The Made-Up Crisis:
Medical Malpractice Insurance Costs in New Jersey Increase Health Disparities Within Health Care Delivery Systems. A Need For New Allocations of Liability for the New Health Care Paradigm By Prof. Ilise L. Feitshans, George Washington University, USA |
I. Introduction: Medical Malpractice Insurance Costs in New Jersey and Increased Health Disparities Within Health Care Delivery Systems. A. Summary of Events in Winter, 2003 Protests in the streets and chanting with posters on the steps of the statehouses of New Jersey [1] and Pennsylvania [2] in 2003 had one remarkable shared feature: their constituents. These protests came not from the vast unemployed masses demanding jobs, fair wages, or educational opportunities for the underemployed, underinsured, homeless or poor. Nor were these protests staged by pacifist citizens, crying out in opposition to some war in a place far away. These protests came from a most unexpected quarter: private sector physicians. Physicians who, according to popular culture at least, enjoy a reasonably nice lifestyle, good wages and are well educated. The front line workers in a different type of war: the war for health, protecting thousands, if not millions of people against the pain and suffering caused by illness and disease. The net effect of their inability to work without fear of malpractice claims whose insurance drives them into bankruptcy, they argue, causes them to limit the scope of their practice or enter research and refrain from using their clinical knowledge to earn their income, thus reducing the pool of available medical care for everyone. B. Impact on Patients In Underserved Populations: The ultimate effect of reducing the supply of an already expensive and preciously limited resource is to increase the disparities in the access and quality of care to poor, uninsured or underinsured patients. Such patients are harder to help in the first place, for reasons of less income to afford care, and a spiraling downward pattern of less care leading to more severe illness when seeking care, with fewer options left to them and fewer opportunities to try experimental but expensive treatments that may prolong life, enhance the quality of life or avoid mortality temporarily. II. Three Sides of the Malpractice Insurance Coin A. Overview of the Problem: The Physicians’ View Medical doctors’ protests on the state capitals’ steps drew enormous media attention. It was curious, perhaps even surprising, to find so many well-dressed, highly paid people with professional prestige taking to public fora to demand legislative change. What is the problem? Why is there a sudden malpractice insurance crisis in these states, so severe that it causes physicians to take to the streets in protest? Medical doctors, licensed in New Jersey and Pennsylvania, who protested complained about: overly-burdensome high costs of medical malpractice insurance; costs so high that the premiums alone could provide several middle or lower income families with all of the products of a descent job at better than minimum wage. And yet, what did they get for these premiums? Higher indirect costs such as overhead, higher levels of scrutiny from insurers and regulators and yet, they did not enjoy complete freedom from unwarranted or overzealous litigation by attorneys hoping for high stake malpractice claims. In such an unfair situation, they righteously demanded that legislatures of their respective states intervene to limit malpractice liability by capping the size of awards in malpractice claims. The problem is not that striking physicians, no matter how improbable, might create a crisis in the delivery of medical care. Nor is the underlying problem the high cost of jury awards to patients who have been found by courts of law to be victims of medical malpractice. The root cause of the problem is that doctors are no longer fully in charge of their patients’ medical care in a number of regards that are presumed by law under the older doctrines that govern physician - patient relations. Having lost their previous independence and attendant power through the change in the structure and financing of the delivery of 21st century medical care compared to centuries before, it is unfair to hold medical doctors to the same standard of responsibility as in the past when allocating liability. Therefore the solutions to these complex issues require a detailed scrutiny of the interrelation between mechanisms for accountability in health care systems, and then, rewriting the law of health care delivery accountability. Medical doctors should be a part of, but not solely or directly liable for mistakes in the delivery of health care under the new model. A new model would allocate responsibility where it appropriately belongs, within the infrastructures of programs and systems that control access and availability of care through cost controls and other efficiency criteria. Such an approach, making responsible the organizational systems and not the medical doctors alone, is sorely needed in order to provide health care equitably to all patients across society. B. Overview of the Problem: The Public Health Systems’ View From a public health perspective, the medical doctors’ protests were not really very surprising. So-called skyrocketing health care costs have been a major public health concern for at least the last four decades [3] . Health care costs consume a large percentage of the