Medical malpractice and how legal waste increases overall costs

Dr. Kirsch at MD Whistleblower has written about his recent unpleasant experience with malpractice litigation. Despite having full access to the patient’s chart and medical records, the plaintiffs attorney chose to include Dr. Kirsch in the suit … apparently … just because … he had seen the patient.

In Ohio – where this case was filed – a plaintiff in a medical malpractice case is required to obtain an “affidavit of merit” from and “expert” witness essentially stating that the case is legitimate from a medical standpoint. Apparently, the plaintiffs attorney was unable to locate a physician to sign an affidavit. Maybe it was because … I don’t know … the case had no merit?

The plaintiff was granted two 45 day extensions as they searched the Ohio country-side in vain for a medical professional to certify the case. After several months, Dr. Kirsch was dropped from the suit and according to Dr. Kirsch’s malpractice insurance company, the cost of “defending” this suit on behalf of Dr. Kirsch came to $9,120.85.

And like other health care costs, this one does not evaporate into the ether. This cost – and who knows how many thousands of other cases like this each year in the US – add to malpractice insurance premiums and likely eventually find their way into the health system as a whole in the form of higher costs. In short and as usual for litigation in this country, we all end up paying the costs of excessive litigation.

Of course, the US is one of the few countries in the world that does not have the so-called “English Rule” or to put it bluntly, the loser pays (the winner’s legal bills). The rational behind this rule is not to impair an injured party’s access to compensation for legitimate cases but to impede the type of gaming of the system that goes on too frequently with personal injury attorneys. Dr. Kirsch’s case is just one example of suing every physician who ever saw the patient regardless of merit or encouraging prospective clients to file suits by taking them on contingency.  These tactics  are designed to maximize the statistical probability that at least one case will yield a large settlement before trial thus minimizing risk and maximizing reward for the firm.This is especially important since the majority of malpractice cases that go to trial are won by the defendant! The key strategy is to cast a wide net and try to settle early.

But as we see in Dr. Kirsch’s case, these aborted merit-less cases still incur costs in the initial and intermediate litigation period that must be compensated for. A 1992 analysis of a 1980s era experiment in Florida with the English Rule found that that not only were more claims dropped in the initial litigation period with fewer cases being settled but cases that went to trial had a higher chance of success and settlements were generally larger, all of which suggests that the merit quality of the cases improved overall.

Ohio’s 2005 statute that requires an “affidavit of merit by a properly qualified expert with respect to each defendant against whom expert testimony is needed” also allows for extensions to made for “good cause.” What causes would be good? How about not being able to find a qualified expert witness to certify a case as having merit because your case has none? It would seem that this statute is somewhat self defeating in its aim to reduce costs by limiting access to only cases with merit.

Either the plaintiff is able to dredge up some paid expert with questionable qualifications to certify the case or waste even more time and money with extensions trying to find any expert to certify a case that even the expert prostitutes won’t touch! A better system is to utilize a pretrial screening panel that decides the merits of a case and has been shown to improve case quality and reduce costs.

Just as there are plenty of wasteful medical practices that increase overall costs, there are wasteful legal practices that increase overall costs and measures can be put in place for both without limiting access to medical care or to be compensated as a result of injuries from medical malpractice.

Chris Rangel is an internal medicine physician who blogs at RangelMD.com.

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  • Matt

    $9,120 for a case where at most an Answer and a couple of objections to extensions were filed before dismissal? They must be throwing in the salary of the adjuster, his assistant, their building rent, utilities, the executive kitchen, etc. in there.

    “This cost – and who knows how many thousands of other cases like this each year in the US – add to malpractice insurance premiums and likely eventually find their way into the health system as a whole in the form of higher costs.”

    The author has no idea what would happen with that cost. It’s entirely possible that if this suit had never been filed, that savings would have gone to employee bonuses, or to the shareholders. There’s no evidence whatsoever that premiums would have gone down a dollar or that healthcare would have been any cheaper.

    It’s like saying if the government would pay doctors less in Medicare reimbursements, your tax bill would go down.
    Funny how physicians take insurers at their word when they’re liability carriers, but let a health insurer claim a procedure is not covered, and they’re lining up in class actions to sue!!!

    “These tactics are designed to maximize the statistical probability that at least one case will yield a large settlement before trial thus minimizing risk and maximizing reward for the firm.This is especially important since the majority of malpractice cases that go to trial are won by the defendant! The key strategy is to cast a wide net and try to settle early.”

