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[answered] Medical Malpractice Law in the United States Prepared for t

Review the Medical Malpractice Policy Brief from The Kaiser Family Foundation. Select at least two alternatives, and offer your own analysis on the Medical Malpractice Reform proposals.?? to an external site.)?

Medical Malpractice Law in the United States
Prepared for the Kaiser Family Foundation by: Peter P. Budetti, M.D., J.D., Teresa M. Waters
May 2005

Medical Malpractice Law in the


United States Prepared for the Kaiser Family Foundation by:


Peter P. Budetti, M.D., J.D.


Edward E. and Helen T. Bartlett Foundation Professor of Public Health


Chair, Department of Health Administration and Policy


College of Public Health


University of Oklahoma Health Sciences Center


Teresa M. Waters


Associate Professor, Department of Preventive Medicine


Associate Director, Center for Health Services Research


University of Tennessee Health Science Center


May 2005 Table of Contents




Medical Malpractice Law and Lawsuits


Medical Malpractice Policy Issues


Who Evaluates the Adequacy of Care?


Expert Witnesses


Pre-Trial Screening of Cases


Alternative Dispute Resolution


How Much Money Should Be Awarded to Plaintiffs or Paid to Lawyers?


Limits on Damages


Attorney Compensation


How Should Damages Be Paid, and by Whom?


Joint and Several Liability


Lump Sum or Periodic Payments


Recoveries from Collateral Sources


How Much Time Should People Have to Bring Lawsuits?


Statutes of Limitations


Newer Proposals for Statutory Reforms of Malpractice Litigation


Patient Compensation Funds


Aligning Malpractice Law and Patient Safety Concerns


Expanding Risk Pools


Prudent Physician Standard of Care


Enterprise Liability


Trends in Medical Malpractice Claims and Payments


Total Dollars in Paid Claims


Average Claims Payments


Number of Paid Claims


Average Defense Costs Per Claim


Variation Across States


Rising Number of Physicians


General Inflation and Health Care Inflation


Summary and Conclusion


This report is not intended to be and should not be considered legal advice. Rather, it is only general information about


the law. For legal advice, you should consult an attorney. Introduction


Medical malpractice law and insurance have been a very visible focus of


attention around the country and in Washington, DC in recent years and on a


cyclical basis for decades. In some states, the problems associated with


medical malpractice are called a crisis, with health care providers concerned


about spikes in malpractice premiums and reductions in the availability of


coverage, especially for specialists who treat high-risk patients. Some believe


the tort system is at fault, blaming excessive litigation, unreasonably high


settlements and judgments, and the encouragement of defensive medical


practices; others blame the medical malpractice insurance market. Numerous


states have enacted legislation to address various aspects of the malpractice


issue. And the Bush Administration has supported legislation (introduced but


not as yet enacted) to reduce the amount of litigation and restrict damage


awards in medical malpractice lawsuits.


This paper provides a brief overview of the issues surrounding medical


malpractice law. It begins by briefly describing how medical malpractice law


works. Following sections discuss the legal changes that states have made over


the past thirty years in response to periodic concerns about rising medical


malpractice costs, some newer proposals for changing medical malpractice law,


and trend data looking at changes in the number of claims and average and


total claims costs. Medical Malpractice Law and Lawsuits


Medical malpractice law in this country traditionally has been under the


authority of the states, not the federal government. And, unlike many other


areas of the law, the framework and legal rules governing malpractice actions


were, prior to the last thirty years, largely established through decisions in


lawsuits in state courts rather than through statutes enacted by state


legislatures. Legal rules established by the courts generally are referred to as


?common law.? Because the legal precedents that established the case law in


one state have no weight in any other state, the rules for handling medical


1 malpractice cases varied from state to state, although many of the principles


were similar.


Medical malpractice law traces its roots back to 19th Century English common law.1 The law that developed concerning medical malpractice is part


of the more general body of law dealing with injuries to people or property,


known as ?tort law.? Medical malpractice cases are an example of one


particular type of tort, the tort known as ?negligence.? The concept of


negligence is that people should be reasonably careful in what they do, and, if


they are not, they should be held responsible for the injuries that can be


reasonably foreseen as resulting from their negligent conduct.


