INNOVATIVE SOLUTIONS TO 

MEDICAL LIABILITY 

HEARING 

BEFORE THE 

SUBCOMMITTEE ON HEALTH 

OF THE 

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED NINTH CONGRESS 

SECOND SESSION 

JULY 13, 2006 

Serial No. 109-117 

Printed for the use of the Committee on Energy and Commerce 

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

U.S. GOVERNMENT PRINTING OFFICE 

WASHINGTON : 2006 

For sale by the Superintendent of Documents, U.S. Government Printing Office 

Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 

Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 

30-411PDF 
COMMITTEE ON ENERGY AND COMMERCE 

JOE BARTON, Texas, Chairman 

RALPH M. HALL, Texas 

MICHAEL BILIRAKIS, Florida 

 Vice Chairman 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

PAUL E. GILLMOR, Ohio 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

CHARLIE NORWOOD, Georgia 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

JOHN B. SHADEGG, Arizona 

CHARLES W. “CHIP” PICKERING, Mississippi 

 Vice Chairman

VITO FOSSELLA, New York 

ROY BLUNT, Missouri

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

CHARLES F. BASS, New Hampshire 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

MIKE ROGERS, Michigan 

C.L. “BUTCH” OTTER, Idaho 

SUE MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

JOHN D. DINGELL, Michigan 

 Ranking Member 

HENRY A. WAXMAN, California 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

SHERROD BROWN, Ohio 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

ALBERT R. WYNN, Maryland 

GENE GREEN, Texas 

TED STRICKLAND, Ohio 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MIKE DOYLE, Pennsylvania 

TOM ALLEN, Maine 

JIM DAVIS, Florida 

JAN SCHAKOWSKY, Illinois 

HILDA L. SOLIS, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

BUD ALBRIGHT, Staff Director 

DAVID CAVICKE, General Counsel

REID P. F. STUNTZ, Minority Staff Director and Chief Counsel

SUBCOMMITTEE ON HEALTH 

NATHAN DEAL, Georgia, Chairman 

RALPH M. HALL, Texas 

MICHAEL BILIRAKIS, Florida 

FRED UPTON, Michigan 

PAUL E. GILLMOR, Ohio 

CHARLIE NORWOOD, Georgia 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

CHARLES W. “CHIP” PICKERING, Mississippi 

STEVE BUYER, Indiana 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO, California 

MIKE FERGUSON, New Jersey 

MIKE ROGERS, Michigan 

SUE MYRICK, North Carolina 

MICHAEL C. BURGESS, Texas 

JOE BARTON, Texas 

 (EX OFFICIO)

SHERROD BROWN, Ohio 

 Ranking Member 

HENRY A. WAXMAN, California 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

GENE GREEN, Texas 

TED STRICKLAND, Ohio 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

TOM ALLEN, Maine 

JIM DAVIS, Florida 

TAMMY BALDWIN, Wisconsin 

JOHN D. DINGELL, Michigan 

 (EX OFFICIO)

(II)
CONTENTS 

Page 

Testimony of: 

Mello, J.D., Ph.D., Michelle, Associate Professor of Health Policy and Law, 

Department of Health Policy and Management, Harvard University .......................... 22 

Wootton, James M., Partner, Mayer, Brown, Rowe & Maw LLP ..................................... 32 

Barringer, Paul, General Counsel, Common Good ............................................................ 44 

VanAmringe, Margaret, Vice President, Public Policy and Government Relations, 

Joint Commission on Accreditation of Healthcare Organizations ................................ 52 

O’Connell, J.D., Jeffery, Samuel H. McCoy II Professor of Law, University of 

Virginia........................................................................................................................... 60 

Doroshow, Joanne, Executive Director, Center for Justice & Democracy ........................ 68 

Niro, Cheryl, Partner, Quinlan & Carroll, Ltd, on behalf of American Bar Association .. 84 

Additional material submitted for the record: 

Mello, J.D., Ph.D., Michelle, Associate Professor of Health Policy and Law, 

Department of Health Policy and Management, Harvard University, response for 

the record........................................................................................................................ 122 

(III) 

(1) 

INNOVATIVE SOLUTIONS TO 

MEDICAL LIABILITY 

THURSDAY, JULY 13, 2006 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON ENERGY AND COMMERCE, 

SUBCOMMITTEE ON HEALTH, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 10:09 a.m., in Room 

2123 of the Rayburn House Office Building, Hon. Nathan Deal 

(Chairman) presiding. 

 Members present: Representatives Deal, Norwood, Shimkus, 

Shadegg, Pitts, Ferguson, Burgess, Barton (ex officio), Pallone, Gordon, 

Eshoo, Green, DeGette, and Capps. 

 Staff Present: Randy Pate, Counsel; Ryan Long, Counsel; Brandon 

Clark, Policy Coordinator; Nandan Kenkeremath, Senior Counsel; Chad 

Grant, Legislative Clerk; John Ford, Minority Counsel; and Jessica 

McNiece, Minority Research Assistant. 

 MR. DEAL. The committee will come to order, and the Chair will 

recognize himself for an opening statement. 

 I am pleased that today, we have a very distinguished expert panel 

that is going to testify on the issue of the performance of our current 

medical liability system. At today’s hearing, we are going to hear 

testimony about the performance of the current system in compensating 

injured patients and deterring negligent conduct and ensuring access to 

quality medical care. Additionally, we intend to discuss non-traditional 

and innovative medical liability reform proposals from some leading 

experts in the field. 

 It is becoming increasingly difficult to ignore the fact that our current 

legal medical liability system is broken. However, needed reform is 

continually being opposed by those who stand to profit handsomely from 

the unsustainable status quo. Unfortunately, patients are the ones who 

stand to be hurt the most by this broken system. 

 There is no denying the fact that there is a medical liability crisis in 

this country, and I don’t need to repeat the staggering statistics about the 

astronomical rates of increase and the cost of medical liability insurance 

over the past few years or talk about the tens of billions of dollars wasted 

each year to frivolous lawsuits and doctors forced to practice defensive 

medicine in order for us to recognize that we have a legitimate crisis on 

our hands that must be addressed as soon as possible. 
2

 Coming from a largely rural district in North Georgia, I view this 

problem primarily as one of access to healthcare. When the only 

OB/GYN within a 200-mile radius of your home refuses to see you 

because you are a high-risk patient, there is a problem with the current 

medical liability system. When you have to be flown to a neighboring 

State just to receive a common medical procedure that was once 

available in your own home town, there is a problem with the current 

medical liability system. When people are dying because their local 

trauma center was forced to close its doors, there is a problem with the 

current medical liability system. 

 Why would any medical student be interested in starting his or her 

practice in rural Mississippi, where I understand the average physician’s 

salary is only $72,000, if he can expect to pay a $70,000 premium for 

malpractice? That doesn’t sound like a very smart career move, and 

clearly, I think something has to be done. 

 I have spent over 23 years in my career as a trial attorney. I have 

also served as a judge and as chairman of the Judiciary Committee at the 

Georgia State Senate where I was active in developing legislation to help 

curb the growing problems in our State’s tort system. From this 

experience, I recognize this problem does not have a single source and 

there is not a magic bullet or a Band-Aid solution that is going to make it 

go away. That is why I support an innovative and comprehensive 

solution to this problem. I am looking forward to having a cooperative 

and productive conversation on this topic today and to working with my 

colleagues on both sides of the aisle to help come up with an effective 

legislative solution to this crisis. 

 In this Congress, like several Congresses before, the House has 

passed, with my support, H.R. 5, the Health Act, a bill that would 

provide comprehensive liability protection for providers. However, the 

narrow Republican Majority in the Senate allowed the Democrats, most 

of whom are opposed to meaningful medical liability reform, to obstruct 

the debate through parliamentary tactics, and unfortunately, this 

Congress is shaping up to be a repeat of the last. 

 That is why I hope I can work with my colleagues on both sides of 

the aisle to develop an effective medical liability reform package that can 

overcome the current legislative stalemate between the House and the 

Senate and produce meaningful reductions in the number of wasteful and 

frivolous lawsuits while at the same time advancing the cause of patient 

care. Everything is on the table and we are open to looking at a variety 

of different proposals, such as liability protection for doctors who cover 

indigent patients, provisions that prevent a doctor’s own apology to a 

patient for being used against him in a court of law, and provisions which 

were incorporated in my home State during this past legislative session. 
3

 We will continue to pursue a variety of avenues to enact meaningful 

medical liability reform. We believe that enacting common sense 

guidelines for healthcare lawsuits will ensure that injured patients receive 

greater compensation while at the same time deterring frivolous lawsuits 

that extort money from healthcare professionals and drive doctors from 

the practice of medicine. 

 We will continue to fight for meaningful medical liability reform 

until the job is done. Our healthcare system needs these reforms. If we 

are serious about expanding patient access to high-quality healthcare, 

then we must deliver on this issue. 

 Again, I would like to thank all of our witnesses for participating 

today. I look forward to hearing your testimony. 

 [The prepared statement of Hon. Nathan Deal follows:] 

PREPARED STATEMENT OF THE HON. NATHAN DEAL, CHAIRMAN, SUBCOMMITTEE ON 

HEALTH

3⁄4 The Committee will come to order, and the Chair recognizes himself for an opening 

statement. 

3⁄4 I am pleased to say that we have an expert panel of witnesses appearing before us 

this morning that will help us examine innovative proposals for improving the 

performance of our medical liability system. 

3⁄4 At today’s hearing, we will hear testimony about the performance of our current 

medical liability system in compensating injured patients, deterring negligent 

conduct, and ensuring access to quality medical care. Additionally, we intend to 

discuss non-traditional and innovative medical liability reform proposals from 

leading experts in the field. 

3⁄4 Without question, it is becoming increasingly difficult to ignore the fact that our 

current medical liability system is broken. However, needed reform is continually 

being opposed by those who stand to profit handsomely from this unsustainable 

status quo. 

3⁄4 Unfortunately, patients are the ones who stand to be hurt the most by this broken 

system. 

3⁄4 There is no denying the fact there is a medical liability crisis in this country, and I 

do not need to repeat the staggering statistics about the astronomical rates of 

increase in the cost of medical liability insurance over the past few years or talk 

about the tens of billions of dollars wasted each year due to frivolous lawsuits and 

doctors forced to practice defensive medicine in order for us all to recognize that we 

have a legitimate crisis on our hands that must be addressed as soon as possible. 

3⁄4 Coming from a largely rural district in North Georgia, I view this problem primarily 

as one of access to heath care. 

3⁄4 When the only OB/GYN within a two-hundred-mile radius of your home refuses to 

see you because you are a high-risk patient, there is a problem with the current 

medical liability system. 

3⁄4 When you have to be flown to a neighboring state just to receive a common medical 

procedure that was once available in your own hometown, there is a problem with 

the current medical liability system. 

3⁄4 And when people are dying because their local trauma center was forced to close its 

doors, there is a problem with the current medical liability system. 
4

3⁄4 Why would any medical student be interested in starting his or her practice in rural 

Mississippi where the average annual physician salary is only $72,000, if he or she 

expects to pay as much as $70,000 per year in malpractice premiums? That doesn’t 

seem like a smart career move to me. 

3⁄4 Clearly, something has to be done. 

3⁄4 I have spent over 23 years of my career as a trial attorney. I have also served as a 

judge and was the Chairman of the Judiciary Committee in the Georgia State Senate 

where I was active in developing legislation to help curb the growing problems in 

our State’s tort system. 

3⁄4 From this experience, I recognize this problem does not have a single source and 

there is not a magic bullet or a Band-Aid solution that will make it go away. 

3⁄4 That is why I support an innovative and comprehensive solution to the medical 

liability reform crisis in this country. 

3⁄4 I am looking forward to having a cooperative and productive conversation on this 

topic today and to working with my colleagues on both sides of the aisle to come up 

with effective legislative solutions to this crisis in our healthcare delivery system. 

3⁄4 This Congress, like several Congresses before, the House has passed, with my 

strong support, H.R. 5, HEALTH Act, a bill that would provide comprehensive 

liability protection for providers. 

3⁄4 However, the narrow Republican majority in the Senate allowed the Democrats, 

most of whom are opposed to meaningful medical liability reform, to obstruct the 

debate through parliamentary tactics. 

3⁄4 And unfortunately, this Congress is shaping up as a repeat of the last. 

3⁄4 That is why I hope to work with my colleagues on both sides of the aisle to develop 

an effective medical liability reform package that can overcome the current 

legislative stalemate between the House and Senate and produce meaningful 

reductions in the number of wasteful and frivolous lawsuits while at the same time 

advancing the cause of patient safety. 

3⁄4 Everything is on the table and we are open to looking at a variety of different 

proposals, such as liability protections for doctors who cover indigent patients and 

provisions that prevent a doctor’s own apology to a patient from being used against 

him or her in court, which were provisions passed into law in my home state of 

Georgia this past legislative session. 

3⁄4 We will continue to pursue a variety of avenues to enact meaningful medical 

liability reform. We believe that enacting common sense guidelines for health care 

lawsuits will ensure that injured patients receive greater compensation while at the 

same time deterring frivolous lawsuits that extort money from health care 

professionals and drive doctors from the practice of medicine. 

3⁄4 We will continue to fight for meaningful medical liability reform until the job is 

done. Our health care system needs these reforms. If we are serious about 

expanding patient access to high-quality health care, we must deliver. 

3⁄4 Again, I would like to thank all of our witnesses for participating today, and we 

look forward to hearing your testimony. 

3⁄4 At this time, I would also like to ask for Unanimous Consent that all Members be 

allowed to submit statements and questions for the record. 

3⁄4 I now recognize the Ranking Member of the Subcommittee, Mr. Brown from 

Ohio, for five minutes for his opening statement. 

MR. DEAL. At this time I would ask unanimous consent that all 

members may be allowed to submit statements and questions for the 

record. Without objection, so ordered. 
5

 I am now pleased to recognize, sitting in for my normal ranking 

member, Ms. DeGette from Colorado, for 5 minutes for her opening 

statement. 

 MS. DEGETTE. Thank you very much, Mr. Chairman. 

 And I, too, am glad that you are holding this hearing called 

“Innovative Solutions to Medical Liability,” and I think we should try to 

work on this issue in a bipartisan way to solve the very real problem of 

high insurance rates for doctors around the country leading to gaps in 

services everywhere. 

 I am disturbed, though, that while you say that you want to work on 

this issue in a bipartisan way, you put the blame squarely on the Senate 

Democrats for stopping legislation. In truth, I have been working on this 

issue for over 10 years, and I, too, am a reformed trial lawyer. And I 

think that we could solve this if we could sit down in a bipartisan way. 

And we passed the legislation through this committee last time, however, 

I was told by the then-bill sponsor, my good friend, Jim Greenwood, that 

there would be no amendments to the bill, no compromises to the bill, no 

topical changes to the bill, and that the interests who had written the bill 

would allow no amendments. That, to me, does not signal a lead towards 

a bipartisan solution. 

 And so, Mr. Chairman, I am glad that you are now our Chairman, 

and I will look forward to working with you in a meaningful way to truly 

work on a compromised solution. 

 I think there are really several issues that we need to look at when we 

examine the alternatives to solve the malpractice insurance crisis. 

 The first issue is do these solutions really help solve the perceived or 

real medical malpractice insurance rate prices. And secondly, do they 

disproportionately put the burden on the victims of medical malpractice. 

For example, under the health court plan, which is one of the alternatives 

we will discuss today, injured patients would be paid according to a predetermined compensation schedule. That schedule would be determined 

by a commission appointed by the President and Congress. 

 Now such a schedule may work for some cases, but it could also 

essentially cap the damages for other patients, regardless of individual 

circumstances. And there is one indication that I have seen in the 

literature that such a proposal would actually reduce insurance rates 

because it does nothing about the insurance companies. 

 A second idea is to limit victims’ rights to a jury trial. And I have 

concerns about this, because in our entire civil system, our common law 

system in the States, juries have always decided with medical 

malpractice rates and now there are anecdotal stories about juries. For 

the most part, the studies have showed that the juries have done an 

excellent job in reaching disputes. And the question would be, are there 
6

other, less draconian results than allowing cases to be decided by a jury 

of one’s peers. 

 Now, of course, Mr. Chairman, our current system is not perfect, and 

some of the witnesses here today will talk about a study that Dr. Marilyn 

Hart did. It concluded that the system is not filled with frivolous 

lawsuits, and that the cost of the system mainly comes from disputing 

and compensating claims involving medical mistakes. So it is not the 

duplicative plaintiffs or the greedy lawyers who are cashing in on a slew 

of bogus suits, although we do need to work to stop bogus lawsuits. But 

what we need to try to figure out is how we can minimize medical 

malpractice and how we can try to make the system work in the best way 

for everybody. We need to make sure that victims are compensated 

when they are injured by medical mistakes. We need to have a system 

where the very small number of doctors who are causing the very great 

number of errors are punished and the majority of doctors who are 

performing well are left alone. We need to increase our knowledge of 

medical errors and make sure that information is shared. And one last 

point, we need to look at some other creative ways. An insurance 

company in my State has a three “R” program: recognize, respond, and 

resolve. And this is a program that encourages doctors to communicate 

with patients when there is an unintended injury and apologize. And 

they have found that, and I would love to hear the witnesses talk about 

this; this minimizes a lot of the lawsuits. 

 Finally, Mr. Chairman, this hearing is called “Innovative Solutions to 

Medical Liability.” For many years, I have been saying to deaf ears that 

one of the things we need to look at if we are going to eliminate the high 

cost of malpractice insurance for doctors is insurance pricing practices 

and risk costs around the country. If we can do that, Mr. Chairman, I 

think we can put that as part of our whole package. We can’t leave any 

part of the system out in our deep analysis and our crafting of legislation. 

 Thank you very much. 

 MR. DEAL. I thank the gentlelady. 

 Mr. Shimkus is recognized for an opening statement. 

 MR. SHIMKUS. Thank you, Mr. Chairman. 

 I want to welcome the panel here. 

 I am from Madison County, Illinois. It is pretty famous, and it is 

famous most recently for going down on the list of court systems. The 

reason why it has done that is because this debate was taken to the public 

in our election in which we elected the first Republican Supreme Court 

judge from the southern part of the State of Illinois, and it has really 

helped wake people up that not only is this an issue and a concern for 

doctors, but it is really an issue for access and the patients. But there is 

still a problem. We have a doctor leaving the metro east area, who is in 
7

the local paper, who practiced 20 years in the area, because of still high 

medical liability insurance. 

 So this is an emotional debate for those who are injured, those who 

want access to the courts, those who want compensation, those who want 

their local doctors present. And I appreciate the Chairman, because the 

Chairman does bring a different perspective based upon his background 

that we are working with. And there are a lot of things that we can do. 

Because of that election, and that is how public policy sometimes gets 

changed is things are falling apart, the public revolts, and you get an 

election that signals to public policy individuals who go change the laws. 

The State of Illinois changed their law. They did some of the things that 

my friend Diana DeGette mentioned. It wasn’t just judicial reforms. It 

was medical discipline issues, judicial reform. They raised the $500,000 

punitive cap. There were also some issues on insurance. And so it was 

an expanse of legislation, so I really don’t know how it will portray in 

the years to come, but it has helped the growth of the access of doctors in 

my area. 

 So I am open for a good discussion and other ideas. We do have a 

great court system. Ninety-nine percent of all doctors are great doctors. 

Ninety-nine percent of the people who serve in the court system, whether 

they are judges or they are lawyers, are great. We always have a 

percentage that take advantage, or we have a percentage of bad doctors 

that cause us problems and we overreact. I think all the public wants is 

access to their doctors and at an affordable rate by which everyone then 

can pay for healthcare and folks can have access to care. 

 So I am looking forward to hearing the discussion. Hopefully we 

won’t get pulled away too much. 

 And I thank you, Mr. Chairman. I yield back. 

 MR. DEAL. I thank the gentleman. 

 Mr. Pallone is recognized for an opening statement. 

 MR. PALLONE. Thank you, Mr. Chairman. 

 Medical liability is a very real problem in my home State. Just last 

year, doctors in New Jersey went on strike to protest the rising costs of 

malpractice insurance, and since then, I continue to hear from doctors on 

a near-daily basis. Skyrocketing premiums couched between declining 

reimbursement rates and increased overhead costs are putting many of 

them out of business. And I have met physicians who have left their 

practice in order to sell real estate as well as medical students who are 

being forced to leave New Jersey once they earn their degrees. So 

clearly, we have a problem. 

 Now Mr. Chairman, although this is not the first time the 

subcommittee has considered this very important topic, we have made 

very little progress at reaching a solution. Over the years, there has been 
8

little effort on the part of the Republican Majority to reach across the 

aisle and work with Democrats on a satisfactory solution to medical 

liability reform. Mostly we just get name-calling, saying the Democrats 

don’t want to address the problem, particularly the Senate Democrats, 

and in my opinion, everything was done just to move H.R. 5 very quickly 

through this subcommittee and full committee without paying attention 

so that it would pass the Senate or without reaching across and trying to 

come up with solutions that would get a bill passed and signed into law. 

 And so I am hoping that today’s hearing will mark a new beginning 

for us to finally come together on a bipartisan basis to address this 

important issue. Now there is some common ground from where we can 

begin. If we are to address the issue of medical malpractice, we need to 

talk about improving patient safety. It has been 6 years since the 

Institute of Medicine issued its landmark report, and yet I am not sure we 

have made much progress on reducing medical errors. And furthermore, 

we need to reduce frivolous lawsuits, so surely we can come to an 

agreement on the best way to accomplish this goal. 

 But there are areas in which Democrats and Republicans remain 

divided, and I strongly believe that insurance reform should be included 

in any discussion of medical liability reform. There are definitely 

members of this committee who do not believe that a cap, per se, will 

reduce insurance rates. They want the issue of premiums and insurance 

rates addressed directly. 

 The other thing is that Republicans have been inflexible on the level 

of the cap. Efforts were made in this subcommittee to have a cap that 

was $500,000 or $1 million, and they were just rejected outright. But 

what is most important, we have to just address the problem of liability 

reform for providers. Now H.R. 5, and other similar bills in the past, 

have not been limited to medical malpractice, and they take in 

manufacturers, distributors, suppliers of drugs, medical devices. That is 

not where the problem is right now, and when you throw that in, it is like 

basically throwing in the kitchen sink. We are not really addressing the 

problem of providers. 

 So I hope that today we move beyond the knee-jerk reaction 

legislation proposed in the past that just was used by the Republicans to 

bash the Democrats and that Republican leadership knows very well that 

H.R. 5, in its current form, is not going to pass the Senate. It is not going 

to be signed into law. We have got to get down to things that actually 

work. And I hope that today is going to be a beginning of trying to work 

with us on a bipartisan basis. 

 Thank you, Mr. Chairman. 

 MR. DEAL. I thank the gentleman. 

 Mr. Burgess is recognized for an opening statement. 
9

 MR. BURGESS. Thank you, Mr. Chairman. 

 I, too, want to thank you for having this important hearing. 

 I do have an opening statement that I will submit for the record, but I 

do want to take the occasion to acknowledge that, one of the few times 

on this subcommittee, I am going to agree with the gentlelady from 

Colorado that the system is not functional. 

 Ten years ago, as a practicing physician, if someone were to ask me 

what do you think would work as far as reforming the medical liability or 

the medical justice system, I probably wouldn’t have come up with the 

idea of caps on non-economic damages. I will tell you that 3 years after 

my State of Texas has passed a cap on non-economic damages, that is 

broken into three parts, a part for the doctor, a part for the hospital, a part 

for a second hospital or nursing home, for a total of $750,000 on noneconomic damages, I am a believer. One of the reasons I am a believer 

is because of the money that has come back into the healthcare system, 

particularly in not-for-profit hospitals that was really an unintended 

consequence of passing the cap on non-economic damages. 

 When we passed our bill here on the House side some 3 years ago, 

my first year in Congress, the Congressional Budget Office recorded that 

as a $15 billion savings. I think that is a reasonable place to look for 

savings as we try to look for additional money to put into our healthcare 

system. Still, I am willing to listen to other arguments. I am particularly 

glad to see Dr. Mello here this morning. I think I agree with her that the 

administrative costs in this system are far too high. I can remember a 

morning in the mid-1990s when, in a very uncomfortable moment, I 

retrieved those foreign objects from a patient’s abdomen during a 

laparoscopic surgery. After I got over the self-congratulatory part of 

being able to get this foreign object out of the abdomen, because it was 

quite large, with only the laparoscopic instruments, and so my technical 

ability was clearly superior to anyone else’s in town, I realized that I was 

in for a good deal of difficulty with our medical justice system. It took 

about 5 or 6 years for that case to wind its way through. It ultimately 

went to trial in another State, required a lot of hours on everyone’s part, 

and as far as I could tell, the only ones who really made out in that 

process were the people who were charging by the hour. And of course, 

the insurance company, being able to delay the payment of that claim for 

5 years at a time when interest rates were considerably higher and their 

money did better in the stock market than it did going into a plaintiff’s 

pocket, I guess they benefited as well. So I am interested in some of the 

administrative changes that might be made in the system to further the 

savings that I believe are the money that is inappropriately taken out of 

the healthcare system and spent on the medical justice system. 

Obviously, we want to see patients compensated who are harmed. Most 
10

patients, though, that are harmed don’t win the case through a lawsuit. I 

can remember at least one time having made an error in judgment and no 

case was ever brought. And this, I think, was because of being open and 

honest with the family during the course of things, being open and honest 

about how difficult the particular case was and being available to answer 

questions for the family as we worked through the process. 

Unfortunately, it doesn’t always work out, and sometimes we do end up 

having to go to the courthouse, and I don’t want to keep anyone from 

that ability, but at the same time, I also recognize that in order to keep 

our healthcare system solvent, there are going to have to be some limits 

placed on compensation. 

 Thank you, Mr. Chairman. You have been indulgent. I will yield 

back. 

 MR. DEAL. Ms. Capps is recognized for an opening statement. 

 MS. CAPPS. Thank you, Mr. Chairman. 

 Yes, indeed, we find ourselves once again discussing medical 

liability reform. Yet it is clear that differences do remain in our 

approaches, and that is no reason why we shouldn’t begin to work 

towards a path of compromising. We absolutely should be looking at 

ways to remove medical liability as a barrier to accessing healthcare. 

And as we examine alternative ways of settling malpractice cases, we 

must be careful to protect patients’ rights. We should ensure that 

settlements are conducted voluntarily from both ends, that the option to 

have one’s case heard before a jury of one’s peers always exists. 

 With the many innovative alternative dispute resolutions being 

discussed today, we cannot ignore the rising cost of malpractice 

insurance premiums. I constantly hear from physicians who are forced to 

retire early or leave their private practices for other jobs because they 

cannot keep up with the rising costs of malpractice insurance premiums. 

But time and time again, our leadership refuses to address the burdens 

posed on our healthcare system by insurance providers. While doctors 

are being forced to close up shop, these companies are raking in record 

profits. With all due respect, I would like to ask the Chairman if we 

could, in addition to the panel before us today, discuss that aspect of 

malpractice, the insurance companies and the accountability that I 

believe is lacking. Where is the justice here? If we are really going to 

work toward viable solutions and better healthcare delivery, we need to 

ensure that physicians can maintain their practices so that patients can 

have better access to quality care. If errors do occur on the part of 

doctors, patients must be assured that they are guaranteed proper 

recourse. We can not throw all of our weight into systems that remove 

objectivity, deny both plaintiffs and defendants the chance to present 

evidence to support their cases. 
11

 So as we discuss innovative solutions to medical liability, we must 

be sure to address both alternative methods of dispute and a commitment 

to lowering the cost of medical malpractice insurance premiums. 

 And I just want to mention on the side that another topic, which we 

have addressed that should be seen as a parallel situation, is the situation 

of medical errors and the morbidity and mortality that result from other 

aspects of delivery of the healthcare system. We seem to focus on going 

after the people in the courts. We could go such a long way to improving 

both the streamlining of administrative costs and the technology that 

would entail making this more open and transparent but also what is the 

healthcare delivery like in today’s world with the shortages of 

professionals to provide the care and giving the patients the confidence 

in the system that we want them once again to have. 

 Mr. Chairman, I yield back. 

 MR. DEAL. I thank the gentlelady. 

 Dr. Norwood is recognized. 

 MR. NORWOOD. Thank you very much, Mr. Chairman, and a great 

thanks for having this, what I consider a very important hearing. 

 It is time we cut through all of the sound bites and get to addressing 

this problem. The premiums that providers pay today for their insurance 

is just continuing to skyrocket, and that actually is affecting access to 

care. 

 Having tried and failed, I believe we may have an opportunity to get 

it, if we can just think outside of the box. The same old way we have 

been doing this for the last 10 years clearly is not working, and I think 

this committee is smart enough to figure out a way to solve the problem, 

a different approach to it. It is not right when a physician, after so many 

years of education and training, has to actually stop providing care 

because Congress fails to address our medical liability crisis in a rational 

way. And that is, in fact, what is happening. 

 I am a dentist, and I know that doctors all over the Nation know that 

there are folks out there trying to make a quick buck abusing malpractice 

compensation laws. That’s just plain wrong. I also know that doctors 

are being forced to retire early because of the insurance premiums that 

they pay. Simply put, our legal system is stacked against those who give 

up in their 20s, all of them generally, to learn to help others, who work 

very long hours and deal with, I think, in many cases, immense stress. 

Don’t believe me? Well, according to a report by the Alliance of 

Specialty Medicine, 75 percent of neurosurgeons in 2004 were no longer 

operating on children. To the patient whose child’s life is on the line, 

this is a problem. They are not understanding of that. 

 The situation in my home State is better, thanks to State reforms. 

However, in Augusta, Georgia, my home town, and city of around 
12

200,000 people, Mr. Chairman, according to data collected by the 

alliance there, there was only one healthcare facility left with a practicing 

pathologist. In Statesboro, Georgia, south of us, women have to wait 6 

to 9 months to have routine mammograms read. As this committee has 

already heard, the Athens Women’s Clinic stopped delivering babies 

after 35 years. One lawsuit put the clinic out of the baby delivery 

business, period. Many doctors are practicing defensive medicine. I 

would say most doctors are practicing defensive medicine and avoiding 

innovative treatment options driving up medical costs and reducing, I 

think, quality of care. And they think so, too. They are really trying to 

practice law rather than medicine to defend their families, and that is 

wrong that they have to do that. Residents for high-risk fields are not 

being filled up. There are various surveys that have shown the number 

of physicians moving into rural areas continues to decrease and now it is 

up toward about 50 percent. I think folks, and I think most people in this 

room, find all of that unacceptable. I have said it before, and I am going 

to say it again, after economic damages, reasonable people should be 

able to agree, to an acceptable limit, non-economic damages. But it is 

time we start looking at the trial attorneys and the insurance companies, 

too, I agree with that, for their way in driving up the costs. If we don’t 

do something, and it is our job, we will further jeopardize patients’ 

health, because they cannot get access to a doctor. It drives me 

absolutely crazy, Mr. Chairman, that some of these physicians who have 

been out there practicing 30 years and have that amount of skill and 

wisdom over the years deciding they would rather go fishing than taking 

care of their patients because it is just too cumbersome anymore to stay 

in practice at that age. And we are losing some of the serious brainpower 

in medicine in this country by allowing this to happen. 

 I appreciate very much you having this hearing, and I look forward 

to our witnesses’ testimony. 

 MR. DEAL. I thank the gentleman. 

 I recognize Mr. Gordon for an opening statement. 

 MR. GORDON. Mr. Chairman, I would like to yield some time to my 

friend from California who has to go to another meeting. 

 MS. ESHOO. I thank the gentleman. 

 I have an Intelligence Committee meeting that I need to get up to, 

Mr. Chairman. 

 Thank you. 

 MR. DEAL. We will just substitute the order, and we will come back 

to you, Mr. Gordon. 

 MS. ESHOO. Thank you, Mr. Chairman. And I thank my colleague 

from Tennessee. 
13

 I have a statement that I would like to have entered into the record, 

and I thank you for having this hearing. 

 Just a couple of comments. 

 Congress is really in, I think, a desperate need of some good ideas to 

help us get over the ditch that we are in. If, in fact, we remain where we 

are, and that some casting aspersion on lawyers, others somehow casting 

aspersions on doctors, we are not going to get anywhere. We do have a 

problem. I think that it is solvable, and I trust that that is what this 

hearing is about. 

 Now at the end of the day, I think all of us, if in fact we need them, 

want the best attorney on one side and the best doctor on the other. So I 

am not interested in casting blame on either profession. Both professions 

contribute a great deal to our society. I think that this issue is larger than 

patient and doctor and one attorney. We have very broad and large 

health systems in the country, and there are glitches and failures within 

these systems that helped produce some of the problems that we are 

trying to get our arms around. 

 So I thank everyone for being here. I began to read some of the 

testimony that has been placed in front of us. I am interested in this 

health court that is being proposed, and I am impressed with the 

bipartisanship of the organization with former Senators Howard Baker 

and Bill Bradley, members of the advisory board as well as Senator 

George McGovern and former Speaker Newt Gingrich. So I think we 

come together as an advisory board. Maybe we should be paying 

attention to what they are thinking and working on. 

 So I thank my colleague from Tennessee for allowing me to speak 

out of order, and Mr. Chairman, thank you for having the hearing and 

also to the text that comes out of it. 

 [The prepared statement of Hon. Anna G. Eshoo follows:] 

PREPARED STATEMENT OF THE HON. ANNA G. ESHOO, A REPRESENTATIVE IN CONGRESS 

FROM THE STATE OF CALIFORNIA

Thank you, Mr. Chairman. 

The purpose of this hearing is to explore new ideas to make the American medical 

malpractice litigation system work better for patients and physicians. 

In order to reduce the number of medical liability claims filed against healthcare 

providers, we must reduce the number of patients injured by negligence. 

Today, we will hear that medical liability cases are clogging the courts, liability 

premiums are “skyrocketing,” and that juries are awarding inconsistent and large awards 

to plaintiffs. 

Some witnesses will call for tort reform, and limiting damages awarded in 

malpractice suits. We’ll be discussing the creation of “health courts” to remove 

“frivolous lawsuits” from the traditional court system. 
14

There are some cases without merit brought against doctors and hospitals, and 

something should be done about medical liability, but we need to place an emphasis on 

reducing the prevalence of medical errors when we consider any comprehensive solution. 

 One key way we can help reduce medical errors is to establish a national and 

interoperable electronic health record system (HIT). 

Electronic health records are updated instantaneously and are portable, making 

legible, accurate and up-to-date information readily available to any doctor treating any 

patient in any setting. 

Doctors will know exactly which medications a patient is taking, what chronic 

conditions a patient may have, and the types of procedures or treatments a patient may 

have undergone in the past. 

This comprehensive profile of a patient’s health history provides physicians a 

clearer picture of the patient they’re treating, and helps reduce the risk of medical errors. 

The promise of HIT is immense, but without appropriate safeguards and standards in 

place, these systems will not work. Unfortunately, the HIT bill passed by this Committee 

is inadequate. It does not address privacy protections in any meaningful way, nor does it 

create standards for interoperability across the system. 

Finally, as we discuss the issue of medical liability, we need to remember that 

90,000 Americans die each year due to medical errors. Most of these deaths could be 

prevented. 

Every injured patient should be fairly compensated for any wrongs that are visited 

upon them because every person’s life and health has worth, regardless of whether they 

have an income. 

I look forward to hearing from the witnesses, and working to address this important 

issue. 

 MR. DEAL. I thank the gentlelady. 

 Mr. Shadegg is recognized for an opening. 

 MR. SHADEGG. Thank you, Mr. Chairman. 

 And I have a prepared opening statement, but I just want to insert it 

in the record and make some remarks. 

 Let me begin by saying I want to thank you, Mr. Chairman, for 

holding this hearing. I believe you and I have talked privately about how 

I feel it is vitally important that we bring some creativity to this topic. 

For too long, the Congress has looked at one solution and one solution 

only, and that solution is caps on damages. There are advocates of caps 

on damages, and there is evidence that in some instances they have 

worked. For philosophical reasons, I have problems with them. I am not 

convinced that the Government can decide in advance the value of any 

given economic loss or non-economic loss, and I am troubled by that as 

the only possible solution. And I believe we should be far more creative 

in looking at solutions. It seems to me that there are clearly proposals 

which would help in this area and perhaps special health courts, though I 

am concerned about federalizing this issue. This is an issue where 

current litigation occurs at the State level, and I am concerned that if we 

impose specialized health courts, we are imposing a Federal solution for 

what is a State issue. 
15

 But we owe it to the American people to address this problem. It is a 

very severe problem. In my State of Arizona, medical malpractice 

premiums are a crisis. They are driving doctors out of the practice. My 

own wife’s physician, her OB/GYN who delivered both of our children, 

was ultimately forced to quit the practice because of the high cost of 

malpractice premiums. 

 But I would share in the views already expressed in opening 

statements here that this isn’t just one issue. It isn’t just trial lawyers. It 

is a combination solution. I have had very successful lawyers in Arizona 

who practice in the tort field come to me and acknowledge that the 

current system is broken. In part, there are lawyers with whom I have 

practiced, because I practiced in a firm that was made up of a number of 

tort lawyers before I came to Congress. These lawyers would come to 

me and say clearly the current system is broken and needs to be fixed. 

They are willing to discuss one of the options, which I think we should 

be exploring, which is the notion of loser pay, but modified by the notion 

that losing lawyer pays. I think it is important that in the American 

justice system we do not discourage people without resources from 

utilizing the court system. And to some token, there is no doubt that 

many lawsuits are abusive. Many lawsuits are brought without any 

factual basis. If you look at the statistics on medical malpractice suits, 

the vast majority are dismissed with no recovery whatsoever. I think 

creating disincentives for people that bring frivolous lawsuits or 

incentives for them to settle at an earlier point in time is something that 

we should be working on. 

 I can’t speak on this topic without addressing one other issue, Mr. 

Chairman, and that is the issue of ERISA. Far too few Americans realize 

that the law this Congress enacted called the Employee Retirement 

Income Security Act, as interpreted by the United States Supreme Court, 

grants absolute immunity to an insurance company whose negligent 

decision kills someone. That simply is wrong. Pilot Life is the name of 

the case. It was written by Justice Sandra Day O’Connor. I am told that 

she later acknowledged that she felt it was a bad decision and that this 

Congress would correct it very quickly. But it seems to me anomalous 

that physicians in America are being sued so many times, so frequently, 

and so aggressively that they are being driven out of the practice at the 

same time that a law we passed grants absolute immunity to insurance 

companies whose negligence kills someone. Everyone makes mistakes. 

I make mistakes. Doctors make mistakes. Insurance companies make 

mistakes. When someone makes a mistake that hurts or kills someone, 

indeed, there should be a system by which there is compensation to the 

person killed or the family injured. And so absolute immunity is simply 

wrong. By the same token, a system that rewards people for bringing 
16

lawsuits even without any merit is equally wrong. And I think it is far 

past time that we look at innovative solutions to this issue. 

 I hope you will also look at repealing the absolute immunity granted 

to insurance companies for their negligence, because no one should get a 

pass when they make a mistake that kills someone. 

 With that, I yield back my time. 

 MR. DEAL. I thank the gentleman. 

 I now recognize the gentleman from Tennessee, Mr. Gordon. 

 MR. GORDON. Thank you, Mr. Chairman. 

 A little over 25 years ago, I was sort of a do-whatever-you-want-orwhatever-you-need, small-town lawyer in Murfreesboro, Tennessee, and 

I took a criminal case pro bono. It was a burglary assault case, second 

offense. The defendant got a reduced sentence. He went to jail, but I 

think I did a pretty good job for a young lawyer, or any lawyer, for that 

matter. He didn’t have anything to do while he was sitting there in jail, 

and so he filed a number of malpractice suits against me. They weren’t 

successful, but I was a sole practitioner. That was all of the time that I 

had. That is how I made my living, and so it took my time. And so for 

any time I had defense cases after that, I filed defensive motions, brought 

witnesses before us that I didn’t really need to, but I was trying to protect 

myself, because I didn’t want to go through that again. 

 I think we are seeing the same thing in the medical profession. 

There is defensive medicine that is taking a large amount of money out 

of the limited amount of healthcare dollars that we have. And so I think 

we need to deal with this issue. 

 Listening to everybody’s opening statements so far, it looks like if 

you locked us in a room, we might get that done, and I hope we could do 

that, because up until now, what has happened, and I will speak frankly 

and everybody can put their own opinion, but I think that the front office 

leadership here in the House has forced H.R. 5 as a my-way-or-thehighway. I voted for it, but it is a failure. And I think it is partly because 

they want to keep the issue alive to raise money. 

 Now on the other side, in my party, some of the folks that would be 

the first to condemn the NRA for their no-camel’s-nose-under-the-tent, 

won’t make any kind of concessions either. And so again, I hope that 

Chairman Deal will find the key, lock us in here, and try to work this out. 

