[House Hearing, 109 Congress]
[From the U.S. Government Printing Office]



                                  BEFORE THE

                             SUBCOMMITTEE ON HEALTH

                                    OF THE 

                             COMMITTEE ON ENERGY AND 
                             HOUSE OF REPRESENTATIVES

                            ONE HUNDRED NINTH CONGRESS

                                   SECOND SESSION

                                   JULY 13, 2006

                                 Serial No. 109-117

           Printed for the use of the Committee on Energy and Commerce

Available via the World Wide Web:  http://www.access.gpo.gov/congress/house

30-411                      WASHINGTON : 2006
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                         JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas                      JOHN D. DINGELL, Michigan                 
MICHAEL BILIRAKIS, Florida                  Ranking Member
  Vice Chairman                           HENRY A. WAXMAN, California
FRED UPTON, Michigan                      EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida                    RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                     EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                      FRANK PALLONE, JR., New Jersey
ED WHITFIELD, Kentucky                    SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia                  BART GORDON, Tennessee
BARBARA CUBIN, Wyoming                    BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois                    ANNA G. ESHOO, California
HEATHER WILSON, New Mexico                BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona                  ELIOT L. ENGEL, New York
  Vice Chairman                           GENE GREEN, Texas
VITO FOSSELLA, New York                   TED STRICKLAND, Ohio
ROY BLUNT, Missouri                       DIANA DEGETTE, Colorado
STEVE BUYER, Indiana                      LOIS CAPPS, California
GEORGE RADANOVICH, California             MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire            TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania             JIM DAVIS, Florida
MARY BONO, California                     JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                       HILDA L. SOLIS, California
LEE TERRY, Nebraska                       CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey                 JAY INSLEE, Washington
MIKE ROGERS, Michigan                     TAMMY BALDWIN, Wisconsin
C.L. "BUTCH" OTTER, Idaho                 MIKE ROSS, Arkansas                       
SUE MYRICK, North Carolina
TIM MURPHY, Pennsylvania

                    BUD ALBRIGHT, Staff Director
                   DAVID CAVICKE, General Counsel
     REID P. F. STUNTZ, Minority Staff Director and Chief Counsel

                        SUBCOMMITTEE ON HEALTH
                   NATHAN DEAL, Georgia, Chairman
RALPH M. HALL, Texas                      SHERROD BROWN, Ohio
MICHAEL BILIRAKIS, Florida                  Ranking Member
FRED UPTON, Michigan                      HENRY A. WAXMAN, California
PAUL E. GILLMOR, Ohio                     EDOLPHUS TOWNS, New York
CHARLIE NORWOOD, Georgia                  FRANK PALLONE, JR., New Jersey
BARBARA CUBIN, Wyoming                    BART GORDON, Tennessee
JOHN SHIMKUS, Illinois                    BOBBY L. RUSH, Illinois
JOHN B. SHADEGG, Arizona                  ANNA G. ESHOO, California
CHARLES W. "CHIP"                         GENE GREEN, Texas
PICKERING,  Mississippi                   TED STRICKLAND, Ohio
STEVE BUYER, Indiana                      DIANA DEGETTE, Colorado
JOSEPH R. PITTS, Pennsylvania             LOIS CAPPS, California
MARY BONO, California                     TOM ALLEN, Maine
MIKE FERGUSON, New Jersey                 JIM DAVIS, Florida
MIKE ROGERS, Michigan                     TAMMY BALDWIN, Wisconsin
SUE MYRICK, North Carolina                JOHN D. DINGELL, Michigan
MICHAEL C. BURGESS, Texas                   (EX OFFICIO)                            


Testimony of:
        Mello, J.D., Ph.D., Michelle, Associate Professor of 
                Health Policy and Law, Department of Health Policy 
                and Management, Harvard University	                22
        Wootton, James M., Partner, Mayer, Brown, Rowe & 
                Maw LLP	                                                32
        Barringer, Paul, General Counsel, Common Good	                44
        VanAmringe, Margaret, Vice President, Public Policy 
                and Government Relations, Joint Commission on 
                Accreditation of Healthcare Organizations	        52
        O'Connell, J.D., Jeffery, Samuel H. McCoy II Professor 
                of Law, University of Virginia	                        60
        Doroshow, Joanne, Executive Director, Center for 
                Justice & Democracy	                                68
        Niro, Cheryl, Partner, Quinlan & Carroll, Ltd, on behalf 
                of American Bar Association	                        84
Additional material submitted for the record:
        Mello, J.D., Ph.D., Michelle, Associate Professor of 
                Health Policy and Law, Department of Health Policy 
                and Management, Harvard University, response for the 
                record	                                              122

                       INNOVATIVE SOLUTIONS TO 
                           MEDICAL LIABILITY

                       THURSDAY, JULY 13, 2006

                       HOUSE OF REPRESENTATIVES,
                         SUBCOMMITTEE ON HEALTH,
                                                          Washington, DC.

        The subcommittee met, pursuant to notice, at 10:09 a.m., in 
Room 2123 of the Rayburn House Office Building, Hon. Nathan 
Deal (Chairman) presiding.
	Members present:  Representatives Deal, Norwood, Shimkus, 
Shadegg, Pitts, Ferguson, Burgess, Barton (ex officio), Pallone, 
Gordon, Eshoo, Green, DeGette, and Capps.
	Staff Present:  Randy Pate, Counsel; Ryan Long, Counsel; 
Brandon Clark, Policy Coordinator; Nandan Kenkeremath, Senior 
Counsel; Chad Grant, Legislative Clerk; John Ford, Minority 
Counsel; and Jessica McNiece, Minority Research Assistant.
	MR. DEAL.  The committee will come to order, and the Chair 
will recognize himself for an opening statement.
	I am pleased that today, we have a very distinguished expert 
panel that is going to testify on the issue of the performance of our 
current medical liability system.  At today's hearing, we are going 
to hear testimony about the performance of the current system in 
compensating injured patients and deterring negligent conduct and 
ensuring access to quality medical care.  Additionally, we intend to 
discuss non-traditional and innovative medical liability reform 
proposals from some leading experts in the field.
	It is becoming increasingly difficult to ignore the fact that our 
current legal medical liability system is broken.  However, needed 
reform is continually being opposed by those who stand to profit 
handsomely from the unsustainable status quo.  Unfortunately, 
patients are the ones who stand to be hurt the most by this broken 
	There is no denying the fact that there is a medical liability 
crisis in this country, and I don't need to repeat the staggering 
statistics about the astronomical rates of increase and the cost of 
medical liability insurance over the past few years or talk about the 
tens of billions of dollars wasted each year to frivolous lawsuits 
and doctors forced to practice defensive medicine in order for us to 
recognize that we have a legitimate crisis on our hands that must 
be addressed as soon as possible.
	Coming from a largely rural district in North Georgia, I view 
this problem primarily as one of access to healthcare.  When the 
only OB/GYN within a 200-mile radius of your home refuses to 
see you because you are a high-risk patient, there is a problem with 
the current medical liability system.  When you have to be flown to 
a neighboring State just to receive a common medical procedure 
that was once available in your own home town, there is a problem 
with the current medical liability system.  When people are dying 
because their local trauma center was forced to close its doors, 
there is a problem with the current medical liability system.
	Why would any medical student be interested in starting his or 
her practice in rural Mississippi, where I understand the average 
physician's salary is only $72,000, if he can expect to pay a 
$70,000 premium for malpractice?  That doesn't sound like a very 
smart career move, and clearly, I think something has to be done.
	I have spent over 23 years in my career as a trial attorney.  I 
have also served as a judge and as chairman of the Judiciary 
Committee at the Georgia State Senate where I was active in 
developing legislation to help curb the growing problems in our 
State's tort system.  From this experience, I recognize this problem 
does not have a single source and there is not a magic bullet or a 
Band-Aid solution that is going to make it go away.  That is why I 
support an innovative and comprehensive solution to this problem.  
I am looking forward to having a cooperative and productive 
conversation on this topic today and to working with my 
colleagues on both sides of the aisle to help come up with an 
effective legislative solution to this crisis.
	In this Congress, like several Congresses before, the House has 
passed, with my support, H.R. 5, the Health Act, a bill that would 
provide comprehensive liability protection for providers.  
However, the narrow Republican Majority in the Senate allowed 
the Democrats, most of whom are opposed to meaningful medical 
liability reform, to obstruct the debate through parliamentary 
tactics, and unfortunately, this Congress is shaping up to be a 
repeat of the last.
	That is why I hope I can work with my colleagues on both 
sides of the aisle to develop an effective medical liability reform 
package that can overcome the current legislative stalemate 
between the House and the Senate and produce meaningful 
reductions in the number of wasteful and frivolous lawsuits while 
at the same time advancing the cause of patient care.  Everything is 
on the table and we are open to looking at a variety of different 
proposals, such as liability protection for doctors who cover 
indigent patients, provisions that prevent a doctor's own apology to 
a patient for being used against him in a court of law, and 
provisions which were incorporated in my home State during this 
past legislative session.
	We will continue to pursue a variety of avenues to enact 
meaningful medical liability reform.  We believe that enacting 
common sense guidelines for healthcare lawsuits will ensure that 
injured patients receive greater compensation while at the same 
time deterring frivolous lawsuits that extort money from healthcare 
professionals and drive doctors from the practice of medicine.
	We will continue to fight for meaningful medical liability 
reform until the job is done.  Our healthcare system needs these 
reforms.  If we are serious about expanding patient access to high-
quality healthcare, then we must deliver on this issue.
	Again, I would like to thank all of our witnesses for 
participating today.  I look forward to hearing your testimony.
	[The prepared statement of Hon. Nathan Deal follows:]


 The Committee will come to order, and the Chair recognizes 
himself for an opening statement.
 I am pleased to say that we have an expert panel of witnesses 
appearing before us this morning that will help us examine 
innovative proposals for improving the performance of our 
medical liability system.  
 At today's hearing, we will hear testimony about the 
performance of our current medical liability system in 
compensating injured patients, deterring negligent conduct, 
and ensuring access to quality medical care.  Additionally, we 
intend to discuss non-traditional and innovative medical 
liability reform proposals from leading experts in the field.
 Without question, it is becoming increasingly difficult to 
ignore the fact that our current medical liability system is 
broken.  However, needed reform is continually being opposed 
by those who stand to profit handsomely from this 
unsustainable status quo.
 Unfortunately, patients are the ones who stand to be hurt the 
most by this broken system.
 There is no denying the fact there is a medical liability crisis in 
this country, and I do not need to repeat the staggering 
statistics about the astronomical rates of increase in the cost of 
medical liability insurance over the past few years or talk 
about the tens of billions of dollars wasted each year due to 
frivolous lawsuits and doctors forced to practice defensive 
medicine in order for us all to recognize that we have a 
legitimate crisis on our hands that must be addressed as soon 
as possible.
 Coming from a largely rural district in North Georgia, I view 
this problem primarily as one of access to heath care.   
 When the only OB/GYN within a two-hundred-mile radius of 
your home refuses to see you because you are a high-risk 
patient, there is a problem with the current medical liability 
 When you have to be flown to a neighboring state just to 
receive a common medical procedure that was once available 
in your own hometown, there is a problem with the current 
medical liability system.  
 And when people are dying because their local trauma center 
was forced to close its doors, there is a problem with the 
current medical liability system.
 Why would any medical student be interested in starting his or 
her practice in rural Mississippi where the average annual 
physician salary is only $72,000, if he or she expects to pay as 
much as $70,000 per year in malpractice premiums?  That 
doesn't seem like a smart career move to me.
 Clearly, something has to be done.
 I have spent over 23 years of my career as a trial attorney.  I 
have also served as a judge and was the Chairman of the 
Judiciary Committee in the Georgia State Senate where I was 
active in developing legislation to help curb the growing 
problems in our State's tort system.  
 From this experience, I recognize this problem does not have a 
single source and there is not a magic bullet or a Band-Aid 
solution that will make it go away.
 That is why I support an innovative and comprehensive 
solution to the medical liability reform crisis in this country.  
 I am looking forward to having a cooperative and productive 
conversation on this topic today and to working with my 
colleagues on both sides of the aisle to come up with effective 
legislative solutions to this crisis in our healthcare delivery 
 This Congress, like several Congresses before, the House has 
passed, with my strong support, H.R. 5, HEALTH Act, a bill 
that would provide comprehensive liability protection for 
 However, the narrow Republican majority in the Senate 
allowed the Democrats, most of whom are opposed to 
meaningful medical liability reform, to obstruct the debate 
through parliamentary tactics.
 And unfortunately, this Congress is shaping up as a repeat of 
the last.
 That is why I hope to work with my colleagues on both sides 
of the aisle to develop an effective medical liability reform 
package that can overcome the current legislative stalemate 
between the House and Senate and produce meaningful 
reductions in the number of wasteful and frivolous lawsuits 
while at the same time advancing the cause of patient safety.
 Everything is on the table and we are open to looking at a 
variety of different proposals, such as liability protections for 
doctors who cover indigent patients and provisions that 
prevent a doctor's own apology to a patient from being used 
against him or her in court, which were provisions passed into 
law in my home state of Georgia this past legislative session.
 We will continue to pursue a variety of avenues to enact 
meaningful medical liability reform.  We believe that enacting 
common sense guidelines for health care lawsuits will ensure 
that injured patients receive greater compensation while at the 
same time deterring frivolous lawsuits that extort money from 
health care professionals and drive doctors from the practice of 
 We will continue to fight for meaningful medical liability 
reform until the job is done.  Our health care system needs 
these reforms.  If we are serious about expanding patient 
access to high-quality health care, we must deliver.
 Again, I would like to thank all of our witnesses for 
participating today, and we look forward to hearing your 
 At this time, I would also like to ask for Unanimous Consent 
that all Members be allowed to submit statements and 
questions for the record.
 I now recognize the Ranking Member of the Subcommittee, 
Mr. Brown from Ohio, for five minutes for his opening 

        MR. DEAL.  At this time I would ask unanimous consent that 
all members may be allowed to submit statements and questions 
for the record.  Without objection, so ordered.
	I am now pleased to recognize, sitting in for my normal 
ranking member, Ms. DeGette from Colorado, for 5 minutes for 
her opening statement.
	MS. DEGETTE.  Thank you very much, Mr. Chairman.
	And I, too, am glad that you are holding this hearing called 
"Innovative Solutions to Medical Liability," and I think we should 
try to work on this issue in a bipartisan way to solve the very real 
problem of high insurance rates for doctors around the country 
leading to gaps in services everywhere.
	I am disturbed, though, that while you say that you want to 
work on this issue in a bipartisan way, you put the blame squarely 
on the Senate Democrats for stopping legislation.  In truth, I have 
been working on this issue for over 10 years, and I, too, am a 
reformed trial lawyer.  And I think that we could solve this if we 
could sit down in a bipartisan way.  And we passed the legislation 
through this committee last time, however,  I was told by the then-
bill sponsor, my good friend, Jim Greenwood, that there would be 
no amendments to the bill, no compromises to the bill, no topical 
changes to the bill, and that the interests who had written the bill 
would allow no amendments.  That, to me, does not signal a lead 
towards a bipartisan solution.
	And so, Mr. Chairman, I am glad that you are now our 
Chairman, and I will look forward to working with you in a 
meaningful way to truly work on a compromised solution.
	I think there are really several issues that we need to look at 
when we examine the alternatives to solve the malpractice 
insurance crisis.
	The first issue is do these solutions really help solve the 
perceived or real medical malpractice insurance rate prices.  And 
secondly, do they disproportionately put the burden on the victims 
of medical malpractice.  For example, under the health court plan, 
which is one of the alternatives we will discuss today, injured 
patients would be paid according to a pre-determined 
compensation schedule.  That schedule would be determined by a 
commission appointed by the President and Congress.
	Now such a schedule may work for some cases, but it could 
also essentially cap the damages for other patients, regardless of 
individual circumstances.  And there is one indication that I have 
seen in the literature that such a proposal would actually reduce 
insurance rates because it does nothing about the insurance 
	A second idea is to limit victims' rights to a jury trial.  And I 
have concerns about this, because in our entire civil system, our 
common law system in the States, juries have always decided with 
medical malpractice rates and now there are anecdotal stories 
about juries.  For the most part, the studies have showed that the 
juries have done an excellent job in reaching disputes.  And the 
question would be, are there other, less draconian results than 
allowing cases to be decided by a jury of one's peers.
	Now, of course, Mr. Chairman, our current system is not 
perfect, and some of the witnesses here today will talk about a 
study that Dr. Marilyn Hart did.  It concluded that the system is not 
filled with frivolous lawsuits, and that the cost of the system 
mainly comes from disputing and compensating claims involving 
medical mistakes.  So it is not the duplicative plaintiffs or the 
greedy lawyers who are cashing in on a slew of bogus suits, 
although we do need to work to stop bogus lawsuits.  But what we 
need to try to figure out is how we can minimize medical 
malpractice and how we can try to make the system work in the 
best way for everybody.  We need to make sure that victims are 
compensated when they are injured by medical mistakes.  We need 
to have a system where the very small number of doctors who are 
causing the very great number of errors are punished and the 
majority of doctors who are performing well are left alone.  We 
need to increase our knowledge of medical errors and make sure 
that information is shared.  And one last point, we need to look at 
some other creative ways.  An insurance company in my State has 
a three "R" program: recognize, respond, and resolve.  And this is 
a program that encourages doctors to communicate with patients 
when there is an unintended injury and apologize.  And they have 
found that, and I would love to hear the witnesses talk about this; 
this minimizes a lot of the lawsuits.
	Finally, Mr. Chairman, this hearing is called "Innovative 
Solutions to Medical Liability."  For many years, I have been 
saying to deaf ears that one of the things we need to look at if we 
are going to eliminate the high cost of malpractice insurance for 
doctors is insurance pricing practices and risk costs around the 
country.  If we can do that, Mr. Chairman, I think we can put that 
as part of our whole package.  We can't leave any part of the 
system out in our deep analysis and our crafting of legislation.
	Thank you very much.
	MR. DEAL.  I thank the gentlelady.
	Mr. Shimkus is recognized for an opening statement.
	MR. SHIMKUS.  Thank you, Mr. Chairman.
	I want to welcome the panel here.
	I am from Madison County, Illinois.  It is pretty famous, and it 
is famous most recently for going down on the list of court 
systems.  The reason why it has done that is because this debate 
was taken to the public in our election in which we elected the first 
Republican Supreme Court judge from the southern part of the 
State of Illinois, and it has really helped wake people up that not 
only is this an issue and a concern for doctors, but it is really an 
issue for access and the patients.  But there is still a problem.  We 
have a doctor leaving the metro east area, who is in the local paper, 
who practiced 20 years in the area, because of still high medical 
liability insurance.
	So this is an emotional debate for those who are injured, those 
who want access to the courts, those who want compensation, 
those who want their local doctors present.  And I appreciate the 
Chairman, because the Chairman does bring a different perspective 
based upon his background that we are working with.  And there 
are a lot of things that we can do.  Because of that election, and 
that is how public policy sometimes gets changed is things are 
falling apart, the public revolts, and you get an election that signals 
to public policy individuals who go change the laws.  The State of 
Illinois changed their law.  They did some of the things that my 
friend Diana DeGette mentioned.  It wasn't just judicial reforms.  
It was medical discipline issues, judicial reform.  They raised the 
$500,000 punitive cap.  There were also some issues on insurance.  
And so it was an expanse of legislation, so I really don't know how 
it will portray in the years to come, but it has helped the growth of 
the access of doctors in my area.
	So I am open for a good discussion and other ideas.  We do 
have a great court system.  Ninety-nine percent of all doctors are 
great doctors.  Ninety-nine percent of the people who serve in the 
court system, whether they are judges or they are lawyers, are 
great.  We always have a percentage that take advantage, or we 
have a percentage of bad doctors that cause us problems and we 
overreact.  I think all the public wants is access to their doctors and 
at an affordable rate by which everyone then can pay for healthcare 
and folks can have access to care.
	So I am looking forward to hearing the discussion.  Hopefully 
we won't get pulled away too much.
	And I thank you, Mr. Chairman.  I yield back.
	MR. DEAL.  I thank the gentleman.
	Mr. Pallone is recognized for an opening statement.
	MR. PALLONE.  Thank you, Mr. Chairman.
	Medical liability is a very real problem in my home State.  Just 
last year, doctors in New Jersey went on strike to protest the rising 
costs of malpractice insurance, and since then, I continue to hear 
from doctors on a near-daily basis.  Skyrocketing premiums 
couched between declining reimbursement rates and increased 
overhead costs are putting many of them out of business.  And I 
have met physicians who have left their practice in order to sell 
real estate as well as medical students who are being forced to 
leave New Jersey once they earn their degrees.  So clearly, we 
have a problem.
	Now Mr. Chairman, although this is not the first time the 
subcommittee has considered this very important topic, we have 
made very little progress at reaching a solution.  Over the years, 
there has been little effort on the part of the Republican Majority to 
reach across the aisle and work with Democrats on a satisfactory 
solution to medical liability reform.  Mostly we just get name-
calling, saying the Democrats don't want to address the problem, 
particularly the Senate Democrats, and in my opinion, everything 
was done just to move H.R. 5 very quickly through this 
subcommittee and full committee without paying attention so that 
it would pass the Senate or without reaching across and trying to 
come up with solutions that would get a bill passed and signed into 
	And so I am hoping that today's hearing will mark a new 
beginning for us to finally come together on a bipartisan basis to 
address this important issue.  Now there is some common ground 
from where we can begin.  If we are to address the issue of medical 
malpractice, we need to talk about improving patient safety.  It has 
been 6 years since the Institute of Medicine issued its landmark 
report, and yet I am not sure we have made much progress on 
reducing medical errors.  And furthermore, we need to reduce 
frivolous lawsuits, so surely we can come to an agreement on the 
best way to accomplish this goal.
	But there are areas in which Democrats and Republicans 
remain divided, and I strongly believe that insurance reform should 
be included in any discussion of medical liability reform.  There 
are definitely members of this committee who do not believe that a 
cap, per se, will reduce insurance rates.  They want the issue of 
premiums and insurance rates addressed directly.
	The other thing is that Republicans have been inflexible on the 
level of the cap.  Efforts were made in this subcommittee to have a 
cap that was $500,000 or $1 million, and they were just rejected 
outright.  But what is most important, we have to just address the 
problem of liability reform for providers.  Now H.R. 5, and other 
similar bills in the past, have not been limited to medical 
malpractice, and they take in manufacturers, distributors, suppliers 
of drugs, medical devices.  That is not where the problem is right 
now, and when you throw that in, it is like basically throwing in 
the kitchen sink.  We are not really addressing the problem of 
	So I hope that today we move beyond the knee-jerk reaction 
legislation proposed in the past that just was used by the 
Republicans to bash the Democrats and that Republican leadership 
knows very well that H.R. 5, in its current form, is not going to 
pass the Senate.  It is not going to be signed into law.  We have got 
to get down to things that actually work.  And I hope that today is 
going to be a beginning of trying to work with us on a bipartisan 
	Thank you, Mr. Chairman.
	MR. DEAL.  I thank the gentleman.
	Mr. Burgess is recognized for an opening statement.
	MR. BURGESS.  Thank you, Mr. Chairman.
	I, too, want to thank you for having this important hearing.
	I do have an opening statement that I will submit for the 
record, but I do want to take the occasion to acknowledge that, one 
of the few times on this subcommittee, I am going to agree with 
the gentlelady from Colorado that the system is not functional.
	Ten years ago, as a practicing physician, if someone were to 
ask me what do you think would work as far as reforming the 
medical liability or the medical justice system, I probably wouldn't 
have come up with the idea of caps on non-economic damages.  I 
will tell you that 3 years after my State of Texas has passed a cap 
on non-economic damages, that is broken into three parts, a part 
for the doctor, a part for the hospital, a part for a second hospital or 
nursing home, for a total of $750,000 on non-economic damages, I 
am a believer.  One of the reasons I am a believer is because of the 
money that has come back into the healthcare system, particularly 
in not-for-profit hospitals that was really an unintended 
consequence of passing the cap on non-economic damages.
	When we passed our bill here on the House side some 3 years 
ago, my first year in Congress, the Congressional Budget Office 
recorded that as a $15 billion savings.  I think that is a reasonable 
place to look for savings as we try to look for additional money to 
put into our healthcare system.  Still, I am willing to listen to other 
arguments.  I am particularly glad to see Dr. Mello here this 
morning.  I think I agree with her that the administrative costs in 
this system are far too high.  I can remember a morning in the mid-
1990s when, in a very uncomfortable moment, I retrieved those 
foreign objects from a patient's abdomen during a laparoscopic 
surgery.  After I got over the self-congratulatory part of being able 
to get this foreign object out of the abdomen, because it was quite 
large, with only the laparoscopic instruments, and so my technical 
ability was clearly superior to anyone else's in town, I realized that 
I was in for a good deal of difficulty with our medical justice 
system.  It took about 5 or 6 years for that case to wind its way 
through.  It ultimately went to trial in another State, required a lot 
of hours on everyone's part, and as far as I could tell, the only ones 
who really made out in that process were the people who were 
charging by the hour.  And of course, the insurance company, 
being able to delay the payment of that claim for 5 years at a time 
when interest rates were considerably higher and their money did 
better in the stock market than it did going into a plaintiff's pocket, 
I guess they benefited as well.  So I am interested in some of the 
administrative changes that might be made in the system to further 
the savings that I believe are the money that is inappropriately 
taken out of the healthcare system and spent on the medical justice 
system.  Obviously, we want to see patients compensated who are 
harmed.  Most patients, though, that are harmed don't win the case 
through a lawsuit.  I can remember at least one time having made 
an error in judgment and no case was ever brought.  And this, I 
think, was because of being open and honest with the family 
during the course of things, being open and honest about how 
difficult the particular case was and being available to answer 
questions for the family as we worked through the process.  
Unfortunately, it doesn't always work out, and sometimes we do 
end up having to go to the courthouse, and I don't want to keep 
anyone from that ability, but at the same time, I also recognize that 
in order to keep our healthcare system solvent, there are going to 
have to be some limits placed on compensation.
	Thank you, Mr. Chairman.  You have been indulgent.  I will 
yield back.
	MR. DEAL.  Ms. Capps is recognized for an opening statement.
	MS. CAPPS.  Thank you, Mr. Chairman.
	Yes, indeed, we find ourselves once again discussing medical 
liability reform.  Yet it is clear that differences do remain in our 
approaches, and that is no reason why we shouldn't begin to work 
towards a path of compromising.  We absolutely should be looking 
at ways to remove medical liability as a barrier to accessing 
healthcare.  And as we examine alternative ways of settling 
malpractice cases, we must be careful to protect patients' rights.  
We should ensure that settlements are conducted voluntarily from 
both ends, that the option to have one's case heard before a jury of 
one's peers always exists.
	With the many innovative alternative dispute resolutions being 
discussed today, we cannot ignore the rising cost of malpractice 
insurance premiums.  I constantly hear from physicians who are 
forced to retire early or leave their private practices for other jobs 
because they cannot keep up with the rising costs of malpractice 
insurance premiums.  But time and time again, our leadership 
refuses to address the burdens posed on our healthcare system by 
insurance providers.  While doctors are being forced to close up 
shop, these companies are raking in record profits.  With all due 
respect, I would like to ask the Chairman if we could, in addition 
to the panel before us today, discuss that aspect of malpractice, the 
insurance companies and the accountability that I believe is 
lacking.  Where is the justice here?  If we are really going to work 
toward viable solutions and better healthcare delivery, we need to 
ensure that physicians can maintain their practices so that patients 
can have better access to quality care.  If errors do occur on the 
part of doctors, patients must be assured that they are guaranteed 
proper recourse.  We can not throw all of our weight into systems 
that remove objectivity, deny both plaintiffs and defendants the 
chance to present evidence to support their cases.
	So as we discuss innovative solutions to medical liability, we 
must be sure to address both alternative methods of dispute and a 
commitment to lowering the cost of medical malpractice insurance 
	And I just want to mention on the side that another topic, 
which we have addressed that should be seen as a parallel 
situation, is the situation of medical errors and the morbidity and 
mortality that result from other aspects of delivery of the 
healthcare system.  We seem to focus on going after the people in 
the courts.  We could go such a long way to improving both the 
streamlining of administrative costs and the technology that would 
entail making this more open and transparent but also what is the 
healthcare delivery like in today's world with the shortages of 
professionals to provide the care and giving the patients the 
confidence in the system that we want them once again to have.
	Mr. Chairman, I yield back.
	MR. DEAL.  I thank the gentlelady.
	Dr. Norwood is recognized.
	MR. NORWOOD.  Thank you very much, Mr. Chairman, and a 
great thanks for having this, what I consider a very important 
	It is time we cut through all of the sound bites and get to 
addressing this problem.  The premiums that providers pay today 
for their insurance is just continuing to skyrocket, and that actually 
is affecting access to care.
	Having tried and failed, I believe we may have an opportunity 
to get it, if we can just think outside of the box.  The same old way 
we have been doing this for the last 10 years clearly is not 
working, and I think this committee is smart enough to figure out a 
way to solve the problem, a different approach to it.  It is not right 
when a physician, after so many years of education and training, 
has to actually stop providing care because Congress fails to 
address our medical liability crisis in a rational way.  And that is, 
in fact, what is happening.
	I am a dentist, and I know that doctors all over the Nation 
know that there are folks out there trying to make a quick buck 
abusing malpractice compensation laws.  That's just plain wrong.  
I also know that doctors are being forced to retire early because of 
the insurance premiums that they pay.  Simply put, our legal 
system is stacked against those who give up in their 20s, all of 
them generally, to learn to help others, who work very long hours 
and deal with, I think, in many cases, immense stress.  Don't 
believe me?  Well, according to a report by the Alliance of 
Specialty Medicine, 75 percent of neurosurgeons in 2004 were no 
longer operating on children.  To the patient whose child's life is 
on the line, this is a problem.  They are not understanding of that.
	The situation in my home State is better, thanks to State 
reforms.  However, in Augusta, Georgia, my home town, and city 
of around 200,000 people, Mr. Chairman, according to data 
collected by the alliance there, there was only one healthcare 
facility left with a practicing pathologist.  In Statesboro, Georgia, 
south of us, women have to wait 6 to 9 months to have routine 
mammograms read.  As this committee has already heard, the 
Athens Women's Clinic stopped delivering babies after 35 years.  
One lawsuit put the clinic out of the baby delivery business, 
period.  Many doctors are practicing defensive medicine.  I would 
say most doctors are practicing defensive medicine and avoiding 
innovative treatment options driving up medical costs and 
reducing, I think, quality of care.  And they think so, too.  They are 
really trying to practice law rather than medicine to defend their 
families, and that is wrong that they have to do that.  Residents for 
high-risk fields are not being filled up.  There are various surveys 
that have shown the number of physicians moving into rural areas 
continues to decrease and now it is up toward about 50 percent.  I 
think folks, and I think most people in this room, find all of that 
unacceptable.  I have said it before, and I am going to say it again, 
after economic damages, reasonable people should be able to 
agree, to an acceptable limit, non-economic damages.  But it is 
time we start looking at the trial attorneys and the insurance 
companies, too, I agree with that, for their way in driving up the 
costs.  If we don't do something, and it is our job, we will further 
jeopardize patients' health, because they cannot get access to a 
doctor.  It drives me absolutely crazy, Mr. Chairman, that some of 
these physicians who have been out there practicing 30 years and 
have that amount of skill and wisdom over the years deciding they 
would rather go fishing than taking care of their patients because it 
is just too cumbersome anymore to stay in practice at that age.  
And we are losing some of the serious brainpower in medicine in 
this country by allowing this to happen.
	I appreciate very much you having this hearing, and I look 
forward to our witnesses' testimony.
	MR. DEAL.  I thank the gentleman.
	I recognize Mr. Gordon for an opening statement.
	MR. GORDON.  Mr. Chairman, I would like to yield some time 
to my friend from California who has to go to another meeting.
	MS. ESHOO.  I thank the gentleman.
	I have an Intelligence Committee meeting that I need to get up 
to, Mr. Chairman.
	Thank you.
	MR. DEAL.  We will just substitute the order, and we will come 
back to you, Mr. Gordon.
	MS. ESHOO.  Thank you, Mr. Chairman.  And I thank my 
colleague from Tennessee.
	I have a statement that I would like to have entered into the 
record, and I thank you for having this hearing.
	Just a couple of comments.
	Congress is really in, I think, a desperate need of some good 
ideas to help us get over the ditch that we are in.  If, in fact, we 
remain where we are, and that some casting aspersion on lawyers, 
others somehow casting aspersions on doctors, we are not going to 
get anywhere.  We do have a problem.  I think that it is solvable, 
and I trust that that is what this hearing is about.
	Now at the end of the day, I think all of us, if in fact we need 
them, want the best attorney on one side and the best doctor on the 
other.  So I am not interested in casting blame on either profession.  
Both professions contribute a great deal to our society.  I think that 
this issue is larger than patient and doctor and one attorney.  We 
have very broad and large health systems in the country, and there 
are glitches and failures within these systems that helped produce 
some of the problems that we are trying to get our arms around.
	So I thank everyone for being here.  I began to read some of 
the testimony that has been placed in front of us.  I am interested in 
this health court that is being proposed, and I am impressed with 
the bipartisanship of the organization with former Senators 
Howard Baker and Bill Bradley, members of the advisory board as 
well as Senator George McGovern and former Speaker Newt 
Gingrich.  So I think we come together as an advisory board.  
Maybe we should be paying attention to what they are thinking and 
working on.
	So I thank my colleague from Tennessee for allowing me to 
speak out of order, and Mr. Chairman, thank you for having the 
hearing and also to the text that comes out of it.
	[The prepared statement of Hon. Anna G. Eshoo follows:]


        Thank you, Mr. Chairman.
        The purpose of this hearing is to explore new ideas to make the 
American medical malpractice litigation system work better for 
patients and physicians.  
        In order to reduce the number of medical liability claims filed 
against healthcare providers, we must reduce the number of 
patients injured by negligence.  
        Today, we will hear that medical liability cases are clogging 
the courts, liability premiums are "skyrocketing," and that juries 
are awarding inconsistent and large awards to plaintiffs.
        Some witnesses will call for tort reform, and limiting damages 
awarded in malpractice suits.  We'll be discussing the creation of 
"health courts" to remove "frivolous lawsuits" from the traditional 
court system.
        There are some cases without merit brought against doctors 
and hospitals, and something should be done about medical 
liability, but we need to place an emphasis on reducing the 
prevalence of medical errors when we consider any comprehensive 
  	One key way we can help reduce medical errors is to establish 
a national and interoperable electronic health record system (HIT).  
Electronic health records are updated instantaneously and are 
portable, making legible, accurate and up-to-date information 
readily available to any doctor treating any patient in any setting.  
        Doctors will know exactly which medications a patient is 
taking, what chronic conditions a patient may have, and the types 
of procedures or treatments a patient may have undergone in the 
        This comprehensive profile of a patient's health history 
provides physicians a clearer picture of the patient they're treating, 
and helps reduce the risk of medical errors.  
        The promise of HIT is immense, but without appropriate 
safeguards and standards in place, these systems will not work.  
Unfortunately, the HIT bill passed by this Committee is 
inadequate.  It does not address privacy protections in any 
meaningful way, nor does it create standards for interoperability 
across the system.  
        Finally, as we discuss the issue of medical liability, we need to 
remember that 90,000 Americans die each year due to medical 
errors.  Most of these deaths could be prevented.  
        Every injured patient should be fairly compensated for any 
wrongs that are visited upon them because every person's life and 
health has worth, regardless of whether they have an income.  
        I look forward to hearing from the witnesses, and working to 
address this important issue.

