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Medical Malpractice Tort Reform in the Healthcare Industry

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Medical Malpractice Tort Reform in the Healthcare Industry

Medical malpractice reform, also known as tort reform, includes strategies to limit medical malpractice costs, deter medical errors and ensure that patients who are injured by medical negligence are fairly compensated. Tort reform has the potential to reduce health care expenditures by reducing the number of malpractice claims, the average size of malpractice awards and tort liability system administrative costs (Medical Malpractice Reform, 2011).
Since the 1970s, medical malpractice has been a controversial social issue, which has caused physicians to have increasing concerns about the large number of lawsuits and the negative connotations that tend to go along with them. Physicians have started pushing for legal reforms to decrease the large monetary awards for damages whereas tort attorneys have argued that the negligence suits are an effective way of compensating the victims fairly and forcing the medical professions to follow a proper standard of care (Pozgar, 2013).
An article from the Journal of Patient Safety estimates that between 210,000 to 400,000 people die every year in the U.S. from hospital medical errors and 1 in 14 U.S. doctors face a malpractice lawsuit every year (Corapi, 2014). Physicians and healthcare providers argue that the millions of dollars that are awarded in damages increase the cost of healthcare by passing this cost onto the consumer in the form of higher insurance premiums and increasing physician’s fees. Adding to this concern many physicians may practice defensive medicine by conducting additional unnecessary tests in an attempt to safe guard themselves against malpractice claims, but ultimately adding to the higher costs of healthcare (Cheeks, 2013). Hellinger and Encinosa (2006), stated that the most damaging attribute of the medical malpractice system is not that it fails to compensate victims or reduce deter poor performance but that it actually promotes the practice of defensive medicine (p. 1375). According to Corapi (2014), many consumers feel that tort reform at the federal level has the ability to improve quality, patient safety, and greatly reduce healthcare costs. Proponents of limiting medical malpractice liability argue that the threat of liability is one cause of the overtreatment given to Americans, reducing liability pressure will help reduce healthcare costs. In fact due to the exsisting flaws in the system many states have changed their laws in a way that will reduce malpractice liability. Several studies have suggested that if wise reforms are choosen they will have a high potential to aid in reducing healthcare spending without any adverse effects on patient health outcomes (Kessler, 2011).
In 2003, President George W. Bush addressed the medical community's concerns by endorsing legislation that would place a $250,000 cap on noneconomic damages at the national level. According to Bush, who spoke before an American Medical Association advocacy conference, "There are too many frivolous lawsuits against good doctors, and the patients are paying the price” (Finkelstein, 2003). The president cited the federal government suffers losses of $28 million per year as a result of liability insurance and defensive medicine practices (Finkelstein, 2003).
One of the biggest arguments for medical malpractice tort reform revolves around lowering health care costs. The Institute of Medicine issued a report estimating that unnecessary medical services cost $210 billion dollars a year. If providers were able to cut back on unnecessary procedures and improve patient care they would be able to lower health care costs and improve quality of care (Hermer, 2014). On the other side of this argument, three states provided data of their costs before and after they changed their laws to allow only emergency room doctors to be sued for negligence in which the outcome showed the cost of healthcare did not go down with the implementation of the new reforms (Emery, 2014). Currently, there are many states that have laws to limit payments in medical malpractice cases and some evidence has shown these laws reduce the frequency and severity of claims and actually lower premiums. One belief around these laws is that the reduction in healthcare expenditures will come in part by physicians reducing the practice of defensive medicine (Hellinger & Encinosa, 2006).
Critics who contest tort reform laws argue that medical malpractice awards account for only one percent of the total yearly National Health Care expenditures. Additionally, they claim that such reforms protect insurance companies and physicians, but not the patients. Proponents of reform continue to maintain, however that a federal cap will ultimately result in lower medical costs and greater medical access for the general population (Medical Malpractice, 2008).
