05 November 2006

Frivolous Lawsuits and the need for malpractice reform

We settled two lawsuits this quarter. In neither had there been medical negligence. It's pretty galling to settle cases like these, but it's smart. The deck is stacked against us, and you have to make the good decisions, even when it is bitter.

Both cases were quite straightforward. In one, there was a DVT diagnosed and treated according to hospital protocol -- low molecular weight heparin and transition to warfarin. The patient went on to have a pulmonary embolus and recovered uneventfully with no adverse sequelae. We only settled because it was cheaper than going to trial. As galling as it was to pay, we did have the satisfaction of knowing that the plaintiff's attorney took a loss on the case. (It was a very small payout, and his preparatory expenses were considerable.)

The other case is more maddening. A very young child was dropped on his head, suffered an epidural hematoma, which was diagnosed on CT, and the child was transferred to a regional trauma center. He recovered, though with some degree of neurologic disability. The plaintiffs waited ten years to file (!) and alleged that some minor delays in CT and transfer were the cause of the bad outcome. This is obviously bogus. But we knew they were going to wheel a brain-damaged kid in front of the jury. The likelihood of losing this case was significant for that reason alone, and the risk of a big payout was significant. So we settled in the mid six figures. I hated to settle, and struggled with the decision, but with juries making decisions, it's a crap shoot, and they consistently rule in favor of sympathetic plaintiffs.

What can we do? When you are at Yellowstone, they tell you not to feed the bears because it just encourages them. But that metaphor doesn't work when the alternative is to let the bear maul you and hope that he won't get all of your food.

The real problem isn't that these suits were frivolous. I don't really know what that word means. I do know they were baseless. The problem is that the newspapers are replete with cases where there is a huge jury award in cases where there was no malpractice. This is what induces us, and lord knows how many other medical groups, to settle cases which were well-handled. When there is no correlation between whether negligence occurred and whether you win or lose, the only viable strategy is to pick your fights very very carefully.

Simply: Lay juries are not qualified to make determination of causation.

What typically happens is that the two sides present dueling expert witnesses who assert fundamentally incompatible standards. The jury is then left to decide which was more credible. How the hell are they supposed to decide which of two eminent, respected academicians is right? When medical experts disagree, how on earth can uneducated laypersons decide accurately what constitutes negligent behavior? If the plaintiff died or was severly imparied as an outcome, that inarguably biases a jury to assume that "something must have gone wrong," and their verdicts do tend to correlate.

I am also aware that the defense prevails in many or most malpractice actions. To me, this is not an indication that the system works. Quite the opposite. There have been cases of which I was personally aware in which the care was clearly substandard but the defense experts were more convincing and the jury went along. The problem is not that doctors win 87% of the time, nor that awards are out of control. The problem is that juries are unpredictable and commonly make very wrong decisions. The result of this is that in many cases patients who were injured go uncompensated (especially if they are not sympathetic victims), and that doctors who were not culpable wind up losing.

When there is not good correlation between causation and verdicts, the system falls apart. I think that tort reform is essential. But I do not particularly favor caps. Caps are clumsy and heavy-handed. Moreover, caps on awards do not get at the heart of the problem, which is the arbitrary and capricious decision-making patterns of juries. It's just as well, because caps are as dead as a doornail, politically speaking. I would like to see an alternative solution. I would prefer special health care courts or some other system which attempts to improve the accuracy of judgements.

Because it's clear that the current system is a miserable failure.


Flea said...

I think I get the point of your post, that it's unwise or dangerous to leave malpractice determinations to juries.

But since when is it wise to settle as a general principle? If no malpractice is committed, IMO you should litigate. Otherwise, what's to keep the floodgates from flying open?

BTW, the decision is not only yours, it's your carrier and your hospital. In both my cases (both current, BTW), we (the carrier and I) are not settling, precisely because we don't believe malpractice occurred.



scalpel said...

I agree with the original post for the most part. The uncertainty of the current system is what often drives us to settle. We cannot count upon lay jurors understanding the complexities of difficult cases. When potential awards are in the millions and you are facing a notorious attorney, sometimes it is wiser to settle, even if your case is defensible.

I personally took two weeks off the schedule twice for a trial that was then postponed by the plaintiff's attorneys both times. Before the third trial date, we settled. It had already cost me a month of lost income with the potential for more.