To win a negligence lawsuit involving medical care, the injured person


needs to prove that they received substandard medical care that caused their


injury. This involves a number of steps. First, a person who is injured during


treatment must determine whether or not they have been harmed by


inadequate care. Physicians and other providers generally are not legally


required to tell their patients that they were hurt by medical care that was not


as good as it should have been, so patients who suffer adverse outcomes, or


their families, usually must consult with others to make this determination.2


Patients who were under the care of multiple health care providers need to


determine which, if any, of these providers contributed to their injury, if it is


possible to do so. A malpractice lawsuit must be brought within a legally


prescribed period, called a ?statute of limitation.? In some states, the period for


filing a suit starts when the person is injured, while in other states it does not


start until the person knows or reasonably should have known that they had


been injured. 1


2 See Speiser, Stuart M., et al., American Law of Torts, Vol. 4, Sec. 15.10 (West, 1987). While physicians are not legally compelled to disclose malpractice to their patients, the American Medical Association code of ethics (8.12) requires physicians to inform patients of the


facts concerning mistakes or judgments that resulted in significant medical complications. A


2001 standard of the Joint Commission on the Accreditation of Health Care Organizations, RI


1.2.2, requires similar disclosure on the part of hospitals. 2 Once a person brings a malpractice lawsuit, the person (called the


?plaintiff?) must show that they were actually under the care of the physician (or


other provider) they are suing -- in other words, that they had established a


physician-patient relationship. The concept here is that physicians (or other


providers) owe a duty to their patients to use reasonable care and diligence in


their treatment, but do not have any duty to care for members of the general


public other than their own patients.


The next requirement is the heart of a negligence lawsuit: the plaintiff


must show that the physician did not provide medical care that met appropriate


standards. The standards of care that physicians must meet have changed


substantially over time. In earlier cases, doctors were only required to perform


as well as other doctors practicing in their home community. More modern


cases have moved toward holding physicians to a national standard for


physicians practicing under circumstances similar to their own. For example,


specialists must practice medicine as well as the average specialist in the same


field, no matter where they are located.


Even if the physician is shown to have provided substandard care, the


plaintiff still must prove that the substandard care caused their injury. In some


cases this is not difficult, such as when surgery is performed on the wrong body


part. In other cases, showing causation can be quite problematic, such as cases


involving severely ill people who might have suffered complications from their


disease even with good medical care. Identifying what part of the medical care


caused an injury can also be a challenge when many different providers


participated in the care, so many courts have special rules to deal with


situations where it is not possible to pinpoint the harmful acts, yet it is obvious


to a layperson that medical care must have led to the patient?s injury.


The final step in a medical malpractice case is establishing how much


money should be awarded to a winning plaintiff. A person who wins a


malpractice lawsuit has shown that the injury is someone?s fault under the rules


of negligence, so the question then becomes how much money is needed to 3 compensate that person for what they have suffered.3 This monetary award is


called the ?damages.? The rules for determining damages can be complicated


and take into account both actual economic losses, such as lost wages and the


costs of future medical care related to the injury, and non-economic losses,


such as pain and suffering or the loss of companionship of a spouse or child.


As noted below, the value to be placed on non-economic losses has been


particularly contentious.


During the last three decades of the 20th Century, the traditional reliance


on state courts to shape medical malpractice law started to change. As


premiums for malpractice insurance climbed sharply, organized medicine


began to put pressure on state legislatures to change many of the rules


governing malpractice lawsuits that had been created by judges over the


previous two centuries. State legislatures have responded to a number of


issues concerning the malpractice tort claims system and passed statutes that


changed a number of different aspects of malpractice law, some of which had


dramatic effects. Those statutes are often referred to as ?tort reforms.? More


recently, the United States Congress has also considered legislation that would


make federal laws more prominent in medical malpractice cases and would


override at least some aspects of state laws. Below we describe a number of


the issues that have led to statutory changes, and discuss those changes. 3 From a societal perspective, medical malpractice lawsuits also serve a preventive function by encouraging medical providers to practice in accordance with professional standards. How well


the current malpractice system fulfills that role, and whether fear of malpractice action discourages providers from participating in reporting and other systems intended to identify


and reduce medical errors, are contentious issues within the overall debate about the


appropriateness of the current medical malpractice structure. 4 Medical Malpractice Policy Issues


This section identifies some of the areas in which state laws have


changed or clarified traditional common law rules for medical malpractice


cases, focusing on:


-- Who Evaluates the Adequacy of Care?


