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OFFICE OF INSPECTOR GENERAL 
OFFICE OF ANALYSIS AND INSPECTIONS 
MAY 1989  OFFICE OF INSPECTOR GENERAL 
The miion of the Ofce of Inpector General (OIG) is to promote the effciency, 
effectveness and integrty of program in the United States Deparent of Health 
and Human Servces (HHS). It does th by developin methods to detect and 
Inctor General 
prevent fraud, waste and abuse. Created by statute in 1976, the 
keeps both the Secreta and the Congess fuy and cuently inormed about 
program or magement problems and reCommends correctve acton. The OIG 
perform its miion by conduct audits, investigations and inpectons with 
approxtely  countr. 
1,200 sta strtegiciy locted around the 
OFFICE OF ANALYSIS AND INSPECTIONS 
Th report is produced by the Ofce of Anysis and Inpectons (OAl), one of the 
with 
three major offces  the OIG. The other two are the Offce of Audit and the 
tyicay, 
Offce of Investigations. The OAl conduct inpectons which are 
short-term studies designed to determe program effecveness, effciency and 
wlerabilty to fraud or abuse. 
Th monogrph on medca mapractce wa prepared to provide the Inctor 
General and other interested pares with a brief sythesis of cuent inormtion 
countr. 
regardig the mapractce inurance problem faci our 
The report wa prepared under the diecton of Kaye D. Kidwell Regiona Inpector 
Inpecor General of Region IX 
Genera and Paul A. Gottober, Deputy Regiona 
Offce of Anis and Inctons. The research was conducted by Thomas A. 
Purv of Region 
OAl-0-89-O300  PREFACE

This monograph presents a summary of information derived 
from secondar sources on the legal and medical aspects of 
malpractice. It (a) describes the rise both in the costs of 
malpractice insurance premiums and in clai paid 
(b) discusses the  specialties 
tyes of fpriogce dures and medical 
most likely to lead to the  of claims, (c) reviews several 
studies which have analyzed the extent to which poor quality of 
cae leads to malpractice suits and (d) exames current efforts 
withi the Deparent of Health and Human Servces (HHS) 
to deal with the malpractice problem. 
th 
We anticipate that fidigs in  report may provide a basis 
for fuher studies or inpections on one or more aspects of the 
malpractice problem. 
INTRODUCTION

Medica malpractice is a complex and highly visible problem 
that remai unesolved despite comprehensive study, tort 
reform in al States and improvement of professional standards 
over the past decade. The General Accounting Offce (GAO) 
has stated that medical malpractce is a problem with "no easy 
anwer or quick fi. 
Malpractce refers to any health cae provider s behavior which 
fais to meet current standards of care and which leads to an 
avoidable adverse medical outcome, whether a legal 
determation has been made or not. In its legal sense, the 
term malpractice refers to a judicial determiation under State 
tort law that there has been a neglgent 
faiure to adhere to the 
cuent standards of medical cae, resultig in injury to the 
patient. Usualy a jury (a) sets the standard of care, based on 
expert testiony and broad guidance from the judge, and (b) 
determnes whether the physician s conduct conformed to the 
standard of care and whether the physician s negligence caused 
the patient s injury. Finaly, the  economic 
jur determes both 
damages, such as past and future medical expenses and lost 
earngs, and noneconomic damages, such as pai and 
suferig or loss of a famly member. An insurance company 
then pays a claim based on these determnations, although 
sometimes pares agree to resolve claims prior to a judicial 
determnation. 
The "malpractice problem" also consists of at least two distinct 
although interrelated, issues: (a) how to reduce the incidence 
of malpractce and (b) the consequences of increased  malpractice on liabilty insurance costs, on fees and charges 
and on access to care. Reducing malpractice requires physician 
credentialng, medical licensure and discipline and quality of 
care assurance through peer review. Addressing malpractice 
consequences requires tort law reform and alternatives to tort 
litigation. This monograph deals with both dimensions of the 
malpractice problem. 
The malpractice problem is reflected in the 
growig number of 
claims fied, the increase in the size of court awards and 
settlement amounts and the riing cost of inurance premiums. 
For exaple Medical Economics found that: 
, a recent survey by 
. Six out of 10 doctors say they have been sued. 
. The average malpractice settlement approached $81 000 
in 1987.