Although I initially disagreed with (and voted against) the caps on noneconomic damages in Texas malpractice torts, they have made a huge difference in reducing the frequency of malpractice suits in this state. I still think medical courts would be a better (and fairer) option.

CJD said...

Actually, the Studdert study, the most nonpartisan study in decades, showed that juries are not at all unpredictable, and when they do make mistakes it's usually in the doc's favor.

So you're going to have to come up with a new justification for health courts.

Anonymous said...

The bottom line, personally is, if you settle, there is Zero percent chance any suit will run you personal dollars, it's less time involved, and you usually stay out of the paper, so your hospital is happy. The system is completely broken, who cares about that, I'm not here to fix it, just to retire with a pension. Let the sodomites get rich off of us, as long as they don't take our personal dollarsI for one would defraud the insurance companies and take kickbacks from the plaintiff's attorneys if it means not having to deal with this shit, so settle, let the sodomites have their money, and move on. Hopefully we'll all have saved enough to get out of this hell someday, and the lawyer sodomites can treat the plaintiffs (I mean patients)

shadowfax said...

CJD -- You are right that juries are in some ways predictible. If there is a dead defendant, disabled child, etc, there is a high likelihood of an adverse judgement and large award, regardless of the merits of the case. This is why we settled the second case. OTOH, should I negligently let a chronically ill old lady die, the family will have more difficulty getting someone to take the case, because juries are less likely to make that case highly remunerative.

The point is that juries are bad at coming to medically sound judgements.

Anon 10:22 -- The dollars are ours. We pay $1.3M annually for insurance (up from $300K in 2002), and if the system worked better, our premiums would be less. Also, we have a deductible on our policy, so we as a corporation do have skin in the game. So we settle when it's strategic, but it does cost us real dollars out of provider compensation. Don't think it doesn't.

CJD said...

Shadowfax, you can make that claim about juries, but the truly nonpartisan evidence clearly contradicts it. Your belief is a faith-based one.

Have you read the study?

By the way, how much coverage do you have for $1.3 million per year? And have the payouts by your insurer increased by 600% in the past 4 years to justify that 600% premium increase?

CJD said...

Sorry, increased 400%, not 600%.

Who is your insurer?

shadowfax said...

CJD -- The Studdert study was interesting, largely in that their conclusion seems completely at odds with their findings. 44% cases involved no injury or no error. And the conclusion drawn was that groundless cases are not a problem. Strange.

In 28% of cases where there was no error, the defendant paid out.

The avg payout in cases where the was no error -- over $300K

In cases where there was no error, juries still found for the plaintiff 10% of the time. Conversely, in cases where there was an error, juries found for the plaintiiff only 43% of the time.

So my conclusion from this study would be:

1. Many baseless cases are filed
2. Many baseless cases result in significant cash payouts
3. There is poor correlation between the presence of an error and the verdict reached by jury.

A HUGE limitation of this study, and one they acknowledge, is that presence of an error does not itself necessarily indicate medical negligence occurred. Negligence is a much higher standard. If you were to factor in that fact, I suspect the conclusion would be that the correlation between verdicts and negligence, and the correlation between payouts and negligence are even worse.

JimII said...

To assist the reader, I am a left-wing attorney.

What is the problem with malpractice suits? -- too many baseless suits.

What is the problem with that? -- the country has to pay more for healthcare than it ought to. Also, professionals have their work formally and unjustly designated deficient.

Caps will not work. They prevent deserving people from getting what they deserve. They do nothing to deter baseless suits.

Fighting baseless suits would work. The problem has to do with who is doing the calculus. Insurance companies and defense firms. Both groups want to keep the cost of a specific litigation down, but actually benefit from the overall cost going up.

My suggestion, in-house counsel. Not lawyers that are paid less and work less; but serious defenders of the particular practice. You'd have to pay them. Probably about the same as a one or two docs. And I know that would hurt. But then, this settle for several thousand for little nuissance claims goes away.

Now, if you kill a baby during delivery? Yeah. That's hard.

Medical juries. They should make recommendations. I don't think they should be definitive. Generals shouldn't have the last word on whether we go to war. Nuclear power plant owners shouldn't have the last word on what's safe. Doctors shouldn't have the last word on medical mal--IMHO.


CJD said...

"44% cases involved no injury or no error."

No, that's incorrect. 37% involved no error, and 16% of those were close cases. More than 90% involved a physical injury.