GNP, and have increased exponentially every few years. There are several reasons for this increased expense. In 1983, it was believed that “rapid escalation of health care costs has resulted, at least in part, from lack of competition in the health care sector, brought about by the present third-party payment system and the conduct of providers” [4] These words proved prescient, because the costs for health care in relation to the US GNP have continued to hemorrhage despite a major overhaul throughout the 1980’s in the structure of health care financing. According to Rosenbaum et al., “as recently as 1980, virtually all insured Americans, whether publicly or privately insured, had coverage that existed independent of the practice of medicine itself. ” [5] and few insured individuals were enrolled in prepaid health-care plans, leaving much of their care at the discretion of individual medical doctors and affiliated laboratories and hospitals. At that time, medical doctors had great discretion to order as many tests as they chose for any patient and great leeway to determine which affiliated health service providers they might choose to best meet the needs and budget for their patient. These were individual choices, and not automatic choices made systemically by the health care delivery infrastructure. By the mid 1980’s this situation became galvanized towards a startling change. A series of new laws at the state and federal level, combined with aggressively antitrust enforcement challenged, and ultimately reshaped the structure of the delivery of health care in the US, without creating a universal basis for a nationalized health care delivery program [6] . According to Rosenbaum, “Twenty years later, the landscape has been completely altered. In a single generation, the American health system was transformed into a "stunning array of new health care financing and delivery entities" that "took responsibility for managing resources," and for channeling "enrollees to providers with whom preferential contracts had been renegotiated." [7] In addition to a systemic restructuring, there has been a response by health care providers to the increased population, increased graying population in need of long-term health care; inadequacies in access and continuity of care for low-income populations, which skews the services provided to them in favor of more expensive urgent care rather than low-cost preventive care and screenings; and new glitzy technologies and experimental techniques for major illnesses and elective treatments,. that although expensive, also enhance quality of life. From the standpoint of overall utilization and access to new or elective techniques for treatment, this expansion cannot come without making mistakes, whose costs are reflected in litigation surrounding malpractice. Gatekeepers in HMO’s or managed care programs; peer reviews for cost-savings, capitation on procedures, access to referrals and prescriptions; quotas for certain types of procedures; lack of coverage for certain other procedures, all erode the medical doctors’ independence in decision making and thus translate into potential malpractice litigation for the medical doctored who cannot guarantee delivery of all the necessary facets of quality care. Rosenbaum et al describe how insurability parameters may limit access to care by excluding specific types of treatment, offering incentives to certain preferred providers' who choose not to offer a full range of services or by requiring a second opinion for "elective" procedures (and routinely denying coverage for them) [8] . Policies may also limit the amount of services a particular provider can render in a time period using highly criticized practices such as "capitation." [9] "Under capitation physicians assume the risk that the cost of services provided may exceed the fixed per-member payment" thus creating a "reverse incentive" for providing care. This pattern of practice indirectly creates holes in the blanket of coverage, especially if certain illnesses give rise to high utilization for treatment or corrective procedures that are not projected but become necessary. According to the Women’s Health Research Committee (WHRC) medical errors although documented by the Institute of Medicine have not decreased since 1999 [10] . The WHRC cites recent articles stating that three years after a report by the Institute of Medicine (IOM) illuminated the risks to patients posed by widespread medical errors, a recent article in the Washington Post indicates that little real progress has been made to improve patient safety. The IOM report, released in 1999, asserted that 98,000 hospitalized Americans die each year and an additional 1 million are hospitalized because of medical mistakes, costing the country an estimated $29 billion. In the aftermath of this landmark study, a flurry of activity focused on attempts to curb medical errors, including the introduction of several bills in Congress. Despite these efforts to address the problem, the Washington Pos [11] t reported on December 3 2002 that few hospitals have made significant improvements in patient safety. Most hospitals still use paper charts rather than computerized records; medication errors remain common; and, according to the Joint Commission on the Accreditation of Healthcare Organizations (JCAHO), operations performed on the wrong patient or wrong part of the body have actually increased in recent