Medical Malpractice Reform (Geocities Rescue)

A major cost driver in the consumer health insurance crisis and the burgeoning of health insurance costs is the malpractice insurance explosion. There are two aspects of malpractice reform worth discussing, insurance reform and procedural reform. Insurance reform is needed because there is more to the current malpractice insurance crisis than high damage awards. Insurance companies have been in financial trouble of late and the cause is not entirely jury awards. Insurance companies maintain a trust fund of investments to insure that benefits are paid. They were not immune from the effects of the stock market meltdown in the early twenty-first century. In order to make up for these losses, insurers are forced to raise their rates. I suspect that because doctors and hospitals must maintain insurance to practice and because they can afford to pay higher rates, they are bearing more than their fair share of the burden. Doctors won’t put up with this for long. While many of them cringe at the idea of single-payer health insurance, they take a different view of single-payer malpractice insurance sponsored by their state medical societies. This is an idea whose time has come, the mere discussion of which makes the insurance industry take notice.

Procedural reform is also necessary, as record jury awards have increased costs, as have large pre-emptive settlements (which are often sealed, allowing bad doctors and hospitals to continue to practice undisciplined). Clearly some form of procedural reform is necessary.

Plaintiffs in malpractice cases have two motivations. The first is to cover the direct cost of medical malpractice, which consist medical expenses already incurred and the cost of corrective care (if possible) or, in the case of catastrophic mistakes, long term care. The second is punitive; to punish the offending physician and make sure no one else is damaged (the cynical would say that greed is also a factor, especially the greed of litigators). A solution to the crisis addresses these motivations, while providing a system to reduce legal costs.

A holistic solution to the malpractice insurance crisis ties malpractice insurance to the disciplinary procedures of state medical societies, which are strengthened. A newly created State Health Board establishes these procedures. State Health Boards establish practice standards and create local Medical Review Panels. These panels contain members from local medical society and community. The panels secure group malpractice coverage for all local doctors. A claim against one then becomes a claim against all. Doctors then have an interest in policing their own to protect themselves. To save risk, interns and residents get more supervision and more humane work schedules. Local medical societies take a proactive role to increase the quality of health care professionals.

Disciplinary procedures are strengthened. Currently, medical peer review groups are seen as protecting their own. This perception is changed, and procedures put in place so that it has no basis in fact.

Medical Review Panels review and approve all voluntary arbitration of malpractice claims in secret. If arbitration fails, a public hearing is held to decide claims. The Medical Review Panels discipline medical personnel and clinics and set compensation and punitive damages. Decisions are then appealed above trial court level. Medical complaint procedures are public and readily available. Any patient with a care complaint is assured easy access to medical review of his case and physician.

Proceedings of such actions are more formal than current peer review, but much less formal than a trial. Medical advocates represent both sides, with only limited access to legal counsel. Doctors still settle before review (out of their own pockets), though the local medical review board reviews the settlement.

If malpractice is found, medical review boards do two things. First, they authorize payment from the local society malpractice insurance fund to correct the problem, cover past medical costs and provide for long term care if necessary (God forbid). Second, they discipline the offending member, imposing any of a variety of sanctions from retraining to license revocation, including punitive finds which go to the patient and be paid out of the physicians own pocket (and if necessary garnished from his income). These sanctions are made public. Medical advocates are compensated for their time, but the percentage contingency fee is lower as the award increases.

Each side gains by giving up something. Patients gain better care, as bad doctors are disciplined, but give up astronomical damage awards (as do their advocates). Insurance companies face less risk, but charge lower premiums and face stiffer competition, since only one is allowed to underwrite the members of each state’s medical society. Doctors benefit from lower premiums, but give up the kind of self-regulation they now enjoy. Bad doctors lose their ability to harm people, but no one is shedding any tears over this.