This is important, and I think looking for alternatives is a good way to 

approach it. 

 And I will just mention one alternative. Between 1993 and 2003, the 

number of visits to emergency rooms increased by 26 percent, yet the 

number of emergency rooms decreased by 14 percent. Every minute an 

ambulance is diverted somewhere in America from an emergency room 

because it is filled. Three-fourths of emergency room directors in this 
17

country say that they can’t get specialists because the specialists don’t 

want to deal with the malpractice and other problems there. 

 And so I have introduced a bill, H.R. 3875, that deals with this 

situation. You see right now, if you are a public health doctor, then you 

don’t have to worry about malpractice, because there is a Federal fund 

that takes care of compensating those people that have had those 

problems. It would seem that if an ER doctor is going to treat and 

indigent without any kind of compensation that they also ought to be able 

to plug into this same fund. But that is a small group, but I think that it is 

one way to look at a comprehensive approach. And I know many of you 

have other things. Hopefully we can plug these in together and really 

make a sincere effort, because healthcare costs are simply killing us in 

this country. Whether you are the CEO or someone who works down the 

line, you know that healthcare costs are affecting us all. There are a 

limited number of healthcare dollars. This isn’t a cure-all, but this is one 

way to better use those. 

 And so again, Mr. Chairman, let us get out the key and work this out. 

 Thank you. 

 MR. DEAL. I thank the gentleman. 

 I now recognize the Chairman of the full committee, Mr. Barton 

from Texas. 

 CHAIRMAN BARTON. Thank you, Mr. Chairman. 

 I have a very excellent, but long opening statement. It is about eight 

pages, so I am going to submit it for the record. 

 Thank you for holding the hearing. Thank our witnesses for being 

here. 

 I will point out that in Texas we reformed our medical liability 

system. In the last 2 years, we have had 4,000 new doctors apply to 

practice and we think this year we are going to get another 4,000. So it 

does work, and I hope that this hearing leads to legislation that might 

help nationally what we have done in the last several years in Texas. 

 Thank you. 

 [The prepared statement of Hon. Joe Barton follows:] 

PREPARED STATEMENT OF THE HON. JOE BARTON, CHAIRMAN, COMMITTEE ON ENERGY 

AND COMMERCE

Thank you, Chairman Deal, for holding this hearing on the important topic of 

medical liability reform. 

As we all know, medical liability reform has been a topic of intense debate. From 

courtrooms to examining rooms and from state houses to Congress, the search for ways 

to fix our broken medical liability system is continuing. Passions run high, but the stakes 

are high, too. We are talking about nothing less than ensuring continued access to quality 

medical care for the American people. We are also talking about reforming the medical 

liability system to make it fairer and more efficient for all participants, but especially for 

patients. 
18

I continue to be encouraged by the successful medical liability reforms being 

enacted in the states. In my home state of Texas, for instance, where we enacted 

common-sense reforms and even went as far as to amend our state constitution to make 

them stick, the good news continues to pour in. From Texas the message is clear: 

effective reforms increase access to quality medical care for patients. 

In just three years, Texans have seen medical liability insurance premiums fall and 

thousands of new doctors coming into the state. More than 4,000 new physicians applied 

to practice in Texas during the last three years, and the Texas Medical Board anticipates 

that we will add another 4,000 new doctors this year alone. The benefits are being felt 

right now by patients all over Texas, but they are especially great in rural areas where 

access to medical care is more difficult. In rural areas, every additional doctor’s office, 

clinic, or ER specialist on call can mean the difference between life and death. 

While access to care is a crucial concern part of any medical liability reform, of 

equal importance is protecting those patients who have a legitimate claim of medical 

malpractice. On this point, the status quo fails to deliver. Patients must often endure 

years of long, drawn-out litigation before receiving compensation for their injuries. 

When compensation finally arrives, lawyers’ fees and expert witness fees often take the 

lion’s share of the award. 

Additionally, in the current climate, doctors are frustrated by a Byzantine legal 

system that takes them away from their patients and threatens to ruin them financially and 

professionally, regardless of whether the claims have any merit. The cost of defending 

yourself is just as high for frivolous lawsuits as it are for honest ones, and they often run 

into the tens of thousands of dollars. The result of all of this is a culture of silence, in 

which health care providers are afraid to admit to their mistakes and so opportunities to 

prevent mistakes from happening again are lost. 

Finally, we know that the current medical liability system is missing the point. 

Study after study has told us that the real problem is errors in the web of people, 

computers, devices, and medicines that make up our modern health care system. 

According to the experts, systemic errors, not individuals, cause the vast majority of 

medical injuries. Yet the current liability system is obsessed with finding somebody to 

blame. The one holding the scalpel or the last one to touch the patient when things went 

wrong is the automatic target. It seems to me that we are missing the real problem and 

that we are not any safer for it. 

The status quo is no longer acceptable. I’m excited to hear testimony from our 

distinguished panel of expert witnesses on innovative proposals that can alleviate our 

nation’s medical liability crisis, and I look forward to examining each of these proposals 

in greater detail as we continue to go forward. 

Thank you again Chairman Deal for holding today’s hearing and welcome to our 

witnesses. 

 MR. DEAL. I thank the gentleman. 

 Mr. Pitts. Mr. Ferguson. 

 MR. FERGUSON. Thank you, Mr. Chairman. 

 I am really pleased that we are having this hearing and appreciate 

your leadership on this issue, because there are some very serious 

problems with our healthcare and medical liability system. It fails our 

patients. It fails our physicians. It is failing our country. The process is 

failing physicians by encouraging predatory and frivolous lawsuits that 

bring skyrocketing malpractice insurance premiums and, frankly, the 

practice of defensive medicine. Studies have found that in high-risk 
19

specialties, practically speaking, all of the physicians surveyed had 

practiced some form of defensive medicine. And while a dollar amount 

is hard to peg for how much this is costing the system, some estimates 

say that it costs the healthcare system roughly $70 billion a year. 

 The process is also failing the rest of us, the patients, the consumers 

of healthcare in our country. Recently, a study published in the New 

England Journal of Medicine found that for every dollar paid to 

compensate victims of medical malpractice, 54 cents, more than half, of 

that dollar goes to administrative expenses, including lawyers’ fees and 

experts’ fees and court costs. The same study found that these plaintiffs 

had to wait over 5 years to receive compensation that is less than half of 

the total amount. 

 We are commissioning lawyers, we are stifling doctors, and most 

importantly, we are cheating patients by limiting access, by increasing 

costs, and compromising the quality of care. I voted a number of times 

for the House bill that we have passed to reform the medical liability 

system. Clearly, that has not become law, and we need to be thinking of 

some alternative solutions to try and address this problem, and I welcome 

the insights that our panelists will lend and their expertise in how we can 

save our Nation’s healthcare system from this growing problem, 

particularly in my home State of New Jersey where we have an acute 

crisis. Three years ago, we had a baby born during the physician job 

action in New Jersey. A physician walked off the job for a week to raise 

profile of this crisis that they are facing in our State. We happened to 

have a baby that week. Now our physician was there to deliver our child, 

obviously, because they were providing emergency and unscheduled care 

to their patients, but it really was a wake-up call for me in how serious 

this problem is. And our physician who delivered our child, her partner 

and her practice has left the State of New Jersey, and our physician is 

bright, a woman who has spent years and years studying and investing 

time and energy and resources because she wants to deliver babies. She 

is considering giving up the practice of obstetrics altogether. That is a 

serious crisis, and if it is that bad in New Jersey, it is clearly that bad in 

other places around the country where there is even less access to good 

quality healthcare and good physicians. 

 So I am delighted of the hearing. I appreciate your leadership, Mr. 

Chairman. 

 And I look forward to hearing our witnesses. 

 MR. DEAL. I thank the gentleman. 

 I am going to introduce our distinguished panel at this time, but I 

would tell you before we proceed, these are probably the most 

encouraging opening statements I think that I have heard in a long time. 

I hope that that is an indication that what you are going to tell us is going 
20

to be received by both sides of our subcommittee, and I think that is a 

healthy thing. 

 First of all, Ms. Michelle Mello, who is the Associate Professor of 

Health Policy and Law at the Department of Health Policy and 

Management at Harvard University; Mr. James M. Wootton, an attorney 

with a law firm here in Washington, D.C.; Mr. Paul Barringer, General 

Counsel of Common Good; Ms. Margaret VanAmringe, who is Vice 

President of Public Policy and Government Relations of the Joint 

Commission on Accreditation of Healthcare Organizations; Mr. Jeffrey 

O’Connell, who is a Professor of Law at the University of Virginia; Ms. 

Joanne Doroshow, who is the Executive Director of the Center for 

Justice & Democracy; and Ms. Cheryl Niro, who is a partner in a law 

firm in Chicago and is appearing on behalf of the American Bar 

Association. 

 Ladies and gentlemen, we are pleased to have you here. I will tell 

you in advance that your written testimony has been made a part of the 

record, and we would ask, if you would, in the 5 minutes allotted to you, 

please, to summarize your testimony, and we will follow that with 

questions from our subcommittee. 

 Dr. Mello, I would recognize you first. 

STATEMENTS OF MICHELLE MELLO, J.D., PH.D., 

ASSOCIATE PROFESSOR OF HEALTH POLICY AND 

LAW, DEPARTMENT OF HEALTH POLICY AND 

MANAGEMENT, HARVARD UNIVERSITY; JAMES M. 

WOOTTON, PARTNER, MAYER, BROWN, ROWE & MAW, 

LLP; PAUL BARRINGER, GENERAL COUNSEL, COMMON 

GOOD; MARGARET VANAMRINGE, VICE PRESIDENT, 

PUBLIC POLICY AND GOVERNMENT RELATIONS, 

JOINT COMMISSION ON ACCREDITATION OF 

HEALTHCARE ORGANIZATIONS; JEFFREY O’CONNELL, 

J.D., SAMUEL H. MCCOY II PROFESSOR OF LAW, 

UNIVERSITY OF VIRGINIA; JOANNE DOROSHOW, 

EXECUTIVE DIRECTOR, CENTER FOR JUSTICE & 

DEMOCRACY; AND CHERYL NIRO, PARTNER, QUINLAN 

AND CARROLL, LTD., ON BEHALF OF AMERICAN BAR 

ASSOCIATION 

DR. MELLO. Mr. Chairman, members of the subcommittee, thank 

you for the opportunity to speak with you today about some of the things 

I have learned in the course of my research at Harvard on the medical 

liability system. 
21

 I am a lawyer and a health services researcher by training, and my 

work focuses on using empirical analysis of data to try to understand 

how well the system does the things it is supposed to be doing and also 

how it affects healthcare and quality and safety of health services. 

 The medical malpractice system is the best study aspect of our entire 

tort liability system. We have over 30 years of research on practice 

claims data, insurance data, and medical records with which to draw 

some inferences about how the system works. The conclusions that I 

draw, based on the study of this work, are fairly pessimist, but I am 

optimistic about the process for reform. 

 I would just emphasize three points from my written testimony about 

the performance of the medical liability system. 

 First, the system helps very few of the patients that it is intended to 

help. Secondly, the system hemorrhages money in the process of doing 

this. Third, the system has some very painful side effects on medicine. 

 The first part is that the system does a very poor job of getting 

compensation to the people who are entitled to it under the rules that we 

have set up. We know, from research studies at Harvard, that only 

between 3 and 5 percent of patients who are seriously injured by medical 

negligence file a malpractice claim. Only about a quarter of those 

claimants, and less than half of all malpractice claimants, recover money 

in our system. Contrary to popular wisdom, malpractice plaintiffs are 

especially unlikely to receive compensation if their claims are decided by 

a jury, they lose four out of five malpractice trials. So although the juries 

have a lot of resonance to us and to me personally as a lawyer, the data 

doesn’t speak to the notion that juries serve patients’ interests. 

 The second point is that we spend an absolute fortune getting money 

from A to B in this system. As one of the distinguished committee 

members mentioned, all research at Harvard shows that for every dollar 

we pay in malpractice compensation costs, 54 cents are spent on lawyers, 

court costs, insurers, and other administrative expenses. There are much 

more efficient ways to get money to injured people. Even workers’ 

compensation programs, which are not exactly known for being lowbureaucracy organizations, do it at overhead rates of between 20 and 30 

percent rather than 54 percent. Many administrative compensation 

systems get that number down as low as 10 percent. The degree of 

inefficiency that we have been tolerating in our malpractice system is 

absolutely staggering. 

 The third point is that the court litigation process has some painful 

side effects on American medicine. Although the problem is that cost of 

defensive medicine behaviors aren’t known with precision, we do know 

that they exist, they occur often, and they implicate very expensive 

services. Another important effect of a liability system that revolves 
22

around the concept of negligence is a creation of fear and stigma among 

medical professionals. Even if we don’t care particularly about doctors, 

this should be a concern for us, because it makes it harder for patient 

safety efforts to cultivate what they call “a culture of safety” in medicine. 

A legal process, which is punitive and stigmatizing, because it focuses on 

the concept of fault or negligence, instead promotes a culture of silence 

around medical errors. It is hard to move the dialogue about errors to 

notions of preventability and fail-safe fixes when our legal system is so 

fixated on the concept of negligence and individual failures. Now our 

medical liability system costs us dearly in monetary terms, in lost 

opportunities to compensate injured patients who have preventable 

injuries, and in lost chances to improve patient safety. 

 These are fundamental problems and they can’t be addressed with 

incremental reforms such as damages caps. Innovative reforms are 

needed that can make compensation more accessible to patients who 

were preventably injured and that boost the efficiency and reliability of 

the compensation process. Several interesting ideas have been 

percolating over the last two malpractice crises. The most promising 

reform approaches are those that create alternative processes for a 

dispute resolution. The approach I favor is the health courts model, 

which proposes to experiment with moving medical injury claims to an 

alternative administrative compensation process that relies on mutual 

experts, decision guidelines, and a standard for eligibility that 

encompasses a broader group of patients than those who are injured by 

negligence. Early offer programs and other alternative dispute resolution 

processes are also very worthy of consideration. 

 In summary, the problems with the liability system challenge us to 

rethink our attachment to the current system, especially our attachment to 

juries. There are great ideas waiting to be tested. Small-scale 

demonstration projects at the State or even sub-State level are a good 

way to do this at low cost and at low risk. 

 I am happy to discuss these ideas further in the question-and-answer 

period or at any time convenient to you, and I thank you again for 

hearing me today. 

 [The prepared statement of Michelle Mello, J.D., Ph.D., follows:] 

PREPARED STATEMENT OF MICHELLE MELLO, J.D., PH.D., ASSOCIATE PROFESSOR OF 

HEALTH POLICY AND LAW, DEPARTMENT OF HEALTH POLICY AND MANAGEMENT,

HARVARD UNIVERSITY

Summary of Testimony 

The American medical liability system performs its core functions poorly, at 

tremendous cost and with unfortunate effects on health care delivery. 
23

1. Compensation of injured patients: Less than 5% of patients who are seriously 

injured by medical negligence file malpractice claims, and less than half those 

who claim receive compensation. Patients are especially unlikely to receive 

compensation if their claims are decided by a jury.

2. Deterrence of medical error: There is very little evidence to suggest that the 

threat or experience of being sued leads doctors and hospitals to make 

systematic improvements in the safety of the care they deliver.

3. “Corrective justice”: Although the system gives claimants their “day in court” 

and an opportunity to hold health care providers accountable for their 

negligence, it does not secure other important aspects of “making whole” 

patients who are injured, such as hearing an apology or public admission of 

responsibility. The system provides no corrective justice to the 95-97% of 

seriously injured patients who don’t file a claim.

4. Efficiency: Exorbitant amounts of money are spent to get compensation to the 

few patients who receive it. On average, about 55 cents on the dollar in 

malpractice system costs are spent on administrative expenses. 

5. Side effects on health care delivery: Among the unintended effects of the 

malpractice system on health care are “defensive medicine” behaviors, which 

increase the costs of care, and creation of a culture that discourages openness 

and information-sharing about medical adverse events. 

 These are fundamental problems that cannot be addressed by incremental reforms, 

such as damages caps. Innovative reforms are needed that can 

• make compensation more accessible to patients who sustain preventable 

injuries; 

• make the process of determining eligibility for compensation cheaper and 

faster; 

• make compensation decisions more accurate and reliable (ideally through 

incorporation of the best available clinical evidence into decision making); 

• make assessments of damages more consistent across similar cases; and 

• make the system less threatening to doctors and encourage transparency about 

errors 

The most promising reform approaches are those that create alternative processes for 

dispute resolution. Among these are the “health courts” model—moving medical injury 

claims to an administrative system that relies on neutral experts and has a broader 

eligibility standard than the tort system—and “Early Offer” programs. 

I am grateful for the opportunity to speak with you today about America’s medical 

liability system and the need for innovative solutions to improve it. 

I am an Associate Professor Health Policy and Law at the Harvard School of Public 

Health. I am trained as a lawyer and health services researcher, and my work focuses on 

the empirical analysis of medical liability. I examine data on malpractice claims, 

insurance costs, and the organization and delivery of health services to try to understand 

how well the liability system is performing on its main functions and what effects it has 

on the quality and availability of health care. 

My work has led me to conclude that our medical liability system is in need of 

significant reform, and that the conventional array of tort reform options will not get us 

where we need to be. Farther-reaching changes are required. In my testimony today, I 

will describe what is known about the performance of the medical liability system on 

several key measures, and comment briefly on reforms that would boost its performance. 
24

Measuring the Performance of the Medical Liability System 

Legal scholars think about the tort liability system as having three core functions: 

injury compensation, injury prevention (sometimes called “deterrence”), and corrective 

justice. Two other key criteria for thinking about how well our medical liability system 

performs are how efficiently it performs its core functions, and whether it has unwelcome 

side effects on health care delivery. I will review the evidence on each of these 

performance measures in turn. 

 

1. Compensation 

The most basic function of a medical liability system is to get compensation to 

people who are injured by medical care that falls below a particular standard of care. In 

our system, that standard of care is negligence. A well-functioning liability system 

should get fair compensation to all or most of those patients who are injured by 

negligence (and who desire compensation), and should give money to few or none of 

those patients whose injuries are not due to negligence. 

This is not the way our system works. Three large-scale studies conducted by 

Harvard researchers over the last 15 years, involving reviews of thousands of hospital 

medical records and malpractice claims files from liability insurers, produced the 

following findings: 

• Between 95% and 97% of patients who sustain serious injuries due to 

negligence in the hospital never file malpractice claims.1, 2

• Of those patients who do file claims, the majority (46%) receive no 

compensation.3

 Thus, overall, 1 to 2 percent of patients injured by negligence 

are compensated by the system. 

• Patients whose claims are decided by a jury are especially unlikely to receive 

compensation (21% versus 61% for claims resolved out of court).3

• The system attracts both meritorious and non-meritorious claims.1-3 In about a 

third of cases, the injury does not appear to be due to errors in care (in the 

judgment of an expert reviewing the medical and litigation record).3

• Juries are tough even on patients with meritorious cases. The odds that a claim 

involving a medical error is denied compensation are about 4 times higher if a 

jury decides the case than if the case is resolved out of court, even after 

controlling for injury severity and other characteristics that may differ across 

the two groups of claims.3

 

• The system pays both meritorious and non-meritorious claims,4

 although it is 

more likely to award money in meritorious cases. The system “gets it right” 

about three quarters of the time: 3 out of 4 non-meritorious claims are denied 

payment and 3 out of 4 meritorious claims receive payment.3

• Jury verdicts tend to produce large variation in damages awards for injuries of 

similar severity.5

Thus, the malpractice system appears to be doing a reasonable job in two specific 

aspects of its compensation function: (1) it is not predominantly attracting claims that are 

frivolous; and (2) it is usually directing compensation to meritorious claims rather than 

non-meritorious ones. Portraits of a system inundated with costly frivolous lawsuits are 

overblown. So are portraits of the system as a “lawsuit lottery,” where awards are 

unconnected to the merits of the claim. 

But to interpret this pair of findings as indicating that the medical liability system is 

performing its compensation function well would be misguided. There are three other 

factors to consider. First, a system that only helps about 1 in 50 of the patients who are 

eligible for compensation under the rules we have set up is not doing a good job of 

providing compensation. 
25

Second, a system that awards very different amounts of money—even different 

amounts of “pain and suffering” damages, which should not vary according to plaintiff 

characteristics such as age and earning power—to plaintiffs with similar injuries raises 

questions about fairness in compensation. 

Third, although non-meritorious claims do not predominate in the system, they do 

account for a third of the caseload. One likely explanation is that plaintiffs and their 

attorneys have some initial uncertainty about whether a case is likely to succeed. One 

reason for this is that it’s often hard for a patient to find out what happened in an episode 

of medical care that had a bad outcome; filing a lawsuit may be the only way to get 

information. Another reason is that patients, lawyers, and even doctors may be unsure 

about what the legal standard of care (negligence) requires of them in particular 

circumstances. Even expert reviewers often disagree about what constitutes negligence. 

Thus, claims that ultimately prove non-meritorious may not appear so at the outset (and 

vice versa). 

Overall, if I was to grade the malpractice system’s performance on the compensation 

function, I’d give it a D. 

2. Deterrence of Medical Error 

The second core function of the tort liability system, and the basis on which it is 

most often defended, is to deter negligence and thereby prevent injuries. In theory, the 

system creates incentives for doctors and hospitals to take appropriate precautions to 

prevent injuries by imposing an economic penalty when they don’t. 

This theory rests on some assumptions about the organization of health care that 

aren’t borne out in reality, and empirical evidence suggests that we don’t get much 

deterrence out of the system. One important problem is uncertainty. Deterrence rests on 

the assumptions that health care providers understand what the law is asking them to 

do—that is, what the standard of care is—and what the penalty will be if they don’t 

comply. But the negligence standard is ambiguous and doesn’t always clearly signal 

what appropriate care constitutes. That’s particularly true in a legal system that produces 

little or no written record that doctors could consult. Settlements and insurers’ case files 

are confidential, and jury verdicts produce no written decisions. It’s also hard to gauge 

what the penalty for negligence in a particular circumstance would be, because there is so 

much variation in litigation outcomes and awards. 

Another key assumption is that physicians actually “feel” the economic 

consequences of their negligence. This tends not to be true in reality. Nearly all 

physicians have liability insurance. Although in theory, judgments can go beyond the 

limits of malpractice awards, this is extremely rare in practice. Moreover, liability 

insurance isn’t individually experience rated, meaning that the premiums that a particular 

doctors pays don’t change from year to year depending on whether she had a judgment 

against her. That makes it very different from car insurance: if we are at fault in a car 

accident, we pay for it the next year in higher premiums. That makes us try hard to avoid 

accidents. Malpractice insurance, in contrast, is generally priced only by specialty and 

geographic region. 

Another reason doctors and hospitals don’t tend to feel the consequences of 

negligence is that so few instances of negligent injury result in a malpractice claim. Most 

of the time, nothing happens. 

All of these factors should make us skeptical of the deterrent value of the 

malpractice system. And indeed, there is very little empirical evidence that deterrence 

occurs in any systematic way. For example, in obstetric care, the best-studied field, 

research has failed to identify any differences in the quality of care rendered by 

obstetricians with varying histories of malpractice claims.6

 Other studies found no 

systematic improvement in any of several birth outcomes associated with a physician’s 

prior claims experience.7, 8 
26

Proponents of the tort system point to some isolated but impressive examples of 

safety improvement to rebut this argument. The leading example is the successful effort 

of anesthesiologists to reduce their malpractice claims by reducing the incidence of 

anesthesia injuries.9

Taking into account such anecdotes, overall, I would give the malpractice system an 

overall grade of C on its deterrence function. 

3. Corrective Justice 

The third major function of the tort liability system is to provide claimants with 

“corrective justice.” The notion of corrective justice has two strands: a soft one that calls 

for financial restitution to make victims “whole” after they are injured by negligence, and 

a harder one that addresses a human impulse to express anger towards, condemn, and 

punish wrongdoers. Both strands point to having a public process to hold wrongdoers 

accountable for their actions.10 

The tort liability system fits well with notions of corrective justice. Claimants gain 

access to a means of learning about what happened to them, showing health care 

providers how their actions have affected them, demanding that providers accept 

responsibility, receiving money, and (at least in theory) imposing a financial penalty on 

the provider, as well as the reputational and psychological burdens of being sued. 

Research indicates that malpractice plaintiffs are often motivated to sue by feelings of 

anger and frustration and a desire to get back at providers who have not communicated 

appropriately or dealt sensitively with them,11-13 so these opportunities may be highly 

valued by claimants. 

But other research suggests that injured patients’ corrective-justice needs could be 

met through a less punitive process. What many malpractice claimants want is to hear 

the provider acknowledge that an error occurred that hurt the patient, apologize or 

otherwise take responsibility for what happened, and assure the patient that attempts will 

be made to fix the problem so that others will not be similarly hurt.14 That does not 

require malpractice litigation and is not facilitated by the adversarial litigation process. 

Thus, although the medical liability system serves some aspects of corrective justice 

fairly well, it ignores other aspects. Moreover, it’s important to remember that only 

claimants get the benefit of corrective justice in the system, and less than 5% of patients 

with serious injuries due to negligence ever become claimants. 

These considerations lead me to give the medical liability system an overall grade of 

B on its corrective justice function, and that is probably generous. 

4. Efficiency 

A well-performing medical liability system would perform its core functions 

efficiently, minimizing transaction costs and waste. Our system does not work this way. 

Research at Harvard shows that for every dollar paid in compensation to plaintiffs, 54 

cents goes towards administrative costs—the costs of lawyers, experts, insurers, and so 

forth.3

 This is similar to previous estimates.15 In part, these high costs reflect the length 

of litigation. On average, in our study, 3 years elapsed between the opening and closing 

of a claim. 

Compared to other compensation systems, this is a tremendously high overhead rate. 

The equivalent figure for workers’ compensation systems, for example, is generally in the 

20-30% range.16, 17 For many disability insurance schemes—public and private—it runs 

as low as 10-15%. 

Another telling feature of these administrative costs is where they get spent. In our 

recent study of hospital malpractice claims, about 80% of the administrative costs were 

incurred resolving meritorious claims. This finding highlights that the process of proving 

negligence is lengthy and costly. It typically requires extensive legal discovery and 

testimony by multiple expert witnesses. The negligence standard itself is murky and 
27

contested; even in the controlled and non-adversarial context of research studies, expert 

reviewers frequently disagree about the presence or absence of negligence in a particular 

case of medical injury.18 The pressures and biases of the litigation process only 

compound this disagreement. 

If a more efficient system existed for determining eligibility for compensation, the 

money currently absorbed by administrative costs could be redirected toward 

compensation. A worthy target for that money would be patients who experience 

medical injuries that are both severe and preventable but don’t receive compensation 

because they never file a claim. 

In terms of efficiency, I would give our medical liability system a grade of F. 

5. Side Effects on Health Care Delivery 

It is reasonable to judge the medical liability system on the basis of its unintended 

effects on health care providers and the quality of care, as well as its performance on its 

core functions. Unfortunately, the side effects of the system are predominantly 

negative.10 

One important effect is defensive medicine. Defensive medicine refers to physicians 

changing the way care they deliver care—ordering unnecessary tests, for example, or 

ceasing to perform high-risk procedures—in order to try to minimize their exposure to 

malpractice litigation. 

It is not known with any reasonable degree of certainty how prevalent defensive 

medicine is, what its health impact is, or how much it costs the health care system.10, 19 

But there is solid evidence that it exists, and its adverse impact may be very substantial.20, 

21 Recent research in Pennsylvania by my group at Harvard suggests that doctors in 

specialties like orthopedic surgery and obstetrics are especially prone to this behavior, 

and that it gets worse during so-called “malpractice crisis” periods.21 

A second effect that the liability system has on health care is to create friction with 

efforts to improve patient safety.

22 Building a culture of safety in medicine requires that 

physicians be willing to share information about injuries with systems that can use it to 

learn about injury prevention. Emulating other industries involving complex services that 

are prone to error, such as aviation and nuclear energy, the patient safety movement has 

sought to create mechanisms for immediate reporting of poor outcomes and analysis of 

what may have gone wrong. 

The threat of malpractice litigation in our present liability system undercuts these 

efforts to encourage openness.23 Doctors are fearful that information they provide may 

be used against them in court, and aware of the stigmatizing effect of a finding of 

negligence, which doctors tend to equate with incompetence.24, 25 Although there is little 

evidence with which to gauge the role that legal fears, as opposed to other factors, have 

played in discouraging doctors from disclosing and reporting medical injuries,9

 the notion 

that liability pressure is a major driver fits the conventional wisdom among physicians 

and has some empirical support.26 Certainly, the tort system isn’t making it any easier for 

the patient safety movement to accomplish its goals. 

Overall, I would give the liability system a D grade for its effects on health care 

delivery. 

Promising Options for Reforming the Medical Liability System 

In summary, the medical liability system does not perform well on its major 

performance criteria. The most trenchant criticisms that can be made, based on the 

evidence gathered in research studies, are: 

• Many patients with severe, preventable injuries miss out on compensation, 

sometimes because their legitimate claims are not paid but much more often 

because they never bring a claim. 
28

• Juries do not decide the vast majority of claims, and when they do, plaintiffs 

usually lose. 

• The process is slow and extremely costly. 

• Malpractice litigation and the threat of it do not appear to result in systematic 

improvements in patient safety; rather, the liability system tends to thwart 

patient safety initiatives. 

These are fundamental problems that cannot be addressed by incremental reforms, 

such as damages caps or pretrial screening panels. Creative thinking is needed to: 

• Make compensation more accessible to patients who sustain preventable 

injuries; 

• Make the process of determining eligibility for compensation cheaper and 

faster; 

• Make compensation decisions more accurate and reliable (ideally through 

incorporation of the best available clinical evidence into decision making); 

• Make assessments of damages more consistent across similar cases; and 

• Make the system less threatening to doctors and encourage transparency about 

errors 

I believe that experiments with alternatives to medical tort litigation are a good idea. 

How promising and successful these alternatives are will depend on their design features. 

With support from the Robert Wood Johnson Foundation, my research group at the 

Harvard School of Public Health, in collaboration with Common Good, has been working 

on the design of such an experiment. Paul Barringer from Common Good will outline the 

major features of our approach, which we call “health courts,” in his testimony today. In 

brief, the idea is to move medical injury claims into an administrative system that relies 

on neutral experts, and expand the pool of patients who are eligible for compensation. 

There are a variety of other innovative alternative dispute resolution (ADR) 

approaches that also warrant serious consideration. Jeffrey O’Connell will discuss one of 

these, the “Early Offer” program, in his testimony today. 

Much is unknown about how well alternatives to traditional malpractice litigation 

will work. Therefore, the appropriate next step is to launch demonstration programs 

accompanied by careful evaluation to assess how well the alternative models have 

performed relative to tort litigation. 

Conclusion 

One of the perplexing aspects of the tort reform debates of recent years is that they 

rarely engage the system’s true failings. Instead, they tend to fixate on traditional 

reforms, despite evidence that those approaches are not very helpful.19 There are good 

reasons to criticize the system’s performance, but it is important to do so for the right 

reasons, because the diagnosis informs the treatment. To be effective in improving the 

performance of the medical liability system, reforms must tackle the core problems that I 

have outlined. 

That may mean rethinking our historical attachment to juries as a means of resolving 

malpractice disputes, especially if we are committed to the goal of getting compensation 

to more injured patients. Contrary to the popular wisdom, juries tend to be tough on 

malpractice plaintiffs. Plaintiffs lose about four in five trials. Moreover, for plaintiffs 

who do win, trials are an expensive way to obtain compensation because the substantial 

costs incurred by the plaintiff’s lawyer in getting to trial are paid by the successful 

plaintiff through contingent fees. 

Finally, the vast majority of medical malpractice claims will not go before a jury. 

National statistics suggest that only about 5-10% of claims reach trial, and this statistic 
29

has held fairly steady over time. In other words, approximately 55,000 of the 60,000 

patients who seek compensation for medical injuries each year will resolve their claims 

out of court. It is imperative that the system work well for them. Therefore, in choosing 

among reform options, we should be careful not to hold the interests of the many hostage 

to the interests of the few, especially when serious questions surround how well the 

interests of the few are served by the current system. 

Although I have painted a rather bleak picture of the medical liability system, I am 

optimistic about the prospects for improving it. There are good ideas waiting to be 

tested. I hope that you will give them serious consideration. 

References 

1. Studdert DM, Thomas EJ, Burstin HR, Zbar BI, Orav EJ, Brennan TA. Negligent 

care and malpractice claiming behavior in Utah and Colorado. Medical Care. Mar 

2000;38(3):250-260. 

2. Localio AR, Lawthers AG, Brennan TA, et al. Relation between malpractice claims 

and adverse events due to negligence. Results of the Harvard Medical Practice 

Study III. N Engl J Med. Jul 25 1991;325(4):245-251. 

3. Studdert DM, Mello MM, Gawande AA, et al. Claims, errors, and compensation 

payments in medical malpractice litigation. New England Journal of Medicine. May 

11 2006;354(19):2024-2033. 

4. Brennan TA, Sox CM, Burstin HR. Relation between negligent adverse events and 

the outcomes of medical-malpractice litigation. N Engl J Med. Dec 26 

1996;335(26):1963-1967. 

5. Studdert DM, Yang YT, Mello MM. Are damages caps regressive? A study of 

malpractice jury verdicts in California. Health Affairs. Jul-Aug 2004;23(4):54-67. 

6. Entman SS, Glass CA, Hickson GB, Githens PB, Whetten-Goldstein K, Sloan FA. 

The relationship between malpractice claims history and subsequent obstetric care. 

Jama. Nov 23-30 1994;272(20):1588-1591. 

7. Sloan FA, Whetten-Goldstein K, Githens PB, Entman SS. Effects of the threat of 

medical malpractice litigation and other factors on birth outcomes. Med Care. Jul 

1995;33(7):700-714. 

8. Dubay L, Kaestner R, Waidmann T. The impact of malpractice fears on cesarean 

section rates. Journal of Health Economics. Aug 1999;18(4):491-522. 

9. Hyman DA, Silver C. The poor state of health care quality in the U.S.: is 

malpractice liability part of the problem or part of the solution? Cornell Law 

Review. May 2005;90(4):893-993. 

10. Mello MM, Studdert DM. The medical malpractice system: structure and 

performance. In: Sage WM, Kersh R, eds. Medical Malpractice and the U.S. Health 

Care System: New Century, Different Issues. Cambridge, UK: Cambridge 

University Press; 2006:11-29. 

11. Beckman HB, Markakis KM, Suchman AL, Frankel RM. The doctor-patient 

relationship and malpractice. Lessons from plaintiff depositions. Arch Intern Med. 

Jun 27 1994;154(12):1365-1370. 

12. Hickson GB, Clayton EW, Entman SS, et al. Obstetricians' prior malpractice 

experience and patients' satisfaction with care. Jama. Nov 23-30 

1994;272(20):1583-1587. 

13. Hickson GB, Clayton EW, Githens PB, Sloan FA. Factors that prompted families to 

file medical malpractice claims following perinatal injuries. Jama. Mar 11 

1992;267(10):1359-1363. 

14. Gallagher TH, Waterman AD, Ebers AG, Fraser VJ, Levinson W. Patients' and 

physicians' attitudes regarding the disclosure of medical errors. Jama. Feb 26 

2003;289(8):1001-1007. 
30

15. Kakalik JS, Pace NM. Costs and compensation paid in tort litigation. Santa 

Monica, CA: RAND; 1986. R-3391-ICJ. 

16. Weiler P, Hiatt H, Newhouse J, Johnson W, Brennan T, Leape L. A measure of 

malpractice: medical injury, malpractice litigation, and patient compensation. 

Cambridge, MA: Harvard University Press; 1993. 

17. Bovbjerg RR, Sloan FA. No-fault for medical injury: theory and evidence. 

University of Cincinnati Law Review. 1998;67:53-123. 

18. Thomas EJ, Lipsitz SR, Studdert DM, Brennan TA. The reliability of medical 

record review for estimating adverse event rates. Ann Intern Med. Jun 4 

2002;136(11):812-816. 

19. Mello MM. Medical malpractice: impact of the crisis and effect of state tort 

reforms. Princeton, NJ: The Robert Wood Johnson Foundation; May 2006. 10. 

20. Kessler D, McClellan M. Do doctors practice defensive medicine? Quarterly 

Journal of Economics. 1996;111:353-390. 

21. Studdert DM, Mello MM, Sage WM, et al. Defensive medicine among high-risk 

specialist physicians in a volatile malpractice environment. Jama. Jun 1 

2005;293(21):2609-2617. 

22. Mello MM, Studdert DM, Kachalia A, Brennan TA. "Health courts" and 

accountability for patient safety. Milbank Quarterly. 2006;(forthcoming). 

23. Bovbjerg RR, Berenson RA. Surmounting myths and mindsets in medical 

malpractice. Washington, D.C.: The Urban Institute; October 2005. 

24. Lawthers AG, Localio AR, Laird NM, Lipsitz S, Hebert L, Brennan TA. Physicians' 

perceptions of the risk of being sued. Journal of Health Politics, Policy and Law. 

Fall 1992;17(3):463-482. 

25. Liang BA. Risks of reporting sentinel events. Health Affairs. Sep-Oct 

2000;19(5):112-120. 

26. Lamb RM, Studdert DM, Bohmer RM, Berwick DM, Brennan TA. Hospital 

disclosure practices: results of a national survey. Health Affairs. Mar-Apr 

2003;22(2):73-83. 

MR. DEAL. Thank you.

 Mr. Wootton. 

MR. WOOTTON. Thank you, Mr. Chairman and members of the 

subcommittee for giving me this opportunity to share my perspective on 

the shape of the next generation of national medical liability reform and 

the direction it might take, and most importantly, its potential 

contribution to the goal of transforming our healthcare system to better 

serve the needs of patients. 

 I want to make clear that while I have discussed a lot of these ideas 

with many stakeholders, these views are my own and are based on my 

career in legal reform. 

 In my opinion, the current court-based medical liability system, even 

after the usual reforms are implemented, does not well serve the interest 

of patients or healthcare professionals, nor will it facilitate desirable 

healthcare transformation. There are, in fact, better alternatives. 

 At a time when the viability of the current reform approach is 

embodied in H.R. 5 is being questioned, versions of which have passed 

the House a number of times but have never passed the Senate, 

proponents of reform have the opportunity to reclaim the debate. 
31

 Advocates of medical liability reform, in my opinion, should now 

put more emphasis on patient safety and put liability reform in the 

context of a broader healthcare transformation agenda. The healthcare 

industry and policymakers can now go on record offering a new contract 

with the public, which is that we will do all we can to reduce the 

avoidable risk of medical treatment but also provide fair, fast, and 

accessible access to healthcare and medical liability compensation. 

Patients are concerned about access to healthcare. I think the Chairman 

is absolutely right. But they are also concerned about the system to 

which they have access. They care about patient safety. They care about 

finding new cures for diseases. They care about expedited drug 

approval. They care about improving the doctor-patient relationship, and 

they care about improving the patient literacy. All of these goals are 

related in some way to the medical liability system. 

 Today, the tort system is seen as an impediment of the free exchange 

of information related to medical errors and adverse events. The Institute 

of Medicine has repeatedly declared that patients’ safety is hindered by 

our current system of legal liability which discourages the disclosure of 

very vital information that could reduce avoidable medical errors. 

 It is system errors, not individual errors by doctors that are most 

prominent in the Institute of Medicine’s concern. Therefore, I am 

suggesting the creation, at the national level, of the National Center for 

Medical Data, and at the State level, a patient safety and compensation 

system that works in a coordinated fashion. This is based on the notion 

that the experience rate of compensation systems with a very low cost of 

claiming would drive up the standard of care more effectively than the 

random imposition and punitive or extreme damages in the tort system 

today. There is a recent CRS study that provides a lot of data that 

supports this kind of approach. 

 If we take this holistic approach, then we can focus on prevention. 

With or without legislation, there should be a lot more emphasis on 

preventing disease. A lot of people look at the cost equation and look at 

the incidents of disease and the cost of treatment. We never look at 

lowering the incidents of disease. We always look at lowering the cost 

of treatment. I think we ought to spend more time focused on lowering 

the incidents of disease, with or without legislation. 

 But if there is legislation, and I think, really, we are discussing today 

a framework, not a detail, it should include a National Medical Data 

Center. It should go along the work that was done by Congress to 

provide information to patient safety organizations. There should be an 

electronic healthcare imitative that provides leadership and incentives at 

the State level to break through the inertia that is preventing the adoption 

of electronic medical records and patient safety programs. 
32

 I do think there is a case to be made for uniform national standards. 

We are in a different world today. I was in the Reagan Administration. 

We struggled over the Federalism Executive Order. We did it in an era 

that was very different from today. Now healthcare has become such a 

large cost of business, it effects the competitive position among 

manufacturers. Healthcare, itself, is a national industry. 