Expert Witnesses


Pre-Trial Screening of Cases


Alternative Dispute Resolution


-- How Much Money Should Be Awarded to Plaintiffs or Paid to Lawyers?


Limits on Damages


Attorney Compensation


-- How Should Damages Be Paid, and by Whom?


Joint and Several Liability


Lump Sum or Periodic Payments


Recoveries from Collateral Sources


-- How Much Time Should People Have to Bring Lawsuits?


Statutes of Limitations


After discussing the areas in which state laws have been modified in


recent decades, this section also identifies newer proposals for tort reform, only


one of which has actually been adopted, focusing on:


-- Patient Compensation Funds


-- Aligning Malpractice Law and Patient Safety Concerns


-- Expanding Risk Pools


-- Prudent Physician Standard of Care


-- Enterprise Liability


Who Evaluates the Adequacy of Care?


Proving that the physician breached the standard of care has been one of


the most important and contentious requirements of malpractice actions, since


it involves finding fault and placing blame on a particular physician. In


5 negligence lawsuits involving everyday matters, the jury generally decides for


itself whether the defendant was reasonably careful, but medical malpractice


usually requires that medical experts testify about the required standard of care


and whether or not the defendant met that standard. Getting experts was


somewhat difficult when the standard was a purely local one, since only doctors


in that community could testify to the standard and they were reluctant to point


fingers at their fellow physicians. It became much easier to bring in outside


experts as the standard changed to a more national one, making lawsuits more


feasible. In turn, this led to development of the so-called ?professional


witness? who travels from courtroom to courtroom to testify in lawsuits. The


perception that such itinerant experts will say whatever supports the side of the


case that is paying for their testimony has seriously undermined confidence


among physicians in the fairness of the negligence system.


In response to unease that physicians were being judged by laypersons


on juries guided only by ?competing experts,? states have made several types of


tort law changes addressing the way that negligence is to be determined.


Expert Witnesses. Some states have specific standards for medical


experts, requiring that they be of the same specialty as the physician being


sued, or that that the experts actually be practicing physicians. An example is


a law providing that the expert witness must practice or have training in


diagnosing or treating conditions similar to those of the patient and must


devote at least 60% of his or her professional time to clinical practice or


teaching in their field or specialty.4


Pre-Trial Screening of Cases. Another common state response is


requiring malpractice cases to be screened by a medical review panel,


mediation office, or some other panel or official before the cases go to court.


Pre-trial review is intended to identify cases that lack merit (although the


lawsuits generally are not precluded from moving forward by such a finding)


and to encourage the parties to settle the case without litigation. Some states


permit the results of the pretrial review to be admitted as evidence if the case 4 West Virginia Code ?55.7B.7. 6 proceeds to court, while other states do not. Alaska, for example, requires


review of filed cases by an expert panel appointed by the court, with the


findings admissible at trial.5


Alternative Dispute Resolution. A number of states have also established


alternatives to going to court, called Alternative Dispute Resolution procedures.


For example, some states permit physicians to require that disputes with their


patients will be resolved by arbitration rather than by judicial process. Another


approach is to make arbitration voluntary, but to enforce arbitration


agreements when they are made or at least permit the findings to be introduced


into court. Connecticut, for example, does not require malpractice cases to go


to arbitration, but if both sides agree to do so, the case will go to a screening


panel of one lawyer and two physicians. The panel can make a finding as to


whether or not there is any liability; if the decision is unanimous, it is


admissible in any subsequent trial.6


How Much Money Should Be Awarded to Plaintiffs or Paid to Lawyers?