	MR. DEAL.  I thank the gentlelady.
	Mr. Shadegg is recognized for an opening.
	MR. SHADEGG.  Thank you, Mr. Chairman.
	And I have a prepared opening statement, but I just want to 
insert it in the record and make some remarks.
	Let me begin by saying I want to thank you, Mr. Chairman, for 
holding this hearing.  I believe you and I have talked privately 
about how I feel it is vitally important that we bring some 
creativity to this topic.  For too long, the Congress has looked at 
one solution and one solution only, and that solution is caps on 
damages.  There are advocates of caps on damages, and there is 
evidence that in some instances they have worked.  For 
philosophical reasons, I have problems with them.  I am not 
convinced that the Government can decide in advance the value of 
any given economic loss or non-economic loss, and I am troubled 
by that as the only possible solution.  And I believe we should be 
far more creative in looking at solutions.  It seems to me that there 
are clearly proposals which would help in this area and perhaps 
special health courts, though I am concerned about federalizing 
this issue.  This is an issue where current litigation occurs at the 
State level, and I am concerned that if we impose specialized 
health courts, we are imposing a Federal solution for what is a 
State issue.
	But we owe it to the American people to address this problem.  
It is a very severe problem.  In my State of Arizona, medical 
malpractice premiums are a crisis.  They are driving doctors out of 
the practice.  My own wife's physician, her OB/GYN who 
delivered both of our children, was ultimately forced to quit the 
practice because of the high cost of malpractice premiums.
	But I would share in the views already expressed in opening 
statements here that this isn't just one issue.  It isn't just trial 
lawyers.  It is a combination solution.  I have had very successful 
lawyers in Arizona who practice in the tort field come to me and 
acknowledge that the current system is broken.  In part, there are 
lawyers with whom I have practiced, because I practiced in a firm 
that was made up of a number of tort lawyers before I came to 
Congress.  These lawyers would come to me and say clearly the 
current system is broken and needs to be fixed.  They are willing to 
discuss one of the options, which I think we should be exploring, 
which is the notion of loser pay, but modified by the notion that 
losing lawyer pays.  I think it is important that in the American 
justice system we do not discourage people without resources from 
utilizing the court system.  And to some token, there is no doubt 
that many lawsuits are abusive.  Many lawsuits are brought 
without any factual basis.  If you look at the statistics on medical 
malpractice suits, the vast majority are dismissed with no recovery 
whatsoever.  I think creating disincentives for people that bring 
frivolous lawsuits or incentives for them to settle at an earlier point 
in time is something that we should be working on.
	I can't speak on this topic without addressing one other issue, 
Mr. Chairman, and that is the issue of ERISA.  Far too few 
Americans realize that the law this Congress enacted called the 
Employee Retirement Income Security Act, as interpreted by the 
United States Supreme Court, grants absolute immunity to an 
insurance company whose negligent decision kills someone.  That 
simply is wrong.  Pilot Life is the name of the case.  It was written 
by Justice Sandra Day O'Connor.  I am told that she later 
acknowledged that she felt it was a bad decision and that this 
Congress would correct it very quickly.  But it seems to me 
anomalous that physicians in America are being sued so many 
times, so frequently, and so aggressively that they are being driven 
out of the practice at the same time that a law we passed grants 
absolute immunity to insurance companies whose negligence kills 
someone.  Everyone makes mistakes.  I make mistakes.  Doctors 
make mistakes.  Insurance companies make mistakes.  When 
someone makes a mistake that hurts or kills someone, indeed, there 
should be a system by which there is compensation to the person 
killed or the family injured.  And so absolute immunity is simply 
wrong.  By the same token, a system that rewards people for 
bringing lawsuits even without any merit is equally wrong.  And I 
think it is far past time that we look at innovative solutions to this 
	I hope you will also look at repealing the absolute immunity 
granted to insurance companies for their negligence, because no 
one should get a pass when they make a mistake that kills 
	With that, I yield back my time.
	MR. DEAL.  I thank the gentleman.
	I now recognize the gentleman from Tennessee, Mr. Gordon.
	MR. GORDON.  Thank you, Mr. Chairman.
	A little over 25 years ago, I was sort of a do-whatever-you-
want-or-whatever-you-need, small-town lawyer in Murfreesboro, 
Tennessee, and I took a criminal case pro bono.  It was a burglary 
assault case, second offense.  The defendant got a reduced 
sentence.  He went to jail, but I think I did a pretty good job for a 
young lawyer, or any lawyer, for that matter.  He didn't have 
anything to do while he was sitting there in jail, and so he filed a 
number of malpractice suits against me.  They weren't successful, 
but I was a sole practitioner.  That was all of the time that I had.  
That is how I made my living, and so it took my time.  And so for 
any time I had defense cases after that, I filed defensive motions, 
brought witnesses before us that I didn't really need to, but I was 
trying to protect myself, because I didn't want to go through that 
	I think we are seeing the same thing in the medical profession.  
There is defensive medicine that is taking a large amount of money 
out of the limited amount of healthcare dollars that we have.  And 
so I think we need to deal with this issue.
	Listening to everybody's opening statements so far, it looks 
like if you locked us in a room, we might get that done, and I hope 
we could do that, because up until now, what has happened, and I 
will speak frankly and everybody can put their own opinion, but I 
think that the front office leadership here in the House has forced 
H.R. 5 as a my-way-or-the-highway.  I voted for it, but it is a 
failure.  And I think it is partly because they want to keep the issue 
alive to raise money.
	Now on the other side, in my party, some of the folks that 
would be the first to condemn the NRA for their no-camel's-nose-
under-the-tent, won't make any kind of concessions either.  And so 
again, I hope that Chairman Deal will find the key, lock us in here, 
and try to work this out.  This is important, and I think looking for 
alternatives is a good way to approach it.
	And I will just mention one alternative.  Between 1993 and 
2003, the number of visits to emergency rooms increased by 26 
percent, yet the number of emergency rooms decreased by 14 
percent.  Every minute an ambulance is diverted somewhere in 
America from an emergency room because it is filled.  Three-
fourths of emergency room directors in this country say that they 
can't get specialists because the specialists don't want to deal with 
the malpractice and other problems there.
	And so I have introduced a bill, H.R. 3875, that deals with this 
situation.  You see right now, if you are a public health doctor, 
then you don't have to worry about malpractice, because there is a 
Federal fund that takes care of compensating those people that 
have had those problems.  It would seem that if an ER doctor is 
going to treat and indigent without any kind of compensation that 
they also ought to be able to plug into this same fund.  But that is a 
small group, but I think that it is one way to look at a 
comprehensive approach.  And I know many of you have other 
things.  Hopefully we can plug these in together and really make a 
sincere effort, because healthcare costs are simply killing us in this 
country.  Whether you are the CEO or someone who works down 
the line, you know that healthcare costs are affecting us all.  There 
are a limited number of healthcare dollars.  This isn't a cure-all, 
but this is one way to better use those.
	And so again, Mr. Chairman, let us get out the key and work 
this out.
	Thank you.
	MR. DEAL.  I thank the gentleman.
	I now recognize the Chairman of the full committee, Mr. 
Barton from Texas.
	CHAIRMAN BARTON.  Thank you, Mr. Chairman.
	I have a very excellent, but long opening statement.  It is about 
eight pages, so I am going to submit it for the record.
	Thank you for holding the hearing.  Thank our witnesses for 
being here.
	I will point out that in Texas we reformed our medical liability 
system.  In the last 2 years, we have had 4,000 new doctors apply 
to practice and we think this year we are going to get another 
4,000.  So it does work, and I hope that this hearing leads to 
legislation that might help nationally what we have done in the last 
several years in Texas.
	Thank you.
	[The prepared statement of Hon. Joe Barton follows:]


        Thank you, Chairman Deal, for holding this hearing on the 
important topic of medical liability reform.
        As we all know, medical liability reform has been a topic of 
intense debate.  From courtrooms to examining rooms and from 
state houses to Congress, the search for ways to fix our broken 
medical liability system is continuing.  Passions run high, but the 
stakes are high, too.  We are talking about nothing less than 
ensuring continued access to quality medical care for the American 
people.  We are also talking about reforming the medical liability 
system to make it fairer and more efficient for all participants, but 
especially for patients.  
        I continue to be encouraged by the successful medical liability 
reforms being enacted in the states.  In my home state of Texas, for 
instance, where we enacted common-sense reforms and even went 
as far as to amend our state constitution to make them stick, the 
good news continues to pour in.   From Texas the message is clear:  
effective reforms increase access to quality medical care for 
        In just three years, Texans have seen medical liability 
insurance premiums fall and thousands of new doctors coming into 
the state.  More than 4,000 new physicians applied to practice in 
Texas during the last three years, and the Texas Medical Board 
anticipates that we will add another 4,000 new doctors this year 
alone.  The benefits are being felt right now by patients all over 
Texas, but they are especially great in rural areas where access to 
medical care is more difficult.  In rural areas, every additional 
doctor's office, clinic, or ER specialist on call can mean the 
difference between life and death. 
        While access to care is a crucial concern part of any medical 
liability reform, of equal importance is protecting those patients 
who have a legitimate claim of medical malpractice.  On this point, 
the status quo fails to deliver.  Patients must often endure years of 
long, drawn-out litigation before receiving compensation for their 
injuries.  When compensation finally arrives, lawyers' fees and 
expert witness fees often take the lion's share of the award.
        Additionally, in the current climate, doctors are frustrated by a 
Byzantine legal system that takes them away from their patients 
and threatens to ruin them financially and professionally, 
regardless of whether the claims have any merit.  The cost of 
defending yourself is just as high for frivolous lawsuits as it are for 
honest ones, and they often run into the tens of thousands of 
dollars.  The result of all of this is a culture of silence, in which 
health care providers are afraid to admit to their mistakes and so 
opportunities to prevent mistakes from happening again are lost.
        Finally, we know that the current medical liability system is 
missing the point.  Study after study has told us that the real 
problem is errors in the web of people, computers, devices, and 
medicines that make up our modern health care system.  According 
to the experts, systemic errors, not individuals, cause the vast 
majority of medical injuries.  Yet the current liability system is 
obsessed with finding somebody to blame.  The one holding the 
scalpel or the last one to touch the patient when things went wrong 
is the automatic target.  It seems to me that we are missing the real 
problem and that we are not any safer for it.
        The status quo is no longer acceptable.  I'm excited to hear 
testimony from our distinguished panel of expert witnesses on 
innovative proposals that can alleviate our nation's medical 
liability crisis, and I look forward to examining each of these 
proposals in greater detail as we continue to go forward.
        Thank you again Chairman Deal for holding today's hearing 
and welcome to our witnesses.

	MR. DEAL.  I thank the gentleman.
	Mr. Pitts.  Mr. Ferguson.
	MR. FERGUSON.  Thank you, Mr. Chairman.
	I am really pleased that we are having this hearing and 
appreciate your leadership on this issue, because there are some 
very serious problems with our healthcare and medical liability 
system.  It fails our patients.  It fails our physicians.  It is failing 
our country.  The process is failing physicians by encouraging 
predatory and frivolous lawsuits that bring skyrocketing 
malpractice insurance premiums and, frankly, the practice of 
defensive medicine.  Studies have found that in high-risk 
specialties, practically speaking, all of the physicians surveyed had 
practiced some form of defensive medicine.  And while a dollar 
amount is hard to peg for how much this is costing the system, 
some estimates say that it costs the healthcare system roughly $70 
billion a year.
	The process is also failing the rest of us, the patients, the 
consumers of healthcare in our country.  Recently, a study 
published in the New England Journal of Medicine found that for 
every dollar paid to compensate victims of medical malpractice, 54 
cents, more than half, of that dollar goes to administrative 
expenses, including lawyers' fees and experts' fees and court costs.  
The same study found that these plaintiffs had to wait over 5 years 
to receive compensation that is less than half of the total amount.
	We are commissioning lawyers, we are stifling doctors, and 
most importantly, we are cheating patients by limiting access, by 
increasing costs, and compromising the quality of care.  I voted a 
number of times for the House bill that we have passed to reform 
the medical liability system.  Clearly, that has not become law, and 
we need to be thinking of some alternative solutions to try and 
address this problem, and I welcome the insights that our panelists 
will lend and their expertise in how we can save our Nation's 
healthcare system from this growing problem, particularly in my 
home State of New Jersey where we have an acute crisis.  Three 
years ago, we had a baby born during the physician job action in 
New Jersey.  A physician walked off the job for a week to raise 
profile of this crisis that they are facing in our State.  We happened 
to have a baby that week.  Now our physician was there to deliver 
our child, obviously, because they were providing emergency and 
unscheduled care to their patients, but it really was a wake-up call 
for me in how serious this problem is.  And our physician who 
delivered our child, her partner and her practice has left the State 
of New Jersey, and our physician is bright, a woman who has spent 
years and years studying and investing time and energy and 
resources because she wants to deliver babies.  She is considering 
giving up the practice of obstetrics altogether.  That is a serious 
crisis, and if it is that bad in New Jersey, it is clearly that bad in 
other places around the country where there is even less access to 
good quality healthcare and good physicians.
	So I am delighted of the hearing.  I appreciate your leadership, 
Mr. Chairman.
	And I look forward to hearing our witnesses.
	MR. DEAL.  I thank the gentleman.
	I am going to introduce our distinguished panel at this time, but 
I would tell you before we proceed, these are probably the most 
encouraging opening statements I think that I have heard in a long 
time.  I hope that that is an indication that what you are going to 
tell us is going to be received by both sides of our subcommittee, 
and I think that is a healthy thing.
	First of all, Ms. Michelle Mello, who is the Associate Professor 
of Health Policy and Law at the Department of Health Policy and 
Management at Harvard University; Mr. James M. Wootton, an 
attorney with a law firm here in Washington, D.C.; Mr. Paul 
Barringer, General Counsel of Common Good; Ms. Margaret 
VanAmringe, who is Vice President of Public Policy and 
Government Relations of the Joint Commission on Accreditation 
of Healthcare Organizations; Mr. Jeffrey O'Connell, who is a 
Professor of Law at the University of Virginia; Ms. Joanne 
Doroshow, who is the Executive Director of the Center for Justice 
& Democracy; and Ms. Cheryl Niro, who is a partner in a law firm 
in Chicago and is appearing on behalf of the American Bar 
	Ladies and gentlemen, we are pleased to have you here.  I will 
tell you in advance that your written testimony has been made a 
part of the record, and we would ask, if you would, in the 5 
minutes allotted to you, please, to summarize your testimony, and 
we will follow that with questions from our subcommittee.
	Dr. Mello, I would recognize you first.


        DR. MELLO.  Mr. Chairman, members of the subcommittee, 
thank you for the opportunity to speak with you today about some 
of the things I have learned in the course of my research at Harvard 
on the medical liability system.
	I am a lawyer and a health services researcher by training, and 
my work focuses on using empirical analysis of data to try to 
understand how well the system does the things it is supposed to be 
doing and also how it affects healthcare and quality and safety of 
health services.
	The medical malpractice system is the best study aspect of our 
entire tort liability system.  We have over 30 years of research on 
practice claims data, insurance data, and medical records with 
which to draw some inferences about how the system works.  The 
conclusions that I draw, based on the study of this work, are fairly 
pessimist, but I am optimistic about the process for reform.
	I would just emphasize three points from my written testimony 
about the performance of the medical liability system.
	First, the system helps very few of the patients that it is 
intended to help.  Secondly, the system hemorrhages money in the 
process of doing this.  Third, the system has some very painful side 
effects on medicine.
	The first part is that the system does a very poor job of getting 
compensation to the people who are entitled to it under the rules 
that we have set up.  We know, from research studies at Harvard, 
that only between 3 and 5 percent of patients who are seriously 
injured by medical negligence file a malpractice claim.  Only about 
a quarter of those claimants, and less than half of all malpractice 
claimants, recover money in our system.  Contrary to popular 
wisdom, malpractice plaintiffs are especially unlikely to receive 
compensation if their claims are decided by a jury, they lose four 
out of five malpractice trials.  So although the juries have a lot of 
resonance to us and to me personally as a lawyer, the data doesn't 
speak to the notion that juries serve patients' interests.
	The second point is that we spend an absolute fortune getting 
money from A to B in this system.  As one of the distinguished 
committee members mentioned, all research at Harvard shows that 
for every dollar we pay in malpractice compensation costs, 54 
cents are spent on lawyers, court costs, insurers, and other 
administrative expenses.  There are much more efficient ways to 
get money to injured people.  Even workers' compensation 
programs, which are not exactly known for being low-bureaucracy 
organizations, do it at overhead rates of between 20 and 30 percent 
rather than 54 percent.  Many administrative compensation 
systems get that number down as low as 10 percent.  The degree of 
inefficiency that we have been tolerating in our malpractice system 
is absolutely staggering.
	The third point is that the court litigation process has some 
painful side effects on American medicine.  Although the problem 
is that cost of defensive medicine behaviors aren't known with 
precision, we do know that they exist, they occur often, and they 
implicate very expensive services.  Another important effect of a 
liability system that revolves around the concept of negligence is a 
creation of fear and stigma among medical professionals.  Even if 
we don't care particularly about doctors, this should be a concern 
for us, because it makes it harder for patient safety efforts to 
cultivate what they call "a culture of safety" in medicine.  A legal 
process, which is punitive and stigmatizing, because it focuses on 
the concept of fault or negligence, instead promotes a culture of 
silence around medical errors.  It is hard to move the dialogue 
about errors to notions of preventability and fail-safe fixes when 
our legal system is so fixated on the concept of negligence and 
individual failures.  Now our medical liability system costs us 
dearly in monetary terms, in lost opportunities to compensate 
injured patients who have preventable injuries, and in lost chances 
to improve patient safety.
	These are fundamental problems and they can't be addressed 
with incremental reforms such as damages caps.  Innovative 
reforms are needed that can make compensation more accessible to 
patients who were preventably injured and that boost the efficiency 
and reliability of the compensation process.  Several interesting 
ideas have been percolating over the last two malpractice crises.  
The most promising reform approaches are those that create 
alternative processes for a dispute resolution.  The approach I favor 
is the health courts model, which proposes to experiment with 
moving medical injury claims to an alternative administrative 
compensation process that relies on mutual experts, decision 
guidelines, and a standard for eligibility that encompasses a 
broader group of patients than those who are injured by 
negligence.  Early offer programs and other alternative dispute 
resolution processes are also very worthy of consideration.
	In summary, the problems with the liability system challenge 
us to rethink our attachment to the current system, especially our 
attachment to juries.  There are great ideas waiting to be tested.  
Small-scale demonstration projects at the State or even sub-State 
level are a good way to do this at low cost and at low risk.
	I am happy to discuss these ideas further in the question-and-
answer period or at any time convenient to you, and I thank you 
again for hearing me today.
	[The prepared statement of Michelle Mello, J.D., Ph.D., 


                         Summary of Testimony

        The American medical liability system performs its core 
functions poorly, at tremendous cost and with unfortunate effects 
on health care delivery.
        1. Compensation of injured patients:  Less than 5% of patients 
who are seriously injured by medical negligence file 
malpractice claims, and less than half those who claim 
receive compensation.  Patients are especially unlikely to 
receive compensation if their claims are decided by a jury.
        2. Deterrence of medical error: There is very little evidence 
to suggest that the threat or experience of being sued leads 
doctors and hospitals to make systematic improvements in 
the safety of the care they deliver.
        3. "Corrective justice": Although the system gives claimants 
their "day in court" and an opportunity to hold health care 
providers accountable for their negligence, it does not 
secure other important aspects of "making whole" patients 
who are injured, such as hearing an apology or public 
admission of responsibility.  The system provides no 
corrective justice to the 95-97% of seriously injured 
patients who don't file a claim.
        4. Efficiency: Exorbitant amounts of money are spent to get 
compensation to the few patients who receive it.  On 
average, about 55 cents on the dollar in malpractice system 
costs are spent on administrative expenses.
        5. Side effects on health care delivery: Among the unintended 
effects of the malpractice system on health care are 
"defensive medicine" behaviors, which increase the costs 
of care, and creation of a culture that discourages openness 
and information-sharing about medical adverse events.

        These are fundamental problems that cannot be addressed by 
incremental reforms, such as damages caps.  Innovative reforms 
are needed that can
	 make compensation more accessible to patients who sustain 
preventable injuries;
	 make the process of determining eligibility for 
compensation cheaper and faster;
	 make compensation decisions more accurate and reliable 
(ideally through incorporation of the best available clinical 
evidence into decision making);
	 make assessments of damages more consistent across 
similar cases; and
	 make the system less threatening to doctors and encourage 
transparency about errors  

        The most promising reform approaches are those that create 
alternative processes for dispute resolution.  Among these are the 
"health courts" model-moving medical injury claims to an 
administrative system that relies on neutral experts and has a 
broader eligibility standard than the tort system-and "Early 
Offer" programs.

        I am grateful for the opportunity to speak with you today about 
America's medical liability system and the need for innovative 
solutions to improve it.  
        I am an Associate Professor Health Policy and Law at the 
Harvard School of Public Health.  I am trained as a lawyer and 
health services researcher, and my work focuses on the empirical 
analysis of medical liability.  I examine data on malpractice claims, 
insurance costs, and the organization and delivery of health 
services to try to understand how well the liability system is 
performing on its main functions and what effects it has on the 
quality and availability of health care.
        My work has led me to conclude that our medical liability 
system is in need of significant reform, and that the conventional 
array of tort reform options will not get us where we need to be.  
Farther-reaching changes are required.  In my testimony today, I 
will describe what is known about the performance of the medical 
liability system on several key measures, and comment briefly on 
reforms that would boost its performance.

Measuring the Performance of the Medical Liability System
        Legal scholars think about the tort liability system as having 
three core functions: injury compensation, injury prevention 
(sometimes called "deterrence"), and corrective justice.  Two other 
key criteria for thinking about how well our medical liability 
system performs are how efficiently it performs its core functions, 
and whether it has unwelcome side effects on health care delivery.  
I will review the evidence on each of these performance measures 
in turn.

        1. Compensation
        The most basic function of a medical liability system is to get 
compensation to people who are injured by medical care that falls 
below a particular standard of care.  In our system, that standard of 
care is negligence.  A well-functioning liability system should get 
fair compensation to all or most of those patients who are injured 
by negligence (and who desire compensation), and should give 
money to few or none of those patients whose injuries are not due 
to negligence.
        This is not the way our system works.  Three large-scale 
studies conducted by Harvard researchers over the last 15 years, 
involving reviews of thousands of hospital medical records and 
malpractice claims files from liability insurers, produced the 
following findings:
	 Between 95% and 97% of patients who sustain serious 
injuries due to negligence in the hospital never file 
malpractice claims.1, 2
	 Of those patients who do file claims, the majority (46%) 
receive no compensation.3  Thus, overall, 1 to 2 percent of 
patients injured by negligence are compensated by the 
	 Patients whose claims are decided by a jury are especially 
unlikely to receive compensation (21% versus 61% for 
claims resolved out of court).3
	 The system attracts both meritorious and non-meritorious 
claims.1-3 In about a third of cases, the injury does not 
appear to be due to errors in care (in the judgment of an 
expert reviewing the medical and litigation record).3
	 Juries are tough even on patients with meritorious cases.  
The odds that a claim involving a medical error is denied 
compensation are about 4 times higher if a jury decides the 
case than if the case is resolved out of court, even after 
controlling for injury severity and other characteristics that 
may differ across the two groups of claims.3 
	 The system pays both meritorious and non-meritorious 
claims,4 although it is more likely to award money in 
meritorious cases.  The system "gets it right" about three 
quarters of the time: 3 out of 4 non-meritorious claims are 
denied payment and 3 out of 4 meritorious claims receive 
	 Jury verdicts tend to produce large variation in damages 
awards for injuries of similar severity.5

        Thus, the malpractice system appears to be doing a reasonable 
job in two specific aspects of its compensation function: (1) it is 
not predominantly attracting claims that are frivolous; and (2) it is 
usually directing compensation to meritorious claims rather than  
non-meritorious ones.  Portraits of a system inundated with costly 
frivolous lawsuits are overblown.  So are portraits of the system as 
a "lawsuit lottery," where awards are unconnected to the merits of 
the claim.  
        But to interpret this pair of findings as indicating that the 
medical liability system is performing its compensation function 
well would be misguided.  There are three other factors to 
consider.  First, a system that only helps about 1 in 50 of the 
patients who are eligible for compensation under the rules we have 
set up is not doing a good job of providing compensation.  
        Second, a system that awards very different amounts of 
money-even different amounts of "pain and suffering" damages, 
which should not vary according to plaintiff characteristics such as 
age and earning power-to plaintiffs with similar injuries raises 
questions about fairness in compensation.   
        Third, although non-meritorious claims do not predominate in 
the system, they do account for a third of the caseload.  One likely 
explanation is that plaintiffs and their attorneys have some initial 
uncertainty about whether a case is likely to succeed.  One reason 
for this is that it's often hard for a patient to find out what 
happened in an episode of medical care that had a bad outcome; 
filing a lawsuit may be the only way to get information.  Another 
reason is that patients, lawyers, and even doctors may be unsure 
about what the legal standard of care (negligence) requires of them 
in particular circumstances.  Even expert reviewers often disagree 
about what constitutes negligence.  Thus, claims that ultimately 
prove non-meritorious may not appear so at the outset (and vice 
        Overall, if I was to grade the malpractice system's performance 
on the compensation function, I'd give it a D.

        2. Deterrence of Medical Error
        The second core function of the tort liability system, and the 
basis on which it is most often defended, is to deter negligence and 
thereby prevent injuries.  In theory, the system creates incentives 
for doctors and hospitals to take appropriate precautions to prevent 
injuries by imposing an economic penalty when they don't.  
        This theory rests on some assumptions about the organization 
of health care that aren't borne out in reality, and empirical 
evidence suggests that we don't get much deterrence out of the 
system.  One important problem is uncertainty.  Deterrence rests 
on the assumptions that health care providers understand what the 
law is asking them to do-that is, what the standard of care is-
and what the penalty will be if they don't comply.  But the 
negligence standard is ambiguous and doesn't always clearly 
signal what appropriate care constitutes.  That's particularly true in 
a legal system that produces little or no written record that doctors 
could consult.  Settlements and insurers' case files are confidential, 
and jury verdicts produce no written decisions.  It's also hard to 
gauge what the penalty for negligence in a particular circumstance 
would be, because there is so much variation in litigation outcomes 
and awards.
        Another key assumption is that physicians actually "feel" the 
economic consequences of their negligence.  This tends not to be 
true in reality.  Nearly all physicians have liability insurance.  
Although in theory, judgments can go beyond the limits of 
malpractice awards, this is extremely rare in practice.  Moreover, 
liability insurance isn't individually experience rated, meaning that 
the premiums that a particular doctors pays don't change from year 
to year depending on whether she had a judgment against her.  
That makes it very different from car insurance: if we are at fault 
in a car accident, we pay for it the next year in higher premiums.  
That makes us try hard to avoid accidents.  Malpractice insurance, 
in contrast, is generally priced only by specialty and geographic 
        Another reason doctors and hospitals don't tend to feel the 
consequences of negligence is that so few instances of negligent 
injury result in a malpractice claim.  Most of the time, nothing 
        All of these factors should make us skeptical of the deterrent 
value of the malpractice system.  And indeed, there is very little 
empirical evidence that deterrence occurs in any systematic way.  
For example, in obstetric care, the best-studied field, research has 
failed to identify any differences in the quality of care rendered by 
obstetricians with varying histories of malpractice claims.6 Other 
studies found no systematic improvement in any of several birth 
outcomes associated with a physician's prior claims experience.7, 8  
        Proponents of the tort system point to some isolated but 
impressive examples of safety improvement to rebut this argument.  
The leading example is the successful effort of anesthesiologists to 
reduce their malpractice claims by reducing the incidence of 
anesthesia injuries.9
        Taking into account such anecdotes, overall, I would give the 
malpractice system an overall grade of C on its deterrence 

        3. Corrective Justice
        The third major function of the tort liability system is to 
provide claimants with "corrective justice."  The notion of 
corrective justice has two strands: a soft one that calls for financial 
restitution to make victims "whole" after they are injured by 
negligence, and a harder one that addresses a human impulse to 
express anger towards, condemn, and punish wrongdoers. Both 
strands point to having a public process to hold wrongdoers 
accountable for their actions.10 
        The tort liability system fits well with notions of corrective 
justice.  Claimants gain access to a means of learning about what 
happened to them, showing health care providers how their actions 
have affected them, demanding that providers accept 
responsibility, receiving money, and (at least in theory) imposing a 
financial penalty on the provider, as well as the reputational and 
psychological burdens of being sued.  Research indicates that 
malpractice plaintiffs are often motivated to sue by feelings of 
anger and frustration and a desire to get back at providers who 
have not communicated appropriately or dealt sensitively with 
them,11-13 so these opportunities may be highly valued by 
        But other research suggests that injured patients' corrective-
justice needs could be met through a less punitive process.  What 
many malpractice claimants want is to hear the provider 
acknowledge that an error occurred that hurt the patient, apologize 
or otherwise take responsibility for what happened, and assure the 
patient that attempts will be made to fix the problem so that others 
will not be similarly hurt.14  That does not require malpractice 
litigation and is not facilitated by the adversarial litigation process.
        Thus, although the medical liability system serves some 
aspects of corrective justice fairly well, it ignores other aspects.  
Moreover, it's important to remember that only claimants get the 
benefit of corrective justice in the system, and less than 5% of 
patients with serious injuries due to negligence ever become 
        These considerations lead me to give the medical liability 
system an overall grade of B on its corrective justice function, and 
that is probably generous.

        4. Efficiency
        A well-performing medical liability system would perform its 
core functions efficiently, minimizing transaction costs and waste.  
Our system does not work this way.  Research at Harvard shows 
that for every dollar paid in compensation to plaintiffs, 54 cents 
goes towards administrative costs-the costs of lawyers, experts, 
insurers, and so forth.3  This is similar to previous estimates.15  In 
part, these high costs reflect the length of litigation.  On average, in 
our study, 3 years elapsed between the opening and closing of a 
        Compared to other compensation systems, this is a 
tremendously high overhead rate.  The equivalent figure for 
workers' compensation systems, for example, is generally in the 
20-30% range.16, 17  For many disability insurance schemes-
public and private-it runs as low as 10-15%.  
        Another telling feature of these administrative costs is where 
they get spent.  In our recent study of hospital malpractice claims, 
about 80% of the administrative costs were incurred resolving 
meritorious claims.  This finding highlights that the process of 
proving negligence is lengthy and costly.  It typically requires 
extensive legal discovery and testimony by multiple expert 
witnesses.  The negligence standard itself is murky and contested; 
even in the controlled and non-adversarial context of research 
studies, expert reviewers frequently disagree about the presence or 
absence of negligence in a particular case of medical injury.18  The 
pressures and biases of the litigation process only compound this 
        If a more efficient system existed for determining eligibility for 
compensation, the money currently absorbed by administrative 
costs could be redirected toward compensation.  A worthy target 
for that money would be patients who experience medical injuries 
that are both severe and preventable but don't receive 
compensation because they never file a claim.
        In terms of efficiency, I would give our medical liability 
system a grade of F. 

        5. Side Effects on Health Care Delivery
        It is reasonable to judge the medical liability system on the 
basis of its unintended effects on health care providers and the 
quality of care, as well as its performance on its core functions.   
Unfortunately, the side effects of the system are predominantly 
        One important effect is defensive medicine.  Defensive 
medicine refers to physicians changing the way care they deliver 
care-ordering unnecessary tests, for example, or ceasing to 
perform high-risk procedures-in order to try to minimize their 
exposure to malpractice litigation.  
        It is not known with any reasonable degree of certainty how 
prevalent defensive medicine is, what its health impact is, or how 
much it costs the health care system.10, 19   But there is solid 
evidence that it exists, and its adverse impact may be very 
substantial.20, 21  Recent research in Pennsylvania by my group at 
Harvard suggests that doctors in specialties like orthopedic surgery 
and obstetrics are especially prone to this behavior, and that it gets 
worse during so-called "malpractice crisis" periods.21  
        A second effect that the liability system has on health care is to 
create friction with efforts to improve patient safety.22   Building a 
culture of safety in medicine requires that physicians be willing to 
share information about injuries with systems that can use it to 
learn about injury prevention.  Emulating other industries 
involving complex services that are prone to error, such as aviation 
and nuclear energy, the patient safety movement has sought to 
create mechanisms for immediate reporting of poor outcomes and 
analysis of what may have gone wrong. 
        The threat of malpractice litigation in our present liability 
system undercuts these efforts to encourage openness.23  Doctors 
are fearful that information they provide may be used against them 
in court, and aware of the stigmatizing effect of a finding of 
negligence, which doctors tend to equate with incompetence.24, 25  
Although there is little evidence with which to gauge the role that 
legal fears, as opposed to other factors, have played in 
discouraging doctors from disclosing and reporting medical 
injuries,9 the notion that liability pressure is a major driver fits the 
conventional wisdom among physicians and has some empirical 
support.26  Certainly, the tort system isn't making it any easier for 
the patient safety movement to accomplish its goals.
        Overall, I would give the liability system a D grade for its 
effects on health care delivery.

Promising Options for Reforming the Medical Liability System
        In summary, the medical liability system does not perform well 
on its major performance criteria. The most trenchant criticisms 
that can be made, based on the evidence gathered in research 
studies, are:
         Many patients with severe, preventable injuries miss out on 
compensation, sometimes because their legitimate claims 
are not paid but much more often because they never bring 
a claim.
	 Juries do not decide the vast majority of claims, and when 
they do, plaintiffs usually lose.
	 The process is slow and extremely costly.
	 Malpractice litigation and the threat of it do not appear to 
result in systematic improvements in patient safety; rather, 
the liability system tends to thwart patient safety initiatives.

        These are fundamental problems that cannot be addressed by 
incremental reforms, such as damages caps or pretrial screening 
panels.   Creative thinking is needed to:
	 Make compensation more accessible to patients who 
sustain preventable injuries;
	 Make the process of determining eligibility for 
compensation cheaper and faster;
	 Make compensation decisions more accurate and reliable 
(ideally through incorporation of the best available clinical 
evidence into decision making);
	 Make assessments of damages more consistent across 
similar cases; and
	 Make the system less threatening to doctors and encourage 
transparency about errors  

        I believe that experiments with alternatives to medical tort 
litigation are a good idea.  How promising and successful these 
alternatives are will depend on their design features.  
        With support from the Robert Wood Johnson Foundation, my 
research group at the Harvard School of Public Health, in 
collaboration with Common Good, has been working on the design 
of such an experiment.  Paul Barringer from Common Good will 
outline the major features of our approach, which we call "health 
courts," in his testimony today.  In brief, the idea is to move 
medical injury claims into an administrative system that relies on 
neutral experts, and expand the pool of patients who are eligible 
for compensation.
        There are a variety of other innovative alternative dispute 
resolution (ADR) approaches that also warrant serious 
consideration.  Jeffrey O'Connell will discuss one of these, the 
"Early Offer" program, in his testimony today.
Much is unknown about how well alternatives to traditional 
malpractice litigation will work.  Therefore, the appropriate next 
step is to launch demonstration programs accompanied by careful 
evaluation to assess how well the alternative models have 
performed relative to tort litigation.  

        One of the perplexing aspects of the tort reform debates of 
recent years is that they rarely engage the system's true failings.  
Instead, they tend to fixate on traditional reforms, despite evidence 
that those approaches are not very helpful.19  There are good 
reasons to criticize the system's performance, but it is important to 
do so for the right reasons, because the diagnosis informs the 
treatment.  To be effective in improving the performance of the 
medical liability system, reforms must tackle the core problems 
that I have outlined.
        That may mean rethinking our historical attachment to juries as 
a means of resolving malpractice disputes, especially if we are 
committed to the goal of getting compensation to more injured 
patients.  Contrary to the popular wisdom, juries tend to be tough 
on malpractice plaintiffs.  Plaintiffs lose about four in five trials.  
Moreover, for plaintiffs who do win, trials are an expensive way to 
obtain compensation because the substantial costs incurred by the 
plaintiff's lawyer in getting to trial are paid by the successful 
plaintiff through contingent fees.  
        Finally, the vast majority of medical malpractice claims will 
not go before a jury.  National statistics suggest that only about 5-
10% of claims reach trial, and this statistic has held fairly steady 
over time.  In other words, approximately 55,000 of the 60,000 
patients who seek compensation for medical injuries each year will 
resolve their claims out of court.  It is imperative that the system 
work well for them.  Therefore, in choosing among reform options, 
we should be careful not to hold the interests of the many hostage 
to the interests of the few, especially when serious questions 
surround how well the interests of the few are served by the current 
        Although I have painted a rather bleak picture of the medical 
liability system, I am optimistic about the prospects for improving 
it.  There are good ideas waiting to be tested.  I hope that you will 
give them serious consideration.


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Brennan TA. Negligent care and malpractice claiming 
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between malpractice claims and adverse events due to 
negligence. Results of the Harvard Medical Practice Study III. 
N Engl J Med. Jul 25 1991;325(4):245-251.
3. Studdert DM, Mello MM, Gawande AA, et al. Claims, errors, 
and compensation payments in medical malpractice litigation. 
New England Journal of Medicine. May 11 
4. Brennan TA, Sox CM, Burstin HR. Relation between 
negligent adverse events and the outcomes of medical-
malpractice litigation. N Engl J Med. Dec 26 
5. Studdert DM, Yang YT, Mello MM. Are damages caps 
regressive? A study of malpractice jury verdicts in California. 
Health Affairs. Jul-Aug 2004;23(4):54-67.
6. Entman SS, Glass CA, Hickson GB, Githens PB, Whetten-
Goldstein K, Sloan FA. The relationship between malpractice 
claims history and subsequent obstetric care. Jama. Nov 23-30 
7. Sloan FA, Whetten-Goldstein K, Githens PB, Entman SS. 
Effects of the threat of medical malpractice litigation and other 
factors on birth outcomes. Med Care. Jul 1995;33(7):700-714.
8. Dubay L, Kaestner R, Waidmann T. The impact of malpractice 
fears on cesarean section rates. Journal of Health Economics. 
Aug 1999;18(4):491-522.
9. Hyman DA, Silver C. The poor state of health care quality in 
the U.S.: is malpractice liability part of the problem or part of 
the solution? Cornell Law Review. May 2005;90(4):893-993.
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Century, Different Issues. Cambridge, UK: Cambridge 
University Press; 2006:11-29.
11. Beckman HB, Markakis KM, Suchman AL, Frankel RM. The 
doctor-patient relationship and malpractice. Lessons from 
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12. Hickson GB, Clayton EW, Entman SS, et al. Obstetricians' 
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reliability of medical record review for estimating adverse 
event rates. Ann Intern Med. Jun 4 2002;136(11):812-816.
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        MR. DEAL.  Thank you.
	Mr. Wootton.
        MR. WOOTTON.  Thank you, Mr. Chairman and members of the 
subcommittee for giving me this opportunity to share my 
perspective on the shape of the next generation of national medical 
liability reform and the direction it might take, and most 
importantly, its potential contribution to the goal of transforming 
our healthcare system to better serve the needs of patients.
	I want to make clear that while I have discussed a lot of these 
ideas with many stakeholders, these views are my own and are 
based on my career in legal reform.
	In my opinion, the current court-based medical liability system, 
even after the usual reforms are implemented, does not well serve 
the interest of patients or healthcare professionals, nor will it 
facilitate desirable healthcare transformation.  There are, in fact, 
better alternatives.
	At a time when the viability of the current reform approach is 
embodied in H.R. 5 is being questioned, versions of which have 
passed the House a number of times but have never passed the 
Senate, proponents of reform have the opportunity to reclaim the 
	Advocates of medical liability reform, in my opinion, should 
now put more emphasis on patient safety and put liability reform in 
the context of a broader healthcare transformation agenda.  The 
healthcare industry and policymakers can now go on record 
offering a new contract with the public, which is that we will do all 
we can to reduce the avoidable risk of medical treatment but also 
provide fair, fast, and accessible access to healthcare and medical 
liability compensation.  Patients are concerned about access to 
healthcare.  I think the Chairman is absolutely right.  But they are 
also concerned about the system to which they have access.  They 
care about patient safety.  They care about finding new cures for 
diseases.  They care about expedited drug approval.  They care 
about improving the doctor-patient relationship, and they care 
about improving the patient literacy.  All of these goals are related 
in some way to the medical liability system.
	Today, the tort system is seen as an impediment of the free 
exchange of information related to medical errors and adverse 
events.  The Institute of Medicine has repeatedly declared that 
patients' safety is hindered by our current system of legal liability 
which discourages the disclosure of very vital information that 
could reduce avoidable medical errors.
	It is system errors, not individual errors by doctors that are 
most prominent in the Institute of Medicine's concern.  Therefore, 
I am suggesting the creation, at the national level, of the National 
Center for Medical Data, and at the State level, a patient safety and 
compensation system that works in a coordinated fashion.  This is 
based on the notion that the experience rate of compensation 
systems with a very low cost of claiming would drive up the 
standard of care more effectively than the random imposition and 
punitive or extreme damages in the tort system today.  There is a 
recent CRS study that provides a lot of data that supports this kind 
of approach.
	If we take this holistic approach, then we can focus on 
prevention.  With or without legislation, there should be a lot more 
emphasis on preventing disease.  A lot of people look at the cost 
equation and look at the incidents of disease and the cost of 
treatment.  We never look at lowering the incidents of disease.  We 
always look at lowering the cost of treatment.  I think we ought to 
spend more time focused on lowering the incidents of disease, with 
or without legislation.
	But if there is legislation, and I think, really, we are discussing 
today a framework, not a detail, it should include a National 
Medical Data Center.  It should go along the work that was done 
by Congress to provide information to patient safety organizations.  
There should be an electronic healthcare imitative that provides 
leadership and incentives at the State level to break through the 
inertia that is preventing the adoption of electronic medical records 
and patient safety programs.
	I do think there is a case to be made for uniform national 
standards.  We are in a different world today.  I was in the Reagan 
Administration.  We struggled over the Federalism Executive 
Order.  We did it in an era that was very different from today.  
Now healthcare has become such a large cost of business, it effects 
the competitive position among manufacturers.  Healthcare, itself, 
is a national industry.
	I think that we should look very strongly at creating 
alternatives at the State level or encouraging alternatives at the 
State level that take into account the fact that it is with an 
experienced rate of compensation system and trusted regulators 
where we overcome the distrust of the very bodies that are charged 
with protecting the public in giving them tools they need so that we 
can get a bipartisan consensus on what we need to do to go 
	I have some slides, which are available during the question-
and-answer period, if they are of interest, and I look forward to the 
committee's questions.
	Thank you, sir.
	[The prepared statement of James M. Wootton follows:]


        The current tort-based medical liability system - even after the 
usual reforms - does not well serve the interests of patients or 
healthcare professionals nor will it facilitate desirable healthcare 
transformation.  There are better alternatives.
        Advocates of medical liability reform should put more 
emphasis on patient safety and put liability reform in the context of 
a broader healthcare transformation agenda.  The healthcare 
industry and policymakers could offer a new contract with the 
public - "We will do all we can to reduce the avoidable risks of 
medical treatment but also will provide a fair, fast and accessible 
system to compensate patients when avoidable injuries do occur."  
Patients are concerned about access to healthcare, but they also 
want to improve patient safety, find new cures for diseases, 
expedite drug approval, improve doctor-patient relationships and 
increase patient literacy.
        Today, the tort system is seen as an impediment to the free 
exchange of information related to medical errors and adverse 
events.  The Institute of Medicine (IOM) has repeatedly declared 
that patient safety is hindered by our current system of legal 
liability which discourages the disclosure of the very information 
that could reduce avoidable medical errors.  As the IOM found, it 
is not mistakes by doctors that cause most medical injuries - it is 
system errors or an absence of a system.  Therefore, I am 
suggesting the creation of a National Medical Data Center at the 
federal level and Patient Safety and Compensation Systems at the 
state level where the medical liability system is seen as a 
component of a much larger patient safety system.  These new 
systems would facilitate - not inhibit - positive healthcare 
transformation and serve the interest of all the stakeholders in our 
healthcare system.
        The country is at a crossroads in dealing with healthcare - 
either moving toward more government involvement and control 
or focusing on better defining and executing the government's 
necessary role in a market-based healthcare system that maximizes 
individual freedom and provides the necessary incentives for hard 
work and innovation.  The goal of this legislation would be to 
provide the leadership and expertise needed to overcome inertia 
and move the country toward a shared vision of a transformed 
healthcare system.  It also recognizes that legal reform is a critical 
step on that path.  To pass this legislation and, indeed, to achieve 
the broader goals of healthcare transformation will require 
bipartisan cooperation and a coordinated effort by employers, 
health insurers, medical professionals and medical manufacturers 
with patient and consumer groups.
        It is reasonable to conclude that widespread adoption of some 
version of this systematic approach to medical liability and the 
electronic medical systems that promote patient safety could save 
the country as much as $114 billion out of the $1.6 trillion 
currently spent on healthcare annually and, more importantly, 
thousands of lives.
*     *     *     *
James M. Wootton is a partner in Mayer, Brown, Rowe & Maw 
LLP and former president of the U.S. Chamber Institute for Legal 
Reform.  Wootton was the founder and president of the Safe Streets 
Coalition and helped create the National Center for Missing and 
Exploited Children and other national programs while an official 
of the Reagan Justice Department.