years. Meanwhile, the Agency for Healthcare Research and Quality (AHRQ) is creating the first online journal focusing on medical errors. The site, www.WebMM.ahrq.gov, formally launched in February 2003, is currently open for the submission of medical error cases. The site uses examples of actual errors in patient treatment to educate health care providers on the subject. Any individual who submits a case that is selected for posting will remain anonymous and receive an honorarium [12] None of these structural changes, however, are accurately reflected in the system of malpractice litigation, which has not been restructured to meet the new conditions and changes over time. The underlying root causes of the problem to which the medical doctors draw attention therefore raises deeper questions about who holds the true decisional authority in medical care decision making. It is the result of a power struggle is within the health care system, locked within the infrastructure of the newly emerged health care delivery systems, who have not sorted out the role of capitation, limits on procedures for cost-savings and requirements for salaried physicians to meet a minimum number of patients in a given hour or week of work. The medical doctors’ new role within complex infrastructures lacks independence, however, that is assumed by the present malpractice principles. In the alternative, their work could better be characterized as that of any employee or agent of a major employer, with little or no control over working conditions, hours of work, or the demands that can be met to ensure care for patients. It is therefore a superficial, but incorrect notion to state that the current malpractice insurance struggle before several legislatures is a powerplay between good doctors and mythological powerful lawyers championing the cause of broken patients and their families. Indeed, the more appropriate paradigm to apply would be that of doctors in the role of factory workers taking on the powerful decision making capabilities of their corporate employers, over a century ago. C. Overview of the Problem: The Litigants’ View From a lawyers’ point of view the doctors’ complaints, as reported in the media are not strange at all. But, it would be a gross oversimplification to think that simply defending their jobs as litigators explains why few lawyers share the view that limiting liability is a correct approach to the problem of increased costs for malpractice insurance among doctors. Lawyers understand that litigation is a symptom, not a cure, to larger social problems. This is true because litigation is retrospective, correcting past wrongs, and not preventive, like future-directed legislation. Although malpractice insurance has been at the heart of calls for litigation, such analysis is superficial because it looks only at the results of jury awards and ignores a long chain of changes in the standard of care, quality of care, and empowerment of physicians to control patient care, that are now deeply embedded in managed care and Health Maintenance Organizations (HMOs). III. Legal Background: Malpractice Claims Rooted in a Standard of Care A. Rationale for Malpractice Claims The question whether doctors can be held personally liable for mistakes when so much of medical care is a matter of the natural history of disease, (or in the opinion of some people, divine intervention) has plagued the legal literature in the USA for over a century. In the past, individual medical doctors practicing alone or in small clusters had permission to control the course of treatment. By contrast the average medical doctors is now one small cog in a much greater wheel, without control over patient treatment, billing or continuity of care. Tests that are not acceptable to the provider system will not be easily ordered and will be treated as a deviation from a newly-formed standard of care, while tests that the system requires will always be conducted, regardless whether the physician believes they are useful, necessary, reliable or appropriate. This is a distinct departure from centuries of precedent in the past, wherein the law considered the doctor’s role as parallel to the “captain of the ship”. In seafaring days, captains held the greatest power of anyone on their ship. They could determine punishment, life or death, allocation of rations, course of action during storm, destination of the ship, marriage for passengers, and even how to apply the law of their flag. No one was more powerful at sea than the “captain of the ship”, who enjoyed the most privilege but also bore full responsibility for any outcomes, good or bad, that occurred under his command. The so-called “captain of the ship doctrine” was consistently applied to doctors in cases of malpractice. This concept still exists, but is no longer appropriate, because the nature of the organizational structure of medical care delivery systems has dramatically changed since the doctrine was first articulated, centuries ago. This shift in the chain of command, but not the ultimate responsibility of physicians for medical care has important ramifications for every patient. There is evidence that suggests too, that because of the change in the structure of the delivery of health care, the “captain of the ship” model, that holds doctors alone as ultimately responsible for “bad medicine” or other unpleasant outcomes should be replaced by a new model for responsibility and allocation of