    This statement is ridiculous. These kinds of statements are made by those without an understanding of the economics of a law practice, particularly a medical malpractice one. It’s like a non-physician looking at a physician’s gross revenue and deciding without knowing a single additional fact that it’s way too high.

  • Matt

    While we’re adopting English law, will we be adopting English medicine as well? At least then the malpractice victim doesn’t have to worry about drowning in a sea of medical bills after being rendered uninsurable.

    Which physicians are ready to take a 27% pay cut (on average) to embrace all things British?

    • doc99

      If the SGR isn’t fixed by November, the answer, Matt, will be pretty much ALL docs participating in Medicare. And since insurers tend to peg their payments on what Medicare pays, then that will quickly be extended to ALL docs who participate in hmo’s, ppo’s, etc.

  • http://fertilityfile.com IVF-MD

    Silly smokescreen argument.

    The $9120 exists and is neither created nor destroyed. If the frivolous suit never happened, the money is controlled by the medical entity and is distributed somehow in some combination to benefit the doctor, his family, his staff, his patients and his vendors and the businesses they patronize. This all directly and indirectly leads to more resources being devoted to provide health care services.

    Under the scenario that played out, the money now becomes controlled by the law firm and is distributed somehow in some combination to benefit the lawyer, his family, his staff, his clients and his vendors and the businesses they patronize. This all directly and indirectly leads to more of the world’s resources being put forth to provide legal services.

    When money flows to doctors, it gives them incentive to do a good job making their patients happy.

    When money flows to lawyers, it gives them incentive to do a good job to make their clients happy.

    How the rules are set up in a society determine whether more energy is devoted towards providing medical services or legal services or whatever. Somewhere, there is an optimal balance. Do we have too much medical service and not enough legal service? Or do we have not enough legal service and too much medical service?

    Everybody is entitled to their own opinion of where that optimal setting lies.

    The most moral freedom-loving way is to make it as individualized as possible. Ideally, people can be allowed to choose which world they wish to live in. The easiest way is to do this by county or by city, but there are other ways this could be set up other than geographically.

    Those who love the “protection” of a highly litigious ruleset, could choose to live, work, play under those rules. Those who love the efficiency of a ruleset that prevents lawsuit abuse can enjoy the respective freedoms and risks or working, playing and living that way.

    Also, this can be customized. We can accept this on an optimized basis. Adopting English rules by no means forces us to adopt English cooking, English TV, English medicine or English humor. That’s as silly as saying if you buy a Japanese car, you must now start eating Japanese food.

  • http://www.eriksuhmd.com erik suh

    I’ll take that 27 % cut on reimbursement if that means adapting “English rule or medicine” means getting 100 % of malpractice lawyers out of a job. Wouldn’t that be a lob-sided win for healthcare. What would we do with all the lawyers that can’t find work?? Oh yeah, I hear Donald Trump is looking for an apprentice on TV.

  • Matt

    “The $9120 exists and is neither created nor destroyed. If the frivolous suit never happened, the money is controlled by the medical entity ”

    This is incorrect. The money comes from the insurer. The medical entity never controls this money.

    “When money flows to doctors, it gives them incentive to do a good job making their patients happy.”

    This makes no sense. Physicians aren’t compensated this way, and again, it’s not their money to begin with.

    “. Those who love the efficiency of a ruleset that prevents lawsuit abuse can enjoy the respective freedoms and risks or working, playing and living that way.”

    Problem with this theory is that there is no evidence that the proposed “ruleset” prevents “lawsuit abuse”. One thing we do know that it does is make it more difficult for the poor to get access to our courts. Of course, the other thing we know about the “English Rule”, is that in practice it works nothing like its American tort reform proponents claim it does.

    If physicians truly want to reduce malpractice claims, then they should support English healthcare, which reduces the need for the injured party to seek recompense for their future and past damages. That is certainly more equitable than simply trying to reduce lawsuits by tilting the scales even further in favor of the wealthy and the insurers.

    • http://fertilityfile.com IVF-MD

      Matt, I understand what you mean now. It was my mistake. I was thinking you were talking about the MEDICAL INSURER, as in the third-party payer. But you are talking about the MALPRACTICE INSURER. In that case you’re right that it’s not directly the doctor’s $9120. Now I still assert that it has a diluted effect in that any money that the malpractice insurer saves could be passed on to the doctor and his patients in the form of lower insurance premiums.

