Health Reform Plan May Exempt Doctors From Suits

Responding to physicians’ complaints about the high cost of malpractice suits, President Clinton’s health care advisers have seized on a new idea for medical liability reform that critics say some doctors may dislike even more than the current system.

On its face, the concept known as “enterprise liability” would relieve physicians of any direct financial liability for medical negligence by decreeing that all suits must be directed not at the doctor but at the hospital, the insurer or the health plan that pays for the care.

Sources said that White House officials see enterprise liability as the likely centerpiece of a malpractice reform proposal that will be unveiled soon as part of the President’s health care reform plan. But as yet there is no word about how the plan would be carried out.

Clinton’s advisers favor the approach as a way of answering doctors’ complaints about costly malpractice suits, while at the same time honoring the competing interests of consumers and their lawyers, who argue that injured patients should still have a right to sue for negligence.

The proposal would eliminate the need for doctors to purchase high-priced malpractice insurance, which varies in cost from state to state and by medical specialty. Obstetricians, for example, paid nearly $38,000 in California and $133,900 in Michigan in 1991 for the insurance.

Advocates also said that enterprise liability will give hospitals, insurers and health plans a financial incentive to monitor doctors closely for indications of negligence and will reduce the number of attorneys involved in typical malpractice cases.

Even so, the American Medical Assn. and other physicians’ groups do not favor it. Critics noted that the plan would not limit monetary awards nor would it relieve the doctors of the obligation of testifying in court on behalf of defendants.

“In some people’s view, enterprise liability may even encourage more litigation,” said Kirk B. Johnson, AMA general counsel. “After all, under enterprise liability, I’m not suing a doctor with whom I have a personal relationship. Instead, I’m suing this big faceless enterprise. And that may be easier for many people to do.”

Groups representing other participants in the medical malpractice system--lawyers, insurers and hospital administrators--also are skeptical. “I don’t see how it helps the consumer or alleviates the costs,” said Chip Kahn, executive vice president of the Health Insurance Assn. of America.

Instead of enterprise liability, many professional groups have called on the Administration to reform medical malpractice along the lines of the system that has been in place in California since 1975. By limiting damages for pain and suffering to $250,000, California has slashed malpractice costs.

For the Clinton Administration, medical malpractice is proving to be one of the thorniest political issues that has arisen as a result of the President’s pledge to reform the health care delivery system.

Last year, Clinton received hundreds of thousands of dollars in campaign contributions from doctors and trial lawyers, who have been at odds for decades over patients’ rights to sue their physicians. While lawyers want to preserve the status quo with malpractice liability, doctors have complained that the high costs of settlements and insurance are forcing some to leave the profession.

The President’s task force on health care reform has shown no signs of shrinking from the issue. “We need to get the lawyers out of the doctor-patient relationship,” Ira C. Magaziner, a top Clinton adviser on health care reform, said Monday. “Consumers need to be protected, but there are other ways to do that rather than expensive, multi-year lawsuits.”

The AMA has estimated that America’s doctors and hospitals spent about $9.2 billion for malpractice insurance in 1991. In addition, AMA officials said that the threat of malpractice suits causes doctors to order redundant tests and take other precautions, known as “defensive medicine,” that add between $4 billion and $25 billion to the nation’s annual health care bill.

With medical liability reform, the AMA has argued, the President can trim the overall costs of health care by eliminating the need for high-priced insurance and the practice of defensive medicine.

Yet many respected authorities, including some doctors, have questioned whether medical liability reform would actually bring about savings.

In a recent study, the Congressional Budget Office concluded that, because malpractice premiums amount to less than 1% of the nation’s $900-billion annual health care budget, “restructuring malpractice liability alone would not generate large savings in U.S. health care costs.”

The budget office also challenged the idea that malpractice reform would eliminate defensive medicine. “Much of the care that is commonly dubbed ‘defensive medicine’ would probably still be provided for reasons other than concerns about malpractice,” it said.

Linda Lipson, health care expert for Consumers’ Union, insisted that doctors exaggerate the savings to be achieved with malpractice reform because they hate being sued. “It’s like having a bake sale to pay for health care reform,” she said. “It’s absurd.”

Some studies have found that the threat of suits does encourage certain precautionary procedures, such as Cesarean births. Negligence claims, however, are not increasing. On the contrary, while malpractice insurance premiums rose during the 1980s, the number of malpractice suits actually fell.

There also is little evidence to support the commonly held notion that consumers routinely defraud the system with trumped up claims. A study published late last year in the Annals of Internal Medicine found that juries usually reject unjustified negligence suits.

In fact, Paul Wiler, author of the 1991 book, “Medical Malpractice on Trial,” said that one of the biggest problems with the current system is that seriously injured patients, such as a brain-damaged baby who needs at least $10 million in future care, usually cannot get more than $2 million because most doctors cannot afford higher coverage. At the same time, large sums of money are squandered on lawyers fees.

Wiler and Kenneth Abraham, a law professor at the University of Virginia, originally came up with the idea of enterprise liability as part of a study conducted for the American Law Institute.

Wiler said that they saw it as a way to eliminate the need for everyone involved in a malpractice suit--the hospital, the doctors, the nurses--to hire their own attorneys. He said it also is designed to create a bigger insurance pool from which to compensate the victims of negligence.

Wiler acknowledged that critics think enterprise liability will encourage more people to file malpractice suits but he said that has not happened at hospitals in Massachusetts and New York that have taken legal responsibility for care provided by their doctors.

Health plans, hospitals and insurers will have a strong incentive to weed out any physician prone to negligence because they will be held liable for the cost of malpractice, Wiler said. “That, in my view, is the central benefit of this idea.”

AMA attorney Johnson said doctors would not welcome a system that would encourage insurers, hospitals or health plan administrators to second-guess the care a doctor provides. “Doctors already are watched as much as anyone in our society,” he said.

Johnson said that the cost-savings to doctors likely would be minimal under enterprise liability because the health plan probably would assess them part of the cost of buying malpractice insurance for the group.

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