. Although the average malpractice premium is $17 000, 
rates in some specialties are as high as $200,000. 
Measurg the incidence of malpractce is dicult. Such a 
measurement caot be based on the number of clai fied 
because substandard medical care is not found in every case. 
Cour awards and settlements do not gauge al intances of 
mapractice, because the cost of litigation discourages some 
vald clai and encourages settlement in cases where 
mapractice may not have occurred. Payment of a clai does 
not necessary provide evidence of malpractce, because an 
adverse medica outcome leadig to a clai may exist even 
though the physician treats the patient in accordance with 
cuent standards of care. Finaly, it is not clear whether the 
increased frequency of suits reflects (a) a greater propensity for 
vict 
actal  to seek compensation or (b) an increased 
wilingness of the court to expand the defition of 
malpractice and thus expand the pool of potential claiants. 
Several comprehensive studies on the problem of medical 
malpractice have been completed in the past 3 years: 
. In 1986-1987, GAO issued a series of report presenting 
inormation relatig to increases in the cost of medical 
malpractice inrance and other aspects of the 
malpractce problem. Included in the GAO series was a 
study of a sample of malpractice claims closed in 1984 
25 inurers. This report is  priary source for much of 
the current empirical data on the frequency of claims

amounts paid and 
tyes of aleged negligence.  . In August 1987, HHS issued its "Report of the Task 
Force on Medical Liabilty and Malpractice" which 
contained a summary of available information on 
malpractice and an agenda for deparmental action. 
. The Duke University School of Law issued a series of 
papers from a 1986 Symposium "Medical Malpractice: 
Ca 
the Private Sector Find Relief?" 
. The Intitute of Civil Law of the Rand Corporation 
issued a series of report and statistical analyses. 
. In 1988, the Offce of Inpector General (OIG) 
conducted a study on qualty of care as par of the 
National DRG Valdation Study. 
Two signcat older report are: 
. the 1973 Health, Education and Welfare (HEW) Report 
of the Secretar s Commsion on Medical Malpractice 
and 
. a 1977 joint report by the Caiforna Medical Association 
and the Caiforna Hospital Association, one of the few 
exame 
studies to  substadard medical cae based on a 
sample of hospital records rather than suits fied. 
Most of the inormation in ths report is derived from these 
studies. We alo conducted telephone intervews with some 
study authors for interpretations of data and updates on the 
most cuent developments. 
A draf version of this report was cicuated to key staf of the 
Deparent' s Task Force on Medical Liabilty and 
Malpractice. Their comments are reflected in ths fial report.  FINDINGS 
Malpractice Premiums, Claims Frequency and Severity Continue 
to Rise 
According to GAO, malpractice inurance costs for physicians 
and hospitals rose from $2.  bilon in 1983 to $4.7 bilon in 
1985. As a percentage of average gross business expenses 
inurance costs for physician rose from 8 to 10 percent during 
this period. For some specialties, the increase bas exceeded 
100 percent. As of 1985, the highest inurance rates were 
concentrated in thee specialties (neurosurgery, ortopedic 
surgery and obstetrcs/gyecology) and in five places (New 
York, Florida, Dlois, Michigan and the District of Columbia). 
AVERAGE ANNUAL PREMIUM

,118,  11185 
TMOUMJDa 01 DOLI.I

A-QS/GYN; B-FAMILY PHYSICIAN

C-GENERAL SURGEON; D-PEDIATRICIAN 
E-INTERNIST; F-ALL PHYSICIANS 
The Commssioner of the Minnesota Deparment of 
Commerce recently completed a controversial study that found 
that trends in malpractice claims and settlements in Minesota 
North Dakota and South Dakota do not justify the signficant 
increases in malpractice premium. The increased premium 
costs are passed on to patients and also result in major 
problems of access to high risk specialties. For example, the 
rik of malpractce suits is cited by 123 percent of 
3 percent of famly 
obstetrician/gyecologists and 23.
physicians as the reason for dropping their obstetrcal 
practices. Problems of access are especially acute for low 
income and Medicaid patients.  As the following chart ilustrates, the frequency of claims made 
against all physician rose from 3.2 claims per 100 physicians 
prior to 1981 to 10.1 claims per 100 physician in 1985. Total 
compensation--awards and settlement payments--grew from 
$391.6 mion in 1979 to $1.5 bilion in 1985. 
GROWTH IN INCIDENCE OF CLAIMS 
CLAIMS PER 100 PHYSICIANS BY SPECIALTY 
1981-984 1i1985
BEFORE 1981 
A-OB/GYN; B-SURGEONS; C-RADIOLOGISTS