Included in medical malpractice tort reform are caps on damages. The caps restrict the amount a victim of a malpractice suit can be awarded. The cap only affects the pain and suffering component, also known as noneconomic damages. The economic and medical loss award is separate and has no limits. Advocates of caps on reform argue that a lack of caps guarantees inconsistency and unpredictability in the tort system and forces insurers to counter this uncertainty by charging higher premiums. On the other hand, a cap on damages would deprive an individual of compensation for pain and suffering in which that individual would have otherwise been compensated for (Malpractice: Tort Reform).
There are two main goals of medical malpractice reform. The first is to reduce the number of frivolous lawsuits. This is accomplished by requiring a certificate of merit and use of screening panels. A certificate of merit requires that the plaintiff have their case reviewed by a qualified expert in the medical field and the plaintiff’s attorney must certify that the consultation with the expert provides a reasonable basis to continue with the case. The second goal is intended to promote an early resolution of claims by requiring the plaintiff to give notice of intent to sue prior to actually filing a lawsuit and requiring a form of mediation as a part of the litigation process (Ksiazek, 2015).
Another type of tort reform is binding alternative dispute resolution. This type of reform “refers to agreements between providers and patients to submit disputes over alleged malpractice to a third party other than a court” (Kessler, 2011). This would result in lower legal costs and time spent away from the clinic. It would also compensate victims quicker and improve the deterrence signal to providers, due to its’ efficient process.
Final Thoughts on Medical Malpractice and Tort Reform
I believe that pain and suffering, or noneconomic damages, should be fully compensated and should be treated in the same respect as economic damages. Just because it may be more difficult to quantify does not justify putting a limit on the amount of awards that an injured person deserves, at the fault of a liable healthcare workers. Lost wages and future medical expenses have been significantly miscalculated by courts show that even economic losses are difficult to estimate accurately (Avraham, 2015).
The California Supreme court case Hughes v. Pham supports my opinion that states should not put a cap on noneconomic damages The California Supreme Court agreed to hear a case challenging the constitutionality of the state's cap on pain and suffering awards in medical malpractice lawsuits, Modern Healthcare reports. In November of 2014 a ballot measure, Proposition 46, aimed to increase the limit on pain and suffering awards. Currently under California's 1975 Medical Injury Compensation Reform Act – MICRA- pain and suffering damages are limited to a maximum of $250,000.
In Hughes v. Pham, Trent and Lisa Hughes allege that Trent Hughes became a paraplegic because a neurosurgeon, Christopher Pham, delayed treatment after an off-road vehicle accident. A jury determined the Hughes' noneconomic damages to be $2.75 million, but the amount was reduced to $250,000 under MICRA. In September, a California appeals court upheld the trial court's decision, ruling against the plaintiffs in all matters but the structure of the judgment. The Hughes argue that the cap violates equal protection guaranteed under the Constitution. They allege that it arbitrarily and irrationally singles out the most severely injured victims of medical malpractice for unfavorable treatment." However, Pham argues that there was a lack of evidence to justify awarding the plaintiffs damages for future medical care costs. The California Supreme Court will hold the case until it hears a separate case, Rashidi v. Moser, that addresses similar issues, according to Modern Healthcare.
Consumer Watchdog, which supported Prop. 46, applauded the state Supreme Court's decision to hear the case. Pam Pressley, litigation director for Consumer Watchdog who wrote an amicus brief urging the court to take the case, said, "Several states in recent years have determined that their own damages caps were unconstitutional and unjust -- it's time for California to join them." Valerie Nannery, a lawyer for the plaintiffs at the Center for Constitutional, said, "Now that Prop. 46 has been defeated there may be more reason for the court to take the constitutional issues up in this case." Kenny Pedroza, a lawyer for the defendant, said he does not think the court will consider the constitutionality of the cap. Instead, he said the court likely will decide how noneconomic damages should be paid (Calif. Supreme, California Healthline).
