True innovation in health care: no-fault insurance for bad medical outcomes.

We would make genuine and profound progress in “fixing” our health care system if we replaced the existing malpractice system with (1) no-fault insurance to compensate patients for the long-term medical and personal costs of bad medical outcomes and (2) an effective mechanism by which the medical profession policed the quality of the care provided by its members.

One political war that never seems to wane is over the medical malpractice system. On the one hand there are the doctors, the insurance companies, and right-wingers screaming that it is medical malpractice that is bankrupting us; on the other, there are the malpractice lawyers and the rest of us who want protection against the risk of suffering unexpectedly from medical treatment.

The critique of the malpractice system has a lot of validity — it’s a lottery in which those patients who have gone to the trouble of hiring lawyers under circumstances smelling sufficiently of medical negligence make out well and the rest of those injured by bad medical outcomes are left with nothing. As a result, too, doctors practice defensive medicine, driving up medical costs for all of us.

But that’s not the entire story. Our health insurance system is a failure, and patients who suffer bad medical outcomes often won’t have coverage sufficient to provide them the care required by the bad outcomes. The only alternative is to sue for malpractice, but the premise of malpractice is that there is no recovery unless the patient is able to prove the doctor was negligent.

Is it any wonder, then, that in a close case, given the choice between, on the one hand, compensating a badly injured patient from with money provided by an insurance company and, on the other, declaring the doctor to be without fault, a jury of human beings will tend to do the merciful thing and find the doctor acted negligently?

Doctors, of course, hate that question. They look at malpractice cases as judgments on their talents, not as tests of mercy. A jury that finds a doctor liable for malpractice has, in the doctor’s eyes, found the doctor to be a bad doctor. To the doctor on trial, The patient’s injuries –as opposed to the doctor’s efforts — are irrelevant.

The dilemma is obvious. First, bad medical outcomes are inevitable regardless of the adequacy of care. As a result, bad medical outcomes are risks we all face. Second, our existing insurance scheme does not spread this risk — rather, those who suffer bad medical outcomes and are not compensated by the malpractice system themselves bear all the costs of that risk.

Wouldn’t we be better off if everyone who suffered a bad medical outcome was compensated for the costs that arose out of that bad medical outcome regardless of the quality of the medical care? No one would be over-compensated, everyone would be fairly compensated, and the abilities of doctors wouldn’t be judged by juries of lay people who are motivated to disregard good judgment regarding those abilities by an entirely understandable and praiseworthy sense of human sympathy.

Such a scheme does raise one problem that the critics of the malpractice system also ignore — we really do enjoy a remarkably high standard of care in this country precisely because of the malpractice system. Doctors have never gone to the trouble of instituting an effective means of policing the quality of medical practice. To some degree they haven’t needed to do so because the risks posed by the malpractice system have forced insurance companies to take on that role. To replace the malpractice system with a no-fault insurance system, therefore, would require some genuine quality control imposed by the medical profession itself.

But if we simply gut the malpractice system and ignore the costs of bad medical outcomes and the need for some genuinely effective means of quality control, we would instead have the worst of all worlds.

Tort law serves a lot of purposes tort reformers don’t recognize, though Robert Bork might have changed his mind.

The law tends to be rational, though the rationale behind it is not always apparent. But when you see people screaming about irrational laws, they’re often failing to see, if not ignoring, what the laws do accomplish.

You’ll hear again and again in connection with proposals to reform our system of health insurance that the real way to cut medical costs is to reform our tort system so that doctors don’t practice excessively expensive “defensive medicine.” Don’t believe it. I’m not saying that our malpractice system is perfect, but merely cutting back on malpractice cases and recoveries because of their impact on the practice of medicine ignores two important consequences of the malpractice system that we better be sure are provided in other ways before we significantly cut it back.

First, the malpractice system maintains the high quality of health care we do have. My dentist, who is German, told me she hates practicing dental surgery in Germany because the standard of care is so low. She’s always afraid the anaesthesiologists will kill the patients. In contrast, she explains that the standard of care is so good here precisely because of the fear of malpractice liability.

Second, judges and juries in some jurisdictions likely do err in favor of patients in finding doctors at fault. Why? Because our health insurance system is so inadequate and, regardless of the doctor’s wrongdoing, a patient who suffers a bad outcome from a medical procedure is going to need money to take care of the bad outcome. If it isn’t going to come from health insurance, why not from the doctor’s malpractice carrier?

The second problem would be better taken care of by instituting a no-fault compensation scheme for people who suffer bad outcomes from medical procedures. But doctors have always, for reasons I do not fathom, resisted such a system, while at the same time they cry, understandably, about the blame game played in malpractice cases.