D-PEDIATRICIANS; E-ANESTHSrOLOGISTS 
F-INTERNAL; G-GENERAL; H-ALL PHYSICIANS 
Stte Tort Reforms Have Slowed-but Have Not Stopped-the 
Growth In Severit and Frequency of Claims 
Since the mid-1970s, al States have enacted one or more tort 
law reform or alternatives to litigation to inure the 
avaiabilty and reduce the cost of malpractce inurance. The 
more common reform include: 
Statutes of Limitations: Statutes of litations prescribe the 
time withi which a lawsuit must be initiated. Many States 
have changed their statutes of litations to require that 
actions involvig medical injury begin withi a specied 
number of years from the date the injury occurs or from the 
time of discovery of the injury. (In most States, actions 
involving miors as plainti must begin with a specified 
number of years from the time a minor reaches age 18 or 19. 
Pretrial Screening:  States have established boards or 
commssions to hear and rule on claims submitted prior to a 
tral, in the hopes the claims wi be settled out of court. 
Decisions mayor may not be admissible if the case does go to 
time. 
tral at a later  Collateral Source: Malpractice awards must be reduced by 
compensation received from collateral sources in some States. 
Limits on Liabilty: The maxum award per patient injury or 
lited 
death has been  in several States; in most, the limitation 
applies only to noneconomic losses. 
lited 
Joint and Several Liabiltv:  Some States have  the 
liabilty, while 
application of laws creatig joint and several 
others have abolished them completely. Joint and several 
permt plaintif to hold one defendant liable for 
liabilty laws 
the full amount of an award even when that defendant was only 
slightly neglgent and was one of several negligent providers. 
These laws have been used by plaitifs to collect from 
defendants known to have large assets, regardless of relative 
fault. 
Arbitration:  Arbitration is an alternative to litigation for 
resolvig disputes. As of 1987, 18 States had statutes 
permttig voluntar, bindig arbitration in malpractice suits. 
Attorney Fee Limitations: 
In malpractice caes, plaintifs 
usually pay their attorneys on a contingent fee basis. Many 
States have sought to regulate the size of the fee, usually to a 
flat percentage of the plaiti's recovery or on a sliding scale 
with the percentage decreasing as the size of the recovery 
increases. 
Periodic Payments: Traditionaly, settlements in malpractice 
caes have been awarded in lump sum. Many States now 
intalents. 
alow court to make awards for future losses in 
A 1986 study by Patricia Danon for the Rand Corporation 
presents empircal evidence concernng the effects of these and 
other tort reform. The study found: 
1. States enacting shorter statutes of limtations have had less 
, reducing the 
growth in claims frequency. On average
statute of litations for adults by 1 year reduces claims 
frequency by 8 percent. 
2. Statutes permttig or mandating the offet of collateral 
benefits have reduced claims severity by 11 to 18 percent 
clai 
and  frequency by 14 percent. 
3. Caps on awards have reduced severity by 23 percent. 4. Arbitration statutes appear to have increased claim
frequency but reduced average severity. 
Of the other reform analyzed in the Rand study, including 
screening panels to sort out whether claims are justified and 
placing lits on contingent fees, none appears to have had any 
systematic effect on clai frequency or severity. 
Improper Diagnosis, Surgery and Treatment Account for Most 
Malpractice Claims 
fig 
Nationwide, the most common grounds for  malpractice
clai 
have been improper diagnoses, improper surgical 
procedures and treatment problems. In 1985-1986, for