 I think that we should look very strongly at creating alternatives at 

the State level or encouraging alternatives at the State level that take into 

account the fact that it is with an experienced rate of compensation 

system and trusted regulators where we overcome the distrust of the very 

bodies that are charged with protecting the public in giving them tools 

they need so that we can get a bipartisan consensus on what we need to 

do to go forward. 

 I have some slides, which are available during the question-andanswer period, if they are of interest, and I look forward to the 

committee’s questions. 

 Thank you, sir. 

 [The prepared statement of James M. Wootton follows:] 

PREPARED STATEMENT OF JAMES M. WOOTTON, PARTNER, MAYER, BROWN, ROWE & MAW 

LLP 

Summary 

The current tort-based medical liability system – even after the usual reforms – does 

not well serve the interests of patients or healthcare professionals nor will it facilitate 

desirable healthcare transformation. There are better alternatives. 

Advocates of medical liability reform should put more emphasis on patient safety 

and put liability reform in the context of a broader healthcare transformation agenda. The 

healthcare industry and policymakers could offer a new contract with the public — “We 

will do all we can to reduce the avoidable risks of medical treatment but also will provide 

a fair, fast and accessible system to compensate patients when avoidable injuries do 

occur.” Patients are concerned about access to healthcare, but they also want to improve 

patient safety, find new cures for diseases, expedite drug approval, improve doctorpatient relationships and increase patient literacy. 

Today, the tort system is seen as an impediment to the free exchange of information 

related to medical errors and adverse events. The Institute of Medicine (IOM) has 

repeatedly declared that patient safety is hindered by our current system of legal liability 

which discourages the disclosure of the very information that could reduce avoidable 

medical errors. As the IOM found, it is not mistakes by doctors that cause most medical 

injuries – it is system errors or an absence of a system. Therefore, I am suggesting the 

creation of a National Medical Data Center at the federal level and Patient Safety and 

Compensation Systems at the state level where the medical liability system is seen as a 

component of a much larger patient safety system. These new systems would facilitate – 

not inhibit – positive healthcare transformation and serve the interest of all the 

stakeholders in our healthcare system. 

The country is at a crossroads in dealing with healthcare – either moving toward 

more government involvement and control or focusing on better defining and executing 

the government’s necessary role in a market-based healthcare system that maximizes 

individual freedom and provides the necessary incentives for hard work and innovation. 
33

The goal of this legislation would be to provide the leadership and expertise needed to 

overcome inertia and move the country toward a shared vision of a transformed 

healthcare system. It also recognizes that legal reform is a critical step on that path. To 

pass this legislation and, indeed, to achieve the broader goals of healthcare transformation 

will require bipartisan cooperation and a coordinated effort by employers, health insurers, 

medical professionals and medical manufacturers with patient and consumer groups. 

It is reasonable to conclude that widespread adoption of some version of this 

systematic approach to medical liability and the electronic medical systems that promote 

patient safety could save the country as much as $114 billion out of the $1.6 trillion 

currently spent on healthcare annually and, more importantly, thousands of lives. 

* * * * 

James M. Wootton is a partner in Mayer, Brown, Rowe & Maw LLP and former 

president of the U.S. Chamber Institute for Legal Reform. Wootton was the founder and 

president of the Safe Streets Coalition and helped create the National Center for Missing 

and Exploited Children and other national programs while an official of the Reagan 

Justice Department.

Thank you, Mr. Chairman, for the opportunity to share my perspective on the shape 

the next generation of national medical liability reform might take and its potential 

contribution to the goal of transforming our healthcare system to better serve the needs of 

patients. I want to make clear that while I have discussed these ideas with many 

stakeholders in the healthcare system, the views I share today are my own. In my opinion 

the current tort-based medical liability system – even after the usual reforms are 

implemented – does not well serve the interests of patients or healthcare professionals nor 

will it facilitate desirable healthcare transformation. There are better alternatives. 

At a time when the viability of the current reform approach as embodied in HR 5 is 

being questioned, versions of which have passed the House eight times but have never 

passed the Senate, proponents of reform have the opportunity to reframe the debate. 

Access to Medical Care

If the rationale given for medical liability reform is limited to the argument that high 

malpractice premiums reduce access to medical care because in one way or another 

medical professionals will withhold their services – by moving out of state, retiring, even 

choosing not to become a doctor – then the focus tends to be on the needs of the doctor. 

While these arguments are valid – even compelling – they have not been sufficient to 

create broad, bi-partisan support for reform at the national level. 

Advocates for reform should put more emphasis on patient safety and put liability 

reform in the context of a broader agenda of healthcare transformation. What do patients 

and their advocates care about? What would a transformed healthcare system look like? 

And in what ways is the current medical liability system impeding progress toward that 

vision? 

Successful legal reform efforts in the past have had three common elements: 1) a 

benefit to consumers and potential plaintiffs; 2) balance and fairness; and 3) sufficient 

stakeholder unity. The surprise passage of a very comprehensive Y2K Liability Act in 

1999 had all of these elements – including the passionate support of the high tech 

industry, which is a very attractive constituency for both political parties. Successful 

federal medical liability reform will need those elements as well. 

A New Contract with Patients

Putting more emphasis on patient safety would allow the healthcare industry and 

policymakers to offer a new contract with the public — “We will do all we can to reduce 
34

the avoidable risks of medical treatment and will provide a fair, fast and accessible 

system to compensate patients when avoidable injuries do occur.” 

Without question, access is chief among patient concerns. As you know, enormous 

intellectual and political effort is going into making healthcare more accessible – the 

Medicare Drug Benefit, Healthcare Savings Accounts, CMS reimbursement policies and 

coverage for the uninsured, etc. The cost issues top many stakeholders’ agendas. 

But patients and their advocates also care about the quality of the healthcare system 

to which they have access. They care about improving patient safety, finding new cures 

for diseases, expediting drug approval, improving doctor-patient relationships and 

improving patient literacy. 

There are many passionate advocates for adopting policies that will facilitate 

healthcare transformation made possible because of advances in information technology 

and understanding of the human genome. In a 2004 speech at the National Press Club, 

Senator Frist painted a compelling picture of the future healthcare system he would like 

to see by introducing the audience to a fictional patient from the year 2015: 

The patient, Rodney Rogers, is a 44-year-old man from the small town of 

Woodbury, Tennessee. He has several chronic illnesses, including diabetes, 

hypercholesterolemia, and hypertension. He is overweight. He quit smoking about 

eight years ago. His father died in his early 50s from a massive myocardial 

infarction. In 2005, Rodney chose a health savings account in combination with a 

high-deductible insurance policy for health coverage. 

Rodney selected his primary medical team from a variety of providers by 

comparing on-line their credentials, performance rankings, and pricing. Because of 

the widespread availability and use of reliable information, which has generated 

increased provider-level competition, the cost of healthcare has stabilized and in 

some cases has actually fallen, whereas quality and efficiency have risen. Rodney 

periodically accesses his multidisciplinary primary medical team using e-mail, 

video conferencing, and home blood monitoring. He owns his privacy-protected, 

electronic medical record. He also chose to have a tiny, radio-frequency computer 

chip implanted in his abdomen that monitors his blood chemistries and blood 

pressure. 

Rodney does an excellent job with his self-care. He takes a single pill each day 

that is a combination of a low dose of aspirin, an angiotensin-converting–enzyme 

(ACE) inhibitor, a cholesterol-lowering medication, and a medication to manage his 

blood sugar. That’s one pill daily, not eight. He gets his routine care at his local 

clinic. He can usually make a same-day appointment by e-mail. 

Unfortunately, chest pain develops one day while Rodney is on a weekend trip 

several hundred miles from home. The emergency room physician quickly accesses 

all of Rodney’s up-to-date medical information. Thanks to interoperability 

standards adopted by the federal government in 2008, nearly every emergency room 

in the United States can access Rodney’s health history, with his permission. The 

physician diagnoses an evolving myocardial infarction by commanding Rodney’s 

implanted computer to perform a series of rapid diagnostic tests. The cardiologist 

in the “nanocath” lab injects nanorobots intravenously, and remotely delivers the 

robots to Rodney’s coronary arteries. The tiny machines locate a 90 percent lesion 

in the left anterior descending coronary artery and repair it. 

The hospital transmits the computerized information about Rodney’s treatment, 

seamlessly and paperlessly, to Rodney’s insurer for billing and payment. The 

insurer pays the hospital and physicians before Rodney returns home. Payments are 

slightly higher to this hospital than to its competitors because of its recognized high 

quality and performance. Rodney’s hospital deductible and co-insurance are 

automatically withdrawn from his health savings account. Because Rodney has met 
35

all his self-management goals this year, he gets a 10 percent discount on the 

hospital deductible. 

Senator Frist concluded that: “Rodney’s world is the future. The high-quality, rich 

information and common-sense efficiency inherent in Rodney’s care are all within our 

grasp. In fact, we have seen similar and even greater transformations in equally complex 

sectors of our economy. It is time that healthcare follows the rest of our competitive 

economy and information society into the 21st century.” 

All those who would like to see such a system in the future should be asking 

whether our current tort-based medical liability system will help or hinder our efforts to 

achieve that vision. Or, whether politically achievable patient safety and compensation 

systems would better serve that vision and the interests of patients. 

Problem with Current Medical Liability System

There are many problems with the current tort-based liability system which have 

been well-documented elsewhere. 

Access/Cost: 

o The current system is creating a shortage of providers. 

o Fear of litigation causes physicians to practice defensive medicine. 

o The current system raises healthcare costs generally, often beyond the reach of 

the most vulnerable. 

Inefficiency: 

o The current system provides inadequate compensation to injured patients. 

o Injured persons face a lengthy wait before receiving compensation. 

o Litigation includes high transaction costs which substantially reduce actual 

payments to plaintiffs. 

Innovation: 

o Litigation slows down the cycle of innovation and impedes the FDA approval 

process. 

o Litigation increasingly involves layperson juries often second-guessing FDA 

science-based determinations. 

o The current liability system has adversely impacted women’s health. 

o Litigation concerns cause safe and effective drugs to be withdrawn or 

completely withheld from the market. 

Doctor-Patient Relationships: 

o Inhibits communication between doctors, their patients and their colleagues. 

o Litigation-related advertising causes patients to stop taking properly prescribed 

medicines. 

o Fear of litigation causes some doctors not to prescribe medicines they believe 

are appropriate. 

Patient Literacy:

o Litigation concerns contribute to confusing communications on drug labels, 

patient packet inserts and other patient information. 

Use of Electronic Medical Records and Systems: 

o Many doctors and hospitals fear that electronic medical records will be used as 

a resource for litigation by lawyers. 
36

Misplaced Trust

My perception is that the only reason the public endures a medical liability system 

that contributes to so many problems is that it believes aggressive personal injury lawyers 

are essential to keep doctors and medical manufacturers honest. They may also believe 

that the medical industry has too much influence over the government bodies designed to 

protect the public, such as state medical boards and the FDA. The plaintiffs bar often 

uses those fears to justify asking their political allies to block reforms of the current tortbased medical liability system. 

However, in looking at this question eSapience, a think-tank in Cambridge, 

Massachusetts, found there are many who question whether the current medical liability 

system helps or hinders patient safety. In a 1999 study the Institute of Medicine (IOM) 

estimated that as many as 98,000 Americans die each year as a result of preventable 

medical errors. Many of these deaths result from errors caused by the misuse of drugs 

and medical devices regulated by the FDA. The IOM and others also suggest that more 

than half the errors that underlie those deaths can be linked to failed systems and 

procedures that are poorly designed to accommodate the complexity of healthcare 

delivery. 

Seven years later, improvements in patient safety can be seen at the margin, but 

much work is left to be done. Technology can pave the way toward improved patient 

outcomes across the healthcare delivery system. It can help healthcare providers, the 

FDA, and drug manufacturers navigate the complexity of the healthcare system by 

systematically capturing, distributing, analyzing and safeguarding the essential 

information needed to support decision-making. Better information can also benefit 

patients and their doctors by reducing avoidable medical errors and adverse events related 

to the administration of prescription drugs and biologics, and in some cases, accelerating 

the drug approval process. 

Technology is an essential component of a healthcare system that has safety and 

patient well being as its overarching priority. Such a system must also be designed 

around a set of incentives for all healthcare stakeholders to contribute willingly and act 

upon that information. Today, the tort system is seen as an impediment to the free 

exchange of information related to medical errors and adverse events. The IOM has 

repeatedly declared that patient safety is hindered by our current system of legal liability 

and the overhanging threat of litigation, which discourage the disclosure of the very 

information that could reduce avoidable medical errors. 

The current approach focuses too little on changing systems to improve patient 

safety and too much on punishing individuals or companies who are alleged to be at fault. 

The punitive nature of the tort system creates an incentive to conceal information for as 

long as possible if there is an allegation of injury. It also forces densely worded 

prescription drug labeling in an effort to cover all possible adverse outcomes, which is 

confusing to doctors and their patients. The tort system thwarts the important principle of 

shared knowledge, which makes it difficult to learn in real time from others. It was 

shared knowledge that dramatically cut the response time to the SARS epidemic. This 

principle is considered critical to the successful results of other industries where 

consumer safety is tantamount. The airline, nuclear energy and chemical industries, for 

example, all have non-punitive surveillance systems that foster the exchange of 

information and which is said to help these industries avert the great majority of all 

accidents or injuries. 

As the IOM report has suggested, patient safety is also made more difficult given the 

sheer complexity of the healthcare system itself. The delivery of healthcare involves the 

careful orchestration of a dynamic network of people and processes that must work 

together to deliver care to patients. According to Professor James Reason, the healthcare 

system has more than 50 different types of medical specialties and subspecialties 

interacting with each other and with an equally large array of allied health professions. 
37

Efforts to improve patient safety must, therefore, focus on what is needed to improve the 

inter- and intra-workings of this overall system. Prior efforts to reform patient safety and 

medical malpractice have focused on worthy, but narrow silos. They have not always 

been effective because they did not adequately address the interaction of a specific 

reform on the overall system. 

If the IOM report is correct – that it is bad systems and not bad people or companies 

that led to the majority of medical errors and injury – then a piecemeal approach to 

reform will not create the sea-change needed to advance a national patient safety agenda. 

Reducing medical errors and minimizing adverse events related to the manufacture and 

use of prescription drugs will hinge on the design of a system that makes wrong actions 

by those with a stake in healthcare delivery more difficult; makes it easier for those 

entrusted with ensuring patient safety to discover the errors that could occur before they 

do; and provides patients with just compensation in the event they are injured. 

It Takes a System

As the IOM found, the problem is not mistakes by doctors that cause most medical 

injuries, it is system errors or an absence of a system. Therefore, Congress should 

encourage the creation of Patient Safety and Compensation Systems at the state level 

where the medical liability system is seen as a component of a much larger patient 

safety system. These new systems would facilitate – not inhibit – positive 

healthcare transformation and serve the interest of all of the stakeholders in our 

healthcare system. The four pillars of improving the capacity and quality of our 

healthcare systems are Information, Infrastructure, Incentives and Innovation: 

• Information is essential to improving doctor/patient decision making, reducing 

medical errors, minimizing redundancy, enabling research and reducing illness 

and disease; 

• Infrastructure is essential so that information can be accurately, efficiently and 

confidentially captured, exchanged and efficiently analyzed; 

• Incentives drive the behavior of doctors, patients, employees, insurers and 

manufacturers of health-related products; and 

• Innovation produces new preventatives, new tools for diagnoses and new 

treatments for illness and disease. 

National Medical Data Center

It now appears both technically and politically possible to create the capability at the 

national level of accessing on a real-time basis medical data (data that cannot be used to 

identify the patient or the healthcare professional) from an ever-increasing pool of 

electronic medical records. Realistically, this goal could not be achieved overnight. At 

the present time, only a small percentage of patients have Electronic Medical Records 

(EMRs). The data in those records are uneven, non-standardized and as one expert said 

“getting doctors to include data that is not clinically useful will be a challenge.” 

However, there are an increasing number of efforts to mine the electronic claims data of 

medical insurance companies which are producing immediately useful information as 

well as providing signals suggesting closer scrutiny of the paper files. 

Eventually these EMRs would contain sufficient standardized data (or data that 

could be translated to standard terms) to allow studies by government, academic and 

industry researchers to reach valid scientific conclusions regarding effective treatment 

protocols, strategies for avoiding medical errors and adverse event and promising paths 

in the search for cures for disease. The availability of such a database could greatly 

reduce the marginal cost and time needed to do valid scientific studies and could fuel a 

dramatic increase in effective medical research. Such a database, even as it matures, also 

would aid HHS, CMS, FDA, DHS and CDC in fulfilling their missions. 
38

Experience-rated Compensation Systems

At the heart of this vision is an experience-rated administrative compensation 

system and trusted regulators focused on patient safety. The premise of this approach is 

that a compensation system with a relatively low cost of claiming for the patient will 

drive up the standard of care and reduce medical errors more effectively than the more 

random tort system. It is fairly well accepted that raising the likelihood of detection 

deters unwanted conduct more effectively than extreme, random and unpredictable 

penalties. If, as expected, the use of electronic medical records and practice aids which 

reduce medical errors becomes the standard of care for certain treatments, this liability 

system will produce powerful incentives for their adoption and help drive positive 

healthcare transformation. 

The idea of administrative courts is not unique. Social Security, Workers Comp, the 

Childhood Vaccine Fund – even Bankruptcy Courts – all operate without juries and 

because of various features of due process have been held to be constitutional. The 

feature of a Patient Safety and Compensation System that makes it somewhat unique is 

the way in which the components would interact. 

Medical Claims Facility: 

If a patient – who was a resident of that state – thought that he or she had been 

injured as a result of medical treatment by a medical provider in that state, then the 

patient could contact that state’s Medical Claims Facility – operated by the Medical 

Providers Insurance Facility comprised of insurers who write insurance for doctors, 

hospitals and nursing homes in that state. 

Claims Assistant: 

The patient would be assigned a Claims Assistant (think paralegal) who, though not 

an advocate for the patient, would help the claimant pull together his or her medical file, 

make sure the claims forms were complete and submit them to the Claims Facility 

Medical Staff. The same Claims Assistant would be assigned to the patient for the 

duration of the claims process. 

Medical Staff: 

The Medical Staff would notify the professional(s) involved and his or her 

malpractice carrier and would compare the claims forms and medical file against the 

practice guidelines issued by the Medical Practice Commission. The Medical Staff 

would make a determination whether the evidence indicated that the medical provider 

had met the applicable standard of care. If there were no applicable guidelines, then the 

Medical Staff would ask the Medical Practice Commission to analyze the facts of that 

particular case and issue an opinion as to whether the professional had met the applicable 

standard of care. The Medical Staff would also be authorized to require an independent 

medical exam at no expense to the patient. 

Medical Providers Insurance Facility: 

Once the Medical Staff concluded that the claimant should be paid, a claims 

processor would contact the patient and offer to settle his or her claim. If the patient 

agreed to settle, then the Medical Providers Insurance Facility, which would operate like 

a Joint Underwriting Association, would pay the claim with funds provided by the 

provider’s malpractice insurer. Ideally, the state would not subsidize these awards. 

The Medical Providers Insurance Facility, which would have an incentive to reduce 

medical errors and a mechanism for insurers to act collectively, would also direct loss 

reduction programs to reduce the number of medical errors in the state. In egregious 

cases, the Facility would also make referrals, along with the Administrative Medical 

Court to the Patient Safety Board, for possible action against the professional. 
39

All medical providers, including nursing homes, would be required to have medical 

malpractice or other insurance which was experience-rated based on the providers safety 

record. If a provider, based on a history of malpractice claims, could no longer prove 

financial responsibility, it could not operate in the state. 

Administrative Medical Court: 

If the patient did not accept the offer, which could be governed by some form of 

“early offer” incentives, then he or she could ask for a hearing in front of an 

Administrative Medical Court Judge. The Judge could take testimony, allow discovery 

and otherwise conduct a civil trial. While parties could have lawyers and retain their own 

experts, the Judge would rely heavily on the opinion of Daubert qualified experts 

working on behalf of the State Medical Commission which would be expected to apply 

nationally accepted standards of care to the particular circumstances of cases that come 

before the Medical Practice Commission and Administrative Medical Court. 

Medical Practice Commission: 

The Medical Practice Commission would be appointed by the Governor and made 

up exclusively of Daubert qualified experts in medical practice. It would be essential 

that Commission members have the support of the medical specialty groups in the state. 

If a state’s system handles claims against medical manufacturers, then the Commission 

should include Daubert qualified experts to make determinations whether a particular 

medical product or device is the likely cause of a medical injury. 

Courts of Appeals: 

If either party is not happy with the Medical Court’s decision, then the party may 

appeal the decision “on the record” to whatever state courts of appeal have jurisdiction. 

Patient Safety Board: 

A Patient Safety Board appointed by the governor and confirmed by the legislature 

would have authority to order further training, suspend or revoke a medical providers 

license and/or impose appropriate fines. The Board would have representatives of both 

the professional and patient communities. 

Patient Safety Data: 

The whole system would rely on evidence-based medical data accumulated by 

government agencies, safety organizations or other credible sources including the 

National Medical Data Center. 

State Electronic Healthcare Initiative: 

A state electronic healthcare initiative involving all stakeholders would provide the 

leadership to set the standards, overcome silos and seek funding mechanisms to achieve 

adoption, interoperability and functionality for electronic medical records and electronic 

medical systems. 

“Keep America Healthy Campaign”

The Congress and Administration, with or without legislation, could encourage 

public/private partnerships to encourage healthy behaviors and the creation of a culture of 

health. Most policymakers in and out of government focus on the cost of treatment side 

of the healthcare cost equation where “cost equals incidences of disease times cost of 

treatment.” It is time for America to focus more attention on lowering the incidences of 

disease. While there are many community and corporate disease prevention programs 

being undertaken already, a concerted effort that more effectively organizes and 

mobilizes our national resources would have a better chance of changing behavior and 
40

positively affecting culture. Lady Byrd Johnson’s “Keep America Beautiful Campaign” 

dramatically reduced the incidence of roadside litter. A “Keep America Healthy 

Campaign” would do the same for the incidence of debilitating and costly diseases. 

Federal Legislation

To encourage the creation of Patient Safety and Compensation Systems along the 

lines outlined, Congress has many choices about how best to provide leadership and 

incentives. There are substantial Federal interests to justify taking action including the 

Medicare and Medicaid programs, the Medicare Drug Benefit, the interstate nature of the 

healthcare and health insurance industry and the interstate nature of large employers for 

whom these reforms could be critical in saving American jobs. Therefore, I urge 

Congress to consider legislation that deals with the issues discussed. 

Patient and Safety and Compensation Act

(A Legislative Concept) 

Title I – National Medical Data Center

The National Medical Data Center would make available to authorized users the 

real-time, privacy-protected data from as many as 12 million electronic medical records 

nationwide. 

Title II – Electronic Health Initiative

The Act could create national uniform standards as needed to facilitate and provide 

formula grant funding and technical assistance to the States for electronic health systems 

to improve patient safety, lower costs and improve medical care. Formula grants would 

be subject to certain conditions and criteria to ensure the funds are put to their intended 

use. 

Title III – Uniform State Medical Liability Standards

This title would contain politically achievable Federal preemptive standards in 

recognition of the fact that state healthcare liability systems do have a substantial impact 

on interstate commerce and that national healthcare transformation can be impeded by a 

single state legal system that imposes unreasonable and damaging liability standards on a 

national market for medical services and products. 

The items that follow have been suggested as belonging in any new Medical 

Liability Reform (MLR) legislation. They are listed here as placeholders only, and there 

may be some items on the list that should be deleted/modified; there may be some 

“missing” items that need to be added. 

• Federal standards for medical liability litigation in federal or state court 

• Scope of bill’s application (persons/entities; definitions) 

• Scope of legislation – ERISA and related issues 

• Speedy resolution of claims through statute of limitations changes 

• Limits on non-economic damages or keep existing state limits 

• Damages apportioned by “fair share” rule, i.e., no joint and several liability 

• Limits on attorney contingency fees 

• Standards for “expert witnesses” 

• Use of Medical Screening Boards/Panels 

• Adoption of “I’m Sorry” programs 

• Independent External Medical Review 

• Reduction in awards for collateral sources 

• Limits on and/or standards for punitive damages 

• Periodic (not lump sum) payments (use federal standards to comply)
41

Title IV – Alternative State Medical Liability Systems

Title IV would encourage and facilitate the creation of new healthcare liability 

systems that are patient safety focused along the lines of the Patient Safety and 

Compensation System. It would provide incentives and guidelines for states to create 

demonstration programs to test alternatives to current medical tort litigation. Funding to 

states under this title would cover planning grants for the development of proposals for 

alternatives, and would also include the initial costs of getting those alternatives up and 

running. The legislation also would require participating states and the federal 

government to collaborate in continuous evaluations of the results of the alternatives as 

compared to traditional tort litigation. 

Conclusion

This holistic approach to healthcare allows focus on three key goals: 

• More effective prevention of illness and disease; 

• Early diagnosis; and 

• More efficient and effective treatment. 

The goal of the Patient Safety and Compensation Act would be to provide the 

leadership and expertise needed to overcome inertia and move the country toward a 

shared vision of a transformed healthcare system. It also recognizes that legal reform is a 

critical step on that path. To pass this legislation and indeed to achieve the broader goals 

of healthcare transformation will require bipartisan cooperation and a coordinated effort 

with employers, health insurers, medical professionals, and medical manufacturers 

working collaboratively with patient and consumer groups. 

It is reasonable to conclude that widespread adoption of some version of this 

systematic approach to medical liability and the electronic medical systems that facilitate 

patient safety could save the country $114 billion or more out of the $1.6 trillion 

currently spent annually on healthcare. According to a January 2005 article in the 

Journal of Health Affairs, savings could be as much as: 

 $ 78 Billion for delivery and administration 

 $ 29 Billion for avoidable medical errors 

 $ 7 Billion for non-meritorious legal actions 

 $114 Billion 

 Most importantly, the article also predicted a reduction in medical errors which 

could save over 7,000 lives a year. 

 An initiative of this scope will require Congressional leadership. Only Congress 

can insist on stakeholders working together to work out their differences, encourage the 

compromises that allow progress toward a common goal and enforce the discipline that 

prevents “ freelance” lobbying from killing such an important legislative initiative. 

Again, Mr. Chairman, thank you for the opportunity to share my perception on these 

issues, and I look forward to any questions you or your colleagues may have. 

 MR. DEAL. Thank you. 

 Mr. Barringer. 

MR. BARRINGER. Thank you. Good morning, Chairman Deal and 

members of the committee. Thank you for inviting me to be here today. 

 My name is Paul Barringer, and I am the General Counsel of 

Common Good, which is a bipartisan legal reform coalition. We very 

much applaud the committee for its vision and leadership in convening 
42

this morning’s hearing to consider innovative solutions to problems in 

America’s ailing medical liability system. 

 Personally, I am really honored to have this opportunity to share 

information with you today about the work that our organization has 

been doing to promote the concept of health courts or special courts to 

handle medical injury cases. 

 With the support of the Robert Wood Johnson Foundation, we have 

been working with the research team from the Harvard School of Public 

Health, which includes Professor Mello and her colleague, David 

Studdert, to develop the conceptual framework for administrative health 

courts and to cultivate support from key stakeholders for demonstration 

projects that could be done to test the feasibility of this proposal. 

 The context within which this proposal arises is, as Professor Mello 

and Mr. Wootton have detailed, in existing medical injury dispute 

resolution and compensation system, which does not work as well as it 

could. We know that few injured patients receive compensation. We 

know the system is very inefficient and contributes to escalating costs. 

We know it has adverse impacts on the relationship between physicians 

and their patients. Perhaps most significantly, as the Institute of 

Medicine and many others have observed, the system functions as a 

major impediment to efforts to enhance patients’ safety and improve 

quality largely due to the strong disincentives it provides to candor about 

errors that have occurred in treatment. 

 There is an urgent need for new and innovative solutions in the area 

of medical liability, and fortunately, there are promising new models that 

can help, such as the health court model that we have developed. 

 Generally, the system we propose is one that would rely to a much 

greater extent than the existing system on administrative processes for 

determining liability and compensation. There are a couple key reasons 

for this, including a greater efficiency associated with administrative 

compensation systems, the opportunity to expedite proceedings and get 

compensation awarded to those who have been injured much more 

rapidly, and also a potential for greater consistency and reliability in 

verdicts. 

 I would note that the system we proposed is very much like the 

patient-centered, safety-focused proposal advanced by the Institute of 

Medicine in its 2002 report around demonstration projects across the 

healthcare system. 

 In particular, we envision an administrative system with strong early 

disclosure and offer programs at the institutional level, say at the hospital 

or integrated delivery system or perhaps the liability insurer, which we 

modeled on programs that have been implemented successfully around 

the country, such as those at the Veterans Administration, hospitals, the 
43

University of Michigan health system, and also at the COPIC Insurance 

Company in Colorado. We also envision reliance in these programs on 

so-called accelerated compensation events or commonly occurring 

injuries for which compensation can be rapidly paid. 

 If the early disclosure and offer process fail to satisfy either party, we 

would see the matter transferred to the health court where you would 

have judges with training and expertise in healthcare relying on mutual 

expert witnesses retained and compensated by the court to make 

decisions about the standard of care in injury cases. Health court judges 

would issue written rulings of their decisions that would provide 

guidance in future cases, and these judges and experts would also rely on 

evidence-based standards of practice, such as those disseminated by the 

National Guideline Clearinghouse at the Agency for Healthcare Research 

and Quality, as well as other organizations. 

 Significantly, we see decision-making in the proposed system as 

relying on a standard of liability other than negligence, which is what we 

use in today’s system. We see particular promise with the standard 

employed in several Scandinavian countries, which is known as 

“avoidability.” Under the avoidability standard, which is broader than 

negligence, those adverse consequences of treatment that could have 

been prevented or avoided had best practices been followed, are 

compensable. The aim of the avoidability standard is to expand 

compensation to injured patients and also to reduce emphasis on blaming 

the individual providers. This is appropriate, because most experts agree 

that errors, generally, result not from individual malfeasance, but rather 

from breakdowns in systems of care at the institutional level. The 

avoidability standard is one which recognizes this role that systems play 

in leading to errors. 

 Finally, I would note that the system we envision would have a range 

of linkages to patients, safety structures, and initiatives so that we could 

learn from our mistakes and help prevent mistakes from occurring in the 

future. 

 We have been very gratified to find the health court proposal 

drawing support from a wide array of stakeholders, including patient 

safety advocates, consumer groups, public health and legal experts, the 

national and regional press, and healthcare provider groups. We have 

also been very pleased and excited that there have been several bills 

proposed in Congress that would create health court pilot projects at the 

State level. 

 We hope that Congress will take speedy action with respect to one or 

more of these proposals, and once more, we appreciate this opportunity 

to provide information today. 

 Thank you. 
44

 [The prepared statement of Paul Barringer follows:] 

PREPARED STATEMENT OF PAUL BARRINGER, GENERAL COUNSEL, COMMON GOOD

Thank you for this opportunity to discuss innovative approaches to improving 

America’s medical liability system. 

 I appear as General Counsel of Common Good, a legal reform coalition. We are a 

bipartisan organization – former Senators Howard Baker and Bill Bradley are members 

of our Advisory Board, as are former Senator George McGovern and Representative 

Newt Gingrich – funded primarily by philanthropic foundations. Our largest financial 

supporter is the Robert Wood Johnson Foundation, which is currently underwriting a 

two-year collaborative effort between our organization and the Harvard School of Public 

Health to refine a conceptual proposal for developing specialized health courts to resolve 

medical injury disputes. Common Good has been active nationally since 2002 in 

promoting the development of specialized health courts. 

 The debate over medical malpractice reform remains one of the most polarized in 

American politics. Frequently lost in partisan disagreements, however, is this key fact: 

America’s approach to resolving medical injury disputes works poorly for consumers and

health care providers. Many preventable injuries occur today in the course of health care 

treatment, yet few injured patients file a claim. Even fewer receive any compensation, 

and those who do never see the full award. When attorney fees and other administrative 

costs are included, only 46 cents of every dollar spent in tort cases in 2003 reached 

injured claimants.1

 

 The system also fails health care providers. In particular, today’s system does a 

poor job in distinguishing negligent from non-negligent care, providing ambiguous 

signals to health care providers about what it will take to avoid litigation, and 

encouraging costly “defensive medicine.”2 Moreover, the system discourages providers 

from disclosing information about errors or “near misses” (those errors that do not result 

in any harm).3

 This is unfortunate, as patient safety experts identify such reporting as a 

key element in comprehensive efforts to improve quality in the health care system. This 

chilling effect on information disclosure has led the Institute of Medicine (IOM) and 

others to identify the existing legal system as a major impediment to system-wide patient 

safety enhancements.4,5

 

1 U.S. Tort Costs: 2003 Update 17 (Tillinghast-Towers Perrin 2003). 2

 For example, one out of four baseless claims result in payment, according a recent study by 

Harvard School of Public Health researchers. See David M. Studdert et al., Claims, Errors, and 

Compensation Payments in Medical Malpractice Litigation, New England Journal of Medicine, vol. 

354; May 2006, p. 2029. For information about defensive medicine, see, e.g., Daniel Kessler & 

Mark McClellan, Do Doctors Practice Defensive Medicine? May 1996 Quarterly Journal of 

Economics 353-390. It is important to note that there are substantial variances in estimates of what 

defensive medicine costs the U.S. health care system. The article cited above represents perhaps the 

highest estimate, although the validity of this estimate has been challenged. There is little question, 

however, that defensive medicine does in fact occur. See e.g., David M. Studdert, Michelle M. 

Mello, William M. Sage, Catherine M. DesRoches, Jordon Peugh, Kinga Zapert, & Troyen A. 

Brennan, Defensive Medicine Among High-Risk Specialist Physicians in a Volatile Malpractice 

Environment 293 Journal of the American Medical Association 2609-2617 (2005). 3 Crossing the Quality Chasm: A New Health System for the 21st Century, Institute of Medicine 219 

(National Academies Press 2001). 

4 Crossing the Quality Chasm: A New Health System for the 21st Century, Institute of Medicine 219 

(National Academies Press 2001). 

5 Health Care At The Crossroads: Strategies for Improving the Medical Liability System and 

Preventing Patient Injury 27 (Joint Commission on the Accreditation of Healthcare Organizations 

2005). 
45

 Since the late 1990s, the concepts of patient safety and health care quality have 

become increasingly important drivers in health policy. Perhaps no single event 

galvanized public interest in safety and quality more than the IOM’s 1999 publication of 

To Err is Human: Building a Safer Health System.6

 In this landmark report, the IOM 

revealed that as many as 98,000 people die unnecessarily every year in American 

hospitals because of medical errors. The report concluded that most errors are caused not 

by individual providers but rather by breakdowns in larger systems of care.7

 This report 

stimulated significant political interest in safety and quality, and has led to the 

development and introduction of numerous legislative initiatives to address these issues.8

 

 As interest in patient safety has increased, so too has the awareness that health care 

quality and the medical malpractice system are connected. To better prevent medical 

errors, experts say, more information needs to be disclosed about errors and near misses.9

 

Only with such data can hospitals and providers analyze the patterns and frequency of 

medical error and focus on fixing the system-wide breakdowns that lead to errors. 

However, fear of litigation in the current system impedes the open exchange of 

information about errors and near misses. Significantly, the IOM identified the legal 

system as a major impediment to improved quality in a 2002 report titled, Fostering 

Rapid Advances in Health Care: Learning from System Demonstrations. “There is 

widespread agreement,” the report stated, “that the current system of tort liability is a 

poor way to prevent and redress injury resulting from medical error.”10 The report called 

on Congress to charter demonstration projects to explore new ways to resolve medical 

injury cases. 

 Growing out of the IOM’s recommendations, support has continued to increase for 

experimenting with new approaches to resolving medical malpractice disputes, including 

the development of specialized health courts. Common Good, founded and chaired by 

attorney and author Philip K. Howard, has been the leading proponent of the health court 

concept and, as stated previously, has been working with the Harvard School of Public 

Health to refine the health court concept and cultivate stakeholder support.11 

 As currently envisioned,12 the health court concept includes the following elements: 

trained judges relying on neutral experts to adjudicate malpractice disputes; reliance on a 

new standard of liability – “avoidability” – that is broader than negligence; explicit use of 

evidence-based guidelines to aid decision-making; damage schedules for compensating 

injured claimants; and a range of linkages to patient safety structures and initiatives. 

Generally, the proposed system would rely to a much greater extent than the current 

system on administrative processes for determining liability and compensation. Key 

reasons for this include the greater efficiency associated with administrative 

 

6 To Err is Human: Building a Safer Health System, Institute of Medicine (Linda T. Kohn, Janet M. 

Corrigan, & Molla S. Donaldson eds., National Academies Press 2000). 

7 To Err is Human: Building a Safer Health System, Institute of Medicine 1 (Linda T. Kohn, Janet 

M. Corrigan, & Molla S. Donaldson eds., National Academies Press 2000). 8

 See, e.g., The Patient Safety and Quality Improvement Act of 2005, P.L. 109-41, signed into law 

July 29, 2005. 

9 Crossing the Quality Chasm: A New Health System for the 21st Century, Institute of Medicine 219 

(National Academies Press 2001). 

10 Fostering Rapid Advances in Health Care: Learning from System Demonstrations, Institute of 

Medicine 82 (Janet M. Corrigan, Ann Greiner, & Shari M. Erickson eds., National Academies Press 

2002). 

11 Harvard School of Public Health and Common Good to Develop New Medical Injury 

Compensation System, Harvard School of Public Health Press Release, January 10, 2005. 

http://www.hsph.harvard.edu/press/releases/press001102005A.html.html 12 More information about the evolving health court proposal is available at 

http://cgood.org/healthcare.html. 
46

compensation systems as well as their ability to award compensation to injured claimants 

more rapidly.13,14

 A core element of the health court concept is that health court judges should have 

expertise in medical issues. Judges would be selected through an independent and 

nonpartisan screening process, and sitting judges would participate in additional training 

and education to ensure their continued understanding of the evolving issues in health 

care. These judges would make decisions about proper standards of care, and would 

issue written rulings of these decisions, which would provide guidance for future cases 

and in turn would help promote consistency from case to case. Over time a body of law 

would develop that would differentiate between what is good medical practice and what 

falls short, and this would send clear and consistent signals to health care providers.15 By 

concretely defining and promoting consistent standards, this process could also help 

reduce variations in medical practice patterns across populations and geographic areas, 

and improve standards of care both regionally and nationally. It could also help reduce 

costly defensive practices, and more broadly provide a framework for cost-containment. 

 A record of these decisions and other de-identified data from claims would be 

reported to patient safety authorities (and back to providers) for root cause analyses of 

what went wrong and why. Standardized event reporting would ensure that the 

appropriate information is reported. In the aggregate, such data would also help facilitate 

epidemiological analyses for purposes of developing health quality improvement 

initiatives and preventive practices. 

 As we envision it, compensation decisions in a health court system would be based 

on a standard other than negligence. Health care treatment is considered “negligent” 

today if the provider failed to exercise the level of care that a reasonable person would 

have exercised in the same circumstances. Many experts have identified the negligence 

standard as contributing to an overemphasis on blaming providers for adverse events that 

have occurred in treatment. This is inappropriate, studies suggest, because most errors 

result not from individual malfeasance but rather due to breakdowns in systems of care.16 

Of particular promise moving forward is the concept of “avoidability,” which is 

employed in Scandinavia. Under this approach, a medical injury is deemed compensable 

if it could have been prevented (or “avoided”) had the doctor followed the best medical 

practice – whether or not the treatment was negligent. Although avoidability is broader 

than negligence as a theory of liability, it does not constitute absolute or strict liability for 

every bad outcome. Only those injuries which are caused by treatment and which could 

have been prevented (avoided) are eligible for compensation.17

 Use of the liberalized avoidability standard of recovery would likely help expand the 

number of patients who receive compensation. Application of the avoidability standard 

should also help lessen the emphasis on blaming individual providers. Unlike a negligent 

event, an avoidable event does not necessarily implicate blame on the provider involved 

(since even the best provider can experience an avoidable event). In Denmark and 

 

13 Randall R. Bovbjerg, Frank A. Sloan, & Peter J. Rankin, Administrative Performance of "NoFault" Compensation for Medical Injury, 60(2) Law and Contemporary Problems 71, 90-98 (1997). 14 David M. Studdert & Troyen A. Brennan, No-Fault Compensation for Medical Injuries: The 

Prospect for Error Prevention, 286(2) Journal of the American Medical Association 217, 219 

(2001). 

