SOSSUS* Legal and Ethics Committee: Summary Report on Professional Liability
HENRY G. SCHWARTZ, M.D.
IN HIS ELOQUENT CALL to arms yesterday, President Muller presented some of the problems with which the SOSSUS committee has been contending. This morning, Dr. Zuidema, the guiding light of SOSSUS, has outlined the areas of importance which have been surveyed and which demand continued attention in the future. Thus, redundancy will inescapably color my presentation. There is a growing force of well informed consumers who prefer a role in determining health policies. From the public point of view, the quality of health care is assessed through the outcome of the services rendered rather than through the provider and practitioner credentialing process. This implies corrective action if care does not meet acceptable criteria and reassessment of such action. That we are not entirely alone in our suspect position in an increasingly litigious era is exemplified by an article which appeared in the St. Louis Post-Dispatch two weeks ago and which has a somewhat familiar ring: "When Peter Doe graduated from a San Francisco public high school in 1972, he had report cards that indicated he was an average student . . . His attendance had been satisfactory and his mother was a college graduate who had demonstrated repeatedly an interest in his educational progress. He had just one problem. He was practically illiterate. Reading a job application was beyond him ... Tests showed that after twelve years of school he was reading and writing at the level of a fifth grader. So he sued the San Francisco School district for $500,000 ... Among those potentially liable for malpractice suits today are doctors, lawyers, architects, engineers and accountants. But until the Doe case, no one apparently had thought to sue teachers for failing to teach or-more precisely-to teach in the manner expected of a reasona*Study on Surgical Services for the United States. Presented at the Annual Meeting of the American Surgical Association, Quebec City, Quebec, May 7-9, 1975.
ble, prudent professional. The Doe case would appear to be the ideal opportunity to break this new ground. 'Negligent' is the key word in the brief which (the lawyer) filed . . .The damage that resulted from this negligence, the brief contends, ranged from Doe's suffering mental distress to a loss of earning capacity. Ergo, the request for $500,000. The case is awaiting consideration in the California Court of Appeals." By Mellinkoff's definition in a 1970 article in PHAROS, "the Satanic axiom is that for any problem, however complicated, it is possible to identify one devil responsible for all the trouble." As a corollary, "the more complicated the problem the more time is saved by exercising the axiom." With some justice we have directed our main arrows against some members of the legal profession, but it is questionable whether sufficient pressure can be brought to bear directly that would lead them to alter their adversarial tractics. Without going into the details of the full report of our committee, I would like to summarize quickly the recommendations which have been made with regard to professional liability: 1) There is a continuing need for informational data to reflect change in the legal environment, and the causes, cost and stimuli for claims. 2) Legislation is needed to require and enable state medical boards to document and report the results of settlements and judgments. With such information the boards would be in a position to correct problems of substandard care and promulgate remedial education measures.