TABLE 1. CLAS AN SEITMENT COSTS BY CAUSE OF ACTON 
PECRCLE AOFS . 
AVERAGE 
ALL  COST .. 
Post operative surgica procures  29.  $02,670 
Improper obstetrc treatment  14.3  103,124 
Faiure to diagose cacer  11.  70,865 
Indvertent surgica act  033 
fracte 
Faiure to diagose  894 
Improper treatment beuse of 
side effect 6. 
drg  procure 6. 49,379
Inappproprriteo surcgicua  res 16.  477 
Other  66,352 
cla 
.Represents percentt rof  the 6,333  in th saple. 
"Legal costs plus  award or settement 
SOURCE:  Medical Economic.", Apri18, 1988. Data are for 1985-1986. 
example, the thee most common reasons for fing claims 
Mare 
against the St. Paul Fire and  Inurance Company, the 
largest malpractice insurer, were faulty post-operative surgical 
procedures, improper obstetrc treatment and failure to 
diagnose cacer. Durg that period, however, plaitiffs 
received awards in only 30 percent of the cases. Table 1 shows 
the tye of clai and awards most frequently made against 
providers inured by thi company in 1985-1986. 
The GAO closed clai study found that about one-quarter of 
all claims arse from improper diagnoses, another quarter from 
poor surgical outcomes and one-fith from problems in 
treatment (see the pie char at the top of page 8).  CLAIMS FILED BY TYPE OF PROCEDURE 
(1984 DATA)

OBSTETRICS 
TRE"TMENT 
20.. 
SURGERY 
OTHER 
12.. 
Most Malpractce Claims Are Filed against Physicians; 
Obstetricians and General Surgeons Are Most Frequently Sued 
The followig char shows the ditribution of malpractice

clai by provider and tye of medica facilty: 
DISTRIBUTION OF DEFENDANTS 
(1984 DATA)

NURSES/DENTISTS S"  ALL OTHE AS S"

PROVIDERS  FACILITIES 
Claims are not distributed proportionately across specialties. 
clai  agait 
Whle 32. are  general and 
9 percent of al 
ortopedic 
surgeons, obstetrician and gyecologists, these 
specialists account for less than 15 percent of all physicians.  TABLE 2. NUMBER AND PERCENT OF CLAMS FILED, BY SPECIATY 
ALL PHYSICIAS 
INVOLVED IN CLAMS 
Specialty  2 8
Number(a) Per4cent  (b)8 Number Percent (c) 
23 5. 927 
0 6
ObstetricsGynecolog 235 1,3 6. 70336 1 212.. 4 
General Surgery 
14,572 3.
Orthopedic Surgery  5;397 8.4 
118 12. 
Internal Medicie 60, 1 3,4,555 7.5 
29;399 6. 
General Practce  195 6.  4,55 66..3 
973 
Famy Practce 31 839 4.
Radiology 19
Medicie 788814015  1 .3  .5 330;37253 4 5.. 5 
Emergency 
Anesthesology 16 501. 3 7231.378 324..3 
TOTAL 485248,.
Other 12 100. 93 100. 
specty 
(a) Total number of physician in 
cl 
(b) Percent whch specialty constutes of al physician 
( c) Shows percent of the 71,93  closed 
Clai 
Source: General Accuntig  Medica Maloractce: Characteritics of 
Offce, 
Closed in 1984. o. 5455 
Malpractce Claims Frequently Do Not Result In Payment 
clai 
result in payment. The 
Less than hal of al malpractice 
GAO study found that only 43 percent of 73,472 sampled
clai 
closed with payment. Ths figure is remarkably close to 
the figue cited in the 1973 HEW report, which reviewed 
00 
16, closed claims and found 45 percent closed with 
clai 
payment. A study by the Rand Corporation of 6,000 
fied between 1974 and 1976 showed that 52 percent of claims 
were settled with some payment. Clai may be dropped for a 
number of reasons, the most frequent being a determination by 
the claiant that the case is not strong enough to wi or that 
the size and lielihood of an award does not justify the cost of 
proceeding with the claim. 
was true for frequency of clai fied, the percent of total
Acs lai 
resulting in payment and the payment amount vares by 
specialty. The GAO study collected data on the percent of 
physician by specialty who had claims paid agait them and 
the median and average amounts paid (table 3). 
The GAO report also showed that payments for less than 
550,000 were significantly overcompensated (e.g., paid more 
than the economic loss), while payments of $100,000 or more 
were less than the patients' actual economic losses.  TABLE 3. PERCENT OF CLAMS PAID, BY AMOUN PAID AND SPECIA1Y 
PERCEm' OF  CPERlCSE m' OF  MEDIA  AVERAGE 
TOTAL a.MS  PAI  PAYME  PAYMEN 
SPECITY 
ObstetrcsGynecology  12.  45.  $75,  $177 509 
General Surgery  12.  26.  49, 
Orthopedic Surgery  33.  25,  80,159 
Intern Medicie  7.5  21.3  42,757 
General Practice  6.3  37.  SO, 
Famy Practice  6.3  25.  15,  339 
Emergency Medicie  24.5  2264 
Anesthesiology  4.3  41.  680 
Platic Surgery  3.2  29.  172 
Pedtrcs  33.  195,  198, 
Ophtalolog  33.  10,  55,593 
Neurosurgery  2.6  23.  65,226 
Pathology  76.  250  197 652 
Other  25.  29.  (a)  (a) 
TotalAverage/Medi  100.  31.8(b)  179 
avable 
a) Data not 
b) Percent of al clai fied tht result in payment 
SOURCE: General Accuntig Offce Medica Malpractce: Characteritics of Claims 
Closed in 1984 (1987), p. 5456 
Medicare and Medicaid Patients Accunt for Only a Small Portion 
of Malpractice Cases 
clai 
The GAO closed  study identied the tye of health 
inurance used by the sample patients who fied mapractice 
clai. Only about 10 percent of al clai were fied by