        Thank you, Mr. Chairman, for the opportunity to share my 
perspective on the shape the next generation of national medical 
liability reform might take and its potential contribution to the goal 
of transforming our healthcare system to better serve the needs of 
patients.  I want to make clear that while I have discussed these 
ideas with many stakeholders in the healthcare system, the views I 
share today are my own.  In my opinion the current tort-based 
medical liability system - even after the usual reforms are 
implemented - does not well serve the interests of patients or 
healthcare professionals nor will it facilitate desirable healthcare 
transformation.  There are better alternatives.
        At a time when the viability of the current reform approach as 
embodied in HR 5 is being questioned, versions of which have 
passed the House eight times but have never passed the Senate, 
proponents of reform have the opportunity to reframe the debate.

Access to Medical Care
        If the rationale given for medical liability reform is limited to 
the argument that high malpractice premiums reduce access to 
medical care because in one way or another medical professionals 
will withhold their services - by moving out of state, retiring, even 
choosing not to become a doctor - then the focus tends to be on the 
needs of the doctor.  While these arguments are valid - even 
compelling - they have not been sufficient to create broad, bi-
partisan support for reform at the national level.
        Advocates for reform should put more emphasis on patient 
safety and put liability reform in the context of a broader agenda of 
healthcare transformation.  What do patients and their advocates 
care about?  What would a transformed healthcare system look 
like?  And in what ways is the current medical liability system 
impeding progress toward that vision?
        Successful legal reform efforts in the past have had three 
common elements: 1) a benefit to consumers and potential 
plaintiffs; 2) balance and fairness; and 3) sufficient stakeholder 
unity.  The surprise passage of a very comprehensive Y2K 
Liability Act in 1999 had all of these elements - including the 
passionate support of the high tech industry, which is a very 
attractive constituency for both political parties.  Successful federal 
medical liability reform will need those elements as well.

A New Contract with Patients
        Putting more emphasis on patient safety would allow the 
healthcare industry and policymakers to offer a new contract with 
the public - "We will do all we can to reduce the avoidable risks 
of medical treatment and will provide a fair, fast and accessible 
system to compensate patients when avoidable injuries do occur."
Without question, access is chief among patient concerns.  As 
you know, enormous intellectual and political effort is going into 
making healthcare more accessible - the Medicare Drug Benefit, 
Healthcare Savings Accounts, CMS reimbursement policies and 
coverage for the uninsured, etc.  The cost issues top many 
stakeholders' agendas.
        But patients and their advocates also care about the quality of 
the healthcare system to which they have access.  They care about 
improving patient safety, finding new cures for diseases, 
expediting drug approval, improving doctor-patient relationships 
and improving patient literacy.
        There are many passionate advocates for adopting policies that 
will facilitate healthcare transformation made possible because of 
advances in information technology and understanding of the 
human genome.  In a 2004 speech at the National Press Club, 
Senator Frist painted a compelling picture of the future healthcare 
system he would like to see by introducing the audience to a 
fictional patient from the year 2015:
        The patient, Rodney Rogers, is a 44-year-old man from the 
small town of Woodbury, Tennessee.  He has several chronic 
illnesses, including diabetes, hypercholesterolemia, and 
hypertension.  He is overweight.  He quit smoking about eight 
years ago.  His father died in his early 50s from a massive 
myocardial infarction.  In 2005, Rodney chose a health savings 
account in combination with a high-deductible insurance 
policy for health coverage.
        Rodney selected his primary medical team from a variety 
of providers by comparing on-line their credentials, 
performance rankings, and pricing.  Because of the widespread 
availability and use of reliable information, which has 
generated increased provider-level competition, the cost of 
healthcare has stabilized and in some cases has actually fallen, 
whereas quality and efficiency have risen.  Rodney 
periodically accesses his multidisciplinary primary medical 
team using e-mail, video conferencing, and home blood 
monitoring.  He owns his privacy-protected, electronic medical 
record.  He also chose to have a tiny, radio-frequency 
computer chip implanted in his abdomen that monitors his 
blood chemistries and blood pressure.
        Rodney does an excellent job with his self-care.  He takes a 
single pill each day that is a combination of a low dose of 
aspirin, an angiotensin-converting-enzyme (ACE) inhibitor, a 
cholesterol-lowering medication, and a medication to manage 
his blood sugar.  That's one pill daily, not eight.  He gets his 
routine care at his local clinic.  He can usually make a same-
day appointment by e-mail.
        Unfortunately, chest pain develops one day while Rodney 
is on a weekend trip several hundred miles from home.  The 
emergency room physician quickly accesses all of Rodney's 
up-to-date medical information.  Thanks to interoperability 
standards adopted by the federal government in 2008, nearly 
every emergency room in the United States can access 
Rodney's health history, with his permission.  The physician 
diagnoses an evolving myocardial infarction by commanding 
Rodney's implanted computer to perform a series of rapid 
diagnostic tests.  The cardiologist in the "nanocath" lab injects 
nanorobots intravenously, and remotely delivers the robots to 
Rodney's coronary arteries.  The tiny machines locate a 90 
percent lesion in the left anterior descending coronary artery 
and repair it.
        The hospital transmits the computerized information about 
Rodney's treatment, seamlessly and paperlessly, to Rodney's 
insurer for billing and payment.  The insurer pays the hospital 
and physicians before Rodney returns home.  Payments are 
slightly higher to this hospital than to its competitors because 
of its recognized high quality and performance.  Rodney's 
hospital deductible and co-insurance are automatically 
withdrawn from his health savings account.  Because Rodney 
has met all his self-management goals this year, he gets a 10 
percent discount on the hospital deductible.

        Senator Frist concluded that:  "Rodney's world is the future.  
The high-quality, rich information and common-sense efficiency 
inherent in Rodney's care are all within our grasp.  In fact, we have 
seen similar and even greater transformations in equally complex 
sectors of our economy.  It is time that healthcare follows the rest 
of our competitive economy and information society into the 21st 
        All those who would like to see such a system in the future 
should be asking whether our current tort-based medical liability 
system will help or hinder our efforts to achieve that vision.  Or, 
whether politically achievable patient safety and compensation 
systems would better serve that vision and the interests of patients.

Problem with Current Medical Liability System
        There are many problems with the current tort-based liability 
system which have been well-documented elsewhere.

o	The current system is creating a shortage of providers.
o	Fear of litigation causes physicians to practice defensive 
o	The current system raises healthcare costs generally, often 
beyond the reach of the most vulnerable.

o	The current system provides inadequate compensation to 
injured patients.
o	Injured persons face a lengthy wait before receiving 
o	Litigation includes high transaction costs which 
substantially reduce actual payments to plaintiffs.

o	Litigation slows down the cycle of innovation and impedes 
the FDA approval process.
o	Litigation increasingly involves layperson juries often 
second-guessing FDA science-based determinations.
o	The current liability system has adversely impacted 
women's health.
o	Litigation concerns cause safe and effective drugs to be 
withdrawn or completely withheld from the market.

Doctor-Patient Relationships:
o	Inhibits communication between doctors, their patients and 
their colleagues.
o	Litigation-related advertising causes patients to stop taking 
properly prescribed medicines.
o	Fear of litigation causes some doctors not to prescribe 
medicines they believe are appropriate.

Patient Literacy:
o	Litigation concerns contribute to confusing 
communications on drug labels, patient packet inserts and 
other patient information.

Use of Electronic Medical Records and Systems:
o	Many doctors and hospitals fear that electronic medical 
records will be used as a resource for litigation by lawyers.

Misplaced Trust
        My perception is that the only reason the public endures a 
medical liability system that contributes to so many problems is 
that it believes aggressive personal injury lawyers are essential to 
keep doctors and medical manufacturers honest.  They may also 
believe that the medical industry has too much influence over the 
government bodies designed to protect the public, such as state 
medical boards and the FDA.  The plaintiffs bar often uses those 
fears to justify asking their political allies to block reforms of the 
current tort-based medical liability system.
        However, in looking at this question eSapience, a think-tank in 
Cambridge, Massachusetts, found there are many who question 
whether the current medical liability system helps or hinders 
patient safety.  In a 1999 study the Institute of Medicine (IOM) 
estimated that as many as 98,000 Americans die each year as a 
result of preventable medical errors.  Many of these deaths result 
from errors caused by the misuse of drugs and medical devices 
regulated by the FDA.  The IOM and others also suggest that more 
than half the errors that underlie those deaths can be linked to 
failed systems and procedures that are poorly designed to 
accommodate the complexity of healthcare delivery.
        Seven years later, improvements in patient safety can be seen 
at the margin, but much work is left to be done.  Technology can 
pave the way toward improved patient outcomes across the 
healthcare delivery system.  It can help healthcare providers, the 
FDA, and drug manufacturers navigate the complexity of the 
healthcare system by systematically capturing, distributing, 
analyzing and safeguarding the essential information needed to 
support decision-making.  Better information can also benefit 
patients and their doctors by reducing avoidable medical errors and 
adverse events related to the administration of prescription drugs 
and biologics, and in some cases, accelerating the drug approval 
        Technology is an essential component of a healthcare system 
that has safety and patient well being as its overarching priority.  
Such a system must also be designed around a set of incentives for 
all healthcare stakeholders to contribute willingly and act upon that 
information.  Today, the tort system is seen as an impediment to 
the free exchange of information related to medical errors and 
adverse events.  The IOM has repeatedly declared that patient 
safety is hindered by our current system of legal liability and the 
overhanging threat of litigation, which discourage the disclosure of 
the very information that could reduce avoidable medical errors.
        The current approach focuses too little on changing systems to 
improve patient safety and too much on punishing individuals or 
companies who are alleged to be at fault.  The punitive nature of 
the tort system creates an incentive to conceal information for as 
long as possible if there is an allegation of injury.  It also forces 
densely worded prescription drug labeling in an effort to cover all 
possible adverse outcomes, which is confusing to doctors and their 
patients.  The tort system thwarts the important principle of shared 
knowledge, which makes it difficult to learn in real time from 
others.  It was shared knowledge that dramatically cut the response 
time to the SARS epidemic.  This principle is considered critical to 
the successful results of other industries where consumer safety is 
tantamount.  The airline, nuclear energy and chemical industries, 
for example, all have non-punitive surveillance systems that foster 
the exchange of information and which is said to help these 
industries avert the great majority of all accidents or injuries.
        As the IOM report has suggested, patient safety is also made 
more difficult given the sheer complexity of the healthcare system 
itself.  The delivery of healthcare involves the careful orchestration 
of a dynamic network of people and processes that must work 
together to deliver care to patients.  According to Professor James 
Reason, the healthcare system has more than 50 different types of 
medical specialties and subspecialties interacting with each other 
and with an equally large array of allied health professions.  Efforts 
to improve patient safety must, therefore, focus on what is needed 
to improve the inter- and intra-workings of this overall system.  
Prior efforts to reform patient safety and medical malpractice have 
focused on worthy, but narrow silos.  They have not always been 
effective because they did not adequately address the interaction of 
a specific reform on the overall system.
        If the IOM report is correct - that it is bad systems and not bad 
people or companies that led to the majority of medical errors and 
injury - then a piecemeal approach to reform will not create the 
sea-change needed to advance a national patient safety agenda.  
Reducing medical errors and minimizing adverse events related to 
the manufacture and use of prescription drugs will hinge on the 
design of a system that makes wrong actions by those with a stake 
in healthcare delivery more difficult; makes it easier for those 
entrusted with ensuring patient safety to discover the errors that 
could occur before they do; and provides patients with just 
compensation in the event they are injured.

It Takes a System
        As the IOM found, the problem is not mistakes by doctors that 
cause most medical injuries, it is system errors or an absence of 
a system.  Therefore, Congress should encourage the creation 
of Patient Safety and Compensation Systems at the state level 
where the medical liability system is seen as a component of a 
much larger patient safety system.  These new systems would 
facilitate - not inhibit - positive healthcare transformation and 
serve the interest of all of the stakeholders in our healthcare 
system.  The four pillars of improving the capacity and quality 
of our healthcare systems are Information, Infrastructure, 
Incentives and Innovation:
	 Information is essential to improving doctor/patient 
decision making, reducing medical errors, minimizing 
redundancy, enabling research and reducing illness and 
	 Infrastructure is essential so that information can be 
accurately, efficiently and confidentially captured, 
exchanged and efficiently analyzed;
	 Incentives drive the behavior of doctors, patients, 
employees, insurers and manufacturers of health-related 
products; and
	 Innovation produces new preventatives, new tools for 
diagnoses and new treatments for illness and disease.

National Medical Data Center
        It now appears both technically and politically possible to 
create the capability at the national level of accessing on a real-
time basis medical data (data that cannot be used to identify the 
patient or the healthcare professional) from an ever-increasing pool 
of electronic medical records.  Realistically, this goal could not be 
achieved overnight.  At the present time, only a small percentage 
of patients have Electronic Medical Records (EMRs).  The data in 
those records are uneven, non-standardized and as one expert said 
"getting doctors to include data that is not clinically useful will be 
a challenge."  However, there are an increasing number of efforts 
to mine the electronic claims data of medical insurance companies 
which are producing immediately useful information as well as 
providing signals suggesting closer scrutiny of the paper files.
        Eventually these EMRs would contain sufficient standardized 
data (or data that could be translated to standard terms) to allow 
studies by government, academic and industry researchers to reach 
valid scientific conclusions regarding effective treatment protocols,  
strategies for avoiding medical errors and adverse event and 
promising paths in the search for cures for disease.  The 
availability of such a database could greatly reduce the marginal 
cost and time needed to do valid scientific studies and could fuel a 
dramatic increase in effective medical research.  Such a database, 
even as it matures, also would aid HHS, CMS, FDA, DHS and 
CDC in fulfilling their missions.  

Experience-rated Compensation Systems
        At the heart of this vision is an experience-rated administrative 
compensation system and trusted regulators focused on patient 
safety.  The premise of this approach is that a compensation system 
with a relatively low cost of claiming for the patient will drive up 
the standard of care and reduce medical errors more effectively 
than the more random tort system.  It is fairly well accepted that 
raising the likelihood of detection deters unwanted conduct more 
effectively than extreme, random and unpredictable penalties.  If, 
as expected, the use of electronic medical records and practice aids 
which reduce medical errors becomes the standard of care for 
certain treatments, this liability system will produce powerful 
incentives for their adoption and help drive positive healthcare 
        The idea of administrative courts is not unique.  Social 
Security, Workers Comp, the Childhood Vaccine Fund - even 
Bankruptcy Courts - all operate without juries and because of 
various features of due process have been held to be constitutional.  
The feature of a Patient Safety and Compensation System that 
makes it somewhat unique is the way in which the components 
would interact.

Medical Claims Facility:
        If a patient - who was a resident of that state - thought that he 
or she had been injured as a result of medical treatment by a 
medical provider in that state, then the patient could contact that 
state's Medical Claims Facility - operated by the Medical 
Providers Insurance Facility comprised of insurers who write 
insurance for doctors, hospitals and nursing homes in that state.

Claims Assistant:
        The patient would be assigned a Claims Assistant (think 
paralegal) who, though not an advocate for the patient, would help 
the claimant pull together his or her medical file, make sure the 
claims forms were complete and submit them to the Claims 
Facility Medical Staff.  The same Claims Assistant would be 
assigned to the patient for the duration of the claims process.

Medical Staff:
        The Medical Staff would notify the professional(s) involved 
and his or her malpractice carrier and would compare the claims 
forms and medical file against the practice guidelines issued by the 
Medical Practice Commission.  The Medical Staff would make a 
determination whether the evidence indicated that the medical 
provider had met the applicable standard of care.  If there were no 
applicable guidelines, then the Medical Staff would ask the 
Medical Practice Commission to analyze the facts of that particular 
case and issue an opinion as to whether the professional had met 
the applicable standard of care.  The Medical Staff would also be 
authorized to require an independent medical exam at no expense 
to the patient.

Medical Providers Insurance Facility:
        Once the Medical Staff concluded that the claimant should be 
paid, a claims processor would contact the patient and offer to 
settle his or her claim.  If the patient agreed to settle, then the 
Medical Providers Insurance Facility, which would operate like a 
Joint Underwriting Association, would pay the claim with funds 
provided by the provider's malpractice insurer.  Ideally, the state 
would not subsidize these awards.  
        The Medical Providers Insurance Facility, which would have 
an incentive to reduce medical errors and a mechanism for insurers 
to act collectively, would also direct loss reduction programs to 
reduce the number of medical errors in the state.  In egregious 
cases, the Facility would also make referrals, along with the 
Administrative Medical Court to the Patient Safety Board, for 
possible action against the professional.
        All medical providers, including nursing homes, would be 
required to have medical malpractice or other insurance which was 
experience-rated based on the providers safety record.  If a 
provider, based on a history of malpractice claims, could no longer 
prove financial responsibility, it could not operate in the state.

Administrative Medical Court:
        If the patient did not accept the offer, which could be governed 
by some form of "early offer" incentives, then he or she could ask 
for a hearing in front of an Administrative Medical Court Judge.  
The Judge could take testimony, allow discovery and otherwise 
conduct a civil trial.  While parties could have lawyers and retain 
their own experts, the Judge would rely heavily on the opinion of 
Daubert qualified experts working on behalf of the State Medical 
Commission which would be expected to apply nationally accepted 
standards of care to the particular circumstances of cases that come 
before the Medical Practice Commission and Administrative 
Medical Court.

Medical Practice Commission:
        The Medical Practice Commission would be appointed by the 
Governor and made up exclusively of Daubert qualified experts in 
medical practice.  It would be essential that Commission members 
have the support of the medical specialty groups in the state.  If a 
state's system handles claims against medical manufacturers, then 
the Commission should include Daubert qualified experts to make 
determinations whether a particular medical product or device is 
the likely cause of a medical injury. 

Courts of Appeals:
        If either party is not happy with the Medical Court's decision, 
then the party may appeal the decision "on the record" to whatever 
state courts of appeal have jurisdiction.

Patient Safety Board:
        A Patient Safety Board appointed by the governor and 
confirmed by the legislature would have authority to order further 
training, suspend or revoke a medical providers license and/or 
impose appropriate fines.  The Board would have representatives 
of both the professional and patient communities.

Patient Safety Data:
        The whole system would rely on evidence-based medical data 
accumulated by government agencies, safety organizations or other 
credible sources including the National Medical Data Center.

State Electronic Healthcare Initiative:
        A state electronic healthcare initiative involving all 
stakeholders would provide the leadership to set the standards, 
overcome silos and seek funding mechanisms to achieve adoption, 
interoperability and functionality for electronic medical records 
and electronic medical systems.

"Keep America Healthy Campaign"
        The Congress and Administration, with or without legislation, 
could encourage public/private partnerships to encourage healthy 
behaviors and the creation of a culture of health.  Most 
policymakers in and out of government focus on the cost of 
treatment side of the healthcare cost equation where "cost equals 
incidences of disease times cost of treatment."  It is time for 
America to focus more attention on lowering the incidences of 
disease.  While there are many community and corporate disease 
prevention programs being undertaken already, a concerted effort 
that more effectively organizes and mobilizes our national 
resources would have a better chance of changing behavior and 
positively affecting culture.  Lady Byrd Johnson's "Keep America 
Beautiful Campaign" dramatically reduced the incidence of 
roadside litter.  A "Keep America Healthy Campaign" would do 
the same for the incidence of debilitating and costly diseases.

Federal Legislation
        To encourage the creation of Patient Safety and Compensation 
Systems along the lines outlined, Congress has many choices about 
how best to provide leadership and incentives.  There are 
substantial Federal interests to justify taking action including the 
Medicare and Medicaid programs, the Medicare Drug Benefit, the 
interstate nature of the healthcare and health insurance industry 
and the interstate nature of large employers for whom these 
reforms could be critical in saving American jobs.  Therefore, I 
urge Congress to consider legislation that deals with the issues 

Patient and Safety and Compensation Act 
(A Legislative Concept) 

Title I - National Medical Data Center
        The National Medical Data Center would make available to 
authorized users the real-time, privacy-protected data from as 
many as 12 million electronic medical records nationwide.

Title II - Electronic Health Initiative
        The Act could create national uniform standards as needed to 
facilitate and provide formula grant funding and technical 
assistance to the States for electronic health systems to improve 
patient safety, lower costs and improve medical care.  Formula 
grants would be subject to certain conditions and criteria to ensure 
the funds are put to their intended use.

Title III - Uniform State Medical Liability Standards
        This title would contain politically achievable Federal 
preemptive standards in recognition of the fact that state healthcare 
liability systems do have a substantial impact on interstate 
commerce and that national healthcare transformation can be 
impeded by a single state legal system that imposes unreasonable 
and damaging liability standards on a national market for medical 
services and products.
        The items that follow have been suggested as belonging in any 
new Medical Liability Reform (MLR) legislation.  They are listed 
here as placeholders only, and there may be some items on the list 
that should be deleted/modified; there may be some "missing" 
items that need to be added.
	 Federal standards for medical liability litigation in federal 
or state court
	 Scope of bill's application (persons/entities; definitions)
	 Scope of legislation - ERISA and related issues 
	 Speedy resolution of claims through statute of limitations 
	 Limits on non-economic damages or keep existing state 
	 Damages apportioned by "fair share" rule, i.e., no joint and 
several liability
	 Limits on attorney contingency fees
	 Standards for "expert witnesses"
	 Use of Medical Screening Boards/Panels
	 Adoption of "I'm Sorry" programs
	 Independent External Medical Review
	 Reduction in awards for collateral sources 
	 Limits on and/or standards for punitive damages
	 Periodic (not lump sum) payments (use federal standards to 
Title IV - Alternative State Medical Liability Systems
        Title IV would encourage and facilitate the creation of new 
healthcare liability systems that are patient safety focused along 
the lines of the Patient Safety and Compensation System.  It would 
provide incentives and guidelines for states to create demonstration 
programs to test alternatives to current medical tort litigation.  
Funding to states under this title would cover planning grants for 
the development of proposals for alternatives, and would also 
include the initial costs of getting those alternatives up and 
running.  The legislation also would require participating states and 
the federal government to collaborate in continuous evaluations of 
the results of the alternatives as compared to traditional tort 

        This holistic approach to healthcare allows focus on three key 
	 More effective prevention of illness and disease;
	 Early diagnosis; and
	 More efficient and effective treatment.

        The goal of the Patient Safety and Compensation Act would be 
to provide the leadership and expertise needed to overcome inertia 
and move the country toward a shared vision of a transformed 
healthcare system.  It also recognizes that legal reform is a critical 
step on that path.  To pass this legislation and indeed to achieve the 
broader goals of healthcare transformation will require bipartisan 
cooperation and a coordinated effort with employers, health 
insurers, medical professionals, and medical manufacturers 
working collaboratively with patient and consumer groups.
        It is reasonable to conclude that widespread adoption of some 
version of this systematic approach to medical liability and the 
electronic medical systems that facilitate patient safety could save 
the country $114 billion or more out of the $1.6 trillion currently 
spent annually on healthcare.  According to a January 2005 article 
in the Journal of Health Affairs, savings could be as much as:
	$  78 Billion for delivery and administration
	$  29 Billion for avoidable medical errors
	$    7 Billion for non-meritorious legal actions
	$114 Billion

	Most importantly, the article also predicted a reduction in 
medical errors which could save over 7,000 lives a year.
	An initiative of this scope will require Congressional 
leadership.  Only Congress can insist on stakeholders working 
together to work out their differences, encourage the compromises 
that allow progress toward a common goal and enforce the 
discipline that prevents " freelance" lobbying from killing such an 
important legislative initiative.  Again, Mr. Chairman, thank you 
for the opportunity to share my perception on these issues, and I 
look forward to any questions you or your colleagues may have.

	MR. DEAL.  Thank you.
	Mr. Barringer.
MR. BARRINGER.  Thank you.  Good morning, Chairman Deal 
and members of the committee.  Thank you for inviting me to be 
here today.
	My name is Paul Barringer, and I am the General Counsel of 
Common Good, which is a bipartisan legal reform coalition.  We 
very much applaud the committee for its vision and leadership in 
convening this morning's hearing to consider innovative solutions 
to problems in America's ailing medical liability system.
	Personally, I am really honored to have this opportunity to 
share information with you today about the work that our 
organization has been doing to promote the concept of health 
courts or special courts to handle medical injury cases.
	With the support of the Robert Wood Johnson Foundation, we 
have been working with the research team from the Harvard 
School of Public Health, which includes Professor Mello and her 
colleague, David Studdert, to develop the conceptual framework 
for administrative health courts and to cultivate support from key 
stakeholders for demonstration projects that could be done to test 
the feasibility of this proposal.
	The context within which this proposal arises is, as Professor 
Mello and Mr. Wootton have detailed, in existing medical injury 
dispute resolution and compensation system, which does not work 
as well as it could.  We know that few injured patients receive 
compensation.  We know the system is very inefficient and 
contributes to escalating costs.  We know it has adverse impacts on 
the relationship between physicians and their patients.  Perhaps 
most significantly, as the Institute of Medicine and many others 
have observed, the system functions as a major impediment to 
efforts to enhance patients' safety and improve quality largely due 
to the strong disincentives it provides to candor about errors that 
have occurred in treatment.
	There is an urgent need for new and innovative solutions in the 
area of medical liability, and fortunately, there are promising new 
models that can help, such as the health court model that we have 
	Generally, the system we propose is one that would rely to a 
much greater extent than the existing system on administrative 
processes for determining liability and compensation.  There are a 
couple key reasons for this, including a greater efficiency 
associated with administrative compensation systems, the 
opportunity to expedite proceedings and get compensation 
awarded to those who have been injured much more rapidly, and 
also a potential for greater consistency and reliability in verdicts.
	I would note that the system we proposed is very much like the 
patient-centered, safety-focused proposal advanced by the Institute 
of Medicine in its 2002 report around demonstration projects 
across the healthcare system.
	In particular, we envision an administrative system with strong 
early disclosure and offer programs at the institutional level, say at 
the hospital or integrated delivery system or perhaps the liability 
insurer, which we modeled on programs that have been 
implemented successfully around the country, such as those at the 
Veterans Administration, hospitals, the University of Michigan 
health system, and also at the COPIC Insurance Company in 
Colorado.  We also envision reliance in these programs on so-
called accelerated compensation events or commonly occurring 
injuries for which compensation can be rapidly paid.
	If the early disclosure and offer process fail to satisfy either 
party, we would see the matter transferred to the health court 
where you would have judges with training and expertise in 
healthcare relying on mutual expert witnesses retained and 
compensated by the court to make decisions about the standard of 
care in injury cases.  Health court judges would issue written 
rulings of their decisions that would provide guidance in future 
cases, and these judges and experts would also rely on evidence-
based standards of practice, such as those disseminated by the 
National Guideline Clearinghouse at the Agency for Healthcare 
Research and Quality, as well as other organizations.
	Significantly, we see decision-making in the proposed system 
as relying on a standard of liability other than negligence, which is 
what we use in today's system.  We see particular promise with the 
standard employed in several Scandinavian countries, which is 
known as "avoidability."  Under the avoidability standard, which is 
broader than negligence, those adverse consequences of treatment 
that could have been prevented or avoided had best practices been 
followed, are compensable.  The aim of the avoidability standard is 
to expand compensation to injured patients and also to reduce 
emphasis on blaming the individual providers.  This is appropriate, 
because most experts agree that errors, generally, result not from 
individual malfeasance, but rather from breakdowns in systems of 
care at the institutional level.  The avoidability standard is one 
which recognizes this role that systems play in leading to errors.
	Finally, I would note that the system we envision would have a 
range of linkages to patients, safety structures, and initiatives so 
that we could learn from our mistakes and help prevent mistakes 
from occurring in the future.
	We have been very gratified to find the health court proposal 
drawing support from a wide array of stakeholders, including 
patient safety advocates, consumer groups, public health and legal 
experts, the national and regional press, and healthcare provider 
groups.  We have also been very pleased and excited that there 
have been several bills proposed in Congress that would create 
health court pilot projects at the State level.
	We hope that Congress will take speedy action with respect to 
one or more of these proposals, and once more, we appreciate this 
opportunity to provide information today.
	Thank you.
	[The prepared statement of Paul Barringer follows:]


        Thank you for this opportunity to discuss innovative 
approaches to improving America's medical liability system.
	I appear as General Counsel of Common Good, a legal reform 
coalition.  We are a bipartisan organization - former Senators 
Howard Baker and Bill Bradley are members of our Advisory 
Board, as are former Senator George McGovern and 
Representative Newt Gingrich - funded primarily by philanthropic 
foundations.  Our largest financial supporter is the Robert Wood 
Johnson Foundation, which is currently underwriting a two-year 
collaborative effort between our organization and the Harvard 
School of Public Health to refine a conceptual proposal for 
developing specialized health courts to resolve medical injury 
disputes.  Common Good has been active nationally since 2002 in 
promoting the development of specialized health courts.  
	The debate over medical malpractice reform remains one of the 
most polarized in American politics.  Frequently lost in partisan 
disagreements, however, is this key fact:  America's approach to 
resolving medical injury disputes works poorly for consumers and 
health care providers.  Many preventable injuries occur today in 
the course of health care treatment, yet few injured patients file a 
claim.  Even fewer receive any compensation, and those who do 
never see the full award.  When attorney fees and other 
administrative costs are included, only 46 cents of every dollar 
spent in tort cases in 2003 reached injured claimants.   
	The system also fails health care providers.  In particular, 
today's system does a poor job in distinguishing negligent from 
non-negligent care, providing ambiguous signals to health care 
providers about what it will take to avoid litigation, and 
encouraging costly "defensive medicine."   Moreover, the system 
discourages providers from disclosing information about errors or 
"near misses" (those errors that do not result in any harm).   This is 
unfortunate, as patient safety experts identify such reporting as a 
key element in comprehensive efforts to improve quality in the 
health care system.  This chilling effect on information disclosure 
has led the Institute of Medicine (IOM) and others to identify the 
existing legal system as a major impediment to system-wide 
patient safety enhancements. , 
	Since the late 1990s, the concepts of patient safety and health 
care quality have become increasingly important drivers in health 
policy.  Perhaps no single event galvanized public interest in safety 
and quality more than the IOM's 1999 publication of To Err is 
Human: Building a Safer Health System.   In this landmark report, 
the IOM revealed that as many as 98,000 people die unnecessarily 
every year in American hospitals because of medical errors.  The 
report concluded that most errors are caused not by individual 
providers but rather by breakdowns in larger systems of care.   
This report stimulated significant political interest in safety and 
quality, and has led to the development and introduction of 
numerous legislative initiatives to address these issues.   
	As interest in patient safety has increased, so too has the 
awareness that health care quality and the medical malpractice 
system are connected.  To better prevent medical errors, experts 
say, more information needs to be disclosed about errors and near 
misses.   Only with such data can hospitals and providers analyze 
the patterns and frequency of medical error and focus on fixing the 
system-wide breakdowns that lead to errors.  However, fear of 
litigation in the current system impedes the open exchange of 
information about errors and near misses.  Significantly, the IOM 
identified the legal system as a major impediment to improved 
quality in a 2002 report titled, Fostering Rapid Advances in Health 
Care: Learning from System Demonstrations.  "There is 
widespread agreement," the report stated, "that the current system 
of tort liability is a poor way to prevent and redress injury resulting 
from medical error."   The report called on Congress to charter 
demonstration projects to explore new ways to resolve medical 
injury cases.
	Growing out of the IOM's recommendations, support has 
continued to increase for experimenting with new approaches to 
resolving medical malpractice disputes, including the development 
of specialized health courts.  Common Good, founded and chaired 
by attorney and author Philip K. Howard, has been the leading 
proponent of the health court concept and, as stated previously, has 
been working with the Harvard School of Public Health to refine 
the health court concept and cultivate stakeholder support.   
	As currently envisioned,  the health court concept includes the 
following elements:  trained judges relying on neutral experts to 
adjudicate malpractice disputes; reliance on a new standard of 
liability - "avoidability" - that is broader than negligence; explicit 
use of evidence-based guidelines to aid decision-making; damage 
schedules for compensating injured claimants; and a range of 
linkages to patient safety structures and initiatives.  Generally, the 
proposed system would rely to a much greater extent than the 
current system on administrative processes for determining 
liability and compensation.  Key reasons for this include the 
greater efficiency associated with administrative compensation 
systems as well as their ability to award compensation to injured 
claimants more rapidly. , 
	A core element of the health court concept is that health court 
judges should have expertise in medical issues.  Judges would be 
selected through an independent and nonpartisan screening 
process, and sitting judges would participate in additional training 
and education to ensure their continued understanding of the 
evolving issues in health care.  These judges would make decisions 
about proper standards of care, and would issue written rulings of 
these decisions, which would provide guidance for future cases and 
in turn would help promote consistency from case to case.  Over 
time a body of law would develop that would differentiate between 
what is good medical practice and what falls short, and this would 
send clear and consistent signals to health care providers.   By 
concretely defining and promoting consistent standards, this 
process could also help reduce variations in medical practice 
patterns across populations and geographic areas, and improve 
standards of care both regionally and nationally.  It could also help 
reduce costly defensive practices, and more broadly provide a 
framework for cost-containment.
	A record of these decisions and other de-identified data from 
claims would be reported to patient safety authorities (and back to 
providers) for root cause analyses of what went wrong and why.  
Standardized event reporting would ensure that the appropriate 
information is reported.  In the aggregate, such data would also 
help facilitate epidemiological analyses for purposes of developing 
health quality improvement initiatives and preventive practices.
	As we envision it, compensation decisions in a health court 
system would be based on a standard other than negligence.  
Health care treatment is considered "negligent" today if the 
provider failed to exercise the level of care that a reasonable 
person would have exercised in the same circumstances.  Many 
experts have identified the negligence standard as contributing to 
an overemphasis on blaming providers for adverse events that have 
occurred in treatment.  This is inappropriate, studies suggest, 
because most errors result not from individual malfeasance but 
rather due to breakdowns in systems of care.   
        Of particular promise moving forward is the concept of 
"avoidability," which is employed in Scandinavia.  Under this 
approach, a medical injury is deemed compensable if it could have 
been prevented (or "avoided") had the doctor followed the best 
medical practice - whether or not the treatment was negligent.  
Although avoidability is broader than negligence as a theory of 
liability, it does not constitute absolute or strict liability for every 
bad outcome.  Only those injuries which are caused by treatment 
and which could have been prevented (avoided) are eligible for 
	Use of the liberalized avoidability standard of recovery would 
likely help expand the number of patients who receive 
compensation.  Application of the avoidability standard should 
also help lessen the emphasis on blaming individual providers.  
Unlike a negligent event, an avoidable event does not necessarily 
implicate blame on the provider involved (since even the best 
provider can experience an avoidable event).  In Denmark and 
Sweden, use of the avoidability standard has helped create a much 
less combative and litigious environment between physicians and 
patients, and has helped provide an incentive for providers to help 
their patients with the claims process and ensure that they receive 
appropriate compensation for avoidable injuries.   
	In today's medical malpractice system, each party typically 
retains its own expert witnesses.  These competing experts-for-hire 
often provide distorted or conflicting advice that can confuse juries 
and add time and expense to the process by which disputes are 
resolved.  Under the health court approach, by contrast, health 
court judges would consult with neutral medical experts to 
determine the standard of care in medical injury cases.  These 
expert witnesses would be compensated by the court, and they 
could be held accountable to a standard of objectivity by regulatory 
	Of course, determining the appropriate standard of care in a 
specific case can be a complex undertaking, regardless of the 
expertise of the decision-maker.  Also, there may be several 
reasonable courses of treatment in a particular circumstance.  To 
aid health court judges in reaching consistent decisions from case 
to case, judges would consult clinical practice guidelines based on 
evidence-based practice standards, such as those published and 
disseminated by the National Guideline Clearinghouse at the U.S. 
Agency for Healthcare Research and Quality, or by medical 
specialty organizations. 
	Based on reviews of the best available scientific evidence 
about how adverse events occur and the extent to which they are 
preventable, medical experts and key stakeholders could also work 
together to develop compensability recommendations for health 
court judges to apply, including the development of so-called 
"avoidable classes of events" or "ACEs" (predetermined 
malpractice scenarios that have been compiled by experts to 
expedite the claims process in clear-cut cases). ,   Clear-cut cases 
would be fast-tracked for compensation, and efforts would be 
made to encourage early offers of compensation.  In particular, 
claims against institutional health care providers (such as a hospital 
or integrated delivery system) would begin with consideration of 
the claim internally by a review board associated with the clinical 
enterprise.  In clear and uncontestable cases, the review board 
would designate the injury as an ACE, and the provider would be 
ordered to pay damages according to the appropriate compensation 
schedule.  In cases in which the circumstances of injury were not 
straightforward, the case would be referred to a health court.  
	In today's system, few injured patients are compensated and 
there is little consistency in awards from case to case.  To promote 
horizontal equity, the health court system would have a schedule of 
benefits specifying a range of values for specific types of injuries 
and taking into account patient circumstances.  To ensure fairness, 
this compensation schedule could be set by an independent body 
and periodically updated.  Individual awards would likely be 
smaller on average than the awards in the current system, but 
having compensation schedules would ensure that more plaintiffs 
had access to reasonable compensation.  At the same time, use of a 
compensation schedule could help reduce the percentage of total 
system costs devoted to administrative expenses.  Comparable 
administrative compensation systems in the U.S. and overseas 
devote far less to administrative expenses than the existing tort 
system.   Research with respect to Colorado and Utah claims has 
indicated that a patient compensation system employing 
compensation schedules and an avoidability standard of liability 
could be implemented in the U.S. at a total system cost comparable 
to that of the existing system, while compensating far more 
	The health court concept calls for replacing the jury with a 
judicial decision-maker.  The constitutional authority to create an 
administrative compensation system in place of a traditional jury 
trial is clear where it is part of a regulatory plan to improve health 
care.   Congress has broad powers to authorize pilot projects for 
specialized health tribunals under the Spending Clause,  and 
under the Commerce Clause because medical injury litigation is 
economic activity that itself constitutes, and affects, interstate 
commerce.   Contrary state law provisions, if any, would be pre-
empted under the Supremacy Clause.   Moreover, similar federal 
administrative compensation systems have been upheld against 
constitutional challenge.  
	A number of prominent public health experts and scholars have 
expressed support for the health court concept,  as have numerous 
political leaders and institutions from both sides of the aisle.  For 
example, the Progressive Policy Institute, a Democratic think tank 
known in the 1990s as President Clinton's ''idea mill,'' has 
endorsed the concept, as has the Manhattan Institute, a 
conservative-leaning think tank.  Numerous health care groups 
have expressed support as well, including the Joint Commission on 
Accreditation of Healthcare Organizations, the American 
Association of Retired Persons, and many state and national 
medical groups.
	The health court concept has also garnered significant media 
coverage and endorsements.  Scores of newspaper and magazine 
articles have devoted attention to the concept, and a number of 
prominent media outlets have expressed their support.  In July 
2005, for example, USA Today opined that "'Health courts' offer 
cure."  The opinion piece went on to say that "[h]ealth courts could 
show the way for quicker and fairer compensation to the deserving, 
and they might reduce the incentive for doctors to engage in 
defensive medicine. . Starting the experiment is the right 
medicine for an ailing system."   The Economist has called the 
health court concept "a sensible idea" that "ought to make the 
system less capricious."   And The New York Times has urged 
Congress to "push for a wide range of demonstration projects" for 
new malpractice reform alternatives, including health courts.   
	Several bills have been introduced in Congress to create health 
court pilot projects.  In the House of Representatives, 
Representative Mac Thornberry (R-TX) has introduced legislation 
to test new model health care tribunals at the state level.   In the 
Senate, Senator Max Baucus (D-MT) and Senator Michael Enzi 
(R-WY), Chairman of the Senate Committee on Health, Education, 
Labor, and Pensions, have introduced a bill to facilitate state level 
experimentation with a number of alternatives to current medical 
malpractice litigation, including health courts, early offer 
programs, and scheduled compensation.   Hearings were recently 
held to consider this legislation.  Senator John Cornyn (R-TX) is 
expected to introduce legislation shortly as well.  Finally, 
legislation to create health courts (or explore the feasibility of 
creating health courts) has been introduced in a number of states, 
including Illinois, Maryland, New Jersey, Pennsylvania, and 
Virginia, and additional state legislative activity is expected this 
year and next.
	The debate over medical malpractice reform will almost 
certainly continue to be a very polarized one.  As awareness 
continues to grow about the ways in which the current system fails 
patients and providers, however, support will likely continue to 
increase for exploring new alternatives that can benefit consumers, 
provide relief to providers, and help advance - rather than impede 
- quality improvement in health care.  An administrative health 
court system represents a promising approach to compensating 
injured patients and establishing greater reliability in medical 
justice.  With public support and political leadership, this new 
approach to medical justice can become a reality, both through 
pilot projects and as part of broader system reforms. 
	Thank you.