3) Additional legislation which requires the presentation of these data to state insurance departments for the development of sound actuarial and rate-making insurance procedures should reduce health care costs. 4) Legislation should be enacted giving state medical
538
Vol. 182 * No. 4
SOSSUS LEGAL AND ETHICS COMMITTEE
boards adequate power for disciplining practitioners for incompetence of who manifestly pursue irregular, inappropriate, unnecessary, and improperly applied procedures. Rehabilitation rather than permanent removal from the health care system should be emphasized. 5) Litigation often fails to provide a fair result for all concerned. Broader enactment of statutes would be desirable to: (a) Standardize informed consent; (b) Stabilize the standard of care; (c) Restrict the use of res ipsa loquitur; (d) Regulate contingency fees; (e) Establish reasonable limitations of amount of judgments. 6) Pre-trial screening panel systems as codified in New York and New Hampshire, and binding arbitration would be favorable substitutes for the jury system if it can be shown that these are effective methods in reducing the costs and delays of litigation. 7) Prevention programs should be intensified to minimize the risk of injuries. These programs should be the concern of agencies and professional staff committees which monitor and evaluate the quality of health care to provide effective peer responses to adverse incidents to patients. 8) There is an increasing need for courses in continuing education in medicine and preventive education measures in legal medicine. (This has been repeatedly emphasized by the AVS Governors Committee on Professional Liability.) 9) There is a need to educate all patients concerning hazards, risks, costs and limitations of medicine to reduce disappointment or dissatisfaction with the outcome of treatment. 10) To make the public aware of the cost of insurance which hospitals and physicians have to pay, it may be desirable to include an explanatory statement in the patient's bill; or to have the patient pay the malpractice premium through Blue Cross, Blue Shield or other health insurance carrier. Perhaps the government should act as a reinsurance mechanism for malpractice insurors to reflect and absorb the cost of litigation in the social security system. To preserve the availability of liability insurance coverage, a method must be worked out to protect practitioners against sudden cancellation of policies. There should be contingency plans for coverage in areas or states where insurance becomes unavailable. This could take the form of shared risks through consortiums of carriers. To control skyrocketing costs, there has been some support for the creation of a no-fault concept in the malpractice field. To be effective and remain within fiscal feasibility, it would be necessary to set exact criteria for determining what would be a compensable medical maladventure, along with appropriate limitations of
539
judgments. Short of this, disability from any illness would have to be compensated at enormous overall cost. Some physicians have been sued for actions they have taken in good faith as members of hospital review credential committees. Physicians selected to serve on such official bodies should be immune from such suits or be indemnified by the institutions they serve. 11) Changing rules on informed consent, substituting a legal standard to measure the physician's conduct rather than the custom of the medical profession, imposes a burden in imparting information which is frequently impractical and time-consuming, often difficult to articulate and which may produce unnecessary anxiety in patients undergoing surgery. 12) We recommend enactment of a uniform standard of consent for treatment, for disclosure of risks to patients in accordance with the local custom of the profession in each jurisdiction. 13) In matters of informed consent, the best legal protection flows from the surgeon obtaining consent himself and documenting this in the patient's record. In the past few months, problems with professional liability insurance coverage have resulted in a wave of publicity and protest, finally reaching the attention not only of previously concerned federal officials but, more importantly, of occupants of our state legislative houses. Availability of insurance has been handled in separate ways by state legislatures. As of the date of this presentation, joint underwriting associations have been established requiring insurors doing business in California, Idaho, Wisconsin, Indiana and Arkansas to write malpractice insurance. In North Dakota, Maryland and Missouri, an alternative method of availability, a Physicians' Mutual Company, has been established through state legislation. It may be expected that other legislatures would rapidly enact statutes providing availability before the close of the current sessions. One additional development, the state fund concept, has been enacted in Indiana. This provides an insurance pool for amounts of awards over $100,000 and up to $500,000. This fund is state managed and is accumulated by assessing a 10%o charge on each premium written in Indiana. In concept, this amounts to self-reinsurance. Idaho and Indiana have put a ceiling on recoveries at $150,000 and $500,000 respectively. Idaho has also established a New Jersey type limitation on contingent fees. Indiana allows a 15% fee for awards over $100,000. Other housekeeping sections were enacted in both states. Indiana has also established a state mediation board which will decide liability and the amount of permanent impairment. There is a possibility that frequency of claims might increase in Indiana if the board is too liberal. We may anticipate other omnibus legislation in Flori-
540
SCHWARTZ
da, Ohio, New York, Illinois and possibly other states. However at this time the above are the current established statutes. The Blank Subcommittee of the NAIC (National Association of Insurance Commissioners) has adopted a separate line of business for malpractice insurance to be included in the 1975 annual statement for all insurers. It will provide data for each insuror on loss and expense ratios, investment income, taxes and profit. It will also show premiums and losses for each insurer in each state. The professional liability subcommittee of the NAIC has developed a statistical form for closed claim data for medical malpractice. It calls for certain information to be reported on each claim that is closed after July 1, 1975. The data will provide information regarding the nature of the injury, the claimant, the defendant(s), the settlement, the location and circumstances of the incident, the date of the occurence, reporting and settlement. The data will be coded and maintained at NAIC headquarters in Milwaukee. The closed claim data will be reconciled with financial information and could profitably dovetail with statistical data bases used in health care such as PAS (Professional Activity Survey) in Ann Arbor. The financial impact is obvious. The statistical information will be very useful in loss prevention and risk control when compared with the universe of injuries in hospitals and other facilities. Obviously there is an intent to insure sound rate-making in each state. Since January 1975 the insurance regulators have been actively working on the claims-made policy to guard against sharp insurance practices in the industry. They have also been active in establishing joint underwriting associations and conferring on malpractice legislation in each state.
