Eur J Health Econ DOI 10.1007/s10198-014-0606-4

ORIGINAL PAPER

Physician–patient relationship and medical accident victim compensation: some insights into the French regulatory system Lydie Ancelot • Cornel Oros

Received: 10 September 2013 / Accepted: 17 April 2014  Springer-Verlag Berlin Heidelberg 2014

Abstract Given the growing amount of medical litigation heard by courts, the 2002 Kouchner law in France has created the Office National d’Indemnisation des Accidents Me´dicaux (ONIAM), whose main aim is to encourage outof-court settlements when a conflict between a physician and the victim of a medical accident occurs. More than 10 years after the implementation of this law, the statistics analysing its effectiveness are contradictory, which raises the question of the potential negative effects of the ONIAM on the compensation system. In order to address this question, the article analyses the impact of the ONIAM on the nature of settlement negotiations between the physician and the victim. Using a dynamic game within incomplete information, we develop a comparative analysis of two types of compensation systems in case of medical accidents: socialised financing granted by the ONIAM and private financing provided by the physician. We show that the ONIAM could encourage out-of-court settlements provided that the hypothesis of judicial error is relevant. L. Ancelot  C. Oros (&) IRIAF- CRIEF, University of Poitiers, 2, Rue Jean Carbonnier Baˆt A1 (BP 623), 86022 Poitiers Cedex, France e-mail: [email protected] L. Ancelot e-mail: [email protected] L. Ancelot BETA, UMR CNRS 7522, University of Strasbourg, Strasbourg, France L. Ancelot BETA, UMR CNRS 7522, University of Lorraine, 13, place Carnot, 54035 Nancy, France C. Oros LEO, University of Orle´ans, Rue de Blois - BP 26739, 45067 Orle´ans, France

On the contrary, in the case of a low probability of judicial errors, the ONIAM could be effective only for severe medical accidents. Keywords French insurance system  Medical accidents  Victims–physician conflict  Judicial errors JEL Classification

I13  I18  K32  K41

Introduction The compensation of victims who have suffered therapeutic accidents has been a constant topic of economic and social debate in developed countries for several decades. The issues dealing with the effectiveness, equity and transparency of the compensations as well as the behaviour, incentives and responsibility of different players involved in this process (physicians, patients, insurers, public authorities) have not yet found any clear and perfectly satisfactory answers, thus justifying the use of complex analyses at the confluence of different fields of economics such as health economics, public economics, and law and economics. Moreover, the development and implementation of this type of compensation have been changing constantly, preserving the relevance of the debates. In the French case, for example, we have witnessed a very important increase in the number of medical litigations1 in the last 20 years, mainly at three levels. First, the frequency of medical accidents doubled between 1 As showed by Helmlinger and Martin [16], ‘‘several resounding trials as for instance that of the infected blood or that of the growth hormone have largely popularised the idea that medicine is also exposed to legal investigation’’ (translation from French).

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1992–1996 and 1997–2001. Second, there has been a constant increase in the number of cases brought to court and the development of the phenomenon called ‘‘medical prosecution’’2 (805 medical liability claims processed in 1990 against 3,906 in 2002 according to the Annuaire Statistique de la Justice, 2003 edition [2]). Third, the average cost of the settlement of an insurance claim rose by about 50 % in 1990 according to the 2002–2003 Activity ˆ le des assurances [8]. Report of the Commission de contro In order to reduce the number of trials—as well as the costs they involve—the 2002 Kouchner law3 stipulates facilitating negotiation, which is considered less expensive than a trial. At the same time, the purpose of the law is to compensate the acknowledged victims of medical accidents irrespective of the existence or not of a physician’s fault. More precisely, this law modifies the compensation process of the victims of medical accidents and thus creates three possibilities for compensation: • • •

Compensation by the physician through the premium paid to the insurer. Compensation by the State through the Office National d’Indemnisation des Accidents Me´dicaux (ONIAM).4 Compensation by a hybrid system in which the insurer and the ONIAM share the costs of compensation.

A few years after the implementation of the Kouchner law, two important trends can be identified: an increase in the percent of cases solved by settlement and also in the amount of compensation incurred by the physician.5 Thus, 2

Helmlinger and Martin [16], Naatowicz-Laurent [22], Kouchner et al. [18], Lecocq et al. [20]. 3 The 2002-303 law from 4 March 2002 relative to the patients’ rights and to the quality of the health system. 4 ONIAM was created in the context of the Kouchner law in 2002 and can be considered as a substitute for the insurers. It intervenes when a medical accident occurs if the responsibility of the physician is not recognised, i.e. lack of medical malpractice liability or if there is no proposal for out-of-court settlement by the insurer. The creation of ONIAM is specifically French, but other European countries (mainly Germany, the UK, Denmark, Sweden and Italy) have developed a similar approach trying to encourage out-of-court settlements when medical accidents occur. As mentioned by the Senate Report in November 2000 [25], ‘‘the analysis of the systems of medical accident compensation puts forward that except Italy, all the analysed countries have developed specific procedures allowing the victims of medical accidents to obtain a compensation without going to court’’ (translation from French). This report also describes the specific procedures implemented in each country. 5 Inspection Ge´ne´rale des Affaires Sociales (2007): ‘‘contrary to what was feared, there has been no important rise in the number of complaints as a consequence of the introduction of an obligation to inform the patient or of the creation of CRCI (Commission Re´gionale de Conciliation et d’Indemnisation)’’ (translation from French). Report of the Office National d’Indemnisations des accidents me´dicaux (2010): ‘‘the number of medical litigations handled by the legal system has remained stable, i.e. around 7,000 new cases each year throughout all jurisdictions’’ (translation from French).