	MR. DEAL.  Thank you.
	Ms. VanAmringe.
	MS. VANAMRINGE.  Thank you.  We appreciate the opportunity 
to be here today.
	In early 2005, the Joint Commission issued a White Paper 
entitled "Healthcare at the Crossroads: Strategies for Improving the 
Medical Liability System and Preventing Patient Injury."  This 
paper was developed with the assistance of a panel of outside 
experts with broad-based knowledge in medical liability and 
patient safety issues.  The experts were asked to assess the 
performance in the current medical liability system in meeting its 
goals for deterring medical negligence, compensating patients, and 
exacting corrective justice.  They were also asked to address the 
extent to which the current medical malpractice system supports or 
interferes with patient safety.
	A fundamental finding of the report was that there is an 
empirically proven disconnect between negligence and litigation.  
The medical liability system is inconsistent in determining 
negligence and compensating patients.  Few injured patients 
receive compensation, and those who do, are often not the victims 
of negligence.  Recompense is highly variable for similar injuries, 
it is expensive to litigate, and compensation does not come quickly 
when it happens.  What we have is a system that is not fair, not 
efficient, and not predictable.  No one is well served.
	The Joint Commission report contained over a dozen 
recommendations.  A few recommendations appropriately called 
for government action.  I would like to highlight some of those 
	First, let me state that the context for the recommendations in 
this report was considered unique when it was issued, because it 
recognized that there is an inextricable link between improving 
patient safety and liability reform.  It recognizes that the increasing 
tension between the patient safety movement in the liability system 
greatly affects the quality and safety of care.  On one hand, there is 
the growing knowledge base held by safety experts that support 
open communication in a blame-free environment, opportunities 
for learning from mistakes, and a systems approach to reducing 
patient risks.  Distinction in the medical liability system is 
characterized by blame, secrecy, and adversity.
	The medical liability system can have a chilling effect on the 
patient-provider relationship, leading to the practice of defensive 
medicine that exposes patients to additional risks and could force 
valuable information about adverse events underground, thereby 
perpetuating the recurrence of preventable adverse events.  The 
crafters of the report understood that these two antithetical forces 
need to be harmonized.  The report, therefore, is an attempt to 
broaden the scope of the dialogue for medical liability reform and 
begin to address some of the dysfunctions that both systems 
	The first of the three strategies in the report is to pursue patient 
safety initiatives that prevent medical injury from happening at the 
front end of the liability process.  The healthcare industry has 
embraced the safety efforts of other industries, such as 
manufacturing and aviation, but it has not been able to fully 
emulate their successes.  A recommendation, therefore, is to spur 
commitments to patient safety improvements, such as systems 
recognizing the use of information technology, the adoption of a 
culture of safety through the use of pay-for-performance programs.  
Major opportunity is presented by pay-for-performance, because it 
envisions rewards for achieving desired behaviors and outcomes, 
and it can be a very powerful tool to accomplish behavior change.
	Pay-for-performance can also be used to promote another 
safety recommendation from the report, which is to accelerate 
enhanced clinical practice guidelines.  Studies have documented 
that compliance with guidelines to improve quality, but will also 
reduce the risk of liability for practitioners.  We also need to 
encourage team approaches to delivery of care.  Teamwork has 
been found to increase the accuracy of care and to reduce 
breakdowns of communication, which is one of the leading causes 
of serious adverse events.  Therefore, these and other safety 
improvements should be incorporated in any national design and 
implementation of pay-for-performance programs.
	The second approach is promoting open communication.  Our 
society values open communication between patients and their 
practitioners as a way to achieve high quality and safe care.  But 
increasingly, there is a code of silence when an unexpected and 
serious adverse event occurs.  This extends to silence between 
practitioners and patients, between practitioners and their peers, 
between practitioners and the organizations in which they practice, 
and between healthcare organizations and oversight bodies.  In 
addition, silence is amplified by fears of loss of reputation or 
	The report identified two areas in which legislation could help.  
The first has been accomplished through the passage of the patient 
safety legislation, and we would like to thank this committee for its 
leadership.  It is a landmark piece of legislation that will help us 
reduce errors.
	The second legislative area is to produce legislation that 
protects disclosure and apology from being used as evidence 
against providers in litigation in which evidence that years of 
extensive and painful litigation ensue when many families and 
patients are only looking for empathy and seeking answers.
	The last set of recommendations was structured around a 
strategy to create an injury compensation system that is patient-
centered and serves the common good.  We have heard lots of 
ideas today.  Many more came from our report and from others 
that are out there.  Our final recommendation, therefore, is to 
encourage Congress to evaluate demonstration projects in the 
States in order to better understand how these will work in the real 
world and how they can achieve a liability system that is more 
efficient and equitable.
	Thank you.
	[The prepared statement of Margaret VanAmringe follows:]


        I am Margaret VanAmringe, Vice President for Public Policy 
and Government Relations of the Joint Commission on 
Accreditation of Healthcare Organizations.  I appreciate the 
opportunity to testify on finding innovative solutions for our 
nation's medical liability system.  Founded in 1951, the Joint 
Commission is the nation's oldest and largest standard setting and 
accrediting body in health care.  The Joint Commission accredits 
approximately 15,000 health care facilities along the entire 
spectrum of health care services.  Our mission is to continuously 
improve the safety and quality of care provided to the public.  We 
are here today as an independent voice that is derived from both 
the multitude of expert opinion that we bring together on tough 
issues facing the health care system, and from our more than 50 
years gathering daily information on quality and safety from the 
front lines of medical care delivery.  
        On behalf of the Joint Commission, I would like to take this 
opportunity to thank the Committee members for their hard work 
in passing The Patient Safety and Quality Improvement Act of 
2005.  When implemented, this landmark patient safety legislation 
will provide the cornerstone for effective reporting systems that 
assure confidentiality and encourage the sharing of lessons learned 
from the analysis of adverse events.  Without surfacing richer 
information about the types and causes of medical errors, we will 
continue to experience preventable errors at unacceptable rates. 
Patient safety depends upon transparency of information as the 
basis for improvement and behavior change.  This dependency 
creates a fundamental dissonance with the current medical liability 
system that drives too much of that information underground.  As a 
result, neither patients nor providers benefit.  

        Many proposals for solving medical liability fail patients 
because they do not effectively deter the underlying causes of the 
harm, such as medical errors. While in isolation these liability 
reform efforts may be helpful to some degree, there is an 
inextricable nexus between addressing patient safety issues and 
addressing medical liability reform that must be recognized. 
Consequently, it is essential to structure solutions to medical 
liability issues that do not address just the back end, but that also 
take into account the factors that lead to litigation and defensive 
medicine on the front end.  By maintaining a dual focus on both 
safety and liability concerns, there is an opportunity to strengthen 
patient-provider relationships, restore trust between the affected 
parties, and change the way care is delivered.  
  	This interrelationship between patient safety and medical 
liability concerns led the Joint Commission to convene a 
roundtable of 29 experts representing a wide array of interests 
relevant to medical liability and tort reform.  The discussions and 
intense deliberations from the roundtable resulted in the 2005 
publication of a White Paper, "Health Care at the Crossroads: 
Strategies for Improving the Medical Liability System and 
Preventing Patient Injury."  This paper, which contained over a 
dozen recommendations, was a call to action for those who 
influence, develop, or carry out policies that can lead to ways to 
address the medical liability system, while developing an 
environment that focuses on patient safety.  My testimony today 
will highlight some of the recommendations from the White Paper 
that, if addressed, would move toward a medical liability system 
and a health care delivery system that both meet the needs of 
providers and patients.

Need for Comprehensive Reform
        Much has been written about the effects that rising medical 
malpractice premiums have had on the ability of health care 
providers to stay in practice and provide access to certain high risk 
services.  It is estimated that each year $28 billion is spent on 
medical liability litigation and defensive medicine combined.   On 
average, a medical liability case takes three to five years to come 
to closure.   Statistics suggest a strong likelihood that every 
surgeon will be named in a suit during his/her career.  These are 
staggeringly true estimations of the magnitude of the problem, but 
they are also illustrative of the dysfunction in the medical and legal 
"systems."  In fact, the current medical liability "system" is really 
not a system, but rather, a patchwork of disjointed and inconsistent 
decisions that has limited ability to inform the development of 
improved health care practices.
        A number of studies have revealed the inconsistency of the 
medical liability system in determining negligence and 
compensating patients.  We know that there are large numbers of 
preventable medical errors but only about two to three percent of 
negligent injuries result in a claim, and even fewer receive 
compensation for their injuries.   Conversely, only about 17 
percent of claims actually involve negligent injury.  This means 
that few injured patients receive compensation through the medical 
liability system, and that those who do get compensated are often 
not the victims of negligence.  Further, compensated individuals 
receive highly variable recompense for similar injuries.  What we 
have today is a system out-of-balance and lacking equity for its 
participants.  In other words, we have a system that is not fair, not 
efficient, and not predictable.
Solving the rising cost of malpractice premiums will make things 
better but it will not result in an effective tort system or improved 
patient safety.  Because what goes on in the court room and what 
goes on in our hospitals and other venues of care have become 
inextricably tied together, only a comprehensive approach to tort 
reform can alter the unfairness it imposes on patients and health 
care providers, and can lessen the deleterious impact it has on 
patient safety.  

Recommendations for Consideration
        The Joint Commission's 2005 White Paper contained 
recommendations organized around three strategies for improving 
the medical liability system while preventing patient injury. The 
recommendations that came from the expert panel are 
characterized as ones that would:
	 pursue patient safety initiatives to prevent medical injury
	 promote open communication between patients and 
practitioners, and 
	 create an injury compensation system that is patient-
centered and serves the common good

        In this testimony, we would like to mention a few of the 
specific recommendations in each category that may be of interest 
to Congress.

        I. Pursuing Patient Safety Initiatives to Prevent Medical 
        Despite the lapse of six years since the IOM's seminal report 
on medical error, "To Err is Human," medical error remains 
ubiquitous in health care delivery.  Progress has been made, but the 
health care industry has not been able to emulate the safety 
successes of other industries, such as aviation and manufacturing, 
which rely heavily on near-miss and error reporting to "learn from 
mistakes.  A significant problem rests is the failure of many health 
care organizations and institutions to adopt a culture of safety and 
commit to systems redesign where necessary. There are substantial 
costs -both direct and opportunity costs - for health care 
organizations that make safety a precondition for all other 
priorities.  These costs include performing "failure mode and 
effects analyses" on all high risk processes of care within the 
organization; establishing redundant systems to guard against 
human factors that contribute to errors; conducting organization-
wide training and education; and investing in specific information 
technology to reduce the likelihood of preventable error.  Further, 
leaders of health care organizations need to "buy-into" the benefits 
that will accrue to them and to patients if they make these 
        Recently, the Congress, CMS, and other national stakeholders, 
such as the Joint Commission, have been working on efforts to 
align payment with improvements in patient safety and health care 
quality.  We believe that these efforts, sometimes called Pay-for-
Performance (P4P), have the potential to encourage health care 
organizations to acculturate patient safety and systems re-
engineering  with the goal of reducing incidences of medical 
injuries.  The P4P concept essentially envisions rewards for desired 
behaviors and outcomes.  As we move forward with P4P 
implementation, it will be important to design these value-based 
purchasing programs in a way that specifically reward those health 
care organizations that transform themselves into "safe 
organizations" and that can demonstrate their adherence to safety 
        Clinical guidelines are increasingly invoked in court to prove 
or disprove deviations from the standard of care.  The pay-for-
performance construct can also encourage appropriate adherence to 
clinical guidelines to improve quality and reduce liability risk.  For 
example, financial incentives for practicing in accordance with 
guidelines can accelerate their adoption and use by clinicians who 
may otherwise be unaware of their content.  This will lead to better 
care in general, but perhaps even more directly related to liability 
reform are studies that show that adherence to clinical guidelines 
can reduce legal risk. In one study that focused on obstetrical 
patients, there was a six fold increase in the risk of litigation for 
cases in which there was a deviation from relevant clinical 
        Further, pay-for-performance programs at the federal level 
should be designed to encourage team approaches to care because 
teamwork has been identified by patient safety experts as an 
essential factor in reducing the risk of medical error. In aviation, 
predefined roles and responsibilities for varying scenarios are used 
to guide team development among pilots, flight attendants and 
other crew. Applying this approach consistently to health care 
delivery could increase the timeliness and accuracy of 
communications -breakdowns of which are commonly implicated 
sources of serious adverse events. Teamwork can also enlist 
clinicians and support staff in committing to a common goal -safe 
and effective care-in the often high pressured and chaotic 
environment of health care delivery.  Pay-for-performance 
programs need to both reward team performance and guard against 
any incentive-based program that is divisive to team approaches to 
        Another opportunity for action is to allow patient safety 
researcher's access to open liability claims to permit early 
identification of problematic trends in clinical care.  One of health 
care's principal patient safety success stories is anesthesiology.  
The American Society of Anesthesiologists uses case analysis to 
identify liability risk areas, monitor trends in patient injury, and 
design strategies for prevention.  In 2005, the ASA Closed Claims 
Project-created in 1985-contained 6,448 closed insurance 
claims.  Analyses of these claims have revealed patterns in patient 
injury in the use of regional anesthesia, in the placement of central 
venous catheters, and in chronic pain management.  Results of 
these analyses are published in the professional literature to aid 
practitioner learning and promote changes in practices that 
improve safety and reduce liability exposure.
        Closed claims data analysis is the one way in which the current 
medical liability system helps to inform improvements in care 
delivery.  However, reliance on closed claims for information 
related to error and injury is cumbersome at best.  It may take years 
for an insurance or medical liability claim to close.  These are 
years in which potentially vital information on substandard 
practices remains unknown.  Providing patient safety researchers 
with access to open claims, now protected from external 
examination, could vastly improve efforts aimed at identifying 
worrisome patterns in care and designing appropriate safety 

II.	Pursuing Open Communication Between Patients and 
        Our society has always valued open communication between 
patients and practitioners as a way to achieve high quality, safe 
care.  But increasingly there is a "code of silence" when an 
unexpected and serious adverse event has occurred.  An 
unintended consequence of the tort system is that it inspires 
suppression of the very information necessary to build safer 
systems of health care delivery. When it comes to acknowledging 
and reporting error, there is too often silence between practitioners 
and patients; practitioners and their peers; practitioners and the 
organizations in which they practice; and between health care 
organizations and oversight agencies.
        In addition, the wall of silence is amplified by the fears of 
physicians and health care organizations about the loss of 
reputation, accreditation or licensure, and income. The wall of 
silence severely undermines efforts to create a culture of safety 
within health care organizations and across the health care system.  
The White Paper identified two areas in which legislation could be 
helpful.  The first is to pursue legislation that protects disclosure 
and apology from being used as evidence against practitioners in 
litigation.  Lack of disclosure and communication is the most 
prominent complaint of patients and their families, who together 
have become victims of medical error or negligence. Years of 
wounding and expensive litigation often ensue when families are 
sometimes only seeking answers.    
        For patients and their family members, the physical and 
emotional devastation of medical errors cannot be easily 
overcome.  Research shows that what they want most out of their 
ordeal is honest and open dialogue about what went wrong, and a 
"legacy" that their experience serves as a lesson to prevent future 
occurrences of the same event.  It has been demonstrated that when 
it occurs, they are much less likely to litigate a medical error.  
However, such communication and assurances are seldom 
forthcoming, although some prominent medical centers have 
adopted policies urging physicians to disclose their mistakes and 
apologies.  Today, physicians and CEOs of health care 
organizations are afraid to make these apologies, expressions of 
sympathy, or commitments to change because they could be used 
in court as proof of negligence. 
        Among our report's recommendations for promoting 
transparency between patients and providers, we recommend that 
Congress consider ways to support and encourage state legislation 
that protects disclosure and apology from being used as evidence 
against providers in litigation. More protections are needed in 
order for most caregivers and health care organizations to feel 
comfortable doing this despite the ethical imperative underlying 
such disclosure.  
        The second recommendation made in 2005 was for Congress to 
enact federal patient safety legislation that provides legal 
protection for information reported to a designated patient safety 
organization (PSO.)  Again, we are very pleased that Congress 
passed this legislation last summer, and we are anxious for the 
Department of Health and Human Services to issue guidance for 
the establishment of PSOs.  This legislation has the potential to 
unlock information we need to move more rapidly toward 
"systems-based" health care that protects inevitable human error 
from reaching the patient.   
III.	Creating an Injury Compensation System that is Patient-
Centered and Serves the Common Good
        In terms of restructuring the compensation system, there have 
been numerous proposals suggested over the past few years for 
making it both efficient and just for all parties by taking a 
proactive approach in administering the system.  These proposals 
center on three broad approaches:  1) creation of alternative 
mechanisms for compensating injured patients, such as through 
early settlement offers often using schedules of compensation for 
frequent events; 2) resolving disputes through a so-called "no-
fault" administrative system or using special health courts; and 3) 
shifting liability from a focus on individuals to a focus on 
organizations and systems.  Though these approaches are distinct, 
they are not in conflict and could easily be combined.
        Congress could assist in creating a patient-centered 
compensation system that is predictable and fair by conducting and 
funding demonstration projects through the Secretary of Health 
and Human Services of alternatives to the medical liability system 
that promote patient safety and transparency; that provide swift, 
equitable compensation to injured patients; and that encourage 
continued development of mediation and early-offer initiatives.
        We need to test the feasibility and effectiveness of alternative 
injury compensation systems that are patient-centered and focused 
on safety.  Such demonstration projects are needed to begin the 
process of mitigating the periodic medical liability crises that, 
aside from economic factors, result from the delivery of unsafe 
care, unreliable adjudication of claims, and unfair compensation 
for injured patients.
        There are a large number of innovative suggestions geared to 
moving away from traditional tort litigation.  Inherent to all of 
these ideas should be highly placed value on immediate 
acknowledgement of the error or injury; an apology; and 
assurances that steps will be taken to avoid such an error in the 
        Another potential action would be to redesign or replace the 
National Practitioner Data Bank (NPDB).  Six years ago, the GAO 
recommended a significant overhaul of DHHS' data bank that 
collects information on adverse actions against clinicians in order 
to make it effective.  No real change has occurred since that year 
2000 report which found that the data were biased in favor of 
settlements and under-reported other information which was more 
reflective of practitioners' competence - such as disciplinary and 
hospital actions.  Because of its operational, the NPDB represents a 
significant threat to physicians and is not useful for those who 
query in to better understand the competencies of clinicians who 
they want to hire.  It also provides no insight into the actions that 
are reported, and disciplinary actions are vastly underreported.  
There is a need for a centralized data base that can capture 
important performance information about all licensed practitioners, 
but the NPDB needs significant overhaul to make it useful.

        It is our contention that neither patients nor health care 
providers are well served by the current medical liability system.  
The central question is how the medical liability system can be 
restructured to actively encourage physicians and other health care 
professionals to participate in patient safety improvement 
activities.  It is clearly time to actively explore and test alternatives 
to the medical liability system that stimulate the creation of "just 
cultures." This type of health care environments fosters learning-
including learning from mistakes-and emphasizes individual 
accountability for misconduct.  
        Redesigning the medical liability system will necessarily be a 
long-term endeavor.  This redesign will take a concerted effort by 
all stakeholders in which the legal and medical systems work 
together to solve these interrelated systems.  Our mutual goal 
should be to reduce litigation by decreasing patient injury; by 
encouraging open communication and disclosure among patients 
and providers, and by assuring prompt, fair compensation when 
safety systems fail.

	MR. DEAL.  Thank you.
	Mr. O'Connell.
        MR. O'CONNELL.  It shouldn't surprise me that a guy named 
O'Connell was a teenage friend of a guy named Pat Moynihan.  I 
met Pat Moynihan through his younger brother, Mike.  Anybody 
named Pat Monahan would obviously have a brother named 
"Mike."  I mention Pat, because once he grew to your status as a 
legislator, he summed up the problem of being a legislator by 
saying, "You find out that this is a world of competing sorrows."  
Now does anything sound better than what you face each day, 
having to work with competing sorrows?  Everybody is at you with 
their sorrow, whether it is from Detroit or take care of nine wives 
or whatever it should be.
	In healthcare, there are a lot of competing sorrows.  In 
malpractice, there are a lot of competing sorrows to address.  But 
we have been very benefited today by having Dr. Mello here, 
because her report published recently in the New England Journal 
of Medicine is a brilliant one.  It is so brilliant, I wish I had written 
it.  But what she says, with her colleagues, pointing out, as many 
of you have indicated, these 5 and 6 years it takes to hear a claim, 
settle a claim, nevermind litigate it, and that more than half of the 
dollar goes to transaction costs.  They end up saying substantial 
savings depend on reforms that improve the system's efficiency 
and the handling of reasonable claims for compensation.
	Now that says it all.  That is really a competing sorrow.  And 
you and your staff should be very rigorous in questioning 
everybody who comes before you to talk about this problem as to 
what their proposals do to improve the system's efficiency in the 
handling of the reasonable claims for compensation.
	This system that we have, for all its complexity, is based on 
true difficulties.  In order to be paid, a patient has to claim that a 
healthcare provider was at fault, and that is very hard to determine.  
Claimants' lawyers have to acknowledge that is very hard to 
determine or else how could they justify taking a third or more of 
compensation to help get it.  Secondly, if the victim is paid after 
this 5 and 6 years of shin-kicking litigation, the victim is supposed 
to get paid for his non-economic loss, for his pain and suffering.
	Well, now it is very hard to determine who is at fault, and I can 
tell you it is very hard to determine the dollar value of pain.  You 
can't go to the Wall Street Journal today and find out what an 
aching elbow is worth.  So almost anybody's opinion as to how 
much pain and suffering is as good as anybody else's, and how 
much that is worth in dollars is about worth as much in anyone's 
opinion as anyone else's.
	Well, let me tell you what I am trying to do.  I wouldn't come 
here and rage on like this unless I thought I had a solution.  Let me 
tell you the solution that I am proposing that has been mentioned 
earlier.  It is called early offers.  It says this: any time a claim for 
malpractice is made, a defendant, or his insurer, has the option, not 
the obligation, of offering to pay within 180 days, a hell of a lot 
shorter than 5 and 6 years, the claimant's net economic loss, by 
which I mean the claimant's medical expenses and wage loss 
beyond any applicable insurance already there, such as claimant's 
own health insurance or Medicare or Medicaid or sick leave.  If the 
defendant will make that offer, and he doesn't have to, but if the 
defendant will make that offer, the claimant has to accept it, unless 
the claimant can prove gross negligence and prove it beyond a 
reasonable doubt.
	Now why do I do this?  Because I want to take these two issues 
of fault and pain and suffering and, in a judicial movement, turn 
around and use those as leverage to get a compensation payment 
for the real losses that the acutely injured are suffering.  I want you 
to keep in mind that the present system protects everybody but 
those who need it.  Everybody.  What do I mean?  I mean the 
people who really need it are the people who have been seriously 
injured and don't have any health insurance to pay for their further 
health costs and no disability insurance to pay for their wage loss.  
They are in desperate circumstances.  What does this system do?  
This system of justice?  It hands them a lottery ticket.  Even Dr. 
Mello says they have got a 25-percent chance of getting it wrong 
after 6 years of experts fighting about it.  They give them a lottery 
ticket to say, "Well, maybe you will get paid years from now, and 
if you do, a lawyer will take a third or more of what you were 
paid."  That is a hell of a way to treat seriously injured people.  
They are not protected by this system.
	How about everybody else?  Well, of course the doctors are 
protected.  They get roughed up in this treatment, but they are 
protected by the fact that they have got liability coverage, right?  
The defense lawyers are paid to win a lawsuit.  The insurance 
companies are covered by the fact that they have got actual 
predictions as to what the exposure is.  Plaintiffs' lawyers don't 
know how to take a guess unless they think they are going to win 
it.  Even if they take a risky case, they have got a portfolio of cases 
for diversification.  Seriously injured people don't have portfolio 
diversification.  They have got one case.  The less-than-seriously 
injured people are protected by the fact that they have been less 
seriously injured, and they are likely to have their coverages of 
healthcare and disability paying for their losses.
	So this crazy system with all of this money, with all of this 
delay, with all of this frustration, is protecting everybody but those 
who need it the most.
	So what does an early offer do?  An early offer says to the 
defendant, "If you will take care of the people who really need 
help, you will be out of the litigation system unless you did 
something that is so bad it is a question of criminal law, and then 
you don't deserve any immunity from tort suit."
	Let me just run a couple of examples by you.  I am the patient.  
You are the doctor.  You treat me.  Something terrible goes wrong.  
We don't know why it happened, but I am in very bad shape.  I am 
in such bad shape that if I got to you and won, I would get a 
million dollars in liability.  But I have only got a one in two chance 
of winning.  So I have got a $500,000 case, a one in two chance of 
winning, which is going to take me 4 or 5 years, or whatever Dr. 
Mello documents.  It turns out, you could pay for my net economic 
loss by a corpus of $250,000.  That would pay for my medical 
expenses and my wage loss, as they occur.  So you would offer me 
my net economic loss, and I would have to take it.  You would 
offer it because obviously $250,000 is a lot less than $500,000.  I 
would have to take it, because I discovered in the study that I have 
done, a closed claim study, not as good as Mello's, but it is good, 
that 3 percent of the cases involve something like gross negligence.  
So I would have to take it.  You would be better off, and I would 
be better off.  The lawyers wouldn't be better off, but you and I 
would be.
	Now change the facts slightly.  I have still got the same injury.  
You are still a doctor.  I have still got a million dollars of damages, 
but now I have a one in ten chance of winning.  I have got a very 
marginal case.  A very worthless case.  I have suffered a million 
dollars worth of loss, but it is very unlikely that you were 
negligent.  So now it is a case worth $100,000 because I have only 
got a one in ten chance of winning.  You don't make the offer, and 
I don't deserve the offer.  So I have guaranteed that nobody is 
going to have to make an offer unless they can save money.  No 
plaintiff is going to lose his rights unless he is guaranteed his 
economic loss.
	One could also build into this system that once the offer is 
accepted, the defendant healthcare providers have to sit down with 
the patient and explain just what will happen.  So they will do this, 
not contention but on a willingness to sit down and describe what 
happened, because as you have earlier indicated, these are not 
people who are massacring people.  These are mistakes, at best, 
and people want to know what happened.
	MR. DEAL.  Professor, I am going to ask you if you would 
conclude for us, please.
	MR. O'CONNELL.  I would conclude.  Gladly.
	So that is what the plan is.  Let me tell you something, I have 
been doing this for about 40 years.  If I had known how long it was 
going to take to get change, I would have undertaken the form of, I 
don't know, the Catholic Church.
	Let me tell you, too.  You have talked here a lot about the fact 
that you want to arrive at a solution.  You know what I think?  I 
don't think you will.  I have heard legislators talk about this and 
not do anything, but I hope to hell you will prove me wrong.
	Thank you.
	[The prepared statement of Jeffrey O'Connell, J.D. follows:]


        In the May 11, 2006 issue of the New England Journal of 
Medicine authors David Studdert and Michelle Mello and their 
colleagues reported on a closed claims study of medical 
malpractice claims.  The study found that the system takes far too 
long - on average five years from the occurrence.  The study also 
found that it chews up far too much in overhead costs, principally 
legal fees on both sides, amounting to more than half (54%) of any 
compensation paid.  In the words of the study, "substantial savings 
depend on reforms that improve the system's efficiency in the 
handling of reasonable claims for compensation."
        It is just such a change that my testimony proposes:
        Under the early offer bill, liability insurers for health care 
providers have the option within 180 days after a claim is filed of 
making an offer, binding on claimants, to effect periodic payment 
equal of claimant's net economic loss (i.e., beyond any other 
insurance), plus reasonable legal fees, but nothing for pain and 
suffering.  If the claimant does not accept this offer, the claimant 
can proceed with a normal tort claim for both economic and 
noneconomic damages, but the legal standards of both the burden 
of proof and level of misconduct applied to the claim would be 
raised, with the claimant having to prove the defendant grossly 
negligent beyond a reasonable doubt.  If the defense does not make 
an offer, the current system applies.

        Insurers would decide whether to make the early offer 
described in the Summary above by comparing the cost of the 
early offer to their expected cost under normal tort rules assuming 
the claim is not settled under the early offer proposal. This 
expected cost would equal the net economic damages (medical 
expense and wage loss but, as stated, not pain and suffering) plus 
an allowable payment of the claimant's lawyers, which is 
presumed to be 10 percent of the value of the early offer. That is, 
the insurer will make an offer when the expected liability and 
litigation costs if the claim is not settled under the early offer 
proposal are greater than the net economic damages and the 
allowable claimant's legal fees.
        Thus, the insurer will make an early offer when the amount of 
the early offer is less than the insurer's expected exposure from a 
full-scale tort claim.
        Numbered items i and ii below present some of the main 
criticisms of current medical malpractice law.   Numbered items 
iii-xi below relate the early offer proposal to the medical 
malpractice reform debate.
        i. Many observers view the current system of tort liability for 
personal injury as unworkable and in need of fundamental reform. 
Under the current system, a claimant must prove two difficult 
elements: the defendant's fault, and the financial value of 
noneconomic damages, mostly for pain and suffering. In medical 
malpractice cases, determining fault is often especially complex, 
given the intricacies of medical decision contexts and the 
probabilistic consequences of medical interventions and their 
interaction with underlying patient characteristics. As a result, the 
system is subject to uncertainties that allow many injured patients 
to receive little or nothing while comparably injured others are 
paid much more than their economic losses. One earlier finding 
indicated that only 28 cents of the medical malpractice premium 
reaches claimants, and of that, only 12.5 cents goes to compensate 
for the actual expenses incurred by patients, with the rest going to 
legal fees, insurance overhead, and the like.  As pointed out, all 
this uncertainty generates not only substantial transaction costs 
(mostly legal fees on both sides) but long delays in any payment 
that is made, usually measured in years. In the end, the liability 
insurance system does not result in prompt payment to many needy 
victims; rather, it is a system of prolonged, unpredictable, 
expensive fights over whether claimants are deserving and/or what 
payment they deserve -- a system that often operates to the 
detriment of both health care professionals and injured patients, 
especially seriously injured patients.
        ii. The present system of tort liability insurance for medical 
injuries may lead to the anomalous result of providing the least 
protection to those who need it most: seriously injured parties 
whose medical expenses and wage losses exceed any applicable 
private or public insurance coverage. The present legal system in 
effect tells patients that they may be paid something, but only years 
from now and only after paying out or any recovery lawyer's fees 
of 30 percent or higher.
        The tort system imposes far fewer risks on the various medical 
malpractice liability participants who are not seriously injured 
victims. Health care providers typically have protection through 
their liability insurance coverage, and their insurers are protected 
by their risk-spreading, strengthened by actuarial calculations. 
Defense lawyers are paid, win or lose. Claimants' lawyers have 
little incentive to take a case unless they are confident it is likely to 
lead to an expected payment in excess of their expenses and 
opportunity costs. Even if the risk of nonpayment for any given 
claim is high, the claimants' lawyer can minimize this risk by 
taking multiple cases to assure portfolio diversification, a form of 
protection denied to the seriously injured victim, who normally 
will have only one such claim in a lifetime. Finally, the less 
seriously injured are relatively protected by the very fact of their 
lesser losses which may, in turn, be covered by their own health 
insurance or sick leave.
        iii. The early offer reform addresses the main shortcomings of 
the current system. Before considering the benefits of early offers, 
it is useful to review their structure. Under such an approach, a 
defendant has the option (not the obligation) to offer an injured 
patient, within 180 days after a claim is filed, periodic payment of 
the claimant's net economic losses as they accrue.  Economic 
losses under an early offer statute must cover medical expenses, 
including rehabilitation plus lost wages, to the extent that all such 
costs are not already covered by other insurance ("collateral 
sources"), plus an additional 10 percent attorney's fee. Therefore, a 
defendant cannot make a lesser or "low ball" offer and still be 
covered by the statute. Nor is there any need for a court to 
determine whether the early offer is fair. The early offer statute 
defines the fairness of the offer, similar to a workers' 
compensation statute for workplace accidents.
        If an early offer is made and accepted, that, of course, settles 
the claim. If the defendant decides not to make an early offer, the 
injured patient can proceed with a normal tort claim for medical 
expense and wage loss plus pain and suffering. Alternatively, if the 
claimant declines an early offer in favor of litigation, (1) the 
standard of proof of misconduct is raised, allowing payment only 
where "gross negligence" is proven; and (2) the standard of proof 
is also raised, requiring proof of such misconduct beyond a 
reasonable doubt (or at least by clear and convincing evidence).
        iv. Consider a typical case to illustrate how the early offer law 
would work. A patient has been injured in the course of treatment. 
If the patient wins in court, she would be awarded $1 million, but 
given the risks of litigation, she has only a 50 percent chance of 
winning. Roughly calculated, the patient has a claim worth about 
$500,000 (50 percent chance at $1 million). Assume the cost of 
setting aside a corpus of money to pay the patient's net economic 
losses as they accrue is projected at about $250,000 (an often 
realistic assumption in such a case, as studies demonstrate).  The 
health care provider's insurer would likely make the early offer, 
$250,000 being clearly less than $500,000. And the patient would 
likely accept, given that under the early offer proposal the plaintiff 
will have the normally insuperable burden of proving her doctor 
guilty of gross negligence beyond a reasonable doubt.
        Now assume a change in the facts: same patient, same health 
care provider, and the same possible $1 million verdict. But here 
assume this patient's chances of winning are only one in ten, with 
an expected value of $100,000 (1/10 of $1 million). Here the 
defendant's insurer would not make an early offer, $100,000 being 
clearly less than $250,000.
        v. The fear of potentially higher costs to insurers under this 
early offer scheme is avoided because no defendants need make an 
offer if they would not do so without this statute.  Thus, defendants 
will make an offer only when it makes economic sense for them to 
do so, as shown in the example above.
        vi. But won't insurance companies thereby just "cherry pick" 
claims by making lower payments to clearly deserving claimants? 
Because of the uncertainty and cost of determining both liability 
and pain and suffering damages under present tort law, it is likely, 
as indicated in Item iv above and the report itself below, that 
defendants in medical malpractice cases will make prompt early 
offers in many cases even when liability is unclear.
        vii. The proposal would affect injury victims in many ways that 
are advantageous. While injury victims would lose their recourse 
to full-scale tort litigation, they would reduce their uncertainty, 
delays, and transaction costs. Moreover, they would lose their 
current tort litigation recourse only when they are guaranteed 
prompt payment of their actual economic losses plus attorney's 
fees. These prompt and certain payments will be especially 
advantageous to those seriously injured patients whose losses have 
outstripped other applicable coverage.
        viii. Several factors make it unattractive for early offers to be 
made voluntarily without an early offer statute. Defendants today 
may be confident of defeating or at least wearing down claimants, 
given the difficulties and delays in proving a tort claim. The long 
delay before trial may often enable defendants to bargain down 
even claimants clearly entitled to tort damages because the latter 
may need immediate money for accrued and accruing medical bills 
and wage loss. Furthermore, defendants may fear that an early 
offer to settle for claimants'  net economic loss will be seen as a 
signal of weakness and encourage claimants and their lawyers to 
seek an even larger settlement than originally sought. This mirrors 
the position of claimants and their lawyers, who similarly fear that 
an early offer to settle only for economic loss would be deemed an 
admission of weakness in their cases, resulting in either no 
payment or less than that otherwise sought.
        ix. Early offers will be a viable mechanism only if defendants, 
not claimants, are allowed to make binding early offers. Claimants 
and their counsel would lack sufficient incentives to weed out 
frivolous or non-meritorious claims if they had the power to 
unilaterally bind defendants by their claims.  This would result in a 
perverse incentive to exploit the system with marginal claims or 
worse which would nonetheless be binding on defendants.  But 
defendants, as the parties making payment, when confronted with 
clearly meritless or very marginal claims will pay nothing and 
make no early offer, as shown in the example above. On the other 
hand, when faced with potentially meritorious claims, defendants 
will have an incentive to explore whether the statutorily-defined 
early offer involves less expected cost than a full-scale tort suit 
with all its uncertainty and transaction costs. Thus, only defendants 
have the appropriate incentives to distinguish carefully between 
arguably meritorious and clearly non-meritorious claims in order to 
reduce costs by promptly paying the required minimum benefits in 
suitable cases.
        x. There are also several rationales for why damages for pain 
and suffering are not included in the early offer reform. The 
uncertainty of determining both liability and damages for 
noneconomic damages is the key to understanding the 
inefficiencies of tort law and to framing a balanced solution that 
attempts to be fair to both injured patients and health care 
providers.  Pain and suffering damages are indeterminate and 
highly volatile. Under an early offer system, the prospect of an 
award of pain and suffering damages nonetheless still serves as a 
means of internalizing health care providers' medical mishaps by 
providing an incentive to make early offers covering injured 
patients essential economic losses. These offers thus will provide 
prompt compensation to many victims of injuries that accompany 
the delivery of medical services. In effect, the threat of paying 
damages for pain and suffering, rather than the actual payments, 
will better serve injured patients as well as the public interest.
        Pain and suffering damages also differ from economic damages 
from the standpoint of insurance.   Because accidents and illnesses 
generally reduce the marginal utility of income, people do not 
generally find it desirable to purchase pain and suffering insurance.  
Indeed, no such general insurance market has emerged.  In 
contrast, risk-averse individuals will desire full insurance of their 
economic losses, which is the focal point of the early offer 
        Because personal injury claims alone among all other damage 
claims routinely entail damages for both economic and 
noneconomic losses, defendants are uniquely positioned not only 
to make, but also to enforce by early offers, socially attractive 
settlements for only economic loss. In non-personal injury claims, 
where only economic damages are at stake, no comparably fair 
means are available to sanction a claimant who refuses to accept an 
offer of only a portion of the total losses claimed.
        xi. A complete no-fault plan for medical injuries does not seem 
feasible. It is difficult to define in advance when no-fault benefits 
should be paid for injuries that arise from medical treatment. 
Under no-fault auto insurance policies, an accident victim is 
compensated for an injury "arising out of the ownership, 
maintenance, or use of a motor vehicle." Under workers' 
compensation laws, an industrial accident victim is compensated 
for an "injury arising out of, and in the course of, employment." It 
is not feasible, however, to force all health care providers to pay 
patients for any and all adverse events arising in the course of 
medical treatment. It is often impossible to determine whether a 
patient was injured by the treatment rendered, or whether the 
adverse condition after treatment was just a normal extension of 
the condition which prompted treatment in the first place. A health 
care provider could not be expected to pay every patient whose 
condition worsens after treatment. Thus such a comprehensive ex 
ante no-fault solution is unworkable, and therefore unavailable. 
The proposed early offer system for medical accidental injuries 
enables, when the facts are much better known, ex post 
comparisons of the cost of a tort claim versus that of an early offer, 
and so this system seems a uniquely workable, economical, 
equitable, and simplifying solution.

