Many states are experiencing a medical liability crisis. The cost of
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1 Improving The Medical Malpractice Litigation Policymakers can do much to improve the malpractice litigation process without moving to no-fault administrative compensation. by Catherine T. Struve ABSTRACT: Critics charge that judges and juries are incompetent to address medical liability issues. Some advocate shifting authority away from ordinary judges and juries, either by appointing expert decisionmakers, such as medical screening panels or specialized medical courts, or by instituting caps on damages. Problems with the tort liability system may weigh in favor of a shift to a no-fault administrative compensation system. If the current fault-based system is retained, however, policymakers should not adopt half-measures by creating expert panels or expert courts. Rather, they should better equip the existing decisionmakers to deal with liability and damages questions. Many states are experiencing a medical liability crisis. The cost of malpractice insurance is skyrocketing in some specialties and geographic areas. A number of factors, including insurers investment and underwriting decisions, may contribute to the rise in premiums. That rise also correlates with rising payouts on malpractice claims and turns attention to the system that determines those payouts. Critics charge that plaintiffs lawyers bring suits without merit and that the civil justice system produces random liability determinations and excessive damages awards. Judges and juries are a particular target of censure: Detractors argue that lay decisionmakers cannot understand complex medical issues. To some, this is a reason to remove malpractice claims from the tort liability system and to turn to an administrative compensation system. Others, however, would retain the fault-based compensation system but would shift authority away from ordinary judges and juries, either by appointing expert decisionmakers, such as medical screening panels or specialized medical courts, or by instituting caps on damages. To assess such measures, this essay examines three key stages in litigation: screening claims at the start of litigation, deciding liability, and determining damages. On each of these topics, debate has focused on a handful of high-profile concepts to the exclusion of better ideas. Catherine Struve (cstruve@law.upenn.edu) is an assistant professor at the University of Pennsylvania Law School in Philadelphia. HEALTH AFFAIRS ~ Volume 23, Number 4 33 DOI /hlthaff Project HOPE The People-to-People Health Foundation, Inc.
2 Malpractice Crisis There are reasons to question the efficacy of the civil justice system in deciding malpractice claims. Only a small fraction of those injured by medical negligence ever bring a claim; those who do sue may face years of litigation before they recover; and much of the money spent on malpractice litigation goes to cover its costs rather than to compensate the victims of malpractice. Screening Claims At The Outset Of Litigation Commentators with widely differing views of the malpractice problem agree that the selection of claims needs improvement. Some point out that few of the patients with legitimate grievances ever bring claims. Others assert that many malpractice suits are weak and ultimately are dismissed or dropped without payment. Data on claiming. Both views find some support in studies of claims data and hospital records. 1 Researchers have reviewed hospital records for evidence of injuries from negligent care and sought to match the data from this review with data from insurers claims records. They found a gap between potential and actual claims: Most claimants injured by medical negligence never asserted a claim. They also found a mismatch : In the cases where they were able to compare hospital and insurance records, only a fraction of the claims were cases in which the researchers had found evidence, in the hospital records, of harm from negligent care. (However, the review might have missed some instances of negligence, especially in cases involving failure to diagnose.) Critics also point to litigation outcomes to support their contention that plaintiffs bring claims without merit. Defendants win a majority of the malpractice cases that produce a jury verdict, but low plaintiff win rates at trial do not prove that plaintiffs bring meritless cases. 2 Most cases are resolved prior to trial, and various theories may explain why the mix of cases the litigants select for trial tends to produce large numbers of defendant verdicts. 3 However, the fact that a substantial number of malpractice claims are terminated prior to trial with no payment to the plaintiff does bring into question the judgments plaintiffs lawyers make in selecting cases. 