“Caps” or Consequences: An Ounce of Prevention is Worth a Pound of “Cure”

In 1999, the Institute of Medicine (IOM) issued a report which concluded that up to 98,000 people die annually due to errors in hospital treatment. In follow up, over the last decade, Consumers Union, the nonprofit publisher of Consumer Reports magazine, has concluded that little has changed. Their research indicates that preventable medical errors cause more than 100,000 deaths each year. Likewise, the Centers for Disease Control and Prevention estimate that almost 100,000 people die from hospital acquired infections alone, most of which are preventable.

According to a study published in November 2010 by the Department of Health and Human Services (DHHS) Office of Inspector General, one in seven Medicare patients experience an adverse event, including “never events” (events that the National Quality Forum (NQF) has determined should never happen, such as surgery performed on the wrong patient). Up to 15,000 Medicare patients per month may experience an adverse event that contributes to their death.

It is clear that improving patient safety should be the central focus of any “health care reform” effort. The DHHS estimates that treating the victims of medical errors cost Medicare $324 million in October 2008 alone. Another recent study concluded that avoidable medical errors across the entire U.S. population cost the economy $19.5 billion in 2008.

In contrast, a Harvard medical practice study that examined the relation between malpractice claims and adverse events due to negligence, concluded that less than 2 percent of medical negligence victims actually filed a malpractice claim. Other similar studies have found that only 4 to 7 percent of injured patients actually bring any type of claim. More recent studies have estimated that litigation costs and malpractice insurance together only account for between 1 to 1.5 percent of total medical costs.

Nonetheless, business and insurance interest groups, as well as physicians organizations, among others, continue to push for so-called “tort-reform,” based on claims that their businesses and/or patient care suffer from a “crisis” brought about by lawsuits and related expenses. Among the benefits that tort-reformers claim will result are: increases in the numbers of new physicians who will enter practice (or conversely a decrease in the numbers of physicians who will leave a geographic area); decreases in malpractice insurance premiums and/or damage awards; and decreases in the amount of “defensive medicine,” “unnecessary” testing, or medical spending.

In 2003, the U.S. General Accounting Office (GAO) determined that among all states (therefore states with and without damage caps) the growth in physician populations had remained constant and increased at roughly the same pace. In 2007, the U.S. Department of Justice determined from a review of data on malpractice claims closed by insurers in seven states (Florida, Illinois, Maine, Massachusetts, Missouri, Nevada, and Texas) between 2000 and 2004, that most were closed without any compensation provided. Only about one-third of claims in Missouri and two other states, resulted in any insurance payout. For the one-third of claims in Missouri that resulted in any payout, two-thirds of those claims were closed for less than $250,000.00.

One of the more recent studies to have examined tort-reform claims, evaluated the results of a 2003 Texas law that limited damage awards in malpractice cases. A report from Public Citizen in October 2011, determined that, contrary to proponents’ claims, the increase in the numbers of doctors actually practicing in the state has been significantly slower since the law was passed. Rural areas, which previously experienced a nearly 24 percent increase during the seven years before the law was passed, are hardest hit and have experienced a decrease in physicians. Health care spending, however, has continued to rise. Medicare diagnostic testing alone increased 25.6 percent faster than the national average. Private health insurance premiums have also risen faster than the national average. The state now has the highest percentage of uninsured residents the nation. Texas health care providers and insurers, on the other hand, have benefited from limits on pay-outs for damages and decreases in malpractice premiums.

So-called “tort reform” seeks to restrict the individual’s constitutional right to a jury trial, in which members of the community (selected in a process which allows each party in the dispute a chance to challenge or remove jurors who may have a bias one-way or another), guided by expert testimony from each side, determine liability and damages under strict rules of evidence. Part of the tort-reform “solution” routinely calls for taking a major determination out of the hands of jurors. A one-size-fits-all limit or “cap” is placed on non-economic damages such as pain and suffering, no matter how terrible, permanent, or painful the injury or loss, and/or no matter how many health care providers may be responsible for an injury under the facts of a particular case. A patient to whom a jury awards more than the arbitrary cap, even for life-long, daily pain and suffering, will see that award reduced to the “cap” (in Missouri, currently $350,000.00 for noneconomic damages). Any award for future damages, including both future non-economic damages and future economic damages (such as the cost of medical care and lost income) may further be broken into future payments an injured patient may not ever receive.

The “tort-reform” approach can at best reduce costs in only part of less than 2 percent of the health care economy, and only after an injury or damage to a patient is already done. This approach also comes at the cost of the loss of an important constitutional right by second guessing jurors who have been presented the relevant facts of a particular case. It will further decrease compensation to victims of medical negligence, whom studies show are already likely to be under-compensated, and penalizes those most seriously injured and/or those with the greatest pain and suffering. At the same time, by decreasing the economic consequences to those who are responsible for medical negligence, such measures are unlikely to result in better or more careful care. The tort-reform approach will also not be likely to improve access to health care. Efforts to improve patient safety, on the other hand, not only are directly aimed at eliminating unnecessary injuries before they occur, but will naturally result in decreased costs related to such injuries, without penalizing those patients who are injured.

Missouri is among one of many states where “tort reform” laws are facing constitutional challenges. The Missouri Supreme Court is currently examining the constitutionality of damage caps, and a second, similar case, is expected to be submitted early in 2012. In 2010, the Illinois Supreme Court struck down a $500,000 non-economic damage cap as unconstitutional. Florida is poised to hear arguments on its damage caps in 2012 as well.

Focusing on improving patient safety efforts to prevent unnecessary injuries, while letting jurors decide how best to value an injury after the damage is done based on the individual facts of each case, not only protects our constitutional right to a jury trial, it is more likely to result in cost savings or injury prevention, and will also result in fair consequences or incentives, which will in turn improve the patient safety efforts of those held responsible.