Atul Gawande, the acclaimed Boston surgeon/author who writes often on medicine for The New Yorker, was interviewed last month by the Times of India (via KevinMD):

Q: What are the best ways to tackle medical malpractice in public health?

Rule 1: Don't do it the way it's done in the US. It's a disaster. Rule 2: If compensating for malpractice is deemed a priority, then a public fund should be established for people who have rare but serious complications from medical care due to error. Rule 3: Perfection is not possible in medicine, but our responsibility in medicine is to tell the truth about error, to measure occurrence, and to constantly work to reduce it.