4 Lawyers typically represent medical malpractice claimants on a contingent fee basis; each lawyer thus has an incentive to screen cases before agreeing to take them, to avoid investing time and money in clients who are likely to lose. The lawyer may initially lack sufficient data to assess the claim; for example, the lawyer will likely be unable to interview doctors and nurses who were present during treatment. Thus, cases dropped without payment may reflect previously unavailable information gained over the course of discovery. 5 On the other hand, some lawyers may bring claims without adequate investigation. A sizable number of malpractice cases are brought by lawyers who do not specialize in the area. 6 Such nonspecialists may lack the skills to assess the strength of a claim; one study found that specialist attorneys are more likely than nonspecialists to bring cases that the insurer (based on the assessments of the in- 34 July/August 2004
3 surer s outside reviewers) perceives as potentially valid. 7 Medical expertise and claim selection. Problems with claim selection, then, have two aspects: Too few claims are asserted, in that many of those injured by medical negligence never bring a claim; yet too many claims are asserted, in that some suits turn out to lack merit. Tort reform initiatives such as contingent fee limits, sanctions provisions, and offer-of-judgment rules typically respond to the second concern and ignore (or even exacerbate) the first. Proposals that seek to inject medical expertise into the process at an early stage should be assessed in light of both issues. Medical screening panels have proven ineffective and may deter valid claims. Certificate-of-merit requirements hold more promise but must be carefully designed so as to minimize the deterrent effect on legitimate suits. Screening panels. Twenty states have screening panels; panel provisions have been repealed or invalidated in eleven others. 8 Although the panel systems vary in their details, the basic concept is that a body composed at least partly of physicians reviews evidence concerning a malpractice claim and reaches conclusions concerning liability and sometimes damages; these conclusions are given to the parties, and in some states they are admissible at trial. 9 At first glance, medical screening panels might seem promising: They might discourage weak claims and encourage valid ones; they might provide a relatively low-cost venue for patients to find out what went wrong; and they might improve trial outcomes by contributing expertise. Unfortunately, the data do not bear out these hopes. Some studies suggest that the availability of a panel system may increase the number of claims asserted. 10 Other research, however, finds no systematic effect on claims frequency. 11 Even if panels encourage claiming by some plaintiffs, others may be deterred by the fact that panel proceedings increase the total cost and length of litigation: Especially in jurisdictions where the panel findings are admissible at trial, the parties tend to seek extensive discovery and make lengthy presentations. 12 Thus, panels goal of providing an early, inexpensive evaluation of claims conflicts with their goal of providing an expert assessment that can be given to the jury at trial. To screen claims well and provide expertise at trial, panels must reach accurate assessments but the cost of accuracy is that the panel proceeding will become longer and more costly. A better option for claim screening is a certificate-of-merit requirement. Certification. Seventeen states require medical malpractice plaintiffs to provide certification that the case has been reviewed by an expert and that the expert has found some basis for the claim. 13 Plaintiffs lawyers who specialize in medical malpractice routinely obtain an expert evaluation before suing, but for nonspecialist plaintiffs attorneys, a certificate-of-merit requirement may deter the assertion of weak claims. However, such requirements should be designed carefully to minimize unfairness to the plaintiff. One issue relates to the availability of information. 14 The plaintiff will lack ac- HEALTH AFFAIRS ~ Volume 23, Number 4 35
4 Malpractice Crisis cess to the defendant and other potential witnesses. Even medical records may not be readily available; regulations set time limits within which providers must supply medical records, but the limits are not particularly tight. 