Ann.
Surg.
* October 1975
On the Federal scene, the Senate Subcommittee continues to hold hearings on Bill S215 establishing a Federal no-fault insurance program. Several of the high risk specialties testified at these hearings. Additionally Senator Kennedy has an alternative bill to establish a Federal Arbitration System for Malpractice, and Senator Nelson has introduced a bill for Federal re-insurance. Congressman Hastings has introduced Bill H.R. 6100, the Medical Malpractice Clains Assistance Act. This bill would create a Federal re-insurance pool to cover awards in excess of $200,000; each state would create a medical injury arbitration board which would be non-binding, except that parties may contract to be bound by arbitration. All awards based upon future losses would be paid out on an annuity basis; a New Jersey sliding scale for contingency fees would be applied; a statute of limitations for all claims would be two years after injury, except that a minor under six years may make a claim at any time before he is eight years old. Providers would contribute to the insurance fund based on their basic insurance premiums, therefore surgeons would pay more; professional risk control programs would be established, together with patient grievance mechanisms; and finally collateral sources would be deducted in the computation of awards. For the short range stop-gap, preserving the market place for malpractice insurance at a reasonable price will continue to be the most pressing problem. Hopefully, in time, adequate legislative solutions will be found at the state level, to resolve inequities in the legal system. Aware of the nature and mechanisms of legislative change, we shall need the support of all concerned, including the public whom we serve.
HENRY G. SCHWARTZ, M.D.
IN HIS ELOQUENT CALL to arms yesterday, President Muller presented some of the problems with which the SOSSUS committee has been contending. This morning, Dr. Zuidema, the guiding light of SOSSUS, has outlined the areas of importance which have been surveyed and which demand continued attention in the future. Thus, redundancy will inescapably color my presentation. There is a growing force of well informed consumers who prefer a role in determining health policies. From the public point of view, the quality of health care is assessed through the outcome of the services rendered rather than through the provider and practitioner credentialing process. This implies corrective action if care does not meet acceptable criteria and reassessment of such action. That we are not entirely alone in our suspect position in an increasingly litigious era is exemplified by an article which appeared in the St. Louis Post-Dispatch two weeks ago and which has a somewhat familiar ring: "When Peter Doe graduated from a San Francisco public high school in 1972, he had report cards that indicated he was an average student . . . His attendance had been satisfactory and his mother was a college graduate who had demonstrated repeatedly an interest in his educational progress. He had just one problem. He was practically illiterate. Reading a job application was beyond him ... Tests showed that after twelve years of school he was reading and writing at the level of a fifth grader. So he sued the San Francisco School district for $500,000 ... Among those potentially liable for malpractice suits today are doctors, lawyers, architects, engineers and accountants. But until the Doe case, no one apparently had thought to sue teachers for failing to teach or-more precisely-to teach in the manner expected of a reasona*Study on Surgical Services for the United States. Presented at the Annual Meeting of the American Surgical Association, Quebec City, Quebec, May 7-9, 1975.
