Should Democrats Embrace Some Form of Tort Reform?

If you’re in Democratic politics, or a liberal political junkie, you have probably, like me, had to learn to studiously avoid the subject around physicians or med school friends. While the general political landscape tends to be a wasteland when it comes to the healthcare debate, those (few) doctors who oppose Obama’s plans for reforming healthcare oppose it viciously, and intelligently.

A modest suggestion: doctors — as intelligent, educated people, accustomed to nuance and complexity — are natural Democratic constituents. When we risk losing them, we’re doing something wrong. Towards that end, it might be time to consider some form of tort reform, both to insulate doctors from a legal system that has, in many ways, left them behind, and to win them back to the fold. But we should shun the simple, populist appeal of damage caps.

By way of background, damages awarded to a victorious plaintiff in a medical malpractice suit are either “economic” (cost of botched procedure/cost of eventual remedy) or “noneconomic” (punitive damages). Because punitive damages can run extraordinarily high — especially in the high-profile cases that make it into the media, and thus, alone, influence the debate — capping noneconomic damages has become, to conservatives, the one-stop solution to runaway malpractice premiums. But, there’s good evidence that they don’t work, and while caps (might) protect doctors, they hold victims of true malpractice hostage to frivolous claimants. A true solution would penalize the latter while protecting the former.

The solution might be to implement stronger “pleading requirements.” A pleading requirement is an allegation that a plaintiff must make in his initial complaint, or risk having his claim dismissed at the threshold. Stricter pleading requirements have a way of weeding out frivolous claims, by shifting the burdens litigants face in favor of the defendant. Consider the case of securities fraud litigation. Securities cases are expensive: defending one, even successfully, can run a company into the hundreds of millions of dollars, and the costs are front-loaded. Simply by filing, a plaintiff gains, with a minimum of additional effort, a chance to compel the defendant corporation to release, to the plaintiff, any potentially relevant internal memoranda, thus permitting plaintiffs to file first and investigate later, on the defendant’s dime. Further, the mere act of filing a securities fraud case negatively impacts a company’s stock, immediately doubling the defendant’s losses, regardless of whether they were actually at fault.

Congress attempted to solve the problem in 1995, by passing the Private Securities Litigation Reform Act (PSLRA), which increased the pleading requirements for securities fraud cases, forcing plaintiffs to allege with particular clarity all of the elements of the offense of securities fraud, or immediately lose. “File and forget” became harder to do, and the market took note. The PSLRA also “stayed” discovery until the case survived a preliminary motion to dismiss, thus preventing abuse of the litigation process. The result, at least in theory, is that frivolous suits face an uphill battle, and almost all meritorious claims will wend their way through the process with ease. As a way of stopping abusive litigation, the theory behind the PSLRA, at least, is quite elegant.

Frivolous medical malpractice cases present similar dangers to doctors: malpractice insurance increases immediately upon the filing of a complaint, and even if the doctor was a model of competence, proving it is a costly affair. Accordingly, strict (but fair) pleading requirements could help here, too. Because medicine is an expert profession, patients can’t be expected to make out a complete case immediately upon filing. But a requirement that plaintiffs identify with particularity where and how the treating physician deviated from a reasonable standard of care may not be a significant burden. And a similar provision staying discovery could weaken the immediate financial implications of becoming a medical malpractice defendant, thus ensuring that costs are allocated by the jury, and not the litigation process.

Changing pleading standards may not create the proper balance in risk allocation between doctor and patient. Indeed, the jury is still out on the PSLRA’s effectiveness. But in tort reform, the Republicans have hit upon a real problem, even if they continue to miss out on the solution. By at least trying to succeed where they’ve failed, we have nothing to lose, and a constituency to regain.

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7 comments

  1. I’ve been saying for years that *both* kinds of damages should be determined in any given court decision involving damages: the perpetrator should be fined a *punitive* amount (as a deterrent), the victim should receive a *remedy* amount (to right the wrong that was done, including some hardship etc.), and the amount left over should go into a fund for future lawsuits.

    This of course begs the question of who would get access to those funds (or, rather, how it would be determined that any given lawsuit merited using them), but there are certainly many reasonable ways that could be decided.

  2. I prefer the loser pays model, which protects the legitimately wronged while offering significant negative consequences to those who file frivolous suits.

  3. the Loser Pays model is compatible with my suggestion, and is improved by it.

    That said, Loser Pays does have some problems, e.g. if I’m filing a lawsuit against a multimillion-dollar company with a team of lawyers, and — somehow, despite the overwhelming power of my sheer virtuousness — they win, do I still have to pay their legal expenses (which will probably be quite high, on paper)?

    Can you say “tilted playing field”, boys and girls?

    1. Loser pays might be a good model. It’s what most European jurisdictions do. But Woozle’s point is valid — the power divide between parties could make that medicine too strong by half. The legitimately wronged plaintiff could easily wind up outmaneuvered by clever lawyering rather than real virtue, and stuck with a $500,000 bill from Cravath, Swaine & Moore.

  4. The potential effects on costs and medical outcomes of changes to the tort laws have been extensively studied, and so far no one seems to have found a silver bullet.

    While this is a deeply felt issue for doctors, we should keep things in perspective. Malpractice premiums make up less than 5% of total costs to providers (Uwe Reinhardt’s estimate was 2% in 2004). That’s all you could save by giving doctors blanket immunity against lawsuits. And don’t get your hopes up that we can reap great savings by reducing “defensive medicine” either — those tests are costs to us, but revenue to the provider. Do you figure a hospital administration is going to say “We were getting $900 for each MRI, but with the threat of malpractice suits gone, we can shut that machine down.”?

    Me neither.

  5. doctorblue · ·

    Glad to see a plea for medical malpractice tort reform that balances both plaintiff’s and defendant’s views. I became disabled, in essence, because my illness is systemic and involves infections and the GI tract. Each specialist sent me to more specialists and none felt responsible for a diagnosis and treatment. I lost my job, my home and all my savings. I now live on a $2000 SSDI monthly benefit. While I do have a case, I don’t have the $20K-$40K needed for case start up costs. I spent all money trying to find competent medical care. It would be great if tort reform could address the inequity of those who have access to the fair trial our constitution espouses. It’s the divide between the haves and have nots that is widening, in part, due to our fragmented medical care system of specialists. And insurance reform doesn’t address this issue. It just gives more people access to a dysfunctional, broken system. This could easily be remedied with a team approach and legislation that ties liability to all team members so there is an incentive to see patients are diagnosed and treated.

  6. You know, I’ve never thought it was appropriate to label caps on damages as “tort reform” – I didn’t even realize until recently that it was a common meaning for the phrase because I’d just assumed it wouldn’t be. And heightened pleading requirements do make sense, but it seems to me they’re only a step in the right direction. When I support “tort reform”, I’m not supporting caps on damages, and I’m not really supporting heightened pleading requirements. I’m supporting a reduction in the number of causes of action. Possibly it’s that I’ve never really thought of tort reform as related to health care (I was kind of surprised when I saw it pop up here and on other blogs) but as a general liability issue. It seems to me that the legal requirement for a duty of care has become excessive, as exemplified by most states’ elimination of absolute immunity due to contributory negligence and the creation of a duty of care towards trespassers. Seems to me that when you can have a case like Van Horn v. Watson (2008) 45 C.4th 322, 86 C.R.3d 350, 197 P.3d 164 not be dismissed for failure to state a [legally cognizable] claim, you’ve got too much de jure liability where no de facto liability exists.

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