15 Thus, the plaintiff s expert should not be required to state with certainty that the claim is valid but merely that based on the available information, there is a reasonable likelihood that the plaintiff will be able to show negligence and causation. Also, the requirement should not apply if the defendant fails to provide pertinent records. The certification requirement inevitably will raise the initial cost of suit for plaintiffs whose attorneys would not otherwise have obtained an expert evaluation and thus may deter valid claims with small expected values. Policymakers may accept this downside to deter the assertion of weak claims, but they should take care that the requirement does not impose unnecessary additional costs on the plaintiff. Plaintiffs lawyers may prefer to have the same expert certify at the outset of the suit and testify at trial to avoid having to pay two experts to learn the facts. Disclosure to the defense of the certifying expert s identity and evaluation could discourage the plaintiff from using the same expert at trial, because the defense might argue that the expert had prematurely made up his or her mind. Disclosure might also render experts less willing to perform evaluations. 16 To minimize this risk, the law could provide that the certifying expert need not be named initially. If the certifying expert later testifies, and if the plaintiff is then required to disclose the expert s certification evaluation, the defendant should not be permitted to impugn the expert s in-court opinion by asserting that the certification opinion evinced a rush to judgment. Most certificate-of-merit provisions target plaintiffs and not defendants; only a few states have imposed the requirement on both sides. 17 Admittedly, plaintiffs and defense counsel present different issues. Plaintiffs lawyers have an incentive to bring strong cases, but some plaintiffs lawyers may not have sufficient expertise. By contrast, the defense of most malpractice claims is guided by insurers, and insurers are likely to work repeatedly with a set of lawyers experienced in defending malpractice claims, but defense lawyers are usually paid by the hour and may have incentives to contest claims they know to be valid. Thus, inexperience may sometimes cause problems on the plaintiffs side, and incentives may cause problems on the defense side. A symmetrical certificate-of-merit requirement might address both issues and be a useful improvement over the plaintiffs-only version. Ensuring that expertise plays a role in case selection is a sensible goal. Medical screening panels serve that goal poorly, because they increase cost and delay. In contrast, a certificate-of-merit requirement can improve malpractice case selection, so long as the requirement is carefully designed. Determining Liability At Trial Plaintiffs lawyers are not the only targets of reform proposals. Critics frequently attack juries capacity to determine liability. Alleged incompetence is a 36 July/August 2004
5 prominent justification for establishing medical courts in which specialized judges would set the standard of care. However, juries do better than their critics charge, and specialized courts would generate problems of their own. Instead of creating special courts, reformers should improve the tools available to judges and juries. Jury determinations of liability. Juries may have difficulty with some technical evidence, especially statistical evidence. 18 Nonetheless, jury determinations of medical liability tend to correlate with independent evaluations, and some juries may be, if anything, unduly defendant-friendly in their liability judgments. In three studies of medical malpractice cases tried to juries, researchers compared expert reviewers assessments of liability with the jury verdicts. 19 In two of the studies, researchers found a correlation between the jury verdicts and the reviewers assessments of liability; in the third study, the reviewers and juries assessments diverged, largely because the juries tended to exculpate defendants whom the reviewers found liable. (Another study suggests that parties settlement decisions may fail to reflect case strength, probably because a defendant may be willing to pay a modest amount to avoid the cost of litigating a claim even if liability is uncertain.) 20 Proposals for medical courts. Prominent commentators, including the national reform organization Common Good, advocate the creation of a special court to hear medical liability claims. 21 They argue that judges on such a court would be more expert and could set precedents to govern the standard of care. However, a specialized court would become a target of political pressures as the repeat players in malpractice litigation plaintiffs lawyers, physicians, and malpractice insurers attempted to influence the selection of judges and the content of decisions. Such pressures exist even when malpractice cases are heard in courts of general jurisdiction, but the pressures are diluted with respect to generalist judges because there are many more of those judges and each judge hears many kinds of cases. Alternatives for improving liability determinations. Instead of supplanting existing judges, policymakers should improve judicial training and empower judges to take a stronger managerial role. Judges on a court of general jurisdiction could rotate