Medicare beneficiares and about 3.9 percent by Medicaid 
fie , 
recipients. Accordig to another study, younger patients 
clai, 
proportonaly more  since the expected value of 
recovery decreases with age. 
Poor Qualit of Care Is Dificult to Document 
Measurig the 
frequency of substandard medical cae, rather 
than claims fied, has proved difcult largely because of a lack 
of agreement on acceptable standards for many medical 
procedures. One attempt to establish such stadards is 
currently underway in a series of research projects fuded by 
HHS to exame ways to foster high quality of care and reduce 
clai. 
the volume and magntude of  The Caiforna Medical Association and Californa Hospital 
commssioned one of the few 
Association  (CMNCHA) 
comprehensive studies to obtain inormation about patient 
disabilties resulting from substandard medical care. A sample 
of 20,864 inpatient hospital medical records for patients 
Caorna 
hospitals 
discharged in 1974 from 23 representative 
were reviewed for evidence of what the study called 
potentially compensable events" (PCEs). These were defined 
ll where, in the
as intances of "substandard medical care
opinon of the reviewers, the physician and the hospital were 
potentially liable for a malpractce award. The study found 
that 970 (4.65 percent) of al hospita inpatient stays resulted in 
PCEs. Of these 970 caes, about 80 percent resulted in 
temporar disabilties, 6.5 percent resulted in minor permanent 
8 percent resulted in major permanent injuries 
disabilties, 3.
and 9.7 percent resulted in death. 
In the judgment of the reviewers, only a fraction of 1 percent 
char 
(0.79 percent or 164) of the 20,864  reviewed included 
evidence that would have supported a verdict in favor of the 
Th 
represented 
patient had a malpractce suit been fied. 
about 17 percent of the 970 PCEs. By extrapolating to the 
entie statewide hospital population in 1974, the study 
projected 23,800 potential liabilty cases. Of these, only 2 600 
would have involved substantial, permanent diabilties. 
Another 5,800 were projected to result in death, but this 
included 800 that the study team said "probably would have 
died withi 1 year from unrelated, underlyig diseases or 
conditions." The CMA data indicate that about 1 in 20 hospital 
inpatients sufers an injur but only 1 in 125 has a legal clai of 
ER 
malpractice. 
TABLE 4. POTENTY COMPENSABLE INJURY RATE IN CAIFORN HOSPITAL, 1974
PERCENT 
Cha Reviewed  20,  100. 
Potential Compensable 
Injures  970 
Caes Involv Probable 
Libilty  164  79. 
.Th f1ge represents 17 percent of the 970 caes of potential compensble injures or .79 percent 
of the total caes. 
The OIG "National DRG Valdation Study" on quality of 
patient cae in hospitals yielded results simar to the CMA 
study. Whereas the CMA study found potential compensatory 
events comprised 4.65 percent of all Californa hospital stays  . :.
-I -..
the OIG found that 6.6 percent (464 patients out of 7,050 in a 
national sample) received poor quality of care ''bordering on 
malpractice." 
Poor Qualit of Care Does 
Not Usually Lead to Malpractice Suits 
The Rand Corporation conducted a follow-up to the 
Caorna 
CMNCHA study using data for  hospitals from the 
clai 
same period, comparg the number of actal  to the 
estiated number of injures. Th study concluded that, on 
average, only 1 malpractice clai was fied for every 10 
clai 
potentialy successfu clai, and only 4 paid  resulted 
clai 
from every 100 injures. The rate of  fied and paid was 
higher for permanent diabilties than for temporar ones. 
However, even among cases where negligent care resulted 
major, permanent injuries-the  likely to 
tye of caes most 
result in malpractice clai-only about one claim seemed to 
result for every six injures identied in the CMNCHA study. 
The OIG study did not try to determne whether the intances 
of poor qualty of cae were alo ''potentialy compensable 
estiate 
events" or to  how many, if filed, would have resulted 
fiding of legal liabilty by the defendant. If the Rand and 
in a 
other studies are a gude, only a smal porton of the 
6 percent of substadard cae cases found in the OIG study 
would result in a malpractice clai being  Danon 
fied.  As
pointed out, "the vast majority of injures arsing out of 
apparently neglgent cae do not result in a suit. This mean 
there are plenty of potential caes to draw from when the 
cliate 
public s propensity to sue increases or the legal 
becomes more favorable to plaiti.