Attorneys argue that putting a cap on pain and suffering will make it unfeasible for them to represent injured patients and those patients won’t be able to get their day in court. They also argue that it is not the amount of awards that cause high malpractice rate premiums, but the insurance industry cycle and some bad doctors (Shepherd, 2014).

References
Avraham, Ronen and Schanzenbach, Max M., Medical Malpractice Reform (March 17, 2015). F. Parisi (ed.), Oxford Handbook of Law and Economics (Oxford Univ. Press, Forthcoming); U of Texas Law, Law and Econ Research Paper No. E558. Available at SSRN: http://ssrn.com/abstract=2579640 orhttp://dx.doi.org/10.2139/ssrn.2579640
Calif. Supreme Court To Hear Case Over Medical Malpractice Awards - California Healthline. (n.d.). Retrieved April 3, 2015, from http://www.californiahealthline.org/articles/2014/12/2/calif-supreme-court-to-hear-case-over-medical-malpractice-awards
Cleckley, F. D., & Hariharan, G. (1991). Free Market Analysis of the Effects of Medical Malpractice Damage Cap Statutes: Can We Afford to Live with Inefficient Doctors, A. W. Va. L. Rev., 94, 11.
Corapi, S. (2014, January 6). Could malpractice reform save the U.S. health care system?. PBS. Retrieved April 15, 2014, from http://www.pbs.org/newshour/rundown/could-malpractice-reform-save-the-us-health-care-system/
Emery, G. (2014, October 15). Malpractice laws that favor doctors fail to cut health costs: Study. Retrieved April 3, 2015, from http://www.reuters.com/article/2014/10/15/us-healthcare-costs-malpractice-law-iduskcn0i42or20141015
Finkelstein, Joel B. March 17, 2003. "Bush to AMA: Tort Reform a Must." American Medical News. Available online at (accessed September 9, 2003).
Hellinger, F. J., & Encinosa, W. E. (2006). The impact of state laws limiting malpractice damage awards on health care expenditures. American Journal of Public Health, 96(8), 1375-1381.
Hermer, l. d. (2014). Aligning Incentives in Accountable Care Organizations: The Role of Medical Malpractice Reform. Journal Of Health Care Law & Policy, 17(2), 271-302
Kessler, D. (2011). Evaluating the Medical Malpractice System and Options for Reform. Journal Of Economic Perspectives, 25(2), 93-110. doi:10.1257/jep.25.2.93
Malpractice: Tort Reform. (n.d.). Retrieved April 3, 2015, from http://ethicalhealthpartnerships.org/maltortreform.html
Medical Malpractice. (2007). In West's Encyclopedia of American Law (Edition 2 ed.).
Medical Malpractice Reform. (2011, October 1). Retrieved April 3, 2015, from http://www.ncsl.org/portals/1/documents/health/MedicalMalReform-2011.pdf
Sage, William M., and Rogan Kersh. Medical Malpractice and the U.S. Health Care System. Cambridge [England: Cambridge UP, 2006. Print.
Sloan, F. A., & Chepke, L. M. (2008). Medical malpractice (p. 1). Cambridge, MA: Mit Press.
Sloan, F. A., Mergenhagen, P. M., & Bovbjerg, R. R. (1989). Effects of tort reforms on the value of closed medical malpractice claims: a microanalysis. Journal of Health Politics, Policy and Law, 14(4), 663-689.
Sharkey, C. M. (2005). Unintended consequences of medical malpractice damages caps. NYU Law Review, 80, 391-512.
Shepherd, J. (2014). Uncovering the silent victims of the american medical liability system. Vanderbilt Law Review, 67(1), 151-195. Retrieved from http://search.proquest.com/docview/1503108725?accountid=27794
Vine, C. L. (2005). Addressing the Medical Malpractice Insurance Crisis: Alternatives to Damage Caps. N. Ill. UL Rev., 26, 413.

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