Golann: Time to Change Tack on Malpractice Claims

Most medical malpractice claims are not won or lost in court, as most people think, or settled for money. They simply disappear, abandoned by the plaintiffs who brought them.

A just-released Health Affairs study of about 4,000 malpractice claims finds that in 46 percent of all cases and in 56 percent of claims against individual doctors, plaintiffs eventually drop their claims.

This doesn’t happen, however, until the typical case has been pending for almost three years, with defense costs of more than $44,000 and untold aggravation for patients and doctors.

What causes this? And can anything be done to cure it? The problem is not that most malpractice claims are frivolous. Plaintiff lawyers are paid only if they recover money, and they know that insurers won’t pay on nuisance claims. Most abandoned claims in the study had gone through their state’s medical malpractice tribunal, and only 27 percent of those were rejected. 

There are many reasons why patients and their lawyers drop even a nonfrivolous claim.

Some become frustrated with a long legal process and decide to get on with their lives. Others recover; in a misdiagnosed cancer case, for instance, the disease might go into remission while the case is pending — good news for the patient but potentially fatal to her claim. And some lawyers don’t do a careful investigation before they sue — claiming damages for a widow’s loss of companionship, only to learn the couple was contemplating divorce when the husband went into the hospital.

The most common reason malpractice claims are dropped, however, is because they are so complex. At the outset of a case, often neither side knows key facts or can predict where the investigation will lead. 

Unfortunately, the legal system is adversarial and inefficient. Plaintiffs and defendants play “hide the ball,” withholding information from each other and avoiding a serious discussion about resolution. The result is years of litigation, causing anxiety for both sides and large costs for the medical system.

Patients and doctors have a joint interest in finding a better process. There are models for how this could be done.

Twenty years ago, Toro — maker of lawn mowers and other tools — decided to junk its traditional “deny and defend” approach to personal-injury claims. Instead, it contacts consumers at the first hint of trouble, investigates incidents informally and offers compensation when it thinks it is appropriate. The company has saved enormously on defense costs and has also found that claimants are willing to accept lower settlements if compensation is offered quickly and without a hassle. After five years of the new policy, Toro reported it had saved $50 million.

The University of Michigan’s hospital system takes a similar approach to allegations of medical malpractice. It investigates adverse outcomes, explains its findings to patients and their lawyers, commits to using what it has learned to improve patient care and, when appropriate, offers fair compensation. If an offer is rejected, however, plaintiff lawyers know the hospital system will go to trial.

The university’s approach has won credibility with claimants and their lawyers. Plaintiff attorneys no longer make claims as frequently as they did before, and some say they no longer charge on the basis of how much they recover — the process has become too efficient to justify contingency fees.

Traditionally, insurers have resisted this kind of “cut to the chase.” If the process is anything short of a marathon, they fear, more runners — plaintiffs — will show up, demanding to be paid on flimsy claims.

Nothing like this has happened, however, either at Toro or at the University of Michigan. After the new policy was adopted, the hospital system’s malpractice claims declined by 36 percent, and the average cost of resolving a case dropped 44 percent, from $410,000 to $228,000. Some of this improvement is almost certainly due to the fact that the Michigan system now provides better care — but that’s an even better reason for trying a new approach.

Speaker John Boehner (R-Ohio) recently castigated President Barack Obama for not including malpractice reform proposals in his deficit package. But relief for doctors and patients is available without a legislative prescription. Plaintiff lawyers and insurers need to work together to make it happen.

Dwight Golann is a professor at Suffolk University Law School in Boston. He is the former chief of consumer protection for the Massachusetts attorney general and a director of a medical malpractice insurance company. The study on which this article is based appears in the July issue of Health Affairs.