ble, prudent professional. The Doe case would appear to be the ideal opportunity to break this new ground. 'Negligent' is the key word in the brief which (the lawyer) filed . . .The damage that resulted from this negligence, the brief contends, ranged from Doe's suffering mental distress to a loss of earning capacity. Ergo, the request for $500,000. The case is awaiting consideration in the California Court of Appeals." By Mellinkoff's definition in a 1970 article in PHAROS, "the Satanic axiom is that for any problem, however complicated, it is possible to identify one devil responsible for all the trouble." As a corollary, "the more complicated the problem the more time is saved by exercising the axiom." With some justice we have directed our main arrows against some members of the legal profession, but it is questionable whether sufficient pressure can be brought to bear directly that would lead them to alter their adversarial tractics. Without going into the details of the full report of our committee, I would like to summarize quickly the recommendations which have been made with regard to professional liability: 1) There is a continuing need for informational data to reflect change in the legal environment, and the causes, cost and stimuli for claims. 2) Legislation is needed to require and enable state medical boards to document and report the results of settlements and judgments. With such information the boards would be in a position to correct problems of substandard care and promulgate remedial education measures.
3) Additional legislation which requires the presentation of these data to state insurance departments for the development of sound actuarial and rate-making insurance procedures should reduce health care costs. 4) Legislation should be enacted giving state medical
538
Vol. 182 * No. 4
SOSSUS LEGAL AND ETHICS COMMITTEE
boards adequate power for disciplining practitioners for incompetence of who manifestly pursue irregular, inappropriate, unnecessary, and improperly applied procedures. Rehabilitation rather than permanent removal from the health care system should be emphasized. 5) Litigation often fails to provide a fair result for all concerned. Broader enactment of statutes would be desirable to: (a) Standardize informed consent; (b) Stabilize the standard of care; (c) Restrict the use of res ipsa loquitur; (d) Regulate contingency fees; (e) Establish reasonable limitations of amount of judgments. 6) Pre-trial screening panel systems as codified in New York and New Hampshire, and binding arbitration would be favorable substitutes for the jury system if it can be shown that these are effective methods in reducing the costs and delays of litigation. 7) Prevention programs should be intensified to minimize the risk of injuries. These programs should be the concern of agencies and professional staff committees which monitor and evaluate the quality of health care to provide effective peer responses to adverse incidents to patients. 8) There is an increasing need for courses in continuing education in medicine and preventive education measures in legal medicine. (This has been repeatedly emphasized by the AVS Governors Committee on Professional Liability.) 9) There is a need to educate all patients concerning hazards, risks, costs and limitations of medicine to reduce disappointment or dissatisfaction with the outcome of treatment. 10) To make the public aware of the cost of insurance which hospitals and physicians have to pay, it may be desirable to include an explanatory statement in the patient's bill; or to have the patient pay the malpractice premium through Blue Cross, Blue Shield or other health insurance carrier. Perhaps the government should act as a reinsurance mechanism for malpractice insurors to reflect and absorb the cost of litigation in the social security system. To preserve the availability of liability insurance coverage, a method must be worked out to protect practitioners against sudden cancellation of policies. There should be contingency plans for coverage in areas or states where insurance becomes unavailable. This could take the form of shared risks through consortiums of carriers. To control skyrocketing costs, there has been some support for the creation of a no-fault concept in the malpractice field. To be effective and remain within fiscal feasibility, it would be necessary to set exact criteria for determining what would be a compensable medical maladventure, along with appropriate limitations of
539
judgments. Short of this, disability from any illness would have to be compensated at enormous overall cost. Some physicians have been sued for actions they have taken in good faith as members of hospital review credential committees. Physicians selected to serve on such official bodies should be immune from such suits or be indemnified by the institutions they serve. 11) Changing rules on informed consent, substituting a legal standard to measure the physician's conduct rather than the custom of the medical profession, imposes a burden in imparting information which is frequently impractical and time-consuming, often difficult to articulate and which may produce unnecessary anxiety in patients undergoing surgery. 12) We recommend enactment of a uniform standard of consent for treatment, for disclosure of risks to patients in accordance with the local custom of the profession in each jurisdiction. 