When a jury gets it right 75% of the time, I'm curious as to how you reach the conclusion that there is poor correlation between error and payout.

And yes, the study did include a SOC standard.

No system will eliminate the filing of baseless claims, primarily because whether they are baseless cannot be known at the time of filing. No proposed system would limit the FILING. The test of a system is its ability to support the baseless from those that have merit. By all accounts, our system does a pretty good job of it.

Thus, your claim that juries are too emotional or lack the intelligence to determine negligence fails. That's a conclusion based on the facts set out in the study, not mere speculation.

Speaking of the facts - did your insurer's payouts increase 400% between '02 and '06? If not, wouldn't that seem that the problem is with the insurance industry?

shadowfax said...


I appreciate your comments.

If the jury gets it right 75% of the time (a debatable proposition, but I'll accept it for the moment), I would say that is abysmal.

If I discharge 25% of my patients with heart attacks, is that acceptable? Not if you are one of the ones discharged. The real number is more like 2%. You'd think that 98% accuracy would be pretty good, but I will likely get sued over the 2%.

A 25% error rate is not good enough. Not by far. Granted, it's better than 50-50, which would be truly flipping a coin, but it's not good at all. I think the real error rate is higher, but I am not much feeling like doing the math right now.

And as far as insurance goes:
No, our payout rate is good. I too, would like to see better regulation of the industry. But the rates I quoted were from a physician-owned co-op -- i.e. not trying to make a profit off of our backs -- and derived from their actuarial analysis. Maybe their actuaries (and all the other ones in the industry) are way off. I don't know. But I have faith that they were derived through good faith analysis, not through an effort to overcharge us.

shadowfax said...


Good idea about the counsel! We probably lack the scale for it to make sense -- suits for us are fortunately infrequent. But it doesn't really address the risk that we just might lose cases randomly. We rarely settle due to cost concerns; it's the risk that typically drives a settlement.

WRT healthcare courts -- I like them because they, as proposed, would have specialized administrative law judges make the findings of fact, like tax courts. So the decision is not in the hands of the doctors, but in impartial arbiters. Also, they would have neutral medical experts make recommendations, instead of dueling hired guns. This would actually assist in setting a standard of care, since all judgments would be published and could be used as precedents.

I do not know if it is practicable. But it is an intriguing notion. I'd be interested in hearing your thoughts after you check out their web site -- you know more about the legalities than I do.

shadowfax said...


I know you are an "active commenter" on this issue, and you certainly are known as an opponent of changes in the system.

Setting aside any discussion of the current system, what is your take on the Common Good proposal? Do you think such a system has beneficial components that perhaps should be incorporated into the current system? Failing that, what proposals would you make to change the system as it exists?

CJD said...

"Maybe their actuaries (and all the other ones in the industry) are way off. I don't know. But I have faith that they were derived through good faith analysis, not through an effort to overcharge us."

Why? Because they said so? Because they are a non-profit?

What is my take on the Common Good proposal?

Primarily that it's simply more damage caps. Take that out of it and its a non-starter. It's barely got any juice now.

It doesn't diminish the real problems identified by the Studdert study - costs of entry to get your negligence compensated. It will actually be more expensive, and likely even more burdensome on physicians. Because think of all the experts that will be required. It's not like a cardiologist will be opining on a botched knee surgery. And who is going to pay all these experts?

Nor, for that matter, will you save administrative costs. Insurers will still hire experts to evaluate their cases and argue them. Attorneys will still be required for people who are too injured to represent themselves. They'll just have a harder time getting them

You say that the present system gets it wrong too often, but given that there is an expert on both sides of every malpractice case, and physicians are loath to state standards of care anyway, what makes you think they're going to agree any more often?

In short, I think without caps, the CG proposal is dead. And even with them, it solves none of the problems, and even if it did, the cost to the taxpayer, or to the physicians who must serve as experts, is prohibitive. And I agree with Jim that you don't let the fox guard the henhouse anyway.

Truthfully, in five years I think this debate is moot anyway because the federal govt. will be running the whole system and we'll have a workers' comp style no-fault system with much lower payouts

CJD said...

Shadowfax, I forgot to comment on one other thing you said:

"This would actually assist in setting a standard of care, since all judgments would be published and could be used as precedents."

There is literally nothing stopping physicians from doing this now. Why do we need health courts to do this?