into and out of a specialized division; this could give judges concentrated experience concerning malpractice litigation without the risks associated with designating judges for a specialized malpractice court. Judges would also benefit from training in basic scientific and medical principles. Better-trained judges could then be encouraged to assert tighter control over the discovery process and to play a greater role in brokering settlements. To help generalist judges and juries to understand medical liability issues, expert testimony could be improved. Some states require that a medical expert be a practicing physician; some also require that the expert be a member of the same specialty as the defendant, and some require that the expert possess the same accreditations. Such measures may improve the quality of expert testimony, but if they narrow the pool of potential experts too much for instance, by requiring a HEALTH AFFAIRS ~ Volume 23, Number 4 37
6 Malpractice Crisis specialist from the same locality as the defendant plaintiffs with valid claims may be unable to find experts who are willing to testify. In appropriate cases, courts can supplement partisan expertise with expert assessments by third parties. Although this was one of the goals of medical screening panels, panels are not an efficient approach: Only one in ten malpractice suits go to trial, and not all claims that go to trial will need a third-party expert. Instead, court-appointed experts could be employed in cases presenting particularly complex or contentious medical or scientific issues. Other changes could improve jury comprehension. 22 Ordinarily, both jury instructions and closing arguments are given after the presentation of the evidence. Earlier instructions by the judge on basic legal concepts may assist the jury. In complex cases, brief explanations by counsel may help to explain the significance of evidence during trial. Experts could testify back-to-back so that any points of disagreement are easier to discern. Jurors could be given copies of the relevant exhibits and allowed to take notes. These changes would better equip judges and juries to decide medical liability issues, but they might not address all of the underlying motives: Some legislators interest in special courts may arise from the view that juries in certain cities are unduly generous to plaintiffs. Because specialized courts would likely sit in only a few locations, their use could ensure that no case would be heard by a jury drawn exclusively from a particular urban area. This change, however, would come at a cost: Some litigants would have to travel large distances to reach the specialized courts. A more balanced approach would limit venue to the place where the claim arose; this would prevent litigants from shopping for a putatively favorable jury pool in a county with few ties to the dispute. In sum, the benefits of special courts fail to outweigh their risks, particularly the risk of increased politicization. Nor do special courts provide a useful way to address concerns over allegedly plaintiff-friendly jurisdictions. Even if juries in some locales tend to award larger-than-average damages, a preferable strategy would focus on guiding juries and judges on the question of damages. 23 Determining Damages At Trial Critics charge that jury awards are both unpredictable and too large. Many view caps as a solution to this problem, but caps are a blunt tool and raise questions of fairness. Instead, juries should receive better guidance concerning both economic and noneconomic damages, and judges should be empowered to engage in more stringent review of jury awards. Economic damages. The cost of lifetime care for a catastrophically injured plaintiff can be enormous, and the numbers will rise as technological improvements increase the chances of surviving a medical injury and survivors life expectancy. Testimony concerning lost wages and cost of future care can have a huge impact on the amount of economic damages awarded. Thus, when considering reforms to the 38 July/August 2004
7 Juries damages determinations can be improved, particularly with respect to the noneconomic component of the award. mode of presenting expert testimony, policymakers should concentrate not only on medical testimony their customary focus but also on economic testimony. Noneconomic damages. In any event, much of the variation in jury awards already correlates with legitimate factors such as the severity of the plaintiff s injury. 24 The greatest degree of unexplained variability comes in the portion of the award attributable to noneconomic damages (damages for pain and suffering). 