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according to the 2010 Report of the Observatoire des Risques Me´dicaux, in 2009 the out-of-court settlements represented 70 % of the solved medical accidents with a clear distinction according to the origin of the proposition (98 % by ONIAM against 52 % by the physician). At the same time, we can notice an increase in the amount of compensation: 20.5 million euros for the ONIAM in 2006 against 88 million euros in 2009, whereas for the insurers the figures vary from 30 million euros in 2006 to 61.5 million euros in 2009 (Report of Observatoire des Risques Me´dicaux, edition 2010). These facts raise questions about the relevance of the Kouchner law. We can thus ask the question of the potential negative effects that the ONIAM could generate. Facilitating the settlements on one hand and enabling victims to get compensation on the other may seem two contradictory objectives. Indeed, making the settlement easier allows for a reduction in the number of cases brought to court,6 whereas the certainty of the compensation when the medical accident is proved7 could encourage the victims to take legal proceedings in order to benefit from a bigger compensation if the physician is convicted, which thus raises the number of cases brought to court. In order to answer this question, the aim of the article is to propose an analysis of the physician-patient relationship by taking into consideration the public compensation granted by the ONIAM. We thus examine the impact of the presence of the ONIAM on the behaviour of the physician who, according to whether he/she is negligent or not, can choose to propose an out-of-court settlement to the victim or not. Is not the traditional separating equilibrium supposing that the physician will reveal his/her real type8 put into question by the presence of this public institution? The article thus has a normative dimension and provides support for the public authorities in the decision-making process by studying the effects of the two possible compensation types in case of medical accidents: the public state funding by the ONIAM and the private funding via the physician’s insurance company. The first section of the article briefly presents the functioning of the ONIAM. The second section presents the model that we have used and describes the strategies and payoffs of the players. The third section presents the different Bayesian equilibriums identified and provides a comparative analysis of physicians’ incentives to propose a 6

The risk with ONIAM is that some conflicts may not be brought to court where the judge could award a better compensation to the victim. Another risk is that in the absence of court judgments, we may lack references relative to similar conflicts [29]. 7 We will later see that the presence of ONIAM implies that the victim is always compensated if a medical accident is proved, whether the physician is negligent or not. 8 The guilty agent recognises his/her negligence, whereas the not guilty agent declares him/herself not negligent [5].

Physician–patient relationship

Changes generated by the Kouchner and About laws Complaint against the physician made by the victim of a medical accident

1. It is admitted that the act may not be negligent. 2. The victim is always compensated if the medical

accident is proved. The physician makes an offer on the insurer’s advice

The victim accepts the proposal = compensation

The physician does not make any offer on the insurer’s advice

The victim refuses the proposal

Court

The physician is convicted = total compensation for the victim = negligence rule

The physician is acquitted = lack of compensation for the victim = the medical error is not recognized

The physician is acquitted = compensation paid by ONIAM = strict liability The physician is partially convicted = compensation paid by the physician’s insurer and by ONIAM: impossibility to prove the complete negligence of the physician The physician is convicted = total compensation for the victim = negligence rule

Fig. 1 Ways of compensation for the victims of medical accidents

convicted as negligent and his (her) insurer will have to pay compensation.

settlement to the victim according to the existence or not of the ONIAM.

The role and functioning of the ONIAM Given the fact that our article aims at analysing the impact that the ONIAM could have on the nature of the physician– patient relationship, a description of the operating principles of the ONIAM will provide a better grasp of our institutional framework. Traditionally, before the creation of the ONIAM, there were two ways for victims of medical accidents to obtain compensation9: •

•

9

A direct settlement between the physician and the victim. Once the victim has made the complaint, the physician makes a compensation offer on his/her insurer’s advice. The victim can accept the proposal or not. A decision by the court stipulating the compensation of the victim. This case occurs when the physician does not make any settlement offer or if the victim refuses the offer made by the physician, thus deciding to go to court. If the physician is found guilty, he/she will be We thank the referee for suggesting this description.

The 2002 Kouchner and About laws introduced an additional way to compensate the victims of medical accidents.10 Two innovative principles characterise this compensation alternative: •

•

It admits that a medical accident may be generated by a not negligent act. In this case, the medical accident is recognised but the physician is not considered negligent.11 and the victim’s compensation is paid by the ONIAM. The victim is always compensated if the medical accident is proved.

The topic of our article is in line with this alternative compensation whose operating mechanisms can by summarised as follows. The persons who consider themselves victims of medical accidents can refer to a regional commission, i.e. the Commission Re´gionale de Conciliation et d’Indemnisation (CRCI), in order to obtain compensation. The role of the CRCI is to encourage the out-of-court settlement of conflicts and to 10

See Fig. 1 for a synthetic description of the different ways for a victim of medical accidents to obtain compensation. 11 For instance, we can mention iatrogenic infections.

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allow compensation to the victims whose damage presents a degree of severity that is superior to a legal threshold. If the request is admissible,12 the Commission will transfer the case to an expert who will conduct an investigation.13 The Commission has 6 months from the date of receipt of an admissible request to deliver its judgement on the circumstances, the causes and the amount of the damage suffered by the victim. If the Commission recognises the existence of a right to compensation, it will name the agent who will pay the compensation, either the physician’s insurer if the physician is considered as negligent or the ONIAM in the case of strict liability.14 The designated agent has to present a compensation offer to the victim within 4 months according to the indications provided by the CRCI. In practice, it is possible that the physician’s insurer does not answer or refuses to make a compensation offer to the victim. In this case, the victim can choose to go to court but he/she also has the possibility to make a demand requesting that ONIAM replaces the deficient insurer.15 If ONIAM accepts the demand, it can pursue the physician afterwards.

