TorteDeForm

Paul Bland

American Arbitration Association Breaks Its Promise Not to Hear Pre-Dispute Arbitrations in Health Care Cases

Although most people haven’t heard of it, they have a big stake in the integrity and honesty of the American Arbitration Association (“AAA”). The reason is simple: it’s rapidly gaining more and more power over Americans. More and more big corporations insist that their customers and employees sign mandatory arbitration agreements taking away their right to go to court as a condition of getting goods or services or as a condition of getting or keeping a job. And of the private corporations that are increasingly replacing the American civil justice system, the AAA is the most prominent and largest.

To allay the concerns expressed by many consumers, employees, legislatures and courts, the AAA has repeatedly promised that Americans need not worry about the growing power of arbitrators, because the AAA will purportedly exercise great restraint in the exercise of its power. Alas, talk is cheap.

In a number of public statements over the last four years, the AAA has solemnly promised the public, the media and legislators that notwithstanding any contract agreements to the contrary, it would not handle pre-dispute binding arbitrations in cases brought by medical patients against health care institutions. But, I have just learned of a serious instance where the AAA has quietly broken that widely trumpeted promise. Apparently, the AAA IS administering arbitrations in medical cases when it feels like doing so.

AAA Broke Its 1997 Promise to Not Handle Health Care Cases

Back in 1997, the AAA, in cooperation with the American Bar Association and the American Medical Association, formed a commission on health care dispute resolution to study and make recommendations on the appropriate use of alternative dispute resolution in claims involving health care. (Commission on Health Care Dispute Resolution, Final Report July 27, 1998) The Commission determined that arbitration is NOT appropriate in disputes involving patients, unless the parties agree to arbitrate after the dispute arises. (Id.) This news was greeted as a very positive development by advocates for medical patients.

Unfortunately, the AAA didn’t keep its 1997 promise. As one newspaper reported, “in 2000, [AAA] Senior Vice President Robert Meade stated in an affidavit that the organization did not require its arbitrators to comply with that policy.” (Reynolds Holding, “Arbitration reform in works; Assembly panel to propose broad changes in maligned system,” San Francisco Chronicle March 11, 2002.) In other words, while AAA joined in a report concluding that pre-dispute binding arbitration was not appropriate in health care cases, AAA arbitrators continued to resolve such arbitrations in such cases, under the auspices of the AAA.

AAA’s New Promise in 2002 to Not Handle Pre-Dispute Arbitrations in Health Care Cases

The AAA’s cavalier decision to break its 1997 promise did not go unnoticed, however, and in 2002 the AAA saw that the California legislature was seriously considering a series of proposals to reform the business of arbitration. Some of these proposals passed, notwithstanding the AAA’s staunch opposition, including strengthened ethics and disclosure rules for arbitrators. Some of the other proposals were killed for the time being, however, including a bill that would have sharply limited the immunity that arbitrators enjoy for their conduct. To help convince the legislature that proposals such as this were not necessary, as a newspaper reported at the time, the AAA “changed its mind” about allowing its arbitrators to handle pre-dispute binding arbitrations in health care cases. As the San Francisco Chronicle cited above reported:


After a dispute arises, said Meade, “unless the person says, ‘yes, I do want to be bound by that clause’ and signs a (new) agreement, we will not administer the case.”

The Chronicle wasn’t the only paper to hear these kinds of words from AAA, though. The Los Angeles Times quoted Mr. Meade as saying that “Nothing is more emotional or personal or devastating than a health care problem. If you buy a lemon car, it’s not life or death. It’s not a medical problem. That’s what puts this on a higher playing field.” The Las Vegas Review-Journal quoted him as saying “It’s not fair to ask a person who’s going in for medical treatment to sign an arbitration agreement. Unless a patient indicates they want arbitration after a dispute, we won’t handle it anymore.”

The AAA itself formalized this promise on June 13, 2002, when it issued a press release under the heading, “Cases Involving Patients Must Have Post-Dispute Agreements to Arbitrate.” (AAA Announces Change in Health Care Policy) In that press release, the AAA stated that effective January 1, 2003, the AAA will “no longer accept the administration of cases involving individual patients without a post-dispute agreement to arbitrate.” (Id.) Mr. Meade gave the following as the regarding the reason the AAA chose to adopt this change to its health care policy:

Although we support and administer pre-dispute arbitration in other case areas, we thought it appropriate to change our policy in these cases since medical problems can be life or death situations and require special consideration. (Id.)