15 Note that appeals to resolve disputes about the standard of care within and across state lines could 

be made to a dedicated court of medical appeals, potentially at the federal level. Similar to the 

current system, both parties would have lawyers representing them. 16 To Err is Human: Building a Safer Health System, Institute of Medicine 51 (Linda T. Kohn, Janet 

M. Corrigan, & Molla S. Donaldson eds., National Academies Press 2000). 17 David M. Studdert, E.J. Thomas, B.I. Zhar, J.P. Newhouse, P.C. Weiler, & Troyen A. Brennan, 

Can the United States Afford a ‘No-Fault’ System of Compensation for Medical Injury?, 60(2) Law 

& Contemporary Problems 1, 3-7 (1997). 
47

Sweden, use of the avoidability standard has helped create a much less combative and 

litigious environment between physicians and patients, and has helped provide an 

incentive for providers to help their patients with the claims process and ensure that they 

receive appropriate compensation for avoidable injuries.18 

 In today’s medical malpractice system, each party typically retains its own expert 

witnesses. These competing experts-for-hire often provide distorted or conflicting advice 

that can confuse juries and add time and expense to the process by which disputes are 

resolved. Under the health court approach, by contrast, health court judges would consult 

with neutral medical experts to determine the standard of care in medical injury cases. 

These expert witnesses would be compensated by the court, and they could be held 

accountable to a standard of objectivity by regulatory authorities. 

 Of course, determining the appropriate standard of care in a specific case can be a 

complex undertaking, regardless of the expertise of the decision-maker. Also, there may 

be several reasonable courses of treatment in a particular circumstance. To aid health 

court judges in reaching consistent decisions from case to case, judges would consult 

clinical practice guidelines based on evidence-based practice standards, such as those 

published and disseminated by the National Guideline Clearinghouse at the U.S. Agency 

for Healthcare Research and Quality, or by medical specialty organizations.19

 Based on reviews of the best available scientific evidence about how adverse events 

occur and the extent to which they are preventable, medical experts and key stakeholders 

could also work together to develop compensability recommendations for health court 

judges to apply, including the development of so-called “avoidable classes of events” or 

“ACEs” (predetermined malpractice scenarios that have been compiled by experts to 

expedite the claims process in clear-cut cases).20,21 Clear-cut cases would be fast-tracked 

for compensation, and efforts would be made to encourage early offers of compensation. 

In particular, claims against institutional health care providers (such as a hospital or 

integrated delivery system) would begin with consideration of the claim internally by a 

review board associated with the clinical enterprise. In clear and uncontestable cases, the 

review board would designate the injury as an ACE, and the provider would be ordered to 

pay damages according to the appropriate compensation schedule. In cases in which the 

circumstances of injury were not straightforward, the case would be referred to a health 

court. 

 In today’s system, few injured patients are compensated and there is little 

consistency in awards from case to case. To promote horizontal equity, the health court 

system would have a schedule of benefits specifying a range of values for specific types 

of injuries and taking into account patient circumstances. To ensure fairness, this 

compensation schedule could be set by an independent body and periodically updated. 

Individual awards would likely be smaller on average than the awards in the current 

system, but having compensation schedules would ensure that more plaintiffs had access 

to reasonable compensation. At the same time, use of a compensation schedule could 

help reduce the percentage of total system costs devoted to administrative expenses. 

Comparable administrative compensation systems in the U.S. and overseas devote far 

 

18 Administrative Approaches to Compensating for Medical Injury: National and International 

Perspectives, Event Transcript 16, 22, Public Forum held by Common Good-Harvard School of 

Public Health at Carnegie Endowment for International Peace, Washington, D.C., October 31, 2005. 19 National Guideline Clearinghouse, Agency for Healthcare Research and Quality, U.S. Department 

of Health and Human Services, http://www.guideline.gov/. 20 Randall R. Bovbjerg, Laurence R. Tancredi, & Daniel S. Gaylin, Obstetrics and Malpractice: 

Evidence on the Performance of a Selective No-Fault System, 265(21) Journal of the American 

Medical Association 2836-2843 (1991). 

21 Randall R. Bovbjerg & Laurence R. Tancredi. Rethinking responsibility for patient injury: 

accelerated-compensation events, a malpractice and quality reform ripe for a test, 54(1-2) Law & 

Contemporary Problems 147-177 (1991). 
48

less to administrative expenses than the existing tort system.22 Research with respect to 

Colorado and Utah claims has indicated that a patient compensation system employing 

compensation schedules and an avoidability standard of liability could be implemented in 

the U.S. at a total system cost comparable to that of the existing system, while 

compensating far more patients.23 

 The health court concept calls for replacing the jury with a judicial decision-maker. 

The constitutional authority to create an administrative compensation system in place of a 

traditional jury trial is clear where it is part of a regulatory plan to improve health care.24 

Congress has broad powers to authorize pilot projects for specialized health tribunals 

under the Spending Clause,25 and under the Commerce Clause because medical injury 

litigation is economic activity that itself constitutes, and affects, interstate commerce.26 

Contrary state law provisions, if any, would be pre-empted under the Supremacy 

Clause.27 Moreover, similar federal administrative compensation systems have been 

upheld against constitutional challenge.28 

 A number of prominent public health experts and scholars have expressed support 

for the health court concept,29 as have numerous political leaders and institutions from 

both sides of the aisle. For example, the Progressive Policy Institute, a Democratic think 

tank known in the 1990s as President Clinton’s ‘‘idea mill,’’ has endorsed the concept, as 

has the Manhattan Institute, a conservative-leaning think tank. Numerous health care 

groups have expressed support as well, including the Joint Commission on Accreditation 

 

22 See, e.g., Randall R. Bovbjerg, Frank A. Sloan, & Peter J. Rankin, Administrative Performance of 

"No-Fault" Compensation for Medical Injury, 60(2) Law and Contemporary Problems 71, 90-98 

(1997). Administrative Approaches to Compensating for Medical Injury: National and International 

Perspectives, Event transcript 21, Public Forum held by Common Good-Harvard School of Public 

Health at Carnegie Endowment for International Peace, Washington, D.C., October 31, 2005. 23 David M. Studdert, Eric J. Thomas, Helen R. Burstin, Brett I.W. Zbar, E. John Orav, & Troyen A. 

Brennan, Negligent Care and Malpractice Claiming Behavior in Utah and Colorado, 38(3) Medical 

Care 250-260 (2000). 

24 As part of Common Good’s ongoing Robert Wood Johnson Foundation project, Professor E. Don 

Elliott of the Yale Law School has developed the constitutional analysis on which this section is 

based. 

25 For example, see South Dakota v. Dole, 483 U.S. 203 (1987), upholding the federal government’s 

conditioning state receipt of federal highway funds on adopting a drinking age of 21. 26 See Gonzales v. Raich, 125 S.Ct. 2195 (2005); United States v. Lopez, 514 U.S. 549 (1995). 27 See Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984); Pennsylvania v. Nelson, 350 U.S. 497 

(1956). Note that whether or not a state could assign malpractice claims to an administrative entity 

without violating 7th Amendment rights to a jury trial would depend in part on whether the Supreme 

Court would characterize the rights at issue as “private” or “public” rights. Essentially, private 

rights involve the obligations of one individual to another, whereas public rights involve issues 

relating to broad public purposes. Significantly, the Supreme Court has held that disputes 

implicating public rights can be adjudicated without jury trials. For example, in Thomas v. Union 

Carbide Agricultural Prod. Co., 473 U.S. 568 (1985), the Supreme Court rejected Union Carbide’s 

right to sue for violations of trade secrets, and upheld Congress’ establishment of an administrative 

process for registering pesticides as part of a comprehensive re-working of federal pesticide law. By 

this rationale, an administrative approach to resolving malpractice disputes should be constitutional 

if health courts are created as part of a comprehensive regulatory scheme for reforming the health 

care system. See, for example, New York Central RR v. White, 243 U.S. 188 (1917). 28 Colaio v. Feinberg, 262 F. Supp. 2d 273 (S.D.N.Y. 2003), aff'd Schneider v. Feinberg, 345 F.3d 

135 (2d Cir. 2003). 

29 Among these experts and academics are Peggy O'Kane, President of National Committee on 

Quality Assurance; Ken Kizer, former President of the National Quality Forum; Helen Darling, 

President of the National Business Group on Health; Troyen Brennan, former President of the 

Brigham & Women’s Hospital in Boston and Professor at the Harvard School of Public Health; and 

William Brody, President of Johns Hopkins University. More information can be found at 

http://cgood.org/brochure-hcare.html. 
49

of Healthcare Organizations, the American Association of Retired Persons, and many 

state and national medical groups. 

 The health court concept has also garnered significant media coverage and 

endorsements. Scores of newspaper and magazine articles have devoted attention to the 

concept, and a number of prominent media outlets have expressed their support. In July 

2005, for example, USA Today opined that “‘Health courts’ offer cure.” The opinion 

piece went on to say that “[h]ealth courts could show the way for quicker and fairer 

compensation to the deserving, and they might reduce the incentive for doctors to engage 

in defensive medicine. ... Starting the experiment is the right medicine for an ailing 

system.”30 The Economist has called the health court concept “a sensible idea” that 

“ought to make the system less capricious.”31 And The New York Times has urged 

Congress to “push for a wide range of demonstration projects” for new malpractice 

reform alternatives, including health courts.32 

 Several bills have been introduced in Congress to create health court pilot projects. 

In the House of Representatives, Representative Mac Thornberry (R-TX) has introduced 

legislation to test new model health care tribunals at the state level.33 In the Senate, 

Senator Max Baucus (D-MT) and Senator Michael Enzi (R-WY), Chairman of the Senate 

Committee on Health, Education, Labor, and Pensions, have introduced a bill to facilitate 

state level experimentation with a number of alternatives to current medical malpractice 

litigation, including health courts, early offer programs, and scheduled compensation.34 

Hearings were recently held to consider this legislation. Senator John Cornyn (R-TX) is 

expected to introduce legislation shortly as well. Finally, legislation to create health 

courts (or explore the feasibility of creating health courts) has been introduced in a 

number of states, including Illinois, Maryland, New Jersey, Pennsylvania, and Virginia, 

and additional state legislative activity is expected this year and next. 

 The debate over medical malpractice reform will almost certainly continue to be a 

very polarized one. As awareness continues to grow about the ways in which the current 

system fails patients and providers, however, support will likely continue to increase for 

exploring new alternatives that can benefit consumers, provide relief to providers, and 

help advance – rather than impede – quality improvement in health care. An 

administrative health court system represents a promising approach to compensating 

injured patients and establishing greater reliability in medical justice. With public 

support and political leadership, this new approach to medical justice can become a 

reality, both through pilot projects and as part of broader system reforms. 

 Thank you. 

 

30 Health Courts offer cure, USA Today, July 4, 2005, Editorials/Opinion. 31 Scalpel, Scissors, Lawyer, The Economist, December 14, 2005, Opinion. 32 It’s Time to Try Special Health Courts, The New York Times, January 9, 2005, Editorial. 33 H.R. 1546, 109th Congress, 1st Sess. (2005). 34 S. 1337, 109th Congress, 1st Sess. (2005). 
50

 MR. DEAL. Thank you. 

 Ms. VanAmringe. 

 MS. VANAMRINGE. Thank you. We appreciate the opportunity to be 

here today. 

 In early 2005, the Joint Commission issued a White Paper entitled 

“Healthcare at the Crossroads: Strategies for Improving the Medical 

Liability System and Preventing Patient Injury.” This paper was 

developed with the assistance of a panel of outside experts with broadbased knowledge in medical liability and patient safety issues. The 

experts were asked to assess the performance in the current medical 

liability system in meeting its goals for deterring medical negligence, 

compensating patients, and exacting corrective justice. They were also 

asked to address the extent to which the current medical malpractice 

system supports or interferes with patient safety. 

 A fundamental finding of the report was that there is an empirically 

proven disconnect between negligence and litigation. The medical 

liability system is inconsistent in determining negligence and 

compensating patients. Few injured patients receive compensation, and 

those who do, are often not the victims of negligence. Recompense is 

highly variable for similar injuries, it is expensive to litigate, and 

compensation does not come quickly when it happens. What we have is 

a system that is not fair, not efficient, and not predictable. No one is well 

served. 

 The Joint Commission report contained over a dozen 

recommendations. A few recommendations appropriately called for 

government action. I would like to highlight some of those today. 

 First, let me state that the context for the recommendations in this 

report was considered unique when it was issued, because it recognized 

that there is an inextricable link between improving patient safety and 

liability reform. It recognizes that the increasing tension between the 

patient safety movement in the liability system greatly affects the quality 

and safety of care. On one hand, there is the growing knowledge base 

held by safety experts that support open communication in a blame-free 

environment, opportunities for learning from mistakes, and a systems 

approach to reducing patient risks. Distinction in the medical liability 

system is characterized by blame, secrecy, and adversity. 

 The medical liability system can have a chilling effect on the patientprovider relationship, leading to the practice of defensive medicine that 

exposes patients to additional risks and could force valuable information 

about adverse events underground, thereby perpetuating the recurrence 

of preventable adverse events. The crafters of the report understood that 

these two antithetical forces need to be harmonized. The report, 

therefore, is an attempt to broaden the scope of the dialogue for medical 
51

liability reform and begin to address some of the dysfunctions that both 

systems experience. 

 The first of the three strategies in the report is to pursue patient 

safety initiatives that prevent medical injury from happening at the front 

end of the liability process. The healthcare industry has embraced the 

safety efforts of other industries, such as manufacturing and aviation, but 

it has not been able to fully emulate their successes. A recommendation, 

therefore, is to spur commitments to patient safety improvements, such 

as systems recognizing the use of information technology, the adoption 

of a culture of safety through the use of pay-for-performance programs. 

Major opportunity is presented by pay-for-performance, because it 

envisions rewards for achieving desired behaviors and outcomes, and it 

can be a very powerful tool to accomplish behavior change. 

 Pay-for-performance can also be used to promote another safety 

recommendation from the report, which is to accelerate enhanced clinical 

practice guidelines. Studies have documented that compliance with 

guidelines to improve quality, but will also reduce the risk of liability for 

practitioners. We also need to encourage team approaches to delivery of 

care. Teamwork has been found to increase the accuracy of care and to 

reduce breakdowns of communication, which is one of the leading 

causes of serious adverse events. Therefore, these and other safety 

improvements should be incorporated in any national design and 

implementation of pay-for-performance programs. 

 The second approach is promoting open communication. Our 

society values open communication between patients and their 

practitioners as a way to achieve high quality and safe care. But 

increasingly, there is a code of silence when an unexpected and serious 

adverse event occurs. This extends to silence between practitioners and 

patients, between practitioners and their peers, between practitioners and 

the organizations in which they practice, and between healthcare 

organizations and oversight bodies. In addition, silence is amplified by 

fears of loss of reputation or income. 

 The report identified two areas in which legislation could help. The 

first has been accomplished through the passage of the patient safety 

legislation, and we would like to thank this committee for its leadership. 

It is a landmark piece of legislation that will help us reduce errors. 

 The second legislative area is to produce legislation that protects 

disclosure and apology from being used as evidence against providers in 

litigation in which evidence that years of extensive and painful litigation 

ensue when many families and patients are only looking for empathy and 

seeking answers. 

 The last set of recommendations was structured around a strategy to 

create an injury compensation system that is patient-centered and serves 
52

the common good. We have heard lots of ideas today. Many more came 

from our report and from others that are out there. Our final 

recommendation, therefore, is to encourage Congress to evaluate 

demonstration projects in the States in order to better understand how 

these will work in the real world and how they can achieve a liability 

system that is more efficient and equitable. 

 Thank you. 

 [The prepared statement of Margaret VanAmringe follows:] 

PREPARED STATEMENT OF MARGARET VANAMRINGE, VICE PRESIDENT, PUBLIC POLICY 

AND GOVERNMENT RELATIONS, JOINT COMMISSION ON ACCREDITATION OF HEALTHCARE 

ORGANIZATIONS

I am Margaret VanAmringe, Vice President for Public Policy and Government 

Relations of the Joint Commission on Accreditation of Healthcare Organizations. I 

appreciate the opportunity to testify on finding innovative solutions for our nation’s 

medical liability system. Founded in 1951, the Joint Commission is the nation’s oldest 

and largest standard setting and accrediting body in health care. The Joint Commission 

accredits approximately 15,000 health care facilities along the entire spectrum of health 

care services. Our mission is to continuously improve the safety and quality of care 

provided to the public. We are here today as an independent voice that is derived from 

both the multitude of expert opinion that we bring together on tough issues facing the 

health care system, and from our more than 50 years gathering daily information on 

quality and safety from the front lines of medical care delivery. 

On behalf of the Joint Commission, I would like to take this opportunity to thank the 

Committee members for their hard work in passing The Patient Safety and Quality 

Improvement Act of 2005. When implemented, this landmark patient safety legislation 

will provide the cornerstone for effective reporting systems that assure confidentiality 

and encourage the sharing of lessons learned from the analysis of adverse events. 

Without surfacing richer information about the types and causes of medical errors, we 

will continue to experience preventable errors at unacceptable rates. Patient safety 

depends upon transparency of information as the basis for improvement and behavior 

change. This dependency creates a fundamental dissonance with the current medical 

liability system that drives too much of that information underground. As a result, 

neither patients nor providers benefit. 

Background 

Many proposals for solving medical liability fail patients because they do not 

effectively deter the underlying causes of the harm, such as medical errors. While in 

isolation these liability reform efforts may be helpful to some degree, there is an 

inextricable nexus between addressing patient safety issues and addressing medical 

liability reform that must be recognized. Consequently, it is essential to structure 

solutions to medical liability issues that do not address just the back end, but that also 

take into account the factors that lead to litigation and defensive medicine on the front 

end. By maintaining a dual focus on both safety and liability concerns, there is an 

opportunity to strengthen patient-provider relationships, restore trust between the affected 

parties, and change the way care is delivered. 

 This interrelationship between patient safety and medical liability concerns led the 

Joint Commission to convene a roundtable of 29 experts representing a wide array of 

interests relevant to medical liability and tort reform. The discussions and intense 

deliberations from the roundtable resulted in the 2005 publication of a White Paper, 
53

“Health Care at the Crossroads: Strategies for Improving the Medical Liability System 

and Preventing Patient Injury.” This paper, which contained over a dozen 

recommendations, was a call to action for those who influence, develop, or carry out 

policies that can lead to ways to address the medical liability system, while developing an 

environment that focuses on patient safety. My testimony today will highlight some of 

the recommendations from the White Paper that, if addressed, would move toward a 

medical liability system and a health care delivery system that both meet the needs of 

providers and patients. 

Need for Comprehensive Reform 

Much has been written about the effects that rising medical malpractice premiums 

have had on the ability of health care providers to stay in practice and provide access to 

certain high risk services. It is estimated that each year $28 billion is spent on medical 

liability litigation and defensive medicine combined.1 On average, a medical liability 

case takes three to five years to come to closure.2

 Statistics suggest a strong likelihood 

that every surgeon will be named in a suit during his/her career. These are staggeringly 

true estimations of the magnitude of the problem, but they are also illustrative of the 

dysfunction in the medical and legal “systems.” In fact, the current medical liability 

“system” is really not a system, but rather, a patchwork of disjointed and inconsistent 

decisions that has limited ability to inform the development of improved health care 

practices. 

A number of studies have revealed the inconsistency of the medical liability system 

in determining negligence and compensating patients. We know that there are large 

numbers of preventable medical errors but only about two to three percent of negligent 

injuries result in a claim, and even fewer receive compensation for their injuries.3 

Conversely, only about 17 percent of claims actually involve negligent injury. This 

means that few injured patients receive compensation through the medical liability 

system, and that those who do get compensated are often not the victims of negligence. 

Further, compensated individuals receive highly variable recompense for similar injuries. 

What we have today is a system out-of-balance and lacking equity for its participants. In 

other words, we have a system that is not fair, not efficient, and not predictable. 

Solving the rising cost of malpractice premiums will make things better but it will not 

result in an effective tort system or improved patient safety. Because what goes on in the 

court room and what goes on in our hospitals and other venues of care have become 

inextricably tied together, only a comprehensive approach to tort reform can alter the 

unfairness it imposes on patients and health care providers, and can lessen the deleterious 

impact it has on patient safety. 

Recommendations for Consideration 

The Joint Commission’s 2005 White Paper contained recommendations organized 

around three strategies for improving the medical liability system while preventing 

patient injury. The recommendations that came from the expert panel are characterized as 

ones that would: 

• pursue patient safety initiatives to prevent medical injury 

• promote open communication between patients and practitioners, and 

 

1

 Iglehart, John, "The malpractice morass: Symbol of societal conflict," Health Affairs, July/August 

2004. 

2

 General Accounting Office, "Medical Malpractice Insurance: Multiple Factors Have Contributed to 

Increased Premium Rates," GAO- 03-702, July 2003 

3

 Studdert, David M., Mello, Michelle M., Brennan, Troyen A., "Medical malpractice," NEJM 

350;3, January 15, 2004 
54

• create an injury compensation system that is patient-centered and serves the 

common good 

In this testimony, we would like to mention a few of the specific recommendations 

in each category that may be of interest to Congress. 

I. Pursuing Patient Safety Initiatives to Prevent Medical Injury 

Despite the lapse of six years since the IOM’s seminal report on medical error, “To 

Err is Human,” medical error remains ubiquitous in health care delivery. Progress has 

been made, but the health care industry has not been able to emulate the safety successes 

of other industries, such as aviation and manufacturing, which rely heavily on near-miss 

and error reporting to “learn from mistakes. A significant problem rests is the failure of 

many health care organizations and institutions to adopt a culture of safety and commit to 

systems redesign where necessary. There are substantial costs –both direct and 

opportunity costs – for health care organizations that make safety a precondition for all 

other priorities. These costs include performing “failure mode and effects analyses” on 

all high risk processes of care within the organization; establishing redundant systems to 

guard against human factors that contribute to errors; conducting organization-wide 

training and education; and investing in specific information technology to reduce the 

likelihood of preventable error. Further, leaders of health care organizations need to 

“buy-into” the benefits that will accrue to them and to patients if they make these 

investments. 

Recently, the Congress, CMS, and other national stakeholders, such as the Joint 

Commission, have been working on efforts to align payment with improvements in 

patient safety and health care quality. We believe that these efforts, sometimes called 

Pay-for-Performance (P4P), have the potential to encourage health care organizations to 

acculturate patient safety and systems re-engineering with the goal of reducing 

incidences of medical injuries. The P4P concept essentially envisions rewards for desired 

behaviors and outcomes. As we move forward with P4P implementation, it will be 

important to design these value-based purchasing programs in a way that specifically 

reward those health care organizations that transform themselves into “safe 

organizations” and that can demonstrate their adherence to safety principles. 

Clinical guidelines are increasingly invoked in court to prove or disprove deviations 

from the standard of care. The pay-for-performance construct can also encourage 

appropriate adherence to clinical guidelines to improve quality and reduce liability risk. 

For example, financial incentives for practicing in accordance with guidelines can 

accelerate their adoption and use by clinicians who may otherwise be unaware of their 

content. This will lead to better care in general, but perhaps even more directly related to 

liability reform are studies that show that adherence to clinical guidelines can reduce 

legal risk. In one study that focused on obstetrical patients, there was a six fold increase 

in the risk of litigation for cases in which there was a deviation from relevant clinical 

guidelines. 

Further, pay-for-performance programs at the federal level should be designed to 

encourage team approaches to care because teamwork has been identified by patient 

safety experts as an essential factor in reducing the risk of medical error. In aviation, 

predefined roles and responsibilities for varying scenarios are used to guide team 

development among pilots, flight attendants and other crew. Applying this approach 

consistently to health care delivery could increase the timeliness and accuracy of 

communications –breakdowns of which are commonly implicated sources of serious 

adverse events. Teamwork can also enlist clinicians and support staff in committing to a 

common goal –safe and effective care—in the often high pressured and chaotic 

environment of health care delivery. Pay-for-performance programs need to both reward 
55

team performance and guard against any incentive-based program that is divisive to team 

approaches to care. 

Another opportunity for action is to allow patient safety researcher’s access to open 

liability claims to permit early identification of problematic trends in clinical care. One 

of health care’s principal patient safety success stories is anesthesiology. The American 

Society of Anesthesiologists uses case analysis to identify liability risk areas, monitor 

trends in patient injury, and design strategies for prevention. In 2005, the ASA Closed 

Claims Project—created in 1985—contained 6,448 closed insurance claims. Analyses of 

these claims have revealed patterns in patient injury in the use of regional anesthesia, in 

the placement of central venous catheters, and in chronic pain management. Results of 

these analyses are published in the professional literature to aid practitioner learning and 

promote changes in practices that improve safety and reduce liability exposure. 

Closed claims data analysis is the one way in which the current medical liability 

system helps to inform improvements in care delivery. However, reliance on closed 

claims for information related to error and injury is cumbersome at best. It may take 

years for an insurance or medical liability claim to close. These are years in which 

potentially vital information on substandard practices remains unknown. Providing 

patient safety researchers with access to open claims, now protected from external 

examination, could vastly improve efforts aimed at identifying worrisome patterns in care 

and designing appropriate safety interventions.

II. Pursuing Open Communication Between Patients and Practitioners 

Our society has always valued open communication between patients and 

practitioners as a way to achieve high quality, safe care. But increasingly there is a “code 

of silence” when an unexpected and serious adverse event has occurred. An unintended 

consequence of the tort system is that it inspires suppression of the very information 

necessary to build safer systems of health care delivery. When it comes to acknowledging 

and reporting error, there is too often silence between practitioners and patients; 

practitioners and their peers; practitioners and the organizations in which they practice; 

and between health care organizations and oversight agencies. 

In addition, the wall of silence is amplified by the fears of physicians and health care 

organizations about the loss of reputation, accreditation or licensure, and income. The 

wall of silence severely undermines efforts to create a culture of safety within health care 

organizations and across the health care system. The White Paper identified two areas in 

which legislation could be helpful. The first is to pursue legislation that protects 

disclosure and apology from being used as evidence against practitioners in litigation. 

Lack of disclosure and communication is the most prominent complaint of patients and 

their families, who together have become victims of medical error or negligence. Years 

of wounding and expensive litigation often ensue when families are sometimes only 

seeking answers. 

For patients and their family members, the physical and emotional devastation of 

medical errors cannot be easily overcome. Research shows that what they want most out 

of their ordeal is honest and open dialogue about what went wrong, and a “legacy” that 

their experience serves as a lesson to prevent future occurrences of the same event. It has 

been demonstrated that when it occurs, they are much less likely to litigate a medical 

error. However, such communication and assurances are seldom forthcoming, although 

some prominent medical centers have adopted policies urging physicians to disclose their 

mistakes and apologies. Today, physicians and CEOs of health care organizations are 

afraid to make these apologies, expressions of sympathy, or commitments to change 

because they could be used in court as proof of negligence. 

Among our report’s recommendations for promoting transparency between patients 

and providers, we recommend that Congress consider ways to support and encourage 

state legislation that protects disclosure and apology from being used as evidence against 
56

providers in litigation. More protections are needed in order for most caregivers and 

health care organizations to feel comfortable doing this despite the ethical imperative 

underlying such disclosure. 

The second recommendation made in 2005 was for Congress to enact federal patient 

safety legislation that provides legal protection for information reported to a designated 

patient safety organization (PSO.) Again, we are very pleased that Congress passed this 

legislation last summer, and we are anxious for the Department of Health and Human 

Services to issue guidance for the establishment of PSOs. This legislation has the 

potential to unlock information we need to move more rapidly toward “systems-based” 

health care that protects inevitable human error from reaching the patient. 

 

III. Creating an Injury Compensation System that is Patient-Centered and Serves 

the Common Good 

In terms of restructuring the compensation system, there have been numerous 

proposals suggested over the past few years for making it both efficient and just for all 

parties by taking a proactive approach in administering the system. These proposals 

center on three broad approaches: 1) creation of alternative mechanisms for 

compensating injured patients, such as through early settlement offers often using 

schedules of compensation for frequent events; 2) resolving disputes through a so-called 

“no-fault” administrative system or using special health courts; and 3) shifting liability 

from a focus on individuals to a focus on organizations and systems. Though these 

approaches are distinct, they are not in conflict and could easily be combined. 

Congress could assist in creating a patient-centered compensation system that is 

predictable and fair by conducting and funding demonstration projects through the 

Secretary of Health and Human Services of alternatives to the medical liability system 

that promote patient safety and transparency; that provide swift, equitable compensation 

to injured patients; and that encourage continued development of mediation and earlyoffer initiatives. 

We need to test the feasibility and effectiveness of alternative injury compensation 

systems that are patient-centered and focused on safety. Such demonstration projects are 

needed to begin the process of mitigating the periodic medical liability crises that, aside 

from economic factors, result from the delivery of unsafe care, unreliable adjudication of 

claims, and unfair compensation for injured patients. 

There are a large number of innovative suggestions geared to moving away from 

traditional tort litigation. Inherent to all of these ideas should be highly placed value on 

immediate acknowledgement of the error or injury; an apology; and assurances that steps 

will be taken to avoid such an error in the future. 

Another potential action would be to redesign or replace the National Practitioner 

Data Bank (NPDB). Six years ago, the GAO recommended a significant overhaul of 

DHHS’ data bank that collects information on adverse actions against clinicians in order 

to make it effective. No real change has occurred since that year 2000 report which 

found that the data were biased in favor of settlements and under-reported other 

information which was more reflective of practitioners’ competence – such as 

disciplinary and hospital actions. Because of its operational, the NPDB represents a 

significant threat to physicians and is not useful for those who query in to better 

understand the competencies of clinicians who they want to hire. It also provides no 

insight into the actions that are reported, and disciplinary actions are vastly 

underreported. There is a need for a centralized data base that can capture important 

performance information about all licensed practitioners, but the NPDB needs significant 

overhaul to make it useful.
57

Conclusion 

It is our contention that neither patients nor health care providers are well served by 

the current medical liability system. The central question is how the medical liability 

system can be restructured to actively encourage physicians and other health care 

professionals to participate in patient safety improvement activities. It is clearly time to 

actively explore and test alternatives to the medical liability system that stimulate the 

creation of “just cultures.” This type of health care environments fosters learning—

including learning from mistakes—and emphasizes individual accountability for 

misconduct. 

Redesigning the medical liability system will necessarily be a long-term endeavor. 

This redesign will take a concerted effort by all stakeholders in which the legal and 

medical systems work together to solve these interrelated systems. Our mutual goal 

should be to reduce litigation by decreasing patient injury; by encouraging open 

communication and disclosure among patients and providers, and by assuring prompt, 

fair compensation when safety systems fail. 

 MR. DEAL. Thank you. 

 Mr. O’Connell. 

MR. O’CONNELL. It shouldn’t surprise me that a guy named 

O’Connell was a teenage friend of a guy named Pat Moynihan. I met Pat 

Moynihan through his younger brother, Mike. Anybody named Pat 

Monahan would obviously have a brother named “Mike.” I mention Pat, 

because once he grew to your status as a legislator, he summed up the 

problem of being a legislator by saying, “You find out that this is a world 

of competing sorrows.” Now does anything sound better than what you 

face each day, having to work with competing sorrows? Everybody is at 

you with their sorrow, whether it is from Detroit or take care of nine 

wives or whatever it should be. 

 In healthcare, there are a lot of competing sorrows. In malpractice, 

there are a lot of competing sorrows to address. But we have been very 

benefited today by having Dr. Mello here, because her report published 

recently in the New England Journal of Medicine is a brilliant one. It is 

so brilliant, I wish I had written it. But what she says, with her 

colleagues, pointing out, as many of you have indicated, these 5 and 6 

years it takes to hear a claim, settle a claim, nevermind litigate it, and 

that more than half of the dollar goes to transaction costs. They end up 

saying substantial savings depend on reforms that improve the system’s 

efficiency and the handling of reasonable claims for compensation. 

 Now that says it all. That is really a competing sorrow. And you 

and your staff should be very rigorous in questioning everybody who 

comes before you to talk about this problem as to what their proposals do 

to improve the system’s efficiency in the handling of the reasonable 

claims for compensation. 

 This system that we have, for all its complexity, is based on true 

difficulties. In order to be paid, a patient has to claim that a healthcare 

provider was at fault, and that is very hard to determine. Claimants’ 
58

lawyers have to acknowledge that is very hard to determine or else how 

could they justify taking a third or more of compensation to help get it. 

Secondly, if the victim is paid after this 5 and 6 years of shin-kicking 

litigation, the victim is supposed to get paid for his non-economic loss, 

for his pain and suffering. 

 Well, now it is very hard to determine who is at fault, and I can tell 

you it is very hard to determine the dollar value of pain. You can’t go to 

the Wall Street Journal today and find out what an aching elbow is 

worth. So almost anybody’s opinion as to how much pain and suffering 

is as good as anybody else’s, and how much that is worth in dollars is 

about worth as much in anyone’s opinion as anyone else’s. 

 Well, let me tell you what I am trying to do. I wouldn’t come here 

and rage on like this unless I thought I had a solution. Let me tell you 

the solution that I am proposing that has been mentioned earlier. It is 

called early offers. It says this: any time a claim for malpractice is made, 

a defendant, or his insurer, has the option, not the obligation, of offering 

to pay within 180 days, a hell of a lot shorter than 5 and 6 years, the 

claimant’s net economic loss, by which I mean the claimant’s medical 

expenses and wage loss beyond any applicable insurance already there, 

such as claimant’s own health insurance or Medicare or Medicaid or sick 

leave. If the defendant will make that offer, and he doesn’t have to, but 

if the defendant will make that offer, the claimant has to accept it, unless 

the claimant can prove gross negligence and prove it beyond a 

reasonable doubt. 

 Now why do I do this? Because I want to take these two issues of 

fault and pain and suffering and, in a judicial movement, turn around and 

use those as leverage to get a compensation payment for the real losses 

that the acutely injured are suffering. I want you to keep in mind that the 

present system protects everybody but those who need it. Everybody. 

What do I mean? I mean the people who really need it are the people 

who have been seriously injured and don’t have any health insurance to 

pay for their further health costs and no disability insurance to pay for 

their wage loss. They are in desperate circumstances. What does this 

system do? This system of justice? It hands them a lottery ticket. Even 

Dr. Mello says they have got a 25-percent chance of getting it wrong 

after 6 years of experts fighting about it. They give them a lottery ticket 

to say, “Well, maybe you will get paid years from now, and if you do, a 

lawyer will take a third or more of what you were paid.” That is a hell of 

a way to treat seriously injured people. They are not protected by this 

system. 

 How about everybody else? Well, of course the doctors are 

protected. They get roughed up in this treatment, but they are protected 

by the fact that they have got liability coverage, right? The defense 
59

lawyers are paid to win a lawsuit. The insurance companies are covered 

by the fact that they have got actual predictions as to what the exposure 

is. Plaintiffs’ lawyers don’t know how to take a guess unless they think 

they are going to win it. Even if they take a risky case, they have got a 

portfolio of cases for diversification. Seriously injured people don’t have 

portfolio diversification. They have got one case. The less-thanseriously injured people are protected by the fact that they have been less 

seriously injured, and they are likely to have their coverages of 

healthcare and disability paying for their losses. 

 So this crazy system with all of this money, with all of this delay, 

with all of this frustration, is protecting everybody but those who need it 

the most. 

 So what does an early offer do? An early offer says to the defendant, 

“If you will take care of the people who really need help, you will be out 

of the litigation system unless you did something that is so bad it is a 

question of criminal law, and then you don’t deserve any immunity from 

tort suit.” 

 Let me just run a couple of examples by you. I am the patient. You 

are the doctor. You treat me. Something terrible goes wrong. We don’t 

know why it happened, but I am in very bad shape. I am in such bad 

shape that if I got to you and won, I would get a million dollars in 

liability. But I have only got a one in two chance of winning. So I have 

got a $500,000 case, a one in two chance of winning, which is going to 

take me 4 or 5 years, or whatever Dr. Mello documents. It turns out, you 

could pay for my net economic loss by a corpus of $250,000. That 

would pay for my medical expenses and my wage loss, as they occur. So 

you would offer me my net economic loss, and I would have to take it. 

You would offer it because obviously $250,000 is a lot less than 

$500,000. I would have to take it, because I discovered in the study that 

I have done, a closed claim study, not as good as Mello’s, but it is good, 

that 3 percent of the cases involve something like gross negligence. So I 

would have to take it. You would be better off, and I would be better off. 

The lawyers wouldn’t be better off, but you and I would be. 

 Now change the facts slightly. I have still got the same injury. You 

are still a doctor. I have still got a million dollars of damages, but now I 

have a one in ten chance of winning. I have got a very marginal case. A 

very worthless case. I have suffered a million dollars worth of loss, but it 

is very unlikely that you were negligent. So now it is a case worth 

$100,000 because I have only got a one in ten chance of winning. You 

don’t make the offer, and I don’t deserve the offer. So I have guaranteed 

that nobody is going to have to make an offer unless they can save 

money. No plaintiff is going to lose his rights unless he is guaranteed his 

economic loss. 
60

 One could also build into this system that once the offer is accepted, 

the defendant healthcare providers have to sit down with the patient and 

explain just what will happen. So they will do this, not contention but on 

a willingness to sit down and describe what happened, because as you 

have earlier indicated, these are not people who are massacring people. 

These are mistakes, at best, and people want to know what happened. 

 MR. DEAL. Professor, I am going to ask you if you would conclude 

for us, please. 

 MR. O’CONNELL. I would conclude. Gladly. 

 So that is what the plan is. Let me tell you something, I have been 

doing this for about 40 years. If I had known how long it was going to 

take to get change, I would have undertaken the form of, I don’t know, 

the Catholic Church. 

 Let me tell you, too. You have talked here a lot about the fact that 

you want to arrive at a solution. You know what I think? I don’t think 

you will. I have heard legislators talk about this and not do anything, but 

I hope to hell you will prove me wrong. 

 Thank you. 

 [The prepared statement of Jeffrey O’Connell, J.D. follows:] 

PREPARED STATEMENT OF JEFFERY O’CONNELL, J.D., SAMUEL H. MCCOY II PROFESSOR OF 

LAW, UNIVERSITY OF VIRGINIA

Summary

In the May 11, 2006 issue of the New England Journal of Medicine authors David 

Studdert and Michelle Mello and their colleagues reported on a closed claims study of 

medical malpractice claims. The study found that the system takes far too long - on 

average five years from the occurrence. The study also found that it chews up far too 

much in overhead costs, principally legal fees on both sides, amounting to more than half 

(54%) of any compensation paid. In the words of the study, “substantial savings depend 

on reforms that improve the system’s efficiency in the handling of reasonable claims for 

compensation.” 

It is just such a change that my testimony proposes: 

Under the early offer bill, liability insurers for health care providers have the option 

within 180 days after a claim is filed of making an offer, binding on claimants, to effect 

periodic payment equal of claimant’s net economic loss (i.e., beyond any other 

insurance), plus reasonable legal fees, but nothing for pain and suffering. If the claimant 

does not accept this offer, the claimant can proceed with a normal tort claim for both 

economic and noneconomic damages, but the legal standards of both the burden of proof 

and level of misconduct applied to the claim would be raised, with the claimant having to 

prove the defendant grossly negligent beyond a reasonable doubt. If the defense does not 

make an offer, the current system applies. 

Testimony

Insurers would decide whether to make the early offer described in the Summary 

above by comparing the cost of the early offer to their expected cost under normal tort 

rules assuming the claim is not settled under the early offer proposal. This expected cost 

would equal the net economic damages (medical expense and wage loss but, as stated, 
61

not pain and suffering) plus an allowable payment of the claimant’s lawyers, which is 

presumed to be 10 percent of the value of the early offer. That is, the insurer will make an 

offer when the expected liability and litigation costs if the claim is not settled under the 

early offer proposal are greater than the net economic damages and the allowable 

claimant’s legal fees. 

Thus, the insurer will make an early offer when the amount of the early offer is less 

than the insurer’s expected exposure from a full-scale tort claim. 

Numbered items i and ii below present some of the main criticisms of current 

medical malpractice law.1

 Numbered items iii-xi below relate the early offer proposal to 

the medical malpractice reform debate. 

i. Many observers view the current system of tort liability for personal injury as 

unworkable and in need of fundamental reform. Under the current system, a claimant 

must prove two difficult elements: the defendant's fault, and the financial value of 

noneconomic damages, mostly for pain and suffering. In medical malpractice cases, 

determining fault is often especially complex, given the intricacies of medical decision 

contexts and the probabilistic consequences of medical interventions and their interaction 

with underlying patient characteristics. As a result, the system is subject to uncertainties 

that allow many injured patients to receive little or nothing while comparably injured 

others are paid much more than their economic losses. One earlier finding indicated that 

only 28 cents of the medical malpractice premium reaches claimants, and of that, only 

12.5 cents goes to compensate for the actual expenses incurred by patients, with the rest 

going to legal fees, insurance overhead, and the like.2

 As pointed out, all this uncertainty 

generates not only substantial transaction costs (mostly legal fees on both sides) but long 

delays in any payment that is made, usually measured in years. In the end, the liability 

insurance system does not result in prompt payment to many needy victims; rather, it is a 

system of prolonged, unpredictable, expensive fights over whether claimants are 

deserving and/or what payment they deserve -- a system that often operates to the 

detriment of both health care professionals and injured patients, especially seriously 

injured patients. 

ii. The present system of tort liability insurance for medical injuries may lead to the 

anomalous result of providing the least protection to those who need it most: seriously 

injured parties whose medical expenses and wage losses exceed any applicable private or 

public insurance coverage. The present legal system in effect tells patients that they may 

be paid something, but only years from now and only after paying out or any recovery 

lawyer’s fees of 30 percent or higher. 