Sanctions Are Not Resulting In Denial of Ucenses 
A recent study revealed that physician excluded from 
Medicae and Medicaid contiue to practice medicine. The 
Health Research Group tracked 62 doctors sanctioned by HHS 
between December 1985 and Februar 1988. State bodies 
bave taen action agait only 17 and have not revoked or 
suspended any licenses. Accordig to the Federation of State 
Medical Boards, "State boards bave been improving in recent 
months and have a good record in acting on at least ' egregious 
caes " The American Medica Peer Review Association 
clai 
that follow-up is hindered because HHS furnshes only 
the names of excluded physician without patient names or 
detaed inormation about the caes. 
1 "\  Initiatives 
HHS 
The National Practitioner Data Bank (NPDB) 
Until recently, trackig doctors who have performance 
problems has been very difcut. Even when their 
licenses were revoked and their hospital privieges were 
suspended, doctors could easily move their practices 
In response to this problem, the 
across State lies. 
Health Cae Qualty Improvement Act of 1986 
mandated that the Secreta of Health and Human 
ban 
Servces establih a national data  The NPDB wil 
conta data on professiona discipliar actions 
malpractce payments, adverse actons regarding clical 
privieges and professional society membership 
revocations. 
The OIG is promulgating regulations that would levy 
civi money penalties agait any individual or entity 
faing to report inormation on medica malpractice 
payments in accordance with the act. A fial rue is 
scheduled for publication by sprig 1989. 
The act requies each hospital to check with the NPDB 
every 2 years about its medica staf and practitioners 
clica 
who have  privieges. The hospital must alo 
check when it hies new medical staf or 
grants an 
clica 
individual  privieges. The NPDB data wi be 
avaiable to other selected entities. The Public Health 
Servce awarded the NPDB contract to UNSYS who 
wi begi 
operations late in 1989. 
Data Sharin! amon! HCFA. Peer Review Ol'anizations 
and State Licensin! Boards 
The recent OIG program inspecton on peer review 
organtion (PRO) qualty review recommended that 
HCF A encourage more sharg of inormation about 
physician and providers with quality of care problems. 
Beginng with their next contract year, PROs are to 
licensing 
share ths inormation systematicaly with 
boards. Once the data ban is operational, HCFA plans 
to have the PROs conduct a 100 percent review of one 
quarer of the servces provided by physician subject to 
fial 
diciplinar acton. Followig publication of 
regutions allowing PROs to deny payment for 
wi 
substandard cae, PROs  provide physician-specific 
data to State medica boards and national accreditation 
bodies when they find a pattern of substandard care.  Public Health Servce Assistance to State LicensinS! 
Boards 
The Public Health Servce has established an Offce of 
Quality Assurance withi its Bureau of Health 
Professions. The Bureau has awarded a contract that 
would exame the appropriate structure  stafg and 
other requiements of State medical boards. 
Research on Standards of Medical Practice and 
MalDractice 
The Offce of the Assistant Secretar for Planng and 
Evaluation is fuding project to research such issues as 
stadards for medica practce, early detection of 
malpractice and the value of deterrence, risk 
management program, the role of peer review 
organtions and patient outcomes. The Department' 
research effort complement those of outside entities. 
For example, Stanord University is conducting research 
to see if malpractice rik ratigs for anesthesiologists 
have improved as a result of professional practice 
stadards mandated by physician-owned inurance 
caers in Caorna. Th project is testig the 
hypothesis that the adoption of explicit professional 
malpractce suits 
practce standards reduces the rik of 
by improvig medica outcomes. 
Model State Tort Reform Lelrslation and Alternatives 
to Tort LitiS!ation

