The pros and cons of medical liability reform

AORN Journal,  March, 2005  by Catherine Sparkman,  Burke Beu

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Medical liability reform was a key issue in most federal political races during the 2004 election season.

Liability for medical malpractice is governed by state law, but Congress has the power under the commerce clause of the US Constitution to regulate it. (1) Now that the 109th Congress has convened, several bills addressing medical liability reform are expected to be introduced.

Details of specific bills will be communicated to AORN members through the monthly Legislative News updates sent to chapter presidents and also will be posted on AORN Online at http:// www.aorn.org/policy/news.htm. Additionally, Government Affairs staff members will have current information at the Resource Center during the AORN Congress next month in New Orleans. This article highlights the pros and cons of the common components of medical liability reform legislation, including

* caps on noneconomic and punitive damages,

* limiting joint and several liability,

* abolishing the collateral source rule,

* regulating contingent fees for lawyers, and

* a federal statute of limitations.

CAP ON NONECONOMIC DAMAGES

Economic damages refer to monetary losses, such as medical expenses, lost wages, and rehabilitation costs, that result from an injury. Noneconomic damages consist primarily of damages for pain and suffering, and many proposals for medical liability reform include a dollar limit for these.

Pro. Advocates of caps on damages for pain and suffering argue that a lack of caps guarantees unevenness and unpredictability in the recovery system. They contend that a lack of caps forces insurers to counter the uncertainty of awards by charging higher premiums.

Con. Caps on noneconomic damages punish people who are the most afflicted. The more pain and suffering an individual has endured, the more a cap deprives him or her of damages to which he or she otherwise would have been entitled.

CAP ON PUNITIVE DAMAGES

Punitive damages may be awarded if a claimant proves with legally defined evidence that a defendant acted with malicious intent to injure the claimant. State laws define the burden of proof and the standard for awarding punitive damages. Many federal proposals would limit punitive damages awarded against manufacturers, distributors, and suppliers of medical products if these products have been approved by the US Food and Drug Administration.

Pro. Critics charge that punitive damage awards in medical malpractice cases often are unfair, arbitrary, unpredictable, and result in overkill. Even though punitive damage awards occur in a small percentage of cases, they can have a devastating effect on individual defendants and can impose severe costs on the economy as a whole.

Con. Punitive damage awards are not routine, nor are they typically given in exorbitant amounts. Moreover, trial judges often reduce punitive damage awards that they find excessive.

LIMITING JOINT AND SEVERAL LIABILITY

Joint and several liability is the common-law rule that says that if more than one defendant is found liable for a plaintiff's injuries, each defendant may be held 100% liable. With joint and several liability, a plaintiff may not recover damages more than once, but he or she may recover all damages from fewer than all liable defendants, and any defendant who pays more than his or her share of the damages is entitled to seek contribution from other liable defendants. Some states have eliminated joint and several liability, making each defendant liable only for his or her share of responsibility for the plaintiff's injury; other states have adopted compromise positions.

Pro. Advocates of abolishing or limiting joint and several liability argue that it frequently operates in a highly inequitable manner, sometimes making defendants with only a small percentage of fault liable for 100% of a plaintiff's damage. Accordingly, joint and several liability in the absence of concerted action has led to the inclusion of many wealthy defendants, such as governments, large corporations, and insured entities whose involvement is only tangential. These entities probably would not be joined except for the existence of joint and several liability.

Con. Advocates of joint and several liability cite a basic rationale from common law. It is preferable for a wrongdoer to pay more than his or her share of the damages than for an injured plaintiff to recover less than the full compensation to which he or she is entitled.

ABOLISHING THE COLLATERAL SOURCE RULE

The collateral source rule is the common-law rule that allows an injured party to recover damages from the defendant even if he or she also is entitled to receive payment from a third party (ie, a collateral source), such as a health insurance company, an employer, or a government program. Abolishing the collateral source rule would require courts to reduce damages by amounts a plaintiff receives, or is entitled to receive, from collateral sources.

Often a collateral source, such as a health insurer or the government, has a right of subrogation against the tort-feasor (ie, the person responsible for the injury). This means that the collateral source assumes the injured party's right to sue the tort-feasor for up to the amount the collateral source owes the injured party. Although the collateral source rule may enable a plaintiff to recover damages from both his or her insurer and the defendant, the plaintiff must reimburse the insurer the amount paid if there is subrogation. Many federal proposals for medical liability reform would prohibit providers of collateral source benefits from asserting a right of subrogation.