25 For this reason, debate on caps frequently focuses on capping noneconomic damages. A cap, however, is likely not the best solution. Some commentators have argued that caps on damages are unfair to the most severely injured plaintiffs. Moreover, caps might actually increase both the size and variability of jury awards in some cases because of the potential anchoring effect. In a recent experiment, the mean award for a low-severity injury by mock jurors who were told of the existence of a $250,000 cap on damages was significantly higher than by jurors who were not told of the cap, and awards by jurors told of the cap were significantly more variable. 26 In other words, a cap might raise the amounts recovered by plaintiffs with less severe injuries at the same time that it limited the amounts recovered by the most severely injured plaintiffs. Although jurors in an actual trial might not be told of the cap, the publicity surrounding caps makes it likely that at least one juror would know of the cap, and that juror could tell others. Alternative methods exist for reducing the variability of awards. Reforms that improve the jury s ability to process complex technical information hold the promise of improving jury determinations, not only on liability, but also on economic damages. However, juries also need more guidance concerning noneconomic damages. Legal doctrine and trial practice both contribute to the problem. In Pennsylvania, for example, lawyers are not allowed to name a suggested figure for noneconomic or punitive damages. To make things worse, defendants lawyers sometimes choose not to put in evidence on damages, for fear of appearing to concede liability. 27 Thus, reforms that structure juries and judges assessment of noneconomic damages appear particularly promising. For example, lawyers could frame their arguments concerning damages around prior awards in comparable cases. 28 Another option would be to require a more stringent review of damages awards. In New York, for example, if an award deviates materially from what would be reasonable compensation, the judge must grant a new trial unless the relevant party accepts a judicially modified award. New York s provision mandates tighter review than in most other states. Because the New York provision requires comparison to awards approved in other HEALTH AFFAIRS ~ Volume 23, Number 4 39
8 Malpractice Crisis cases, it provides a check on outlier jury awards; it also avoids disadvantages associated with caps (such as inflexibility and the possibility of an anchoring effect). Policymakers who strengthen judicial review of jury awards should be aware of questions of symmetry. A recent proposal by Pennsylvania s governor would only operate to decrease jury awards and never to increase them. By contrast, New York s provision can require either reduction (if the award is unreasonably high) or augmentation (if the award is unreasonably low). Although the former may be the more common result in practice, fairness counsels that the deviates materially standard should operate in both directions. In sum, juries damages determinations can be improved, particularly with respect to the noneconomic component of the award. Juries should be given more guidance, and judges should be empowered to review awards for reasonableness. In light of the cost and delay associated with malpractice litigation, an administrative system may be a better alternative. If policymakers stop short of moving to such a system, however, they should improve the capabilities of judges and juries rather than shifting authority away from those decisionmakers by creating medical screening panels or medical courts (or instituting caps). Instituting certificate-of-merit requirements can ensure that plaintiffs lawyers seek an expert review prior to suit; and instituting training for judges and alterations in the presentation of evidence (including expert evidence) can enhance liability determinations. Also, juries should be given more guidance concerning damages, and judges should be empowered to engage in more stringent review of the resulting awards. The author thanks Parmeeth Atwal, William Sage, and two anonymous reviewers for their comments on prior drafts. This work was supported by the Project on Medical Liability in Pennsylvania, funded by the Pew Charitable Trusts. 1. P.C. Weiler et al., A Measure of Malpractice: Medical Injury, Malpractice Litigation, and Patient Compensation (Cambridge, Mass.: Harvard University Press, 1993); and D.M. Studdert and T.A. Brennan, Beyond Dead Reckoning: Measures of Medical Injury Burden, Malpractice Litigation, and Alternative Compensation Models from Utah and Colorado, Indiana Law Review 33, no. 4 (2000): N. Vidmar, Medical Malpractice and the American Jury: Confronting the Myths about Jury Incompetence, Deep Pockets, and Outrageous Damage Awards (Ann Arbor: University of Michigan Press, 1995). 3. Ibid.; and S.R. Gross and K.D. Syverud, Getting to No: A Study of Settlement Negotiations and the Selection of Cases for Trial, Michigan Law Review 90, no. 2 (1991): T.B. Metzloff, Researching Litigation: The Medical Malpractice Example, Law and Contemporary Problems 51, no. 4 (1988): H.S. Farber and M.J. White, Medical Malpractice: An Empirical Examination of the Litigation, RAND Journal of Economics 22, no. 2 (1991): ; and H.S. Farber and M.J. White, A Comparison of Formal and Informal Dispute Resolution in Medical Malpractice, Journal of Legal Studies 23, no. 2 (1994): T.B. Metzloff, Resolving Malpractice Disputes: Imaging the Jury s Shadow, Law and Contemporary Problems 54, no. 1 (1991): July/August 2004