The model The model that we develop falls within the scope of two important types of microeconomics models: the bargaining models with asymmetric information [19] applied to health problems [21] on the one hand and the economic analysis of law and economics on the other hand. The literature on bargaining games with asymmetric information in health economics is quite vast, which is mainly due to the multiplicity of actors generating the analysis of a large number of strategic behaviours.16 In this 12

The request is admissible if the medical procedure generating the accident took place after September 2001 and if it generated damage that is superior to a threshold fixed by the law. 13 The expert investigation is free of charge for the victim. 14 We could draw a parallel with the 1985 Badinter law for traffic accidents within a system of strict liability. This law creates an obligation for the insurers to make an offer to the victims. In this type of conflict, only the most severe injuries or the most complex cases go to court. 15 We can thus conclude that the ONIAM has two main objectives. First, it generates a victim compensation process when the physician is not negligent. Second, it represents a substitute to the negligent physician if he/she does not make an offer. 16 Rochaix [26] provides a survey of the literature and presents the various strategic behaviours that can be analysed in health economics. The articles of Be´jean and Gadreau [6] and Be´jean et al. [7] describe the specific relationships that could be identified among the different regulatory authorities (health insurance system, government), insurers (private and public) and thealth care providers (hospitals, physicians, pharmacists, etc.).

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context, our model aims to examine the impact on the physician–patient relationship of the presence of the public regulatory authority specific to the French system of compensation, namely the ONIAM. Beyond the introduction of this specific public actor, the originality of our framework is based on the fact that the physician-patient relationship is developed in the context of a legal dispute between these two actors.17 Thus, both of the models used in the resolution of legal disputes and of the models analysing the role of information asymmetries in health systems being close,18 our own model examines the effectiveness of the impact of the ONIAM on the development of the out-of-court settlements. The methodology uses game theory tools and involves the construction of a dynamic game model with incomplete information between two players: the physician and the victim. The judge is also present in our model and influences the conviction or not of the physician, the behaviour of the latter and of the victim through his/her decision. When the case is referred to the judge, we consider that the latter may commit two types of judicial errors: (1) declare the physician guilty when he/she is not negligent or (2) declare the physician not guilty when he/she is negligent. Our approach is in line with P’ng’s model [24] supposing a signaling model where the informed party (the physician) makes an offer to a non-informed party (the victim). Nevertheless, our model is different as we consider the hypothesis of a lack of perfect information from the judge, thus generating the potential existence of the two judicial errors (type 1 and 2) previously mentioned.19 We chose to focus only on the physician-patient relationship and thus to ignore the role of the physician’s insurer in the victim compensation process. As we have already indicated, the insurer plays a technically specific role in the compensation process mainly by paying the compensation when the judge or the CRCI declare the physician negligent. Nevertheless, in practice, the exact type of these compensations and thus the role of the insurer in this process are very heterogeneous and complex depending essentially on the specific nature of the contract between the insurer and the physician, specificity that depends on the physician’s specialty. The latter highly 17

The economic analysis of the legal system draws a distinction between two main categories of models [14]: the screening models [5] and signal models [13, 28]. It has grown in popularity as a result of the implementation of alternative dispute resolution. This field of research aims to study the effectiveness of legal rules and to provide innovative measures allowing improving the current juridical system. 18 Our approach refers also to the literature about medical malpractice. For some important references on the topic, see for instance Danzon and Lillard [12], Danzon [9–11]. 19 Contrary to the P’ng [24] model, we do not take the existence of the nuisance suits explicitly into consideration, supposing that the victim’s expected gain from the legal proceedings could be inferior to his/her cost.

Physician–patient relationship

influences both the number of compensated cases and amount of the compensation.20 Moreover, the insurance system itself can generate important compensation heterogeneities. Certain specialties pay very important premiums because in case of a medical error, the compensation amount cannot be covered only by the physician and an intervention of the insurance is thus necessary.21 An important distinction thus exists between the full insurance and the co-insurance: the insurer has a particularly important role in the compensation process only when the physician benefits from a full insurance contract. On the contrary, the role of the insurer becomes relatively less important for the co-insurance contracts. At the same time, the status of the physician (professional of a public or private sector) highly influences the type of the liability and thus the compensation.22 Another element leading us to ignore the physician’s insurer relies on the specificity of ONIAM as a public institution specialised in the compensation of the victims of medical accidents. Indeed, as we have already mentioned, the physician’s insurer is a central player in the resolution of the medical conflicts for which the physician’s responsibility is recognised. On the contrary, as the presence of the ONIAM is justified by the potential existence of the physician’s strict liability, the role of the physician’s insurer is consequently relatively less important.23 In the context of a medical compensation system that is particularly complex, involving a large number of actors [health institutions (public or private), health professionals, insurers, medical experts, victims] and taking into consideration that the objective of the article is to analyse the potential impact of the creation of a public compensation institution on the physician’s behaviour, the role of the insurance is thus isolated in order to focus on the physician–patient relationship.24

The game is developed according to the following steps: 1. 2.

3.

4. 5.

The payoffs of the players are the following: D

20

According to the Observatoire des Risque Me´dicaux [23] for the period 2006–2009, the surgical disciplines represented 59.4 % of the compensated cases, which corresponds to 280 million euros. Anaesthesia, resuscitation, emergency and regulation procedures represent 6.4 % of the compensated cases, which corresponds to 41 million euros. 21 We can mention for instance the important differences between the premiums paid by a general practitioner and by an obstetriciangynecologist. 22 According to the Observatoire des Risques Me´dicaux [23], in private health institutions, it is the liability of the practitioners that is largely questioned (58 % of cases for all the private institutions), whereas in public health institutions, it is the institution itself (more than 90 % of cases). 23 An interesting extension of our model could be to consider a different framework supposing that the proposal is made either by the insurer or by ONIAM according to whether the case is initially considered as a negligent or not negligent act. The victim’s incentives to accept or refuse the offer could thus be different according to the origin of the offer. 24 The Kouchner law implementing the ONIAM insists on the role of the physician in the physician-patient relationship and imposes an obligation for the physician to inform the patient about his/her medical file.