Limits on Damages. Perhaps the most contentious set of issues deals


with the amount of damages awarded in medical malpractice cases. The most


straightforward part of the damage calculation would seem to be adding up the


actual out-of-pocket losses that resulted from a negligent injury. These would


include lost wages, medical care expenses, and other actual economic losses.


Although it is simple in theory to measure economic losses, it in reality can


become somewhat complicated when trying to estimate how much a person


would have earned far into the future, or what medical or long term care they


might need and how much it would cost many years after their injury.


As difficult as calculating economic losses are, the more controversial


part of calculating damages is estimating the dollar value of non-economic


losses. In particular, there is substantial disagreement over the way to measure 5


6 Alaska Statutes ?09.55.536. Connecticut General Statutes, Chapter 697 ?? 38a-33 and 38a-36. 7 the ?pain and suffering? that resulted from the injury. Deciding how much


money it would take to compensate someone for a humiliating appearance or


chronic pain or some other non-economic harm is a highly subjective


determination. Consequently, the dollars that are awarded by different juries


for similar injuries can vary substantially, raising the criticism that noneconomic damage awards are too arbitrary to be fair. In particular, physicians


often feel that juries respond to the plight of the injured person and make large


financial awards irrespective of whether the person?s misfortune was actually


the result of substandard medical care, simply because physicians and their


insurance companies are seen as ?deep pockets? that can be tapped to


ameliorate that misfortune.


Another aspect of damage awards that has become highly contentious is


the perception that some large awards are extraordinarily out of proportion to


the injury suffered. As such, the awards appear not really to be to compensate


the person, which is proper under the law of negligence, but would be to


punish the physician for their behavior. In general, ?punitive? damages are not


supposed to be awarded in medical malpractice cases.


The size of damage awards has become a major focus of state legislative


changes. The principal response has been to put a limit on the amount of


money that could be awarded in a malpractice suit. These statutory limits are


generally known as ?caps.? Previously, juries were largely free to award winning


plaintiffs as much as they thought was appropriate, limited only by constraints


on sums that amounted to punitive damages. Legislated caps, however, have


restricted the size of awards well below that level. Several states have limited


the total recovery available to plaintiffs. A larger number of states have


imposed caps on non-economic damages; in some of these states the caps are


absolute for all non-economic damages (e.g., cap of $250,000 for noneconomic damages) while in others the amount that may be recovered may vary


based on the injury (e.g., cap does not apply in cases of permanent loss of


bodily function or substantial disfigurement) or the type of conduct (e.g., cap


may not apply in cases arising out of willful or reckless conduct). 8 Attorney Compensation. The way that lawyers representing injured


parties are paid in most medical malpractice cases has also generated a great


deal of controversy. In this country, people on each side of a lawsuit are


generally responsible for paying their own lawyers. This is also true in medical


malpractice cases. But in most legal cases, each party knows that they must


pay their lawyers whether they win or lose, and this serves as a financial barrier


to filing frivolous or small lawsuits. In medical malpractice, however, the


lawyers representing patients usually receive a fee only if their client wins the


case. This is known as a ?contingent fee? arrangement. In addition, the fee is


not a set dollar amount or an hourly fee, but instead is a percentage of the




Attorneys who take these cases know that they might not get paid. This


has several consequences. It means that lawyers are most likely to take cases


that they think they will win and that they think will result in large verdicts.


Traditionally, lawyers argued that this meant that they screened out cases that


were not meritorious, since they would not want to risk wasting their time for


free. But physicians feel that more often it means that lawyers will bring cases


without merit but involving a seriously injured person simply because a highly


sympathetic victim can lead to an award regardless of the quality of medical


care involved. Moreover, physicians feel that the high costs of defending


lawsuits has generated a likelihood that their own malpractice insurance


company will ?reward? and indeed encourage non-meritorious lawsuits by


settling them when the insurer thinks settlement would be less costly than


defending the case.


