mistakes and lost opportunities in medical malpractice litigation midwest actuarial forum september...
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Mistakes and Lost Opportunitiesin Medical Malpractice LitigationMidwest Actuarial ForumSeptember 24, 2003
Richard C. BoothmanUniversity of Michigan
Office of the General Counsel University of Michigan Health System
Disclaimers
Observations are unscientific: derived from 21 years as a trial attorney
Expedient ≠ best Litigation serves important societal interests Trials overwhelmingly lead to the right result Litigation must be improved to be relevant Risk can be better managed internally Thoughtful claims management can reduce
present costs and future loss
Risk
Michigan’s tort reform capped non-economic damages only; presently does not apply in death cases.
Ohio has untested, modest tort reform and is a punitive damages state.
Michigan physician discipline actions following med mal settlements/verdicts increasing.
Planned National Practitioner Data Bank reporting requirements will increase costs and complexity in claims management.
Most medical institutions are conservative and risk-averse.
Risk of single catastrophic loss is low.
Risk of Major Financial Loss Through Less-Than-Optimal Settlements, Unnecessary Expenses and Unrealized
Opportunities is High.
Opportunity cost is tougher to appreciate, tougher to measure, but cost is insidious, significant and real.
The expense can be reduced. Immediately through improved claims
management. In the near future through improved risk
management. For the future through connections to
institutional quality improvement, patient safety, staff education, integrating claims experience in business planning and tort reform.
Principles What should be a thoughtful decision is often
overlooked altogether, left to the idiosyncrasies of claims managers or lawyers outside the institution or company.
Few institutions or insurance companies give thought to the options.
Even fewer institutions or insurance companies integrate those options with their business goals, long range strategies, identities.
Honoring and serving institutional principles in claims management. Economic realities – forced risk aversion? Recognition that options have consequences on
staff and other constituencies, plaintiff’s bar, courts, public perceptions as well as transactional costs and risk.
Choices impact credibility in the litigation arena which in turn, impact future litigation outcomes.
We will defend medically We will defend medically appropriate care aggressively.appropriate care aggressively.
We will seek to compensate We will seek to compensate quickly and fairly when quickly and fairly when
inappropriate medical care inappropriate medical care causes injury.causes injury.
University of Michigan Litigation Principles
Principled Approach
Signals to the plaintiffs’ bar that there is a penalty to bringing medically dishonest claims.
Signals to the plaintiffs’ bar that there is a premium to client and lawyer for legitimate claims.
Signals to the courts that UM defends only meritorious claims.
Principled approach in practice Tried 7 cases between August, 2001 and September, 2002.
Total exposure (assuming all seven were lost): est. $7.5 – 8.5 million
Won 6 outright. Lost 1, but verdict ($150,000) far below settlement demand ($550,000) and was recently settled.
Cost of settling all seven: est. $2.5 million Cost to try all seven: est. $320,000
$2 million savings
Immediate response from shift to principled approach Increase in early resolutions Altered the plaintiff’s attorneys’ approach Altered mediators’ approaches We believe (too early to know for sure) that fewer
questionable cases are being filed Sharp, palpable improvement in staff attitude
about claims, with greater personal investment and improvement in morale
Altered Courts’ attitude
Shift to principled approach required: Agreement on benchmark Resolve to hew sensibly to the benchmark Change in selection of trial counsel Change in our contractual relationships Change in culture toward claims Experience in litigation to assess the risks
Pro-Activity
Evaluating potential claims for early resolution without litigation.
Selecting cases for aggressive defense.
Offers Opportunity to Preempt Catastrophic Loss.
• Requires experience
• Requires confidence
• Requires resolve to confront the problem
• Requires the will to engage the opposition
Health systems largely ignore the opportunity.
Health systems manage claims on the cheap.
Health systems use the wrong people.
Pro-activity
Pro-activity at UM Health System Marry trial experience with Risk Management and
UM expertise to evaluate claims from both legal and medical perspectives during pre suit period.
Approach confidently and creatively with novel ways of engaging plaintiffs, resolving what needs to be resolved before litigation, increasing chances for success at trial with early trial preparation and dissuading plaintiffs in selected cases.
Risks and benefits of pro-activity
Saves defense/transactional costs. Saves anxiety, distraction, productivity, time. Avoids licensing complaints. Controls risk. Increases staff confidence. Chance that defenses left unasserted. Chance that litigation would produce better
result.
Benefits
Risks
If discussed at all in the health care industry, “claims
management” is mostly discussed in the context of
administrative overhead, not opportunity – not opportunity to save, not opportunity to learn, not in terms of prophylaxis and
most definitely, not patient safety.
Prophylaxis
Possible reasons: Psychological and cultural avoidance; Accounting partitions; Resignation that “claims, like the poor, will
always be with us;” cost of doing business. Claims expense is often incurred long after the
patient injury occurred; Sometimes, care adjustments have been made
independent of the claim;
Consequence: a vicious cycle
Missed opportunities to avoid future patient injuries or teach medical self defense.
Leads to missed opportunities to avoid curse of history repeating itself.
Leads to continued serious med mal expense draining valuable resources from patient care and personnel retention.
Reinforcement of resignation and avoidance.
Attacking the problem Identify the barriers:
Courts/laws need to allow discussions – potential target of tort reform.
Break down the culture of avoidance and resignation.
Develop connections between claims experience and initiatives for improvement of care.
Cost – benefit business analyses need to include claims cost.
Prophylaxis - recent progress within UMHealth System Promoting education and study of losses on the
clinical level. Using claims experience for Grand Rounds. Risk Management rounds – reviews claims experience
for trends and vulnerability. Created a claims management structure that connects
to peer review and patient safety and quality improvement.
Beginning to integrate claims experience in business strategies.
Areas of opportunity – UM Health System goals
Improved staff education in self defense. Focused risk management for every division and
department. Maintain systems integral to safety and defensibility. Continue to streamline process for improving clinical
services in response to identified need. Consciously attack culture of avoidance, resignation and
accounting partitions.
No Fault System Defined
In the abstract, concept calls for elimination of administrative expense and legal costs in favor of a predictable, non-adversarial approach to compensation of people injured by the delivery of medical care.
Is not designed to reduce insurance costs. Is designed to spread reasonable
compensation across to more “victims.”
Problems with No-Fault
Disincentive to improvements in care. Expensive. Cannot work like worker comp because
threshold determination will still require litigation of some form.
Demoralizing effect on healthcare staff. Social safety net at the expense of the
healthcare industry.