liability for medical care. Such a model can take into account the medical doctor’s comparative disempowerment by the change in health care financing that has been the hallmark of HMOs and managed care. B. Historical Antecedents of Malpractice Principles Under US Law Since 1914, if not earlier, there have been US legal cases establishing the requirement that a patient consent before being administered any medical treatment, every human being of adult years and sound mind has a right to determine what shall be done with his own body, and a surgeon who performs an operation without his patient's consent commits an assault for which he is liable in damages. [13] Conversely, unwarranted medical invasions of the person’s bodily integrity by a doctor that are unconsented and giving rise to harm are the gravamen of malpractice claims. As stated by the courts, the rationale for malpractice claims is that "True consent to what happens to one's self informed exercise of a choice, and that entails an opportunity to evaluate knowledgeably the options... The average patient has little or no understanding of the medical arts, and ordinarily has only his physician to whom he can look for enlightenment with which to reach an intelligent decision. From these almost axiomatic considerations springs the need, and in turn the requirement, of a reasonable divulgence by physician to patient to make such a decision possible." Canterbury v. Spence [14] (1972) at 780 This principal has been extended to give patients the right to forgo life‑sustaining medical care, and then to give surrogates that right on behalf of incompetent patients. Patient "consent be obtained every time information changes hands. "Chouinard v. Marjani [15] ,(1990). IV. Systemic Causes of The Malpractice Insurance Problem Managed care and a variety of health care delivery organizations have been developed throughout the late 20th century in order to experiment with methods for expanding the availability of care and to stem the tide of “skyrocketing costs” by producing demonstrated cost savings. In theory, such systems as: managed care organizations, Health maintenance organizations, providers groups and various other health plans reach more people more efficiently and thus at less cost so that health disparities between rich and poor will narrow. In order to achieve these goals, such health systems have been given permission under a variety of state laws and federally funded programs to try an infinite variety of creative structural and organizational variation approaches in order to render care to more people with significant cost savings. It is not clear that such systems have provided a sound answer to these perennial problems, but it is clear that in order to have medical doctors participate in such programs, there was a trade off made by society, striking the balance between physician independence and ease of administration. Depending on the variables measured and the baseline level of care one expects to find, the health services research does not provide clear guidance whether the approaches taken by managed care are successful. Yet, Rosenbaum et al note that managed care dominates the modern American health-care system for the non-elderly U.S. population, stating that “Through its emphasis on standardized practice norms and performance measurement, coupled with industrial purchasing techniques, prepayment, risk downstreaming, and incentives-based compensation, managed care has the potential to exert considerable influence over the manner in which the health-care system is organized and functions.” [16] In a previous study, Rosenbaum et al. explained clearly the negative incentives in managed care in particular, which invite malpractice by limiting the availability of services based on cost and the expected effectiveness (or lack thereof) of services. For poor, underinsured or underserved special populations such as the elderly, working poor, single mothers or disabled who cannot afford the additional costs of transportation or child care that may be required to facilitate their access to medical care of any type, the “fixed facial limits” on costs may be devastating to personal medical care decisions, despite any overt success in saving costs on a systemwide basis. [17] Rosenbaum also remarks that the ability of these varied systems to achieve their stated goals depends on a partnership between public health and private insurance organizations, “Given the degree to which the attainment of the basic public health goal of protecting the public against population health threats for which there are known and effective medical interventions depends on the successful interaction between public health policy and the medical care system, the importance of a viable working relationship between public health and managed care is difficult to overstate. [18] V. Legislative response A. Medical Malpractice Liability Insurance Study Insurance Commission of 2002 In 2002, recent legislative initiative in NJ established the Medical Malpractice Liability Insurance Study Commission [19] . A Joint Resolution establishing the Medical Malpractice Liability Insurance Study Commission to determine whether medical malpractice liability insurance is sufficiently available and affordable in New Jersey. If it is not, the commission is to make its recommendations to improve the situation. The commission consists of the Commissioner of Banking and Insurance