Medical Malpractice: Actors, Flaws, and Reform

          Today I’m beginning a multi-post series on medical malpractice litigation.  The posts are inspired by a book I’m publishing with Jeffrey O’Connell, A Recipe for Balanced Tort Reform.  It should be available in June.  Of course, all comments are welcome.

I.         Actors

          There is considerable antagonism among the actors involved in the medical malpractice litigation system:  lawyers, health care providers, and liability insurers.  In particular, there is enmity between plaintiffs’ lawyers and insurers (with health care providers generally aligned with insurers).  The sides each blame the other for perceived problems in the system.  The vilification is unfortunate, but perhaps understandable.

          It seems to me that each group of actors is simply responding to incentives.  In other words, to the extent there are problems with medical malpractice law, it is not generally due to the illicit conduct of either the plaintiffs’ bar or insurers (and certainly not health care providers).  They are behaving largely as one would expect, given the adversary system in which they operate.  Insurers are in business to make a profit.  They want to maximize the amount of premiums collected and minimize the amount of settlements and judgments paid out.  Plaintiffs’ attorneys are also in business to make a profit.  The contingent fee provides their incentives.  The more claims they can settle or win, and the higher the value of those claims, the better.

        Although that sounds stark (perhaps even critical), it’s not meant to be.  All of the actors in this system have positive roles to play.  We want them to play their roles, and there is a good reason for the incentives.  The benefits we receive from health care providers are too obvious to require elaboration.  Medical liability insurers are necessary because health care providers are necessary.  Insurers allow health care providers to spread the risk of liability.  Many med mal judgments are so large they would financially crush even the wealthiest health care provider.  Even if there is a defense verdict, the costs of defense are often steep as well.  Few people considering a medical education would invest the necessary money, only to risk a reasonable possibility of financial ruin through liability.

          Finally, plaintiffs’ lawyers have a positive role to play.  As valuable as health care providers may be, they are only human.  They make mistakes, and, because of the nature of their work, those mistakes can have serious consequences.  Plaintiffs’ lawyers bring lawsuits that can:  1. correct the wrong of an injury, 2. compensate the victim, and 3. provide cost-internalization.

        The problems lays not so much with the actors in the malpractice system, but in the content of the rules that goven it.

–CJR