Ostensibly, this has remained the AAA’s current policy with respect to health care disputes, as the AAA’s Health Care Policy Statement provides that “it will no longer accept the administration of cases involving individual plaintiffs without a post-dispute agreement to arbitrate.” (Healthcare)

Deja Vu All Over Again: AAA Has Again Decided to Break Its Promise

Unfortunately, it sounds like the AAA has secretly recalled its promise not to administer mandatory pre-dispute binding arbitration in health care cases. I have been provided a copy of a letter that Frank Zotto, Vice President for Case Management for AAA, sent to a number of lawyers in a medical malpractice case on July 13, 2005. It states that “the AAA determined to continue to administer Duke health care disputes....” How can this be? After the AAA beat back legislative action and negative press coverage with solemn declarations that it was done with mandatory arbitration in the health care setting, how could it be handling medical malpractice cases? I’ve searched for stories from the San Francisco Chronicle, the Los Angeles Times and the Las Vegas Review-Journal, and none of them have reported receiving communications from Mr. Meade retracting all of his bold words from 2002.

Mr. Zotto gives three reasons. First, he says, “The Duke Program is optional. Patients could reject the arbitration clause and still receive medical care.” In the real world in which people actually live, however, this is a very flimsy reed. What happens at Duke Hospital is that when a patient is agreeing to have some kind of surgery performed (a time when people tend to feel very vulnerable, and pre-occupied), they are handed a stack of papers and asked to sign them. The arbitration clause is one of those papers. Mr. Zotto may be correct that IF a patient were to closely read the arbitration clause, decide that they didn’t want to sign it, and ask if they could get treatment without signing, that Duke might still provide the surgery. But in reality, how many people facing surgery would ever notice this kind of form, and instead of signing it as asked, insist upon their right not to sign it? Most people would never notice it, would not understand it, and after all, not that many people are exactly Rosa Parks types who stand up to authority figures who are about to hold their lives in their hands. Mr. Zotto’s justification is phony.

And in any case, this answer does not respond to the reasons that AAA itself had earlier given: that it was inappropriate to use pre-dispute arbitration for people facing life and death health decisions (remember all the language quoted above about how the AAA would only use these clauses if people agreed to arbitrate AFTER the dispute arose?).

Mr. Zotto gives a second point: “The Duke Program’s arbitration option is revocable under certain circumstances.” To be honest, I can’t figure out here what Mr. Zotto is talking about. From conversations with several different North Carolina lawyers representing persons who claim that they were seriously injured by Duke Hospital’s negligence, though, I can tell you when Duke’s program is NOT revocable – namely, when the victim of medical malpractice wants to revoke it. In the real world, when someone who is injured by Duke Hospital tries to exercise his or her right to trial by jury, Duke Hospital rushes to court to force arbitration. Notwithstanding some sophistry or over-active imagination by Mr. Zotto, there is nothing meaningfully “revocable” about Duke Hospital’s mandatory pre-dispute binding arbitration clause. In short, there is a word for AAA’s second supposed justification, and the word is “lie.”

Finally, Mr. Zotto says that AAA will enforce the arbitration clause involving Duke Hospital because a court enforced the arbitration agreement, and the AAA “follows court orders.” This explanation is outrageous. Under this theory, the AAA would never follow any of its Consumer Due Process Protocols or other supposed self-imposed restrictions in any case where a defendant could get a court to enforce an agreement that strips individuals of rights. Mr. Zotto’s argument is really a rejection of the entire premise of AAA’s repeated promises that it imposes standards upon itself.

Arbitration service providers such as AAA have the right – and really the duty – to develop and stick to their own ethical principles. For some time, AAA and other major arbitration service providers have stated repeatedly and publicly that they will not administer arbitrations in settings that they deemed to be unfair. For AAA, these statements took the form of their Due Process Protocols and so forth. These protocols were not described to consumers, employees and the public as attempts to summarize the minimum legal requirements that are laid out in court decisions in every jurisdiction, but were set forth as statements of the arbitration firms’ own identity. When AAA has said that it insists upon certain standards of fairness, it has not articulated that insistence as a statement that “the law in all 50 states will bind us to comply with certain rock bottom principles, and we reluctantly agree that we will not go below those even if someone offers us money to do so.” Instead, AAA’s rules of fairness were articulated as a statement of what the organization itself believed was necessary to ensure justice.

