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What is deterred by liability for discretionary medical judgments?

July 12, 2006 3:44 PM

To keep the mutual admiration society going, I'll note what a pleasure it is not to have to debate basic issues like the fact that malpractice insurance rates are based on malpractice insurance costs.

1. In return for that reasonable concession by you, I'll make one of my own. I agree: increased malpractice liability will deter some malpractice, at the margin. I'll even go further and note that not all defensive medicine is unambiguously bad; while some defensive medicine imposes costs and adds health problems, other defensive medicine merely inefficiently improves health outcomes.

2. The issue though, is not minimizing malpractice, but maximizing health outcomes. And there's every reason to believe that, at the margin, malpractice liability for discretionary decision-making deters not just medical malpractice, but medical practice. The reason is because, for the class of lawsuits we're discussing here--the ones that don't involve drunk doctors or those who amputate the wrong leg--the lawsuit is based upon second-guessing the decision of the doctor. This doesn't incentivize the doctor; in a number of suits, the doctor faced with the same decision would do the exact same thing. The deterrent effects are perhaps to increase defensive medicine or time spent documenting CYA notes to patients' charts instead of practicing medicine. Or to leave medicine entirely.

3. To illustrate this, imagine a world where police just randomly arrest people in a community without regard to guilt or innocence. Length of prison sentence or criminalizing or legalizing�certain acts would be irrelevant to deterrence, because the risk of a lengthy prison sentence would go up or down equally for the innocent as well as the guilty. I'm not saying that the medical malpractice system is that arbitrary and capricious. It's not. But it's not much better. Insurers are unable to predict in advance which doctors will be sued, except within broad occupational categories. As a result, to the extent that there are "bad" doctors, they're not treated much differently than the good doctors, and those that are are the ones who would still be liable in a world with discretionary immunity. My hypothesis is that, because good doctors outnumber bad doctors, and because the status quo is so imprecise and inefficient, more good doctors are being deterred from practice than bad doctors are being deterred from malpractice--and the concomitant effects on health outcomes from the system are negative.

4. Empirical work bears this out. For example, Jon Klick's work finds that infant mortality rises in states without damages caps. A slight decrease in medical quality is apparently outweighed by the decrease in practicing obstetricians from the increased costs of the system.

5. It interests me when people complain about reform proposals as "dangerous experimentation." We've tolerated a substantial expansion of liability for medical professionals through judicial experimentation, in part because judicial decisionmakers are frequently looking solely at the case in front of them based on procrustean legal principles rather than the consequences of that case on the system as a whole; but John Edwards has suffered no consequences for helping to create a legal environment that has perhaps resulted in hundreds of extra infant deaths in North Carolina. (And the expansion in the field of medical malpractice is nothing compared to the experimentation the judicial branch has engaged in without empirical basis when it comes to products liability, securities litigation, and criminal procedure.) Why is the judicial branch the only one allowed to experiment? What happened to the famous laboratories of democracy?

6. A judge can cause a great deal of damage through an erroneous opinion; an executive can lose thousands of investors billions of dollars through an erroneous business decision; a do-nothing police department can cost hundreds of lives and cause tremendous damage to the local economy. Yet we accept that to impose liability in such situations would do more harm than good. The consequences of negligent medical practice in the course of discretionary decisions are not so great that it is not worth exploring redefining the lines of liability given the evidence that second-guessing discretionary decisions is causing more harm than good on the deterrence side and only randomly fulfilling compensatory principles.

7. There are certainly other alternatives: Common Good's idea of medical courts; testimony of court-appointed experts; taking cerebral palsy cases out of the legal system the way we do with vaccine injuries. But when there are serious scholars arguing that there should be more than ten times as much malpractice litigation as there is now under the current liability standards, it's time to ask what's so special and untouchable about the current liability standards.

8. But even if one is disinclined to be on the "bleeding edge" of policy-making, that's no argument against scaling down the scope of liability. We wouldn't be the first to do so. Doctors in New Zealand can't be sued, and show no evidence of erring more than their liable American compatriots.

9. How do we compensate those injured by discretionary medical malpractice? It's not clear to me that this is a prerequisite. Not every injury requires compensation. There isn't compensation for someone who keels over from a sudden brain aneurysm or is struck by lightning. The family of someone brutally murdered in Georgetown by a paroled armed robber doesn't get compensation. Sometimes the loss just falls where it does, and it's not clear to me why an adverse medical result caused by a discretionary medical decision should be any different.

10. But one answer to the compensation question is insurance. Health insurers could offer additional coverage for losses caused by malpractice, and that would certainly create a market incentive to ensure that doctors weren't committing medical errors or skimping on cost-effective procedures, and HMOs are better situated to do that oversight than courts or attorneys or individual patients. (If there really is a problem with a handful of incompetent doctors, this would be the surest way to suss them out.) Insurance would also end the controversy over damages caps: patients could choose for themselves how much insurance they want for pain and suffering.

 

 

 

Rafael Mangual
Project Manager,
Legal Policy
rmangual@manhattan-institute.org

Communications
Manhattan Institute
communications@manhattan-institute.org

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.