ORLANDO — The medical liability system in the U.S. is dysfunctional for physicians and their patients, but healthcare systems that have enacted successful reform offer hope for the future, according to a report from the American College of Physicians (ACP).

“The medical liability system in the U.S. is broken. The current system just doesn’t work; it’s unfair to patients,” ACP President Molly Cooke, MD, told reporters in a press briefing at the college’s annual internal medicine meeting. An ACP policy paper on medical liability published online simultaneously in the Annals of Internal Medicine.

“As physicians modify their practices in ways that they hope will decrease the risk of being sued, the patient-physician relationship is harmed,” Cooke said. “The current system also spends enormous amounts of money to compensate a small minority of injured patients by distributing large rewards to the 2% who actually bring a suit to court following medical harm.”

Cooke went on to say reform is imperative due to these high costs. The Congressional budget office estimated that in 2009, clinicians incurred $35 billion in direct medical liability costs, which included premiums, settlements, awards, and administrative costs not included in insurance.

The vast majority (89%) of internists and internal medicine subspecialists are subject to a medical liability claim by the age of 65. With rates that high, the fear of being sued, as well as actually being sued, is the cause of much psychological strain and stress, Cooke noted.

“With all of the other healthcare reforms that have been going on, this is actually an opportune time to work on the liability issue as well,” said Thomas G. Tape, MD, chair of ACP’s health and policy committee and one of the co-authors of the report. “There are many physicians who believe that without a solution to the liability problem, we’re going to have a difficult time getting complete control over the cost of care problem.”

The Policy Paper

According to the ACP policy paper, evidence suggests traditional tort reform, and non-economic damage caps in particular, may help reduce liability claims and healthcare costs. The paper defines non-economic damage as “compensation for pain, suffering, inconvenience, or other nonmonetary losses…unverifiable losses.”

However, in states where stringent tort limits have been enacted, concerns over medical liability among physicians is still a problem that impacts career satisfaction and patient relationships, Cooke said. “It remains unclear whether traditional tort reform improves patient safety and outcomes.”

“Remedies need to be multifaceted,” Cooke said. No single program or law by itself will likely achieve the goals of improving patient safety; ensuring fair compensation to the patients when they are harmed by a medical error or negligence; strengthening the patient-physician relationship; and reducing the economic costs associated with the current system, she added.

Cooke suggested some alternatives to traditional tort reforms such as jury trial alternatives using judicial experts to make prompt decisions and enhanced liability protection for physicians who follow established clinical guidelines and take responsibility for errors. Also, risk management efforts that focus on ensuring patient safety are needed.

A multifaceted approach to reform should allow for innovation, pilot testing, and research on the most effective reforms, Cooke said.

The ACP policy paper contains nine main approaches to reform:

1. Continued focus on patient safety and prevention of errors
2. Passage of a comprehensive tort reform package, including caps on noneconomic damages
3. Minimum standards and qualifications for expert witnesses
4. Oversight of medical liability insurers
5. Testing, and if warranted, expansion of communication and disclosure programs
6. Pilot testing a variety of alternative dispute resolution models
7. Developing effective safe-harbor protections that improve quality of care, increase efficiency, and reduce cost
8. Expanded testing of health courts and administrative compensation systems
9. Research into the effect of team-based care on medical liability, and testing of enterprise liability and other products that protect and encourage team-based care

Successful Models

“New reform models show exciting promise,” Tape said. “Enterprise liability, safe harbor protections, and disclosure laws may be the keys to breaking through the current political impasse, and creating a system that encourages the prevention of errors, improves patient safety, and the timely resolution of legitimate claims.”

In the report, the authors reviewed evidence on error disclosure. They found that the number of claims filed dropped when physicians disclosed errors and discussed unanticipated outcome with their patients, provided an explanation, and expressed sympathy. In addition, money spent on attorney’s fees fell.

“Furthermore, disclosure may encourage a culture of honesty that sustains a positive patient-physician relationship and may improve physician morale,” Tape said.

The report cited the early disclosure and offer program at the University of Michigan Health System (UMHS) in Ann Arbor as one that has increased accountability, reduced claims, and quickened the dispersal of legitimate awards to patients, while maintaining positive patient-physician relationships.

In the decade-old program, when an unintended outcome has occurred, UMHS begins an investigation, contacts the patient’s family, and conducts an internal review of the error. If it’s determined a provider caused the error, a prompt apology is given and compensation is swiftly allocated. If no provider fault is found, UMHS does not settle with the patient, but continues to engage the patient and discuss why a proposed suit lacks merit.

Tape also explained that establishing liability safe harbors for following clinical guidelines could encourage broader adherence to evidence-based medicine, improve patient safety, and even efficiently dismiss unwarranted liability claims.

“Physicians support this concept as a way to limit defensive medicine, and reform the existing system,” he said.

Finally, health courts can help support speedy decisions, promote consistent and reliable verdicts, discourage the filing of unnecessary claims, and justly compensate patients, according to Tape.

In Sweden and Denmark, medical liability claims wrap up in an average of 8 months. In New Zealand, the health court system typically resolves cases in 16 days, Tape said. “Contrast that with the U.S., where the claim may languish for years.”

Additionally, Cooke said there’s potential to link liability reform with a national clinical guidelines. In 2011, the Institute of Medicine published a report entitled “Standards for Developing Trustworthy Clinical Practice Guidelines.” Instituting national guidelines — versus the roughly 3,700 separate guidelines that currently reside in the national guidelines clearing house — would eliminate confusion and simplify the work for clinicians, she stated.