9 7. R. Peeples, C.T. Harris, and T.B. Metzloff, The of Managing Medical Malpractice Cases: The Role of Standard of Care, Wake Forest Law Review 37, no. 3 (2002): States that have panel systems are Alaska, Connecticut, Delaware, Florida, Hawaii, Idaho, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Montana, Nebraska, New Hampshire, New Mexico, Utah, Virginia, and Wisconsin. Panel systems have been repealed or invalidated, or both, in Arizona, Illinois, Missouri, Nevada, New Jersey, New York, North Dakota, Pennsylvania, Rhode Island, Tennessee, and Wyoming. 9. J.A. Macchiaroli, Medical Malpractice Screening Panels: Proposed Model Legislation to Cure Judicial Ills, George Washington Law Review 58, no. 2 (1990): R. Hanson, B. Ostrom, and D. Rottman, What Is the Role of State Doctrine in Understanding Tort Litigation? Michigan Law and Policy Review 1, no. 1 (1996): 43 72; and S. Shmanske and T. Stevens, The Performance of Medical Malpractice Review Panels, Journal of Health Politics, Policy and Law 11, no. 3 (1986): P.M. Danzon, The Frequency and Severity of Medical Malpractice Claims: New Evidence, Law and Contemporary Problems 49, no. 2 (1986): F.A. Sloan, State Responses to the Malpractice Insurance Crisis of the 1970s: An Empirical Assessment, Journal of Health Politics, Policy and Law 9, no. 4 (1985): ; and P.M. Danzon, Medical Malpractice: Theory, Evidence, and Public Policy (Cambridge, Mass.: Harvard University Press, 1985). 13. Those states are Colorado, Connecticut, Florida, Georgia, Illinois, Maryland, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, North Dakota, Pennsylvania, Texas, and West Virginia. 14. J.A. Parness and A. Leonetti, Expert Opinion Pleading: Any Merit to Special Certificates of Merit? Brigham Young University Law Review 1997, no. 3 (1997): CFR (2003), sec (b)(2). 16. D.M. Kopstein, An Unwise Reform Measure, Trial 39, no. 5 (2003): See, for example, Florida Statutes sec ; and Maryland Code, Courts and Judicial Proceedings sec. 3-2A J.S. Cecil, V.P. Hans, and E.C. Wiggins, Citizen Comprehension of Difficult Issues: Lessons from Civil Jury Trials, American University Law Review 40, no. 2 (1991): F.A. Sloan, P.B. Githens, and G.B. Hickson, The Dispute Resolution, in F.A. Sloan et al., Suing for Medical Malpractice (Chicago: University of Chicago Press, 1993), ; Farber and White, Formal and Informal Dispute Resolution ; and B.A. Liang, Assessing Medical Malpractice Jury Verdicts: A Case Study of an Anesthesiology Department, Cornell Journal of Law and Public Policy 7, no. 1 (1997): T.A. Brennan, C.M. Sox, and H.R. Burstin, Relation between Negligent Adverse Events and the Outcomes of Medical-Malpractice Litigation, New England Journal of Medicine 335, no. 26 (1996): P.K. Howard, The Best Course of Treatment, New York Times, 21 July G.T. Munsterman, P.L. Hannaford, and G.M. Whitehead, eds., Jury Trial Innovations (Williamsburg, Va.: National Center for State Courts, 1997). 23. Although mean awards in some cities are markedly larger than those in surrounding areas, this does not prove that the juries in those cities are more liberal in their awards; it is not known whether the cases that are selected for trial in those areas are comparable to those selected for trial in the areas with lower awards. Moreover, absent an independent measure of the appropriate amount of damages in the relevant cases, it cannot be determined whether the higher-award jurisdictions are unduly plaintiff-friendly or whether, instead, the lower-award jurisdictions are unduly defense-oriented. 24. F.A. Sloan and C.R. Hsieh, Variability in Medical Malpractice Payments: Is the Compensation Fair? Law and Society Review 24, no. 4 (1990): S.S. Diamond, M.J. Saks, and S. Landsman, Juror Judgments about Liability and Damages: Sources of Variability and Ways to Increase Consistency, DePaul Law Review 48, no. 2 (1998): ; and R.R. Bovbjerg, F.A. Sloan, and J.F. Blumstein, Valuing Life and Limb in Tort: Scheduling Pain and Suffering, Northwestern University Law Review 83, no. 4 (1989): M.J. Saks et al., Reducing Variability in Civil Jury Awards, Law and Human Behavior 21, no. 3 (1997): Vidmar, Medical Malpractice. 28. Diamond et al., Juror Judgments ; and Bovbjerg et al., Valuing Life and Limb. HEALTH AFFAIRS ~ Volume 23, Number 4 41
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