      By the way, free market principles have not been destroyed completely in medicine and those fields which still play by those rules end up with happier patients and happier doctors. Based on your other comments on this site, I’m see that we don’t disagree on everything :)

  • Matt

    “What would we do with all the lawyers that can’t find work?? ”

    What makes you think they wouldn’t find work? A lawyer who can handle a malpractice claim and do it well will have plenty of work. It just won’t be for ordinary folks like you and I they’ll be working for. It’ll be insurers and those who can afford hourly fees and front tens of thousands in expert costs.

    So unless you’re eliminating malpractice, are an insurance executive, or are invincible, you’re not really helping yourself.

  • SmartDoc

    Outstanding post; excellent well-reasoned article.

    The simple, extremely effective reform described by Dr. Rangel would correct corruption in many areas, not just medical liability.

  • Matt

    It’s only well-reasoned if you assume a great many things which are incorrect.

    A while back Kevin posted an article about Canada’s experience with this very thing which made it clear that the “english rule” does not work in practice like you guys think it does.

  • http://www.eriksuhmd.com erik suh

    What is the unemployment rate for lawyers anyways?
    I find 4 of them on the TV show Apprentice.

    I don’t even know there is one for physicians.
    We work hard and try to better the health of our patients.
    We are always needed, everywhere we go in this country.

    It’s truly sad that law schools are putting out so many new grads and not eneugh jobs to go around for everyone.

  • Matt

    Of course there’s not one for physicians. They’re largely immune to the free market, and don’t get compensated based on their relative skills. You by default become one of the highest paid members of society. The only impediment to remaining employed at a high rate of pay is that you don’t get addicted to drugs or alochol. Once you have the degree, it’s nearly impossible not to find work regardless of how poor you are at your job.

    If you’re a lawyer who isn’t any good, your clients won’t pay you and you’ll quickly be looking for other employment.

  • http://fertilityfile.com IVF-MD

    My friend quit practicing law after her revelation that it is a job where you can’t make somebody’s life better without somehow making somebody’s life worse. I don’t completely agree. There is one exception. If you are some sort of transactional attorney and you help two or more parties VOLUNTARILY stipulate the terms of their business relationship, then you are acting as a referee, arbitrator or negotiator and that is totally moral. It’s only when you consistently prey on people and force them to give money INVOLUNTARILY that your soul withers. I idealistically look forward to the day when enough people see the light that all human interactions should be consensual and voluntary. This may not happen in my lifetime, but if we engage in meaningful discussions peacefully, we’ll eventually get there.

    • Matt

      “It’s only when you consistently prey on people and force them to give money INVOLUNTARILY that your soul withers. ”

      You’re right – it can be soul sucking. To see what people do to each others. Ironically, they fight harder over money than they do things that matter, like children. The most contentious divorce I ever handled was 1/2 as bitter as the breakup of a physicians’ partnership.

      Although it’s not really the attorneys “preying” on people. The litigants are “preying” on each other. And some are just victims, trying to get back to even. That’s hardly “preying” on the other party. There’s nothing immoral about that.

  • guest

    Wow, Matt. You seem to dislike physicians and their “big six figure salary”. I would wager that physicians would make much more under a free-market system where price fixing does not exist.

    Have you gone through medical school and residency? Its pretty tough.

    • Matt

      On the contrary, I don’t dislike physicians or their salaries. I would prefer they enter the free market. Maybe they’d make more, maybe they wouldn’t. I’m sure some would and some wouldn’t.

      I would think, though, if you’re a good physician, you have to be a little put out that your services have no more value to the third party payor than the worst practitioner you know doing the same thing.

  • Ralph

    Matt, are you a lawyer? Unless you are in healthcare and see how much defensive medicine is practiced (about 85%) you won’t appreciate why I hate lawyers. No matter what I do I always wonder if I will be sued for an outcome that a patient doesnt like.

    • Matt

      You worry too much. The vast majority of malpractice never sees a claim file.

      If you want to combat “defensive medicine” let’s hear the proposal. We’ve tried all the usual proposals and it hasn’t seemed to reduce it.

  • http://www.medicaljustice.com Shane Stadler

    Studies published this year estimated the cost of defensive medicine (defined as tests ordered based on fear of possible lawsuits) between $200 and $400 billion per year. We work with physicians everyday, the fear of a lawsuit is top of mind with 99% of physicians. In the US, suing someone is like playing with house money (if the lawyer is on contingency, what does the plaintiff have to lose?). Our company puts accountability into the equation. It is amazing how that accountability influences behavior – people act much more rationally – and the number of meritless suits drop, dramatically.

  • http://www.oginski-law.com Gerry Oginski

    I want to address what someone said about ‘frivolous’ cases.