The contingent fee arrangement also means that lawyers must take a


large enough share of the damages when they win to offset the probability that


they will get nothing from other lawsuits that they lose. Typically, this means


that the lawyer will end up with 33%-50% of the total award. In large cases that


settle quickly, this produces substantial payouts to lawyers for what seems to


be very little effort. The financial interest that lawyers have under the


contingent fee system has become a major source of controversy among


physicians. It has also stimulated significant opposition by lawyers to caps on


damage awards or any change in the way damages are calculated. For example,


9 if damages were to be strictly limited to actual monetary losses, the contingent


fee would reduce the injured person?s recovery below their actual out-ofpocket loss by whatever amount was paid over to the lawyer.


The contingent fee arrangements have led to tort law changes that target


the amount of money paid to the lawyers who brought the lawsuit. A number


of states restrict the attorney?s contingent fees to no more than a specific


percentage of the total award, sometimes with the percentage decreasing as the


size of the award increases. For example, California limits contingent fees to 40% of the first $50,000 of damages, 33 1/3% of the next $50,000, 25% of the


next $500,000, and 15% of damages exceeding $600,000.7


How Should Damages Be Paid, and by Whom?


Joint and Several Liability. Another contentious issue in the debate over


medical malpractice law has been the extent to which negligent defendants can


be required to pay damages for injuries caused by another negligent defendant.


Traditionally in the tort system, any defendant who is found to have been


responsible for a negligent injury can be required to pay the full amount of an award, regardless of how many other defendants were also at fault.8 Under this


rule, all negligent defendants are subjected to what is called ?joint and several?


liability. If one or more defendants cannot pay for their share of an injury, the


rule of joint and several liability permits the injured person to collect the


missing shares from other negligent defendants who can afford to pay. The


principle behind the rule is that it is fairer to require a negligent party to pay


more than their share of an injury than to deny compensation to the innocent


(or less negligent) victim of injury.


Concerns have arisen that this rule has been applied unfairly, requiring


defendants who may have played only a minor role in someone?s injury to pay


the entire award because they had the most money. Also, this rule is seen to 7


8 California Business and Professions Code ?6146. Such a defendant can generally try to force the other defendants to reimburse them in proportion to each one?s share of the fault. 10 have created an incentive to sue as many defendants as possible, particularly


large institutions such as hospitals, to make sure someone has sufficient assets


to pay the damages. These concerns have generated state laws that limit who


can be required to pay an award for negligence when there was more than one


possible defendant, and laws controlling how much each defendant may be


required to pay. Kansas, for example, limits the amount of damages from any


defendant to the portion of the injury caused by that defendant.9 In


Pennsylvania, any defendant that is found responsible for 60% or more of an


injury is jointly responsible for the entire amount; defendants who are


responsible for smaller shares of an injury are only responsible for their own


share of the injury.10 Ohio has another variant on this theme: a defendant determined to have negligently caused more than 50% of an injury is jointly


responsible for the entire amount of any economic loss but is responsible only


for his share of any non-economic loss.11


Lump Sum or Periodic Payments. Defendants who are found to have


negligently injured a person often must pay all of the damages that are owed in


a lump sum at the end of the legal action. Since awards often include


estimated future losses, such as lost income or future medical expenses, some


argue that it is unfair to require the defendant to pay all the damages


immediately. Another issue is whether a defendant should be required to pay


for estimated future damages that never materialize. These concerns have led


to state laws that permit either party to elect that some damage awards (e.g.,


damages awards over $250,000) be paid periodically rather than as a lump


sum. Some states, such as Florida, may require security for the future


amounts.12 States also may permit a defendant to cease payments if anticipated losses do not occur (e.g., periodic payments for damages other than


lost earnings may cease if the plaintiff dies).13 9 Kansas Statutes ? 60-258a(d). 10






13 42 Pa. Cons. Stat. ? 7102(b.1). Ohio Revised Code ? 2307.22. Florida Statutes ? 768.78(2)(b)2. See, for example, Utah Code ? 78-14-9.5(6). 11 Recoveries from Collateral Sources. Fairness concerns have also arisen


over the longstanding practice of letting injured persons collect the full am...


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