The tort system imposes far fewer risks on the various medical malpractice liability 

participants who are not seriously injured victims. Health care providers typically have 

protection through their liability insurance coverage, and their insurers are protected by 

their risk-spreading, strengthened by actuarial calculations. Defense lawyers are paid, win 

or lose. Claimants’ lawyers have little incentive to take a case unless they are confident it 

is likely to lead to an expected payment in excess of their expenses and opportunity costs. 

Even if the risk of nonpayment for any given claim is high, the claimants’ lawyer can 

 

1

 The following numbered items i-ix are adapted from Jeffrey O’Connell, Statutory Authorization of 

Nonpayment of Non-economic Damages, 71 Tenn. L. Rev. 191-95 (2003). For a brief presentation 

of the inadequacies of current medical malpractice law, see Jeffrey O=Connell & Andrew S. 

Boutros, Treating Medical Malpractice Claims Under A Variant of the Business Judgment Rule, 77 

Notr. D. L. Rev. 373, 374-83 (2002). Two recent works, while purporting to rebut criticisms of 

medical malpractice law, nonetheless acknowledge its inadequacies in proposing substantial reforms, 

in the first instance even proposing a variant of early offers to reduce exposure to pain and suffering 

damages. See David A. Hyman and Charles Silver, The Poor State of Heath Care Quality in the 

U.S.: Is Malpractice Liability Part of the Problem or Part of the Solution? 90 CORNELL L. REV. 893, 

986-87, 992 (2005); TOM BAKER, THE MEDICAL MALPRACTICE MYTH 90, 163-64; 172-74 (2005). 2

 Jeffrey O’Connell, An Alternative to Abandoning Tort Liability 60 MINN. L. R. 501 506-09 (1976). 
62

minimize this risk by taking multiple cases to assure portfolio diversification, a form of 

protection denied to the seriously injured victim, who normally will have only one such 

claim in a lifetime. Finally, the less seriously injured are relatively protected by the very 

fact of their lesser losses which may, in turn, be covered by their own health insurance or 

sick leave. 

iii. The early offer reform addresses the main shortcomings of the current system. 

Before considering the benefits of early offers, it is useful to review their structure. Under 

such an approach, a defendant has the option (not the obligation) to offer an injured 

patient, within 180 days after a claim is filed, periodic payment of the claimant's net 

economic losses as they accrue. Economic losses under an early offer statute must cover 

medical expenses, including rehabilitation plus lost wages, to the extent that all such 

costs are not already covered by other insurance (“collateral sources”), plus an additional 

10 percent attorney's fee. Therefore, a defendant cannot make a lesser or “low ball” offer 

and still be covered by the statute. Nor is there any need for a court to determine whether 

the early offer is fair. The early offer statute defines the fairness of the offer, similar to a 

workers’ compensation statute for workplace accidents. 

If an early offer is made and accepted, that, of course, settles the claim. If the 

defendant decides not to make an early offer, the injured patient can proceed with a 

normal tort claim for medical expense and wage loss plus pain and suffering. 

Alternatively, if the claimant declines an early offer in favor of litigation, (1) the standard 

of proof of misconduct is raised, allowing payment only where “gross negligence” is 

proven; and (2) the standard of proof is also raised, requiring proof of such misconduct 

beyond a reasonable doubt (or at least by clear and convincing evidence). 

iv. Consider a typical case to illustrate how the early offer law would work. A 

patient has been injured in the course of treatment. If the patient wins in court, she would 

be awarded $1 million, but given the risks of litigation, she has only a 50 percent chance 

of winning. Roughly calculated, the patient has a claim worth about $500,000 (50 percent 

chance at $1 million). Assume the cost of setting aside a corpus of money to pay the 

patient’s net economic losses as they accrue is projected at about $250,000 (an often 

realistic assumption in such a case, as studies demonstrate). The health care provider’s 

insurer would likely make the early offer, $250,000 being clearly less than $500,000. 

And the patient would likely accept, given that under the early offer proposal the plaintiff 

will have the normally insuperable burden of proving her doctor guilty of gross 

negligence beyond a reasonable doubt. 

Now assume a change in the facts: same patient, same health care provider, and the 

same possible $1 million verdict. But here assume this patient’s chances of winning are 

only one in ten, with an expected value of $100,000 (1/10 of $1 million). Here the 

defendant’s insurer would not make an early offer, $100,000 being clearly less than 

$250,000. 

v. The fear of potentially higher costs to insurers under this early offer scheme is 

avoided because no defendants need make an offer if they would not do so without this 

statute. Thus, defendants will make an offer only when it makes economic sense for 

them to do so, as shown in the example above. 

vi. But won’t insurance companies thereby just “cherry pick” claims by making 

lower payments to clearly deserving claimants? Because of the uncertainty and cost of 

determining both liability and pain and suffering damages under present tort law, it is 

likely, as indicated in Item iv above and the report itself below, that defendants in 

medical malpractice cases will make prompt early offers in many cases even when 

liability is unclear. 

vii. The proposal would affect injury victims in many ways that are advantageous. 

While injury victims would lose their recourse to full-scale tort litigation, they would 

reduce their uncertainty, delays, and transaction costs. Moreover, they would lose their 

current tort litigation recourse only when they are guaranteed prompt payment of their 
63

actual economic losses plus attorney's fees. These prompt and certain payments will be 

especially advantageous to those seriously injured patients whose losses have outstripped 

other applicable coverage. 

viii. Several factors make it unattractive for early offers to be made voluntarily 

without an early offer statute. Defendants today may be confident of defeating or at least 

wearing down claimants, given the difficulties and delays in proving a tort claim. The 

long delay before trial may often enable defendants to bargain down even claimants 

clearly entitled to tort damages because the latter may need immediate money for accrued 

and accruing medical bills and wage loss. Furthermore, defendants may fear that an early 

offer to settle for claimants’ net economic loss will be seen as a signal of weakness and 

encourage claimants and their lawyers to seek an even larger settlement than originally 

sought. This mirrors the position of claimants and their lawyers, who similarly fear that 

an early offer to settle only for economic loss would be deemed an admission of 

weakness in their cases, resulting in either no payment or less than that otherwise sought. 

ix. Early offers will be a viable mechanism only if defendants, not claimants, are 

allowed to make binding early offers. Claimants and their counsel would lack sufficient 

incentives to weed out frivolous or non-meritorious claims if they had the power to 

unilaterally bind defendants by their claims. This would result in a perverse incentive to 

exploit the system with marginal claims or worse which would nonetheless be binding on 

defendants. But defendants, as the parties making payment, when confronted with 

clearly meritless or very marginal claims will pay nothing and make no early offer, as 

shown in the example above. On the other hand, when faced with potentially meritorious 

claims, defendants will have an incentive to explore whether the statutorily-defined early 

offer involves less expected cost than a full-scale tort suit with all its uncertainty and 

transaction costs. Thus, only defendants have the appropriate incentives to distinguish 

carefully between arguably meritorious and clearly non-meritorious claims in order to 

reduce costs by promptly paying the required minimum benefits in suitable cases. 

x. There are also several rationales for why damages for pain and suffering are not 

included in the early offer reform. The uncertainty of determining both liability and 

damages for noneconomic damages is the key to understanding the inefficiencies of tort 

law and to framing a balanced solution that attempts to be fair to both injured patients and 

health care providers. Pain and suffering damages are indeterminate and highly volatile. 

Under an early offer system, the prospect of an award of pain and suffering damages 

nonetheless still serves as a means of internalizing health care providers’ medical 

mishaps by providing an incentive to make early offers covering injured patients essential 

economic losses. These offers thus will provide prompt compensation to many victims of 

injuries that accompany the delivery of medical services. In effect, the threat of paying 

damages for pain and suffering, rather than the actual payments, will better serve injured 

patients as well as the public interest. 

Pain and suffering damages also differ from economic damages from the standpoint 

of insurance.3

 Because accidents and illnesses generally reduce the marginal utility of 

income, people do not generally find it desirable to purchase pain and suffering 

insurance. Indeed, no such general insurance market has emerged. In contrast, 

risk-averse individuals will desire full insurance of their economic losses, which is the 

focal point of the early offer proposal. 

Because personal injury claims alone among all other damage claims routinely entail 

damages for both economic and noneconomic losses, defendants are uniquely positioned 

not only to make, but also to enforce by early offers, socially attractive settlements for 

only economic loss. In non-personal injury claims, where only economic damages are at 

 

3

 See W. Kip Viscusi, Pain and Suffering: Damages in Search of a Sounder Rationale, I MICHIGAN 

LAW AND POLICY REV 141 (1996). 
64

stake, no comparably fair means are available to sanction a claimant who refuses to 

accept an offer of only a portion of the total losses claimed. 

xi. A complete no-fault plan for medical injuries does not seem feasible. It is 

difficult to define in advance when no-fault benefits should be paid for injuries that arise 

from medical treatment. Under no-fault auto insurance policies, an accident victim is 

compensated for an injury “arising out of the ownership, maintenance, or use of a motor 

vehicle.” Under workers’ compensation laws, an industrial accident victim is 

compensated for an “injury arising out of, and in the course of, employment.” It is not 

feasible, however, to force all health care providers to pay patients for any and all adverse 

events arising in the course of medical treatment. It is often impossible to determine 

whether a patient was injured by the treatment rendered, or whether the adverse condition 

after treatment was just a normal extension of the condition which prompted treatment in 

the first place. A health care provider could not be expected to pay every patient whose 

condition worsens after treatment. Thus such a comprehensive ex ante no-fault solution is 

unworkable, and therefore unavailable. The proposed early offer system for medical 

accidental injuries enables, when the facts are much better known, ex post comparisons of 

the cost of a tort claim versus that of an early offer, and so this system seems a uniquely 

workable, economical, equitable, and simplifying solution. 

Some operational features of the early offer plan

It may be useful, for example, to address some questions regarding the time frame 

for operation of the early offer plan. Is the 180-day period too short a time for the 

defendant to decide to make an early offer? In general, insurers already compute their 

initial reserve amounts in a much shorter period, and the preliminary discovery process 

would be accelerated by the early offer structure. In addition to doing research to decide 

whether to bring a claim, claimants and their lawyers can also take their time and press 

any discovery they deem necessary before responding to any early offer. 

Court approval of the terms of an accepted early offer will no more be required than 

is court approval of the terms of a workers’ compensation case. Of course, there may be 

later disputes after an early offer settlement regarding what is due periodically as losses 

accrue in the future, but that can happen under workers= compensation or any major 

medical/disability policy extending into the future. Courts now routinely review 

settlements in minors’ cases, a practice that presumably will continue. 

An early offer settlement is no worse than lump sum court awards in dealing with 

seemingly difficult questions, such as whether the claimant’s condition might change. 

The parties also might agree to a structured settlement,. i.e., present estimates which 

would bypass the need for future recalculations of amounts as they are due. In the case of 

death, the survivors would be due the amount, if any, that the decedent’s earnings would 

have been expected to provide as support. Note that the Michigan no-fault auto law with 

its large wage loss coverage extending to the hundreds of thousands of dollars has been 

able to deal effectively with such matters. 

As to the limit on claimant attorneys’ fees to 10 percent of the value of the early 

offer, this percentage is based on a comparison of (1) the current almost uniform 

minimum of one-third of the value of a full-scale tort settlement or verdict and (2) the 

claimant’s attorney fees under no-fault workers’ compensation, which are not 

uncommonly limited to 10 percent for losses above a minimum payment. 

Note further that by definition there will be no trial expenses under early 

settlements. Note too that the early settlement will also greatly diminish pre-trial 

expenses. Also, if the 10 percent fee is manifestly too low because of special 

circumstances, claimant’s counsel can petition the court for an augmentation that will be 

payable by the early offerer. 

When an early offer makes sense, all the insurers involved in the case, should join 

together in making the early offer. If not, insurers not making an early offer would be 
65

left with a claimant no pursuing economic damages with no offset for collateral sources, 

plus non-economic damages. Indeed such a case would be financed by payment from 

any other insurer’s early offer. As a practical matter disputes over division of the 

ultimate cost to any given insurer would be handled later through arbitration. 

Conclusion

An economic model of the cost and other effects of the early offer proposal shows a 

typical result as follows: With the parties stalemated after years of negotiation between 

$279,000 and $408,000, an early offer of $190,740 covering claimant’s net economic 

loss, plus 10% for claimant’s attorney’s fee, would have netted claimant $173,400 and 

settled the case promptly. 

The model especially highlights the “wedge” effect, that current law induces in 

placing barriers between claimants and defendants, greatly inhibiting efficient settlements 

B a wedge that early offers greatly diminish. 

A Wedge Effect . . . exists when buyers and sellers in a market must share a cost 

related to consummating a transaction. The Wedge is the amount by which the 

purchase price to the buyer is raised plus the amount the selling price received by 

the seller is reduced. The paradigmatic example is the sales tax on goods. To the 

extent that litigation-based costs cause a Wedge Effect in the market for resolution 

of medical malpractice claims, the current [tort] system artificially prevents some 

welfare-enhancing settlements, reduces the compensation of claimants 

unnecessarily, inflates the payment of defendants and creates a deadweight loss.4

The early offer reform should lead to cost savings and speedy resolution of many 

cases if adopted. The main benefit to claimants of the early offer reform is that if an offer 

is made and accepted, claimants receive assurance of payment that covers their net 

economic losses approximately six months after the claim is filed. Payment will thus be 

received much sooner than under the current system and with much lower transaction 

costs. 

The disadvantage to the claimant of accepting the early offer is that the possibility of 

receiving noneconomic damages is eliminated. Since noneconomic damages often 

involve greater sums than economic damages, this loss is admittedly significant. But only 

in about 3 percent of present cases does the possibility of punitive plus noneconomic 

damages exist. Under an early offer regime even in such cases victory would not be 

assured since the burden of proof would be substantially greater than it is now. 

Although, the extent to which savings from early offers would be passed on through 

lower malpractice insurance premiums is unknown, assuming a competitive marketplace, 

one certainly can expect that to happen. 

 

4

 Jeffrey O’Connell, Jeremy Kidd, & Evan Stevenson, An Economic Model Costing AEarly 

Offers@ Medical Malpractice Reform, 35 N. Mex. L. Rev. 259, 280.

 MR. DEAL. Thank you. 
66

 Ms. Doroshow. 

MS. DOROSHOW. Thank you, Mr. Chairman, members of the 

subcommittee. 

 I want to address my remarks mostly on the issue of health courts, 

because a lot of the testimony refers to those. I do want to, though, 

before I begin, just review for a moment what the study that has been 

referred to that Dr. Mello participated in and what the New England 

Journal of Medicine did find. That study, and I think if you read it, 

actually for the purpose of this hearing, in terms of the way the system 

really is working. That study found that most of the claims that result 

from errors, those individuals receive compensation. On the other hand, 

most individuals whose claims did not involve errors or injuries receive 

nothing. Eighty percent of claims involved injuries that cause significant 

or major disability or death. Disputing in paying for errors account for 

the largest share of malpractice costs for errors. Fifteen percent of the 

cases are going to trial. That means a large majority of them are settling 

or there are some other kind of alternative compensation systems or 

processes currently taking care of the majority of these claims. 

 In this very same issue in the New England Journal of Medicine, 

there was a companion piece which discussed how litigation against 

hospitals is critical for ensuring patients’ safety. So there is a patient 

safety issue involved here that would be very detrimentally affected by 

removing litigation as a prospect, at least in the case of hospitals. 

 Now the Center for Justice & Democracy, that I am the Executive 

Director of, works with a number of malpractice victims, and none of 

them have been very active in their fight against caps on damages. But a 

couple of weeks ago, we have reached out to them on the issue of health 

courts, because there was a hearing on the Senate side on this issue. I 

cannot tell you how surprised I was to see the immediate and intense 

response from the victims that we worked with who were horrified by the 

prospect of health courts. I can’t tell you how distressed they were. 

These individuals that, for the most part, never went to trial, their cases 

were resolved by mostly pre-settlement negotiations, a form of 

alternative dispute resolution which currently exists in the system, which 

is voluntary and does not remove the individuals’ fundamental right to 

jury trial. They strongly object to requiring that cases be forced into an 

informal administrative system without any prospect of a jury or an 

unbiased judge hearing their case or ensuring the fairness of the 

proceeding and also a one-size-fits-all schedule for compensation for 

these victims. They feel very strongly this would deny justice to them 

and to those who would be injured in the future. 

 Going into more detail about the specific health court model, I feel 

there are areas that are particularly of concern to us and to the victims we 
67

work with. The specialized judge that would be ruling in these cases 

would certainly not be unbiased. They have been described as mutual, 

but they would be coming from the healthcare industry, the medical 

industry in some way. The experts that they would hire to advise them 

would, as well, play a very large role in these health courts. Liability is 

basically a form of negligence. This avoidability standard is a form of 

negligence, so you are basically forcing the patient into an administrative 

system, having to prove virtually the same thing in terms of liability, but 

without the procedural protections that a court provides without an 

unbiased judge to ensure fairness. 

 The compensation schedules, the victims are obviously very 

concerned about this, not only because they don’t take into account the 

individual circumstances of someone’s life, but because once, and this is 

the lesson of all administrative systems when you set them up by statute 

and compensation is set up in a schedule in a statute, they become 

vulnerable to political influences. If you look at the workers’ 

compensation system, it started out with very good intentions in the early 

part of this century to help workers. You will see the steady chipping 

away of compensation and benefit levels to workers, even to the point 

where some systems now have been completely gutted for workers 

because of the costs, because the insurance companies will go in there 

every year to State legislatures and get the benefits chipped away. In 

Florida, in virtually every session since that workers’ comp statute was 

set up in 1935, those benefits have been chipped away. 

 Taking away a jury in this situation, the vague promises of efficiency 

and so forth that have been promised, in no way equal the magnitude of 

what is being proposed here to being taken away from victims, the right 

to a jury trial. There are also very serious constitutional concerns about 

that, which I don’t believe are surmountable. But if you look at the 

claims of efficiency and speed, they are derived by almost every 

administrative compensation system that has ever been instituted in this 

country, all of which are plagued by bureaucratic problems, political 

capture problems. 

 Just very briefly, the experts that have been contemplated here, in all 

of the models that we have seen, although very skeletal at this point, 

these experts coming from the industry would play a very large role in 

determining compensation and determining fault. This is very unfair to 

victims. Victims need to have lawyers helping them in these situations, 

and the lawyers need to have experts. They have a right to have that, and 

they have a right to have the experts go up against the insurance 

companies’ experts, and that is what you need a jury to determine. 

Juries, their quintessential function is to determine fault in those kinds of 
68

situations and the fairness of what a victim is going to need, particularly, 

when you are talking about future medical expenses. 

 Just to conclude, we do not object, and the victims that we work with 

absolutely do not object, to alternative compensation systems, provided 

they are voluntary, provided that they do not eradicate the fundamental 

right that we have in this country to jury trial. Most of the victims we 

work with take advantage already of those systems already in effect. If 

you are going to look at trying to improve the efficiency of some of those 

systems, we would be all for it, but they must be voluntary, and they 

must ensure the right to jury trial. 

 Thank you. 

 [The prepared statement of Joanne Doroshow follows:] 

PREPARED STATEMENT OF JOANNE DOROSHOW, EXECUTIVE DIRECTOR, CENTER FOR 

JUSTICE & DEMOCRACY

Mr. Chairman, members of the Committee, I am Joanne Doroshow, President and 

Executive Director of the Center for Justice & Democracy, a national public interest 

organization that is dedicated to educating the public about the importance of the civil 

justice system. 

In addition to our normal work, CJ&D has two projects: Americans for Insurance 

Reform, a coalition of over 100 public interest groups from around the country that seeks 

better regulation of the insurance industry; and the Civil Justice Resource Group, a group 

of 24 prominent scholars from 14 states formed to respond to the widespread 

disinformation campaign by critics of the civil justice system. 

I appreciate the opportunity to address the issue of medical malpractice litigation 

and patient safety. Today, I would like to discuss why mandatory alternatives to medical 

malpractice litigation would not only have terrible consequences for patients, but also 

hurt patient safety. 

INTRODUCTION AND SUMMARY 

CJ&D and the malpractice victims with whom we work all agree that alternative 

systems, where both parties voluntarily agree to take a case out of the civil justice system, 

are not only appropriate, but currently resolve the vast majority of legitimate medical 

malpractice claims today. Most victims with whom we work resolved their cases through 

informal pre-trial settlements. This is consistent with findings published in the May 11, 

2006 New England Journal of Medicine, that only 15 percent of claims are resolved by 

jury verdict today.1

 

There is nothing wrong with alternative dispute resolution (ADR) or alternative 

compensation systems, provided they are truly voluntary and do not eliminate the right to 

trial by jury. This view is consistent with a July 27, 1998 report released jointly by the 

American Medical Association, the American Bar Association and the American 

Arbitration Association, entitled Health Care Due Process Protocol, which found that, 

“[t]he agreement to use ADR should be knowing and voluntary. Consent to use an ADR 

process should not be a requirement for receiving emergency care or treatment. In 

disputes involving patients, binding forms of dispute resolution should be used only 

where the parties agree to do so after a dispute arises.” 

 

1

 David M. Studdert, Michelle Mello, et al. “Claims, Errors, and Compensation Payments in Medical 

Malpractice Litigation,” New England Journal of Medicine, May 11, 2006. 
69

However, we and the medical malpractice victims with whom we work strongly 

object to schemes that require that cases be heard in informal settings, such as Health 

Courts, without the option of having either juries or unbiased judges making decisions, 

and with schedules of benefits that deny individual justice. Such systems tilt the legal 

playing field heavily in favor of insurance companies that represent health care providers. 

This is especially so in systems where the burden of proof on patients (as is contemplated 

by so-called Health Courts) is little different than would be required in a court of law. 

What’s more, removing the possibility of jury trial will infect the bilateral 

bargaining/settlement process, through which most legitimate medical malpractice 

disputes are resolved. Ordinarily, the victim’s warning that he or she is prepared to take a 

case before a jury helps to ensure a fairer settlement. Without the prospect of a jury trial, 

the health care/insurance company’s leverage in any settlement negotiation is greatly 

increased, to the detriment of innocent patients. 

Moreover, it is bad enough that the law contemplates a one-size-fits-all schedule of 

benefits that, like caps, take into account no individual circumstances of a person’s life. 

But also, political bodies will set these compensation judgments, and insurance and 

health industry representatives can lobby these bodies. It is the lesson of history that, 

unlike our courts and juries, political money and lobbying can easily influence 

legislatures and agencies that retain the sole power to redefine limits and benefits under 

codified compensation systems. Once political forces take over a statutory system, as 

they always do, it is merely a matter of time before even the most pro-victim proposal is 

turned into a nightmare for the injured person. 

Removing the threat of litigation would also disrupt other critical functions of the 

legal system, most importantly the deterrence of unsafe practices, especially in hospitals 

as explained below. Clearly, we need to look for ways to improve the quality of health 

care services in our country and to reduce preventable medical errors. Alternatives to 

litigation will not only fail to fully compensate patients, but they will also undermine 

restraints the civil justice system currently imposes on dangerous conduct. 

Patient safety should be our first priority. There are many productive areas to focus 

upon – weeding out the small number of doctors responsible for most malpractice, 

improving nurse staffing ratios, to mention just two. Mechanisms that shield grossly 

negligent doctors from accountability by intruding upon the legal system are simply the 

wrong way to go. 

WHERE’S THE CRISIS?

On May 11, 2006, two articles published in the New England Journal of Medicine

lead to the conclusion that despite a tremendous amount of negative rhetoric about 

medical malpractice litigation, the medical malpractice system works pretty well. 

In their closed claims study, Michelle Mello, David M. Studdert and others found 

that despite its costs, the current system works: legitimate claims are being paid, nonlegitimate claims are generally not being paid, and that “portraits of a malpractice system 

that is stricken with frivolous litigation are overblown.”2

 The authors found: 

• Sixty-three percent of the injuries were judged to be the result of error and most 

of those claims received compensation; on the other hand, most individuals 

whose claims did not involve errors or injuries received nothing. 

• Eighty percent of claims involved injuries that caused significant or major 

disability or death. 

• “The profile of non-error claims we observed does not square with the notion 

of opportunistic trial lawyers pursuing questionable lawsuits in circumstances 

in which their chances of winning are reasonable and prospective returns in the 

event of a win are high. Rather, our findings underscore how difficult it may 

 

2 Ibid. 
70

be for plaintiffs and their attorneys to discern what has happened before the 

initiation of a claim and the acquisition of knowledge that comes from the 

investigations, consultation with experts, and sharing of information that 

litigation triggers.” 

• “Disputing and paying for errors account for the lion’s share of malpractice 

costs.” 

• “Previous research has established that the great majority of patients who 

sustain a medical injury as a result of negligence do not sue. ... [F]ailure to pay 

claims involving error adds to a larger phenomenon of underpayment generated 

by the vast number of negligent injuries that never surface as claims.”

• Patients “rarely won damages at trial, prevailing in only 21 percent of verdicts 

as compared with 61 percent of claims resolved out of court.” 

The authors also determined that the costs of the current system were high – but 

compared to what? Medical malpractice cases represent a tiny fraction of cases that pass 

through the civil courts every day. Health Courts contemplate establishing an entirely 

new administrative bureaucracy to accomplish the same thing. Insurers will still fight 

claims. Independent witnesses for both sides will still be needed. The Health Court 

process would hardly save money - unless it was done on the backs of injured patients 

who would be less likely to obtain adequate compensation under this system. 

The second article from the May 11, 2006, New England Journal of Medicine

argued that litigation against hospitals improves the quality of care for patients.3

 The 

article also confirmed that removing the threat of litigation would do nothing to improve 

the reporting of errors since fear of litigation is not the main reason doctors do not report 

errors. Highlights of this article include: 

• “In the absence of a comprehensive social insurance system, the patient’s right 

to safety can be enforced only by a legal claim against the hospital. ... [M]ore 

liability suits against hospitals may be necessary to motivate hospital boards to 

take patient safety more seriously.” 

• “The major safety-related reasons for which hospitals have been successfully 

sued are inadequate nursing staff and inadequate facilities.” For example, the 

Illinois Supreme Court found that a hospital was at fault for failing to provide 

enough qualified nurses “to monitor a patient, whose leg had to be amputated 

because his cast had been put on too tight.” 

• Anesthesiologists were motivated by litigation to improve patient safety. As a 

result, twenty-five years ago, this profession implemented “a program to make 

anesthesia safer for patients” and as a result, “the risk of death from anesthesia 

dropped from 1 in 5000 to about 1 in 250,000.” 

• Only one quarter of doctors disclosed errors to their patients, but “the result 

was not that much different in New Zealand, a country that has had no-fault 

malpractice insurance” [i.e., no litigation against doctors] for decades. In other 

words, “There are many reasons why physicians do not report errors, including 

a general reluctance to communicate with patients and a fear of disciplinary 

action or a loss of position or privileges.” 

• “[B]y working with patients (and their lawyers) to establish a patient’s right to 

safety, and by proposing and supporting patient-safety initiatives, physicians 

can help pressure hospitals to change their operating systems to provide a safer 

environment for the benefit of all patients.” 

 

3

 George J. Annas, J.D., M.P.H., “The Patient’s Right to Safety – Improving the Quality of Care 

through Litigation against Hospitals,” New England Journal of Medicine, May 11, 2006. 
71

Finally, statistics suggest that few who are injured by medical negligence actually 

file a claim, go to court, or receive any compensation for their injuries.4

 Proponents of 

Health Courts call this a litigation crisis that can be resolved with alternative systems. 

This is absurd. 

First, patients who are injured by medical malpractice usually do not know that 

negligence was involved in the first place, or even suspect it. Hospital records certainly 

do not indicate errors. This situation would be no different if patients were forced to 

litigate in Health Courts. Certainly, the hardball litigation tactics of insurance companies 

that deny and fight legitimate claims will not suddenly stop either. Second, sometimes it 

is only after an attorney agrees to take a case, goes through the laborious process of 

obtaining hospital records, and has their own experts evaluate the information, that 

negligence can be proven. This process would be no different with Health Courts, but 

would be even more difficult for the patients because there would be no judge or jury to 

ensure a fair process. In fact, bias in the process may make it less likely that an attorney 

will financially risk taking the case at all. 

Finally, there are many reasons why malpractice victims do not sue even when they 

know negligence was involved. My own father’s cancer was misdiagnosed by his family 

physician. No one in my family even considered the notion of suing this doctor, and 

would not have done so no matter what kind of process was available to us. These kinds 

of stories are repeated every day in this country. But when a child is catastrophically 

injured or the breadwinner of a young family is rendered quadriplegic, families need and 

deserve the kind of compensation that a judge or jury, who listen to the evidence in each 

individual case, decide is best. While presented ostensibly for the benefit of victims, 

Health Court proposals show nothing but misguided concern for what is best for patients 

and, particularly, the most severely injured patients. 

MODELS 

Sorry Works 

Several alternative compensation proposals for medical malpractice cases have been 

discussed over the last year. The Medical Error Disclosure and Compensation (MEDiC) 

Program, also known as “Sorry Works”, is problematic. Under the current federal 

proposal, “health care providers would report patient injuries to a designated officer who 

would determine whether those injuries resulted from a medical error. In the event that a 

medical error occurred, providers would explain the incident to patients, offer an apology 

and enter into compensation negotiations. The apologies would remain confidential, and 

patients could not use them as an admission of guilt in legal proceedings.”5

 

There are several concerns. First, the civil justice system is structured to neutralize 

resource and power imbalances between the parties. Without it, negotiations become 

heavily tilted in favor of the doctor or hospital. There is little doubt that an uninformed 

patient, particularly one who is catastrophically injured, will be pressured by insurers to 

resolve their case for a fraction of what they need or deserve, particularly when it comes 

to future medical expenses. Because there is no requirement that the patient be 

represented by counsel, these negotiations will be extremely perilous for the injured 

patient. If the dispute goes to mediation, this can also be dangerous for the injured 

patient. Mediation can make a dispute appear as a conflict between equals that should be 

worked out on amicable terms for both, inducing the feeling on the injured victim’s part 

that he or she should compromise, regardless of the justice of his or her claim. 

 

4

 Harvard Medical Practice Study, Patients, Doctors and Lawyers: Medical Injury, Malpractice 

Litigation, and Patient Compensation in New York, 1990. 5

 “Medical Errors: Rodham Clinton, Obama Propose Disclosure; Program, American Health Line,” 

September 29, 2005. 
72

Another problems is that, while there is the right to proceed to the judicial system if 

no agreement is reached after six months, the bill does not toll the statute of limitations 

during the negotiation period, which is a serious problem in states that have only a 1 year 

statute of limitations. Finally, it hardly needs to be said that keeping an admission of 

wrongdoing out of court is not only unfair to patients who have been hurt, but increases 

transaction costs as patients are forced to build their case from scratch. The real problem 

is the insurance company that fights patients in these cases, rather than acknowledge the 

culpability of the health care provider that they insure. 

Health Courts 

The Health Court model has generated a good deal of interest and is being strongly 

pushed by Common Good. The proposal that is taking shape has the following key 

features: specialized judges with an expertise in health care; experts hired by the Health 

Court; a modified form of negligence (termed “avoidability”); a compensation schedule; 

no juries; and no access to civil court review. 

As for the standard of liability, the Health Court proposal being discussed most 

recently relies on a new standard entitled “avoidability.” This is not a “no-fault” standard 

but rather contemplates some element of fault, or a judgment that care was somehow suboptimal and this lower level of care resulted in injury. 

 Avoidability appears to draw from a standard applied in Sweden and lies somewhere 

between negligence and strict liability. It should be noted that Sweden, which is often 

cited as the model for current Health Court proposals, allows for tort remedies to co-exist 

alongside Health Courts. Moreover, Sweden has an array of other public benefits that 

offset costs of injuries regardless of any claims. In the U.S., however, where there are 

very few public benefits, the proponents of Health Courts are adamant about the 

exclusivity of Health Courts and the removal of all access to the court system. This can 

only result in injured people having to shoulder much more of the cost of the injury, 

without any accountability mechanisms being placed on the health care industry. 

REMOVING THE JURY 

Proponents of Health Courts waive away constitutional problems raised by 

eliminating the right to trial by the jury by citing to worker’s compensation, vaccine 

injury compensation, tax courts, and even the National Labor Relations Board. Although 

each of these programs was built on a different authorizing structure, they all share an 

adjudication function without the aid of juries. They are also all distinguishable from 

Health Courts. The compensation schemes are all based on no-fault models, and the 

remaining alternative schemes adjudicate public, federally-created rights, not private 

long-standing state common law rights. 

In fact, almost every state constitution guarantees the right to trial by jury in civil 

cases and the right to access the court system for redress. Health Courts require that 

patients give up these rights without any reasonable substitute. A majority of states will 

likely find health “courts” unconstitutional based on their state constitutional provisions 

safeguarding the right to a jury, the right to open access to the courts and/or the right to 

due process.6

Moreover, the determination of fault under common law is the quintessential jury 

function, and empirical studies support the view that a jury’s ability to handle complex 

litigation, including medical malpractice cases, is not a problem, and has never been a 

 

6

 See, Amy Widman, Center for Justice & Democracy, “Why Health Courts are Unconstitutional” 

(publication forthcoming by the Pace Law Review), 

http://centerjd.org/press/opinions/HealthCourtsUnconstitutional.pdf. 
73

problem.”7 Juries, through the group processes of collaboration and deliberation, are 

particularly well-suited for complex cases.8

 Jury verdicts are consistent with those of 

other decision-makers. A doctor-led research group examined 8,231 closed malpractice 

cases in New Jersey and found that the verdicts rendered by juries in the few cases that 

went to trial correlated with the judgment of the insurers’ reviewing physicians.”9

 

Another analysis of various studies found: “Researchers have repeatedly found that juries 

and judges reach extremely similar conclusions about tort liability.”10 “Other researchers 

found that the evidence on judge-jury concordance in complex cases is very favorable. In 

one study of malpractice trials, for example, juries were harder on plaintiffs than judges 

were.”11 

Moreover, judges, who see how juries function every day, have enormous 

confidence in the jury system, including their ability to handle complex cases. In March 

2000, the Dallas Morning News and Southern Methodist School of Law sent 

questionnaires to every federal trial judge in the United States, its territories and 

protectorates – over 900 judges. About 65 percent (594) of the federal judges 

responded.12 The paper reported, “The judges’ responses reflect a high level of day-today confidence in the jury system. Only 1 percent of the judges who responded gave the 

jury system low marks.... Ninety-one percent believe the system is in good condition 

needing, at best, only minor work... Overwhelmingly...judges said they have great faith 

in juries to solve complicated issues.... Ninety-six percent said they agree with jury 

verdicts most or all of the time. And nine of 10 judges responding said jurors show 

considerable understanding of legal and evidentiary issues involved in the cases they 

hear.”13

STACKING THE PROCESS AGAINST THE PATIENT 

Proponents of alternatives like Health Courts often make vague promises that an 

alternative system will be fairer to plaintiffs and/or will provide more compensation 

accompany such proposals. They point to benefits such as “free legal representation,” 

“efficiency,” and “quicker resolution,” as reasonably just substitutes for a plaintiff’s right 

to open access of the courts and right to trial by jury.14 

At the outset, it is worth noting that there is no free legal representation being 

offered as part of the Health Courts model or any of the alternative systems. An attorney 

is not mandatory, but neither is this true for our civil justice system. But clearly, victims 

feel that they fare better with an attorney representing them and it is safe to assume the 

same will be true for the Health Courts, if not even more so as the administrative tribunal 

will have less procedural safeguards in place to assure fairness. Although it is true that a 

plaintiff may be given access to free “experts,” these are experts picked by a panel 

heavily weighted toward industry. 

 

7

 Philip G. Peters, Jr. “The Role of the Jury in Modern Malpractice Law,” 87 Iowa L. Rev. 909, 927-

28 (2002), http://papers.ssrn.com/sol3/Papers.cfm?abstract_id=310681. 8 Ibid.

9

 Marc Galanter, “Real World Torts: An Antidote to Anecdote,” 55 Maryland L. Rev. 1093, 1111 

(1996), citing Mark I. Taragin et al., “The Influence of Standard of Care and Severity of Injury on 

the Resolution of Medical Malpractice Claims,” 117 Annals Internal Med. 780, 782, 780 (1992). 10 Philip G. Peters, Jr. “The Role of the Jury in Modern Malpractice Law,” 87 Iowa L. Rev. 909, 922 

(2002), http://papers.ssrn.com/sol3/Papers.cfm?abstract_id=310681. 11 Id. at 924-25, citing Kevin M. Clermont & Theodore Eisenberg, “Trial by Jury or Judge: 

Transcending 

Empiricism,” 77 Cornell L. Rev. 1124, 1137, 1174 (1992). 12 Allen Pusey, “Judges Rule in Favor of Juries: Surveys by Morning News, SMU Law School Find 

Overwhelming Support for Citizens’ Role in Court System,” Dallas Morning News, May 7, 2000. 13 Ibid. 14 See Kirk B. Johnson, “A Fault-Based Administrative Alternative for Resolving Medical 

Malpractice Claims,” 42 VAND. L. REV. 1365, 1401 (1989). 
74

Moreover, claims of efficiency and speed of process are belied by almost every 

other alternative compensation system, each of which is plagued with a host of 

bureaucratic, cost and political capture problems. For example: 

The Vaccine Injury Compensation Program (VIC)

VIC was created by federal statute, the National Childhood Vaccine Injury Act of 

1986, and went into effect on October 1, 1988.15 Unlike Health Courts, it is based on a 

no-fault compensation system although many argue that the Program has been co-opted 

by political forces and turned into a victim’s nightmare.16 Critics contend that the 

process is heavily weighted against the injured parties, the process takes too long, and the 

HHS Secretary has removed too many injuries from the table.17 

Agency determinations to remove certain injuries from the covered table, and limit 

the statute of limitations have foreclosed many claims.18 These determinations usually 

cannot be reviewed or appealed. Once a claim or injury is removed from the table, the 

element of no-fault is also removed. The claimant is then left with the frustrating task of 

litigating fault in an administrative setting without the full procedural safeguards of civil 

courts to guide the litigation. Personal anecdotes of those who have attempted to utilize 

the system describe waits of more than ten years and an increasingly adversarial nature to 

the “no-fault” proceedings.19 Even with the morphing of the Program into an 

increasingly fault-based standard, the Vaccine Program still contemplates a no-fault arena 

for certain injuries. The Program’s slow political capture and subsequent demise as an 

adequate alternative for victims should, if anything, serve as a loud warning as to the 

vulnerability of a fault-based alternative tribunal to address injured medical consumers. 

Workers Compensation 

State legislatures have been chipping away at worker’s compensation systems at an 

alarming rate almost since its inception, in direct response to the requests of insurance 

carriers and businesses.20 In many states, the process workers must go through to make 

claims and receive compensation has become longer, less efficient, and ultimately less 

successful in terms of its original goals.21 According to one legal scholar who studies 

workers compensation, “injured workers often face denials and delays of apparently 

 

15 National Childhood Vaccine Injury Act of 1986, P.L. 99-660. 16 Id.; see also Statement of the National Vaccine Information Center Co-Founder & President 

Barbara Loe Fisher, September 28, 1999, House Oversight Hearing, “Compensating Vaccine Injury: 

Are Reforms Needed?” (discussing the unilateral power DHHS has to change the burdens of proof 

and other restrictions); Derry Ridgway, “No-Fault Vaccine Insurance: Lessons from the National 

Vaccine Injury Compensation Program,” 24 J. HEALTH POL’Y & L. 59, 69 

(1999)(“Lessons”)(describing how the program originally awarded many more claims, until the 

Department of Justice decided to aggressively argue against claimants.) 17 See Elizabeth C. Scott, “The National Childhood Vaccine Injury Act Turns Fifteen,” 56 FOOD &

DRUG L.J. 351 (2001)(stating that, as of 2001, 75 percent of claims were denied after long and 

contentious legal battles taking an average of 7 years to resolve). 18 See, e.g., Lessons, supra note 38, at 86. 