The physician is negligent or not. This characteristic represents his/her type. The physician knows perfectly his/her type and decides to propose or not a settlement to the victim. The negligent physician proposes a settlement with a probability bN, whereas the non-negligent physician proposes a negotiation with a probability bN . The victim decides to accept or not the settlement proposed by the physician. The victim accepts with a probability cN when he/she considers that the physician is negligent. On the contrary, when the victim considers that the physician is not negligent, he/she accepts the arrangement with a probability cN . The victim’s a priori beliefs on the type of the physician are the following: the physician is negligent with a probability a and nonnegligent with a probability 1 - a. If the victim accepts, the case is closed. If the victim refuses the settlement, the case is brought to court, and the judge decides to convict the physician or not.25 The judge may commit judicial errors (type 1 or 3) and the negligent physician is acquitted or convicted with a probability (1 - pN) or (pN). The non-negligent physician is convicted or acquitted with a probability (pN ) or (1  pN ). Concerning the relationship between these probabilities, we have pN [ pN , which means that the probability for a physician to be convicted is higher when he/she is negligent than when she (he) is not negligent.

amount of the compensation if the victim accepts the settlement. Taking into account that our approach ignores the presence of the insurance and focusses exclusively on the physician–patient relationship, we consider that the compensation proposal is made directly by the physician. In this case, if the victim accepts, the amount of this compensation will be entirely incurred by the physician. 26

25

The game is identical regardless of the presence or not of the ONIAM. The differences concern the players’ payoffs. 26 When there is an insurance, the proposal will be made by the insurer on behalf of the physician. In this case, the insurance can cover the compensation if the victim accepts the proposal. The type of this proposal depends on the nature of the contract between the insurer and the physician. It is thus particularly difficult given the complexity and the diversity of these contracts to be able to capture a representative insurerphysician relationship in order to explicitly formalise it in our model. Moreover, if we consider that it is the insurer who makes a proposal to the victim and pays it, the physician–patient relationship, which we aim at focussing on in our article, will be biased as it will be highly conditioned by the nature of the contract between the insurer and the physician.

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D

DI

CV CV CM CM DI

amount of the compensation of the victim if he/she refuses the settlement in the case in which the physician is convicted. amount of the compensation paid by the physician if the victim refuses the settlement and if the physician is convicted (in presence of the ONIAM). cost supported by the victim who goes to trial if there is no settlement proposal. cost incurred by the victim if he/she decides to go to trial and refuses the proposal. cost of the trial incurred by the physician if he/she makes a proposal. cost of the trial incurred by the physician in case of lack of proposal. amount of the compensation paid by the physician if he/she did not make any proposal and is convicted by the judge (in presence of the ONIAM).

The Table 1 sums up all the payoffs both for the physician and the victim according to the presence or the lack of the ONIAM: Concerning the payoffs of the players, several assumptions must be taken into account: If ONIAM is not present, we consider that: •

•

•

the judge does not intervene to impose sanctions on the physician who did not make any proposal. Consequently, the compensation D paid to the victim is the same when the physician is convicted whether the latter made a proposal or not. On the contrary, his/her trial costs are different: the fact of making a settlement proposal implies an additional cost accounted for by the existence of a supplementary step in the conflict resolution. We thus have: CM [ CM . the trial costs charged to the victim are more important if he/she refuses the proposal and goes to trial: CV [ CV . Our approach takes into consideration the French rule of allocation of litigation costs (‘‘re`gle de condamnation aux de´pens’’), according to which the loser pays a part of the winner’s litigation costs. Indeed, the convicted physician pays the victim’s litigation costs. the compensation paid by the physician is more important when there is no settlement (D [ D). We follow here the principle of an out-of-court settlement supposing that the sanction (compensation and trial costs) is always less important in the case of a settlement than in the case of a trial.

In the presence of the ONIAM, the specificity of the hypothesis concerns the following elements: •

the presence of the ONIAM does not influence the physician payoffs when the latter is convicted after

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•

•

•

having made a proposition (DI ¼ D). Indeed, since the physician makes a proposal, we consider that a higher degree of sanction is not appropriate.27 when the physician is convicted, the monetary costs he/ she incurs are identical between the situation supposing the presence and the lack of the ONIAM. Indeed, we consider that the financial burden incurred by the physician in order to prove its innocence is identical regardless of the nature of the defence, i.e. in front of the victim’s lawyer or in front of the ONIAM. if the physician is acquitted, his/her payoff is zero when the ONIAM is present, which means that the public authority bears the trial costs in this case. The explanation is based on the fact that if the physician is acquitted, the victim did not have to take legal proceedings and consequently the physician will not incur any costs. The ONIAM plays a protective role here with regard to the physician by paying the trial costs when the physician is not convicted. the French rule of allocation of litigation costs (‘‘re`gle de condamnation aux de´pens’’) is applied, and the victim bears the costs of the trial only when the physician is acquitted28 whereas the convicted physician pays for the victim’s litigation costs.

We consider that all these variables that influence the payoffs of the players are exogeneous. The Ku¨hn tree (extensive form game) is described in Fig. 2 (the payoffs in the case where the ONIAM is not present are represented on the first line, whereas the differences between the payoffs generated by the presence of ONIAM are represented on the second line).

Equilibrium of the game We will identify the Bayesian equilibriums of the game according to the presence or not of the ONIAM. Even if our approach is close to the signalling models proposed by P’ng [24], a major distinction compared to this model concerns the manner of analysing the game equilibriums. Our objective is not to identify all the equilibriums of the game (pure and mixed strategies) but to analyse the impact on the equilibrium physician’s behaviour of the existence 27

We will see further on that ONIAM has the possibility to sanction the physician more severely when he/she did not make any proposal as this behaviour is inconsistent with ONIAM’s objective of developing a settlement agreement. 28 The victim bears the costs of the trial when the physician is acquitted regardless of the physician’s decision (i.e. to propose a settlement or not). This hypothesis is justified by the fact that the victim is the first actor to take legal proceedings.