Some operational features of the early offer plan
        It may be useful, for example, to address some questions 
regarding the time frame for operation of the early offer plan. Is 
the 180-day period too short a time for the defendant to decide to 
make an early offer? In general, insurers already compute their 
initial reserve amounts in a much shorter period, and the 
preliminary discovery process would be accelerated by the early 
offer structure. In addition to doing research to decide whether to 
bring a claim, claimants and their lawyers can also take their time 
and press any discovery they deem necessary before responding to 
any early offer.
        Court approval of the terms of an accepted early offer will no 
more be required than is court approval of the terms of a workers' 
compensation case. Of course, there may be later disputes after an 
early offer settlement regarding what is due periodically as losses 
accrue in the future, but that can happen under workers= 
compensation or any major medical/disability policy extending 
into the future. Courts now routinely review settlements in minors' 
cases, a practice that presumably will continue.
        An early offer settlement is no worse than lump sum court 
awards in dealing with seemingly difficult questions, such as 
whether the claimant's condition might change. The parties also 
might agree to a structured settlement,. i.e., present estimates 
which would bypass the need for future recalculations of amounts 
as they are due.  In the case of death, the survivors would be due 
the amount, if any, that the decedent's earnings would have been 
expected to provide as support. Note that the Michigan no-fault 
auto law with its large wage loss coverage extending to the 
hundreds of thousands of dollars has been able to deal effectively 
with such matters.
        As to the limit on claimant attorneys' fees to 10 percent of the 
value of the early offer, this percentage is based on a comparison 
of (1) the current almost uniform minimum of one-third of the 
value of a full-scale tort settlement or verdict and (2) the 
claimant's attorney fees under no-fault workers' compensation, 
which are not uncommonly limited to 10 percent for losses above a 
minimum payment.
        Note further that by definition there will be no trial expenses 
under early settlements. Note too that the early settlement will also 
greatly diminish pre-trial expenses.  Also, if the 10 percent fee is 
manifestly too low because of special circumstances, claimant's 
counsel can petition the court for an augmentation that will be 
payable by the early offerer.
        When an early offer makes sense, all the insurers involved in 
the case, should join together in making the early offer.  If not, 
insurers not making an early offer would be left with a claimant no 
pursuing economic damages with no offset for collateral sources, 
plus non-economic damages.  Indeed such a case would be 
financed by payment from any other insurer's early offer.  As a 
practical matter disputes over division of the ultimate cost to any 
given insurer would be handled later through arbitration.

        An economic model of the cost and other effects of the early 
offer proposal shows a typical result as follows:  With the parties 
stalemated after years of negotiation between $279,000 and 
$408,000, an early offer of $190,740 covering claimant's net 
economic loss, plus 10% for claimant's attorney's fee, would have 
netted claimant $173,400 and settled the case promptly.
        The model especially highlights the "wedge" effect, that 
current law induces in placing barriers between claimants and 
defendants, greatly inhibiting efficient settlements B a wedge that 
early offers greatly diminish.

        A Wedge Effect . . . exists when buyers and sellers in a market 
must share a cost related to consummating a transaction.  The 
Wedge is the amount by which the purchase price to the buyer 
is raised plus the amount the selling price received by the 
seller is reduced.  The paradigmatic example is the sales tax on 
goods.  To the extent that litigation-based costs cause a Wedge 
Effect in the market for resolution of medical malpractice 
claims, the current [tort] system artificially prevents some 
welfare-enhancing settlements, reduces the compensation of 
claimants unnecessarily, inflates the payment of defendants 
and creates a deadweight loss. 

        The early offer reform should lead to cost savings and speedy 
resolution of many cases if adopted. The main benefit to claimants 
of the early offer reform is that if an offer is made and accepted, 
claimants receive assurance of payment that covers their net 
economic losses approximately six months after the claim is filed.  
Payment will thus be received much sooner than under the current 
system and with much lower transaction costs.
        The disadvantage to the claimant of accepting the early offer is 
that the possibility of receiving noneconomic damages is 
eliminated. Since noneconomic damages often involve greater 
sums than economic damages, this loss is admittedly significant. 
But only in about 3 percent of present cases does the possibility of 
punitive plus noneconomic damages exist.  Under an early offer 
regime even in such cases victory would not be assured since the 
burden of proof would be substantially greater than it is now.
        Although, the extent to which savings from early offers would 
be passed on through lower malpractice insurance premiums is 
unknown, assuming a competitive marketplace, one certainly can 
expect that to happen.

	MR. DEAL.  Thank you.
	Ms. Doroshow.
        MS. DOROSHOW.  Thank you, Mr. Chairman, members of the 
	I want to address my remarks mostly on the issue of health 
courts, because a lot of the testimony refers to those.  I do want to, 
though, before I begin, just review for a moment what the study 
that has been referred to that Dr. Mello participated in and what the 
New England Journal of Medicine did find.  That study, and I think 
if you read it, actually for the purpose of this hearing, in terms of 
the way the system really is working.  That study found that most 
of the claims that result from errors, those individuals receive 
compensation.  On the other hand, most individuals whose claims 
did not involve errors or injuries receive nothing.  Eighty percent 
of claims involved injuries that cause significant or major 
disability or death.  Disputing in paying for errors account for the 
largest share of malpractice costs for errors.  Fifteen percent of the 
cases are going to trial.  That means a large majority of them are 
settling or there are some other kind of alternative compensation 
systems or processes currently taking care of the majority of these 
	In this very same issue in the New England Journal of 
Medicine, there was a companion piece which discussed how 
litigation against hospitals is critical for ensuring patients' safety.  
So there is a patient safety issue involved here that would be very 
detrimentally affected by removing litigation as a prospect, at least 
in the case of hospitals.
	Now the Center for Justice & Democracy, that I am the 
Executive Director of, works with a number of malpractice 
victims, and none of them have been very active in their fight 
against caps on damages.  But a couple of weeks ago, we have 
reached out to them on the issue of health courts, because there 
was a hearing on the Senate side on this issue.  I cannot tell you 
how surprised I was to see the immediate and intense response 
from the victims that we worked with who were horrified by the 
prospect of health courts.  I can't tell you how distressed they 
were.  These individuals that, for the most part, never went to trial, 
their cases were resolved by mostly pre-settlement negotiations, a 
form of alternative dispute resolution which currently exists in the 
system, which is voluntary and does not remove the individuals' 
fundamental right to jury trial.  They strongly object to requiring 
that cases be forced into an informal administrative system without 
any prospect of a jury or an unbiased judge hearing their case or 
ensuring the fairness of the proceeding and also a one-size-fits-all 
schedule for compensation for these victims.  They feel very 
strongly this would deny justice to them and to those who would 
be injured in the future.
	Going into more detail about the specific health court model, I 
feel there are areas that are particularly of concern to us and to the 
victims we work with.  The specialized judge that would be ruling 
in these cases would certainly not be unbiased.  They have been 
described as mutual, but they would be coming from the healthcare 
industry, the medical industry in some way.  The experts that they 
would hire to advise them would, as well, play a very large role in 
these health courts.  Liability is basically a form of negligence.  
This avoidability standard is a form of negligence, so you are 
basically forcing the patient into an administrative system, having 
to prove virtually the same thing in terms of liability, but without 
the procedural protections that a court provides without an 
unbiased judge to ensure fairness.
	The compensation schedules, the victims are obviously very 
concerned about this, not only because they don't take into account 
the individual circumstances of someone's life, but because once, 
and this is the lesson of all administrative systems when you set 
them up by statute and compensation is set up in a schedule in a 
statute, they become vulnerable to political influences.  If you look 
at the workers' compensation system, it started out with very good 
intentions in the early part of this century to help workers.  You 
will see the steady chipping away of compensation and benefit 
levels to workers, even to the point where some systems now have 
been completely gutted for workers because of the costs, because 
the insurance companies will go in there every year to State 
legislatures and get the benefits chipped away.  In Florida, in 
virtually every session since that workers' comp statute was set up 
in 1935, those benefits have been chipped away.
	Taking away a jury in this situation, the vague promises of 
efficiency and so forth that have been promised, in no way equal 
the magnitude of what is being proposed here to being taken away 
from victims, the right to a jury trial.  There are also very serious 
constitutional concerns about that, which I don't believe are 
surmountable.  But if you look at the claims of efficiency and 
speed, they are derived by almost every administrative 
compensation system that has ever been instituted in this country, 
all of which are plagued by bureaucratic problems, political 
capture problems.
	Just very briefly, the experts that have been contemplated here, 
in all of the models that we have seen, although very skeletal at 
this point, these experts coming from the industry would play a 
very large role in determining compensation and determining fault.  
This is very unfair to victims.  Victims need to have lawyers 
helping them in these situations, and the lawyers need to have 
experts.  They have a right to have that, and they have a right to 
have the experts go up against the insurance companies' experts, 
and that is what you need a jury to determine.  Juries, their 
quintessential function is to determine fault in those kinds of 
situations and the fairness of what a victim is going to need, 
particularly, when you are talking about future medical expenses.
	Just to conclude, we do not object, and the victims that we 
work with absolutely do not object, to alternative compensation 
systems, provided they are voluntary, provided that they do not 
eradicate the fundamental right that we have in this country to jury 
trial.  Most of the victims we work with take advantage already of 
those systems already in effect.  If you are going to look at trying 
to improve the efficiency of some of those systems, we would be 
all for it, but they must be voluntary, and they must ensure the 
right to jury trial.
	Thank you.
	[The prepared statement of Joanne Doroshow follows:]


        Mr. Chairman, members of the Committee, I am Joanne 
Doroshow, President and Executive Director of the Center for 
Justice & Democracy, a national public interest organization that is 
dedicated to educating the public about the importance of the civil 
justice system.  
        In addition to our normal work, CJ&D has two projects: 
Americans for Insurance Reform, a coalition of over 100 public 
interest groups from around the country that seeks better regulation 
of the insurance industry; and the Civil Justice Resource Group, a 
group of 24 prominent scholars from 14 states formed to respond 
to the widespread disinformation campaign by critics of the civil 
justice system.
        I appreciate the opportunity to address the issue of medical 
malpractice litigation and patient safety.  Today, I would like to 
discuss why mandatory alternatives to medical malpractice 
litigation would not only have terrible consequences for patients, 
but also hurt patient safety.  

        CJ&D and the malpractice victims with whom we work all 
agree that alternative systems, where both parties voluntarily agree 
to take a case out of the civil justice system, are not only 
appropriate, but currently resolve the vast majority of legitimate 
medical malpractice claims today.  Most victims with whom we 
work resolved their cases through informal pre-trial settlements.  
This is consistent with findings published in the May 11, 2006 New 
England Journal of Medicine, that only 15 percent of claims are 
resolved by jury verdict today.  
        There is nothing wrong with alternative dispute resolution 
(ADR) or alternative compensation systems, provided they are 
truly voluntary and do not eliminate the right to trial by jury.  This 
view is consistent with a July 27, 1998 report released jointly by 
the American Medical Association, the American Bar Association 
and the American Arbitration Association, entitled Health Care 
Due Process Protocol, which found that, "[t]he agreement to use 
ADR should be knowing and voluntary.  Consent to use an ADR 
process should not be a requirement for receiving emergency care 
or treatment.  In disputes involving patients, binding forms of 
dispute resolution should be used only where the parties agree to 
do so after a dispute arises."   
        However, we and the medical malpractice victims with whom 
we work strongly object to schemes that require that cases be 
heard in informal settings, such as Health Courts, without the 
option of having either juries or unbiased judges making decisions, 
and with schedules of benefits that deny individual justice.  Such 
systems tilt the legal playing field heavily in favor of insurance 
companies that represent health care providers.  This is especially 
so in systems where the burden of proof on patients (as is 
contemplated by so-called Health Courts) is little different than 
would be required in a court of law.  
        What's more, removing the possibility of jury trial will infect 
the bilateral bargaining/settlement process, through which most 
legitimate medical malpractice disputes are resolved.  Ordinarily, 
the victim's warning that he or she is prepared to take a case before 
a jury helps to ensure a fairer settlement.  Without the prospect of a 
jury trial, the health care/insurance company's leverage in any 
settlement negotiation is greatly increased, to the detriment of 
innocent patients.  
        Moreover, it is bad enough that the law contemplates a one-
size-fits-all schedule of benefits that, like caps, take into account 
no individual circumstances of a person's life.  But also, political 
bodies will set these compensation judgments, and insurance and 
health industry representatives can lobby these bodies.  It is the 
lesson of history that, unlike our courts and juries, political money 
and lobbying can easily influence legislatures and agencies that 
retain the sole power to redefine limits and benefits under codified 
compensation systems.  Once political forces take over a statutory 
system, as they always do, it is merely a matter of time before even 
the most pro-victim proposal is turned into a nightmare for the 
injured person. 
        Removing the threat of litigation would also disrupt other 
critical functions of the legal system, most importantly the 
deterrence of unsafe practices, especially in hospitals as explained 
below.  Clearly, we need to look for ways to improve the quality of 
health care services in our country and to reduce preventable 
medical errors.  Alternatives to litigation will not only fail to fully 
compensate patients, but they will also undermine restraints the 
civil justice system currently imposes on dangerous conduct. 
        Patient safety should be our first priority.  There are many 
productive areas to focus upon - weeding out the small number of 
doctors responsible for most malpractice, improving nurse staffing 
ratios, to mention just two.  Mechanisms that shield grossly 
negligent doctors from accountability by intruding upon the legal 
system are simply the wrong way to go.

        On May 11, 2006, two articles published in the New England 
Journal of Medicine lead to the conclusion that despite a 
tremendous amount of negative rhetoric about medical malpractice 
litigation, the medical malpractice system works pretty well.  
        In their closed claims study, Michelle Mello, David M. 
Studdert and others found that despite its costs, the current system 
works: legitimate claims are being paid, non-legitimate claims are 
generally not being paid, and that "portraits of a malpractice 
system that is stricken with frivolous litigation are overblown."   
The authors found:
	 Sixty-three percent of the injuries were judged to be the 
result of error and most of those claims received 
compensation; on the other hand, most individuals whose 
claims did not involve errors or injuries received nothing. 
	 Eighty percent of claims involved injuries that caused 
significant or major disability or death.
	 "The profile of non-error claims we observed does not 
square with the notion of opportunistic trial lawyers 
pursuing questionable lawsuits in circumstances in which 
their chances of winning are reasonable and prospective 
returns in the event of a win are high.  Rather, our findings 
underscore how difficult it may be for plaintiffs and their 
attorneys to discern what has happened before the initiation 
of a claim and the acquisition of knowledge that comes 
from the investigations, consultation with experts, and 
sharing of information that litigation triggers."
	 "Disputing and paying for errors account for the lion's 
share of malpractice costs."
	 "Previous research has established that the great majority 
of patients who sustain a medical injury as a result of 
negligence do not sue. . [F]ailure to pay claims involving 
error adds to a larger phenomenon of underpayment 
generated by the vast number of negligent injuries that 
never surface as claims."
	 Patients "rarely won damages at trial, prevailing in only 21 
percent of verdicts as compared with 61 percent of claims 
resolved out of court." 

        The authors also determined that the costs of the current system 
were high - but compared to what?  Medical malpractice cases 
represent a tiny fraction of cases that pass through the civil courts 
every day.  Health Courts contemplate establishing an entirely new 
administrative bureaucracy to accomplish the same thing.  Insurers 
will still fight claims.  Independent witnesses for both sides will 
still be needed.  The Health Court process would hardly save 
money - unless it was done on the backs of injured patients who 
would be less likely to obtain adequate compensation under this 
        The second article from the May 11, 2006, New England 
Journal of Medicine argued that litigation against hospitals 
improves the quality of care for patients.   The article also 
confirmed that removing the threat of litigation would do nothing 
to improve the reporting of errors since fear of litigation is not the 
main reason doctors do not report errors.  Highlights of this article 
	 "In the absence of a comprehensive social insurance 
system, the patient's right to safety can be enforced only by 
a legal claim against the hospital. . [M]ore liability suits 
against hospitals may be necessary to motivate hospital 
boards to take patient safety more seriously."
	 "The major safety-related reasons for which hospitals have 
been successfully sued are inadequate nursing staff and 
inadequate facilities."  For example, the Illinois Supreme 
Court found that a hospital was at fault for failing to 
provide enough qualified nurses "to monitor a patient, 
whose leg had to be amputated because his cast had been 
put on too tight."
	 Anesthesiologists were motivated by litigation to improve 
patient safety.  As a result, twenty-five years ago, this 
profession implemented "a program to make anesthesia 
safer for patients" and as a result, "the risk of death from 
anesthesia dropped from 1 in 5000 to about 1 in 250,000."
	 Only one quarter of doctors disclosed errors to their 
patients, but "the result was not that much different in New 
Zealand, a country that has had no-fault malpractice 
insurance" [i.e., no litigation against doctors] for decades. 
In other words, "There are many reasons why physicians do 
not report errors, including a general reluctance to 
communicate with patients and a fear of disciplinary action 
or a loss of position or privileges."
	 "[B]y working with patients (and their lawyers) to establish 
a patient's right to safety, and by proposing and supporting 
patient-safety initiatives, physicians can help pressure 
hospitals to change their operating systems to provide a 
safer environment for the benefit of all patients."

        Finally, statistics suggest that few who are injured by medical 
negligence actually file a claim, go to court, or receive any 
compensation for their injuries.   Proponents of Health Courts call 
this a litigation crisis that can be resolved with alternative systems.  
This is absurd.
        First, patients who are injured by medical malpractice usually 
do not know that negligence was involved in the first place, or 
even suspect it.  Hospital records certainly do not indicate errors.  
This situation would be no different if patients were forced to 
litigate in Health Courts.  Certainly, the hardball litigation tactics 
of insurance companies that deny and fight legitimate claims will 
not suddenly stop either.  Second, sometimes it is only after an 
attorney agrees to take a case, goes through the laborious process 
of obtaining hospital records, and has their own experts evaluate 
the information, that negligence can be proven.  This process 
would be no different with Health Courts, but would be even more 
difficult for the patients because there would be no judge or jury to 
ensure a fair process.  In fact, bias in the process may make it less 
likely that an attorney will financially risk taking the case at all.  
        Finally, there are many reasons why malpractice victims do not 
sue even when they know negligence was involved.  My own 
father's cancer was misdiagnosed by his family physician.  No one 
in my family even considered the notion of suing this doctor, and 
would not have done so no matter what kind of process was 
available to us.  These kinds of stories are repeated every day in 
this country.  But when a child is catastrophically injured or the 
breadwinner of a young family is rendered quadriplegic, families 
need and deserve the kind of compensation that a judge or jury, 
who listen to the evidence in each individual case, decide is best.  
While presented ostensibly for the benefit of victims, Health Court 
proposals show nothing but misguided concern for what is best for 
patients and, particularly, the most severely injured patients.  

Sorry Works
        Several alternative compensation proposals for medical 
malpractice cases have been discussed over the last year.  The 
Medical Error Disclosure and Compensation (MEDiC) Program, 
also known as "Sorry Works", is problematic.  Under the current 
federal proposal, "health care providers would report patient 
injuries to a designated officer who would determine whether those 
injuries resulted from a medical error.  In the event that a medical 
error occurred, providers would explain the incident to patients, 
offer an apology and enter into compensation negotiations.  The 
apologies would remain confidential, and patients could not use 
them as an admission of guilt in legal proceedings."  
        There are several concerns.  First, the civil justice system is 
structured to neutralize resource and power imbalances between 
the parties.  Without it, negotiations become heavily tilted in favor 
of the doctor or hospital.  There is little doubt that an uninformed 
patient, particularly one who is catastrophically injured, will be 
pressured by insurers to resolve their case for a fraction of what 
they need or deserve, particularly when it comes to future medical 
expenses.  Because there is no requirement that the patient be 
represented by counsel, these negotiations will be extremely 
perilous for the injured patient.  If the dispute goes to mediation, 
this can also be dangerous for the injured patient.  Mediation can 
make a dispute appear as a conflict between equals that should be 
worked out on amicable terms for both, inducing the feeling on the 
injured victim's part that he or she should compromise, regardless 
of the justice of his or her claim. 
        Another problems is that, while there is the right to proceed to 
the judicial system if no agreement is reached after six months, the 
bill does not toll the statute of limitations during the negotiation 
period, which is a serious problem in states that have only a 1 year 
statute of limitations.  Finally, it hardly needs to be said that 
keeping an admission of wrongdoing out of court is not only unfair 
to patients who have been hurt, but increases transaction costs as 
patients are forced to build their case from scratch.  The real 
problem is the insurance company that fights patients in these 
cases, rather than acknowledge the culpability of the health care 
provider that they insure.

Health Courts
        The Health Court model has generated a good deal of interest 
and is being strongly pushed by Common Good. The proposal that 
is taking shape has the following key features: specialized judges 
with an expertise in health care; experts hired by the Health Court; 
a modified form of negligence (termed "avoidability"); a 
compensation schedule; no juries; and no access to civil court 
        As for the standard of liability, the Health Court proposal being 
discussed most recently relies on a new standard entitled 
"avoidability."  This is not a "no-fault" standard but rather 
contemplates some element of fault, or a judgment that care was 
somehow sub-optimal and this lower level of care resulted in 
 	Avoidability appears to draw from a standard applied in 
Sweden and lies somewhere between negligence and strict 
liability.   It should be noted that Sweden, which is often cited as 
the model for current Health Court proposals, allows for tort 
remedies to co-exist alongside Health Courts.  Moreover, Sweden 
has an array of other public benefits that offset costs of injuries 
regardless of any claims.  In the U.S., however, where there are 
very few public benefits, the proponents of Health Courts are 
adamant about the exclusivity of Health Courts and the removal of 
all access to the court system.  This can only result in injured 
people having to shoulder much more of the cost of the injury, 
without any accountability mechanisms being placed on the health 
care industry.  

        Proponents of Health Courts waive away constitutional 
problems raised by eliminating the right to trial by the jury by 
citing to worker's compensation, vaccine injury compensation, tax 
courts, and even the National Labor Relations Board. Although 
each of these programs was built on a different authorizing 
structure, they all share an adjudication function without the aid of 
juries.  They are also all distinguishable from Health Courts.  The 
compensation schemes are all based on no-fault models, and the 
remaining alternative schemes adjudicate public, federally-created 
rights, not private long-standing state common law rights.
        In fact, almost every state constitution guarantees the right to 
trial by jury in civil cases and the right to access the court system 
for redress.  Health Courts require that patients give up these rights 
without any reasonable substitute.  A majority of states will likely 
find health "courts" unconstitutional based on their state 
constitutional provisions safeguarding the right to a jury, the right 
to open access to the courts and/or the right to due process. 
        Moreover, the determination of fault under common law is the 
quintessential jury function, and empirical studies support the view 
that a jury's ability to handle complex litigation, including medical 
malpractice cases, is not a problem, and has never been a 
problem."   Juries, through the group processes of collaboration 
and deliberation, are particularly well-suited for complex cases.   
Jury verdicts are consistent with those of other decision-makers.  A 
doctor-led research group examined 8,231 closed malpractice cases 
in New Jersey and found that the verdicts rendered by juries in the 
few cases that went to trial correlated with the judgment of the 
insurers' reviewing physicians."   Another analysis of various 
studies found: "Researchers have repeatedly found that juries and 
judges reach extremely similar conclusions about tort liability."  
"Other researchers found that the evidence on judge-jury 
concordance in complex cases is very favorable.  In one study of 
malpractice trials, for example, juries were harder on plaintiffs 
than judges were."  
        Moreover, judges, who see how juries function every day, have 
enormous confidence in the jury system, including their ability to 
handle complex cases.  In March 2000, the Dallas Morning News 
and Southern Methodist School of Law sent questionnaires to 
every federal trial judge in the United States, its territories and 
protectorates - over 900 judges.  About 65 percent (594) of the 
federal judges responded.   The paper reported, "The judges' 
responses reflect a high level of day-to-day confidence in the jury 
system.  Only 1 percent of the judges who responded gave the jury 
system low marks..  Ninety-one percent believe the system is in 
good condition needing, at best, only minor work. 
Overwhelmingly.judges said they have great faith in juries to 
solve complicated issues..  Ninety-six percent said they agree 
with jury verdicts most or all of the time.  And nine of 10 judges 
responding said jurors show considerable understanding of legal 
and evidentiary issues involved in the cases they hear." 

        Proponents of alternatives like Health Courts often make vague 
promises that an alternative system will be fairer to plaintiffs 
and/or will provide more compensation accompany such proposals.  
They point to benefits such as "free legal representation," 
"efficiency," and "quicker resolution," as reasonably just 
substitutes for a plaintiff's right to open access of the courts and 
right to trial by jury.   
        At the outset, it is worth noting that there is no free legal 
representation being offered as part of the Health Courts model or 
any of the alternative systems.  An attorney is not mandatory, but 
neither is this true for our civil justice system.  But clearly, victims 
feel that they fare better with an attorney representing them and it 
is safe to assume the same will be true for the Health Courts, if not 
even more so as the administrative tribunal will have less 
procedural safeguards in place to assure fairness.  Although it is 
true that a plaintiff may be given access to free "experts," these are 
experts picked by a panel heavily weighted toward industry. 
        Moreover, claims of efficiency and speed of process are belied 
by almost every other alternative compensation system, each of 
which is plagued with a host of bureaucratic, cost and political 
capture problems.  For example:

The Vaccine Injury Compensation Program (VIC)
        VIC was created by federal statute, the National Childhood 
Vaccine Injury Act of 1986, and went into effect on October 1, 
1988.   Unlike Health Courts, it is based on a no-fault 
compensation system although many argue that the Program has 
been co-opted by political forces and turned into a victim's 
nightmare.   Critics contend that the process is heavily weighted 
against the injured parties, the process takes too long, and the HHS 
Secretary has removed too many injuries from the table.  
        Agency determinations to remove certain injuries from the 
covered table, and limit the statute of limitations have foreclosed 
many claims.   These determinations usually cannot be reviewed 
or appealed.  Once a claim or injury is removed from the table, the 
element of no-fault is also removed.  The claimant is then left with 
the frustrating task of litigating fault in an administrative setting 
without the full procedural safeguards of civil courts to guide the 
litigation.  Personal anecdotes of those who have attempted to 
utilize the system describe waits of more than ten years and an 
increasingly adversarial nature to the "no-fault" proceedings.   
Even with the morphing of the Program into an increasingly fault-
based standard, the Vaccine Program still contemplates a no-fault 
arena for certain injuries.  The Program's slow political capture 
and subsequent demise as an adequate alternative for victims 
should, if anything, serve as a loud warning as to the vulnerability 
of a fault-based alternative tribunal to address injured medical 

Workers Compensation
        State legislatures have been chipping away at worker's 
compensation systems at an alarming rate almost since its 
inception, in direct response to the requests of insurance carriers 
and businesses.  In many states, the process workers must go 
through to make claims and receive compensation has become 
longer, less efficient, and ultimately less successful in terms of its 
original goals.   According to one legal scholar who studies 
workers compensation, "injured workers often face denials and 
delays of apparently legitimate claims, high litigation costs, 
discrimination, and harassment by employers and coworkers.. 
[M]any reports suggest that  recent reforms have substantially 
increased injured workers' financial burdens."     
        It is clear that workers who are permanently disabled are not 
getting enough compensation and the compensation duration is too 
short.  Data consistently shows that a worker injured at the 
workplace earns significantly less than before the injury, even after 
returning to work.   For example, according to one Rand Institute 
for Civil Justice study, "permanent partial disability claimants 
injured in 1991-1992 [in California] received approximately 40 
percent less in earnings over the four to five years following their 
injuries than did their uninjured counterparts."   Moreover, "for 
workers with minor disabilities, benefits replace a small fraction of 
lost wages."     An earlier Rand ICJ report, released in 1991 found 
that "injured workers recovered a lower percentage of their 
accident costs than all accident victims (54.1%), and that workers' 
compensation only compensated about 30% of the costs of long-
term disabilities from work accidents." 

Virginia's Birth-Related Neurological Injury Compensation 
        The Richmond Post-Dispatch newspaper reported on this 
program several years ago, finding, "Children born in Virginia 
with catastrophic neurological injuries are promised lifetime 
medical care by the birth-injury program.  But these children and 
their families also have been forced to absorb stunning disparities 
in program benefits because of shifting priorities and cost 
reductions over which they had no control or voice..  'The 
program can end up providing very little,' said Christina Rigney, 
referring to the minimal benefits her family received in the face of 
her son's traumatic birth and brief life.  'We believed there was 
negligence involved, but nothing ever came of it.'"  Her son died 
three years after he was severely injured due to oxygen loss during 
birth.  Because of the birth injury law, the family couldn't file a 
malpractice suit, the obstetrician was never even asked to explain 
what happened, and the family could learn nothing from illegible 
notes that failed to account for long periods of time.  Families of 
two other brain-injured infants delivered by the same obstetrician 
faced the same limits on their ability to learn what happened, or 
seek to show he was negligent.  He is facing a lawsuit, however, 
for a fourth case in which a woman giving birth bled to death after 
delivering a healthy baby.   National birth-injury experts have 
reportedly expressed fear about Virginia becoming a safe harbor 
for bad doctors due to this law. 

        It is misguided to think that fear of litigation is the only, or 
even principal, reason that doctors and hospitals do not report 
errors. As noted in the May 11, 2006 New England Journal of 
Medicine article, "There are many reasons why physicians do not 
report errors, including a general reluctance to communicate with 
patients and a fear of disciplinary action or a loss of position or 

        hospitals have some of the strongest protections from liability 
in the nation, since nearly all fall under the state's charitable 
immunity laws that cap their liability at $20,000.   Yet, even 
though they run little risk of liability for errors, "statistics suggest, 
and leading experts confirm, that doctors and hospitals around 
Boston - widely considered the medical capital of the world - 
are vastly underreporting their mistakes to regulators and the 
public."   According to a February 2003 Boston Magazine article:

        In 2001, Massachusetts hospitals reported 982 serious 
incidents, or medical errors, to state regulators, up from 636 
five years earlier, but still an average of just three reports per 
day.  In New York State, by comparison, hospitals submitted 
nearly 30,000 reports, or 82 per day. In fairness, that disparity 
is mostly due to the different ways the states define a medical 
error: New York studies every little complication; 
Massachusetts, only major incidents. Still even New York is 
criticized for disclosing fewer medical errors than actually 
occur, and with a population only three times that of 
Massachusetts, it is reporting more than 30 times as many.  
One doctor who was a member of a Massachusetts oversight 
committee says statistics show there should be 10 reports of 
medical errors per 100 hospital beds each year. In fact, 
hospitals in this state are disclosing roughly three.  Even when 
they are reported, one Harvard School of Public Health 
professor says, many medical errors are barely investigated 
because of a lack of resources.  

        Under the birth-injury program in place in Virginia, 
obstetricians are not asked to explain what happened, and the 
family may never learn anything about what caused a catastrophic 
injury.  According to news reports, not a single case in the 
program's 15-year history has produced a disciplinary action 
against a hospital or doctor, even though those cases "pose a high 
risk for findings of negligence against doctors, nurses and 
hospitals."   One mother of a daughter with cerebral palsy and 
other severe disabilities testified before the Virginia House that the 
program "has evolved from a model of care for severely disabled 
children to . . . safe haven for physicians and hospitals who, in 
some cases, are directly responsible for these catastrophic 

        As stated earlier, the May 11, 2006, New England Journal of 
Medicine article argued that litigation against hospitals improves 
the quality of care for patients.   In a March 5, 1995, New York 
Times article, Dr. Wayne Cohen, then-medical director of Bronx 
Municipal Hospital, said, "The city was spending so much money 
defending obstetrics suits, they just made a decision that it would 
be cheaper to hire people who knew what they were doing."  
        Patients have suffered tremendously as a result of dangerous or 
incompetent health care providers, hospitals, HMOs, and nursing 
homes.  Many unsafe practices were made safer only after lawsuits 
were filed against those responsible.  In other words, lawsuits 
protect us all, whether or not we ever go to court.  Moreover, the 
amount of money saved as a direct result of this litigation - 
injuries prevented, health care costs not expended, wages not lost, 
etc. - is incalculable.  Some examples of these cases include:

	 Failure to properly monitor patient.
        FACTS: Marilyn Hathaway suffered brain damage after an 
anesthesiologist failed to monitor her cardiopulmonary status 
during surgery. In 1983, Hathaway sued the physician.  The jury 
verdict was for $5 million in damages. 
        EFFECT: According to the book Silent Violence, Silent Death, 
"After having to pay repeated medical malpractice claims arising 
from faulty anesthesia practices ... Arizona's malpractice insurance 
companies took action.  For example, the Mutual Insurance 
Company of Arizona, which insures over 75 percent of the state's 
physicians, began levying a $25,000 surcharge on insurance 
premiums for anesthesiologists against whom claims had been 
made because constant monitoring of the patient was not 
performed during general anesthesia.  As a result of litigation, 
adequate anesthesia monitoring during surgery has become a 
standard medical practice in Arizona." 

	 Tube misinsertion caused death.
        FACTS: Rebecca Perryman was admitted to Georgia's 
DeKalb Medical Center after suffering from kidney failure.  While 
undergoing dialysis, a catheter inserted in her chest punctured a 
vein, causing her chest cavity to fill with blood.  Perryman suffered 
massive brain damage and lapsed into a coma.  She died two 
weeks later.  Perryman's husband Henry filed suit against DeKalb 
and its Radiology Group, as well as the doctor who failed not only 
to spot the misplaced catheter in Perryman's chest x-ray but also to 
quickly respond to the victim's excessive bleeding.  DeKalb and 
the Radiology Group settled before trial for an undisclosed 
amount; a jury awarded $585,000 against the doctor. 
        EFFECT: "After the award, the radiology department 
instituted new protocol for verifying proper placement of 

	 Emergency room failed to diagnose heart disorders.
        FACTS: Three Air Force servicemen died after being 
discharged from the emergency room without proper examination.  
Though each had a history of heart problems and displayed classic 
symptoms of heart disorder, all three were misdiagnosed with 
        EFFECT: "As a result of malpractice litigation, the Air Force 
investigated the deaths and instituted stringent new requirements 
for diagnostic testing ... These procedures are now standard 
practice at Air Force medical facilities throughout the world." 

	 Newborns left in nursery without supervision.
        FACTS: In September 1982, James Talley was born at Doctors 
Hospital in Little Rock, Arkansas.  He was left alone for 35 
minutes, 10 to 15 of which he stopped breathing.  When a nurse 
came to check on him, his heart had stopped and he had turned 
blue.  The oxygen deprivation caused permanent brain damage.  
The Talleys sued Hospital Corporation of America (HCA), 
Doctors Hospital's parent company, arguing that HCA's cost 
cutting procedure of reducing the number of nurses in the pediatric 
unit placed newborns at risk of injury or death.  At trial, evidence 
showed that it would have cost Doctors Hospital an additional 
$70,000 per year per nurse to have someone in the nursery at all 
times and that the hospital was consistently two nurses short on the 
nightshift.  The jury awarded $1.85 million in compensatory 
damages for James, $777,000 to his mother and $2 million in 
punitive damages. 
        EFFECT: "As a result of this decision, HCA changed its 
policy on staffing pediatric units throughout its chain of hospitals, 
potentially saving hundreds of new lives and preventing as many 

	 Staffing problem endangered patients.
        FACTS: On January 26, 1998, Dr. Roberto C. Perez suffered 
severe brain damage after a nurse, who had been working over 70 
hours a week and was just finishing an 18-hour shift, injected him 
with the wrong drug.  Perez had been admitted to Mercy Hospital 
in Laredo, Texas, two weeks earlier after a fainting spell and was 
almost ready to be discharged.  His family filed a medical 
malpractice suit against Mercy Hospital, among others, arguing 
that hospital administrators knew since 1994 that staffing problems 
existed yet failed to do anything about the nursing short-age.  The 
case settled before trial, with the hospital paying $14 million. 
        EFFECT: As part of the settlement, Mercy Hospital agreed 
that no nurse in the ICU would be allowed to work more than 60 
hours per week. 

	 Bacterial infection spread to hospital roommate.
        FACTS: In 1983, 72-year-old Julius Barowski contracted a 
bacterial infection from a fellow patient after undergoing knee 
replacement surgery.  His condition required 11 hospitalizations 
and 9 surgeries; his leg lost all mobility.  As the infection spread, 
he suffered excruciating pain and was institutionalized for 
depression until his death one year later.  Barowski's 
representative filed suit, alleging that the hospital breached its own 
infection control standards.  The jury awarded $500,000. 
        EFFECT: "The Widmann ruling and similar cases have had a 
catalytic impact in health care facilities around the country.  
Facilities are much more attentive to the clinical importance of 
cleanliness in all its dimensions - handwashing, routine 
monitoring of infection risks, and more vigorous reviews of 
hospital infection control protocols."  

	 Inadequate monitoring led to patient's death.
        FACTS: In 1996, 78-year-old Margaret Hutcheson lapsed into 
a coma and died after a two-and-a-half month stay at Chisolm Trail 
Living & Rehabilitation Center.  Hutcheson had been admitted to 
Chisolm for short-term rehabilitation after fracturing her hip and 
wrist at home.  While residing at the center, she suffered severe 
pressure sores, malnourishment and dehydration, which required 
three hospitalizations.  Hutcheson's family sued the facility and its 
personnel for wrongful death, arguing that Chisolm was 
understaffed and failed to follow internal procedures to ensure 
Hutcheson's safety.  The jury awarded $25 million. 
        EFFECT:  As part of the settlement, Diversicare, the nursing 
home operator, "agreed to adopt a policy requiring the residents' 
charts be monitored on a weekly basis to ensure their needs are 
being met.  This policy has been implemented in all 65 nursing 
homes owned or operated by Diversicare, and will benefit over 
7,000 nursing home residents."  

	 Nurses feared consequences of challenging doctors' 
        FACTS: On April 30, 1979, Jennifer Campbell suffered 
permanent brain damage after becoming entangled in her mother's 
umbilical cord before delivery.  Although a nurse had expressed 
concern when she noticed abnormalities on the fetal monitor, the 
obstetrician failed to act.  Despite the doctor's unresponsiveness, 
the nurse never notified her supervisor or anyone else in her 
administrative chain of command.  The child developed cerebral 
palsy, requiring constant care and supervision.  Evidence revealed 
that the hospital lacked an effective mechanism for the nursing 
staff to report negligent or dangerous treatment of a patient.  In 
addition, the nursing supervisor testified that an employee could be 
fired for questioning a physician's judgment.  The jury awarded 
the Campbells over $6.5 million. 
        EFFECT: "Because of this verdict and its subsequent 
publicity, hospitals throughout North Carolina have adopted a new 
protocol that allows nurses to use their specialized training and 
judgment on behalf of patients, without risking their jobs."  

	 Patient prescribed incorrect chemotherapy dosage.
        FACTS: When 41-year-old Vincent Gargano was diagnosed 
with testicular cancer in 1994, he was given a 90 percent to 95 
percent chance of survival.  On May 26, 1995, he entered the 
University of Chicago Hospitals to undergo his last phase of 
chemotherapy.  For four consecutive days Gargano received a 
dosage that was four times the needed amount, a mistake that went 
undetected by at least one doctor, two pharmacists and four nurses 
until four overdoses had already been administered.  Hospital 
records showed that the prescribing doctor wrote the incorrect 
dosage and that three registered nurses failed to double-check the 
prescription against the doctor's original order.  As a result, 
Gargano suffered hearing loss, severe kidney damage, festering 
sores and ultimately the pneumonia that caused his death the 
following month.  The case settled for $7.9 million. 
        EFFECT: The hospital implemented new policies to ensure 
that doctors and nurses better document and cross-check 
medication orders. 