    “Hey Sam, did you read about the lawsuit where the neurosurgeon operated on the wrong side of the patient’s brain?”
    “Yeah. I wonder how a brain surgeon could have made such a simple mistake?”

    When was the last time that you actually read about a “FRIVOLOUS” lawsuit in the newspaper or one that was reported on TV? Sure there are some stupid lawsuits that should never have been brought; look at the Judge who sued his dry cleaner for thousands of dollars because the dry cleaner destroyed his pants.

    But really. Think about the last time you heard about a frivolous medical malpractice case in New York. I haven’t heard of one in a long time, and I’ve been in this business for 22 years.

    I know that when a doctor is sued for providing negligent care and being careless, 99 times out of a 100 they feel they did nothing wrong. Yet the injured victim has a totally different opinion. When you have two competing opinions, where each side has their own medical experts to support their position, if a jury ultimately sides with the doctor, does that mean that the patient’s lawsuit was “Frivolous?” (Obviously in the case presented by Dr. Rangel, there was no medical expert willing to risk their reputation on a case that clearly had no merit.)

    If the patient wins, does that mean that the doctor should have never defended the lawsuit, since his defense was “Frivolous?”

    Personally, I think this is semantics; a play on words. Each side can manipulate their viewpoint to show how the other side’s position was “frivolous” at the end of the case. What does that mean for the argument for or against the way medical malpractice lawsuits are handled here in New York and throughout the country?

    It means that you need to look at the fundamentals of why we, as citizens of this State and Country, are permitted to bring lawsuits. The reasoning even goes back to Talmudic (ancient biblical) times. If someone causes harm to another, they must pay. It’s as simple as that. The payback includes actual costs; the cost to replace a destroyed item as well as the intangible cost- the suffering caused when the incident occurred.

    Our common law adapted those basic fundamental rights, and gave citizens the absolute right to seek compensation in a Court of law. That rule of law applies to anyone in any State in the United States. If you are a company and a competitor stole your secrets, you have an absolute right to go to court and try to prove that you were wronged and seek compensation from the wrongdoer.

    If you are in a business that makes T-shirts and you hired a vendor to supply you with special t-shirts and the vendor breached his contract and you lost hundreds of thousands of dollars, you have an absolute right to go into court claiming breach of contract and try to prove that you’re entitled to be compensated for your business losses.

    If those businesses lost their cases, for whatever reason, does that mean that they had “Frivolous” cases? If they won their cases, does that mean the people or companies that they sued had “Frivolous” defenses? You see the semantics and how this word “frivolous” has little meaning depending on who won or who lost?

    The next time you read about “Frivolous” lawsuits here in New York or anywhere in our great United States of America ask yourself who is claiming the case was frivolous? The winner or loser? Then you’ll have a better understanding of their agenda and why they want people to think cases are frivolous.

  • gzuckier

    Well, at the risk of repeating myself; in Canada, you can’t sue for medical costs due to malpractice, because medical costs are entirely covered by the healthcare systemon a nofault basis. Suits for pain and suffering and punitive damages for malpractice are illegal, therefore all you can sue for is actual monetary damages, i.e. lost income or some such. In addition the “English rule” applies, discouraging extortion/nuisance/fishing expeditions; as a result, there are few cases where there enough damages to file suit for, and in those cases actually filed the evidence is pretty clear and the amounts low (in comparison to the US) enough that they are generally settled.

    As an aside, we were taught that the “each sides pays their own lawyers” rule was instituted rather than the English rule in order to discourage British interests from suing to recover their assets after the Revolution, even where justified. A minor deal with the Devil, but such deals never work out well.

  • imdoc

    So, Gerry you state “frivolous” is semantic, as if it doesn’t really exist. You first point out the case of the judge (a legal expert) suing a dry cleaners as “stupid” but then go on to imply that citizens filing torts do not think them to be “frivolous”. One could just as easily say malpractice does not exist and is merely a semantic to describe an undesired outcome or perception of service failure.

  • Tax Payer

    If a doctor cuts off the wrong leg in an amputation surgery, that patient is left with no legs right? This has happened before and is a valid malpractice case. This patient deserves to be compensated. However, there should be a limit to the compensation. Why should the victim be awarded tens of millions of dollars if they were a burger flipper at McDonalds? They should be compensated enough so that they would never have to work again if they live an average lifestyle. The average American with a high school diploma makes about $2.3 million in a lifetime. Award them 3 maybe 4 times that number max.