Physician–patient relationship

Fig. 2 The extensive form of the game

or not of a public compensation institution (ONIAM). This is the reason why we have identified the conditions allowing the existence of a benchmark equilibrium (separating equilibrium) and analysed the evolution of this equilibrium according to the two configurations.29 A modification of the benchmark equilibrium according to the presence or not of the ONIAM allows capturing the nature of the modification of the physician’s behavior in a relatively easy manner. Game configuration when the ONIAM is not present We take as a reference a specific separating equilibrium supposing that contrary to the negligent physician, the nonnegligent physician does not make any proposal. This hypothesis seems relevant as it is more advantageous for a 29

A close approach developing a bargaining model with asymmetrical information and supposing an initial separating equilibrium is proposed by Baker and Mezzetti [3]. We can thus identify a difference compared with the results of P’ng [24] who, according to the parameters of its model, has identified only pooling equilibriums. In our approach, the existence of a separating equilibrium used as a benchmark in order to compare the physician’s incentives to make a proposal according to the presence or not of the ONIAM does not exclude the existence of pooling equilibriums.

negligent physician to compensate the victim following an out-of-court settlement that is less costly (in terms of compensation and legal fees) compared to a trial convicting the physician. On the contrary, the non-negligent physician does not have to make any proposal and thus goes to trial in order to prove his/her innocence. This situation will be used as a benchmark allowing to compare the different strategies of the players according to the specific game configuration, i.e. with/without ONIAM. The conditions that allow this type of behaviour on the part of the physician are the following: The non-negligent physician does not make a proposal:     pN D þ CMþ CV  CM 1  pN [  cN D   1  cN ðD þ CM þ CV ÞpN þ CM 1  pN : We thus have:     pN CV  CV þ CM  CM ¼ A: D [ pN D þ CV þ CM  cN The negligent physician makes a proposal:     cN D  ð1  cN Þ D þ CM þ CV pN þ CM ð1  pN Þ [  pN ðD þ CM þ CV Þ  CM ð1  pN Þ: We thus have:

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L. Ancelot, C. Oros Table 1 The physician and the victim’s payoffs according to the presence or the lack of the ONIAM

Situation

D\pN D þ CV



With ONIAM

Victim payoff

Physician payoff

Victim payoff

Physician payoff

Victim accepts settlement

D D

-D   - D þ cM þ cV

D

Victim refuses settlement, the physician is convicted

D

D    D I þ cM þ cV

Victim refuses settlement, the physician is acquitted Lack of proposition and discharge of the physician

cV

cM

cV

0

-cV

cM

-cV

0

D

   D þ cM þ cV

DI

  DI þ cM þ cV

Lack of proposition and conviction of the physician



Without ONIAM

  pN CV  CV þ CM  CM þ CM  ¼ B: cN

The victim accepts the proposal if:     pðNNjPÞD þ pðNjPÞD [ pðNNjP Þ pN D  1  pN CV þ pðNjPÞ pN D  ð1  pN ÞCV : We obtain:

  D [ pðNNjPÞðD þ CV Þ pN  pN þ pN D  ð1  pN ÞCV   D þ 1  pN CV  pN D   : pðNjPÞ\T ¼ ðD þ CV Þ pN  pN When we have a separating equilibrium, the negligent physician makes a proposal (pðNjPÞ ¼ 1) and the behaviour of the victim can thus be analysed. The victim refuses   the proposal if D þ CV \pN D þ CV ) D þ ð1  pN Þ CV \pN D, which implies a relatively low value for CV because we have D\D. This strategy is not compatible with the physician’s strategy and consequently the game equilibrium is not stable in this case. On the contrary, the acceptance is optimal for the victim if D þ CV [ pN ðD þ CV Þ ) D þ ð1  pN ÞCV [ pN D. We observe that the victim’s switching toward an acceptance strategy is conditioned by the costs of the trial (CV ), which becomes a crucial factor for the stability of the equilibrium.30 When the trial costs incurred by the victim are relatively high as well as the probability of the judicial error of type 2 (pN low), negotiation is encouraged even if the compensation is bigger when the victim obtains it following a trial. We can thus raise the question of the

effect of the ONIAM on the negotiation when the victims do not incur the trial costs (the case of the agents who are subject to legal proceedings and who benefit either from the legal aid or from the legal expenses insurance). According to the literature,31 there is a bigger probability of refusal from the individuals benefitting from the reduction of their trial costs because of the presence of ONIAM. The victim’s acceptance strategy is compatible with the physician’s behaviour if the two following conditions are satisfied: D [ pN ðD þ CV Þ þ CM ) pN \ D\pN ðD þ CV Þ þ CM ) pN [

D  CM D þ CV D  CM D þ CV

:

The acceptance by the victim thus insures the stability of the separating equilibrium whose strategies are: M  s ðNNÞ; sM ðNÞ; sV Without ONIAM  M  s ðNNÞ ¼ No Proposal; sM ðNÞ ¼ Proposal; ¼ : sV ¼ Accepts Game configuration when the ONIAM is present We keep the separating equilibrium as a benchmark supposing that the non-negligent physician does not make a proposal:   D [ pN hD þ CM þ CV    i p þ N DI  D  CM  CM  CV  CV ¼ A0 cN contrary to the negligent physician who makes a proposal:

30

We notice that the acceptance by the victim can also be explained by the existence of a type 2 judicial error supposing that the responsible physician is acquitted (pN \1). Thus, the higher the probability of this erroris (pN goes down), the higher the victim’s incentive to accept the physician proposal. Indeed, faced with the risk of undergoing a judge’s wrongful decision, which diminishes compensation by acquitting the responsible physician, the victim prefers to accept the physician’s proposal.

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31 Indeed, as shown by the literature on public aid [1], [4], [15], [17]], [27], the persons subject to legal proceedings are encouraged to go to trial by refusing the proposal from the accused as their trial costs are paid by the insurer but also because the assistance received could represent a credible threat.