19 See Elizabeth C. Scott, “The National Childhood Vaccine Injury Act Turns Fifteen,” 56 FOOD &

DRUG L.J. 351, 358-363 (2001)(discussing “horror stories about the length of time it takes them to 

process the case and receive compensation . . . [and] families who’ve gone bankrupt trying to meet 

their children’s medical and emotional needs while going through the system.” Also noting the 

adversarial nature of these “combative mini-trials,” where, even after the decision to compensate is 

made, veteran DOJ litigators “fight over minutia like the future cost of diapers in a certain state.”) 20 See “Worker’s Comp: Falling Down on the Job,” Consumer Reports, 2000 (discussing the 

legislative reforms of the 1990s and the resulting profits for worker’s compensation insurance 

providers). 

21 See Hammond and Kniesner, “The Law and Economics of Worker’s Compensation,” Rand 

Institute for Civil Justice, 1980. 
75

legitimate claims, high litigation costs, discrimination, and harassment by employers and 

coworkers.... [M]any reports suggest that recent reforms have substantially increased 

injured workers’ financial burdens.” 22 

It is clear that workers who are permanently disabled are not getting enough 

compensation and the compensation duration is too short. Data consistently shows that a 

worker injured at the workplace earns significantly less than before the injury, even after 

returning to work. For example, according to one Rand Institute for Civil Justice study, 

“permanent partial disability claimants injured in 1991-1992 [in California] received 

approximately 40 percent less in earnings over the four to five years following their 

injuries than did their uninjured counterparts.”23 Moreover, “for workers with minor 

disabilities, benefits replace a small fraction of lost wages.” 24 An earlier Rand ICJ 

report, released in 1991 found that “injured workers recovered a lower percentage of their 

accident costs than all accident victims (54.1%), and that workers' compensation only 

compensated about 30% of the costs of long-term disabilities from work accidents.”25

Virginia’s Birth-Related Neurological Injury Compensation Program 

The Richmond Post-Dispatch newspaper reported on this program several years ago, 

finding, “Children born in Virginia with catastrophic neurological injuries are promised 

lifetime medical care by the birth-injury program. But these children and their families 

also have been forced to absorb stunning disparities in program benefits because of 

shifting priorities and cost reductions over which they had no control or voice.... ‘The 

program can end up providing very little,’ said Christina Rigney, referring to the minimal 

benefits her family received in the face of her son’s traumatic birth and brief life. ‘We 

believed there was negligence involved, but nothing ever came of it.’” Her son died three 

years after he was severely injured due to oxygen loss during birth. Because of the birth 

injury law, the family couldn’t file a malpractice suit, the obstetrician was never even 

asked to explain what happened, and the family could learn nothing from illegible notes 

that failed to account for long periods of time. Families of two other brain-injured infants 

delivered by the same obstetrician faced the same limits on their ability to learn what 

happened, or seek to show he was negligent. He is facing a lawsuit, however, for a fourth 

case in which a woman giving birth bled to death after delivering a healthy baby.26 

National birth-injury experts have reportedly expressed fear about Virginia becoming a 

safe harbor for bad doctors due to this law.27

SECRECY ABOUT ERRORS AND INJURIES 

WILL CONTINUE UNDER THESE PROPOSALS 

It is misguided to think that fear of litigation is the only, or even principal, reason 

that doctors and hospitals do not report errors. As noted in the May 11, 2006 New 

England Journal of Medicine article, “There are many reasons why physicians do not 

report errors, including a general reluctance to communicate with patients and a fear of 

disciplinary action or a loss of position or privileges.”28

 

22 McCluskey, Martha T., “The Illusion of Efficiency in Workers’ Compensation “Reform,” 50 

Rutgers L. Rev 657, 699-700, 711 (1998) n. 158, 159, 160 

23 See, Rand Research Brief, “Compensating Permanent Workplace Injuries,” 1998. 24 Id. 

25McCluskey, Martha T., “The Illusion of Efficiency in Workers’ Compensation “Reform,” 50 

Rutgers L. Rev 657, 699 (1998) n. 156, 157 (citing Deborah R. Hensler et Al., Compensation For 

Accidental Injuries In The United States 107 fig.4.8 (1991)). 26 Bill McKelway, “Brain-Injury Program’s Outlook Dim; Cost Savings For Doctors Meant Less For 

Children,” Richmond Times Dispatch,” Nov, 16, 2002. 27 Ibid. 28 George J. Annas, J.D., M.P.H., “The Patient’s Right to Safety – Improving the Quality of Care 

through Litigation against Hospitals,” New England Journal of Medicine, May 11, 2006. 
76

hospitals have some of the strongest protections from liability in the nation, since 

nearly all fall under the state’s charitable immunity laws that cap their liability at 

$20,000.29 Yet, even though they run little risk of liability for errors, “statistics suggest, 

and leading experts confirm, that doctors and hospitals around Boston — widely 

considered the medical capital of the world — are vastly underreporting their mistakes to 

regulators and the public.”30 According to a February 2003 Boston Magazine article: 

In 2001, Massachusetts hospitals reported 982 serious incidents, or medical errors, 

to state regulators, up from 636 five years earlier, but still an average of just three 

reports per day. In New York State, by comparison, hospitals submitted nearly 

30,000 reports, or 82 per day. In fairness, that disparity is mostly due to the 

different ways the states define a medical error: New York studies every little 

complication; Massachusetts, only major incidents. Still even New York is 

criticized for disclosing fewer medical errors than actually occur, and with a 

population only three times that of Massachusetts, it is reporting more than 30 times 

as many. One doctor who was a member of a Massachusetts oversight committee 

says statistics show there should be 10 reports of medical errors per 100 hospital 

beds each year. In fact, hospitals in this state are disclosing roughly three. Even 

when they are reported, one Harvard School of Public Health professor says, many 

medical errors are barely investigated because of a lack of resources.31 

Under the birth-injury program in place in Virginia, obstetricians are not asked to 

explain what happened, and the family may never learn anything about what caused a 

catastrophic injury. According to news reports, not a single case in the program’s 15-

year history has produced a disciplinary action against a hospital or doctor, even though 

those cases “pose a high risk for findings of negligence against doctors, nurses and 

hospitals.”32 One mother of a daughter with cerebral palsy and other severe disabilities 

testified before the Virginia House that the program “has evolved from a model of care 

for severely disabled children to . . . safe haven for physicians and hospitals who, in some 

cases, are directly responsible for these catastrophic injuries.”33

THE IMPORTANCE OF LITIGATION FOR PATIENT SAFETY 

As stated earlier, the May 11, 2006, New England Journal of Medicine article 

argued that litigation against hospitals improves the quality of care for patients.34 In a 

March 5, 1995, New York Times article, Dr. Wayne Cohen, then-medical director of 

Bronx Municipal Hospital, said, “The city was spending so much money defending 

obstetrics suits, they just made a decision that it would be cheaper to hire people who 

knew what they were doing.”35 

Patients have suffered tremendously as a result of dangerous or incompetent health 

care providers, hospitals, HMOs, and nursing homes. Many unsafe practices were made 

safer only after lawsuits were filed against those responsible. In other words, lawsuits 

 

29 Mass. Gen. Laws ch. 231, § 85K (2003). 

30 Doug Most, “The Silent Treatment,” Boston Magazine, Feb. 2003. 31 Ibid. 32 Bill McKelway, “Brain Injuries Spur No Action; Case Review, Required by Law, Is Not Being 

Done, Va. Study Found,” Richmond Times Dispatch, Jan. 14, 2003. 33 Bill McKelway, “Panel Approves Bill on Birth Injuries; Would Expand Benefits and Notification 

Rights,” Richmond Times Dispatch, Jan. 29, 2003. 34 George J. Annas, J.D., M.P.H., “The Patient’s Right to Safety – Improving the Quality of Care 

through Litigation against Hospitals,” New England Journal of Medicine, May 11, 2006. 35 Dean Baquet and Jane Fritsch, “New York’s Public Hospitals Fail, and Babies Are the Victims,” 

New York Times, March 5, 1995. 
77

protect us all, whether or not we ever go to court. Moreover, the amount of money saved 

as a direct result of this litigation — injuries prevented, health care costs not expended, 

wages not lost, etc. — is incalculable. Some examples of these cases include: 

• Failure to properly monitor patient. 

FACTS: Marilyn Hathaway suffered brain damage after an anesthesiologist failed 

to monitor her cardiopulmonary status during surgery. In 1983, Hathaway sued the 

physician. The jury verdict was for $5 million in damages.36

EFFECT: According to the book Silent Violence, Silent Death, “After having to pay 

repeated medical malpractice claims arising from faulty anesthesia practices ... Arizona’s 

malpractice insurance companies took action. For example, the Mutual Insurance 

Company of Arizona, which insures over 75 percent of the state’s physicians, began 

levying a $25,000 surcharge on insurance premiums for anesthesiologists against whom 

claims had been made because constant monitoring of the patient was not performed 

during general anesthesia. As a result of litigation, adequate anesthesia monitoring 

during surgery has become a standard medical practice in Arizona.”37

• Tube misinsertion caused death. 

FACTS: Rebecca Perryman was admitted to Georgia’s DeKalb Medical Center 

after suffering from kidney failure. While undergoing dialysis, a catheter inserted in her 

chest punctured a vein, causing her chest cavity to fill with blood. Perryman suffered 

massive brain damage and lapsed into a coma. She died two weeks later. Perryman’s 

husband Henry filed suit against DeKalb and its Radiology Group, as well as the doctor 

who failed not only to spot the misplaced catheter in Perryman’s chest x-ray but also to 

quickly respond to the victim’s excessive bleeding. DeKalb and the Radiology Group 

settled before trial for an undisclosed amount; a jury awarded $585,000 against the 

doctor.38

EFFECT: “After the award, the radiology department instituted new protocol for 

verifying proper placement of catheters.” 39

• Emergency room failed to diagnose heart disorders. 

FACTS: Three Air Force servicemen died after being discharged from the 

emergency room without proper examination. Though each had a history of heart 

problems and displayed classic symptoms of heart disorder, all three were misdiagnosed 

with indigestion.40 

EFFECT: “As a result of malpractice litigation, the Air Force investigated the 

deaths and instituted stringent new requirements for diagnostic testing ... These 

 

36 Frank v. Superior Court of the State of Arizona et al., 150 Ariz. 228 (1986). 37 Rosenfeld, Harvey, Silent Violence, Silent Death. Washington, DC: Essential Books (1994), p. 56, 

citing Holzer, James F., “The Advent of Clinical Standards for Professional Liability,” Quality 

Review Bulletin, Vol. 16, No. 2 (February 1990). 38 Perryman v. Rosenbaum et al., No. 86-3453 (DeKalb County Super. Ct., Ga., verdict June 5, 

1991). 

39 Koenig, Thomas & Michael Rustad, In Defense Of Tort Law. New York: New York University 

Press (2001), citing letter correspondence from W. Fred Orr, III, Henry Perryman’s attorney, dated 

April 26, 1994. 

40 Rosenfeld, Harvey, Silent Violence, Silent Death. Washington, DC: Essential Books (1994), pp. 

567, citing Downey v. U.S., No. MCA 84-2012/RV (N.D. Fla., filed 1984), Evans v. U.S. and Dutka 

v. U.S .Evans and Dutka were filed as administrative complaints but settled prior to filing of 

complaints in federal district court. Rosenfeld, Harvey, Silent Violence, Silent Death. Washington, 

DC: Essential Books (1994), n. 153, citing telephone interview with C. Wes Pittman, one of the 

servicemen’s attorneys. 
78

procedures are now standard practice at Air Force medical facilities throughout the 

world.”41

• Newborns left in nursery without supervision. 

FACTS: In September 1982, James Talley was born at Doctors Hospital in Little 

Rock, Arkansas. He was left alone for 35 minutes, 10 to 15 of which he stopped 

breathing. When a nurse came to check on him, his heart had stopped and he had turned 

blue. The oxygen deprivation caused permanent brain damage. The Talleys sued 

Hospital Corporation of America (HCA), Doctors Hospital’s parent company, arguing 

that HCA’s cost cutting procedure of reducing the number of nurses in the pediatric unit 

placed newborns at risk of injury or death. At trial, evidence showed that it would have 

cost Doctors Hospital an additional $70,000 per year per nurse to have someone in the 

nursery at all times and that the hospital was consistently two nurses short on the 

nightshift. The jury awarded $1.85 million in compensatory damages for James, 

$777,000 to his mother and $2 million in punitive damages.42

EFFECT: “As a result of this decision, HCA changed its policy on staffing 

pediatric units throughout its chain of hospitals, potentially saving hundreds of new lives 

and preventing as many injuries.”43

• Staffing problem endangered patients. 

FACTS: On January 26, 1998, Dr. Roberto C. Perez suffered severe brain damage 

after a nurse, who had been working over 70 hours a week and was just finishing an 18-

hour shift, injected him with the wrong drug. Perez had been admitted to Mercy Hospital 

in Laredo, Texas, two weeks earlier after a fainting spell and was almost ready to be 

discharged. His family filed a medical malpractice suit against Mercy Hospital, among 

others, arguing that hospital administrators knew since 1994 that staffing problems 

existed yet failed to do anything about the nursing short-age. The case settled before 

trial, with the hospital paying $14 million.44

EFFECT: As part of the settlement, Mercy Hospital agreed that no nurse in the ICU 

would be allowed to work more than 60 hours per week.45

• Bacterial infection spread to hospital roommate. 

FACTS: In 1983, 72-year-old Julius Barowski contracted a bacterial infection from 

a fellow patient after undergoing knee replacement surgery. His condition required 11 

hospitalizations and 9 surgeries; his leg lost all mobility. As the infection spread, he 

suffered excruciating pain and was institutionalized for depression until his death one 

 

41 Rosenfeld, Harvey, Silent Violence, Silent Death. Washington, DC: Essential Books (1994), p. 57, 

citing telephone interview with C. Wes Pittman, one of the servicemen’s attorneys. 42 “Saving The Newborn,” Trial Lawyers Doing Public Justice (July 1987), citing National Bank of 

Commerce v. HCA Health Services of Midwest, Inc., No. 84-160 (Saline County Cir. Ct., Ark., 

verdict October 6, 1986). See also, Rosenfeld, Harvey, Silent Violence, Silent Death. Washington, 

DC: Essential Books (1994), pp. 578. 

43 “Saving The Newborn,” Trial Lawyers Doing Public Justice (July 1987). 44 Perez v. Mercy Hospital, No. 98 CVQ 492-D3 (341st Judicial Dist., Webb County Ct., Tex., 

settlement October 28, 1999); Perez v. Mercy Hospital, No. 98 CVQ 492-D3 (341st Judicial Dist., 

Webb County Ct., Tex., fourth amended original petition, filed October 22, 1999)(on file with 

CJ&D). 

45 Perez v. Mercy Hospital, No. 98 CVQ 492-D3 (341st Webb County Ct., Tex., settlement October 

28, 1999); Perez v. Mercy Hospital, No. 98 CVQ 492-D3 (341st Judicial Dist., Webb County Ct., 

Tex., release and settlement agreement, October 28, 1999)(on file with CJ&D). 
79

year later. Barowski’s representative filed suit, alleging that the hospital breached its 

own infection control standards. The jury awarded $500,000.46

EFFECT: “The Widmann ruling and similar cases have had a catalytic impact in 

health care facilities around the country. Facilities are much more attentive to the clinical 

importance of cleanliness in all its dimensions — handwashing, routine monitoring of 

infection risks, and more vigorous reviews of hospital infection control protocols.” 47

• Inadequate monitoring led to patient’s death. 

FACTS: In 1996, 78-year-old Margaret Hutcheson lapsed into a coma and died 

after a two-and-a-half month stay at Chisolm Trail Living & Rehabilitation Center. 

Hutcheson had been admitted to Chisolm for short-term rehabilitation after fracturing her 

hip and wrist at home. While residing at the center, she suffered severe pressure sores, 

malnourishment and dehydration, which required three hospitalizations. Hutcheson’s 

family sued the facility and its personnel for wrongful death, arguing that Chisolm was 

understaffed and failed to follow internal procedures to ensure Hutcheson’s safety. The 

jury awarded $25 million.48

EFFECT: As part of the settlement, Diversicare, the nursing home operator, 

“agreed to adopt a policy requiring the residents’ charts be monitored on a weekly basis 

to ensure their needs are being met. This policy has been implemented in all 65 nursing 

homes owned or operated by Diversicare, and will benefit over 7,000 nursing home 

residents.”49

• Nurses feared consequences of challenging doctors’ actions. 

FACTS: On April 30, 1979, Jennifer Campbell suffered permanent brain damage 

after becoming entangled in her mother’s umbilical cord before delivery. Although a 

nurse had expressed concern when she noticed abnormalities on the fetal monitor, the 

obstetrician failed to act. Despite the doctor’s unresponsiveness, the nurse never notified 

her supervisor or anyone else in her administrative chain of command. The child 

developed cerebral palsy, requiring constant care and supervision. Evidence revealed 

that the hospital lacked an effective mechanism for the nursing staff to report negligent or 

dangerous treatment of a patient. In addition, the nursing supervisor testified that an 

employee could be fired for questioning a physician’s judgment. The jury awarded the 

Campbells over $6.5 million.50

EFFECT: “Because of this verdict and its subsequent publicity, hospitals 

throughout North Carolina have adopted a new protocol that allows nurses to use their 

specialized training and judgment on behalf of patients, without risking their jobs.” 51

 

46 Widmann v. Paoli Memorial Hospital, No. 85-1034 (E.D. Pa., verdict December 9, 1988). See 

also, Rosenfeld, Harvey, Silent Violence, Silent Death. Washington, DC: Essential Books (1994), 

pp. 556. 

47 Rosenfeld, Harvey, Silent Violence, Silent Death. Washington, DC: Essential Books (1994), pp. 

556. 

48 Olson et al. v. Chisolm Trail Living & Rehabilitation Center et al., No. 98-0363 (Caldwell County 

Ct., Tex., verdict August 26, 1999). See also, Osborn, Claire, “Family of care center resident who 

died awarded $25 million,” Austin AmericanStatesman, August 27, 1999. 49 Texas Reporter Soele’s Trial Report (November 1999). See also, Malone, Julia, “Lawyers Filling 

Gap Left By Regulators,” Palm Beach Post, September 25, 2000. 50 Campbell v. Pitt County Memorial Hospital, Inc., 84 N.C. App. 314 (1987). See also, 

Mahlmeister, Laura, “The perinatal nurse’s role in obstetric emergencies: legal issues and practice 

issues in the era of health care redesign,” Journal of Perinatal & Neonatal Nursing (December 

1996); Rosenfeld, Harvey, Silent Violence, Silent Death. Washington, DC: Essential Books (1994), 

p. 57. 

51 Rosenfeld, Harvey, Silent Violence, Silent Death. Washington, DC: Essential Books (1994), p. 57. 
80

• Patient prescribed incorrect chemotherapy dosage. 

FACTS: When 41-year-old Vincent Gargano was diagnosed with testicular cancer 

in 1994, he was given a 90 percent to 95 percent chance of survival. On May 26, 1995, 

he entered the University of Chicago Hospitals to undergo his last phase of 

chemotherapy. For four consecutive days Gargano received a dosage that was four times 

the needed amount, a mistake that went undetected by at least one doctor, two 

pharmacists and four nurses until four overdoses had already been administered. 

Hospital records showed that the prescribing doctor wrote the incorrect dosage and that 

three registered nurses failed to double-check the prescription against the doctor’s 

original order. As a result, Gargano suffered hearing loss, severe kidney damage, 

festering sores and ultimately the pneumonia that caused his death the following month. 

The case settled for $7.9 million.52

EFFECT: The hospital implemented new policies to ensure that doctors and nurses 

better document and cross-check medication orders.53

SOME solutions to reduce medical errors 

There is no doubt that deaths and injuries due to medical malpractice are substantial. 

In late 1999, the National Academy of Sciences Institute of Medicine (IOM) published 

To Err is Human; Building a Safer Health System. The study makes some striking 

findings about the poor safety record of U.S. hospitals due to medical errors.54 For 

example, between 44,000 and 98,000 deaths occur each year in U.S. hospitals due to 

medical errors, the higher figure extrapolated from the 1990 Harvard Medical Practice 

study of New York hospitals. Even using the lower figure, more people die due to 

medical errors than from motor vehicle accidents (43,458), breast cancer (42,297) or 

AIDS (16,516). 

A recent survey found, “[e]ighty percent of U.S. doctors and half of nurses surveyed 

said they had seen colleagues make mistakes, but only 10 percent ever spoke up.” 

Moreover, “fifty percent of nurses said they have colleagues who appear incompetent” 

and “[e]ighty-four percent of physicians and 62 percent of nurses and other clinical care 

providers have seen co-workers taking shortcuts that could be dangerous to patients.” 

Doctors and nurses do not talk about these problems because “people fear confrontation, 

lack time or feel it is not their job.”55

There is much that can and should be done. Unfortunately, too little is being done to 

weed out the small number of doctors responsible for most malpractice. As the New York 

Times reported, 

Experts retained by the Bush administration said on Tuesday that more effective 

disciplining of incompetent doctors could significantly alleviate the problem of 

medical malpractice litigation. 

 

52 Berens, Michael J., “Problem nurses escape punishment; State agency often withholds key details 

of violations,” Chicago Tribune, September 12, 2000; “Notable settlement,” National Law Journal, 

November 8, 1999, citing Gargano v. University of Chicago Hospitals, 95 L 10088 (Cook County 

Cir. Ct., Ill., settled October 7, 1999); “University hospital to pay $7.9 million for fatal doses of 

chemotherapy,” Associated Press, October 8, 1999; “Cancer Patient in Chicago Dies After 

Chemotherapy Overdose,” New York Times, June 18, 1995; “Cancer Patient Dies After Chemo 

Overdose,” Legal Intelligencer, June 16, 1995. 53 Berens, Michael J. & Bruce Japsen, “140 Nurses’ Aides Fired By U. Of C. Hospitals; Registered 

Nurses Fear Work Burden,” Chicago Tribune, October 31, 2000; Berens, Michael J., “U. Of C. To 

Pay $7.9 Million In Death Of Cancer Patient,” Chicago Tribune, October 8, 1999. 54 Kohn, Corrigan, Donaldson, Eds., To Err is Human; Building a Safer Health System, Institute of 

Medicine, National Academy Press: Washington, DC (1999). 55 “Survey: 80 percent of doctors witness mistakes; But only 10 percent report errors or poor 

judgment, “Reuters, January 26, 2005. http://www.msnbc.msn.com/id/6872715/. 
81

As President Bush prepared to head to Illinois on Wednesday to campaign for limits 

on malpractice lawsuits, the experts said that states should first identify those 

doctors most likely to make mistakes that injure patients and lead to lawsuits. 

The administration recently commissioned a study by the University of Iowa and 

the Urban Institute to help state boards of medical examiners in disciplining 

doctors. 

“There’s a need to protect the public from substandard performance by physicians,” 

said Josephine Gittler, a law professor at Iowa who supervised part of the study. “If 

you had more aggressive policing of incompetent physicians and more effective 

disciplining of doctors who engage in substandard practice, that could decrease the 

type of negligence that leads to malpractice suits.’” 

Randall R. Bovbjerg, a researcher at the Urban Institute, said, “If you take the worst 

performers out of practice, that will have an impact” on malpractice litigation.56

Public Citizen’s Health Research Group has made similar findings for many years. 57 

The group found that only one-half of 1 percent of 770,320 licensed medical doctors face 

any serious state sanctions each year. “Too little discipline is still being done,” the report 

said. “2,696 total serious disciplinary actions a year, the number state medical boards 

took in 1999, is a pittance compared to the volume of injury and death of patients caused 

by negligence of doctors.... Though it has improved during the past 15 years, the 

nation’s system for protecting the public from medical incompetence and malfeasance is 

still far from adequate.” 

Other problems that can be addressed include: 

Safer RN staffing ratios. A 2002 study in the Journal of the American Medical 

Association found that patients on surgical units with patient-to-nurse ratios of 8:1 were 

30 percent more likely to die than those on surgical units with 4:1 ratios.58

Reduce continuous work schedules. According to studies published in the October 

28, 2004, issue of the New England Journal of Medicine, “The rate of serious medical 

errors committed by first-year doctors in training in two intensive care units (ICUs) at a 

Boston hospital fell significantly when traditional 30-hour-in-a-row extended work shifts 

were eliminated and when interns’ continuous work schedule was limited to 16 hours, 

according to two complementary studies funded by the National Institute for 

Occupational Safety and Health (NIOSH) and the Agency for Healthcare Research 

(AHRQ). Interns made 36 percent more serious medical errors, including five times as 

many serious diagnostic errors, on the traditional schedule than on an intervention 

schedule that limited scheduled work shifts to 16 hours and reduced scheduled weekly 

work from approximately 80 hours to 63. The rate of serious medication errors was 21 

percent greater on the traditional schedule than on the new schedule.59 

Better technology in hospitals to provide better care with greater consistency. 

A handful of hospitals are starting to use technology to make prenatal care and delivery 

 

56 Robert Pear, “Panel Seeks Better Disciplining of Doctors,” New York Times, January 5, 2005. 57 See, e.g., Sidney Wolfe et al., 20,125 Questionable Doctors, Public Citizen Health Research 

Group, Washington, DC (2000). 

58 L.H. Aiken et al., “Hospital Nurse Staffing and Patient Mortality, Nurse Burnout, and Job 

Dissatisfaction,” 288 JAMA 1987 (Oct. 23/30, 2002). 

59 “Interns' Medical Errors Affected by Work Schedules,” November 15, 2004, 

http://www.insurancejournal.com/news/national/2004/11/15/47660.htm 
82

safer. These hospitals are using computer software that improves monitoring and 

treatment.60

CONCLUSION 

Under Health Courts, the long-standing and fundamental right to trial by jury is 

eliminated for medical malpractice victims. Instead, patients are forced into an 

alternative system without juries, without any accountability mechanisms, without 

procedural safeguards, and without any meaningful appeals process. These hardships, 

coupled with the burden of having to prove fault, render the injured claimant virtually 

powerless and at the mercy of the insurance and hospital industries. 

Safety suffers when systems are not designed to reflect the full costs of accidents. 

Our objectives should be deterring unsafe and substandard medical practices while 

safeguarding patients’ rights. Indeed, our goal must be to reduce medical negligence. 

This is not the time to establish a new process, which will only protect incompetent 

doctors even more from meaningful liability exposure and scrutiny, including the most 

egregiously reckless health care providers. 

 MR. DEAL. Thank you. 

 Ms. Niro. 

MS. NIRO. Thank you, Mr. Chairman, for the opportunity to present 

the views of the American Bar Association, the ABA. 

 My name is Cheryl Niro. I have been an attorney for almost 25 

years. I am one of the earliest attorneys in the country, and certainly in 

the State of Illinois, to become a mediator and arbitrator. I have been 

both a student and a teaching assistant at the Harvard Law School of 

Mediation and Negotiation Training programs. I have successfully 

mediated well over 100 cases. I have trained judges and lawyers to 

mediate cases. But most importantly, I have worked with healthcare 

institutions to design courses and ADR systems and have taught their 

professionals how to use negotiation and mediation skills to resolve 

healthcare disputes with patients and their families on site, just one 

program that has the potential for dramatically impacting and lowering 

the number of subsequent filings of malpractice suits. I have never filed 

a plaintiff’s medical malpractice suit in my career, although I have 

resolved many of them. 

 My written testimony focuses largely on the issues presented by the 

health court models discussed today, but I would just like to highlight the 

ABA’s concerns about them. 

 The preeminent concern is that the model would remove the injured 

patients’ rights protected by the Seventh Amendment of our Constitution 

to have a trial by jury. Injured persons would therefore lose the 

protections of the rules of evidence and the rules of procedure, which 

exist to assure that parties are treated equally in the court system. While 

proponents say that the health court model would be constitutional 

because it is similar to the workmen’s compensation model, there is a 

 

60 Margaret Ramirez, “System Checks Steps in Care,” Newsday, Oct. 7, 2003. 
83

significant difference, and that is injured workers do not have to prove 

liability where injured patients would still have that burden. They would 

not be in a court of law, but they would have a burden of proof as if they 

were in a court. 

 There are very fine alternatives that exist currently today that do not 

damage an injured patient’s right to a trial by jury and judge. Alternative 

dispute resolution, or ADR, as we call it, has been used across the 

country, and quite successfully. We certainly do not need to create a 

system with this administrative, bureaucratic tangle when we have got a 

system currently that looks like this. 

 The circle here at the bottom, below the trial court and the appellate 

court, is the world of alternative dispute resolution. I would like to take 

just a moment to explain some of these processes. 

 The most simple is negotiation. A convening of the parties to sit 

across the table from each other, or even better yet, to sit next to each 

other at the table and try to cooperatively work out a resolution to the 

dispute. If they fail, they may agree to bring in a mediator. The 

mediator, also selected by agreement of the parties, is neutral, has no 

authority to impose a resolution. The mediator is there to assure that the 

process is fair and assists the parties to continue their negotiations, often 

using sophisticated skills in getting them beyond impasse and keeping 

the parties at the table until a solution is found. 

 There are summary jury trials where the parties may present their 

cases to a privately-obtained neutral to act as judge, which allows the 

parties to see how a judge and jury may likely rule. With that 

information, they can conduct further negotiation armed with the 

information from the likelihood of outcome in trial. Only mutual 

evaluation is presenting both sides’ information to an expert, private, 

neutral, who makes very instructive and informative assessments of the 

case in the most likely outcomes, both in liability and damages. 

 All of these, and many more processes, are currently available and in 

use around the country and all have the integrity necessary to pass 

constitutional muster. They are all voluntary, truly voluntary. They may 

be used, in effect, custom designs to fit the unique circumstances of the 

cases. 

 At this point, I just want to mention that neither the health court 

proposal nor the early offer proposals are truly voluntary. In the 

healthcare bill, patients would be forced into the health court system with 

no access to the court. In early offer, the decision to refuse the offer 

made by the patient would put the injured patient in what the offer 

concedes would be an unattainable burden of proof in liability of gross 

negligence beyond the shadow of a doubt, which is simply no choice at 

all. 
84

 The ABA is very concerned that any alternative to our court system 

must be completely free of coercion, truly voluntary, and preserve the 

rights of the patient. ADR offers both. I urge you to make the 

contribution to invest in greater use, greater understating, greater 

cooperation, greater participation in developing these alternatives so that 

they, which are consistent with patients’ rights, may be used. 

 I have brought for you two magazines today, which were created on 

dispute resolutions used in the healthcare industry. I believe some of the 

materials are in your packages today. The ABA supports any change in 

the access to alternative dispute resolution that is voluntary, that 

preserves the rights of the patients, and opposes any bill that would 

remove those essential rights from any of our citizens. 

 I am grateful to have had the opportunity to discuss this with you this 

morning and would be honored to take your questions and continue the 

dialogue. 

 [The prepared statement of Cheryl Niro follows:] 

PREPARED STATEMENT OF CHERYL NIRO, PARTNER, QUINLAN & CARROLL, LTD, ON 

BEHALF OF AMERICAN BAR ASSOCIATION

Mr. Chairman and Members of the Subcommittee: 

I appreciate the opportunity to present the views of the American Bar Association 

(ABA) on “Innovative Solutions to Medical Liability.” My name is Cheryl Niro, and I 

am an incoming member of the Standing Committee on Medical Professional Liability 

and a member of the House of Delegates of the ABA. I am appearing on behalf of the 

ABA at the request of its President, Michael Greco. 

I was an early proponent of alternative dispute resolution and sought the best 

education possible in the areas of mediation, negotiation and arbitration. I have been 

certified and trained by the founders of these fields. I began at The Atlanta Justice 

Center, one of the first three mediation programs in the nation. I was a student and 

teaching assistant at the Harvard Law School mediation and negotiation training 

programs. 

In 1992, I was a founding director of a dispute resolution training program funded 

by a joint grant from the US Departments of Education and Justice. That program 

became the National Center for Conflict Resolution Education and trained thousands of 

educators, teachers, parents and students to create Peer Mediation Programs in schools 

and other youth-serving organizations across the country. 

I have served on the ABA Section of Dispute Resolution Council and have 

conducted skills-based training programs for hospital professionals so that they may use 

these skills to resolve medical care disputes cooperatively with patients and their 

families. I have never filed a plaintiff’s medical malpractice claim in my career. 

I testify here today as a proud representative of the ABA, a lawyer interested in 

improving our legal system and an American citizen committed to our tradition of 

fairness and justice. 

For decades the ABA has supported the use of, and experimentation with, voluntary 

alternative dispute resolution techniques as welcome components of the justice system in 

the United States, provided the disputant’s constitutional and other legal rights and 

remedies are protected. The ABA strongly supported the alternative dispute resolution 

movement in the United States through Committees and in 1993 it created a Section of 
85

Dispute Resolution. The Section promotes efforts that focus on education, 

experimentation and implementation of alternatives to litigation that resolve disputes 

economically and without taxing limited courtroom resources. 

As a result of the work of our Dispute Resolution professionals, and leaders in that 

field across the country, the number of courts utilizing these methods increases daily. 

Successful programs are replicated, new understanding of the potential offered by these 

voluntary processes is achieved, and greater numbers of judges, lawyers and clients find 

these alternatives acceptable tools with which legal disputes may be resolved. Over the 

past fifteen years, the ABA has contributed significantly to the development of the field 

by creating ethical standards, best practices training and scholarship to this emerging 

practice. Additionally, the ABA House of Delegates has adopted policy directed at 

ensuring the efficacy and integrity of these voluntary alternatives to litigation. 

Mediation, by definition, is a voluntary process whereby disputants may work 

together, with the assistance of a trained neutral facilitator, to resolve their dispute. 

Mediation, as it is known and practiced worldwide, is not a mandatory process. Where 

disputants are compelled to mediate, the compulsion is only to engage in a mediation 

process in good faith. Agreements cannot be compelled. Likewise, the ethical use of 

arbitration requires that parties knowingly agree to engage in the process. 

Specific to the area of medical malpractice, the ABA endorses the use of voluntary 

negotiation, mediation, and settlement agreements. In addition, the ABA recognizes the 

use of arbitration as an option for resolving these types of disputes under circumstances 

whereby the agreement to arbitrate is entered into only on a voluntary basis after a 

dispute has arisen and only if the disputant has full knowledge of the consequences of 

entering into such an arrangement. 

The American Bar Association has reviewed, as part of ongoing efforts to improve 

the operation of our legal system, proposals related to the area of liability of health care 

providers. One such proposal is the creation of “health courts.” Under the proposed 

“health court” system, an administrative agency would oversee the operation of 

specialized “courts” where medical malpractice cases would be heard by persons 

possessing experience in the health care field rather than judges and juries. Under this 

proposal, medical negligence litigation cases would be removed from the court system 

and the protection of the time-tested rules of procedure and evidence. The parties would 

be allowed to be represented by attorneys. There would be no juries. Expert witnesses 

would by hired by “health courts,” not by the injured patient. Injured patients would be 

compensated according to a schedule of awards. Patients injured by medical negligence 

would be denied the right to request a trial by jury and the right to receive full 

compensation for their injuries. 

Proponents of the “health courts” proposal say it is modeled on the Workers’ 

Compensation system. But there are major differences between the two systems. It is 

unlike the Workers’ Compensation system in that injured patients would still be required 

to prove fault on the part of a defendant. A similar burden to prove fault is not imposed 

on an injured worker in a Workers’ Compensation case. Importantly, the Workers’ 

Compensation system balances the loss of the right to bring an action in court with a 

guaranteed award that is not fault-based. In the “health court” scheme, injured patients 

are forced to give up the right to bring an action in a court with no guarantee of an award. 

Injured patients would be required to prove that their injuries are “the result of a mistake 

that should have been prevented.” Proponents call this the “avoidability standard,” which 

includes injuries “that would not have happened were optimal care given.” This is not a 

“no fault” standard as in the Workers’ Compensation field, nor is it a strict liability 

standard. 

The “health court” scheme and other proposals for administrative tribunal schemes 

also include the creation of a schedule for the assessment of damages and would cover 

both economic and non-economic damages. Such a schedule is inappropriate in medical 
86

malpractice cases where a fixed, rigid assessment would treat all patients with similar 

injuries the same. Would it be fair to award a pre-determined award for negligence that 

results in a paralyzed hand for a surgeon, or the loss of vision for an artist? The plan 

assumes that consensus would produce an annually adjusted schedule based upon 

research on similar schedules in the U.S. legal system and abroad. Proponents urge the 

comparison to Sweden and Denmark for regularizing the value of American injuries. The 

efficacy of that approach is doubtful, because those nations have health and welfare 

benefits that are paid for by their governments before consideration of the injury claim 

take place. 

By establishing a schedule of injuries/pay-outs, the “health court” scheme would 

impose a de facto cap on non-economic damages in injury claims. The plan contemplates 

Presidential and congressional appointees to establish the schedule, but there is no 

guarantee that the Commission would be balanced, nor that the schedule would provide 

fair and just compensation for the injured patients. Caps on non-economic damages work 

to the disadvantage of women, children and the elderly. Thirteen states have found caps 

unconstitutional. Courts and juries have a long tradition of fashioning individualized, 

customized damage awards to fit the unique circumstances of each case. 

Thus, in February, 2006, the ABA adopted as policy the following resolution: 

RESOLVED, That the American Bar Association reaffirms its opposition to 

legislation that places a dollar limit on recoverable damages that operates to deny 

full compensation to a plaintiff in a medical malpractice action. 

RESOLVED, That the American Bar Association recognizes that the nature and 

extent of damages in a medical malpractice case are triable issues of fact (that may 

be decided by a jury) and should not be subject to formulas or standardized 

schedules. 

FURTHER RESOLVED, That the ABA opposes the creation of health care 

tribunals that would deny patients injured by medical negligence the right to 

request a trial by jury or the right to receive full compensation for their injuries. 

The ABA firmly supports the integrity of the jury system, the independence of the 

judiciary and the right of consumers to receive full compensation for their injuries, 

without any arbitrary caps on damages. It is for these reasons that the ABA opposes the 

creation of any “health court” system that undermines these values by requiring injured 

patients to utilize “health courts” rather than utilizing regular state courts in order to be 

compensated for medical negligence. 

As stated above, ABA policy has long endorsed the use of alternatives to litigation 

for resolution of medical malpractice disputes only when such alternatives are entered 

into on a voluntary basis and only when they are entered into after a dispute has arisen. 

Instead of creating and mandating the use of “health courts,” the ABA advocates the use 

of voluntary arbitrations, mediations, and settlement conferences, all of which are 

appropriate means of alternative dispute resolution. 

There are exciting new programs that demonstrate the efficacy of the use of 

alternative methodologies. One such program is at the Rush Presbyterian Hospital in 

Chicago, run by former judges and personal friends of mine. The Rush Mediation 

Program has successfully resolved more than 80% of filed claims. It is a voluntary and 

confidential mediation program. The mediator has no power to force the parties to agree 

on settlement. The mediator (or team of two mediators) has no interest in the outcome 

and is purely neutral. The program has demonstrated that voluntary mediation can save 

money for all parties, save time, settle cases and preserve the patient’s right to a trial by 

jury. 
87

Our legal system, the most respected in the world, has procedural safeguards that 

have evolved over centuries. The proposals for “health courts” contain little information 

on how the system would actually work. Unanswered are questions about how patients 

would obtain information and/or what kind of discovery would be permitted. The plan 

does specify that the “health court,” not the injured patient, would hire expert witnesses, 

which is another departure from current practice. It appears that health care providers get 

an “opt in” opportunity, but patients have no corresponding right to “opt out.” Patients 

may be in the position of being forced to sign agreements to use the “health court” with 

their HMO or health care provider before they receive treatment. More information is 

clearly required to obtain any clarity on the basic fairness that may be present or lacking 

under the “health courts” proposal. 

I would be remiss if I did not mention the obvious problem contained within our 

Constitution in the Seventh Amendment. “In suits at common law, where the value in 

controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and 

no fact tried by a jury shall be otherwise reexamined in a Court of the United States, than 

according to the rules of the common law.” Proponents argue that because the Workers’ 

Compensation system is Constitutional, that the “health courts” proposals would be as 

well. The problem with this reasoning, as pointed out above, is that the Workers’ 

Compensation system was effectively balanced in providing a certain award without the 

burden of establishing that a mistake has been made that should have been prevented. 

The schedule of benefits may also be found unconstitutional if it is deemed to be caps on 

damages in disguise. 