SOME solutions to reduce medical errors
        There is no doubt that deaths and injuries due to medical 
malpractice are substantial.  In late 1999, the National Academy of 
Sciences Institute of Medicine (IOM) published To Err is Human; 
Building a Safer Health System.  The study makes some striking 
findings about the poor safety record of U.S. hospitals due to 
medical errors.   For example, between 44,000 and 98,000 deaths 
occur each year in U.S. hospitals due to medical errors, the higher 
figure extrapolated from the 1990 Harvard Medical Practice study 
of New York hospitals.  Even using the lower figure, more people 
die due to medical errors than from motor vehicle accidents 
(43,458), breast cancer (42,297) or AIDS (16,516).  
        A recent survey found, "[e]ighty percent of U.S. doctors and 
half of nurses surveyed said they had seen colleagues make 
mistakes, but only 10 percent ever spoke up."  Moreover, "fifty 
percent of nurses said they have colleagues who appear 
incompetent" and "[e]ighty-four percent of physicians and 62 
percent of nurses and other clinical care providers have seen co-
workers taking shortcuts that could be dangerous to patients." 
Doctors and nurses do not talk about these problems because 
"people fear confrontation, lack time or feel it is not their job." 
        There is much that can and should be done.  Unfortunately, too 
little is being done to weed out the small number of doctors 
responsible for most malpractice.  As the New York Times 

Experts retained by the Bush administration said on Tuesday 
that more effective disciplining of incompetent doctors could 
significantly alleviate the problem of medical malpractice 

As President Bush prepared to head to Illinois on Wednesday 
to campaign for limits on malpractice lawsuits, the experts said 
that states should first identify those doctors most likely to 
make mistakes that injure patients and lead to lawsuits.

The administration recently commissioned a study by the 
University of Iowa and the Urban Institute to help state boards 
of medical examiners in disciplining doctors.

"There's a need to protect the public from substandard 
performance by physicians," said Josephine Gittler, a law 
professor at Iowa who supervised part of the study.  "If you 
had more aggressive policing of incompetent physicians and 
more effective disciplining of doctors who engage in 
substandard practice, that could decrease the type of 
negligence that leads to malpractice suits.'"

Randall R. Bovbjerg, a researcher at the Urban Institute, said, 
"If you take the worst performers out of practice, that will have 
an impact" on malpractice litigation. 

        Public Citizen's Health Research Group has made similar 
findings for many years.    The group found that only one-half of 
1 percent of 770,320 licensed medical doctors face any serious 
state sanctions each year.  "Too little discipline is still being done," 
the report said.  "2,696 total serious disciplinary actions a year, the 
number state medical boards took in 1999, is a pittance compared 
to the volume of injury and death of patients caused by negligence 
of doctors..  Though it has improved during the past 15 years, the 
nation's system for protecting the public from medical 
incompetence and malfeasance is still far from adequate."
        Other problems that can be addressed include:
        Safer RN staffing ratios. A 2002 study in the Journal of the 
American Medical Association found that patients on surgical units 
with patient-to-nurse ratios of 8:1 were 30 percent more likely to 
die than those on surgical units with 4:1 ratios. 
        Reduce continuous work schedules. According to studies 
published in the October 28, 2004, issue of the New England 
Journal of Medicine, "The rate of serious medical errors 
committed by first-year doctors in training in two intensive care 
units (ICUs) at a Boston hospital fell significantly when traditional 
30-hour-in-a-row extended work shifts were eliminated and when 
interns' continuous work schedule was limited to 16 hours, 
according to two complementary studies funded by the National 
Institute for Occupational Safety and Health (NIOSH) and the 
Agency for Healthcare Research (AHRQ).  Interns made 36 
percent more serious medical errors, including five times as many 
serious diagnostic errors, on the traditional schedule than on an 
intervention schedule that limited scheduled work shifts to 16 
hours and reduced scheduled weekly work from approximately 80 
hours to 63. The rate of serious medication errors was 21 percent 
greater on the traditional schedule than on the new schedule.  
        Better technology in hospitals to provide better care with 
greater consistency.  A handful of hospitals are starting to use 
technology to make prenatal care and delivery safer.  These 
hospitals are using computer software that improves monitoring 
and treatment.  

        Under Health Courts, the long-standing and fundamental right 
to trial by jury is eliminated for medical malpractice victims.  
Instead, patients are forced into an alternative system without 
juries, without any accountability mechanisms, without procedural 
safeguards, and without any meaningful appeals process.  These 
hardships, coupled with the burden of having to prove fault, render 
the injured claimant virtually powerless and at the mercy of the 
insurance and hospital industries.  
        Safety suffers when systems are not designed to reflect the full 
costs of accidents. Our objectives should be deterring unsafe and 
substandard medical practices while safeguarding patients' rights.  
Indeed, our goal must be to reduce medical negligence.  This is not 
the time to establish a new process, which will only protect 
incompetent doctors even more from meaningful liability exposure 
and scrutiny, including the most egregiously reckless health care 

	MR. DEAL.  Thank you.
	Ms. Niro.
        MS. NIRO.  Thank you, Mr. Chairman, for the opportunity to 
present the views of the American Bar Association, the ABA.
	My name is Cheryl Niro.  I have been an attorney for almost 25 
years.  I am one of the earliest attorneys in the country, and 
certainly in the State of Illinois, to become a mediator and 
arbitrator.  I have been both a student and a teaching assistant at 
the Harvard Law School of Mediation and Negotiation Training 
programs.  I have successfully mediated well over 100 cases.  I 
have trained judges and lawyers to mediate cases.  But most 
importantly, I have worked with healthcare institutions to design 
courses and ADR systems and have taught their professionals how 
to use negotiation and mediation skills to resolve healthcare 
disputes with patients and their families on site, just one program 
that has the potential for dramatically impacting and lowering the 
number of subsequent filings of malpractice suits.  I have never 
filed a plaintiff's medical malpractice suit in my career, although I 
have resolved many of them.
	My written testimony focuses largely on the issues presented 
by the health court models discussed today, but I would just like to 
highlight the ABA's concerns about them.
	The preeminent concern is that the model would remove the 
injured patients' rights protected by the Seventh Amendment of 
our Constitution to have a trial by jury.  Injured persons would 
therefore lose the protections of the rules of evidence and the rules 
of procedure, which exist to assure that parties are treated equally 
in the court system.  While proponents say that the health court 
model would be constitutional because it is similar to the 
workmen's compensation model, there is a significant difference, 
and that is injured workers do not have to prove liability where 
injured patients would still have that burden.  They would not be in 
a court of law, but they would have a burden of proof as if they 
were in a court.
	There are very fine alternatives that exist currently today that 
do not damage an injured patient's right to a trial by jury and 
judge.  Alternative dispute resolution, or ADR, as we call it, has 
been used across the country, and quite successfully.  We certainly 
do not need to create a system with this administrative, 
bureaucratic tangle when we have got a system currently that looks 
like this.
	The circle here at the bottom, below the trial court and the 
appellate court, is the world of alternative dispute resolution.  I 
would like to take just a moment to explain some of these 
	The most simple is negotiation.  A convening of the parties to 
sit across the table from each other, or even better yet, to sit next to 
each other at the table and try to cooperatively work out a 
resolution to the dispute.  If they fail, they may agree to bring in a 
mediator.  The mediator, also selected by agreement of the parties, 
is neutral, has no authority to impose a resolution.  The mediator is 
there to assure that the process is fair and assists the parties to 
continue their negotiations, often using sophisticated skills in 
getting them beyond impasse and keeping the parties at the table 
until a solution is found.
	There are summary jury trials where the parties may present 
their cases to a privately-obtained neutral to act as judge, which 
allows the parties to see how a judge and jury may likely rule.  
With that information, they can conduct further negotiation armed 
with the information from the likelihood of outcome in trial.  Only 
mutual evaluation is presenting both sides' information to an 
expert, private, neutral, who makes very instructive and 
informative assessments of the case in the most likely outcomes, 
both in liability and damages.
	All of these, and many more processes, are currently available 
and in use around the country and all have the integrity necessary 
to pass constitutional muster.  They are all voluntary, truly 
voluntary.  They may be used, in effect, custom designs to fit the 
unique circumstances of the cases.
	At this point, I just want to mention that neither the health 
court proposal nor the early offer proposals are truly voluntary.  In 
the healthcare bill, patients would be forced into the health court 
system with no access to the court.  In early offer, the decision to 
refuse the offer made by the patient would put the injured patient 
in what the offer concedes would be an unattainable burden of 
proof in liability of gross negligence beyond the shadow of a 
doubt, which is simply no choice at all.
	The ABA is very concerned that any alternative to our court 
system must be completely free of coercion, truly voluntary, and 
preserve the rights of the patient.  ADR offers both.  I urge you to 
make the contribution to invest in greater use, greater understating, 
greater cooperation, greater participation in developing these 
alternatives so that they, which are consistent with patients' rights, 
may be used.
	I have brought for you two magazines today, which were 
created on dispute resolutions used in the healthcare industry.  I 
believe some of the materials are in your packages today.  The 
ABA supports any change in the access to alternative dispute 
resolution that is voluntary, that preserves the rights of the patients, 
and opposes any bill that would remove those essential rights from 
any of our citizens.
	I am grateful to have had the opportunity to discuss this with 
you this morning and would be honored to take your questions and 
continue the dialogue.
	[The prepared statement of Cheryl Niro follows:]


        Mr. Chairman and Members of the Subcommittee:
        I appreciate the opportunity to present the views of the 
American Bar Association (ABA) on "Innovative Solutions to 
Medical Liability."  My name is Cheryl Niro, and I am an 
incoming member of the Standing Committee on Medical 
Professional Liability and a member of the House of Delegates of 
the ABA. I am appearing on behalf of the ABA at the request of its 
President, Michael Greco.  
        I was an early proponent of alternative dispute resolution and 
sought the best education possible in the areas of mediation, 
negotiation and arbitration.  I have been certified and trained by the 
founders of these fields.  I began at The Atlanta Justice Center, one 
of the first three mediation programs in the nation.  I was a student 
and teaching assistant at the Harvard Law School mediation and 
negotiation training programs.
        In 1992, I was a founding director of a dispute resolution 
training program funded by a joint grant from the US Departments 
of Education and Justice.  That program became the National 
Center for Conflict Resolution Education and trained thousands of 
educators, teachers, parents and students to create Peer Mediation 
Programs in schools and other youth-serving organizations across 
the country.  
        I have served on the ABA Section of Dispute Resolution 
Council and have conducted skills-based training programs for 
hospital professionals so that they may use these skills to resolve 
medical care disputes cooperatively with patients and their 
families. I have never filed a plaintiff's medical malpractice claim 
in my career.
        I testify here today as a proud representative of the ABA, a 
lawyer interested in improving our legal system and an American 
citizen committed to our tradition of fairness and justice.
        For decades the ABA has supported the use of, and 
experimentation with, voluntary alternative dispute resolution 
techniques as welcome components of the justice system in the 
United States, provided the disputant's constitutional and other 
legal rights and remedies are protected. The ABA strongly 
supported the alternative dispute resolution movement in the 
United States through Committees and in 1993 it created a Section 
of Dispute Resolution. The Section promotes efforts that focus on 
education, experimentation and implementation of alternatives to 
litigation that resolve disputes economically and without taxing 
limited courtroom resources.  
        As a result of the work of our Dispute Resolution 
professionals, and leaders in that field across the country, the 
number of courts utilizing these methods increases daily.  
Successful programs are replicated, new understanding of the 
potential offered by these voluntary processes is achieved, and 
greater numbers of judges, lawyers and clients find these 
alternatives acceptable tools with which legal disputes may be 
resolved. Over the past fifteen years, the ABA has contributed 
significantly to the development of the field by creating ethical 
standards, best practices training and scholarship to this emerging 
practice.  Additionally, the ABA House of Delegates has adopted 
policy directed at ensuring the efficacy and integrity of these 
voluntary alternatives to litigation.
        Mediation, by definition, is a voluntary process whereby 
disputants may work together, with the assistance of a trained 
neutral facilitator, to resolve their dispute.  Mediation, as it is 
known and practiced worldwide, is not a mandatory process.  
Where disputants are compelled to mediate, the compulsion is only 
to engage in a mediation process in good faith.  Agreements cannot 
be compelled.   Likewise, the ethical use of arbitration requires that 
parties knowingly agree to engage in the process.   
        Specific to the area of medical malpractice, the ABA endorses 
the use of voluntary negotiation, mediation, and settlement 
agreements. In addition, the ABA recognizes the use of arbitration 
as an option for resolving these types of disputes under 
circumstances whereby the agreement to arbitrate is entered into 
only on a voluntary basis after a dispute has arisen and only if the 
disputant has full knowledge of the consequences of entering into 
such an arrangement.
        The American Bar Association has reviewed, as part of 
ongoing efforts to improve the operation of our legal system, 
proposals related to the area of liability of health care providers.  
One such proposal is the creation of "health courts." Under the 
proposed "health court" system, an administrative agency would 
oversee the operation of specialized "courts" where medical 
malpractice cases would be heard by persons possessing 
experience in the health care field rather than judges and juries.  
Under this proposal, medical negligence litigation cases would be 
removed from the court system and the protection of the time-
tested rules of procedure and evidence.  The parties would be 
allowed to be represented by attorneys. There would be no juries. 
Expert witnesses would by hired by "health courts," not by the 
injured patient. Injured patients would be compensated according 
to a schedule of awards.  Patients injured by medical negligence 
would be denied the right to request a trial by jury and the right to 
receive full compensation for their injuries.
        Proponents of the "health courts" proposal say it is modeled on 
the Workers' Compensation system. But there are major 
differences between the two systems. It is unlike the Workers' 
Compensation system in that injured patients would still be 
required to prove fault on the part of a defendant.  A similar burden 
to prove fault is not imposed on an injured worker in a Workers' 
Compensation case.  Importantly, the Workers' Compensation 
system balances the loss of the right to bring an action in court 
with a guaranteed award that is not fault-based.  In the "health 
court" scheme, injured patients are forced to give up the right to 
bring an action in a court with no guarantee of an award.  Injured 
patients would be required to prove that their injuries are "the 
result of a mistake that should have been prevented."  Proponents 
call this the "avoidability standard," which includes injuries "that 
would not have happened were optimal care given."  This is not a 
"no fault" standard as in the Workers' Compensation field, nor is it 
a strict liability standard.
        The "health court" scheme and other proposals for 
administrative tribunal schemes also include the creation of a 
schedule for the assessment of damages and would cover both 
economic and non-economic damages.  Such a schedule is 
inappropriate in medical malpractice cases where a fixed, rigid 
assessment would treat all patients with similar injuries the same.  
Would it be fair to award a pre-determined award for negligence 
that results in a paralyzed hand for a surgeon, or the loss of vision 
for an artist?  The plan assumes that consensus would produce an 
annually adjusted schedule based upon research on similar 
schedules in the U.S. legal system and abroad.  Proponents urge 
the comparison to Sweden and Denmark for regularizing the value 
of American injuries.  The efficacy of that approach is doubtful, 
because those nations have health and welfare benefits that are 
paid for by their governments before consideration of the injury 
claim take place. 
        By establishing a schedule of injuries/pay-outs, the "health 
court" scheme would impose a de facto cap on non-economic 
damages in injury claims.  The plan contemplates Presidential and 
congressional appointees to establish the schedule, but there is no 
guarantee that the Commission would be balanced, nor that the 
schedule would provide fair and just compensation for the injured 
patients.  Caps on non-economic damages work to the 
disadvantage of women, children and the elderly.  Thirteen states 
have found caps unconstitutional.  Courts and juries have a long 
tradition of fashioning individualized, customized damage awards 
to fit the unique circumstances of each case. 
        Thus, in February, 2006, the ABA adopted as policy the 
following resolution:

RESOLVED, That the American Bar Association reaffirms its 
opposition to legislation that places a dollar limit on 
recoverable damages that operates to deny full compensation 
to a plaintiff in a medical malpractice action.

RESOLVED, That the American Bar Association recognizes 
that the nature and extent of damages in a medical malpractice 
case are triable issues of fact (that may be decided by a jury) 
and should not be subject to formulas or standardized 

FURTHER RESOLVED, That the ABA opposes the creation 
of health care tribunals that would deny patients injured by 
medical negligence the right to 
request a trial by jury or the right to receive full compensation 
for their injuries.

        The ABA firmly supports the integrity of the jury system, the 
independence of the judiciary and the right of consumers to receive 
full compensation for their injuries, without any arbitrary caps on 
damages. It is for these reasons that the ABA opposes the creation 
of any "health court" system that undermines these values by 
requiring injured patients to utilize "health courts" rather than 
utilizing regular state courts in order to be compensated for 
medical negligence.
        As stated above, ABA policy has long endorsed the use of 
alternatives to litigation for resolution of medical malpractice 
disputes only when such alternatives are entered into on a 
voluntary basis and only when they are entered into after a dispute 
has arisen. Instead of creating and mandating the use of "health 
courts," the ABA advocates the use of voluntary arbitrations, 
mediations, and settlement conferences, all of which are 
appropriate means of alternative dispute resolution.
        There are exciting new programs that demonstrate the efficacy 
of the use of alternative methodologies.  One such program is at 
the Rush Presbyterian Hospital in Chicago, run by former judges 
and personal friends of mine.  The Rush Mediation Program has 
successfully resolved more than 80% of filed claims.  It is a 
voluntary and confidential mediation program.  The mediator has 
no power to force the parties to agree on settlement.  The mediator 
(or team of two mediators) has no interest in the outcome and is 
purely neutral.  The program has demonstrated that voluntary 
mediation can save money for all parties, save time, settle cases 
and preserve the patient's right to a trial by jury.
        Our legal system, the most respected in the world, has 
procedural safeguards that have evolved over centuries.  The 
proposals for "health courts" contain little information on how the 
system would actually work.  Unanswered are questions about how 
patients would obtain information and/or what kind of discovery 
would be permitted.  The plan does specify that the "health court," 
not the injured patient, would hire expert witnesses, which is 
another departure from current practice.  It appears that health care 
providers get an "opt in" opportunity, but patients have no 
corresponding right to "opt out."  Patients may be in the position of 
being forced to sign agreements to use the "health court" with their 
HMO or health care provider before they receive treatment.  More 
information is clearly required to obtain any clarity on the basic 
fairness that may be present or lacking under the "health courts" 
        I would be remiss if I did not mention the obvious problem 
contained within our Constitution in the Seventh Amendment.  "In 
suits at common law, where the value in controversy shall exceed 
twenty dollars, the right of trial by jury shall be preserved, and no 
fact tried by a jury shall be otherwise reexamined in a Court of the 
United States, than according to the rules of the common law."  
Proponents argue that because the Workers' Compensation system 
is Constitutional, that the "health courts" proposals would be as 
well.  The problem with this reasoning, as pointed out above, is 
that the Workers' Compensation system was effectively balanced 
in providing a certain award without the burden of establishing that 
a mistake has been made that should have been prevented.  The 
schedule of benefits may also be found unconstitutional if it is 
deemed to be caps on damages in disguise.
        Proponents of "health courts" argue that juries are not capable 
of understanding medical malpractice cases. There is no evidence 
that this is the case. In fact, empirical studies have demonstrated 
that juries are competent in handling medical malpractice cases.  
Duke University School of Law Professor Neil Vidmar's 1995 
extensive study of juries found that:
        [o]n balance, there is no empirical support for the propositions 
that juries are biased against doctors or that they are prone to 
ignore legal and medical standards in order to decide in favor 
of plaintiffs with severe injuries.  This evidence in fact 
indicates that there is reasonable concordance between jury 
verdicts and doctors' ratings of negligence.  On balance, juries 
may have a slight bias in favor of doctors. 

        In addition, he concludes at page 259 of his 1995 publication 
that research "does not support the widely made claims that jury 
damage awards are based on the depth of the defendants' pockets, 
sympathies for plaintiffs, caprice, or excessive generosity."   A 
survey of studies in the area by University of Missouri-Columbia 
Law Professor Philip Peters, Jr., published in March 2002 likewise 
found that:
        [t]here is simply no evidence that juries are prejudiced against 
physician defendants or that their verdicts are distorted by their 
sympathy for injured plaintiffs.  Instead, the existing evidence 
strongly indicates that jurors begin their task harboring sympathy 
for the defendant physician and skepticism about the plaintiff. 
        A May 2005 Illinois study conducted in my home state by 
Professor Vidmar also concluded that there was no basis for the 
argument that runaway verdicts were responsible for increases in 
malpractice premiums.   
        Our legal system has served our nation well.  Our lawyers and 
judges have been protecting the Constitution and the rights it 
contains, and have made our democracy the envy of the world.  As 
a bar president, I have had the opportunity to visit nations where 
lawyers do not have the role and function of the American lawyer.  
I have been to Zimbabwe and Zambia, and witnessed first-hand 
countries where citizens can have no expectation of fairness, 
justice or equal treatment.  I have seen the result of decades of 
unchecked power in the hands of leaders more interested in their 
own wealth than the well-being of their nations.  Our system is not 
perfect, but our founders understood that perfection in human 
endeavor is not likely to be possible.  I believe that is why our 
Constitution speaks of our national mission to create a union that is 
always trying to be more perfect, closer to the ideal.  It is our legal 
system, our Constitution and our steadfast adherence to the rights 
of our citizens that make ours a nation of hope above all others.  
Lawyers strive every day to do their best work to achieve justice.  
Legislators have a similar duty to create laws that will produce just 
        In accordance with our duty to preserve and protect our system 
of justice, the ABA opposes the "health courts" proposal currently 
being discussed.  We support the use of alternatives to litigation in 
medical malpractice cases only when such alternatives are entered 
into on a voluntary basis, and only when they are entered into after 
a dispute has arisen.  We also oppose the Workers' Compensation 
model in medical malpractice cases as proposed, because an 
injured patient loses the right to bring an action in court, but 
receives no guaranteed award.   
	Injured patients and health care providers have access to a 
respected court system and fair processes to resolve disputes.  Any 
proposal that would deny access to that court system should offer a 
better system than our current civil justice system.  The "health 
courts" proposal fails to meet that standard and it should be 
        Thank you for the opportunity to appear before you today to 
present the views of the American Bar Association.  I would be 
happy to answer any questions you may have.

	MR. DEAL.  Thank you very much.
	A very good panel.
	Let me start off with the questions.
	There seems to be, first of all, a disagreement within the panel.  
Our last two panel members, basically, are defending the status 
quo.  I think we have heard from both sides of the committee here 
concern that the status quo is not achieving the overall goals that 
we should be achieving.  I guess we need to see if we agree on 
what those goals ought to be.
	One of the goals that would seem to me would be to put as 
much of the billions of dollars that are now currently spent in the 
overall medical liability arena, more of those dollars into the hands 
of the individuals who have been harmed or who are suffering, 
who are the victim.  I hate to use that word.  But does anyone 
disagree with that being a goal, that more of the dollars currently 
being expended ought to go to the person who has been injured?
	I don't see anybody disagreeing with that one.  All right.  
Good.  We are doing good.  Lawyers always disagree.  Yes, 
	MS. DOROSHOW.  I mean, of course it depends where you are 
taking the money from.
	MR. DEAL.  Well, you are taking it from the lawyers' pockets.  
I say that facetiously, but that is really the truth.
	MS. DOROSHOW.  Well, I would certainly agree that much of 
the transaction costs of the system are due to the fact that the 
defendants are not acknowledging negligence and paying 
legitimate claims.
	MR. DEAL.  Well, we will get to that.  That is not the question.  
I am going to get to that.
	My second question is do you have any agreement or 
disagreement that the current system fosters unnecessary medical 
expenses by way of defensive medicine practices in an effort to 
avoid the consequences of the current tort system?  Would you 
disagree with that?
	MS. NIRO.  I don't necessarily disagree, but I do wish to 
suggest that it is very difficult to solve a problem that we can't all 
agree on its definition.  While there is a lot of money that goes into 
professional malpractice transactions, it is less than one-half of 1 
percent, according to a study from the University of Connecticut in 
all of healthcare spending.
	MR. DEAL.  Well, that really is irrelevant.  I mean, we are 
comparing that to open heart surgeries.  You are comparing it to 
everything else.  My point is that there is something wrong in the 
current system.  Money is not going to the right place.  Medical 
practice is, in part, dictated by what is going on.  Mr. Wootton, I 
think the last two speakers were directing their comments to some 
of your suggestions, and I am going to ask you if you would 
elaborate.  You said you had some charts.  If you would like, try to 
use those.
	MR. WOOTTON.  Yes, thank you, Mr. Chairman.
	If you want to put up the first chart, it should be the National 
Medical Data Center.
	This is really about something that I learned from some people 
who are in the patient safety business, particularly working with 
the CDC and the FDA.  The idea is that, over time, we would be 
able to have as many as 12 million electronic medical records that 
could be queried on a real-time basis, and they would be 
completely stripped of personally-identifiable and professionally-
identifiable information.  They would be available to researchers in 
the Government and industry and academia to look at a whole host 
of issues, including patient safety issues, but also in what protocols 
work in the treatment of disease, what kinds of areas might be 
promising for further research in the area.
	MR. DEAL.  On that, as you know, this committee has passed 
out a health information bill, and I don't have time now, but I 
would ask you, in light of your concern here, would you look at the 
bill we have passed out of here and give us comments as to any 
further things that need to be done on that health information 
technology bill, as it relates to this?
	MR. WOOTTON.  Yes, sir.  Yes, sir, I will, and I also think this 
will provide real-time information for the agencies that are very 
interested in keeping track of what is going on in the health of the 
population, including Homeland Security, CDC, and the FDA.
	If you go to the next chart, this becomes further information 
along with that which is going to the patient safety organizations 
based on the legislation that you all passed and the protections you 
gave last year to bring that down to the State level so that at the 
State level, the guidelines, which Paul mentioned and others have 
mentioned, become guidelines for practice.  They are the taking of 
the nationally-accepted practices but applied by the medical 
community at the State level.  They will become guidelines for 
practice but also become the basis for liability determinations, and 
that would be found in the State Medical Practice Commission.  
They would be a special resource, but not the only resource.  I am 
very concerned about due process issues, too, and I do think that 
the parties have to have a right to have their own lawyers and their 
own experts, but having those that have a special relationship with 
the administrative process, I think, is very valuable.  Then to have 
something that I discovered in talking to a lot of patient groups, 
and that is a distrust of the State local boards with regard to doctors 
who had problems that don't ever seem to have their license either 
suspended or revoked or not engaged in more education and get 
patient participation on those patient safety boards.  Then 
something that I picked up, and actually this is something that 
Professor Mello speaks about, which is a problem for some in the 
medical community, but I think it has a lot of value, and that is the 
notion of enterprise liability.  That is the idea that somebody has to 
have an incentive to deal with patient safety problems in the State.  
If you had something that looked like an insurance facility, like a 
captain insurance facility, they are actually operating in a number 
of States today as joint underwriting agreements, they could 
engage in loss reduction programs, and they would have an 
incentive to, because that means that the cost of their malpractice 
payments would be going down because you would have fewer 
	MR. DEAL.  I am going to have to interrupt you, but my time is 
way over.
	MR. WOOTTON.  Oh, I am sorry.
	MR. DEAL.  I am going to recognize Ms. DeGette for questions.
	MR. WOOTTON.  All right.  Thank you, sir.
	MS. DEGETTE.  Thank you very much, Mr. Chairman.
	This is, by far, the best panel I have ever heard on this subject 
in 10 years, so thank you.
	And before I question, Mr. Chairman, I would ask unanimous 
consent to allow statements from a number of groups who have 
wanted to submit statements, a 24-hour period to have them 
	MR. DEAL.  Without objection.
	MS. DEGETTE.  Thank you.
	And in addition, Mr. Wootton, I would hope that you would 
provide us with copies of your slides, and I would ask unanimous 
consent that those be submitted as well.
	MR. DEAL.  Without objection.
	[The information follows:]


