The U.S. Senate Takes On Medical Malpractice Reform
About This Event

The U.S. Senate has announced that it will be debating new legislation to reform America’s medical malpractice law in early May. Is the Senate likely to pass useful reforms? What types of reform should they consider? What is the appropriate role of the federal government in addressing the issue and what are the potential conflicts between the federal government and the states?

At this AEI event, a distinguished group of panelists will discuss the questions surrounding federal medical malpractice reform. The panel will include Michael S. Greve, the John G. Searle Scholar at AEI and director of the institute’s Federalism Project; George L. Priest, the John M. Olin Professor of Law and Economics at Yale Law School; and Dr. Stuart Weinstein, the current chairman of Doctors for Medical Liability Reform and the Ignacio V. Ponseti Professor of Orthopaedic Surgery at the University of Iowa. Ted Frank, director of AEI’s Liability Project, will moderate.

The AEI Liability Project (www.liabilityproject.org) seeks to promote a better understanding of the scope and consequences of the liability crisis and to help ensure that political or legal reform efforts are aimed at the appropriate targets.

Agenda
2:45 p.m.
Registration
3:00
Introduction:
Ted Frank, AEI
3:10
Panelists:
Michael S. Greve, AEI
George L. Priest, Yale Law School
Stuart L. Weinstein, M.D., Doctors for Liability Reform,University of Iowa
Moderator:
Ted Frank, AEI
5:00
Adjournment
Event Summary

April 2006

The U.S. Senate Takes On Medical Malpractice Reform

 

The U.S. Senate announced that it will be debating new legislation to reform America’s medical malpractice law in early May. Is the Senate likely to pass useful reforms? What types of reform should they consider? What is the appropriate role of the federal government in addressing the issue, and what are the potential conflicts between the federal government and the states? At an April 24 AEI event, a distinguished group of panelists discussed the questions surrounding federal medical malpractice reform.

Stuart Weinstein, M.D.
Doctors for Medical Liability Reform and the University of Iowa

America’s medical malpractice system is plagued by escalating jury awards and increasing costs of litigation, even for unmeritorious cases, resulting in rising premiums for medical malpractice. These rising premiums translate directly into reduced access for patients, especially in high risk specialties and in states with poor liability regimes. The people most adversely affected are rural Americans and women, who have less access to OB/GYN services and mammography than in the past. Half of all neurosurgeons and three-quarters of OB/GYNs are sued each year. Dealing with unmanageable insurance costs and unjustified lawsuits is not why doctors went to medical school--we just want to be able to practice. Furthermore, the deterioration of the doctor/patient relationship caused by the constant threat of liability makes the health care environment less transparent and less amenable to fixing the system errors that are responsible for the great bulk of medically caused injuries.

Two states in particular show why reform at the national level is important. First there is Wisconsin, which has had sensible reforms in place for a long time and has had few problems with access to medical care as a direct result. Recently, however, the Wisconsin Supreme Court has declared some of those reforms unconstitutional, thereby threatening to put Wisconsin on the path of the crisis states. Second there is Texas, which until a few years ago had serious and worsening access problems, as well as a trend of insurance companies leaving their medical malpractice lines. Since 2003, when Texas’s constitutional reforms were upheld by its courts, twenty-two new carriers of medical malpractice have entered the market there, as well as 3,000 physicians. Rates have gone down precipitously, providing evidence of the efficacy of reforms.

Michael S. Greve
AEI
 
Although I am quite sympathetic to the types of reforms suggested for the medical malpractice system and have no doubt of the need for those reforms at the state level, I count myself among the skeptics when it comes to the various reforms likely to emerge from Washington, D.C. For medical malpractice, the decentralization of America’s federalism promotes healthy competition. The evidence Dr. Weinstein cites regarding physician exit, which is in itself a distressing symptom, is proof that this competition is functioning actively. There is no better way to incentivize states like Pennsylvania and Illinois to reform their medical malpractice systems than to have their doctors flee the state for fairer jurisdictions. This problem of access will force their citizens to take notice of the problems and address them.

When it comes to national solutions, there are several issues. First, you have to be careful not to commandeer state courts by telling them what procedures to follow, or else the reforms will almost certainly be unconstitutional. Second, you must ask yourself, what is the cost of the sixtieth vote in the Senate going to be? It seems to me overwhelmingly likely that this cost will be so high as to lead to a solution that is worse than the status quo. Finally, creating a viable preemption regime in a national medical malpractice reform would be extremely difficult. While Dr. Weinstein would like to save states like Wisconsin from their own courts, the truth is that precisely those same courts will be the ones deciding whether federal law preempts state law. Also, historically only preemption regimes with strong and credible federal agencies have stood up over time, and H.R. 5, the House’s HEALTH Act of 2005, at least, has nothing of the sort.

George L. Priest
Yale Law School

The debate over our medical malpractice system evokes several larger theoretical questions about liability: how do we know what the appropriate level of liability is, and what do we want our system to accomplish? From an economic standpoint, the system should force actors to internalize all the costs of their actions, thereby deterring socially detrimental conduct. In the context of medical malpractice, it is now clear that there is too much liability, to the point where unquestionably socially beneficial activities (such as neurosurgery and obstetrics) are no longer economically feasible. The exit of insurers, including St. Paul’s (the former leader in medical malpractice coverage), is further proof of this. Concerning Michael Greve’s concerns about federal legislation, I believe he ignores the truly national scope of this problem. Tort reform on the national scale is not unprecedented, either--we have had it in the context of nuclear-related cases, black lung, and the 9/11 victims’ fund. There are also genuinely interstate issues created by the medical malpractice problem, such as Illinois patients swamping St. Louis hospitals, as Dr. Weinstein cited, which create the sort of free-rider issues that suggest a need for federal intervention. There is a strong case for federal action because it could deliver such a large welfare gain for society. The $750,000 cap on noneconomic damages being discussed is really a very modest reform, but there is some empirical evidence that suggests that even such small efforts could have significant positive effects.

AEI research assistant Philip Wallach prepared this summary.

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AEI Participants

 

Ted
Frank
  • Ted Frank is a former resident fellow at AEI. He specialized in product liability, class actions, and civil procedure while at AEI. Before joining AEI, Mr. Frank was a litigator from 1995 to 2005 and clerked for the Honorable Frank H. Easterbrook on the Seventh Circuit Court of Appeals. Mr. Frank has written for law reviews, the Wall Street Journal, the Washington Post, and The American Spectator and has testified before Congress multiple times on legal issues. He writes for the award-winning legal blogs PointOfLaw.com and Overlawyered, and the Wall Street Journal has called him a "leading tort-reform advocate."  Mr. Frank was recently elected to membership in the American Law Institute.

 

Michael S.
Greve
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