey.”

Where the initiative will lead will not be known for years, but any knowledge gained because of it could be helpful.

“These pilot programs are a good idea so that we can see what works and what doesn't,” said Elaine C. Jones, MD, co-chair of the AAN Government Relations Committee.

The $25 million initiative will start with a review — to be published in December — of initiatives that improve health care quality and patient safety, and decrease medical liability.

That document will guide the initiative's major program, which provides grants of up to $3 million each to implement and evaluate medical liability demonstration projects. The grants will be awarded in 2010.

According to the White House, the government wants to see demonstrations that meet multiple goals, including: putting patient safety first and working to reduce preventable injuries; fostering better communication between doctors and their patients; ensuring that patients are fairly and quickly compensated for medical injuries; reducing the incidence of frivolous lawsuits; and reducing liability premiums.

That is a tall order, of course, because America's state-based tort system does not support any of those goals. Rather, James C. Johnston, MD, JD, a consultant neurologist and attorney in Seattle, said the current system is more like a group of state-based lotteries that do not compensate all injured victims.

“Some people are going to get a lot of money, maybe not even for major injuries,” he said. “And other people who have horrible injuries are never able to get to the court house doors.”

Meanwhile, many physicians suffer from high malpractice insurance rates and the role of defensive medicine in America's high health care costs is endlessly debated.

No one thinks that a $25 million initiative will solve the medical liability conundrum, but the Academy appreciates the start.

“We think any step is important, and we would support the step the President is taking,” said Rod Larson, the AAN Professional Association chief health policy officer.


In his remarks to Congress on health care reform, President Obama addressed the fundamental disagreement that has kept America's medical malpractice reform on the federal back burner for years. “Many in this chamber —- particularly on the Republican side of the aisle — have long insisted that reforming our medical malpractice laws can help bring down the cost of health care,” he said. “Now, I don't believe malpractice reform is a silver bullet...”

However, Obama said physicians have convinced him that defensive medicine may be contributing to unnecessary costs, prompting him to sign a memorandum ordering demonstration grants for the development, implementation, and evaluation of alternatives to the medical liability system.

Nothing in the memorandum indicates whether the Administration wants to see improvements to the current tort system or alternatives outside the court system entirely.

If it's tort reform, the nonpartisan Congressional Budget Office (CBO) believes it could help the health care cost problem incrementally. In an analysis issued this fall, the CBO considered the potential effects of nationwide implementation of a “typical” package of tort reform proposals that includes caps on awards for noneconomic and punitive damages; rules allowing the introduction at trials of evidence about insurance payments and related sources of income; statutes of limitations on suits; and replacement of joint-and-several liability with a fair-share rule.

Such a package would reduce total US health care spending by an estimated 0.5 percent, including 0.2 percent from lower medical liability premiums and 0.3 percent from slightly less utilization of health care services, according to estimates by CBO and the Joint Committee of Taxation. That would translate into reducing the federal budget deficit by about $54 billion over 10 years.


“I am disappointed in the tort reform I have seen so far because I think it takes a bad situation and makes it worse,” said Dr. Johnston. “It blunts the deterrent effect of tort law, fails to address patient safety, and results in limited compensation for fewer and fewer injured patients.”

However, tort reform undertaken in some states has helped physicians. Dr. Austin, a member of the Academy Government Relations Committee, has seen her malpractice insurance premiums fall from $12,000 annually to about $4,500 a year since Texas passed tort reform legislation in 2003.

The key features of that reform are a cap on damages and a provision that makes it more difficult for patients who are treated in an emergency department to make malpractice claims.

“It doesn't seem like there has been a dramatic change in the way people practice medicine — that goes on the same as it always did, taking care of people and doing the best you can for them,” she said. “But it has certainly made it cheaper to buy malpractice insurance.”

Gil Siegal, MD, JD, a law professor at the University of Virginia School of Law, hopes that the grant program will advance alternatives to the tort system for dealing with medical errors.

A practicing surgeon, Dr. Siegal advocates that administrative tribunals award compensation on the basis of avoidability of the injury and neutral medical expert opinion. Decision guidelines can be an attractive alternative to the tort system for resolving certain types of medical errors, he added.

The only two such programs in the country — in Virginia and Florida — limit their focus to brain and spinal cord injuries of newborns caused by oxygen deprivation or mechanical injury during labor, delivery or resuscitation immediately after birth.

While those no-fault programs are more efficient than the court system — more than 90 percent of funds expended in a no-fault case go directly to the injury victim, compared to less than 55 percent of the money in court-adjudicated claims — neither the Florida or Virginia programs seem to have increased patient safety in the first place, Dr. Siegal said.

Nonetheless, Dr. Siegal believes the programs hold valuable lessons for those seeking alternatives to the current tort system.

“Changes on the political front and the changing face of America's health system gives a new hope for reform in some areas of medical injury compensation,” he said.