Malpractice Reform ¿ Opportunities for Leadership by Health Care Institutions and Liability Insurers

As recent legal developments make traditional malpractice reform less likely, interest has grown in alternatives. Private reform involves strategies that can be implemented by private institutions, do not require legislative change and, in most cases, do not abridge patients’ legal remedies. Although there are other types of private reform, “disclosure and offer” models may be best received by the market because they do link patient injuries to safety improvements.

Generally, these models require institutions to disclose errors quickly, make apologies if appropriate, offer payment and make a commitment to specific improvements in patient safety, This article compares three distinct “disclosure and offer” models that have emerged from early adoption by a handful of hospitals and insurers.

Key Findings:

  • Within modest limits, the reimbursement model pays for out-of-pocket costs (usually a maximum of $25,000) and loss of time costs (usually a maximum of $5,000) without an investigation into possible provider negligence. Patients do not waive their right to sue and this system excludes cases with fatal injuries or injuries clearly due to substandard care.
  • The early-settlement model has no preset limits on compensation; can be used in all cases; and will compensate for all types of traditional tort losses; but no compensations offers are made unless an expedited investigation determines care was inappropriate. Also, patients must sign away their right to sue when they accept the compensation offer.
  • Health courts, successfully implemented in several European countries and cited by scholarly journals and President Obama, rely on panels of experts that determine whether patient injuries were avoidable. The avoidability standard is easier for patients to meet than the negligence standard. For avoidable injuries, compensation can be offered for economic losses, plus pain and suffering. If patients are dissatisfied with the offer, they may have further routes to redress, such as an appeals process or pursuing a lawsuit.
  • A key feature of all disclosure and offer models is that they create structures and institutional commitments that ensure information from injury cases will be used to improve patient safety. In European countries where health courts are used, national databases on patient injuries are created and analyzed. In U.S. institutions which have tried other disclosure and offer models, injury data is shared with risk management and patient safety personnel.

There are potential troubles associated with institution-led malpractice reform, including potentially creating increased inequities in patient compensation as cases are handled privately by many different institutions, implementing a system that has not been well-tested and may present unforeseen problems, and dealing with an unknown regulatory environment as governments try to adapt to these models. But this article calls on institutions to seize the opportunity now to lead malpractice reform in a way that results in improved patient care and not to wait for government action.