A March 4 AEI-Brookings Joint Center conference addressed concerns that the unpredictable medical liability system serves as a drag on innovation and treatment, while not fairly compensating victims of malpractice.

Describing the system as a "horrible mess," Alex M. Azar II, general counsel of the Department of Health and Human Services, noted that the median malpractice jury award more than doubled from $475,000 in 1996 to $1,000,000 in 2000. Not surprisingly, malpractice premiums have also increased dramatically in recent years. Azar described the results of this growing medical liability crisis as "frankly alarming," and said that "pregnant women in states like Nevada, Mississippi, West Virginia, Florida are having to drive hours just to find OB-GYNs who will care for them. . . . In many states physicians are retiring or moving their practices because they cannot afford liability insurance."

There is also a link between medical liability costs and the care provided. "Doctors recommend medically unnecessary, sometimes invasive procedures to confirm diagnoses because of litigation fears," and in doing so, increase risks to patients, Azar said.

Marshall B. Kapp of the Wright State University School of Medicine described the inappropriate medical treatment that results from the liability system: "Often there is excessive use of intrusive, uncomfortable, expensive technological interventions with no expectation of meaningful patient benefit. For example, futile resuscitation attempts, use of antibiotics, feeding in hydration tubes and ventilators when there is no perceived benefit to be derived, but fear of potential legal consequences if they are not inflicted on the patient."

Not only do liability costs negatively impact medical treatment, argued Michelle M. Mello of the Harvard School of Public Health, but the system also fails to compensate or deter effectively. She suggested an alternative system that would deter institutions, not individuals. "Hospitals are more accustomed to the tort system than physicians, and hospitals are also more able to change the systems responsible for errors. So, moving liability from the individual level to an enterprise level is an important first step."

In addition, the current tort system is both costly and inefficient. David W. Beier, former chief domestic policy adviser to Vice President Al Gore, discussed the costs of the current system, saying medical liability costs $180 billion or 1.8 percent of GDP, an amount "three times more than it was in the 1950s and hugely more than any other industrial country."

Recommending limits on noneconomic damages as a way to reform the system, Azar explained, "Over the past two years, states with limits of $250,000 or $350,000 on noneconomic damages have seen their premiums increase only 18 percent. But states without reasonable limits have seen average increases of 45 percent."

Azar outlined some other important judicial changes, such as limiting punitive damages to instances where they are justified by the most malicious and deliberate of conduct, eliminating joint and several liability, eliminating the collateral source rule to avoid double-dipping on compensation, implementing a standard statute of limitations, and instituting a provision to ensure that future payments would be made when patients actually need them.

Azar also argued that "providers need to be able to study how mistakes occur and how to prevent [errors]. When they do, the results can be incredible. . . . You'd think that we'd do everything in our power to encourage this kind of critical self-analysis and self-evaluation. But instead our tort system has set up roadblocks to discourage healthcare providers from participating voluntarily in quality improvement efforts. Providers are understandably reluctant to engage in self-evaluation for fear of drawing a roadmap for lawsuits."