Physician–patient relationship

  D\pN D þ CM þ CV  i pN h þ DI  D  ðCM  CM Þ  CV  CV ¼ B0 : cN Concerning the behaviour of the victim, the acceptance condition is the same as in the case of the game without ONIAM:     pðNNjPÞD þ pðNjPÞD [ pðNNjP Þ pN D  1  pN CV þ pðNjPÞ pN D  ð1  pN ÞCV : We thus have:   D þ 1  pR CV  pN D   : pðNjPÞ\T ¼  D þ C V pN  pN The acceptance by the victim is compatible with the separating equilibrium if: D [ pN ðDI þ CM þ CV Þ ) pN \

D

DI þ CM þ CV  D D\pN DI þ CM þ CV ) pN [ : DI þ CM þ CV As in the previous case, the decision of the victim to refuse the proposal is not compatible with the physician’s strategies described by the separating equilibrium. The separating equilibrium is thus the same as that identified in the case when the ONIAM is not present: M  s ðNN Þ; sM ðN Þ; sV ONIAM  M  s ðNN Þ ¼ No Proposal; sM ðN Þ ¼ Proposal; ¼ : sV ¼ Accepts Using the equilibriums previously identified, we develop a comparative analysis of the behaviour of the physician according to the presence or the absence of the ONIAM. Taking as a benchmark the separating equilibrium allowing the physician to reveal his/her real type, we compare the relative position of the thresholds A, B, A0 , B0 , which define the separating equilibriums for the two situations (presence/lack of the ONIAM). If we take into consideration the fact that the separating equilibriums are unstable when the victim refuses the settlement, we only analyse the situation supposing the acceptance from the victim (cN ¼ cN ¼ 1). In this context, the comparison supposes:   0 A vs A , CM 1  pN vs pN ðDI  DI Þ

guidance provided by the public authorities to the role of the ONIAM. A.

DI  DI : the ONIAM pays a part of the compensation because the responsibility of the physician is not entirely proved by the judge.

B.

DI \DI : the ONIAM penalises the physician who does not make any settlement proposal more severely.

The comparative analysis of the equilibriums is done according to the relative position of variable D (amount of the compensation of the victim if he/she accepts the settlement) compared to the thresholds A, B, A0 and B0 . Variable D is considered exogeneous as in our model we analyse the role of the public authorities in developing the out-of-court settlement. In this case, the physician is free to propose a settlement or not, but does not have the possibility to influence the amount of the compensation proposed. To put it differently, the amount proposed by the physician depends on the damage incurred by the victim, this amount being defined by the legal framework.32 The ONIAM pays a part of the compensation This case corresponds to a subsidy provided by the public authorities to the physician whose responsibility is not entirely proved. We have decided to analyse this situation as one of the roles of ONIAM is to pay to the victim a part of the compensation in the case of strict liability. Taking into consideration the hypothesis defining this configuration, we have A [ A0 and B [ B0 . We can thus identify three intervals of analysis. a.

b.

c.

D 2 ðA0 ; AÞ implying a pooling equilibrium with a proposal from the physician in the case where the ONIAM is not present and a separating equilibrium in the case with ONIAM. D 2 ðA; B0 Þ implying a separating equilibrium regardless of the presence of the ONIAM or not.33 D 2 ðB0 ; BÞ implying a separating equilibrium in the case where the ONIAM is not present and a pooling equilibrium without a proposal when ONIAM is present. These three intervals are represented in the figure below:

0

B vs B , CM ð1  pN Þ vs pN ðDI  DI Þ: The relative position of these thresholds is conditioned by the distinction existing when the ONIAM is present between the payoff of the physician when he/she makes a proposal and is convicted (DI ) and the payoff when the physician is convicted without making any proposal (DI ). We can thus identify two configurations according to the

32

ONIAM has created a reference system that gives the guidelines applied for the compensation of the victim according to the type of damage suffered (http://www.oniam.fr/infos-et-documents/referen tiels-d-indemnisation/). 33 This case implies the same type of separating equilibrium according to the presence/lack of ONIAM. This does not allow refining our comparative analysis relative to the two other configurations and consequently will not be developed here.

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A

B

D

Without ONIAM Pooling Proposal

Separating

A’

Pooling Lack of Proposal

B’

With ONIAM Pooling Proposal

Separating

When D rises and moves from A0 to B, the physician’s incentive to avoid the proposal rises. At the same time, for a given value of D, the physician’s incentive to avoid the proposal is more important when ONIAM is present compared to the situation when ONIAM is absent. To put it differently, D can be interpreted here as a threshold considered as acceptable by the physician to make a proposal. This threshold is smaller in the presence of ONIAM, which thus reduces his/her incentive to propose. A moral hazard problem can thus appear because of the presence of ONIAM34 as the negligent physician is encouraged to avoid the proposal and thus conceal his/her real type. In the first configuration, the separating equilibrium with ONIAM is: M  s ðNN Þ; sM ðN Þ; sV ONIAM  M  s ðNN Þ ¼ No Proposal; sM ðN Þ ¼ Proposal; : ¼ sV ¼ Accepts The pooling equilibrium in the case without ONIAM is described by the following strategies: M  s ðNN Þ; sM ðN Þ; sV WithoutONIAM  M  s ðNN Þ ¼ Proposal; sM ðN Þ ¼ Proposal; ¼ sV ¼ Accepts   if D þ CV [ D apN þ ð1  aÞpN or M  s ðNN Þ; sM ðN Þ; sV WithoutONIAM  M  s ðNN Þ ¼ Proposal; sM ðN Þ ¼ Proposal; ¼ sV ¼ Refuses   if D þ CV \ D apN þ ð1  aÞpN :35

34

This moral hazard problem can be identified on the segment B0 B of the above diagram. 35 Contrary to the separating equilibrium, the rejection of the proposal by the victim is a strategy that is compatible with the physician’s behaviour in the case of a pooling equilibrium. Nevertheless, our comparative analysis is concerned with the physician’s behaviour whose benchmark is the separating equilibrium. Thus, even in the case of pooling equilibriums, we will retain only the acceptance strategies from the victim as solution.