	MS. DEGETTE.  Thank you.
	Mr. Wootton, I am interested in your national medical data 
center proposal and your slides, although these middle-aged guys 
are having a hard time seeing all of the way over there, but I think 
it strikes all of us that that is a very good idea and one positive way 
that the Federal government could have a role.  So thank you.
	I want to ask all of the panelists, does anyone here think, for 
example, the health courts should be at the Federal or State level?  
Dr. Mello?
	DR. MELLO.  In my opinion, the ideal structure would be 
federal legislation that provides funding and parameters for State 
demonstration projects.
	MS. DEGETTE.  Okay.  The health court really, and I am sure 
Professor O'Connell would agree with this, the tort law that is well 
established is at the State level, correct?
	DR. MELLO.  Agreed.
	MS. DEGETTE.  So you would want the actual health courts to 
be at the State level?
	DR. MELLO.  Yes.
	MS. DEGETTE.  And you really see the Federal role as 
providing resources to State tort systems to have these courts, 
	DR. MELLO.  I think that would be ideal.
	MS. DEGETTE.  Does anybody disagree where these types of 
reforms should be through the State level?
	MR. BARRINGER.  I would add that we do agree that the ideal 
spot for pilot projects, in particular, to take place would be at the 
State level, given that the States have traditionally regulated 
matters of insurance and malpractice.  But there is also a potential 
for a Federal administrative pilot project.  We know that Senator 
Cornyn and the Senate is preparing a bill that could charter 
federally-sponsored pilot projects.  So we are, as an organization, 
open to a range of different approaches to pilots.
	MS. DEGETTE.  But would you think, then, that the Federal 
government would take it on?  One of the big issues I have had, 
and frankly I think the Chairman shares some of my concerns, is 
that tort law and medical liability law has traditionally been the 
State role, and so what we have to figure it out.  I always say that 
legislators legislate to the level they are elected.  And my concern 
is I am not really sure that the most efficient way to resolve patient 
issues and to make these systems more streamlined is to suddenly 
create Federal courts that would--
	MR. BARRINGER.  We have 50 or more laboratories at the State 
level to try new approaches, and so we would see very ideally that 
the Federal government would provide resources to try pilot 
projects out.
	MS. DEGETTE.  Right.  Resources is a great idea, and Mr. 
Wootton's idea is a great idea.  I think there are other roles for the 
federal government, but I think that is what we have to sort out.
	I wanted to ask you, Mr. Barringer, you talked about the 
systemic mistakes.  And actually, maybe someone else has an idea 
on this, too.  I didn't hear anybody today talk about the fact that of 
medical malpractice by doctors, 5 percent of the healthcare 
professionals are responsible for 54 percent of malpractice claims 
paid.  And it has always been my view that if we could, as well as 
many of these other excellent ideas, if we could target that 5 
percent and figure out ways to improve performance for them that 
might help reduce medical malpractice.
	MR. BARRINGER.  We would say that that statistic is somewhat 
misleading, because it does not take into account the particular 
riskiness of certain specialties that are more often targeted for 
litigation.  That is particularly the case because of what we know 
about the fact that malpractice claims are not a good indicator of 
quality among the physician population.  But we would also see, in 
conjunction with a move towards a non-punitive administrative 
compensation structure at the State level, that it would be entirely 
appropriate to look for ways to beef up the regulation of the 
medical profession through enhanced, perhaps, standards, 
oversight, or some work in reform of the State medical boards, 
which is the hammer which comes down on the physicians.
	MS. DEGETTE.  So is what you are saying is that you think 
there is actually much more widespread medical malpractice 
among doctors than just 5 percent?
	DR. MELLO.  If I may jump in, the tricky thing--
	MS. DEGETTE.  Well, wait a minute.  Let him answer, and then 
I will let you answer, Dr. Mello.
	DR. MELLO.  Okay.
	MR. BARRINGER.  The point that I am making is that we know, 
and I believe the statistic is from Public Citizen about the 5 percent 
of doctors leading to 50 percent or more of awards, and what we 
have consistently pointed to, with respect to that statistic, is that it 
does not account for the riskiness of particular specialties, which 
are subject more often to litigation.  We don't know the answer.  
We know that there are vastly more injuries than are compensated.
	MS. DEGETTE.  Dr. Mello, would you like to add in?
	DR. MELLO.  Yes.  The tricky thing about that statistic is that it 
is not the same 5 percent every year.  It is a different 5 percent.  So 
what that statistic tells you is that a small number of awards 
account for a large share of the costs, not that a small number of 
doctors account for a large share of the injuries, and certainly not 
that it is the same doctors from year to year who are injuring 
	MS. DEGETTE.  So you disagree with the study by the National 
Practitioner Database?
	DR. MELLO.  No, the data are accurate, but the interpretation 
that is often given of those data is that it is a small number of bad 
apples who are out there injuring patients year after year does not 
reflect what the data tell us.
	MS. DEGETTE.  Mr. Wootton wants to answer.
	MR. WOOTTON.  Yes.  Actually, I have no idea what this data is 
or what it means or how to interpret it, but human nature is that 
there usually is a small number of people in any given population 
that have the greatest contribution to the cost, in any system.  The 
beauty of what we are suggesting, and there are some differences 
between our proposals, is if you have a low cost of making a claim, 
if it is easy to come in, if you don't need to hire a lawyer, and I am 
not discouraging, in any way, the need for a lawyer, but if you 
don't need to hire a lawyer, you can come in and say, "Look, I 
think the standard of care has been breached here, and I have been 
injured."  The ability to do that is going to drive up the standard of 
care and expose the doctors, if they are repeat offenders as opposed 
to just happened to be in the group that year, that they will expose 
the doctors who really have a problem, and you will have enough 
data points, by the way, to do experience rating of their 
malpractice insurance.
	MS. DEGETTE.  I just have one last question, and I would ask 
unanimous consent, and that is do any of you disagree that, as part 
of Congress's overall assessment of this, we need to look at 
malpractice pricing, practices, and risk pools?
	DR. MELLO.  Well, I have looked at this a little bit, and I 
haven't been able to find any data that would lead me to believe 
that overpricing of products has gone on during this latest 
malpractice crisis.  I think that to the extent that companies have 
contributed to the problem, it was in under pricing products during 
favorable markets in the late 1980s.
	MS. DEGETTE.  All right.  Mr. Chairman, it would really help if 
Dr. Mello would be willing to supplement her responses today to 
give us some of their data or the sources for that.  That would be 
	DR. MELLO.  I would be happy to, and I do have a report.
	MS. DEGETTE.  Thank you very much.
	MR. BARRINGER.  I would just have one additional point, if I 
may, to add, and that is that, based on our review--
	MR. DEAL.  Wait just one second.
	I am going to hopefully go to a second round here, if 
everybody is agreeable to that and we would be able to come back, 
but let us let the members who are here participate before we get to 
a second round of that.  We will hopefully remember where we 
were in that discussion.
	Mr. Shimkus.
	MR. SHIMKUS.  Thank you, Mr. Chairman.
	We are participating, and Dr. Burgess is jumping out of his seat 
and twisting, and I almost gave him my time just to hear his line of 
questioning, because I mean, just like many of you, he has real-
world expertise in this area.  And I am not going to let him do that, 
so it is good.  Again, I think this has been a wonderful committee, 
and you have all been pretty forthright on the issue.
	I also understand.  I basically saw all of the names and 
scribbled notes, and your association has got a couple of 
universities.  We have got a couple of law firms and some interest 
groups.  And it is always interesting to see who funds these interest 
groups, because that does tell you.  I mean, just like our opponents 
look at who contributes to us, and we get attacked for, "Okay, well, 
you must be that group or you must be supported by these folks."  I 
think a good investigation of that would tell you some interesting 
stories about who is representing who.
	Having said that, I want to welcome Ms. Niro from Illinois, my 
home State, although I am a downstater, and it is pretty far away 
from Chicago, Illinois.  And so you followed what is going on, the 
medical liability issue.  At least we have plateaued, because 
legislation passed at the State, and I don't know if you confirm that 
our Supreme Court has had a major pushing of folks to the table to 
at least pass some legislation that we think hopefully would be 
helpful.  I think the jury, if I can use that term, based upon 
discussions, is still out on how long that would be successful.  But 
Madison County has slipped down the list of concerned 
jurisdictions.  Cooke County has catapulted to the top.  Do you 
know why?
	MS. NIRO.  Well, actually, I was President of the State Bar 
between two major tort reform legislatures, and in earnest, I 
decided to look into how we could work with the Illinois Medical 
Society to come up with a solution, just as you good folks are 
trying today.  I thought that the most helpful thing to do would be 
to actually do an empirical study to find out how bad this problem 
is.  Every day I listen to the radio, they are talking about 
malpractice insurance.
	MR. SHIMKUS.  Ma'am, I only have 2 minutes, and I really 
have got a whole bunch more.
	MS. NIRO.  Let me tell you what our study showed.  It showed 
that from 1994 through 2004 there were no upward trends in 
filings per 100 treating physicians in Cooke County.  There was a 
modest increase in malpractice case filings between 1996 and 
2004, but if you adjust for the growth in the number of physicians, 
there was no evidence of increase.  The filings between--
	MR. SHIMKUS.  Let me stop you there.  And you can submit 
that.  But this year, there has been an exponential increase in 
	MS. NIRO.  Yes.
	MR. SHIMKUS.  There has been a loss of doctors.
	MS. NIRO.  Yes, there has.
	MR. SHIMKUS.  And so I really want to get Mr. O'Connell, 
because I tell you, I am conservative Republican, but I adored 
Senator Moynihan, a straight-shooter, told you what he thought 
was right, whether you liked it or not, Social Security issues.  He is 
right on reform.  But Ms. Niro and Ms. Doroshow are continuing 
to support the status quo.  And your testimony says it doesn't 
work.  What issues do you have with their testimony?
	MR. O'CONNELL.  I didn't hear a word about the fact that it 
takes 5 and 6 years to settle these claims.  Anybody who wants to 
defend the status quo, as I tried to indicate in my testimony, has 
got to defend the system that takes 5 and 6 years.  Anybody who 
wants to defend the present system has got to defend spending 54 
or 55 percent of the dollars that are spent on administrative and 
legal fees rather than paying patients.
	MR. SHIMKUS.  And if I may, that is consistent with Dr. 
Mello's report.  And no one from your left disagrees with that, am 
I correct?
	My time is out, but I would like you to finish, Mr. O'Connell.  
Do you have anything additional to add to that?
	MR. O'CONNELL.  Just that I think Dr. Mello got it right.  
Those are the two issues, and we have got to find the means of 
getting payment faster to people who really need it.  You can talk 
all you want about ADR.  You can talk all you want about 
mediation.  We have had those in place for a long time.  They 
haven't affected what Dr. Mello found, and they haven't affected 
what I am doing in my research.  I don't find any lessening of the 
transaction costs or the timing overall, based on the amount of 
ADR, mediation, or other alternate dispute resolutions that we 
have.  The system marches on, as Dr. Mello demonstrates, 
irrespective of these.
	MR. SHIMKUS.  And Mr. Chairman, I will just end by saying 
the Federal government is a big player in healthcare in this 
country, and as the cost of healthcare goes up, our costs of 
providing Medicare and Medicaid continue to escalate.  And it is 
literally so much of the buying power in healthcare as a whole 
because of that money moving into litigation and the court system, 
and that is not in the healthcare system.  We, as taxpayers, are 
being harmed by that, too, because it distorts the costs.
	And I really do appreciate all of your testimony, and I yield 
back, Mr. Chairman.
	MR. DEAL.  Mr. Pallone is recognized.
	MR. PALLONE.  Thank you, Mr. Chairman.
	I just wanted Ms. Niro and Ms. Doroshow to respond to Ms. 
DeGette's earlier question about the malpractice insurance pricing 
practices.  I know you didn't get a chance, so if you could do that, 
and then I am going to ask some questions.
	MS. NIRO.  Well, I would like to also, if I may, just say that the 
status quo that I would be suggesting needs to be preserved as 
simply the constitutional right of citizens to have their Seventh 
Amendment protections remain.  I think there is great room for 
innovation in how to deal with healthcare dispute resolution.
	In response to the questions that we have before us today, I 
would just say that justice isn't easy.  Systems aren't easy, and we 
don't do these things because they are easy.  We can't find justice 
the easy way and the least expensive way.  What we have to do is 
what is right and what is consistent with everyone's rights.  If you 
would repeat her question, I would appreciate it.
	MR. PALLONE.  Well, why don't I yield to her and let her repeat 
	MS. DEGETTE.  I saw you were raising your hand so eagerly.  
The question was do you think that Congress's oversight on this 
should be on medical malpractice insurance pricing practices?
	MS. NIRO.  As I was trying to explain before, there is 
absolutely no rational basis in Illinois based on what we have seen 
in lawsuits for doctors to be paying increased insurance premiums.  
The statistics simply do not bear that out.  In Madison, St. Claire 
County alone, in 12 years, we only found 11 jury verdicts that 
favor the plaintiff.  There were only verdicts that exceeded $1 
million, and one was reversed on appeal.  Nevertheless, the 
insurance premiums asked by these doctors are escalating 
dramatically.  If this committee does not look seriously into the 
irrationally increased expenses for insurance, I don't think that you 
will be able to put a solution in place that will actually have a 
positive impact on the situation.
	MR. PALLONE.  And I would say, as I said in my opening 
statement, that that is part of the problem here, because if you 
don't address that, and I think that is true for the Senate Democrats 
that keep being accused of holding up H.R. 5 that allow them just 
to really believe that the insurance premiums have to be addressed 
directly and that the cap in the tort reform isn't going to solve the 
	Ms. Doroshow, quickly, because I want to ask you another 
	MS. DOROSHOW.  Okay.  Well, just briefly on the insurance 
issue, there are two important points to remember.  One is the 
Council on Independent Insurance Agents, which monitors 
insurance premiums for doctors as all lines of insurance, has found 
that in the last 6 months, the average increase for doctors has been 
zero percent.  In other words, rates are basically stabilizing now 
everywhere in the country.  The reason is because we are in the 
part of the cycle.  This is a very cyclical phenomenon.  Yes, there 
was a great deal of under pricing the premiums in the 1990s.  They 
all shot up everywhere in the country, irrespective of tort law.  
There are many management and underlying issues that were 
responsible for that, but they have now stabilized.  So I think it is 
one reason why some of the pressure may have been alleviated on 
the need to deal with the insurance premium crisis that had been 
going on in the last 5 years.
	Secondly, there is something Congress can do, which is to 
repeal the anti-trust exemption, which the insurance industry 
currently enjoys that no other industry other than Major League 
Baseball has in this country, and that has allowed prices to go up.
	MR. PALLONE.  All right.  Now let me just ask you about these 
health courts, the problem of eliminating a jury is of great concern 
to me.  In other words, this idea of moving legal cases outside the 
court system, which not only eliminates an injured patient's right 
to a jury, but subjects the injured patient to a single judge.  And at 
least in a jury system, you have a number of decision makers that 
balance each other out.  So based on your research and studies of 
jury verdicts, have you found that jury verdicts track the 
conclusions of objective medical experts?  I mean, the concern 
seems to be that the juries don't know what they are doing.  And I 
don't think that is true.
	MS. DOROSHOW.  Right.  Actually all empirical research on 
juries has found the opposite.  They actually have been doing 
studies on juries' behavior for 30 years or more.  There is a new 
book on this.  They have excessively examined juries since the 
1980s.  They find that juries are consistent, conservative.  
Basically, if anything, they rule against the plaintiff more often 
than not.  I think other statistics bear that out as well.  But the main 
thing is that they are absolutely competent to handle any kind of 
complex case, particularly a medical malpractice case where you 
really have to delve into the life circumstances of an individual.  
These kinds of fault determinations are quintessential jury 
functions.  They are competent to do it.  They have always been 
competent to do it.  If you ask judges who are the ones day-to-day 
in the courtroom with juries observing how they operate, with 
almost no exception, they believe strongly in the jury system and 
the ability of juries to handle medical malpractice or complex 
cases.  The Dallas Morning News reported on a year 2000 survey 
of every Federal judge in the country as well as judges in Texas, 
and judges were in universal agreement that juries perform 
extremely well in complex cases and would, in fact, want juries to 
handle their own case if they were injured.  There is absolutely no 
evidence at all that juries can't handle these cases.
	MR. PALLONE.  Thank you.
	MR. DEAL.  Dr. Burgess.
	MR. BURGESS.  Thank you, Mr. Chairman.
	Just as an editorial comment, I can't wait for the day where 
across the hall in the Judiciary Committee we have a panel of 
seven doctors tell us how to reform the legal system.
	On the issue of cost, and I am aware of the study from back in 
the early 1990s that said it was only 1 percent of the cost of the 
healthcare system, but you know that is not correct.  I mean, I 
learned it in my early career as a resident that part of your function 
was to treat the chart, and defensive medicine is a true cost that the 
Federal government, since we pay 50 cents out of every healthcare 
dollar that is spent in this country, does bear a significant part of 
	But more importantly, that is the loss.  And during the worst of 
the medical liability crisis in Texas, in the spring of 2003, we 
almost eliminated the specialty of maternal fetal medicine, and 
these were individuals who had been trained at State institutions.  
Their education had been subsidized by the State.  But because 
they could not get insurance, they were leaving the State and not 
practicing the highest of high-risk obstetrics.  And the community 
suffered as a result.  We lost a neurosurgeon from our trauma 
system at Methodist Hospital and nearly ground our trauma system 
to a halt.  So these are very real costs that are paid for by society.  
They may not be reflected in a study that looks at the dollars, but 
they certainly are real costs that society bears.
	Before I accidentally use up all of my time with talking, I do 
want to ask Dr. Mello, because I was, unfortunately, called out of 
the room when you gave your testimony.  And if I missed this, I do 
want to know the answer.  From your work, if there was one lever 
of government that we could pull, whether it be at the State or 
Federal level, what would be your recommendation to have the 
greatest improvement, the greatest bang for the buck, on our 
medical justice system?
	DR. MELLO.  Well, I think we have to try experimentation with 
some of our recent reforms, like health courts.  I would suggest 
that that be facilitated by action at the Federal and State levels 
jointly.  It should start small.  There is a lot of suspicion and 
distrust about these kinds of reforms, and the way we build a case 
for something in academia is to gather evidence and data, and that 
is what we should do.
	MR. BURGESS.  Well, now we have gathered some evidence in 
Texas since 2003 on caps.  And I will admit to you, 10 years ago, 
caps wouldn't have been my first choice for a solution, but it has 
made a believer out of me because of the fact that the year I ran for 
Congress in 2002, we had gone from 17 to 2 liability insurers in 
my State.  You don't get much competition for rates when you 
have only got two insurers left, and one was packing his bags.  
Since we passed the medical liability caps in 2003, we now have 
14 insurers, and we are getting better prices for medical liability 
insurance as a result.  Texas Medical Liability Trust, my old 
insurer of record, has come down 22 percent since I started in 
Congress since that bill was passed back in Texas.
	Let me ask a question, if I could, of Ms. Niro and Mr. 
O'Connell, because I am intrigued by both of your testimonies.  
Are either of you familiar with what is called the National 
Practitioner Databank?
	MS. NIRO.  Yes.
	MR. BURGESS.  How would a physician's reportage to the 
National Practitioner Databank be affected, or how is it affected 
under the current alternative dispute resolution system that Ms. 
Niro described?  And Mr. O'Connell, what would you see if a 
system that you described, the voluntary system that you 
described, were to be enacted?  How is the reportage of a claim 
against a physician going to be handled?
	MR. O'CONNELL.  Shall I go first?
	MR. BURGESS.  Either one.
	MS. NIRO.  Either one.
	MR. O'CONNELL.  Let me say that one could include in the bill 
that there be a recognition that the early offer is the main pursuit to 
a statute encouraging the early offer, and therefore the settlement 
should not count in the databank or should be accompanied by an 
asterisk in the databank, indicating that the settlement was 
encouraged by the Government under a statute encouraging it.  
That would be one solution.
	MR. BURGESS.  Ms. Niro, do you have any thoughts on that?
	MS. NIRO.  I actually agree that it is one of the biggest 
impediments in getting healthcare providers to participate in 
alternative dispute resolutions, because they don't want dollars 
paid in malpractice liability to show up.  That is one of the rating 
factors on hospitals.  Doctors want to defend their fine reputation, 
their clean record, and so it disincentivizes any use of alternative 
dispute resolution.  If the committee could suggest reforms so that 
reporting could be broader than just gross dollars paid in liability 
and identify those which were cooperative settlements, which were 
by alternative means where no finding of liability exists.
	MR. BURGESS.  Let me just reclaim my time.  And Mr. 
Wootton, you can see why I would be very nervous about what 
you described.  And can I ask our representative from the Joint 
Commission of Accreditation of Healthcare Organizations, how 
would your body look at this type of thing if there were an asterisk 
or, as Mr. O'Connell has suggested, a statement that this settlement 
occurred pursuant to a recommended rapid settlement offer that 
was made because of Federal statute?
	MS. VANAMRINGE.  Well, I think we have a significant 
problem that exists today with the information in the National 
Practitioner Databank because it lumps everything together.  It is 
incomplete, and therefore very skewed data.  So what you want is 
really to overhaul some type of central repository of information, 
so it is very clear when a settlement or when a disciplinary action 
is in there, whether or not there truly was a standard of care that 
was actually violated or whether this was a settlement made under 
other circumstances so that people would understand the type of 
information to make decisions based upon it.  Certainly, they 
would look at information in which a standard of care was violated 
very differently than if there was not one violated and there was no 
evidence that it was violated.
	MR. BURGESS.  Mr. Chairman, just before I yield back, Mr. 
Wootton, I do feel obligated to tell you that, from my old 
profession, you would likely encounter a significant amount of 
pushback through the concept that you described today, and this is 
the very reason why, because--
	MR. WOOTTON.  Are you talking about the National Medical 
Data, sir?
	MR. BURGESS.  The repository for national medical data.
	MR. WOOTTON.  Well, no, that would be completely stripped of 
any identification of the doctor.  It would really just be having 
access to the facts in the electronic medical record: no 
identification of the doctor, no identification of the individual.  I 
think there are other puzzles.
	MR. BURGESS.  And just quickly, I think the most important 
reform is the source of the standard of care.  I think all of these 
things get handled better if people trusted that the standard of care 
that was at work here was in fact the valid standard of care.  I think 
that is where a lot of the corruption of all of these issues begins.
	MR. DEAL.  Ms. Capps.
	MS. CAPPS.  Thank you, Mr. Chairman.
	I want to give equal time to Ms. Doroshow.  Both you and Ms. 
Niro were labeled as favoring the status quo by our Chairman and 
another colleague.  And Ms. Niro, you weren't given a chance to 
respond.  Could you briefly explain whether or not that is a fair 
labeling?  But that is not the substance of my questions, so if you 
could, be brief.
	MS. DOROSHOW.  Well, I do think that there is an assumption 
being made here that the system is in a terrible crisis, and I don't 
believe it is.  I think that the New England Journal of Medicine 
articles, both together, showed that the system is working, actually, 
pretty well.  Now as I said, if there are proposals to encourage 
alternative dispute resolution that can be done to ensure that it is 
voluntary and the right to jury trial is preserved--
	MS. CAPPS.  I entered that, because I actually think you are also 
confusing apples and oranges.  A lot of doctors pay really high 
premiums.  That is part of what is being considered, I think, the 
status quo that both of you are favoring, and that is why I want the 
record to show where we should be focusing some of our direction 
in a different way.
	MS. DOROSHOW.  Right.  The issue of insurance premiums is 
something that can be solved very clearly by stronger oversight 
regulation of the insurance industries practices.
	MS. CAPPS.  Thank you.  That is, I think, an important 
statement to be in the record.  And I think that should be the 
subject of a hearing.  And I would hope that all of you look 
compassionately at that topic.  Since the medical court is sort of 
the model that is being promoted today, Ms. Niro, I wanted us to 
understand it, because the American Bar Association, and it is a 
big organization, is very skeptical about it, and I want you to be 
able to tell us, for example, what it would be like to have a 
compensation schedule.  I am going to give you three examples 
and you can do all of them or take your pick.  For example, I am 
not an attorney, but I could understand that if you lose a finger, it 
might depend on whether you are a pianist by profession or a filing 
clerk.  It would be not a very good thing to lose four either, but 
what would the schedule be like and how would that be taken into 
account?  Also, I am really concerned once we do move away from 
whatever regulation we have now, how would the medical court be 
held accountable?  And then finally, a lot of the evidence for 
supporting it seems to come from European countries where it is 
successful but where they have a vastly different delivery of care, 
universal healthcare, which we don't have, would that color any of 
	MS. NIRO.  Well, I think whenever a schedule of damages is 
contemplated, the possibility of not matching the unique 
circumstances of an individual's condition exists, as you rightly 
suggest.  But also, the surgeon's use of his right hand is not 
equivalent to my 80-year-old mother's similar problem with her 
hand.  So scheduling things without a unique and specific approach 
to an individual may lead to very illogical situations, as would 
leaving out any compensation for pain and suffering.  If a woman 
has, as has occurred, the wrong breast surgically removed, and she 
has no economic damage under these policies, she would get 
	MS. CAPPS.  I am interrupting you now, but as this was being 
presented, I was thinking this.  How about little kids?
	MS. NIRO.  They have no economic damages, nor do most 
elderly, nor do the underemployed, nor do the unemployed.  That 
is disparate treatment, under the law, unless we find some way to 
compensate them fairly.  With regard to the analogy of the 
Scandinavian or European countries, you are absolutely right.  
They have other systems in place that our tort system currently 
needs to provide, like their childcare, their job trainings, their 
federalized healthcare delivery system.
	MS. CAPPS.  I will leave it at that.
	Thank you.
	MR. DEAL.  All right.
	MS. CAPPS.  Although I can tell that there is room for more 
discussion on this topic, which is fact that it is a good hearing.
	MR. DEAL.  All right.  I think we are going to go to a second 
round of questions here.
	Oh, I am sorry.  Mr. Ferguson is here.
	MR. FERGUSON.  I am sorry, Mr. Chairman.  I have been 
jumping in and out, but I appreciate the chance to do my first 
round of questions.
	I did just miss some of the testimony, but Ms. Doroshow, thank 
you for being here.  Thank all of our panelists for being here.  I 
didn't hear your back-and-forth and your comment myself, but I 
am told by staff the gist of it.  I just wondered if you might tell me 
again.  Did you say that essentially the status quo is okay with 
regard to the current system or that there are not significant 
problems with the current medical liability?
	MS. DOROSHOW.  Well, there were two different issues 
presented: one with regard to medical malpractice premiums for 
doctors.  Absolutely, that is a situation that needs far greater 
oversight and regulation of the insurance industry to solve that 
problem.  The States that have done that have gotten rates under 
control and actually did not experience this most recent hard 
market crisis.  So we would certainly encourage that sort of thing 
and for Congress to repeal the anti-trust exemption that currently 
exists for the insurance industry.  It has been percolating for years 
here and doesn't really seem to get anywhere, but I think that if 
that were removed, it would relieve tremendous pressure on rates 
during a hard market.  You would really see rates stabilize, I think.  
So with regard to premiums, absolutely something needs to be 
	MR. FERGUSON.  Would you characterize the current medical 
liability scene or landscape as a crisis?
	MS. DOROSHOW.  Well, I am looking most particularly at the 
most recent New England Journal of Medicine articles, the two 
that came out in May, one that Dr. Mello participated in and then 
there was a second one.  Basically, her study has showed that 
people who are legitimately hurt, legitimate claims, are getting 
compensated, for the most part.  Frivolous claims are not.  Most of 
the costs of the system are going to resolve claims where there was 
medical error and injuries, legitimate claims.  A very small 
percentage of cases are ending up in trial.  Most of them were 
already, I believe, being handled properly by alterative dispute or 
negotiations.  That is what their findings were.  The second article 
in that very same issue was about how litigation can help ensure 
patient safety in hospitals and how that works, and so the 
implication there is certainly if you take away the threat of 
litigation, that is going to hurt patient safety initiatives in hospitals.  
So based on those two reports, there is certainly not a crisis, and 
the authors of those studies were pretty clear about that.  There is 
an issue that Dr. Mello raised earlier about people not partaking of 
the system enough, not enough people who are injured legitimately 
are getting compensated.  Yes, I think there is some problem there; 
however, I think that this is not a simple answer as to why people 
are not suing or going to court right now.  I, myself, have had two 
instances in my family of medical malpractice.  We would never 
have considered the notion of suing the family doctor in our 
family.  That is why most people are not going to court, unless 
they really need it, unless they really need compensation.  If a 
catastrophically injured child is involved, those cases aren't 
making their way into the court system, and they are getting 
compensated.  The other problem is a lot of people don't know that 
if there has been a death as a result of a hospital stay, that 
negligence was involved.  The hospitals are not coming forward 
with that information, and there is probably a lot of error 
happening that people are not even aware of.
	MR. FERGUSON.  Sure.  My time is very short.  I want to give 
Dr. Mello a chance to respond, but I am just reminded, when we 
are talking about this issue, when I hear someone suggest that it is 
not a crisis or not a big problem, as I would characterize it, and I 
think many people would, I am reminded of the early days of the 
Iraq War when all of our troops were rolling into Baghdad and 
Saddam Hussein's spokesman was out on TV saying, "There are 
no tanks in Iraq.  There are no American soldiers in Iraq.  
Everything is just fine."  And then 20 minutes later, he was being 
hauled off in chains or something.  It just seems like it is a real 
disconnect from reality when we see it all around us, both 
anecdotally and the evidence that Dr. Mello was talking about, to 
suggest that this is not a crisis.
	Dr. Mello, if you would like, would you just quickly respond to 
what has been referred to?
	DR. MELLO.  Maybe it would just be helpful to clarify that I 
think we are talking about two different things here.  When people 
talk about a medical malpractice crisis, they are generally talking 
about an insurance crisis.  What Ms. Doroshow has just been 
speaking about, and what my article speaks to, is the performance 
of the malpractice system.  A poor performing malpractice system 
may create insurance problems or may not.  So they are two 
different things, and I would be happy to speak to either one of 
	MR. FERGUSON.  Well, I am going to have more time later, so I 
will yield back.
	Thank you, Mr. Chairman.
	MR. DEAL.  Thank you.
	Let me start off this second round by just making some 
personal observations.
	There are some entrenched patterns and habits here that will 
have to be broken to make any changes work.  First of all, I think 
there is the entrenched perception, at least, from the legal 
community, admitting to a more modest medical court system 
would cut the lawyers out.  I don't envision that as being the case.  
Quite frankly, the legal profession, in terms of medical 
malpractice, is restricted to a very, very small number of lawyers.  
That was one of the things, as a lawyer practicing in a middle-sized 
small town, all of the doctors were always mad at the lawyers, and 
nobody in the local bar had ever sued them.  The reason is it is a 
very specialized practice.  I envision that if you go to a court 
system that is less contentious, perhaps would be one way of 
saying it, you may see more lawyers actually be able to help their 
clients in a legitimate malpractice case without having to refer 
them to the big high-dollar lawyers, because those lawyers would 
be all of the ones that could afford to underwrite the discovery that 
is necessary to produce a case that is going to stand up in court.  So 
I think that perception from the legal community is maybe not 
quite in keeping with what we are talking about.
	But the one big thing that I see that we are going to have to 
deal with, and we may not be able to ever overcome it, is the idea 
of making an analogy to the workers' comp system.  I think that 
that was made.  That is a system in which fault is not the issue.  
Now in any system that we talk about of making the process less 
complicated, whether it be in medical court or otherwise, we are 
still inherently going to have the concept of fault, even though I 
believe, Mr. Barringer, you used the Scandinavian term of 
"avoidability" of consequences.  One of the big problems that has 
always been, as I see it, in any system we would devise, being able 
to separate the natural consequences of what has happened to this 
individual from consequences that have either been exacerbated or 
new consequences that have been caused by the medical 
procedures or whatever has occurred to them.  Where is the trigger 
that distinguishes where one stops and the other one starts?  I 
would like to hear, and maybe, Mr. Barringer, a good place to start 
would be you, this "avoidability" concept.  The medical 
community is probably not going to like that, because it expands 
the idea of potential cases.  That is one of the things we are going 
to have to deal with this.  A legitimate policy question we are 
going to have to deal with is are we willing to move to a system 
that will compensate more individuals, maybe at not the same level 
of compensation of those who are currently receiving verdicts, or 
are we going to stick with a system that only rewards those in the 
most egregious cases who have the financial resources and the 
attorneys who can stick it out through the whole process?  But how 
do you think the medical community will view moving to this 
"avoidability" concept rather than the traditional liability concept?
	MR. BARRINGER.  Well, naturally, there is concern in the 
medical community and in the insurance community about a new 
standard of liability that could expand access to compensation.  
Nonetheless, we think there is understanding within the provider 
community about a new standard which would purport more with 
the goals of improving patient safety and enhancing quality in the 
system.  We are calling for pilot projects to begin to test the 
applicability of this system and the way in which an avoidability 
standard might be operationalized at the State level.  I would note 
that the best available research around this issue, conceptual 
though it is, suggests that an administrative compensation system 
could be implemented.  This research looked at claims data in 
Colorado and Utah.  But an administrative compensation system 
with an avoidability standard of liability and a compensation 
schedule could be implemented at a cost comparable to that of the 
existing system while compensating far more patients.
	I would like to make just a few points about the schedule of 
damages.  We don't envision a one-size-fits-all schedule, and we 
haven't proposed a schedule.  But what we do envision is a system 
that would be likely developed by experts, perhaps the Institute of 
Medicine, that would take account of patient circumstances and 
severity of injury and creating some sort of grid or structure or 
matrix to encourage uniformity such that similarly situated 
claimants received similar amounts.  The whole idea of the notion 
of a schedule is to enhance horizontal equity in the system, if you 
	Just to get to the point about a pianist versus a filing clerk who 
lost a finger, the schedule of damages that we envision is for non-
economic awards, or pain and suffering.  So if you had a concert 
pianist who lost a finger, naturally economic damages would cover 
the losses to that musician.  I as a person who actually personally 
enjoys playing the piano but don't make much of a living playing 
the piano wouldn't get much from the system except pursuant to 
the schedule, and perhaps there would be some provision for 
taking that into account.
	I would also note that little children do have access to 
economic damages in the current system.
	The final two things I just want to say is that the comparisons 
that have been made to the European systems and which we are 
basing some of this system, it is true, they do have universal 
coverage and a range of other benefits that they provide to folks, 
but in terms of the potential for reduced adversarialism, expedited 
compensation, and improving the relationship between individual 
patients and their physicians, we think there are a lot of lessons to 
learn from particularly the Scandinavian system.
	Finally, I would note that the proposal that we have put forth is 
one that is evolving, and we are actually grateful for all input that 
we can get from stakeholders around, because we think that that is 
the way to make the most robust proposal we possibly can.
	MR. DEAL.  All right.  Thank you.
	I am going to ask Mr. Ferguson to assume the chair, and I want 
to tell you again how much I appreciate all of your testimony.  
Hopefully, we will be able to continue this dialogue in the future.  I 
have something on the floor that I need to get to, and I am going to 
ask Mr. Ferguson to take the chair.
	Ms. DeGette, you are recognized for questions.
	MS. DEGETTE.  Thank you, Mr. Chairman.
	Ms. Niro, I assume that the ABA's objection to the health court 
system is not that it would take resources away from lawyers, but 
rather that it would remove the right to a jury trial, correct?
	MS. NIRO.  Absolutely.
	MS. DEGETTE.  And I wanted to ask both you and Ms. 
Doroshow, there are a lot of alternative proposals that have been 
presented.  Mr. Wootton presented the idea of the national medical 
data center.  Would either of you object to that kind of  a concept 
of a national data collection system with privacy and liability 
protections so we could figure out what is going on here and find 
ways to improve service for patients?
	MS. DOROSHOW.  Well, we certainly believe that disclosure of 
	MS. DEGETTE.  I am sorry.  I don't have very much time.  Do 
you object to that kind of a--
	MS. DOROSHOW.  Well, the answer is, when you are infringing 
on the patients' rights to be able to use an admission of negligence 
in court, so if--
	MS. DEGETTE.  Well, that is not what he is doing.  He is 
talking about data collection at a national center.  Do you have 
objection to that?
	MS. DEGETTE.  Ms. Niro, do you?
	MS. NIRO.  No.
	MS. DEGETTE.  Okay.  I am sure neither one of you would 
object to enhancing efforts at early dispute resolution, so long as 
they didn't remove fundamental rights like the right to a jury trial, 
correct?  Ms. Niro?
	MS. NIRO.  Yes.
	MS. DEGETTE.  Ms. Doroshow?
	MS. DOROSHOW.  Right, and it didn't exert undue pressure on 
the victims themselves.
	MS. DEGETTE.  And you don't object to programs like the 
program that I was talking about in my opening statement, which is 
being done in Colorado by our COPIC Insurance Company.  I 
think Mr. Barringer talked about it, where we have efforts to get 
doctors to communicate with patients if there is an unintended 
injury, apologize, and try to rectify that at an early stage, so long as 
it doesn't remove rights to jury trial and other rights, correct?
	MS. DOROSHOW.  Well, the only thing we are concerned about 
is the negotiation period, which is laid out, and during the 6 
months that I have seen in the Federal--
	MS. DEGETTE.  And you don't have objection to State efforts 
like that, do you, overall?
	MS. DOROSHOW.  Overall, but the devil is in the details, 
	MS. DEGETTE.  Right.  Ms. Niro?
	MS. NIRO.  May I declare that the ABA doesn't have a current 
policy pending?  In my opinion, I think it is a positive thing.
	MS. DEGETTE.  I mean, what I am trying to point out is you 
two, at this end of the table, have been painted as people who don't 
think we should have any reforms or advances.  But I don't think 
that is what I hear you saying.  Is that right?  Ms. Niro?
	MS. NIRO.  Thank you for clarifying that.  I think we are all 
here for the purpose of trying to improve the delivery of healthcare 
and improve the fairness in which we are all treated.
	MS. DEGETTE.  You just don't want to remove the rights of 
patients to be compensated, right?
	MS. NIRO.  That is right.
	MS. DEGETTE.  Now, Ms. Doroshow, I want to ask you.  A lot 
of people have been saying that caps on malpractice awards reduce 
malpractice premiums.  That is kind of an assumption that a lot of 
people make.  Are you familiar with data which would speak to 
	MS. DOROSHOW.  No, there is a tremendous amount of data 
which contradicts that statement.
	MS. DEGETTE.  Would you please talk about some of it?
	MS. DOROSHOW.  Sure.  Well, first of all, anecdotally, many 
States' rates are stabilizing all over the country because we are in a 
soft market period, whether or not caps were enacted.  Rates shot 
up because we were in a certain part of the market.  They have 
now stabilized.  But in addition, many empirical studies, one done 
for our organization, found that there was actually a higher 
increase of rates in States that had caps than States that didn't.  
Economists have looked into this.  University of Texas economists 
have looked into this.  They have all reached the same conclusion: 
that there is a disconnect between caps and insurance rates.
	MS. DEGETTE.  Ms. Niro, you are nodding your head.  Is that 
	MS. NIRO.  I am in agreement with her statement.
	MS. DEGETTE.  Okay.  The Kaiser Family Foundation, I don't 
know if anyone here if familiar with that, showed that the number 
of paid claims per thousand active physicians was unrelated to 
whether a State had caps.  Does anyone know about that study?  
No?  Okay.
	DR. MELLO.  I do.
	MS. DEGETTE.  Oh, Dr. Mello knows about it.  Sorry.
	DR. MELLO.  I am aware of that study.  I would just clarify that 
the argument has never been that caps affect nor that the 
malpractice crisis is driven by an increase in claims.
	MS. DEGETTE.  Well, I know that you are a well respected 
academic, and I respect your findings, and I know that is not your 
claim, but that is the claim that many in Congress have made as a 
rationale for why we should enact this legislation at a Federal 
level, but you, as an academic, don't know of any correlation 
between malpractice insurance rates and State caps?
	DR. MELLO.  Oh, now we are talking about something 
different, so I was just speaking a moment ago about the frequency 
of claiming.
	MS. DEGETTE.  Okay.
	DR. MELLO.  I had the privilege of spending the last year 
looking at the available evidence about the relationship between 
caps and premiums, including the stakeholder studies, like the ones 
that were just mentioned, and controlled academic studies.  My 
conclusion is that there is a modest, but statistically significant 
	MS. DEGETTE.  Thank you very much.
	MR. FERGUSON.  [Presiding.]  Now I will continue the 
	Ms. Doroshow, I will give you another shot.  I didn't mean to 
suggest that I was comparing anybody here to Saddam Hussein's 
spokesperson, and I don't know if anybody mistook that, but let 
me come back to you on another sort of related issue.
	You had said that this health court system that had been talked 
about or suggested might tilt the playing field in favor of insurance 
companies that represent healthcare providers.  But as a system 
that relies on independent experts to make qualified decisions on 
the negligence of a provider, might that not be more fair than a 
system where experts are simply hired folks who come in and who 
are paid to say whatever it is they say, depending on what side they 
are representing?  Doesn't that system sort of tilt the playing field 
in favor of whoever can pay the most to hire the so-called best 
experts or most experts?
	MS. DOROSHOW.  Well, the thing that ensures fairness is that 
the decision maker is fair.  In the health court model, you have got 
a specialized judge, who is, most logically, going to come from the 
healthcare industry or have a medical background.  Already this is 
somebody that a patient is going to see as somewhat biased.  Then 
heavily relying on medical experts coming from the healthcare 
industry, that is who is going to be making the decision as opposed 
to an unbiased judge or a jury.  That is really the only way to 
ensure fairness in a situation like that.  You have experts battling it 
out before jurors, but they make the decision and their job is to 
reach the most fair decision.  When you remove that process, the 
process becomes biased.
	MR. FERGUSON.  Clearly, there is the potential for, if you are 
changing the decision makers, you are changing the folks who are 
deciding on the fairness, there is a risk there.  But is there not a risk 
currently?  It seems difficult to defend the fairness if we are talking 
about simple fairness.  It seems difficult to defend the status quo, 
in which case it is really whoever has got the deepest pockets, 
whoever can afford the best witnesses, because you are never 
going to call a witness unless they are going to say what you are 
paying them to say or an expert.  You are never going to bring 
them in unless they say what you are paying them to say.
	MS. DOROSHOW.  Well, first of all, the cases that are getting to 
this point are ones where an attorney has already made a decision 
of taking the risk to take the case because they think it is a strong 
and valid case.  That is what the contingency fee system does.  It 
allows people access to attorneys, and it is a natural screening 
mechanism that kicks the worst cases out.  And I am not the only 
one that said that.  There are many conservative people that have 
said that as well.  So you have already got a situation where it is 
generally a strong case, and they have a right to their experts.  
They have a right to consult with people who are going to advise 
their client--
	MR. FERGUSON.  I agree with all of that.  My time is short.  I 
agree with that.  I am simply saying isn't there a great risk now?  If 
there is a risk in changing to a different system, it seems to me it is 
tough to argue that.  I don't know, maybe there is a greater risk or 
maybe there is less of a risk, but isn't there a tremendous risk in 
the status quo where we have got a bunch of experts that we parade 
through courtrooms who are paid to say what they are there to say?  
And it seems to me, there doesn't necessarily seem to be a great 
risk for a bias or a tilted playing field, to use your words, in terms 
of who can purchase the best experts.
	I need to move on.
	MS. DOROSHOW.  Well, that is exactly what their function is: to 
evaluate experts and make decisions.
	MR. FERGUSON.  But if all they have access to is the best paid 
experts on one side and perhaps not on the other--
	MS. DOROSHOW.  They have experts, but that is their job.
	MR. FERGUSON.  I am just saying, it doesn't seem to me like it 
would be a level playing field in that case.
	Ms. Niro, just a quick question on fees.  Plaintiffs' attorneys 
charge, my understanding is, and I am not a lawyer, a contingency 
fee that amounts to 40 percent or more for an injured patient's 
compensation award.  Plaintiffs' lawyers charge this standard 
contingency fee regardless of the specific details or the probability 
of winning or losing.  However, and I want to reference Mr. 
O'Connell in a second, in Rule 1.15 of the ABA Model Rules of 
Professional Conduct, I have never read them, but this is what I am 
told, states that the contingency fees must be reasonable and 
should differ from case to case based on, among other things, the 
likelihood of success or failure.  Do you feel that plaintiffs should 
be protected from what some may say are unethical contingency 
fees?  I reference an article that Mr. O'Connell wrote on this very 
topic in the Connecticut Insurance Law Journal.  And if Mr. 
O'Connell would comment on this after, Ms. Niro, you have had a 
chance to respond to that question.
	MS. NIRO.  As I have said before, I am not a plaintiff lawyer.  
What I have done, however, is serve on the disciplinary board 
established by the Illinois Supreme Court that disciplines unethical 
behavior by lawyers, and we have never, to my knowledge, had to 
prosecute a plaintiff's injury lawyer for violating Rule 1.15, which 
is the reasonable fees requirement.  If there are plaintiffs' lawyers 
that make one fee arrangement consistent in their practice, I do not 
know of them.  
	MR. FERGUSON.  You do not know that the standard 
contingency fee is 40 percent in most cases?
	MS. NIRO.  No, I don't.  As a matter of fact, that would seem 
outrageously high.  If you had some plaintiffs' lawyers here, I 
think they would tell you that they lose cases to other lawyers who 
will manage the case for less money.  What happens is the 
contingent fee is very relative to the class of the disbursements and 
the necessary preparation for trial.  Most lawyers I am aware of 
have less than a third in agreements with clients.
	MR. FERGUSON.  Mr. O'Connell, can you comment on that?  
You wrote an article on this.
	MR. O'CONNELL.  That is not my experience.  My experience 
is that the 33 and 1/3 and 40 percent is very standard, that, in 
addition, that figure is taken off the top, according to the 
contingency contracts that I have seen, namely, the lawyer takes 
the 33 1/3, and it is often 40 percent, certainly if there is going to 
be an appeal and increasing this 40-percent standard such that all 
of the expenses are borne by the client, if you see what I mean.  
You take the 40 percent off the top and all of the expenses then are 
left to the client to pay as well as receiving what is left once the 40 
percent is taken off the top and the expenses of expert witnesses 
and exhibits are deducted.  So we have to differ.  My impression is 
that the situation is far from sanguine, that it is a very corrupt 
system.  If there is a great deal of competition, for example, if you 
go to the yellow pages, which I have done and have research 
assistants do for years, you will never see any mention of 
competitive pricing by any lawyer advertising in the yellow pages, 
and the yellow pages are full of hundreds and hundreds of ads for 
personal injury lawyers.  I challenge somebody to come in here 
and tell me one ad they have ever seen which says, "We will 
charge you less than a third."
	MR. FERGUSON.  Okay.  I am way over my time.
	Ms. Capps.
	MS. CAPPS.  Thank you.  I think we are just getting into the 
thick of things.  And Ms. Doroshow, I will let you respond some to 
Mr. O'Connell, but I also only have the 5 minutes, and I want to 
get to Ms. Niro talking about alternatives to going to court that 
would be maybe an alternative to the health court system.  But for 
starters, my background is healthcare as a nurse, but I come off on 
medical malpractice often differently from the physicians with 
whom I have worked for a long time in my community.  So in 
California, we have done tort reform for healthcare.  Still, there is 
this myth, it is considered a myth, doctors that I know assume, and 
maybe the general public as well, that people go to trial and get 
huge settlements, disproportionate to reality and that suddenly the 
next day the doctor's malpractice insurance premium has to go up 
to take care of that.  I heard you say something about the market is 
soft.  Are we talking about the stock market regulating premiums?
	MS. DOROSHOW.  It is the insurance market, actually.  It is a 
cyclical market, and a soft market.
	MS. CAPPS.  Who determines it?
	MS. DOROSHOW.  The companies and their rates, basically.  
The Council of Independent Agents and Brokers is the agency that 
monitors insurance rates around the country, and beginning in 
2001 to 2005, rates shot up pretty significantly.
	MS. CAPPS.  What was the reason for it?
	MS. DOROSHOW.  Well, there had been a large number of years 
where the prices were under priced because they were making lots 
of money by investing the premiums.
	MS. CAPPS.  The insurance companies?
	MS. CAPPS.  No correlation to damages?
	MS. DOROSHOW.  Oh, no.
	MS. CAPPS.  And payments out?
	MS. DOROSHOW.  No, you never heard a word about it.
	MS. CAPPS.  For physicians?
	MS. DOROSHOW.  They were under pricing policies below 
inflation, basically, to physicians beginning in the late 1980s all 
through the 1990s since the last hard market, which was in the 
mid-1980s.  It is very cyclical and it is a very peculiar kind of 
accounting and underwriting that they do.
	MS. CAPPS.  I am going to stop, because that is not the focus of 
this hearing, but Mr. Chairman, I would respectfully request that 
this subcommittee have a hearing on this topic and do it far more 
justice than we can do in 2 minutes.
	MR. FERGUSON.  You got it.
	MS. CAPPS.  Pardon?
	MR. FERGUSON.  I mean, I will talk to the Chairman about it.
	MS. CAPPS.  Well, I am assuming you are the Chairman.
	I am being facetious.
	This is about alternatives and the idea that Dr. Mello and others 
have proposed is a very interesting one.  And I think our system is 
needing some help, however, I am a firm believer that we have a 
system of justice in this country that includes a trial by jury.  
However, Ms. Mello, you sort of teased at or hinted at, and I want 
you to use whatever little time I have left, to talk about other 
alternatives.  And suggest some ways that we could assess and 
voluntarily allow alternatives to going to court.  Mediation is very 
successful in resolving family disputes.  And would you continue?
	MS. DOROSHOW.  Well, I think that, as Dr. Burgess suggested 
earlier, one of the greatest impediments right now is where the data 
is collected, and I think if there were ways to incentivize the 
healthcare profession to engage earlier in the process of open 
exchange of information, I think these currently available ADR 
methods would be even more efficient and demonstrate that they 
are very effective in the marketplace.
	MS. CAPPS.  Could you give very specific ways that we could 
assist in that that would be appropriate for Congress?
	MS. DOROSHOW.  Well, I think you could certainly do some 
influence on changing that data reporting system.  I do think that if 
you are going to pilot any projects, that you look at the current 
projects that are using mediation currently, as is Rush Hospital in 
Chicago, which is a national model, and allow those programs to 
be tested in other areas of the country to see if the same positive 
results could be obtained.
	MS. CAPPS.  Dr. Mello, you are the academic about a lot of 
these things.  Have these projects been studied?
	DR. MELLO.  Not in as systematic a way as we would like.  Of 
course, controlled studies are difficult to do when you only have 
one site.
	MS. CAPPS.  Right.  I understand.  Do you think what you are 
proposing, does it have to be a sort of totally different structure?
	DR. MELLO.  No, it doesn't.  The health courts model can 
incorporate any number of alternative dispute processes at the first 
level of dispute resolution, which is the interactions between the 
two private parties: the hospital or the doctor and the patient.
	MS. CAPPS.  I know I am out of time, but since this is our last 
round, could I ask just one more?
	MS. CAPPS.  I'm interested in your model, but I also don't want 
to let go of the ability to go to trial by jury.  Can they work 
	DR. MELLO.  Well, what we are proposing is a sort of opt-in 
demonstration program so that patients who really believe that 
right is important can choose to go elsewhere for their healthcare 
besides the limited number of providers who are opting into our 
	MS. CAPPS.  But then do I understand this?  If it became the 
system, it would be for everyone?
	DR. MELLO.  We would have multiple levels of appeal, and the 
final appeal would be to a court of law.
	MS. CAPPS.  Oh, I see.  That really isn't the same as what Ms. 
	DR. MELLO.  It is not a jury.
	MS. CAPPS.  So you would be fundamentally taking an injured 
patient's right to a trial by jury away from them?
	DR. MELLO.  I don't see it in quite those terms, but actually, 
they would be--
	MS. CAPPS.  Could you say yes or no to my question?
	DR. MELLO.  There would be no jury trial in this system for 
	MS. CAPPS.  Wow.  That is major.  This is a country built on 
trial by jury.
	DR. MELLO.  I appreciate that fully, as a lawyer, but I think in 
this case the system doesn't work in the interest of patients as it 
doesn't work in the interest of injured workers or injured vaccinees 
and many other areas where we have carved out.
	MS. CAPPS.  Well, I would certainly hope we could explore all 
kinds of alternatives before we take this drastic step.  Thank you 
very much.
	MR. FERGUSON.  Well, thank you all for being here.
	Oh, no.  I am sorry.  Mr. Shimkus is recognized for questions.
	MR. SHIMKUS.  Thank you, Mr. Chairman.  Again, this is a 
great debate.  I think the passion on all sides is because most 
people feel the system is not working.  And before we passed 
liability reform in Illinois, which the jury is still out on.  We don't 
know if doctors are still leaving but slowly.  But I represent 40 
counties in the State of Illinois.  Springfield South is probably 
about 47 counties, so it is actually the seventh Supreme Court 
district.  I think there are about 47 counties.  There was no 
neurosurgeons in 47 counties in southern Illinois.  Now we have a 
couple.  And that is from Springfield, the central part of our State, 
to Paducah, Kentucky.  No neurosurgeon.  Probably close to one 
million people.  That is the problem.
	Now the question is, Ms. Niro, how many medical liability 
insurers are there in Illinois?
	MS. NIRO.  I can't answer that with any certainty from one day 
to the next.
	MR. SHIMKUS.  Yes.  Two.  One has 95 percent of the market.  
That is a co-op.  It is owned by doctors.  It is a not-for-profit.  So 
one of the reforms is how do you get more insurers into the 
market?  Would anyone disagree with that, if you believe in 
competition?  If it is such a lucrative business, why wouldn't 
people be flocking, the insurers, to Illinois?  So we have to have 
the doctors develop their own insurance pool just so they have 
coverage.  And that is really part of my frustration.  And even the 
doctors' cooperative insurance is pricing the doctors out of the 
business.  So the people who are running the co-op say, "We can't 
afford you," doctors who own this insurance company.  That is 
	Dr. Burgess talked about Texas.  And we always get confused 
with economic damages, pain and suffering.  They get lumped in 
together.  And the public gets confused, because no one ever 
disputes full economic recovery.  They really dispute, even today, 
about whether kids get economic recovery.  Ms. Niro, you say no.  
Mr. Barringer, you say yes.  Who is correct?
	MR. O'CONNELL.  Well, one issue is whether a child is 
economically productive.  That is, if a child doesn't have a job and 
the child dies, there isn't any basis for claiming the child, except 
for the medical expenses incurred for the child, that the child has 
cost money to anyone.  That is why--
	MR. SHIMKUS.  Mr. Barringer is getting excited, so please.
	MR. BARRINGER.  I am not.
	MR. SHIMKUS.  No, no.  This is what we do this for.  It is the 
method to get you guys interacting.
	MR. BARRINGER.  My understanding, and my statement was, to 
the extent that you had an injury and if there were future 
productive losses or economic damages that would have been 
foregone due to the injury, that there would be entitlement to 
economic damages.  Someone correct me if I am wrong, but I 
thought that that was the case.
	MR. SHIMKUS.  And of course the mother.  Are you calculating 
economic damages for a mother who is not employed?
	MR. O'CONNELL.  Well, there would be replacement costs.  
You would have to hire a homemaker and others.  Those costs 
would be economic losses.
	MR. SHIMKUS.  And so the whole cap issue is not talking about 
pain and suffering.  This is in addition to.
	MR. O'CONNELL.  That is right.
	MR. SHIMKUS.  And Dr. Burgess just came back, but in the 
debate on how you get more insurers back, Texas went from 2 to 
14.  And how did they do it?  They capped the second portion of 
the pain and suffering.
	I have got two questions I have got to ask.  I have been asking 
others, but I want to make sure I ask.  I don't understand, Mr. 
Wootton, this statement in your testimony.  "How will patients 
benefit from the adoption of an experience-rated administrative 
compensation system?"  What do you mean?  Explain that.
	MR. WOOTTON.  Yes.  That could be at the heart of the health 
court idea, but it is certainly at the heart of my idea, and that is that 
if you have a low-cost claim like workers' comp, there have been 
findings that more workplace safety was generated by the workers' 
comp system, which is an experience-rated compensation, which 
means that if you are an employer and you have lots of claims 
against you as an employer, then you are going to pay a higher rate 
for your workers' comp and that that rating that costs you as an 
employer more means you have somebody in your employ who is 
going to go around and make your place safer.  That generates 
more workplace safety than the very random tort system or, for 
that matter, OSHA.  I hope somebody will sort of catch on to what 
is going on here that if you make it easy for people to come in and 
say, "I think I have been injured because of a departure from 
standard of care," an avoidability kind of situation, you are going 
to drive up the standard of care.  I will say one thing I think that 
the status quo people have to answer is why is it that half of the 
adverse events that happen with drugs happen in hospitals to old 
people that are taking generic drugs and those cases never get in 
the court system.  The answer is old people are not attractive 
plaintiffs.  Lawyers take cases that fit their business model.  They 
do not take cases because they are really trying to serve the public 
good.  What we are talking about is a system that will in fact drive 
up the standard of care.  So that is the distinction that I am trying to 
make by an experience-rated compensation system providing more 
incentive for patient safety.
	MR. FERGUSON.  Before we go to Dr. Burgess, Ms. DeGette 
has a quick point of clarification.
	MS. DEGETTE.  Thank you.
	I think some of the non-lawyers here are confused about 
economic versus non-economic damages.  Economic damages, for 
any plaintiff, are the damages where there is an economic loss.  So 
what that would mainly be is out-of-pocket medical expenses that 
they might incur and some projected expenses, like if somebody 
was disabled and they needed home healthcare, something like 
that.  Economic damages.  It would also mean loss of wages for 
that individual, so for a year, if you were injured and lost your job 
due to medical malpractice and sued, then they would calculate 
your projected economic damages.  For stay-at-home moms, for 
children, for senior citizens, what these witnesses are saying is 
because there are no wages to be lost, then there would be no 
wages computed in the economic damages.  And I was actually 
talking to the Chairman about this earlier.  For children, for future 
lost wages, most of the time, that would be speculative, because 
those are young children that don't have that economic loss.  So I 
think in some States, and I am sure some of my friends will correct 
me, you might be able to compute future wage loss for children 
based on parents or something like that.  But that would not be 
included in economic damages.  That would be non-economic 
damages that you are calling pain and suffering, but it is actually a 
much broader group.  And the non-economic damages are the 
damages that the States put the caps on.  So I hope that clarifies 
what those different types of damages are.
	MR. SHIMKUS.  And if I may, I appreciate that.  I am not a 
lawyer, and I see heads shaking yes and no, so I think there is some 
frustration.  But if the gentleman is correct, then why not develop a 
system by which you then can calculate non-economic damages?  I 
know one of my State senators, a Democrat, a good friend of mine, 
Bill Hayne, who was involved with the legislation, brought this 
issue up all of the time.  So I know it is a valid issue and a valid 
debate.  I don't know if we are willing to sit at the table and 
	MS. DEGETTE.  Right.  Well, we actually do have a system 
right now in all 50 States that computes economic and non-
economic damages, and that is called the tort system.  But that 
doesn't mean we shouldn't look at some other innovative ways like 
the witnesses are discussing today to compensate.  It is really not 
about what the damages are.  It is how we can resolve cases much 
more quickly and efficiently.
	MR. FERGUSON.  Dr. Burgess.
	MR. BURGESS.  Thank you, Mr. Chairman.
	Let me ask Mr. O'Connell again on this concept of economic 
and non-economic damages.  The diagram that you proposed in 
your testimony, I believe, you were just talking about a voluntary 
system that would get rapid payment for what would be described 
as economic loss.  Is that correct?  Do I understand that correctly?
	MR. O'CONNELL.  It would be voluntary from the point of view 
of the defendant.  The defendant would have the option of offering 
to pay economic loss within 180 days of the claim.
	MR. BURGESS.  What would be the objection to including non-
economic damages under some parameters, whether it be a cap or 
some percentage of the total claim?
	MR. O'CONNELL.  What you are trying to do, sir, is incentivize 
a defendant to come forward and pay essential losses.  Today, the 
defendant has the right to come forward and offer to pay both 
economic and non-economic damages within 180 days, or any 
other period, but I suggest, as I said in my submitted statement, 
that for either side to come forward early on the defendant's side to 
make a generous offer or the plaintiff's side to make an offer to 
settle encourages the other side to become a participant.  That is, if 
I, as a defendant, come forward to you very early on and make a 
generous offer of both medical expense and wage loss plus your 
pain and suffering, counsel is liable to say, "Why are they offering 
this much this early?  Maybe they are hiding something back there.  
Who knows?  But we are not going to take this early settlement."  
Similarly, if the plaintiff comes forward and says, "All I want is 
my economic loss," and the law entitles them to non-economic 
loss, the defendant will kind of say, "Well, why are we paying him 
that if that is all he wants?  He must not be entitled to anything, or 
much less."  So what I am trying to do is encourage the defendant 
to come forward and offer to pay economic loss in order to get that 
prompt payment of economic loss.  So he has got that incentive to 
make the offer.  The plaintiff now has the incentive to accept it, 
because he cannot sue for non-economic loss unless he has got a 
case for gross negligence provable by clear evidence.  So I am 
trying to encourage--
	MR. BURGESS.  It is an enormously attractive concept.  If there 
were a way to capture that spirit into legislation, would you 
envision that as a State issue or as a Federal issue?
	MR. O'CONNELL.  It could be enacted either way.  There was a 
Federal bill introduced a few years ago by Senator McConnell of 
Kentucky and a few years before that Representative Gephardt 
introduced a bill applying this scheme for federally-funded 
healthcare recipients, Medicare and Medicaid.  Neither of them 
passed, but I have drafted legislation, and legislation was drafted 
by the staff of those two legislators, so it is what I am suggesting to 
this committee.
	MR. BURGESS.  The concept of creating a savings for the 
Federal government, we do spend 50 cents out of every healthcare 
dollar that is spent in this country, also is enormously attractive to 
me, which is why I would like to think along the lines of a Federal 
solution, but I am concerned, since my own State has successfully 
tackled and passed legislation and passed to constitutional 
amendment, which has been enormously effective at keeping 
doctors and insurers in the State.  Would this type of legislation be 
injurious to a State that has already dealt with the problem 
	MR. O'CONNELL.  No, I don't think so.  You could draft a 
statute such that it doesn't displace what the State has already 
done.  It might add an additional incentive.  In other words, you 
now have a cap on pain and suffering.  Under this scheme, the 
defendant could make the offer to them and a payment for pain and 
suffering as long as there was prompt payment for the economic 
loss, which would do away with the claim for non-economic loss, 
which already exists in Illinois, below the cap.
	MR. BURGESS.  Well, I thank you for your testimony and for 
everyone on the panel for their forbearance today.
	Mr. Chairman, I would like to ask unanimous consent that I 
insert into the record data from Texas that deals with the number of 
neurologists in the State showing a gradual increase up until the 
year 2002 and then a dramatic decline.  Following the passage of 
our medical cap, the number of neurologists has dramatically 
increased in the State.  I think this study on the neurologists in the 
State just really is illustrative of the problem and how at least one 
State has solved that problem.
	And with that, I will yield back.
	MR. FERGUSON.  Without objection, that will be included in the 
	[The information follows:]