There have to be better ways than the malpractice system to maintain our nation’s high standard of medical care. But until we’ve devised such a system, we ought to be cautious about dismantling the system that currently maintains that high standard.

The funny thing is that no one likes a personal injury lawyer until they need one. Robert Bork, of course, is a notorious conservative critic of our legal system who is often portrayed as a victim as a result of the rejection of his nomination by Ronald Reagan to the Supreme Court. Bork’s critique of the legal system has included an attack on the tort system, calling it, as Bloomberg News reported last month, an irrational and unpredictable process that subjects businesses to the kind of predation practiced by pirates:

In a 1995 opinion piece published in the Washington Times, Bork and Theodore Olson, who later became a top Justice Department official, criticized what they called the “expensive, capricious and unpredictable” civil justice system in the U.S.

“Today’s merchant enters the marketplace with trepidation — anticipating from the civil justice system the treatment that his ancestors experienced with the Barbary pirates,” they wrote.

But Bork recently sued the Yale Club of New York City, “claiming he tripped and fell because of the club’s negligence as he ascended a dais to give a speech.” His amended complaint alleges that “[w]hen it was his turn to deliver” a speech at the Yale Club, he “approached the dais. Because of the unreasonable height of the dais, without stairs or a handrail, Mr. Bork fell backwards as he attempted to mount the dais, striking his left leg on the side of the dais and striking his head on a heat register.” Among other defensess asserted by the Yale Club in its answer are that the risks of mounting the dais were “open and obvious” and that Bork has already been compensated (no doubt through his health insurance, which I bet is as good as it comes) for some or all of his economic loss.

Bork isn’t the first “hypocrite of tort reform,” nor will he be the last. But next time you know someone who’s been badly injured, you might want to keep in mind the ways he or she might get compensated for the costs arising from the injury and the ways the law discourages the conditions that caused the injury.

Fix the law, but don’t forget what the law has already tried to fix.

Opinions about law tend to focus on its defects, and there are plenty of those.  What too many of those opinions ignore, however, is that law is rarely arbitrary or one-sided.  There are imperfections, but those imperfections are flaws in an effort to address real problems.  To fix the flaws in existing law without attending to the problems that law addresses is to trade one set of problems for another, often bigger, one.

The U.S. legal system is an immensely complex product of decisions made in courts, legislatures, and administrative agencies at the federal level as well as the state and local level.  When one considers the monumental number of individual decisions that make up the workings of those tens of thousands of jurisdictions and the fact that law persists over time until it is changed, it is plain that the “law” is the product of a massive collective wisdom.

That is not to say the system is perfect — it is far from perfect, and its complexity is in no small part directed at perpetually refining the defects that perpetually appear as new problems arise in new contexts that include new ways of looking at things.  Not only do we continually face new facts, but what we think and feel about those facts always changes.  As Nicholas Kristoff points out this morning, for example, new industrial farming methods and new ideas about the morality of ignoring the suffering of animals is has produced “a broad push in Europe and America alike to grant increasing legal protections to animals.”

But my point today isn’t about new law — it’s about the efforts to fix existing law.  If one is going to do so in an effective way, it is not enough to identify a problem and eliminate it.  One must also figure out what the existing law is trying to do.  Medical malpractice is a lottery, giving big awards to certain injured plaintiffs while leaving most uncompensated.  It also does a less than optimal job at distinguishing between negligent doctors and non-negligent doctors who, after all, practice a profession in which perfect performance will not necessarily lead to a good outcome.  It also likely increases the costs of health care by forcing doctors to practice “defensive medicine.”

But if one produces a solution that merely solves these problems without recognizing the problems the system is trying to address, one is merely serving one set of interests.

There are two major reasons the medical malpractice system operates the way it does.  Patients suffer major harm from medical procedures, and they can’t afford to pay for the care that harm requires.  In addition, the threat of liability has made the standard of care in U.S. health care the highest in the world.  (It’s an interesting instance of selective vision, I think, that political opposition to medical malpractice and to universal health care come from the same political sector and the opposition to universal health care is based on a promotion of the superior quality of U.S. health care, as if that quality has nothing to do with the incentives imposed by the threat of medical malpractice.)