or his designee and fifteen other members representing: physicians, medical malpractice insurers and attorneys specializing in medical malpractice. Appointed members represent a broad spectrum of the affected parties. The commission is to report its recommendations, including any recommended legislation, to the Governor, Co-Presidents of the Senate and Speaker of the General Assembly within 12 months of its organization. B. Health Disparities Among Vulnerable Populations: Malpractice as a Pretext for Not Providing Care Disabled women testified seeking accessible equipment, not available ostensibly because their situations are too fraught with potential malpractice claims for anyone to offer them treatment. For example, adjustable height tables to allow mobility-limited patients to be examined and treated would cost only $1,500 for an entire medical practice, and that an adjustable height table plus adjustable stretcher would cost hospitals as little as $3,000. People with disabilities and mobility-limited seniors should not be denied medical care for the sake of a one-time outlay of a few thousand dollars. With appropriate training and oversight to ensure the purchase of adequate equipment. Although patients were told that hat malpractice insurance fees and hospitals' financial difficulties could prevent thousands of people with disabilities and seniors from getting the medical care they need, this cannot be true if staff are well trained and if the necessary equipment is available. The failure to meet such infrastructure requirements as proper equipment and adequate trained staff should not be laid at the feet of the medical doctors, however, because they do not control the supply and demand for these subsystems as they did in generations before. Yet, the failure to provide such components of the infrastructure can result in failures of quality care. Thus, malpractice by the system is a foreseeable consequence of such failures. Issues such as these should be resolved through legislatures, not malpractice and tort reform. These issues concern changing the standard of care and raising the mantra about human concerns, some of which cost very little to implement although they may require changing embedded attitudes in the manner in which care is provided by standard medical practice. One example is the draft bill that was before the NJ legislature recently, the “Physical Access to Health Care Act.", through the Department of Consumer Affairs, which would require health care facilities to maintain at least one height-adjustable patient examination table that can be lowered to facilitate the transfer of a patient with a mobility impairment to and from its surface [20] . VI. Conclusions: New Allocations of Liability for the New Health Care Paradigm The malpractice tort liability struggle that has attained so much publicity has been mischaracterized as a crisis; it is a symptom of a chronic problem in the delivery of health care and related systems. There is also misplaced urgency in the popular outcry for tort liability limitations. This struggle incorrectly ignores the underlying problem: doctors in the 21st century no longer control their agenda, their patient load or their own discretionary expertise regarding sound methods for patient care. The solution to this problem, is not, however, capitation of tort liability. Such a simplistic approach unrealistically limits the cost of life-long injury, which can consume hundreds of thousands of dollars in medical care in just a year or two after injury. Such an approach may also have constitutional ramifications, if it conflicts with inherent rights to have matters judged by peers and the 7th Amendment right to trial by jury. Although medical doctors are nominally in charge of patient care, these new structures may allow that to be so in name only. In light of the fact that costs are a driver, along with other administrative concerns, physicians may have little or no power inside the new structures. These structures are not necessarily designed with access to care or high quality of care as their central goal. In this sense, patient care is frequently compromised and the gold standard of patient care, against which any individual physician’s actions are measured, is necessarily changed to reflect the goals of these organizations. Consequently, there have been increased mistakes resulting in litigation, and resulting in awards by angry juries who are frustrated at their own powerlessness to attain good quality medical care under an inconsistent patchwork of health plans. Therefore, malpractice insurance costs are merely a deeply embedded hidden cost of a broken, and often unfair health care delivery program, where the accessibility of care and the quality of care often resembles more of a lottery than an organized health care delivery system. Under this view, many people, such as health professionals, consumers and lawyers, the rise in malpractice insurance costs is a sorely needed check on an expensive, life-threatening, chaotic situation. Reducing access to this venue will not solve the problem. Health disparities will increase: as the scope of care narrows, the difference between the available care to people at the margins or with special needs widens. Creating a legislated system of liability that takes into account the primacy of health care delivery structures, not doctors, is therefore the best solution to this perennial problem.