The HHS Offce of General Counel, in consultation 
with the Deparent of Justice, has prepared model tort 
States. The 
reform legilation for consideration by the 
model legilation includes (a) lits on noneconomic 
docte 
damage awards; (b) elimiation of the  of joint 
and several liabilty where a "deep-pocket" defendant 
ca be held responsible for payig up to the full cost of 
the plaitiffs award, even if his proporton of 
responsibilty was smaller; (c) litations on plaitifs 
attorney fees; (d) periodic payments; and (d) a statute of 
litations requirng that legal action begin within 
2 years afer a relationship between a medica event and 
an injur was discovered or should have been 
discovered. Model legislation has also been proposed 
authorig 
the use of mandatory nonbinding arbitration 
The Deparent has 
as an alternative to tort litigation. 
engaged in outreach actvities to assist States in drafting 
their own legislation.  CONCLUSIONS

Studies to date suggest that, when measured by increases in 
premium payments and in the frequency and severity of claims 
fied and paid, the medical malpractice problem continues to 
these 
grow. The literature does not clearly explai the cause of 
increases. No evidence exits to suggest that the frequency of 
substandard medica cae is increasing, but no defitive study 
th 
of  issue has been completed. Most observers have 
concluded that the increase in frequency and severity of claims 
is due to the expanion of the tort liabilty system. Cour have 
plaitif durg 
increased compensation to  the past two 
decades because of eased requiements for establihing joint 
and several liabilty and have moved increasingly to grant large 
awards for noneconomic damages. Some of the State efforts 
at tort reform since the mid-1970s have slowed, but have not 
stopped, the increases. 
The growt in malpractce suits, awards and premium is 
usualy cat as a problem in itself independent of the 
underlyig problem of substadard medical cae. A valid legal 
clai however, must rest on an actal medica injury. Yet, few 
docuented caes of poor qualty of care result in malpractice 
suits, and fewer than hal the suits fied result in payment. The 
CMNCHA study found in fact that most medica injuries 
mitaes. 
result from treatment errors and unorseen 
Some observers believe the legal malpractce sytem is the best 
vict 
way to compensate  of malpractce and deter neglgent 
cae. Others believe, as one commentator put it, that 
intrent 
mapractce law is too blunt an  and applied too 
uncertaiy and broadly to address many or most quality 
problems. The scacity of clai makes most providers believe 
that the system is random and hard.. to use for qualty 
takg 
control." The America Medical Association is now  the 
position that strengthened and publicized disciplie of 
accompany malpractice reform. Inormation 
physician should 
about the specialties and procedures most liely to lead to 
fig and payment of malpractice claims should help target 
actvities by State licensing boards, PROs and other 
enforcement entities to improve quality of cae.  Issues Neeing Furter Study 
In its 1987 report, HHS promulgated an "agenda for action" on 
the malpractce problem dealing with health care, professional 
liabilty, alternatives to tort litigation and inurance. The 
health care issues cover State licensing boards, risk 
management, the peer review organitions and professional 
education. Other areas that may require fuher study include: 
Improvim! treatment: The HCF A and PHS are 
xamining ths as par of their 
effectiveness intiative. 
Qyity assurance: Th includes PRO and State 
licensing board actvities. 
Information exchange: Ths primariy involves operation 
Ban. 
of the National Paractitioner Data 
Malpractice liabilty reform: 
This involves both tort 
reform and malpractice inurance reform.  , " 
. .
ANNOTATED BIBLIOGRAPHY 
1. U.S. General Accounting Offce  Medical Malpractice. No 
Agreement on the Problems or Solutions. February 1986. 
2. U.S. General Accounting Offce  Medical Malpractice. 
Insurance Costs Increased Varied Among Physicians and 
Hospitals. September 1986. 
3. U. Medical Malpractice. Six 
S. General Accounting Offce, 
State Cae Studies Show Claims and Insurance Costs Stil Rise 
Despite Reforms. December 1986. 
4. U. Medical Malpractice. Case 
S. General Accounting Offce, 
Study on Arkansas. December 1986, and simar studies on 
Caorna, Florida, Indiana, New York and North Carolia. 
5. U. Medical Malpractice. 
S. General Accounting Offce, 
Characteristics of Claims Closed in 1984. Apri 1987. 
6. U. Medica Malpractice. A 
S. General Accounting Offce, 
Framework for Action. May 1987. 
Th  contai 
General Accountig Offce series on malpractice 
clai, 
the most comprehensive, current data on malpractice 
inurance premium rates and analysis of State reform effort. 
The report include an overvew of the issues, a study of 
mapra  ce costs, a sumar of State malpractce inurance 
clai 
reform effort, an analysis of  closed in 1984 and a 
suar 
of conclusions, recommendations and suggestions. 
7. Due University School of Law  Medica Malpractice: Ca 
49 Law and Contemporary
the Prvate Sector Find Relief?" in 