AAA is a private actor. It is not obliged to provide services for parties in settings that it considers to be unfair or improper, just because there is some jurisdiction in America that would permit it to do so. There is no requirement that AAA refuse to hold itself to standards above the lowest common denominator, less it be deemed to have acted in a “non-neutral” manner. As just one illustration, look at the case of Overstreet v. Contigroup Companies, Inc., 2006 WL 2424828 (5th Cir. Aug. 23, 2006). In that case, a federal court of appeals enforced an arbitration clause even though it (a) imposed arbitration costs upon an impoverished individual of between $27,500 and $29,000 in order for him to vindicate his claims; and (b) expressly waived all of the individuals claims for exemplary, punitive and consequential damages (even though they otherwise would have been available under the law). Is AAA saying that it would administer such an arbitration in a consumer case if a court would enforce the clause, notwithstanding its Consumer Due Process Protocols? That seems to be the necessary logic of Mr. Zotto’s letter.

If AAA intends not to stand behind its Due Process Protocols except when a court orders it to do so, then it should just go ahead and pull them down off its website, repeal them, and quit praising itself to the media and others about its bold decision to enact them.

When AAA’s Senior Vice President repeatedly publicly stated to reporters across the country in 2002 last fall that it is “inappropriate” for individuals to be forced into pre-dispute arbitration in cases involving health care issues, that moral statement was a recognition of reality and fairness. Mr. Zotto’s recent letter represents a total break with that promise.

A Case Study of How AAA’s Broken Promise Can Harm an Injured Person

Putting aside the broader policy issue of whether it matters if AAA is honest when it makes apparently sweeping and solemn promises to the public, to the media, and to legislatures, does it really matter as a practical matter if AAA breaks its promises? Well, ask a man named Bennie W. Holland. His story is described in an Associated Press story dated September 5, 2006 titled “Man promises to refile lawsuit over dirty surgical instruments.” The story tells how in November 2004, Bennie W. Holland had back surgery at Duke Hospital. After his surgery, Holland learned that he was among a large number of other persons whose “operations may have been performed with instruments mistakenly washed in hydraulic fluid. . . .” Somehow, Duke Hospital personnel apparently got confused, and mixed hydraulic fluid used to operate the hospital's elevators with the system used to wash surgical instruments prior to their use in surgery. In Mr. Holland’s case, this contamination resulted in grave complications from the surgery, including a severe infection, and the temporary loss of kidney and bowel functions. Mr. Holland recently underwent a second surgery on a hip that was affected by Duke’s failure to properly clean its surgical instruments.

Unfortunately for Mr. Holland, though, before his surgery he had signed a pre-dispute arbitration clause designating the AAA to administer any potential claims arising out of Duke’s provision of health care services pursuant to the Health Care Claim Settlement Procedures.
When Mr. Holland went to court to bring claims against Duke for medical malpractice arising out of Duke’s use of contaminated instruments during his surgery, however, Duke rushed to enforce what the AAA’s Mr. Zotto whimsically called Duke’s “revocable” pre-dispute binding arbitration clause. This is precisely the type of “life or death” case that AAA’s Senior Vice President Meade spoke of when he implemented the policy that the AAA would no longer administer health care disputes.

It’s easy to see why Duke Hospital wants to force such a case into arbitration. Experienced lawyers know that, in any given type of case, most AAA arbitrators tend to be lawyers whose principal job is defending companies that might be defendants in similar cases. In other words, if Mr. Holland and his lawyer go forward with arbitration before the AAA, they are likely to receive a list of seven names from the AAA of possible arbitrators, and all or very nearly all of the names on that list will probably be lawyers who work at law firms where they and their partners represent other health care providers in defending against medical malpractice cases. There’s every possibility that an HMO or nursing home defense lawyer is going to view Duke Hospital’s negligence in a case like this less seriously than might a jury of Mr. Holland’s peers.

Conclusion

In 1997, the AAA promised that it wouldn’t handle pre-dispute binding arbitrations of medical cases. It turned out, to put it nicely, that they were “just kidding” when they promised this, and by their own admission, they allowed their arbitrators to handle a number of such cases over the next five years.