Proponents of “health courts” argue that juries are not capable of understanding 

medical malpractice cases. There is no evidence that this is the case. In fact, empirical 

studies have demonstrated that juries are competent in handling medical malpractice 

cases. Duke University School of Law Professor Neil Vidmar’s 1995 extensive study of 

juries found that: 

[o]n balance, there is no empirical support for the propositions that juries are biased 

against doctors or that they are prone to ignore legal and medical standards in order 

to decide in favor of plaintiffs with severe injuries. This evidence in fact indicates 

that there is reasonable concordance between jury verdicts and doctors’ ratings of 

negligence. On balance, juries may have a slight bias in favor of doctors.1

In addition, he concludes at page 259 of his 1995 publication that research “does not 

support the widely made claims that jury damage awards are based on the depth of the 

defendants’ pockets, sympathies for plaintiffs, caprice, or excessive generosity.” A 

survey of studies in the area by University of Missouri-Columbia Law Professor Philip 

Peters, Jr., published in March 2002 likewise found that: 

[t]here is simply no evidence that juries are prejudiced against physician defendants 

or that their verdicts are distorted by their sympathy for injured plaintiffs. Instead, the 

existing evidence strongly indicates that jurors begin their task harboring sympathy for 

the defendant physician and skepticism about the plaintiff.2

A May 2005 Illinois study conducted in my home state by Professor Vidmar also 

concluded that there was no basis for the argument that runaway verdicts were 

responsible for increases in malpractice premiums.3

 

 

1

 Neil Vidmar, Medical Malpractice and the American Jury: Confronting the Myths about Jury 

Incompetence, Deep Pockets and Outrageous Damage Awards 182 (Univ. of Michigan Press 1998) 

(1995).

2

 Philip G. Peters, Jr., The Role of the Jury in Modern Malpractice Law, 87 IOWA L. REV. 934 

(2002).

3

 Neil Vidmar, Medical Malpractice and the Tort System in Illinois, 93 ILLINOIS BAR JOURNAL 340 

(2005). 

The complete study may be found at this link: http://www.isba.org/medicalmalpracticestudy.pdf
88

Our legal system has served our nation well. Our lawyers and judges have been 

protecting the Constitution and the rights it contains, and have made our democracy the 

envy of the world. As a bar president, I have had the opportunity to visit nations where 

lawyers do not have the role and function of the American lawyer. I have been to 

Zimbabwe and Zambia, and witnessed first-hand countries where citizens can have no 

expectation of fairness, justice or equal treatment. I have seen the result of decades of 

unchecked power in the hands of leaders more interested in their own wealth than the 

well-being of their nations. Our system is not perfect, but our founders understood that 

perfection in human endeavor is not likely to be possible. I believe that is why our 

Constitution speaks of our national mission to create a union that is always trying to be 

more perfect, closer to the ideal. It is our legal system, our Constitution and our steadfast 

adherence to the rights of our citizens that make ours a nation of hope above all others. 

Lawyers strive every day to do their best work to achieve justice. Legislators have a 

similar duty to create laws that will produce just outcomes. 

In accordance with our duty to preserve and protect our system of justice, the ABA 

opposes the “health courts” proposal currently being discussed. We support the use of 

alternatives to litigation in medical malpractice cases only when such alternatives are 

entered into on a voluntary basis, and only when they are entered into after a dispute has 

arisen. We also oppose the Workers’ Compensation model in medical malpractice cases 

as proposed, because an injured patient loses the right to bring an action in court, but 

receives no guaranteed award. 

 Injured patients and health care providers have access to a respected court system 

and fair processes to resolve disputes. Any proposal that would deny access to that court 

system should offer a better system than our current civil justice system. The “health 

courts” proposal fails to meet that standard and it should be rejected. 

Thank you for the opportunity to appear before you today to present the views of the 

American Bar Association. I would be happy to answer any questions you may have. 

 MR. DEAL. Thank you very much. 

 A very good panel. 

 Let me start off with the questions. 

 There seems to be, first of all, a disagreement within the panel. Our 

last two panel members, basically, are defending the status quo. I think 

we have heard from both sides of the committee here concern that the 

status quo is not achieving the overall goals that we should be achieving. 

I guess we need to see if we agree on what those goals ought to be. 

 One of the goals that would seem to me would be to put as much of 

the billions of dollars that are now currently spent in the overall medical 

liability arena, more of those dollars into the hands of the individuals 

who have been harmed or who are suffering, who are the victim. I hate 

to use that word. But does anyone disagree with that being a goal, that 

more of the dollars currently being expended ought to go to the person 

who has been injured? 

 I don’t see anybody disagreeing with that one. All right. Good. We 

are doing good. Lawyers always disagree. Yes, ma’am. 

 MS. DOROSHOW. I mean, of course it depends where you are taking 

the money from. 
89

 MR. DEAL. Well, you are taking it from the lawyers’ pockets. I say 

that facetiously, but that is really the truth. 

 MS. DOROSHOW. Well, I would certainly agree that much of the 

transaction costs of the system are due to the fact that the defendants are 

not acknowledging negligence and paying legitimate claims. 

 MR. DEAL. Well, we will get to that. That is not the question. I am 

going to get to that. 

 My second question is do you have any agreement or disagreement 

that the current system fosters unnecessary medical expenses by way of 

defensive medicine practices in an effort to avoid the consequences of 

the current tort system? Would you disagree with that? 

 MS. NIRO. I don’t necessarily disagree, but I do wish to suggest that 

it is very difficult to solve a problem that we can’t all agree on its 

definition. While there is a lot of money that goes into professional 

malpractice transactions, it is less than one-half of 1 percent, according 

to a study from the University of Connecticut in all of healthcare 

spending. 

 MR. DEAL. Well, that really is irrelevant. I mean, we are comparing 

that to open heart surgeries. You are comparing it to everything else. 

My point is that there is something wrong in the current system. Money 

is not going to the right place. Medical practice is, in part, dictated by 

what is going on. Mr. Wootton, I think the last two speakers were 

directing their comments to some of your suggestions, and I am going to 

ask you if you would elaborate. You said you had some charts. If you 

would like, try to use those. 

 MR. WOOTTON. Yes, thank you, Mr. Chairman. 

 If you want to put up the first chart, it should be the National 

Medical Data Center. 

 This is really about something that I learned from some people who 

are in the patient safety business, particularly working with the CDC and 

the FDA. The idea is that, over time, we would be able to have as many 

as 12 million electronic medical records that could be queried on a realtime basis, and they would be completely stripped of personallyidentifiable and professionally-identifiable information. They would be 

available to researchers in the Government and industry and academia to 

look at a whole host of issues, including patient safety issues, but also in 

what protocols work in the treatment of disease, what kinds of areas 

might be promising for further research in the area. 

 MR. DEAL. On that, as you know, this committee has passed out a 

health information bill, and I don’t have time now, but I would ask you, 

in light of your concern here, would you look at the bill we have passed 

out of here and give us comments as to any further things that need to be 

done on that health information technology bill, as it relates to this? 
90

 MR. WOOTTON. Yes, sir. Yes, sir, I will, and I also think this will 

provide real-time information for the agencies that are very interested in 

keeping track of what is going on in the health of the population, 

including Homeland Security, CDC, and the FDA. 

 If you go to the next chart, this becomes further information along 

with that which is going to the patient safety organizations based on the 

legislation that you all passed and the protections you gave last year to 

bring that down to the State level so that at the State level, the guidelines, 

which Paul mentioned and others have mentioned, become guidelines for 

practice. They are the taking of the nationally-accepted practices but 

applied by the medical community at the State level. They will become 

guidelines for practice but also become the basis for liability 

determinations, and that would be found in the State Medical Practice 

Commission. They would be a special resource, but not the only 

resource. I am very concerned about due process issues, too, and I do 

think that the parties have to have a right to have their own lawyers and 

their own experts, but having those that have a special relationship with 

the administrative process, I think, is very valuable. Then to have 

something that I discovered in talking to a lot of patient groups, and that 

is a distrust of the State local boards with regard to doctors who had 

problems that don’t ever seem to have their license either suspended or 

revoked or not engaged in more education and get patient participation 

on those patient safety boards. Then something that I picked up, and 

actually this is something that Professor Mello speaks about, which is a 

problem for some in the medical community, but I think it has a lot of 

value, and that is the notion of enterprise liability. That is the idea that 

somebody has to have an incentive to deal with patient safety problems 

in the State. If you had something that looked like an insurance facility, 

like a captain insurance facility, they are actually operating in a number 

of States today as joint underwriting agreements, they could engage in 

loss reduction programs, and they would have an incentive to, because 

that means that the cost of their malpractice payments would be going 

down because you would have fewer errors. 

 MR. DEAL. I am going to have to interrupt you, but my time is way 

over. 

 MR. WOOTTON. Oh, I am sorry. 

 MR. DEAL. I am going to recognize Ms. DeGette for questions. 

 MR. WOOTTON. All right. Thank you, sir. 

 MS. DEGETTE. Thank you very much, Mr. Chairman. 

 This is, by far, the best panel I have ever heard on this subject in 10 

years, so thank you. 
91

 And before I question, Mr. Chairman, I would ask unanimous 

consent to allow statements from a number of groups who have wanted 

to submit statements, a 24-hour period to have them submitted. 

 MR. DEAL. Without objection. 

 MS. DEGETTE. Thank you. 

 And in addition, Mr. Wootton, I would hope that you would provide 

us with copies of your slides, and I would ask unanimous consent that 

those be submitted as well. 

 MR. DEAL. Without objection. 

 [The information follows:] 

National Medical Data Center

(With Privacy and Liability Protections)

Clinical Trials

(Standardized Data)

CDC

Government 

Researchers

EMRs

(Standardized Data)

(12 million)

HHS

National Medical

Data Center

(EMR Sampling

System)

FDA

Industry 

Researchers

Academic 

Researchers

Homeland 

Security
92

State Patient Safety & 

Compensation System

Administrative

Medical Court

State Court 

of Appeals

State Medical 

Providers

Insurance 

Facility 

State Patient 

Safety Board

State Medical 

Practice 

Commission 

(panel of experts)

State Supreme Court

Medical Injury Claims 

Facility

• Claims processors

• Medical staff

State Electronic • Navigator

Healthcare 

Initiative

Patient

Safety

Data 

Claimants

 MS. DEGETTE. Thank you. 

 Mr. Wootton, I am interested in your national medical data center 

proposal and your slides, although these middle-aged guys are having a 

hard time seeing all of the way over there, but I think it strikes all of us 

that that is a very good idea and one positive way that the Federal 

government could have a role. So thank you. 

 I want to ask all of the panelists, does anyone here think, for 

example, the health courts should be at the Federal or State level? Dr. 

Mello? 

 DR. MELLO. In my opinion, the ideal structure would be federal 

legislation that provides funding and parameters for State demonstration 

projects. 

 MS. DEGETTE. Okay. The health court really, and I am sure 

Professor O’Connell would agree with this, the tort law that is well 

established is at the State level, correct? 

 DR. MELLO. Agreed. 

 MS. DEGETTE. So you would want the actual health courts to be at 

the State level? 

 DR. MELLO. Yes. 

 MS. DEGETTE. And you really see the Federal role as providing 

resources to State tort systems to have these courts, correct? 

 DR. MELLO. I think that would be ideal. 
93

 MS. DEGETTE. Does anybody disagree where these types of reforms 

should be through the State level? 

 MR. BARRINGER. I would add that we do agree that the ideal spot 

for pilot projects, in particular, to take place would be at the State level, 

given that the States have traditionally regulated matters of insurance and 

malpractice. But there is also a potential for a Federal administrative 

pilot project. We know that Senator Cornyn and the Senate is preparing 

a bill that could charter federally-sponsored pilot projects. So we are, as 

an organization, open to a range of different approaches to pilots. 

 MS. DEGETTE. But would you think, then, that the Federal 

government would take it on? One of the big issues I have had, and 

frankly I think the Chairman shares some of my concerns, is that tort law 

and medical liability law has traditionally been the State role, and so 

what we have to figure it out. I always say that legislators legislate to the 

level they are elected. And my concern is I am not really sure that the 

most efficient way to resolve patient issues and to make these systems 

more streamlined is to suddenly create Federal courts that would-- 

 MR. BARRINGER. We have 50 or more laboratories at the State level 

to try new approaches, and so we would see very ideally that the Federal 

government would provide resources to try pilot projects out. 

 MS. DEGETTE. Right. Resources is a great idea, and Mr. Wootton’s 

idea is a great idea. I think there are other roles for the federal 

government, but I think that is what we have to sort out. 

 I wanted to ask you, Mr. Barringer, you talked about the systemic 

mistakes. And actually, maybe someone else has an idea on this, too. I 

didn’t hear anybody today talk about the fact that of medical malpractice 

by doctors, 5 percent of the healthcare professionals are responsible for 

54 percent of malpractice claims paid. And it has always been my view 

that if we could, as well as many of these other excellent ideas, if we 

could target that 5 percent and figure out ways to improve performance 

for them that might help reduce medical malpractice. 

 MR. BARRINGER. We would say that that statistic is somewhat 

misleading, because it does not take into account the particular riskiness 

of certain specialties that are more often targeted for litigation. That is 

particularly the case because of what we know about the fact that 

malpractice claims are not a good indicator of quality among the 

physician population. But we would also see, in conjunction with a 

move towards a non-punitive administrative compensation structure at 

the State level, that it would be entirely appropriate to look for ways to 

beef up the regulation of the medical profession through enhanced, 

perhaps, standards, oversight, or some work in reform of the State 

medical boards, which is the hammer which comes down on the 

physicians. 
94

 MS. DEGETTE. So is what you are saying is that you think there is 

actually much more widespread medical malpractice among doctors than 

just 5 percent? 

 DR. MELLO. If I may jump in, the tricky thing-- 

 MS. DEGETTE. Well, wait a minute. Let him answer, and then I will 

let you answer, Dr. Mello. 

 DR. MELLO. Okay. 

 MR. BARRINGER. The point that I am making is that we know, and I 

believe the statistic is from Public Citizen about the 5 percent of doctors 

leading to 50 percent or more of awards, and what we have consistently 

pointed to, with respect to that statistic, is that it does not account for the 

riskiness of particular specialties, which are subject more often to 

litigation. We don’t know the answer. We know that there are vastly 

more injuries than are compensated. 

 MS. DEGETTE. Dr. Mello, would you like to add in? 

 DR. MELLO. Yes. The tricky thing about that statistic is that it is not 

the same 5 percent every year. It is a different 5 percent. So what that 

statistic tells you is that a small number of awards account for a large 

share of the costs, not that a small number of doctors account for a large 

share of the injuries, and certainly not that it is the same doctors from 

year to year who are injuring patients. 

 MS. DEGETTE. So you disagree with the study by the National 

Practitioner Database? 

 DR. MELLO. No, the data are accurate, but the interpretation that is 

often given of those data is that it is a small number of bad apples who 

are out there injuring patients year after year does not reflect what the 

data tell us. 

 MS. DEGETTE. Mr. Wootton wants to answer. 

 MR. WOOTTON. Yes. Actually, I have no idea what this data is or 

what it means or how to interpret it, but human nature is that there 

usually is a small number of people in any given population that have the 

greatest contribution to the cost, in any system. The beauty of what we 

are suggesting, and there are some differences between our proposals, is 

if you have a low cost of making a claim, if it is easy to come in, if you 

don’t need to hire a lawyer, and I am not discouraging, in any way, the 

need for a lawyer, but if you don’t need to hire a lawyer, you can come in 

and say, “Look, I think the standard of care has been breached here, and I 

have been injured.” The ability to do that is going to drive up the 

standard of care and expose the doctors, if they are repeat offenders as 

opposed to just happened to be in the group that year, that they will 

expose the doctors who really have a problem, and you will have enough 

data points, by the way, to do experience rating of their malpractice 

insurance. 
95

 MS. DEGETTE. I just have one last question, and I would ask 

unanimous consent, and that is do any of you disagree that, as part of 

Congress’s overall assessment of this, we need to look at malpractice 

pricing, practices, and risk pools? 

 DR. MELLO. Well, I have looked at this a little bit, and I haven’t 

been able to find any data that would lead me to believe that overpricing 

of products has gone on during this latest malpractice crisis. I think that 

to the extent that companies have contributed to the problem, it was in 

under pricing products during favorable markets in the late 1980s. 

 MS. DEGETTE. All right. Mr. Chairman, it would really help if Dr. 

Mello would be willing to supplement her responses today to give us 

some of their data or the sources for that. That would be great. 

 DR. MELLO. I would be happy to, and I do have a report. 

 MS. DEGETTE. Thank you very much. 

 MR. BARRINGER. I would just have one additional point, if I may, to 

add, and that is that, based on our review-- 

 MR. DEAL. Wait just one second. 

 I am going to hopefully go to a second round here, if everybody is 

agreeable to that and we would be able to come back, but let us let the 

members who are here participate before we get to a second round of 

that. We will hopefully remember where we were in that discussion. 

 Mr. Shimkus. 

 MR. SHIMKUS. Thank you, Mr. Chairman. 

 We are participating, and Dr. Burgess is jumping out of his seat and 

twisting, and I almost gave him my time just to hear his line of 

questioning, because I mean, just like many of you, he has real-world 

expertise in this area. And I am not going to let him do that, so it is 

good. Again, I think this has been a wonderful committee, and you have 

all been pretty forthright on the issue. 

 I also understand. I basically saw all of the names and scribbled 

notes, and your association has got a couple of universities. We have got 

a couple of law firms and some interest groups. And it is always 

interesting to see who funds these interest groups, because that does tell 

you. I mean, just like our opponents look at who contributes to us, and 

we get attacked for, “Okay, well, you must be that group or you must be 

supported by these folks.” I think a good investigation of that would tell 

you some interesting stories about who is representing who. 

 Having said that, I want to welcome Ms. Niro from Illinois, my 

home State, although I am a downstater, and it is pretty far away from 

Chicago, Illinois. And so you followed what is going on, the medical 

liability issue. At least we have plateaued, because legislation passed at 

the State, and I don’t know if you confirm that our Supreme Court has 

had a major pushing of folks to the table to at least pass some legislation 
96

that we think hopefully would be helpful. I think the jury, if I can use 

that term, based upon discussions, is still out on how long that would be 

successful. But Madison County has slipped down the list of concerned 

jurisdictions. Cooke County has catapulted to the top. Do you know 

why? 

 MS. NIRO. Well, actually, I was President of the State Bar between 

two major tort reform legislatures, and in earnest, I decided to look into 

how we could work with the Illinois Medical Society to come up with a 

solution, just as you good folks are trying today. I thought that the most 

helpful thing to do would be to actually do an empirical study to find out 

how bad this problem is. Every day I listen to the radio, they are talking 

about malpractice insurance. 

 MR. SHIMKUS. Ma’am, I only have 2 minutes, and I really have got 

a whole bunch more. 

 MS. NIRO. Let me tell you what our study showed. It showed that 

from 1994 through 2004 there were no upward trends in filings per 100 

treating physicians in Cooke County. There was a modest increase in 

malpractice case filings between 1996 and 2004, but if you adjust for the 

growth in the number of physicians, there was no evidence of increase. 

The filings between-- 

 MR. SHIMKUS. Let me stop you there. And you can submit that. 

But this year, there has been an exponential increase in premiums. 

 MS. NIRO. Yes. 

 MR. SHIMKUS. There has been a loss of doctors. 

 MS. NIRO. Yes, there has. 

 MR. SHIMKUS. And so I really want to get Mr. O’Connell, because I 

tell you, I am conservative Republican, but I adored Senator Moynihan, a 

straight-shooter, told you what he thought was right, whether you liked it 

or not, Social Security issues. He is right on reform. But Ms. Niro and 

Ms. Doroshow are continuing to support the status quo. And your 

testimony says it doesn’t work. What issues do you have with their 

testimony? 

 MR. O’CONNELL. I didn’t hear a word about the fact that it takes 5 

and 6 years to settle these claims. Anybody who wants to defend the 

status quo, as I tried to indicate in my testimony, has got to defend the 

system that takes 5 and 6 years. Anybody who wants to defend the 

present system has got to defend spending 54 or 55 percent of the dollars 

that are spent on administrative and legal fees rather than paying patients. 

 MR. SHIMKUS. And if I may, that is consistent with Dr. Mello’s 

report. And no one from your left disagrees with that, am I correct? 

 My time is out, but I would like you to finish, Mr. O’Connell. Do 

you have anything additional to add to that? 
97

 MR. O’CONNELL. Just that I think Dr. Mello got it right. Those are 

the two issues, and we have got to find the means of getting payment 

faster to people who really need it. You can talk all you want about 

ADR. You can talk all you want about mediation. We have had those in 

place for a long time. They haven’t affected what Dr. Mello found, and 

they haven’t affected what I am doing in my research. I don’t find any 

lessening of the transaction costs or the timing overall, based on the 

amount of ADR, mediation, or other alternate dispute resolutions that we 

have. The system marches on, as Dr. Mello demonstrates, irrespective of 

these. 

 MR. SHIMKUS. And Mr. Chairman, I will just end by saying the 

Federal government is a big player in healthcare in this country, and as 

the cost of healthcare goes up, our costs of providing Medicare and 

Medicaid continue to escalate. And it is literally so much of the buying 

power in healthcare as a whole because of that money moving into 

litigation and the court system, and that is not in the healthcare system. 

We, as taxpayers, are being harmed by that, too, because it distorts the 

costs. 

 And I really do appreciate all of your testimony, and I yield back, 

Mr. Chairman. 

 MR. DEAL. Mr. Pallone is recognized. 

 MR. PALLONE. Thank you, Mr. Chairman. 

 I just wanted Ms. Niro and Ms. Doroshow to respond to Ms. 

DeGette’s earlier question about the malpractice insurance pricing 

practices. I know you didn’t get a chance, so if you could do that, and 

then I am going to ask some questions. 

 MS. NIRO. Well, I would like to also, if I may, just say that the status 

quo that I would be suggesting needs to be preserved as simply the 

constitutional right of citizens to have their Seventh Amendment 

protections remain. I think there is great room for innovation in how to 

deal with healthcare dispute resolution. 

 In response to the questions that we have before us today, I would 

just say that justice isn’t easy. Systems aren’t easy, and we don’t do 

these things because they are easy. We can’t find justice the easy way 

and the least expensive way. What we have to do is what is right and 

what is consistent with everyone’s rights. If you would repeat her 

question, I would appreciate it. 

 MR. PALLONE. Well, why don’t I yield to her and let her repeat it? 

 MS. DEGETTE. I saw you were raising your hand so eagerly. The 

question was do you think that Congress’s oversight on this should be on 

medical malpractice insurance pricing practices? 

 MS. NIRO. As I was trying to explain before, there is absolutely no 

rational basis in Illinois based on what we have seen in lawsuits for 
98

doctors to be paying increased insurance premiums. The statistics 

simply do not bear that out. In Madison, St. Claire County alone, in 12 

years, we only found 11 jury verdicts that favor the plaintiff. There were 

only verdicts that exceeded $1 million, and one was reversed on appeal. 

Nevertheless, the insurance premiums asked by these doctors are 

escalating dramatically. If this committee does not look seriously into 

the irrationally increased expenses for insurance, I don’t think that you 

will be able to put a solution in place that will actually have a positive 

impact on the situation. 

 MR. PALLONE. And I would say, as I said in my opening statement, 

that that is part of the problem here, because if you don’t address that, 

and I think that is true for the Senate Democrats that keep being accused 

of holding up H.R. 5 that allow them just to really believe that the 

insurance premiums have to be addressed directly and that the cap in the 

tort reform isn’t going to solve the problem. 

 Ms. Doroshow, quickly, because I want to ask you another question. 

 MS. DOROSHOW. Okay. Well, just briefly on the insurance issue, 

there are two important points to remember. One is the Council on 

Independent Insurance Agents, which monitors insurance premiums for 

doctors as all lines of insurance, has found that in the last 6 months, the 

average increase for doctors has been zero percent. In other words, rates 

are basically stabilizing now everywhere in the country. The reason is 

because we are in the part of the cycle. This is a very cyclical 

phenomenon. Yes, there was a great deal of under pricing the premiums 

in the 1990s. They all shot up everywhere in the country, irrespective of 

tort law. There are many management and underlying issues that were 

responsible for that, but they have now stabilized. So I think it is one 

reason why some of the pressure may have been alleviated on the need to 

deal with the insurance premium crisis that had been going on in the last 

5 years. 

 Secondly, there is something Congress can do, which is to repeal the 

anti-trust exemption, which the insurance industry currently enjoys that 

no other industry other than Major League Baseball has in this country, 

and that has allowed prices to go up. 

 MR. PALLONE. All right. Now let me just ask you about these health 

courts, the problem of eliminating a jury is of great concern to me. In 

other words, this idea of moving legal cases outside the court system, 

which not only eliminates an injured patient’s right to a jury, but subjects 

the injured patient to a single judge. And at least in a jury system, you 

have a number of decision makers that balance each other out. So based 

on your research and studies of jury verdicts, have you found that jury 

verdicts track the conclusions of objective medical experts? I mean, the 
99

concern seems to be that the juries don’t know what they are doing. And 

I don’t think that is true. 

 MS. DOROSHOW. Right. Actually all empirical research on juries 

has found the opposite. They actually have been doing studies on juries’ 

behavior for 30 years or more. There is a new book on this. They have 

excessively examined juries since the 1980s. They find that juries are 

consistent, conservative. Basically, if anything, they rule against the 

plaintiff more often than not. I think other statistics bear that out as well. 

But the main thing is that they are absolutely competent to handle any 

kind of complex case, particularly a medical malpractice case where you 

really have to delve into the life circumstances of an individual. These 

kinds of fault determinations are quintessential jury functions. They are 

competent to do it. They have always been competent to do it. If you 

ask judges who are the ones day-to-day in the courtroom with juries 

observing how they operate, with almost no exception, they believe 

strongly in the jury system and the ability of juries to handle medical 

malpractice or complex cases. The Dallas Morning News reported on a 

year 2000 survey of every Federal judge in the country as well as judges 

in Texas, and judges were in universal agreement that juries perform 

extremely well in complex cases and would, in fact, want juries to handle 

their own case if they were injured. There is absolutely no evidence at 

all that juries can’t handle these cases. 

 MR. PALLONE. Thank you. 

 MR. DEAL. Dr. Burgess. 

 MR. BURGESS. Thank you, Mr. Chairman. 

 Just as an editorial comment, I can’t wait for the day where across 

the hall in the Judiciary Committee we have a panel of seven doctors tell 

us how to reform the legal system. 

 On the issue of cost, and I am aware of the study from back in the 

early 1990s that said it was only 1 percent of the cost of the healthcare 

system, but you know that is not correct. I mean, I learned it in my early 

career as a resident that part of your function was to treat the chart, and 

defensive medicine is a true cost that the Federal government, since we 

pay 50 cents out of every healthcare dollar that is spent in this country, 

does bear a significant part of that. 

 But more importantly, that is the loss. And during the worst of the 

medical liability crisis in Texas, in the spring of 2003, we almost 

eliminated the specialty of maternal fetal medicine, and these were 

individuals who had been trained at State institutions. Their education 

had been subsidized by the State. But because they could not get 

insurance, they were leaving the State and not practicing the highest of 

high-risk obstetrics. And the community suffered as a result. We lost a 

neurosurgeon from our trauma system at Methodist Hospital and nearly 
100

ground our trauma system to a halt. So these are very real costs that are 

paid for by society. They may not be reflected in a study that looks at 

the dollars, but they certainly are real costs that society bears. 

 Before I accidentally use up all of my time with talking, I do want to 

ask Dr. Mello, because I was, unfortunately, called out of the room when 

you gave your testimony. And if I missed this, I do want to know the 

answer. From your work, if there was one lever of government that we 

could pull, whether it be at the State or Federal level, what would be your 

recommendation to have the greatest improvement, the greatest bang for 

the buck, on our medical justice system? 

 DR. MELLO. Well, I think we have to try experimentation with some 

of our recent reforms, like health courts. I would suggest that that be 

facilitated by action at the Federal and State levels jointly. It should start 

small. There is a lot of suspicion and distrust about these kinds of 

reforms, and the way we build a case for something in academia is to 

gather evidence and data, and that is what we should do. 

 MR. BURGESS. Well, now we have gathered some evidence in Texas 

since 2003 on caps. And I will admit to you, 10 years ago, caps wouldn’t 

have been my first choice for a solution, but it has made a believer out of 

me because of the fact that the year I ran for Congress in 2002, we had 

gone from 17 to 2 liability insurers in my State. You don’t get much 

competition for rates when you have only got two insurers left, and one 

was packing his bags. Since we passed the medical liability caps in 

2003, we now have 14 insurers, and we are getting better prices for 

medical liability insurance as a result. Texas Medical Liability Trust, my 

old insurer of record, has come down 22 percent since I started in 

Congress since that bill was passed back in Texas. 

 Let me ask a question, if I could, of Ms. Niro and Mr. O’Connell, 

because I am intrigued by both of your testimonies. Are either of you 

familiar with what is called the National Practitioner Databank? 

 MR. O’CONNELL. Yes. 

 MS. NIRO. Yes. 

 MR. BURGESS. How would a physician’s reportage to the National 

Practitioner Databank be affected, or how is it affected under the current 

alternative dispute resolution system that Ms. Niro described? And Mr. 

O’Connell, what would you see if a system that you described, the 

voluntary system that you described, were to be enacted? How is the 

reportage of a claim against a physician going to be handled? 

 MR. O’CONNELL. Shall I go first? 

 MR. BURGESS. Either one. 

 MS. NIRO. Either one. 

 MR. O’CONNELL. Let me say that one could include in the bill that 

there be a recognition that the early offer is the main pursuit to a statute 
101

encouraging the early offer, and therefore the settlement should not count 

in the databank or should be accompanied by an asterisk in the databank, 

indicating that the settlement was encouraged by the Government under a 

statute encouraging it. That would be one solution. 

 MR. BURGESS. Ms. Niro, do you have any thoughts on that? 

 MS. NIRO. I actually agree that it is one of the biggest impediments 

in getting healthcare providers to participate in alternative dispute 

resolutions, because they don’t want dollars paid in malpractice liability 

to show up. That is one of the rating factors on hospitals. Doctors want 

to defend their fine reputation, their clean record, and so it 

disincentivizes any use of alternative dispute resolution. If the 

committee could suggest reforms so that reporting could be broader than 

just gross dollars paid in liability and identify those which were 

cooperative settlements, which were by alternative means where no 

finding of liability exists. 

 MR. BURGESS. Let me just reclaim my time. And Mr. Wootton, you 

can see why I would be very nervous about what you described. And 

can I ask our representative from the Joint Commission of Accreditation 

of Healthcare Organizations, how would your body look at this type of 

thing if there were an asterisk or, as Mr. O’Connell has suggested, a 

statement that this settlement occurred pursuant to a recommended rapid 

settlement offer that was made because of Federal statute? 

 MS. VANAMRINGE. Well, I think we have a significant problem that 

exists today with the information in the National Practitioner Databank 

because it lumps everything together. It is incomplete, and therefore 

very skewed data. So what you want is really to overhaul some type of 

central repository of information, so it is very clear when a settlement or 

when a disciplinary action is in there, whether or not there truly was a 

standard of care that was actually violated or whether this was a 

settlement made under other circumstances so that people would 

understand the type of information to make decisions based upon it. 

Certainly, they would look at information in which a standard of care 

was violated very differently than if there was not one violated and there 

was no evidence that it was violated. 

 MR. BURGESS. Mr. Chairman, just before I yield back, Mr. Wootton, 

I do feel obligated to tell you that, from my old profession, you would 

likely encounter a significant amount of pushback through the concept 

that you described today, and this is the very reason why, because-- 

 MR. WOOTTON. Are you talking about the National Medical Data, 

sir? 

 MR. BURGESS. The repository for national medical data. 

 MR. WOOTTON. Well, no, that would be completely stripped of any 

identification of the doctor. It would really just be having access to the 
102

facts in the electronic medical record: no identification of the doctor, no 

identification of the individual. I think there are other puzzles. 

 MR. BURGESS. And just quickly, I think the most important reform 

is the source of the standard of care. I think all of these things get 

handled better if people trusted that the standard of care that was at work 

here was in fact the valid standard of care. I think that is where a lot of 

the corruption of all of these issues begins. 

 MR. DEAL. Ms. Capps. 

 MS. CAPPS. Thank you, Mr. Chairman. 

 I want to give equal time to Ms. Doroshow. Both you and Ms. Niro 

were labeled as favoring the status quo by our Chairman and another 

colleague. And Ms. Niro, you weren’t given a chance to respond. Could 

you briefly explain whether or not that is a fair labeling? But that is not 

the substance of my questions, so if you could, be brief. 

 MS. DOROSHOW. Well, I do think that there is an assumption being 

made here that the system is in a terrible crisis, and I don’t believe it is. I 

think that the New England Journal of Medicine articles, both together, 

showed that the system is working, actually, pretty well. Now as I said, 

if there are proposals to encourage alternative dispute resolution that can 

be done to ensure that it is voluntary and the right to jury trial is 

preserved-- 

 MS. CAPPS. I entered that, because I actually think you are also 

confusing apples and oranges. A lot of doctors pay really high 

premiums. That is part of what is being considered, I think, the status 

quo that both of you are favoring, and that is why I want the record to 

show where we should be focusing some of our direction in a different 

way. 

 MS. DOROSHOW. Right. The issue of insurance premiums is 

something that can be solved very clearly by stronger oversight 

regulation of the insurance industries practices. 

 MS. CAPPS. Thank you. That is, I think, an important statement to 

be in the record. And I think that should be the subject of a hearing. 

And I would hope that all of you look compassionately at that topic. 

Since the medical court is sort of the model that is being promoted today, 

Ms. Niro, I wanted us to understand it, because the American Bar 

Association, and it is a big organization, is very skeptical about it, and I 

want you to be able to tell us, for example, what it would be like to have 

a compensation schedule. I am going to give you three examples and 

you can do all of them or take your pick. For example, I am not an 

attorney, but I could understand that if you lose a finger, it might depend 

on whether you are a pianist by profession or a filing clerk. It would be 

not a very good thing to lose four either, but what would the schedule be 

like and how would that be taken into account? Also, I am really 
103

concerned once we do move away from whatever regulation we have 

now, how would the medical court be held accountable? And then 

finally, a lot of the evidence for supporting it seems to come from 

European countries where it is successful but where they have a vastly 

different delivery of care, universal healthcare, which we don’t have, 

would that color any of those? 

 MS. NIRO. Well, I think whenever a schedule of damages is 

contemplated, the possibility of not matching the unique circumstances 

of an individual’s condition exists, as you rightly suggest. But also, the 

surgeon’s use of his right hand is not equivalent to my 80-year-old 

mother’s similar problem with her hand. So scheduling things without a 

unique and specific approach to an individual may lead to very illogical 

situations, as would leaving out any compensation for pain and suffering. 

If a woman has, as has occurred, the wrong breast surgically removed, 

and she has no economic damage under these policies, she would get 

nothing. 

 MS. CAPPS. I am interrupting you now, but as this was being 

presented, I was thinking this. How about little kids? 

 MS. NIRO. They have no economic damages, nor do most elderly, 

nor do the underemployed, nor do the unemployed. That is disparate 

treatment, under the law, unless we find some way to compensate them 

fairly. With regard to the analogy of the Scandinavian or European 

countries, you are absolutely right. They have other systems in place that 

our tort system currently needs to provide, like their childcare, their job 

trainings, their federalized healthcare delivery system. 

 MS. CAPPS. I will leave it at that. 

 Thank you. 

 MR. DEAL. All right. 

 MS. CAPPS. Although I can tell that there is room for more 

discussion on this topic, which is fact that it is a good hearing. 

 MR. DEAL. All right. I think we are going to go to a second round 

of questions here. 

 Oh, I am sorry. Mr. Ferguson is here. 

 MR. FERGUSON. I am sorry, Mr. Chairman. I have been jumping in 

and out, but I appreciate the chance to do my first round of questions. 

 I did just miss some of the testimony, but Ms. Doroshow, thank you 

for being here. Thank all of our panelists for being here. I didn’t hear 

your back-and-forth and your comment myself, but I am told by staff the 

gist of it. I just wondered if you might tell me again. Did you say that 

essentially the status quo is okay with regard to the current system or that 

there are not significant problems with the current medical liability? 

 MS. DOROSHOW. Well, there were two different issues presented: 

one with regard to medical malpractice premiums for doctors. 
104

Absolutely, that is a situation that needs far greater oversight and 

regulation of the insurance industry to solve that problem. The States 

that have done that have gotten rates under control and actually did not 

experience this most recent hard market crisis. So we would certainly 

encourage that sort of thing and for Congress to repeal the anti-trust 

exemption that currently exists for the insurance industry. It has been 

percolating for years here and doesn’t really seem to get anywhere, but I 

think that if that were removed, it would relieve tremendous pressure on 

rates during a hard market. You would really see rates stabilize, I think. 

So with regard to premiums, absolutely something needs to be done. 

 MR. FERGUSON. Would you characterize the current medical 

liability scene or landscape as a crisis? 

 MS. DOROSHOW. Well, I am looking most particularly at the most 

recent New England Journal of Medicine articles, the two that came out 

in May, one that Dr. Mello participated in and then there was a second 

one. Basically, her study has showed that people who are legitimately 

hurt, legitimate claims, are getting compensated, for the most part. 

Frivolous claims are not. Most of the costs of the system are going to 

resolve claims where there was medical error and injuries, legitimate 

claims. A very small percentage of cases are ending up in trial. Most of 

them were already, I believe, being handled properly by alterative 

dispute or negotiations. That is what their findings were. The second 

article in that very same issue was about how litigation can help ensure 

patient safety in hospitals and how that works, and so the implication 

there is certainly if you take away the threat of litigation, that is going to 

hurt patient safety initiatives in hospitals. So based on those two reports, 

there is certainly not a crisis, and the authors of those studies were pretty 

clear about that. There is an issue that Dr. Mello raised earlier about 

people not partaking of the system enough, not enough people who are 

injured legitimately are getting compensated. Yes, I think there is some 

problem there; however, I think that this is not a simple answer as to why 

people are not suing or going to court right now. I, myself, have had two 

instances in my family of medical malpractice. We would never have 

considered the notion of suing the family doctor in our family. That is 

why most people are not going to court, unless they really need it, unless 

they really need compensation. If a catastrophically injured child is 

involved, those cases aren’t making their way into the court system, and 

they are getting compensated. The other problem is a lot of people don’t 

know that if there has been a death as a result of a hospital stay, that 

negligence was involved. The hospitals are not coming forward with that 

information, and there is probably a lot of error happening that people 

are not even aware of. 
105

 MR. FERGUSON. Sure. My time is very short. I want to give Dr. 

Mello a chance to respond, but I am just reminded, when we are talking 

about this issue, when I hear someone suggest that it is not a crisis or not 

a big problem, as I would characterize it, and I think many people would, 

I am reminded of the early days of the Iraq War when all of our troops 

were rolling into Baghdad and Saddam Hussein’s spokesman was out on 

TV saying, “There are no tanks in Iraq. There are no American soldiers 

in Iraq. Everything is just fine.” And then 20 minutes later, he was 

being hauled off in chains or something. It just seems like it is a real 

disconnect from reality when we see it all around us, both anecdotally 

and the evidence that Dr. Mello was talking about, to suggest that this is 

not a crisis. 

 Dr. Mello, if you would like, would you just quickly respond to what 

has been referred to? 

 DR. MELLO. Maybe it would just be helpful to clarify that I think we 

are talking about two different things here. When people talk about a 

medical malpractice crisis, they are generally talking about an insurance 

crisis. What Ms. Doroshow has just been speaking about, and what my 

article speaks to, is the performance of the malpractice system. A poor 

performing malpractice system may create insurance problems or may 

not. So they are two different things, and I would be happy to speak to 

either one of them. 

 MR. FERGUSON. Well, I am going to have more time later, so I will 

yield back. 

 Thank you, Mr. Chairman. 

 MR. DEAL. Thank you. 

 Let me start off this second round by just making some personal 

observations. 

 There are some entrenched patterns and habits here that will have to 

be broken to make any changes work. First of all, I think there is the 

entrenched perception, at least, from the legal community, admitting to a 

more modest medical court system would cut the lawyers out. I don’t 

envision that as being the case. Quite frankly, the legal profession, in 

terms of medical malpractice, is restricted to a very, very small number 

of lawyers. That was one of the things, as a lawyer practicing in a 

middle-sized small town, all of the doctors were always mad at the 

lawyers, and nobody in the local bar had ever sued them. The reason is it 

is a very specialized practice. I envision that if you go to a court system 

that is less contentious, perhaps would be one way of saying it, you may 

see more lawyers actually be able to help their clients in a legitimate 

malpractice case without having to refer them to the big high-dollar 

lawyers, because those lawyers would be all of the ones that could afford 

to underwrite the discovery that is necessary to produce a case that is 
106

going to stand up in court. So I think that perception from the legal 

community is maybe not quite in keeping with what we are talking 

about. 

 But the one big thing that I see that we are going to have to deal 

with, and we may not be able to ever overcome it, is the idea of making 

an analogy to the workers’ comp system. I think that that was made. 