123

Pooling Lack of Proposal

D

In the third situation, the separating equilibrium in the case where the ONIAM is not present is written as follows: M  s ðNN Þ; sM ðN Þ; sV WithoutONIAM  M  s ðNN Þ ¼ No Proposal; sM ðN Þ ¼ Proposal; ¼ sV ¼ Accepts whereas the pooling equilibrium supposing the lack of a proposal by the physician when the ONIAM is present is given by: M  s ðNN Þ; sM ðN Þ; sV ONIAM  M  s ðNN Þ ¼ No Proposal; sM ðN Þ ¼ No Proposal; ¼ sV ¼ Accepts   if D þ CV [ D apN þ ð1  aÞpN . In this first configuration, which supposes that the ONIAM pays a part of the compensation, the settlements are not encouraged by the presence of the ONIAM. Thus, the objective of the public authorities to encourage the out-ofcourt settlements through the ONIAM is not achieved. The intuition of this result relies on the fact that the trial sanction is reduced by the subvention provided to the physician who becomes more tempted to go to court, taking the risk of being convicted. His/her incentives to make a proposal will be thus reduced. The ONIAM sanctions the lack of a proposal more severely In this configuration, the objective of the ONIAM to develop the negotiation is clearly put forward. We can identify three distinct situations that allow us to refine the analysis of the role of the ONIAM. 1.

A \ A0 and B \ B0 36 We thus have:   CM 1  pN \pN ðDI  DÞ CM ð1  pN Þ\pN ðDI  DÞ:

36 Condition A \ A0 implies B \ B0 . It is thus impossible to have the case A \ A0 and B [ B0 .

Physician–patient relationship

In order to verify the condition A \ A0 , we must have pN [ 0. This latter condition implies the existence of a type 1 judicial error, triggering the conviction of the nonnegligent physician. In this configuration, we can identify three analysis intervals represented as follows:

her, always prefers to make a proposal in the presence of the ONIAM, thus avoiding a more important sanction. In this case, the ONIAM can be seen as an entity that replaces a failing judicial system, thus allowing reducing the sanctions wrongly imposed on the non-negligent physician. In the case of the third situation, the pooling equilibrium

A

B

D

Without ONIAM Pooling Proposal

Pooling Lack of Proposal

Separating

A’

B’

D

With ONIAM Pooling Proposal

a.

b c.

D 2 ðA; A0 Þ implying a separating equilibrium in the case where the ONIAM is not present, associated with a pooling equilibrium with a proposal when the ONIAM is present. D 2 ðA0 ; BÞ supposing a separating equilibrium without and with the ONIAM. D 2 ðB; B0 Þ supposing a pooling equilibrium without a proposal from the physician when the ONIAM is not present and a separating equilibrium with the ONIAM.

For the first configuration, the separating equilibrium in the case where the ONIAM is not present corresponds to the strategies previously identified: M  s ðNN Þ; sM ðN Þ; sV WithoutONIAM  M  s ðNN Þ ¼ No Proposal; sM ðN Þ ¼ Proposal; ¼ sV ¼ Accepts whereas the presence of the ONIAM generates the following equilibrium strategies: M  s ðNN Þ; sM ðN Þ; sV ONIAM  M  s ðNN Þ ¼ Proposal; sM ðN Þ ¼ Proposal; ¼ sV ¼ Accepts   if D þ CV [ D apN þ ð1  aÞpN . The presence of the ONIAM encourages the physician to make a proposal that corresponds to the objective pursued by the public authorities. Nevertheless, this type of behaviour from the physician depends on the judicial error of type 1, i.e. ‘‘conviction of an innocent’’ (pN [ 0) and not only on the existence of a more severe sanction in the case of a lack of proposal. Indeed, the results point out that the non-negligent physician, knowing that the justice may wrongly convict him/

Separating

Pooling Lack of Proposal

in the case where the ONIAM is not present becomes: M  s ðNN Þ; sM ðN Þ; sV WithoutONIAM  M  s ðNN Þ ¼ No Proposal; sM ðN Þ ¼ No Proposal; ¼ sV ¼ Accepts if   D þ CV [ D apN þ ð1  aÞpN : In the presence of ONIAM, the separating equilibrium is written as: M  s ðNN Þ; sM ðN Þ; sV ONIAM  M  s ðNN Þ ¼ No Proposal; sM ðN Þ ¼ Proposal; ¼ : sV ¼ Accepts In this case, the physician’s incentive to avoid the proposal is relatively more important in the case where the ONIAM is not present. The comparative analysis relative to case A allows us to observe that the economic policies can make the ONIAM effective even if there are not any judicial errors. Indeed, the supplementary sanction imposed by the ONIAM on the physician who avoids the proposal encourages the negligent physician to make a proposal, whereas without the ONIAM, other things being equal, this type of physician would not make any proposal. 2.

A [ A0 and B [ B0

We find the same results as in the case A showing the ineffectiveness of the ONIAM, which did not encourage the settlements. Nevertheless, in case A, the lack of incentives to make a proposal was based on the subsidy provided by the ONIAM to the convicted physician, whereas here the role of the ONIAM is different and aims at further sanctioning the

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lack of proposal (DI \DI ). To put it differently, even when implementing an explicit policy to fight against the lack of a proposal, the presence of the ONIAM turns out to be counterproductive as it does not encourage negotiations. This case relies also on the existence of a judicial error, i.e. the type 2 error, supposing that the negligent physician could be acquitted (pN \ 1).37 In this configuration, the fact that the negligent physician could be acquitted implies the lack of effectiveness of

b. c.

