Medical Malpractice Law and the Changing Healthcare Landscape

Proponents of tort reform are considering asking Congress to revive the Republican-created Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act, which died in committee in 2011. (GovTrack)  Supporters say that the Affordable Care Act (ACA) did not go far enough to reform the tort system.  (Politico)  The revived HEALTH Act, among other things, would institute a $250,000 federal cap on damages gotten from medical malpractice cases.  A federal cap would please insurance companies and many doctors because it would decrease their liability to pay when patients successfully bring a civil action.  Patient advocacy groups and many lawyers would be unhappy because such a cap would prevent patients from being able to collect high sums of money for emotional claims and would hurt the bottom lines for many medical malpractice lawyers.    Some opponents to caps on damages even suggest that large jury payouts may help make patients safer by holding doctors and healthcare facilities responsible for their care.  (Forbes)

Aside from a $50 million total allowance to experiment with alternatives to the medical liability system on the state level, the ACA does not make any change or reform to the existing tort system. (Politico)  In spite of losing the battle over tort reform in ACA negotiations, proponents of tort reform have once again called for a $250,000 federal cap on noneconomic damages and shorter statutes of limitation.  (AMA)  If supporters of caps can convince the Republican Party to revisit the HEALTH Act, tort reform could become a major political issue in the near future.  Regardless of whether a federal cap is instituted or not, the implementation of the ACA will change the way the healthcare system works as a whole, and therefore will affect the role of litigators within the system.

So what is the future of tort reform in the medical malpractice system?  The short answer is that nobody knows—yet.  The industry is already evolving, as states enact provider liability shields, damages caps, and no-fault funds to pay victims of medical malpractice.  (Harvard)  But predictions about whether claims will increase or decrease under the ACA vary widely.  There are two irreconcilable schools of thought: those who think that the number of claims will increase as the number of people using healthcare services increases, and those who believe that fewer patients will need to bring claims because their insurance will cover their expenses.

If The Number of Claims Decreases Under the ACA: 

Medical malpractice lawyers would face challenges if the number of claims decreases.  Litigators are already forced to use profitability as a major factor when considering whether or not to take on a case.  Often, if the amount of profit predicted at the verdict is less than the amount it would take to try the case, the case is deemed not viable for trial.  The amount of realized profit from a case with a huge award may not be very much if the lawyer had to spend a lot of money to try the case.  The practice of taking the highest-paying cases in favor of lower paying ones is troubling because it leaves clients who have a potentially viable claim without options.  If the number of claims decreases, medical malpractice lawyers will have to choose their cases more carefully than ever, and choose from a potentially less profitable pool.   (CNN)

Compounding this problem is the practice of placing state caps on non-economic damages, which has grown in popularity over the last decade, is hurting the litigators who must pick and choose their cases and the clients with less profitable cases.  Along the same vein as state caps, many support the implementation of a federal damages cap.  There are many potential benefits to a federal damages cap, the most obvious being that doctors would not have to worry about going bankrupt after a medical malpractice case, and could practice medicine without that fear looming over them.  But a federal damages cap could also effectively shut down the medical malpractice tort system if it prevented attorneys from collecting money necessary to pay for the case out of the case’s award.  Unless an alternative system was put in place, this could prevent patients with small claims from securing representation at all.

If the Number of Claims Increases Under the ACA: 

Courts have faced the overcrowding of claims issue for decades, and adding 20-40 million potential new plaintiffs may compound the problem.  As one litigator points out, “The more people you have accessing medical care, the greater the potential incidence of medical mistakes in which injuries or death occur.”  (PR Newswire)

While the fear of further court backlog is valid, there are possible positive aspects of an increase in claims.  For medical malpractice litigators, more complaints mean more choice in which cases to take on.  Currently, many lawyers choose their cases based on how much money they are predicted to bring in.  Having more clients coming to litigators can be a great thing.  Lawyers who currently turn down small-profit cases could take them on if they had other larger cases whose payouts would act as a sort of ‘insurance’ policy for the smaller cases.  Cases with large profit margins could potentially pay for otherwise not-viable cases.  This gives the lawyers trying those cases more freedom to choose the cases that appeal to them both intellectually and financially, rather than relying on only one of those criteria.

Conclusion:

Of course there is the possibility that, as the ACA is implemented, the number of medical malpractice claims stays relatively unchanged.  However, the tumultuous nature of healthcare law makes it unlikely that nearly any aspect of medical care will stay the same.  As one journalist phrased it, when discussing malpractice insurers, “[a] new healthcare world is emerging, and malpractice [lawyers] are going to have to figure out a way to profitably live in it.”  (Property Casualty)

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