That is a system in which fault is not the issue. Now in any system that 

we talk about of making the process less complicated, whether it be in 

medical court or otherwise, we are still inherently going to have the 

concept of fault, even though I believe, Mr. Barringer, you used the 

Scandinavian term of “avoidability” of consequences. One of the big 

problems that has always been, as I see it, in any system we would 

devise, being able to separate the natural consequences of what has 

happened to this individual from consequences that have either been 

exacerbated or new consequences that have been caused by the medical 

procedures or whatever has occurred to them. Where is the trigger that 

distinguishes where one stops and the other one starts? I would like to 

hear, and maybe, Mr. Barringer, a good place to start would be you, this 

“avoidability” concept. The medical community is probably not going to 

like that, because it expands the idea of potential cases. That is one of 

the things we are going to have to deal with this. A legitimate policy 

question we are going to have to deal with is are we willing to move to a 

system that will compensate more individuals, maybe at not the same 

level of compensation of those who are currently receiving verdicts, or 

are we going to stick with a system that only rewards those in the most 

egregious cases who have the financial resources and the attorneys who 

can stick it out through the whole process? But how do you think the 

medical community will view moving to this “avoidability” concept 

rather than the traditional liability concept? 

 MR. BARRINGER. Well, naturally, there is concern in the medical 

community and in the insurance community about a new standard of 

liability that could expand access to compensation. Nonetheless, we 

think there is understanding within the provider community about a new 

standard which would purport more with the goals of improving patient 

safety and enhancing quality in the system. We are calling for pilot 

projects to begin to test the applicability of this system and the way in 

which an avoidability standard might be operationalized at the State 

level. I would note that the best available research around this issue, 

conceptual though it is, suggests that an administrative compensation 

system could be implemented. This research looked at claims data in 

Colorado and Utah. But an administrative compensation system with an 

avoidability standard of liability and a compensation schedule could be 
107

implemented at a cost comparable to that of the existing system while 

compensating far more patients. 

 I would like to make just a few points about the schedule of 

damages. We don’t envision a one-size-fits-all schedule, and we haven’t 

proposed a schedule. But what we do envision is a system that would be 

likely developed by experts, perhaps the Institute of Medicine, that 

would take account of patient circumstances and severity of injury and 

creating some sort of grid or structure or matrix to encourage uniformity 

such that similarly situated claimants received similar amounts. The 

whole idea of the notion of a schedule is to enhance horizontal equity in 

the system, if you will. 

 Just to get to the point about a pianist versus a filing clerk who lost a 

finger, the schedule of damages that we envision is for non-economic 

awards, or pain and suffering. So if you had a concert pianist who lost a 

finger, naturally economic damages would cover the losses to that 

musician. I as a person who actually personally enjoys playing the piano 

but don’t make much of a living playing the piano wouldn’t get much 

from the system except pursuant to the schedule, and perhaps there 

would be some provision for taking that into account. 

 I would also note that little children do have access to economic 

damages in the current system. 

 The final two things I just want to say is that the comparisons that 

have been made to the European systems and which we are basing some 

of this system, it is true, they do have universal coverage and a range of 

other benefits that they provide to folks, but in terms of the potential for 

reduced adversarialism, expedited compensation, and improving the 

relationship between individual patients and their physicians, we think 

there are a lot of lessons to learn from particularly the Scandinavian 

system. 

 Finally, I would note that the proposal that we have put forth is one 

that is evolving, and we are actually grateful for all input that we can get 

from stakeholders around, because we think that that is the way to make 

the most robust proposal we possibly can. 

 MR. DEAL. All right. Thank you. 

 I am going to ask Mr. Ferguson to assume the chair, and I want to 

tell you again how much I appreciate all of your testimony. Hopefully, 

we will be able to continue this dialogue in the future. I have something 

on the floor that I need to get to, and I am going to ask Mr. Ferguson to 

take the chair. 

 Ms. DeGette, you are recognized for questions. 

 MS. DEGETTE. Thank you, Mr. Chairman. 
108

 Ms. Niro, I assume that the ABA’s objection to the health court 

system is not that it would take resources away from lawyers, but rather 

that it would remove the right to a jury trial, correct? 

 MS. NIRO. Absolutely. 

 MS. DEGETTE. And I wanted to ask both you and Ms. Doroshow, 

there are a lot of alternative proposals that have been presented. Mr. 

Wootton presented the idea of the national medical data center. Would 

either of you object to that kind of a concept of a national data collection 

system with privacy and liability protections so we could figure out what 

is going on here and find ways to improve service for patients? 

 MS. DOROSHOW. Well, we certainly believe that disclosure of 

information-- 

 MS. DEGETTE. I am sorry. I don’t have very much time. Do you 

object to that kind of a-- 

 MS. DOROSHOW. Well, the answer is, when you are infringing on 

the patients’ rights to be able to use an admission of negligence in court, 

so if-- 

 MS. DEGETTE. Well, that is not what he is doing. He is talking 

about data collection at a national center. Do you have objection to that? 

 MS. DOROSHOW. No. 

 MS. DEGETTE. Ms. Niro, do you? 

 MS. NIRO. No. 

 MS. DEGETTE. Okay. I am sure neither one of you would object to 

enhancing efforts at early dispute resolution, so long as they didn’t 

remove fundamental rights like the right to a jury trial, correct? Ms. 

Niro? 

 MS. NIRO. Yes. 

 MS. DEGETTE. Ms. Doroshow? 

 MS. DOROSHOW. Right, and it didn’t exert undue pressure on the 

victims themselves. 

 MS. DEGETTE. And you don’t object to programs like the program 

that I was talking about in my opening statement, which is being done in 

Colorado by our COPIC Insurance Company. I think Mr. Barringer 

talked about it, where we have efforts to get doctors to communicate 

with patients if there is an unintended injury, apologize, and try to rectify 

that at an early stage, so long as it doesn’t remove rights to jury trial and 

other rights, correct? 

 MS. DOROSHOW. Well, the only thing we are concerned about is the 

negotiation period, which is laid out, and during the 6 months that I have 

seen in the Federal-- 

 MS. DEGETTE. And you don’t have objection to State efforts like 

that, do you, overall? 
109

 MS. DOROSHOW. Overall, but the devil is in the details, 

unfortunately. 

 MS. DEGETTE. Right. Ms. Niro? 

 MS. NIRO. May I declare that the ABA doesn’t have a current policy 

pending? In my opinion, I think it is a positive thing. 

 MS. DEGETTE. I mean, what I am trying to point out is you two, at 

this end of the table, have been painted as people who don’t think we 

should have any reforms or advances. But I don’t think that is what I 

hear you saying. Is that right? Ms. Niro? 

 MS. NIRO. Thank you for clarifying that. I think we are all here for 

the purpose of trying to improve the delivery of healthcare and improve 

the fairness in which we are all treated. 

 MS. DEGETTE. You just don’t want to remove the rights of patients 

to be compensated, right? 

 MS. NIRO. That is right. 

 MS. DEGETTE. Now, Ms. Doroshow, I want to ask you. A lot of 

people have been saying that caps on malpractice awards reduce 

malpractice premiums. That is kind of an assumption that a lot of people 

make. Are you familiar with data which would speak to that? 

 MS. DOROSHOW. No, there is a tremendous amount of data which 

contradicts that statement. 

 MS. DEGETTE. Would you please talk about some of it? 

 MS. DOROSHOW. Sure. Well, first of all, anecdotally, many States’ 

rates are stabilizing all over the country because we are in a soft market 

period, whether or not caps were enacted. Rates shot up because we 

were in a certain part of the market. They have now stabilized. But in 

addition, many empirical studies, one done for our organization, found 

that there was actually a higher increase of rates in States that had caps 

than States that didn’t. Economists have looked into this. University of 

Texas economists have looked into this. They have all reached the same 

conclusion: that there is a disconnect between caps and insurance rates. 

 MS. DEGETTE. Ms. Niro, you are nodding your head. Is that also-- 

 MS. NIRO. I am in agreement with her statement. 

 MS. DEGETTE. Okay. The Kaiser Family Foundation, I don’t know 

if anyone here if familiar with that, showed that the number of paid 

claims per thousand active physicians was unrelated to whether a State 

had caps. Does anyone know about that study? No? Okay. 

 DR. MELLO. I do. 

 MS. DEGETTE. Oh, Dr. Mello knows about it. Sorry. 

 DR. MELLO. I am aware of that study. I would just clarify that the 

argument has never been that caps affect nor that the malpractice crisis is 

driven by an increase in claims. 
110

 MS. DEGETTE. Well, I know that you are a well respected academic, 

and I respect your findings, and I know that is not your claim, but that is 

the claim that many in Congress have made as a rationale for why we 

should enact this legislation at a Federal level, but you, as an academic, 

don’t know of any correlation between malpractice insurance rates and 

State caps? 

 DR. MELLO. Oh, now we are talking about something different, so I 

was just speaking a moment ago about the frequency of claiming. 

 MS. DEGETTE. Okay. 

 DR. MELLO. I had the privilege of spending the last year looking at 

the available evidence about the relationship between caps and 

premiums, including the stakeholder studies, like the ones that were just 

mentioned, and controlled academic studies. My conclusion is that there 

is a modest, but statistically significant association. 

 MS. DEGETTE. Thank you very much. 

 MR. FERGUSON. [Presiding.] Now I will continue the questioning. 

 Ms. Doroshow, I will give you another shot. I didn’t mean to 

suggest that I was comparing anybody here to Saddam Hussein’s 

spokesperson, and I don’t know if anybody mistook that, but let me come 

back to you on another sort of related issue. 

 You had said that this health court system that had been talked about 

or suggested might tilt the playing field in favor of insurance companies 

that represent healthcare providers. But as a system that relies on 

independent experts to make qualified decisions on the negligence of a 

provider, might that not be more fair than a system where experts are 

simply hired folks who come in and who are paid to say whatever it is 

they say, depending on what side they are representing? Doesn’t that 

system sort of tilt the playing field in favor of whoever can pay the most 

to hire the so-called best experts or most experts? 

 MS. DOROSHOW. Well, the thing that ensures fairness is that the 

decision maker is fair. In the health court model, you have got a 

specialized judge, who is, most logically, going to come from the 

healthcare industry or have a medical background. Already this is 

somebody that a patient is going to see as somewhat biased. Then 

heavily relying on medical experts coming from the healthcare industry, 

that is who is going to be making the decision as opposed to an unbiased 

judge or a jury. That is really the only way to ensure fairness in a 

situation like that. You have experts battling it out before jurors, but 

they make the decision and their job is to reach the most fair decision. 

When you remove that process, the process becomes biased. 

 MR. FERGUSON. Clearly, there is the potential for, if you are 

changing the decision makers, you are changing the folks who are 

deciding on the fairness, there is a risk there. But is there not a risk 
111

currently? It seems difficult to defend the fairness if we are talking about 

simple fairness. It seems difficult to defend the status quo, in which case 

it is really whoever has got the deepest pockets, whoever can afford the 

best witnesses, because you are never going to call a witness unless they 

are going to say what you are paying them to say or an expert. You are 

never going to bring them in unless they say what you are paying them to 

say. 

 MS. DOROSHOW. Well, first of all, the cases that are getting to this 

point are ones where an attorney has already made a decision of taking 

the risk to take the case because they think it is a strong and valid case. 

That is what the contingency fee system does. It allows people access to 

attorneys, and it is a natural screening mechanism that kicks the worst 

cases out. And I am not the only one that said that. There are many 

conservative people that have said that as well. So you have already got 

a situation where it is generally a strong case, and they have a right to 

their experts. They have a right to consult with people who are going to 

advise their client-- 

 MR. FERGUSON. I agree with all of that. My time is short. I agree 

with that. I am simply saying isn’t there a great risk now? If there is a 

risk in changing to a different system, it seems to me it is tough to argue 

that. I don’t know, maybe there is a greater risk or maybe there is less of 

a risk, but isn’t there a tremendous risk in the status quo where we have 

got a bunch of experts that we parade through courtrooms who are paid 

to say what they are there to say? And it seems to me, there doesn’t 

necessarily seem to be a great risk for a bias or a tilted playing field, to 

use your words, in terms of who can purchase the best experts. 

 I need to move on. 

 MS. DOROSHOW. Well, that is exactly what their function is: to 

evaluate experts and make decisions. 

 MR. FERGUSON. But if all they have access to is the best paid 

experts on one side and perhaps not on the other-- 

 MS. DOROSHOW. They have experts, but that is their job. 

 MR. FERGUSON. I am just saying, it doesn’t seem to me like it would 

be a level playing field in that case. 

 Ms. Niro, just a quick question on fees. Plaintiffs’ attorneys charge, 

my understanding is, and I am not a lawyer, a contingency fee that 

amounts to 40 percent or more for an injured patient’s compensation 

award. Plaintiffs’ lawyers charge this standard contingency fee 

regardless of the specific details or the probability of winning or losing. 

However, and I want to reference Mr. O’Connell in a second, in Rule 

1.15 of the ABA Model Rules of Professional Conduct, I have never read 

them, but this is what I am told, states that the contingency fees must be 

reasonable and should differ from case to case based on, among other 
112

things, the likelihood of success or failure. Do you feel that plaintiffs 

should be protected from what some may say are unethical contingency 

fees? I reference an article that Mr. O’Connell wrote on this very topic 

in the Connecticut Insurance Law Journal. And if Mr. O’Connell would 

comment on this after, Ms. Niro, you have had a chance to respond to 

that question. 

 MS. NIRO. As I have said before, I am not a plaintiff lawyer. What I 

have done, however, is serve on the disciplinary board established by the 

Illinois Supreme Court that disciplines unethical behavior by lawyers, 

and we have never, to my knowledge, had to prosecute a plaintiff’s 

injury lawyer for violating Rule 1.15, which is the reasonable fees 

requirement. If there are plaintiffs’ lawyers that make one fee 

arrangement consistent in their practice, I do not know of them. 

 MR. FERGUSON. You do not know that the standard contingency fee 

is 40 percent in most cases? 

 MS. NIRO. No, I don’t. As a matter of fact, that would seem 

outrageously high. If you had some plaintiffs’ lawyers here, I think they 

would tell you that they lose cases to other lawyers who will manage the 

case for less money. What happens is the contingent fee is very relative 

to the class of the disbursements and the necessary preparation for trial. 

Most lawyers I am aware of have less than a third in agreements with 

clients. 

 MR. FERGUSON. Mr. O’Connell, can you comment on that? You 

wrote an article on this. 

 MR. O’CONNELL. That is not my experience. My experience is that 

the 33 and 1/3 and 40 percent is very standard, that, in addition, that 

figure is taken off the top, according to the contingency contracts that I 

have seen, namely, the lawyer takes the 33 1/3, and it is often 40 percent, 

certainly if there is going to be an appeal and increasing this 40-percent 

standard such that all of the expenses are borne by the client, if you see 

what I mean. You take the 40 percent off the top and all of the expenses 

then are left to the client to pay as well as receiving what is left once the 

40 percent is taken off the top and the expenses of expert witnesses and 

exhibits are deducted. So we have to differ. My impression is that the 

situation is far from sanguine, that it is a very corrupt system. If there is 

a great deal of competition, for example, if you go to the yellow pages, 

which I have done and have research assistants do for years, you will 

never see any mention of competitive pricing by any lawyer advertising 

in the yellow pages, and the yellow pages are full of hundreds and 

hundreds of ads for personal injury lawyers. I challenge somebody to 

come in here and tell me one ad they have ever seen which says, “We 

will charge you less than a third.” 

 MR. FERGUSON. Okay. I am way over my time. 
113

 Ms. Capps. 

 MS. CAPPS. Thank you. I think we are just getting into the thick of 

things. And Ms. Doroshow, I will let you respond some to Mr. 

O’Connell, but I also only have the 5 minutes, and I want to get to Ms. 

Niro talking about alternatives to going to court that would be maybe an 

alternative to the health court system. But for starters, my background is 

healthcare as a nurse, but I come off on medical malpractice often 

differently from the physicians with whom I have worked for a long time 

in my community. So in California, we have done tort reform for 

healthcare. Still, there is this myth, it is considered a myth, doctors that I 

know assume, and maybe the general public as well, that people go to 

trial and get huge settlements, disproportionate to reality and that 

suddenly the next day the doctor’s malpractice insurance premium has to 

go up to take care of that. I heard you say something about the market is 

soft. Are we talking about the stock market regulating premiums? 

 MS. DOROSHOW. It is the insurance market, actually. It is a cyclical 

market, and a soft market. 

 MS. CAPPS. Who determines it? 

 MS. DOROSHOW. The companies and their rates, basically. The 

Council of Independent Agents and Brokers is the agency that monitors 

insurance rates around the country, and beginning in 2001 to 2005, rates 

shot up pretty significantly. 

 MS. CAPPS. What was the reason for it? 

 MS. DOROSHOW. Well, there had been a large number of years 

where the prices were under priced because they were making lots of 

money by investing the premiums. 

 MS. CAPPS. The insurance companies? 

 MS. DOROSHOW. Yes. 

 MS. CAPPS. No correlation to damages? 

 MS. DOROSHOW. Oh, no. 

 MS. CAPPS. And payments out? 

 MS. DOROSHOW. No, you never heard a word about it. 

 MS. CAPPS. For physicians? 

 MS. DOROSHOW. They were under pricing policies below inflation, 

basically, to physicians beginning in the late 1980s all through the 1990s 

since the last hard market, which was in the mid-1980s. It is very 

cyclical and it is a very peculiar kind of accounting and underwriting that 

they do. 

 MS. CAPPS. I am going to stop, because that is not the focus of this 

hearing, but Mr. Chairman, I would respectfully request that this 

subcommittee have a hearing on this topic and do it far more justice than 

we can do in 2 minutes. 

 MR. FERGUSON. You got it. 
114

 MS. CAPPS. Pardon? 

 MR. FERGUSON. I mean, I will talk to the Chairman about it. 

 MS. CAPPS. Well, I am assuming you are the Chairman. 

 I am being facetious. 

 This is about alternatives and the idea that Dr. Mello and others have 

proposed is a very interesting one. And I think our system is needing 

some help, however, I am a firm believer that we have a system of justice 

in this country that includes a trial by jury. However, Ms. Mello, you 

sort of teased at or hinted at, and I want you to use whatever little time I 

have left, to talk about other alternatives. And suggest some ways that 

we could assess and voluntarily allow alternatives to going to court. 

Mediation is very successful in resolving family disputes. And would 

you continue? 

 MS. DOROSHOW. Well, I think that, as Dr. Burgess suggested 

earlier, one of the greatest impediments right now is where the data is 

collected, and I think if there were ways to incentivize the healthcare 

profession to engage earlier in the process of open exchange of 

information, I think these currently available ADR methods would be 

even more efficient and demonstrate that they are very effective in the 

marketplace. 

 MS. CAPPS. Could you give very specific ways that we could assist 

in that that would be appropriate for Congress? 

 MS. DOROSHOW. Well, I think you could certainly do some 

influence on changing that data reporting system. I do think that if you 

are going to pilot any projects, that you look at the current projects that 

are using mediation currently, as is Rush Hospital in Chicago, which is a 

national model, and allow those programs to be tested in other areas of 

the country to see if the same positive results could be obtained. 

 MS. CAPPS. Dr. Mello, you are the academic about a lot of these 

things. Have these projects been studied? 

 DR. MELLO. Not in as systematic a way as we would like. Of 

course, controlled studies are difficult to do when you only have one site. 

 MS. CAPPS. Right. I understand. Do you think what you are 

proposing, does it have to be a sort of totally different structure? 

 DR. MELLO. No, it doesn’t. The health courts model can incorporate 

any number of alternative dispute processes at the first level of dispute 

resolution, which is the interactions between the two private parties: the 

hospital or the doctor and the patient. 

 MS. CAPPS. I know I am out of time, but since this is our last round, 

could I ask just one more? 

 MR. FERGUSON. Sure. 

 MS. CAPPS. I’m interested in your model, but I also don’t want to let 

go of the ability to go to trial by jury. Can they work together? 
115

 DR. MELLO. Well, what we are proposing is a sort of opt-in 

demonstration program so that patients who really believe that right is 

important can choose to go elsewhere for their healthcare besides the 

limited number of providers who are opting into our demonstration. 

 MS. CAPPS. But then do I understand this? If it became the system, 

it would be for everyone? 

 DR. MELLO. We would have multiple levels of appeal, and the final 

appeal would be to a court of law. 

 MS. CAPPS. Oh, I see. That really isn’t the same as what Ms. Niro-- 

 DR. MELLO. It is not a jury. 

 MS. CAPPS. So you would be fundamentally taking an injured 

patient’s right to a trial by jury away from them? 

 DR. MELLO. I don’t see it in quite those terms, but actually, they 

would be-- 

 MS. CAPPS. Could you say yes or no to my question? 

 DR. MELLO. There would be no jury trial in this system for 

participants. 

 MS. CAPPS. Wow. That is major. This is a country built on trial by 

jury. 

 DR. MELLO. I appreciate that fully, as a lawyer, but I think in this 

case the system doesn’t work in the interest of patients as it doesn’t work 

in the interest of injured workers or injured vaccinees and many other 

areas where we have carved out. 

 MS. CAPPS. Well, I would certainly hope we could explore all kinds 

of alternatives before we take this drastic step. Thank you very much. 

 MR. FERGUSON. Well, thank you all for being here. 

 Oh, no. I am sorry. Mr. Shimkus is recognized for questions. 

 MR. SHIMKUS. Thank you, Mr. Chairman. Again, this is a great 

debate. I think the passion on all sides is because most people feel the 

system is not working. And before we passed liability reform in Illinois, 

which the jury is still out on. We don’t know if doctors are still leaving 

but slowly. But I represent 40 counties in the State of Illinois. 

Springfield South is probably about 47 counties, so it is actually the 

seventh Supreme Court district. I think there are about 47 counties. 

There was no neurosurgeons in 47 counties in southern Illinois. Now we 

have a couple. And that is from Springfield, the central part of our State, 

to Paducah, Kentucky. No neurosurgeon. Probably close to one million 

people. That is the problem. 

 Now the question is, Ms. Niro, how many medical liability insurers 

are there in Illinois? 

 MS. NIRO. I can’t answer that with any certainty from one day to the 

next. 
116

 MR. SHIMKUS. Yes. Two. One has 95 percent of the market. That 

is a co-op. It is owned by doctors. It is a not-for-profit. So one of the 

reforms is how do you get more insurers into the market? Would anyone 

disagree with that, if you believe in competition? If it is such a lucrative 

business, why wouldn’t people be flocking, the insurers, to Illinois? So 

we have to have the doctors develop their own insurance pool just so 

they have coverage. And that is really part of my frustration. And even 

the doctors’ cooperative insurance is pricing the doctors out of the 

business. So the people who are running the co-op say, “We can’t afford 

you,” doctors who own this insurance company. That is crazy. 

 Dr. Burgess talked about Texas. And we always get confused with 

economic damages, pain and suffering. They get lumped in together. 

And the public gets confused, because no one ever disputes full 

economic recovery. They really dispute, even today, about whether kids 

get economic recovery. Ms. Niro, you say no. Mr. Barringer, you say 

yes. Who is correct? 

 MR. O’CONNELL. Well, one issue is whether a child is economically 

productive. That is, if a child doesn’t have a job and the child dies, there 

isn’t any basis for claiming the child, except for the medical expenses 

incurred for the child, that the child has cost money to anyone. That is 

why-- 

 MR. SHIMKUS. Mr. Barringer is getting excited, so please. 

 MR. BARRINGER. I am not. 

 MR. SHIMKUS. No, no. This is what we do this for. It is the method 

to get you guys interacting. 

 MR. BARRINGER. My understanding, and my statement was, to the 

extent that you had an injury and if there were future productive losses or 

economic damages that would have been foregone due to the injury, that 

there would be entitlement to economic damages. Someone correct me if 

I am wrong, but I thought that that was the case. 

 MR. SHIMKUS. And of course the mother. Are you calculating 

economic damages for a mother who is not employed? 

 MR. O’CONNELL. Well, there would be replacement costs. You 

would have to hire a homemaker and others. Those costs would be 

economic losses. 

 MR. SHIMKUS. And so the whole cap issue is not talking about pain 

and suffering. This is in addition to. 

 MR. O’CONNELL. That is right. 

 MR. SHIMKUS. And Dr. Burgess just came back, but in the debate on 

how you get more insurers back, Texas went from 2 to 14. And how did 

they do it? They capped the second portion of the pain and suffering. 

 I have got two questions I have got to ask. I have been asking others, 

but I want to make sure I ask. I don’t understand, Mr. Wootton, this 
117

statement in your testimony. “How will patients benefit from the 

adoption of an experience-rated administrative compensation system?” 

What do you mean? Explain that. 

 MR. WOOTTON. Yes. That could be at the heart of the health court 

idea, but it is certainly at the heart of my idea, and that is that if you have 

a low-cost claim like workers’ comp, there have been findings that more 

workplace safety was generated by the workers’ comp system, which is 

an experience-rated compensation, which means that if you are an 

employer and you have lots of claims against you as an employer, then 

you are going to pay a higher rate for your workers’ comp and that that 

rating that costs you as an employer more means you have somebody in 

your employ who is going to go around and make your place safer. That 

generates more workplace safety than the very random tort system or, for 

that matter, OSHA. I hope somebody will sort of catch on to what is 

going on here that if you make it easy for people to come in and say, “I 

think I have been injured because of a departure from standard of care,” 

an avoidability kind of situation, you are going to drive up the standard 

of care. I will say one thing I think that the status quo people have to 

answer is why is it that half of the adverse events that happen with drugs 

happen in hospitals to old people that are taking generic drugs and those 

cases never get in the court system. The answer is old people are not 

attractive plaintiffs. Lawyers take cases that fit their business model. 

They do not take cases because they are really trying to serve the public 

good. What we are talking about is a system that will in fact drive up the 

standard of care. So that is the distinction that I am trying to make by an 

experience-rated compensation system providing more incentive for 

patient safety. 

 MR. FERGUSON. Before we go to Dr. Burgess, Ms. DeGette has a 

quick point of clarification. 

 MS. DEGETTE. Thank you. 

 I think some of the non-lawyers here are confused about economic 

versus non-economic damages. Economic damages, for any plaintiff, are 

the damages where there is an economic loss. So what that would 

mainly be is out-of-pocket medical expenses that they might incur and 

some projected expenses, like if somebody was disabled and they needed 

home healthcare, something like that. Economic damages. It would also 

mean loss of wages for that individual, so for a year, if you were injured 

and lost your job due to medical malpractice and sued, then they would 

calculate your projected economic damages. For stay-at-home moms, 

for children, for senior citizens, what these witnesses are saying is 

because there are no wages to be lost, then there would be no wages 

computed in the economic damages. And I was actually talking to the 

Chairman about this earlier. For children, for future lost wages, most of 
118

the time, that would be speculative, because those are young children 

that don’t have that economic loss. So I think in some States, and I am 

sure some of my friends will correct me, you might be able to compute 

future wage loss for children based on parents or something like that. 

But that would not be included in economic damages. That would be 

non-economic damages that you are calling pain and suffering, but it is 

actually a much broader group. And the non-economic damages are the 

damages that the States put the caps on. So I hope that clarifies what 

those different types of damages are. 

 MR. SHIMKUS. And if I may, I appreciate that. I am not a lawyer, 

and I see heads shaking yes and no, so I think there is some frustration. 

But if the gentleman is correct, then why not develop a system by which 

you then can calculate non-economic damages? I know one of my State 

senators, a Democrat, a good friend of mine, Bill Hayne, who was 

involved with the legislation, brought this issue up all of the time. So I 

know it is a valid issue and a valid debate. I don’t know if we are willing 

to sit at the table and address-- 

 MS. DEGETTE. Right. Well, we actually do have a system right now 

in all 50 States that computes economic and non-economic damages, and 

that is called the tort system. But that doesn’t mean we shouldn’t look at 

some other innovative ways like the witnesses are discussing today to 

compensate. It is really not about what the damages are. It is how we 

can resolve cases much more quickly and efficiently. 

 MR. FERGUSON. Dr. Burgess. 

 MR. BURGESS. Thank you, Mr. Chairman. 

 Let me ask Mr. O’Connell again on this concept of economic and 

non-economic damages. The diagram that you proposed in your 

testimony, I believe, you were just talking about a voluntary system that 

would get rapid payment for what would be described as economic loss. 

Is that correct? Do I understand that correctly? 

 MR. O’CONNELL. It would be voluntary from the point of view of 

the defendant. The defendant would have the option of offering to pay 

economic loss within 180 days of the claim. 

 MR. BURGESS. What would be the objection to including noneconomic damages under some parameters, whether it be a cap or some 

percentage of the total claim? 

 MR. O’CONNELL. What you are trying to do, sir, is incentivize a 

defendant to come forward and pay essential losses. Today, the 

defendant has the right to come forward and offer to pay both economic 

and non-economic damages within 180 days, or any other period, but I 

suggest, as I said in my submitted statement, that for either side to come 

forward early on the defendant’s side to make a generous offer or the 

plaintiff’s side to make an offer to settle encourages the other side to 
119

become a participant. That is, if I, as a defendant, come forward to you 

very early on and make a generous offer of both medical expense and 

wage loss plus your pain and suffering, counsel is liable to say, “Why are 

they offering this much this early? Maybe they are hiding something 

back there. Who knows? But we are not going to take this early 

settlement.” Similarly, if the plaintiff comes forward and says, “All I 

want is my economic loss,” and the law entitles them to non-economic 

loss, the defendant will kind of say, “Well, why are we paying him that if 

that is all he wants? He must not be entitled to anything, or much less.” 

So what I am trying to do is encourage the defendant to come forward 

and offer to pay economic loss in order to get that prompt payment of 

economic loss. So he has got that incentive to make the offer. The 

plaintiff now has the incentive to accept it, because he cannot sue for 

non-economic loss unless he has got a case for gross negligence provable 

by clear evidence. So I am trying to encourage-- 

 MR. BURGESS. It is an enormously attractive concept. If there were 

a way to capture that spirit into legislation, would you envision that as a 

State issue or as a Federal issue? 

 MR. O’CONNELL. It could be enacted either way. There was a 

Federal bill introduced a few years ago by Senator McConnell of 

Kentucky and a few years before that Representative Gephardt 

introduced a bill applying this scheme for federally-funded healthcare 

recipients, Medicare and Medicaid. Neither of them passed, but I have 

drafted legislation, and legislation was drafted by the staff of those two 

legislators, so it is what I am suggesting to this committee. 

 MR. BURGESS. The concept of creating a savings for the Federal 

government, we do spend 50 cents out of every healthcare dollar that is 

spent in this country, also is enormously attractive to me, which is why I 

would like to think along the lines of a Federal solution, but I am 

concerned, since my own State has successfully tackled and passed 

legislation and passed to constitutional amendment, which has been 

enormously effective at keeping doctors and insurers in the State. Would 

this type of legislation be injurious to a State that has already dealt with 

the problem satisfactorily? 

 MR. O’CONNELL. No, I don’t think so. You could draft a statute 

such that it doesn’t displace what the State has already done. It might 

add an additional incentive. In other words, you now have a cap on pain 

and suffering. Under this scheme, the defendant could make the offer to 

them and a payment for pain and suffering as long as there was prompt 

payment for the economic loss, which would do away with the claim for 

non-economic loss, which already exists in Illinois, below the cap. 

 MR. BURGESS. Well, I thank you for your testimony and for 

everyone on the panel for their forbearance today. 
120

 Mr. Chairman, I would like to ask unanimous consent that I insert 

into the record data from Texas that deals with the number of 

neurologists in the State showing a gradual increase up until the year 

2002 and then a dramatic decline. Following the passage of our medical 

cap, the number of neurologists has dramatically increased in the State. I 

think this study on the neurologists in the State just really is illustrative 

of the problem and how at least one State has solved that problem. 

 And with that, I will yield back. 

 MR. FERGUSON. Without objection, that will be included in the 

record. 

 [The information follows:] 

1

786 791

797

789

810

827

868

740

760

780

800

820

840

860

880

Number of Physicians

1999 2000 2001 2002 2003 2004 2005

Year

Neurologists In Texas (1999 - 2005)

Source: Texas Medical Board – May Reports

 MR. FERGUSON. Let me thank all of our witnesses for being here 

today. This is an extremely important issue, and we need to be thinking 
121

outside the box. Your testimony has really helped us in that regard, and 

we really hope to continue to hear more from you in the future as we try 

to get our arms around this problem. 

 Thank you for being here today. We appreciate it. 

 We stand adjourned. 

 [Whereupon, at 1:14 p.m., the subcommittee was adjourned.] 
122

RESPONSE FOR THE RECORD OF MICHELLE MELLO, J.D., PH.D., ASSOCIATE PROFESSOR OF 

HEALTH POLICY AND LAW, DEPARTMENT OF HEALTH POLICY AND MANAGEMENT,

HARVARD UNIVERSITY

Responses of Michelle Mello, JD, PhD to questions from The Honorable Diana 

DeGette: 

The NPDB 2002 Annual Report (page 35) states: 

A few physicians are responsible for a large proportion of 

malpractice payment dollars paid: The one percent of physicians 

with the largest total payments in the NPDB were responsible for 

about 12 percent of all the money paid for physicians in malpractice 

judgments or settlements reported to the NPDB since its opening in 

1990. The five percent of physicians with the largest total payments 

in the NPDB were responsible for just under a third of the total 

dollars paid for physicians over the period. Eleven percent of 

physicians were responsible for half of all malpractice dollars paid, or 

settlements from September 1, 1990 through March 31, 2003. 

These data indicate that malpractice payments tend to be concentrated among a relatively 

small group of physicians. The most likely explanation for this is not that a small number 

of physicians are repeatedly sued, but that a small number of high-cost claims account for 

a large proportion of the expenses. It is highly unlikely that these high-cost claims 

involve the same physicians each year. I am not aware of any data that support such a 

notion. 

Among the data in the NPDB report that suggest that high-cost claims, not repeatedly 

sued physicians, are responsible for the skewed distribution of claims costs are the 

following: 

• The 1% of physicians with the highest total claims payments accounted for 

12% of all payments (page 35). 

• The differences between the mean and median claims payments in Table 10 of 

the NPDB Annual Report are large. When means are much higher than 

medians, it indicates that a distribution contains a small number of high values. 

• About 84% of physicians have two or fewer NPDB reports, 97% have five or 

fewer reports, and 99.5% have 10 or fewer reports over the 1990-2002 period 

(page 34). 
123

I disagree that there are any data available to support the proposition that a small number 

of health care professionals cause a large share of malpractice injuries. To my 

knowledge, no data are available to support or refute such a claim. 

The NPDB data discussed above do not support this claim because, among other reasons, 

they relate to claims payments, not injuries. The correlation between injuries and claims 

payments is weak. The overwhelming proportion of medical injuries never become 

claims, and about half to two thirds of claims do not result in a payment. Therefore, we 

cannot infer anything about who is injured, or who causes injury, on the basis of data 

indicating which doctors have faced claims that resulted in payments. 

Please see my response to question #2, above. 

The following studies do not directly address the question, but establish the weak link 

between injury, claiming, and payment discussed above: 

Localio AR, Lawthers AG, Brennan TA, et al. Relation between malpractice claims and 

adverse events due to negligence. Results of the Harvard Medical Practice Study III. N 

Engl J Med 1991;325(4):245-51. 

• A key finding of this study is that only about 2% of medical injuries attributable 

to negligence become claims. 

Studdert DM, Thomas EJ, Burstin HR, Zbar BI, Orav EJ, Brennan TA. Negligent care 

and malpractice claiming behavior in Utah and Colorado. Medical Care 2000;38(3):250-

60. 

• This study confirmed the 2% finding from the Harvard Medical Practice Study 

on a different sample of medical injuries. 

Studdert DM, Mello MM, Gawande AA, et al. Claims, errors, and compensation 

payments in medical malpractice litigation. New England Journal of Medicine 

2006;354(19):2024-33. 

• Key findings of this study are that about 63% of claims involve medical errors 

and about 56% of all claims result in payment. Among claims that involve 

medical errors, about three quarters result in payment and a quarter do not. 

Among claims that do not involve errors, about one quarter result in payment 

and three quarters do not. 

Most scholars of medical liability, and many in the medical community, agree that 

medical boards have not been aggressive in policing physician quality/competence 

problems. Their investigations and disciplinary actions tend to center on physician 
124

misconduct (such as substance abuse) rather than physician competence. However, it 

would be a mistake to conclude that having two or more paid malpractice claims, or even 

five paid claims, should result in disciplinary action. As the Studdert et al. 2006 article 

referenced above shows, many claims are paid in the absence of evidence of negligence. 

A large number of paid claims against a physician might reasonably trigger scrutiny by a 

disciplinary board, but the question of whether those claims indicate a pattern of 

negligence is not answered by the mere existence of those payments. 

Please see my response to question #4. 

Please see my response to question #4. 

Two mechanisms that could be helpful are: 

1. Ensuring that medical boards (and/or state departments of health) have well 

publicized mechanisms for patients and staff in hospitals and clinics to 

complain about perceived physician competence problems. As noted above, 

malpractice claims are a crude indicator of physician competence. Other 

countries, such as New Zealand, use a parallel complaints process to gather 

reports of competence problems and investigate them. The following articles 

may be of interest: 

Bismark M and Paterson RJ. No-fault compensation in New Zealand: 

harmonizing injury compensation, provider accountability, and patient safety. 

Health Affairs 2006;25(1): 278–283. 

Paterson RJ. The patients’ complaints system in New Zealand, Health Affairs

2002;21(3):71–79. 

2. Conducting formal audits of medical board activity. 

To my knowledge, no studies or data have established that overpricing occurred. One 

useful indicator is insurers’ loss ratios, as reported by the National Association of 

Insurance Commissioners. These ratios compare the money collected in premiums to 

what was paid out (or incurred) in claims costs. These ratios were less than 1 for insurers 

in many markets until recently, meaning that what they charged was not adequate to 

cover their losses. 
125

A good explanation of this issue is available in the paper by Bovbjerg and Bartow at 

http://medliabilitypa.org/research/report0603/. In brief, some insurance companies 

appear to have underestimated their claims liability during the favorable markets of the 

1980s and 1990s. They competed strongly on price. They later found that they had a 

“tail” of liability on for which they had not adequately reserved funds. Malpractice 

claims have a long “tail” because patients may wait 2-3 years to file them and then the 

cases typically take 3 or more years to resolve. During this period, the insurer can only 

make an educated guess about what its liability will ultimately be. Some insurers 

guessed wrong; they did not charge enough to cover what they eventually had to pay. 

Some went out of business as a result, as the Bovbjerg and Bartow paper explains. 

Some insurers’ loss ratios would have been more favorable heading into the 1990s. 

Because the most recent malpractice crisis had multiple causes (please see my response 

to question #11, below), I cannot conclude that later increases in insurance prices could 

have been prevented by earlier increases. 

My views on this subject are available on pages 11-12 of the report at 

http://www.rwjf.org/publications/synthesis/reports_and_briefs/pdf/no8_primer.pdf. In 

brief, I believe that the “insurance cycle” contributed to the malpractice insurance crisis 

but was not the sole contributing factor. 

I reviewed a large literature on this subject in the process of preparing the following 

report: 

http://www.rwjf.org/publications/synthesis/reports_and_briefs/pdf/no10_researchreport.p

df. The relevant studies, their findings, their limitations, and my overall conclusions are 

discussed in detail there. Among my findings were that many of the reports put out by 

political interest groups are unreliable on this subject; however, a small number of welldesigned academic studies provide reliable evidence. The strongest studies on this topic, 

listed on page 12 of that report, find a modest effect of damages caps on premiums. 
126

The relevant studies are summarized on pages 12 and 24-25 of the above-referenced 

report, 

http://www.rwjf.org/publications/synthesis/reports_and_briefs/pdf/no10_researchreport.p

df. 

The Weiss Ratings study is a descriptive analysis that simply compares the median 

premium in two groups of states without attempting to control for ways in which the 

groups of states may differ. This is not a scientifically defensible way to measure the 

effect of damages caps. Observed differences in premiums may be attributable to the 

presence or absence of a damages cap, but without controlling for other variables, we 

cannot know for sure. 

The Weiss Ratings study findings are at odds with the findings of many well-controlled 

academic studies of damages caps (see response to question #13, above). The controlled 

studies should be given greater weight. 

All relevant work has been referenced above. Copies of works authored by me are 

appended. They are also publicly accessible at: 

http://www.rwjf.org/publications/synthesis/reports_and_briefs/pdf/no8_primer.pdf 

http://www.rwjf.org/publications/synthesis/reports_and_briefs/pdf/no10_researchreport.p

df 

http://www.hsph.harvard.edu/faculty/MichelleMello.html (“Claims, Errors, and 

Compensation Payments in Medical Malpractice”) 
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188

○