13) In matters of informed consent, the best legal protection flows from the surgeon obtaining consent himself and documenting this in the patient's record. In the past few months, problems with professional liability insurance coverage have resulted in a wave of publicity and protest, finally reaching the attention not only of previously concerned federal officials but, more importantly, of occupants of our state legislative houses. Availability of insurance has been handled in separate ways by state legislatures. As of the date of this presentation, joint underwriting associations have been established requiring insurors doing business in California, Idaho, Wisconsin, Indiana and Arkansas to write malpractice insurance. In North Dakota, Maryland and Missouri, an alternative method of availability, a Physicians' Mutual Company, has been established through state legislation. It may be expected that other legislatures would rapidly enact statutes providing availability before the close of the current sessions. One additional development, the state fund concept, has been enacted in Indiana. This provides an insurance pool for amounts of awards over $100,000 and up to $500,000. This fund is state managed and is accumulated by assessing a 10%o charge on each premium written in Indiana. In concept, this amounts to self-reinsurance. Idaho and Indiana have put a ceiling on recoveries at $150,000 and $500,000 respectively. Idaho has also established a New Jersey type limitation on contingent fees. Indiana allows a 15% fee for awards over $100,000. Other housekeeping sections were enacted in both states. Indiana has also established a state mediation board which will decide liability and the amount of permanent impairment. There is a possibility that frequency of claims might increase in Indiana if the board is too liberal. We may anticipate other omnibus legislation in Flori-
540
SCHWARTZ
da, Ohio, New York, Illinois and possibly other states. However at this time the above are the current established statutes. The Blank Subcommittee of the NAIC (National Association of Insurance Commissioners) has adopted a separate line of business for malpractice insurance to be included in the 1975 annual statement for all insurers. It will provide data for each insuror on loss and expense ratios, investment income, taxes and profit. It will also show premiums and losses for each insurer in each state. The professional liability subcommittee of the NAIC has developed a statistical form for closed claim data for medical malpractice. It calls for certain information to be reported on each claim that is closed after July 1, 1975. The data will provide information regarding the nature of the injury, the claimant, the defendant(s), the settlement, the location and circumstances of the incident, the date of the occurence, reporting and settlement. The data will be coded and maintained at NAIC headquarters in Milwaukee. The closed claim data will be reconciled with financial information and could profitably dovetail with statistical data bases used in health care such as PAS (Professional Activity Survey) in Ann Arbor. The financial impact is obvious. The statistical information will be very useful in loss prevention and risk control when compared with the universe of injuries in hospitals and other facilities. Obviously there is an intent to insure sound rate-making in each state. Since January 1975 the insurance regulators have been actively working on the claims-made policy to guard against sharp insurance practices in the industry. They have also been active in establishing joint underwriting associations and conferring on malpractice legislation in each state.
Ann.
Surg.
* October 1975
On the Federal scene, the Senate Subcommittee continues to hold hearings on Bill S215 establishing a Federal no-fault insurance program. Several of the high risk specialties testified at these hearings. Additionally Senator Kennedy has an alternative bill to establish a Federal Arbitration System for Malpractice, and Senator Nelson has introduced a bill for Federal re-insurance. Congressman Hastings has introduced Bill H.R. 6100, the Medical Malpractice Clains Assistance Act. This bill would create a Federal re-insurance pool to cover awards in excess of $200,000; each state would create a medical injury arbitration board which would be non-binding, except that parties may contract to be bound by arbitration. All awards based upon future losses would be paid out on an annuity basis; a New Jersey sliding scale for contingency fees would be applied; a statute of limitations for all claims would be two years after injury, except that a minor under six years may make a claim at any time before he is eight years old. Providers would contribute to the insurance fund based on their basic insurance premiums, therefore surgeons would pay more; professional risk control programs would be established, together with patient grievance mechanisms; and finally collateral sources would be deducted in the computation of awards. For the short range stop-gap, preserving the market place for malpractice insurance at a reasonable price will continue to be the most pressing problem. Hopefully, in time, adequate legislative solutions will be found at the state level, to resolve inequities in the legal system. Aware of the nature and mechanisms of legislative change, we shall need the support of all concerned, including the public whom we serve.