Thus, I wrote recently in connection with Philip K. Howard’s Life Without Lawyers: Liberating Americans from Too Much Law, that if “doctors really want to reduce malpractice problems in a way that will satisfy everyone . . . [they should] create a patients’ compensation law that provides relief to patients injured by adverse medical outcomes.”  I am gratified to realize I am not alone in my thinking.  Writing today in the New York Times in response to Mr. Howard’s one-sided solution to the problems of the malpractice system, Clifford Allo points out that the biggest problem — the one the existing system is an imperfect remedy for and that Mr. Howard ignores — is that patients who suffer hard resulting from medical procedures (a risk we all face all the time no matter how perfect our doctors might be) are not provided the financial means to live with that harm:

The biggest reason for bringing the most expensive malpractice claims – for example, adverse incidents at birth – is to find some source to pay for long-term care. A single-payer system would provide that care without threatening any doctor’s personal wealth.

We use the courts to allocate yesterday’s fault so that tomorrow’s bills may be paid. If tomorrow’s care were assured, care review could focus on quality assurance rather than on fault. We need to overcome the ideology that prefers private profit to universal security.

And Jerry Frankel, a doctor, writes that Sweden already has a system like the one I described:

The problem with the proposal advocated by Philip K. Howard is that it’s very difficult in most injuries to discern negligence from an unfortunate complication or complications.

Honest, objective medical experts often can’t agree about what is the standard of care, much less whether a complication was negligence or not.

In Scandinavia, anyone who suffers a major medical injury is compensated by a no-fault system where the compensation has been set based on the type and severity of injury. This eliminates our lottery system, where few patients are compensated at all.

Physician report cards are maintained to protect the public from bad doctors, but no-fault liability payments are not part of doctors’ evaluations.

Patients in this system have the ability to opt out and sue, but if they lose in court, they lose their no-fault option. Few, if any, opt out.

Taking care of people and keeping standards high

In reviewing Philip K. Howard’s Life Without Lawyers: Liberating Americans from Too Much Law, Anthony Lewis points out that those, like Howard, who bemoan U.S. tort law, particularly in the seemingly random way it sometimes rewards people for damages caused by corporations or doctors, ignore a specific part of the socio-political realities of our country: we don’t have the safety nets other countries provide. So when a patient sues a doctor after an unsuccessful medical outcome, a jury naturally enough is going to sympathize and lean toward the injured person regardless of the doctor’s competence — to give the patient money is to give him something with which he may be able to pay for the medical needs created by the bad medical outcome.  In addition, juries are smart enough to know the award comes from insurance, not from the doctor herself. In countries which have universal health care, there’s no need to worry that the patient will be cared for.  In ours, there is.  The same thing goes for anyone arguably injured by a corporation’s product.  Better that injured person has the money to pay for the care he’ll need than not, even if that cost is spread among all the corporation’s customers (through higher prices):

Nor does Howard dig deep enough to explain the excesses of American tort law and the eagerness to seek vast damages for civil injuries. He blames the overreaching of Earl Warren’s Supreme Court in its sympathy for the little man, and the mood of antipathy to large institutions starting in the 1960s. He does not explore deeper social causes.

his country is notoriously lacking in safety nets that are taken for granted in other advanced societies. Medical care is guaranteed by the state, by one method or another, in Canada and all European countries; in the United States upward of 40 million people have no medical insurance. Around 46 percent of employed Americans get not even one day of paid sick leave-which is guaranteed by law in 145 other countries. Lawsuits are often a substitute for safety nets.

There is a historical example that makes the point: workers’ compensation. Employees injured on the job used to have to bring tort actions against their employer; that required proof of negligence, and complicated doctrines were developed by some courts to deny the claims of plaintiffs. Early in the twentieth century a movement led by Louis D. Brandeis-then a reformist private lawyer in Boston, later a Supreme Court justice-sought a system that would compensate the injured without regard to negligence, and in return would bar lawsuits. By 1949 every state had a workers’ compensation law. It is a perfect example of a safety net that assures limited compensation without the gamble of litigation.

Do doctor’s really want to reduce malpractice problems in a way that will satisfy everyone? Then create a patients’ compensation law that provides relief to patients injured by adverse medical outcomes regardless of fault.  Doing so effectively, however, will require there to remain some incentive to provide another wonderful product of our torty system: medical care in this country is provided at a higher standard than anywhere else.  Funny how Howard doesn’t mention that positive result of tort law.  How do we do motivate employers to maintain safe work places despite the fact workers’ compensation schemes have substantially relieved them of the burden of tort liability for failures to maintain safe work places?  Two ways: (1) employers finance workers’ compensation schemes, and (2) the Occupational Safety and Health Administration regulates and enforces workplace safety.

Of course, people like Howard have also argued for years that the financial system should be freed from the “burdens” posed both by tort law and state regulation.  We can see where those very successful arguments have gotten us.