You asked for information on a medical malpractice reform pilot being developed by Massachusetts’ Governor Mitt Romney’s administration and the Harvard School of Public Health.

SUMMARY

The Romney administration and the Harvard School of Public Health began developing a medical malpractice reform pilot program to address inequitable damage awards and long delays seen in the current jury trial system. After a series of planning meetings between the administration and Harvard, there has been no further action on the proposal.

The pilot would be based on a modified workers’ compensation model. An administrative tribunal would hear medical malpractice claims, instead of a jury. Compensation would be provided for avoidable medical injuries according to a schedule of damages for specific injuries. The tribunal’s decision would be the exclusive remedy for the claimant, who would have a limited right to appeal the tribunal’s decision to an administrative law judge. Only patients who agreed to participate would be included in the pilot. Patients would be informed that if they elect to participate, they would not have access to the court system if they suffer a medical injury.

The pilot would be conducted at two hospitals, one community-based and one affiliated with an academic institution. Two other similar hospitals would serve as a control group. The pilot would be limited to obstetrics, which has experienced some of the largest increases in malpractice insurance premiums in recent years.

Harvard professors see several potential advantages to an administrative system, as well as obstacles. Advantages may be found with respect to efficiency, administrative issues, and patient safety. Obstacles that need to be addressed early in the development of an administrative system include leadership identification, venue selection, legal assessment, compensation criteria development, and determining compensation amounts. These advantages and obstacles are summarized below and discussed in more detail in two documents that the professors prepared (copies enclosed).

ADMINISTRATIVE COMPENSATION FOR MEDICAL INJURIES

The Romney Administration proposal makes three major changes in the way medical malpractice claims are handled: (1) claims are heard by a tribunal instead of a jury, (2) an “avoidability” standard replaces the negligence standard, and (3) compensation is awarded according to a predetermined schedule of damages.

Under the current Massachusetts’ system, a court-appointed tribunal pre-screens medical malpractice claims and passes to state court for jury trials those that present a legitimate liability question. The Boston Globe reports that Massachusetts Secretary of Economic Affairs Robert Pozen finds the current system costly and unfair. According to Pozen, the current system permits a small number of people who suffer medical injuries to get very large awards after a long wait and after accruing large administrative costs. “We want to have a different system where we have more people getting awards in smaller amounts,” he said. “We want to reduce administrative delay and costs, while increasing medical safety and having people learn from their mistakes” (The Boston Globe, 11/13/2003).

Potential Advantages

There are several potential advantages to an administrative compensation system for avoidable medical injuries, according to the three Harvard School of Public Health professors who worked with the Romney Administration on the proposal, Troyen Brennan, David Studdert, and Michelle Mello. The advantages are with respect to efficiency, administrative issues, and patient safety.

Efficiency. An administrative compensation system based on an avoidability standard should result in more injuries eligible for compensation than the current jury trial system and more dollars available to go to injured patients due to lower overhead costs and more predictable awards.

Comparing estimates that 55% of medical malpractice premium dollars go toward overhead, including attorney fees, with a workers’ compensation system with overhead of about 25% to 30%, the professors estimate that moving to an administrative system will reduce overhead costs by roughly half. These resources can then become available as compensation to injured patients.

With respect to compensation, the current jury trial system can result in significantly different awards for similar injuries. An administrative system that has a set compensation award schedule will bring equity to the system. More predictable awards would bring stability to insurance markets, according to the professors.

Administrative Issues. An administrative compensation system based on an avoidability standard should simplify the claim adjudication process by developing a list of injuries that are presumptively compensable. As a result, the time from claim to resolution should be dramatically reduced. Under the current system, a claim can take an average of four to five years to resolve, but an administrative system should take between 12 and 18 months, according to the professors.

Developing an administrative compensation system would require a consensus of medical and legal experts on injury causation and reasonable compensation. It presents an opportunity to bring experts together to address controversial issues and ensure dissemination of new and changing scientific advances that might bear on injury avoidability.

Patient Safety. The current medical malpractice system places many injuries under a confidential seal, which does not promote the reduction of medical errors. An administrative system should result in more transparency and learning opportunities by shifting the focus from negligence and blame to avoidability and quality improvement, according to the professors. Claim data collected will also provide information on injuries that could be studied and used for education purposes.

Known Obstacles

Developing an administrative compensation system for avoidable medical injuries also presents several obstacles that have to be faced prior to or during its planning, according to the professors. Based on the professors’ prior research, they believe that an administrative compensation system for medical injury is technically feasible and economically affordable (and they note that political feasibility is another matter). They also believe that the identified obstacles can be overcome.

Identification of Leadership. Identifying the program leadership is necessary for organizing the needed participants and moving enabling legislation through the legislature.

Selection of Venue. The specific clinical field (e. g. , obstetrics), the institutional base (e. g. , hospital, provider network), and geographic location for the pilot must be determined early.

Assessment of Legality. Legislators need to be convinced that an administrative compensation system for medical injury will survive a constitutionality challenge. The system could be challenged under the following theories, according to the professors: (1) access to courts, (2) right to trial by jury, (3) equal protection, (4) due process, and (5) separation of powers. The professors believe that these issues may be overcome because “state constitutions generally provide that these rights may be abrogated if a compelling public policy purpose exists and the deprivation is no more burdensome than necessary to achieve the public purpose” (Brennan, Mello, Studdert - 2003 Memorandum).

Formulation of Compensation Criteria. The criteria used to determine if an event is compensable or non-compensable will have significant implications on system cost, expected efficiencies, the volume and types of injuries to be compensated, and potential patient safety gains. The professors note that there is reasonable agreement in the academic community that an administrative system should compensate injuries that are avoidable or preventable, rather than injuries caused by negligence. “Avoidability” must be clearly defined and include easily identifiable events. They indicate that “other nations, most notably Sweden, have successfully operationalized the concept of avoidability” and that much can be learned from its experiences. They also propose that within specific clinical areas, certain adverse events can be identified for “fast track” compensation. (Brennan, Mello, Studdert - 2003 Memorandum)

Determining Levels of Compensation. Similar to a workers’ compensation system, compensating economic losses would involve decisions regarding what percentage of salary is covered and how much is offset by other sources, such as health and disability insurance. Determining noneconomic loss compensation would be more difficult. The professors suggest a schedule or sliding scale of damages that uses an injury severity scale or differentiates among levels of noneconomic injury. Each tier or range is then assigned dollar values.

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