	MR. FERGUSON.  Let me thank all of our witnesses for being 
here today.  This is an extremely important issue, and we need to 
be thinking outside the box.  Your testimony has really helped us 
in that regard, and we really hope to continue to hear more from 
you in the future as we try to get our arms around this problem.
	Thank you for being here today.  We appreciate it.
	We stand adjourned.
	[Whereupon, at 1:14 p.m., the subcommittee was adjourned.]


Responses of Michelle Mello, JD, PhD to questions from The 
Honorable Diana DeGette:

The NPDB 2002 Annual Report (page 35) states:

A few physicians are responsible for a large 
proportion of malpractice payment dollars paid: 
The one percent of physicians with the largest total 
payments in the NPDB were responsible for about 
12 percent of all the money paid for physicians in 
malpractice judgments or settlements reported to the 
NPDB since its opening in 1990. The five percent 
of physicians with the largest total payments in the 
NPDB were responsible for just under a third of the 
total dollars paid for physicians over the period. 
Eleven percent of physicians were responsible for 
half of all malpractice dollars paid, or settlements 
from September 1, 1990 through March 31, 2003.

These data indicate that malpractice payments tend to be 
concentrated among a relatively small group of physicians.  The 
most likely explanation for this is not that a small number of 
physicians are repeatedly sued, but that a small number of high-
cost claims account for a large proportion of the expenses.  It is 
highly unlikely that these high-cost claims involve the same 
physicians each year.  I am not aware of any data that support such 
a notion.

Among the data in the NPDB report that suggest that high-cost 
claims, not repeatedly sued physicians, are responsible for the 
skewed distribution of claims costs are the following:
         The 1% of physicians with the highest total claims 
payments accounted for 12% of all payments (page 35).
	 The differences between the mean and median claims 
payments in Table 10 of the NPDB Annual Report are 
large.  When means are much higher than medians, it 
indicates that a distribution contains a small number of high 
	 About 84% of physicians have two or fewer NPDB reports, 
97% have five or fewer reports, and 99.5% have 10 or 
fewer reports over the 1990-2002 period (page 34).

I disagree that there are any data available to support the 
proposition that a small number of health care professionals cause 
a large share of malpractice injuries.  To my knowledge, no data 
are available to support or refute such a claim.  

The NPDB data discussed above do not support this claim because, 
among other reasons, they relate to claims payments, not injuries.  
The correlation between injuries and claims payments is weak.  
The overwhelming proportion of medical injuries never become 
claims, and about half to two thirds of claims do not result in a 
payment.  Therefore, we cannot infer anything about who is 
injured, or who causes injury, on the basis of data indicating which 
doctors have faced claims that resulted in payments.


Please see my response to question #2, above.  

The following studies do not directly address the question, but 
establish the weak link between injury, claiming, and payment 
discussed above:

Localio AR, Lawthers AG, Brennan TA, et al. Relation between 
malpractice claims and adverse events due to negligence. Results 
of the Harvard Medical Practice Study III. N Engl J Med 
	 A key finding of this study is that only about 2% of medical 
injuries attributable to negligence become claims.

Studdert DM, Thomas EJ, Burstin HR, Zbar BI, Orav EJ, Brennan 
TA. Negligent care and malpractice claiming behavior in Utah and 
Colorado. Medical Care 2000;38(3):250-60.
	 This study confirmed the 2% finding from the Harvard 
Medical Practice Study on a different sample of medical 

Studdert DM, Mello MM, Gawande AA, et al. Claims, errors, and 
compensation payments in medical malpractice litigation. New 
England Journal of Medicine 2006;354(19):2024-33.
	 Key findings of this study are that about 63% of claims 
involve medical errors and about 56% of all claims result in 
payment.  Among claims that involve medical errors, about 
three quarters result in payment and a quarter do not.  
Among claims that do not involve errors, about one quarter 
result in payment and three quarters do not.

Most scholars of medical liability, and many in the medical 
community, agree that medical boards have not been aggressive in 
policing physician quality/competence problems.  Their 
investigations and disciplinary actions tend to center on physician 
misconduct (such as substance abuse) rather than physician 
competence.  However, it would be a mistake to conclude that 
having two or more paid malpractice claims, or even five paid 
claims, should result in disciplinary action.  As the Studdert et al. 
2006 article referenced above shows, many claims are paid in the 
absence of evidence of negligence.  A large number of paid claims 
against a physician might reasonably trigger scrutiny by a 
disciplinary board, but the question of whether those claims 
indicate a pattern of negligence is not answered by the mere 
existence of those payments.  


Please see my response to question #4.


Please see my response to question #4.


Two mechanisms that could be helpful are:

1. Ensuring that medical boards (and/or state departments of 
health) have well publicized mechanisms for patients and 
staff in hospitals and clinics to complain about perceived 
physician competence problems.  As noted above, 
malpractice claims are a crude indicator of physician 
competence.  Other countries, such as New Zealand, use a 
parallel complaints process to gather reports of competence 
problems and investigate them.  The following articles may 
be of interest:
Bismark M and Paterson RJ. No-fault compensation in 
New Zealand: harmonizing injury compensation, provider 
accountability, and patient safety. Health Affairs 
2006;25(1): 278-283.
Paterson RJ. The patients' complaints system in New 
Zealand, Health Affairs 2002;21(3):71-79. 
2. Conducting formal audits of medical board activity.

To my knowledge, no studies or data have established that 
overpricing occurred.  One useful indicator is insurers' loss ratios, 
as reported by the National Association of Insurance 
Commissioners.  These ratios compare the money collected in 
premiums to what was paid out (or incurred) in claims costs.  
These ratios were less than 1 for insurers in many markets until 
recently, meaning that what they charged was not adequate to 
cover their losses.


A good explanation of this issue is available in the paper by 
Bovbjerg and Bartow at 
http://medliabilitypa.org/research/report0603/.  In brief, some 
insurance companies appear to have underestimated their claims 
liability during the favorable markets of the 1980s and 1990s.  
They competed strongly on price.  They later found that they had a 
"tail" of liability on for which they had not adequately reserved 
funds.  Malpractice claims have a long "tail" because patients may 
wait 2-3 years to file them and then the cases typically take 3 or 
more years to resolve.  During this period, the insurer can only 
make an educated guess about what its liability will ultimately be.  
Some insurers guessed wrong; they did not charge enough to cover 
what they eventually had to pay.  Some went out of business as a 
result, as the Bovbjerg and Bartow paper explains.


Some insurers' loss ratios would have been more favorable 
heading into the 1990s.  Because the most recent malpractice crisis 
had multiple causes (please see my response to question #11, 
below), I cannot conclude that later increases in insurance prices 
could have been prevented by earlier increases.

My views on this subject are available on pages 11-12 of the report 
no8_primer.pdf.  In brief, I believe that the "insurance cycle" 
contributed to the malpractice insurance crisis but was not the sole 
contributing factor.


I reviewed a large literature on this subject in the process of 
preparing the following report: 
no10_researchreport.pdf.  The relevant studies, their findings, their 
limitations, and my overall conclusions are discussed in detail 
there.  Among my findings were that many of the reports put out 
by political interest groups are unreliable on this subject; however, 
a small number of well-designed academic studies provide reliable 
evidence.  The strongest studies on this topic, listed on page 12 of 
that report, find a modest effect of damages caps on premiums.

The relevant studies are summarized on pages 12 and 24-25 of the 
above-referenced report, 

The Weiss Ratings study is a descriptive analysis that simply 
compares the median premium in two groups of states without 
attempting to control for ways in which the groups of states may 
differ.  This is not a scientifically defensible way to measure the 
effect of damages caps.  Observed differences in premiums may be 
attributable to the presence or absence of a damages cap, but 
without controlling for other variables, we cannot know for sure.  

The Weiss Ratings study findings are at odds with the findings of 
many well-controlled academic studies of damages caps (see 
response to question #13, above).  The controlled studies should be 
given greater weight.


All relevant work has been referenced above.  Copies of works 
authored by me are appended.  They are also publicly accessible at:



("Claims, Errors, and Compensation Payments in Medical 


  U.S. Tort Costs:  2003 Update 17 (Tillinghast-Towers Perrin 2003).
  For example, one out of four baseless claims result in payment, according a recent study by 
Harvard School of Public Health researchers.  See David M. Studdert et al., Claims, Errors, and 
Compensation Payments in Medical Malpractice Litigation, New England Journal of Medicine, vol. 
354; May 2006, p. 2029.  For information about defensive medicine, see, e.g., Daniel Kessler & 
Mark McClellan, Do Doctors Practice Defensive Medicine? May 1996 Quarterly Journal of 
Economics 353-390.  It is important to note that there are substantial variances in estimates of what 
defensive medicine costs the U.S. health care system.  The article cited above represents perhaps the 
highest estimate, although the validity of this estimate has been challenged.  There is little question, 
however, that defensive medicine does in fact occur.  See e.g., David M. Studdert, Michelle M. 
Mello, William M. Sage, Catherine M. DesRoches, Jordon Peugh, Kinga Zapert, & Troyen A. 
Brennan,  Defensive Medicine Among High-Risk Specialist Physicians in a Volatile Malpractice 
Environment 293 Journal of the American Medical Association 2609-2617 (2005).
  Crossing the Quality Chasm: A New Health System for the 21st Century, Institute of Medicine 219 
(National Academies Press 2001).	
  Crossing the Quality Chasm: A New Health System for the 21st Century, Institute of Medicine 219 
(National Academies Press 2001).
  Health Care At The Crossroads: Strategies for Improving the Medical Liability System and 
Preventing Patient Injury 27 (Joint Commission on the Accreditation of Healthcare Organizations 
  To Err is Human: Building a Safer Health System, Institute of Medicine (Linda T. Kohn, Janet M. 
Corrigan, & Molla S. Donaldson eds., National Academies Press 2000).
  To Err is Human: Building a Safer Health System, Institute of Medicine 1 (Linda T. Kohn, Janet 
M. Corrigan, & Molla S. Donaldson eds., National Academies Press 2000).
  See, e.g., The Patient Safety and Quality Improvement Act of 2005, P.L. 109-41, signed into law 
July 29, 2005.
  Crossing the Quality Chasm: A New Health System for the 21st Century, Institute of Medicine 219 
(National Academies Press 2001).
  Fostering Rapid Advances in Health Care: Learning from System Demonstrations, Institute of 
Medicine 82 (Janet M. Corrigan, Ann Greiner, & Shari M. Erickson eds., National Academies Press 
  Harvard School of Public Health and Common Good to Develop New Medical Injury 
Compensation System, Harvard School of Public Health Press Release, January 10, 2005. 
  More information about the evolving health court proposal is available at 
  Randall R. Bovbjerg, Frank A. Sloan, & Peter J. Rankin, Administrative Performance of "No-
Fault" Compensation for Medical Injury, 60(2) Law and Contemporary Problems 71, 90-98 (1997).
  David M. Studdert & Troyen A. Brennan, No-Fault Compensation for Medical Injuries:  The 
Prospect for Error Prevention, 286(2) Journal of the American Medical Association 217, 219 
  Note that appeals to resolve disputes about the standard of care within and across state lines could 
be made to a dedicated court of medical appeals, potentially at the federal level.  Similar to the 
current system, both parties would have lawyers representing them.
  To Err is Human: Building a Safer Health System, Institute of Medicine 51 (Linda T. Kohn, Janet 
M. Corrigan, & Molla S. Donaldson eds., National Academies Press 2000).
  David M. Studdert, E.J. Thomas, B.I. Zhar, J.P. Newhouse, P.C. Weiler, & Troyen A. Brennan, 
Can the United States Afford a 'No-Fault' System of Compensation for Medical Injury?, 60(2) Law 
& Contemporary Problems 1, 3-7 (1997).
   Administrative Approaches to Compensating for Medical Injury:  National and International 
Perspectives, Event Transcript 16, 22, Public Forum held by Common Good-Harvard School of 
Public Health at Carnegie Endowment for International Peace, Washington, D.C., October 31, 2005.
  National Guideline Clearinghouse, Agency for Healthcare Research and Quality, U.S. Department 
of Health and Human Services, http://www.guideline.gov/. 
  Randall R. Bovbjerg, Laurence R. Tancredi, & Daniel S. Gaylin, Obstetrics and Malpractice:  
Evidence on the Performance of a Selective No-Fault System, 265(21) Journal of the American 
Medical Association 2836-2843 (1991).	
  Randall R. Bovbjerg & Laurence R. Tancredi. Rethinking responsibility for patient injury: 
accelerated-compensation events, a malpractice and quality reform ripe for a test, 54(1-2) Law & 
Contemporary Problems 147-177 (1991).
  See, e.g., Randall R. Bovbjerg, Frank A. Sloan, & Peter J. Rankin, Administrative Performance of 
"No-Fault" Compensation for Medical Injury, 60(2) Law and Contemporary Problems 71, 90-98 
(1997). Administrative Approaches to Compensating for Medical Injury:  National and International 
Perspectives, Event transcript 21, Public Forum held by Common Good-Harvard School of Public 
Health at Carnegie Endowment for International Peace, Washington, D.C., October 31, 2005.
  David M. Studdert, Eric J. Thomas, Helen R. Burstin, Brett I.W. Zbar, E. John Orav, & Troyen A. 
Brennan, Negligent Care and Malpractice Claiming Behavior in Utah and Colorado, 38(3) Medical 
Care 250-260 (2000).
  As part of Common Good's ongoing Robert Wood Johnson Foundation project, Professor E. Don 
Elliott of the Yale Law School has developed the constitutional analysis on which this section is 
  For example, see South Dakota v. Dole, 483 U.S. 203 (1987), upholding the federal government's 
conditioning state receipt of federal highway funds on adopting a drinking age of 21.
  See Gonzales v. Raich, 125 S.Ct. 2195 (2005); United States v. Lopez, 514 U.S. 549 (1995).  
  See Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984); Pennsylvania v. Nelson, 350 U.S. 497 
(1956).  Note that whether or not a state could assign malpractice claims to an administrative entity 
without violating 7th Amendment rights to a jury trial would depend in part on whether the Supreme 
Court would characterize the rights at issue as "private" or "public" rights.  Essentially, private 
rights involve the obligations of one individual to another, whereas public rights involve issues 
relating to broad public purposes.  Significantly, the Supreme Court has held that disputes 
implicating public rights can be adjudicated without jury trials.  For example, in Thomas v. Union 
Carbide Agricultural Prod. Co., 473 U.S. 568 (1985), the Supreme Court rejected Union Carbide's 
right to sue for violations of trade secrets, and upheld Congress' establishment of an administrative 
process for registering pesticides as part of a comprehensive re-working of federal pesticide law.  By 
this rationale, an administrative approach to resolving malpractice disputes should be constitutional 
if health courts are created as part of a comprehensive regulatory scheme for reforming the health 
care system.  See, for example, New York Central RR v. White, 243 U.S. 188 (1917).    
  Colaio v. Feinberg, 262 F. Supp. 2d 273 (S.D.N.Y. 2003), aff'd Schneider v. Feinberg, 345 F.3d 
135 (2d Cir. 2003).
  Among these experts and academics are Peggy O'Kane, President of National Committee on 
Quality Assurance; Ken Kizer, former President of the National Quality Forum; Helen Darling, 
President of the National Business Group on Health; Troyen Brennan, former President of the 
Brigham & Women's Hospital in Boston and Professor at the Harvard School of Public Health; and 
William Brody, President of Johns Hopkins University.  More information can be found at 
  Health Courts offer cure, USA Today, July 4, 2005, Editorials/Opinion.
  Scalpel, Scissors, Lawyer, The Economist, December 14, 2005, Opinion.
  It's Time to Try Special Health Courts, The New York Times, January 9, 2005, Editorial.
  H.R. 1546, 109th Congress, 1st Sess. (2005).
  S. 1337, 109th Congress, 1st Sess. (2005).
  Iglehart, John, "The malpractice morass: Symbol of societal conflict," Health Affairs, July/August 
  General Accounting Office, "Medical Malpractice Insurance: Multiple Factors Have Contributed to 
Increased Premium Rates," GAO- 03-702, July 2003
  Studdert, David M., Mello, Michelle M., Brennan, Troyen A., "Medical malpractice," NEJM 
350;3, January 15, 2004
   The following numbered items i-ix are adapted from Jeffrey O'Connell, Statutory Authorization of 
Nonpayment of Non-economic Damages, 71 Tenn. L. Rev. 191-95 (2003).  For a brief presentation 
of the inadequacies of current medical malpractice law, see Jeffrey O=Connell & Andrew S. 
Boutros, Treating Medical Malpractice Claims Under A Variant of the Business Judgment Rule, 77 
Notr. D. L. Rev. 373, 374-83 (2002). Two recent works, while purporting to rebut criticisms of 
medical malpractice law, nonetheless acknowledge its inadequacies in proposing substantial reforms, 
in the first instance even proposing a variant of early offers to reduce exposure to pain and suffering 
damages. See David A. Hyman and Charles Silver, The Poor State of Heath Care Quality in the 
U.S.: Is Malpractice Liability Part of the Problem or Part of the Solution? 90 CORNELL L. REV. 893, 
986-87, 992 (2005); TOM BAKER, THE MEDICAL MALPRACTICE MYTH 90, 163-64; 172-74 (2005).
   Jeffrey O'Connell, An Alternative to Abandoning Tort Liability 60 MINN. L. R. 501 506-09 (1976).  
   See W. Kip Viscusi, Pain and Suffering: Damages in Search of a Sounder Rationale, I MICHIGAN 
LAW AND POLICY REV 141 (1996).
   Jeffrey O'Connell, Jeremy Kidd, & Evan Stevenson, An Economic Model Costing AEarly Offers@ 
Medical Malpractice Reform, 35 N. Mex. L. Rev. 259, 280.
  David M. Studdert, Michelle Mello, et al. "Claims, Errors, and Compensation Payments in Medical 
Malpractice Litigation," New England Journal of Medicine, May 11, 2006.
  George J. Annas, J.D., M.P.H., "The Patient's Right to Safety - Improving the Quality of Care 
through Litigation against Hospitals," New England Journal of Medicine, May 11, 2006.
  Harvard Medical Practice Study, Patients, Doctors and Lawyers: Medical Injury, Malpractice 
Litigation, and Patient Compensation in New York, 1990.
  "Medical Errors: Rodham Clinton, Obama Propose Disclosure; Program, American Health Line," 
September 29, 2005.
  See, Amy Widman, Center for Justice & Democracy, "Why Health Courts are Unconstitutional" 
(publication forthcoming by the Pace Law Review), 
  Philip G. Peters, Jr. "The Role of the Jury in Modern Malpractice Law," 87 Iowa L. Rev. 909, 927-
28 (2002), http://papers.ssrn.com/sol3/Papers.cfm?abstract_id=310681.
  Marc Galanter, "Real World Torts: An Antidote to Anecdote," 55 Maryland L. Rev. 1093, 1111 
(1996), citing Mark I. Taragin et al., "The Influence of Standard of Care and Severity of Injury on 
the Resolution of Medical Malpractice Claims," 117 Annals Internal Med. 780, 782, 780 (1992).
  Philip G. Peters, Jr. "The Role of the Jury in Modern Malpractice Law," 87 Iowa L. Rev. 909, 922 
(2002), http://papers.ssrn.com/sol3/Papers.cfm?abstract_id=310681.
  Id. at 924-25, citing Kevin M. Clermont & Theodore Eisenberg, "Trial by Jury or Judge: 
Empiricism," 77 Cornell L. Rev. 1124, 1137, 1174 (1992).
  Allen Pusey, "Judges Rule in Favor of Juries: Surveys by Morning News, SMU Law School Find 
Overwhelming Support for Citizens' Role in Court System," Dallas Morning News, May 7, 2000.
  See Kirk B. Johnson, "A Fault-Based Administrative Alternative for Resolving Medical 
Malpractice Claims," 42 VAND. L. REV. 1365, 1401 (1989).
  National Childhood Vaccine Injury Act of 1986, P.L. 99-660.
  Id.; see also Statement of the National Vaccine Information Center Co-Founder & President 
Barbara Loe Fisher, September 28, 1999, House Oversight Hearing, "Compensating Vaccine Injury: 
Are Reforms Needed?" (discussing the unilateral power DHHS has to change the burdens of proof 
and other restrictions); Derry Ridgway, "No-Fault Vaccine Insurance: Lessons from the National 
Vaccine Injury Compensation Program," 24 J. HEALTH POL'Y & L. 59, 69 
(1999)("Lessons")(describing how the program originally awarded many more claims, until the 
Department of Justice decided to aggressively argue against claimants.)
  See Elizabeth C. Scott, "The National Childhood Vaccine Injury Act Turns Fifteen," 56 FOOD & 
DRUG L.J. 351 (2001)(stating that, as of 2001, 75 percent of claims were denied after long and 
contentious legal battles taking an average of 7 years to resolve).
  See, e.g., Lessons, supra note 38, at 86.
  See Elizabeth C. Scott, "The National Childhood Vaccine Injury Act Turns Fifteen," 56 FOOD & 
DRUG L.J. 351, 358-363 (2001)(discussing "horror stories about the length of time it takes them to 
process the case and receive compensation . . . [and] families who've gone bankrupt trying to meet 
their children's medical and emotional needs while going through the system."  Also noting the 
adversarial nature of these "combative mini-trials," where, even after the decision to compensate is 
made, veteran DOJ litigators "fight over minutia like the future cost of diapers in a certain state.")
  See "Worker's Comp: Falling Down on the Job," Consumer Reports, 2000 (discussing the 
legislative reforms of the 1990s and the resulting profits for worker's compensation insurance 
  See Hammond and Kniesner, "The Law and Economics of Worker's Compensation," Rand 
Institute for Civil Justice, 1980.
  McCluskey, Martha T., "The Illusion of Efficiency in Workers' Compensation "Reform," 50 
Rutgers L. Rev 657, 699-700, 711 (1998) n. 158, 159, 160 
  See, Rand Research Brief, "Compensating Permanent Workplace Injuries," 1998.
 McCluskey, Martha T., "The Illusion of Efficiency in Workers' Compensation "Reform," 50 
Rutgers L. Rev 657, 699 (1998) n. 156, 157 (citing Deborah R. Hensler et Al., Compensation For 
Accidental Injuries In The United States 107 fig.4.8 (1991)).
  Bill McKelway, "Brain-Injury Program's Outlook Dim; Cost Savings For Doctors Meant Less For 
Children," Richmond Times Dispatch," Nov, 16, 2002. 
  George J. Annas, J.D., M.P.H., "The Patient's Right to Safety - Improving the Quality of Care 
through Litigation against Hospitals," New England Journal of Medicine, May 11, 2006.
  Mass. Gen. Laws ch. 231,  85K (2003).
  Doug Most, "The Silent Treatment," Boston Magazine, Feb. 2003.
  Bill McKelway, "Brain Injuries Spur No Action; Case Review, Required by Law, Is Not Being 
Done, Va. Study Found," Richmond Times Dispatch, Jan. 14, 2003.
  Bill McKelway, "Panel Approves Bill on Birth Injuries; Would Expand Benefits and Notification 
Rights," Richmond Times Dispatch, Jan. 29, 2003.
  George J. Annas, J.D., M.P.H., "The Patient's Right to Safety - Improving the Quality of Care 
through Litigation against Hospitals," New England Journal of Medicine, May 11, 2006.
   Dean Baquet and Jane Fritsch, "New York's Public Hospitals Fail, and Babies Are the Victims," 
New York Times, March 5, 1995.
  Frank v. Superior Court of the State of Arizona et al., 150 Ariz. 228 (1986).
  Rosenfeld, Harvey, Silent Violence, Silent Death.  Washington, DC: Essential Books (1994), p. 56, 
citing Holzer, James F., "The Advent of Clinical Standards for Professional Liability," Quality 
Review Bulletin, Vol. 16, No. 2 (February 1990).
  Perryman v. Rosenbaum et al., No. 86-3453 (DeKalb County Super. Ct., Ga., verdict June 5, 
  Koenig, Thomas & Michael Rustad, In Defense Of Tort Law.  New York: New York University 
Press (2001), citing letter correspondence from W. Fred Orr, III, Henry Perryman's attorney, dated 
April 26, 1994.
  Rosenfeld, Harvey, Silent Violence, Silent Death.  Washington, DC: Essential Books (1994), pp. 
567, citing Downey v. U.S., No. MCA 84-2012/RV (N.D. Fla., filed 1984), Evans v. U.S. and Dutka 
v. U.S .Evans and Dutka were filed as administrative complaints but settled prior to filing of 
complaints in federal district court.  Rosenfeld, Harvey, Silent Violence, Silent Death. Washington, 
DC: Essential Books (1994), n. 153, citing telephone interview with C. Wes Pittman, one of the 
servicemen's attorneys.
  Rosenfeld, Harvey, Silent Violence, Silent Death.  Washington, DC: Essential Books (1994), p. 57, 
citing telephone interview with C. Wes Pittman, one of the servicemen's attorneys.
  "Saving The Newborn," Trial Lawyers Doing Public Justice (July 1987), citing National Bank of 
Commerce v. HCA Health Services of Midwest, Inc., No. 84-160 (Saline County Cir. Ct., Ark., 
verdict October 6, 1986).  See also, Rosenfeld, Harvey, Silent Violence, Silent Death.  Washington, 
DC: Essential Books (1994), pp. 578.
  "Saving The Newborn," Trial Lawyers Doing Public Justice (July 1987).
  Perez v. Mercy Hospital, No. 98 CVQ 492-D3 (341st Judicial Dist., Webb County Ct., Tex., 
settlement October 28, 1999); Perez v. Mercy Hospital, No. 98 CVQ 492-D3 (341st Judicial Dist., 
Webb County Ct., Tex., fourth amended original petition, filed October 22, 1999)(on file with 
  Perez v. Mercy Hospital, No. 98 CVQ 492-D3 (341st Webb County Ct., Tex., settlement October 
28, 1999); Perez v. Mercy Hospital, No. 98 CVQ 492-D3 (341st Judicial Dist., Webb County Ct., 
Tex., release and settlement agreement, October 28, 1999)(on file with CJ&D).
  Widmann v. Paoli Memorial Hospital, No. 85-1034 (E.D. Pa., verdict December 9, 1988). See 
also, Rosenfeld, Harvey, Silent Violence, Silent Death.  Washington, DC: Essential Books (1994), 
pp. 556.
  Rosenfeld, Harvey, Silent Violence, Silent Death.  Washington, DC: Essential Books (1994), pp. 
  Olson et al. v. Chisolm Trail Living & Rehabilitation Center et al., No. 98-0363 (Caldwell County 
Ct., Tex., verdict August 26, 1999).  See also, Osborn, Claire, "Family of care center resident who 
died awarded $25 million," Austin AmericanStatesman, August 27, 1999.
  Texas Reporter Soele's Trial Report (November 1999).  See also, Malone, Julia, "Lawyers Filling 
Gap Left By Regulators," Palm Beach Post, September 25, 2000.
  Campbell v. Pitt County Memorial Hospital, Inc., 84 N.C. App. 314 (1987).  See also, 
Mahlmeister, Laura, "The perinatal nurse's role in obstetric emergencies: legal issues and practice 
issues in the era of health care redesign," Journal of Perinatal & Neonatal Nursing (December 
1996); Rosenfeld, Harvey, Silent Violence, Silent Death.  Washington, DC: Essential Books (1994), 
p. 57.
  Rosenfeld, Harvey, Silent Violence, Silent Death. Washington, DC: Essential Books (1994), p. 57.
  Berens, Michael J., "Problem nurses escape punishment; State agency often withholds key details 
of violations," Chicago Tribune, September 12, 2000; "Notable settlement," National Law Journal, 
November 8, 1999, citing Gargano v. University of Chicago Hospitals, 95 L 10088 (Cook County 
Cir. Ct., Ill., settled October 7, 1999); "University hospital to pay $7.9 million for fatal doses of 
chemotherapy," Associated Press, October 8, 1999; "Cancer Patient in Chicago Dies After 
Chemotherapy Overdose," New York Times, June 18, 1995; "Cancer Patient Dies After Chemo 
Overdose," Legal Intelligencer, June 16, 1995.
  Berens, Michael J. & Bruce Japsen, "140 Nurses' Aides Fired By U. Of C. Hospitals; Registered 
Nurses Fear Work Burden," Chicago Tribune, October 31, 2000; Berens, Michael J., "U. Of C. To 
Pay $7.9 Million In Death Of Cancer Patient," Chicago Tribune, October 8, 1999.
   Kohn, Corrigan, Donaldson, Eds., To Err is Human; Building a Safer Health System, Institute of 
Medicine, National Academy Press: Washington, DC (1999).
  "Survey: 80 percent of doctors witness mistakes; But only 10 percent report errors or poor 
judgment, "Reuters, January 26, 2005. http://www.msnbc.msn.com/id/6872715/.
  Robert Pear, "Panel Seeks Better Disciplining of Doctors," New York Times, January 5, 2005.
   See, e.g., Sidney Wolfe et al., 20,125 Questionable Doctors, Public Citizen Health Research 
Group, Washington, DC (2000).   
  L.H. Aiken et al., "Hospital Nurse Staffing and Patient Mortality, Nurse Burnout, and Job 
Dissatisfaction," 288 JAMA 1987 (Oct. 23/30, 2002).
  "Interns' Medical Errors Affected by Work Schedules," November 15, 2004, 
  Margaret Ramirez, "System Checks Steps in Care," Newsday, Oct. 7, 2003.
  Neil Vidmar, Medical Malpractice and the American Jury: Confronting the Myths about Jury 
Incompetence, Deep Pockets and Outrageous Damage Awards 182 (Univ. of Michigan Press 1998) 
  Philip G. Peters, Jr., The Role of the Jury in Modern Malpractice Law, 87 IOWA L. REV. 934 
  Neil Vidmar, Medical Malpractice and the Tort System in Illinois, 93 ILLINOIS BAR JOURNAL 340 
The complete study may be found at this link: http://www.isba.org/medicalmalpracticestudy.pdf