D 2 ðA; BÞ supposing a separating equilibrium regardless of the presence or not of the ONIAM. D 2 ðB; B0 Þ supposing a pooling equilibrium without a proposal if the ONIAM is not present associated with a separating equilibrium with the ONIAM.

For the first configuration, we can identify the separating equilibrium when the ONIAM is present:

A

B

D

Without ONIAM Pooling Proposal

Separating

A’

Pooling Lack of Proposal

B’

With ONIAM Pooling Proposal

the ONIAM, as the incentive for the negligent physician to make a proposal is reduced (compared to the case where the ONIAM is not present). More precisely, the negligent physician avoids proposing and accepts the risk of a supplementary sanction as he/she is counting on a judicial error, indicating his/her false innocence, whereas the same physician would make a proposal if the ONIAM were absent. 3.

A C A0 and B \ B0

This situation is interesting because it is no longer conditioned by the existence of a judicial error. Indeed, the condition A [ A0 does not imply that the non-negligent physician is convicted (pN [ 0). On the contrary, the more correct the decision of the judge (pR goes down), the higher the probability is to have A [ A0 . In the same way, the condition B \ B0 excludes the possibility to acquit the negligent physician (pN \ 1). In contrast, the more correct the decision of the judge (pN rises) is, the higher the probability to have B \ B0 . The differences between the configurations with and without the ONIAM are represented below: The configurations are: a.

D 2 ðA0 ; AÞ implying a pooling equilibrium with a proposal if the ONIAM is not present and a separating equilibrium with the ONIAM.

37

Indeed, the lack of judicial error signifies that the responsible physician has to be convicted (pN ¼ 1). In this context, the condition B [ B0 is no longer satisfied.

123

Separating



D Pooling Lack of Proposal

 sM ðNNÞ; sM ðNÞ; sV ONIAM  M  s ðNNÞ ¼ No Proposal; sM ðNÞ ¼ Proposal; : ¼ sV ¼ Accepts

The pooling equilibrium when the ONIAM is not present is described by the following strategies: M  s ðNN Þ; sM ðN Þ; sV WithoutONIAM  M  s ðNN Þ ¼ Proposal; sM ðN Þ ¼ Proposal; ¼ sV ¼ Accepts   if D þ CV [ D apN þ ð1  aÞpN . For the third situation, the pooling equilibrium when the ONIAM is not present is written as: M  s ðNN Þ; sM ðN Þ; sV WithoutONIAM  M  s ðNN Þ ¼ No Proposal; sM ðN Þ ¼ No Proposal; ¼ sV ¼ Accepts   if D þ CV [ D apN þ ð1  aÞpN . In the presence of the ONIAM, the separating equilibrium is: M  s ðNN Þ; sM ðN Þ; sV ONIAM  M  s ðNN Þ ¼ No Proposal; sM ðN Þ ¼ Proposal; ¼ : sV ¼ Accepts We observe that if D is relatively small (D [ (A0 , A)), the ONIAM encourages the physician to avoid the proposal despite the policy implemented by the public authorities (DI \DI ). This policy turns out to be effective only if D is

Physician–patient relationship

relatively high (D 2 ðB; B0 Þ), which signifies that the ONIAM can encourage the settlements if the harm suffered by the victim is important. This result thus raises the question of whether the ONIAM is effective in all types of medical accidents. Indeed, as the ONIAM is effective only when D is important, we can consider that its effectiveness will be all the higher as the damage suffered will be high and thus D will be important.

Conclusion The 2002 Kouchner law establishes the creation of the ONIAM as a public authority enabled to compensate the victims of medical accidents in two specific cases: if the physician is not negligent and if the insurer does not make any proposal for settlement negotiations. At the same time, the ONIAM aims at encouraging the negotiations between victims and insurers before the beginning of prosecution requirements. Based on the observation that this law generates an increase of both the settlements and the compensations, the issue of the effectiveness of this law is even more relevant as it involves an important financial responsibility from the state. This article reconsidered the impact of the ONIAM on the evolution of the settlement negotiations between the physician and the victim. Using a dynamic game with incomplete information, we developed a comparative analysis of the Bayesian equilibriums identified according to two game configurations supposing the presence or absence of the ONIAM. We showed that the out-of-court settlement is highly conditioned by the extent of the costs payable by the actors. The presence of the ONIAM reinforces the effectiveness of the settlement negotiations provided that the public authorities can influence the costs incurred by the patients. On the contrary, when the public authorities cover a part of the compensations paid by the physicians, the presence of the ONIAM becomes counterproductive. Our study also showed that the ONIAM can be considered as an authority facilitating the out-of-court settlements when the hypothesis of judicial error is relevant. The ONIAM’s objective to develop the out-of-court settlements can sometimes be achieved to the detriment of a potential conviction of a non-negligent physician. If the judicial system is reliable supposing a low probability for the judicial errors, ONIAM encourages the out-of-court settlements only for the medical accidents that are relatively heavy implying important damage. Our analysis can be further developed: a different framework can be considered in which the physician plays an active role in the definition of the compensation amount. In this case, the physician will no longer use the referential imposed by the ONIAM, but he/she could have more

leeway to define the amount proposed to the victim. This situation was not examined here as we focussed mainly on the role of the public authorities on the development of the out-of-court settlements (a crucial role assigned to the ONIAM). Nevertheless, relaxing this assumption could be useful in order to better examine the impact on the physician’s incentives of revealing his/her private information. The theoretical results of the article could be tested empirically in order to identify the evolution of the percent of the out-of-court settlements before and after the creation of the ONIAM according to the nature of the medical accidents generating a proposal from the physician or from the ONIAM. Acknowledgments The authors thank two anonymous referees as well as David Crainich, Louis Eeckhoudt and the participants to the 34th JESF, 30th JMA and 2013 AFSE Meeting for their constructive suggestions and comments.

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