Problems. 2. Bovbjerg and Havigurst editors, Sprig 1986. 
Contans an excellent sumar of legal issues and cuent 
malpractce research. 
The followig publications (8-14) by the Rand Corporation 
Intitute of Civil Justice contai empirca data on the 
incidence of malpractce clai and the impact of State reform 
decade: 
effort over the past 
8. Danon, P.M. and  The Resolution of 
LA. Ulard, 
Malpractice Claims: Modeling the Bargaining Process. 1982. 
9. Danon, P.M. and  The Resolution of 
LA. lillard, 
Malpractice Claims: Research Results and Policy Implications. 
1982.  The Frequency and SeveritY of Malpractice 
10. Danzon,P.M., 
Claims. 1982. 
11. Danon, P.M. New Evidence on the Frequency and 
Severity of Medical Malpractice. 1986. 
12. Danon, P.M. The Effects of Tort Reforms on the 
Frequency and Severity of Medical Malpractice Claims: A 
Summary of Research Results. 1986. 
Kaak J.
13.  S. and Pace Costs and Compensation Paid 
, N. M., 
in Tort Litigation. 1986. 
Some Approaches to Deterrng Medical
14. Rolph, John E., 
Malpractice (work in progress). 
15. Deparment of Health and  Report of the 
Human Servces, 
Task Force on Medical Liabilty and Malpractice. August 1987. 
Contai a thorough discusion of the malpractce issues and 
Deparent 
an "agenda for action" for the 
16. "Special Issue on Malpractce " Medical Economics. Apri 
Conta a 
18, 1988.  thorough dicussion of the malpractice 
issues and an "agenda for acton" for the Deparment. 
17. "Medica Inurance Feasibilty Study,  Western Journal of 
Medicine. 128:360-365, Apri 1978. Contai a descrption of 
the methodology and fidings of the most comprehensive study 
completed to date of disabilties of hospital patients resulting 
from health cae management 
18. Meyers, Alan R., "Luping It: The Hidden Denomiator 
of the Medical Malpractice Criis,  American Journal of Public 
Health. December 1987. Descrbes a pilot study of public 
perceptions of hospital caused iless and injur. 
19. Robert Wood Johnon Foundation, "First Round of Grants 
Anounced Under Medical Malpractice Program" June 1988. 
A descrption of 14 projects funded by the Foundation to 
advance knowledge about what constitutes malpractice, what 
causes it and how it ca be prevented.