Prepared April 2003 at the Request of:
About the author:
[1] “NJ Doctors stage walkout” Metro newspaper, Tuesday Feb 5 2003 p 5; “Issue of Limiting jury awards dominates malpractice debate” Trenton Star-Ledger, Feb 23, 2003, p. 20 [2] Radio reports Thursday May 1, 2003 and response by Gov. Rend ell of Pennsylvania [3] H Robert Helper and John J. Miles, “Antitrust Guide for Health Care Coalitions”, National Health Policy Forum 1983 states in its Preface: “The Cost of health care has skyrocketed in the last two decades. In 1981, it constituted approximately 9.8 per cent of the United States’ gross national product, and experts expect the percentage to increase during the next few years, (Unpublished figures for 1982 place health care expenditures at 10.5 per cent of the gross national product). [4] H Robert Halper and John J. Miles, “AntiTrust Guide for Health Care Coalitions”, National Health Policy Forum 1983 states in its Preface. [5] Sara Rosenbaum and Brian Kamoie, ‘Managed Care and Public Health: Conflict and Collaboration’, Journal of Law, Medicine and Ethics Summer, 2002 American Society of Law, Medicine & Ethics; p. 191 Citing: R. Rosenblatt, S. Law, and S. Rosenbaum, Law and the American Health Care System (New York: Foundation Press, 1997): at 543-73. [6] H Robert Halper and John J. Miles, “AntiTrust Guide for Health Care Coalitions”, National Health Policy Forum 1983. [7] Sara Rosenbaum and Brian Kamoie, ‘Managed Care and Public Health: Conflict and Collaboration’, Journal of Law, Medicine and Ethics Summer, 2002 American Society of Law, Medicine & Ethics; p191 Citing J. Weiner and G. de Lissovoy, "Razing a Tower of Babel: A Taxonomy for Managed Care and Health Insurance Plans," Journal of Health Politics, Policy and Law, 18 (1993): 75-103, at 73-77. [8] Sara Rosenbaum and Brian Kamoie, ‘Managed Care and Public Health: Conflict and Collaboration’, Journal of Law, Medicine and Ethics Summer, 2002 American Society of Law, Medicine & Ethics. [9] Tracy Griff, "Comment: Capitation Shifts Financial Risk From HMOs to Providers" 15 Preventive Law Reporter No 2 1996 at 26. [10] THE WHRC HOTLINE An Information Service of the Women's Health Research Coalition December 2002, Medical Errors Have Not Decreased Since 1999 IOM Report, on-line subscriptions services of WHRC. [11] Washington Post article, visit http://www.washingtonpost.com/wp-dyn/articles/A58443-2002Nov30.html [12] THE WHRC HOTLINE An Information Service of the Women's Health Research Coalition December 2002 MEDICAL ERRORS HAVE NOT DECREASED SINCE 1999 IOM REPORT, on-line subscriptions services of WHRC. [13] Schloendorff v. Society of New York Hospital, 1914, Cardozo, J. Majority, quoted in Holtzman N Proceed With Caution p.186 [14] Canterbury v. Spence 464 F.2d 772; 790-91 150 Us App. D.C. 263 (1972) at 780 [15] Chouinard v. Marjani, 575 A.2d 238 (Conn. App. Ct. 1990). [16] Sara Rosenbaum and Brian Kamoie, ‘Managed Care and Public Health: Conflict and Collaboration’, Journal of Law, Medicine and Ethics Summer, 2002 American Society of Law, Medicine & Ethics; p. 191 [17] Sara Rosenbaum, Anne Markus, Colleen Son sky and Lee Repasch, “Policy Brief No 2: State Benefit Design Choices under SCHIP—Implications for Pediatric Health Care Center for Health Services Research and Policy, School of Public Health and Health Services, George Washington University may 2001, citing David Eddy, “Rationing Resources While Improving Quality: How to Get more for Less” 272 JAMA 817-24 (1994) [18] Sara Rosenbaum and Brian Kamoie, ‘Managed Care and Public Health: Conflict and Collaboration’, Journal of Law, Medicine and Ethics Summer, 2002 American Society of Law, Medicine & Ethics; p191 [19] NEW JERSEY BILL TRACKING McKeon Jury Awards for Medical Malpractice. Establishes standard of review for excessiveness of jury awards in medical malpractice.10/10/2002 Introduced. 10/10/2002 To Assembly 2002 NJ A.B. 2873 (SN); Joint Resolution No. 33 State Of New Jersey 210th Legislature, Introduced March 18, 2002. Sponsored by: Francis L. Bodine, and Eric Munoz [20] An Act concerning physical access to health care and supplementing Titles 45 and 26 of the Revised Statutes. Prompted by the finding that “Every day, in this State and across this country, men and women, children and adults, who are challenged by various forms of physical disability, must confront the additional challenge of overcoming physical barriers to their accessing the health care services that they need; These barriers include a widespread lack of physical accommodations and medical equipment in the offices maintained by health care professionals, such as examination tables, dental chairs and scanning devices, that ARE designed to be "user-friendly" to health care consumers with physical disabilities extent that these are available under State law or regulations, including, but not limited to, the barrier free subcode adopted by the Commissioner of Community Affairs as part of the State Uniform Construction Code.
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