In 2002, under pressure from the California legislature and the media, the AAA made the same promise, and assured everyone that this time they weren’t kidding, they really meant it. Once again, unfortunately, the AAA’s actions have fallen far short of their pretty words.

Perhaps the next time the AAA makes a promise to try to stave off serious government action, the legislators won’t be so quick to believe them. And perhaps the next time the AAA makes a series of self-praising statements to reporters about its great restraint, the reporters won’t be so quick to take the AAA at its word.

Paul Bland: Author Bio | Other Posts
Posted at 12:35 PM, Feb 22, 2007 in
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Comments

My blog posting has several links to items that have been posted on AAA's website for a long time. I've gotten several e-mails that the links no longer work. A little Orwell-like, I suppose, that these longstanding links would suddenly no longer work on the day that this blog appeared. Anyhow, I have PDFs of the AAA's own press release and its health care protocol, for anyone who is interested, if AAA has decided to try to wipe away that portion of its history. Please just e-mail me at pbland@publicjustice.net if you'd like to have copies of these AAA documents.
Paul Bland

Posted by: Paul Bland | February 22, 2007 3:24 PM

Anyone aware of AAA's relationship with Kaplan and/or any vocational schools,which have ripped off students?

Your help is appreciated

Posted by: Mauro Ruiz | February 22, 2007 4:22 PM

As I have stated repeadly, AAA conducts itself like a demented collection agency. All they care about are their fees... and they will get them.

They will hound you, email you,write you, bill you, put you under weekly deadlines for payment, frighten you, and break you. They have no clue what it will cost you in total and they do not care. They tell you you don't even need an attorney but won't answer questions unless you have one.

Repeat meal tickets and big business with big bucks win. You need not even participate they can rule against you for not showing up or not paying your fees. The business compelling you there can pay your fees and force you to particpate. It is a horrible privitazation of the legal system.

I have been though the AAA process twice and have never been exposed to such torture. No one will even know what happens to you. It is a secret society held behind closed doors and many come out under gag orders. The media is not allowed. AAA compromises our liberty and our freedom.
We the people have become... we the subjects of the American Arbitration Association.

Posted by: Jordan Fogal | February 22, 2007 5:17 PM

The decision that an unsophisticated healthcare consumer must make when a pre-dispute arbitration agreement is placed in front of him, while in a pre-op holding area, is one that could be characterized as nothing less than under duress. Contracts made under duress are not legally binding under the common law; not to mention that such an agreement has got to be unconscionable. If insurance companies and hospital administrators require arbitration agreements of patients, and advise the healthcare providers that they must attempt to obtain these agreements,how is the patient to know whether he should or should not agree to sign it? How many patients even know what arbitration is when they sign such an agreement. Co-incidentally, I was being interviewed on a radio show this morning in Philadelphia, when a caller called with the following question: "Do I need to sign an arbitration agreement to get my doctor to treat me?" The answer is not as important as the fact that the question even has to be asked. It is a sign of what the insurance companies have done--they have made patients and doctors enemies, all by design. It is the insurance companies that have put fear in the hearts of doctors. When 80% of doctors in this country have never had a malpractice claim against them, and only 5% of the doctors are responsible for over half of the total malpractice payments, it is clear that good doctors should not have the unreasonable fear of lawsuits. Lawsuits happen because errors happen. The Harvard Health Study group conlcuded that the vast majority of medical malpractice cases result from real, provable error and result in significant, long-lasting injury. It seems that it should be the patients who fear the bad doctors, not the doctors who should fear the allegedly litigious patients. Arbitration agreements are just another tactic insurance companies and large for-profit hospitals are using to intimidate people and keep their profits as high as possible. Michael Townes Watson.

Posted by: Michael Townes Watson | February 23, 2007 7:26 PM

Lawsuits happen because errors happen. The Harvard Health Study group conlcuded that the vast majority of medical malpractice cases result from real, provable error and result in significant, long-lasting injury

Wish it were that simple but without stratifying the doctors on the basis of discipline, their rate of getting sued is just all glib talk.Just ask any obstretician , you will be horrified to know that , women receives care from all these error-prone jerks

The recent Harvard Study ,despite all its frailties ,Shows
the -

97% of claims reflected patients who suffered "harm,"
60% -- harm because of malpractice.
40% of claims were non-meritorious -- no medical error was responsible.

An earlier 1991 Harvard study Showed

meritless claims were as likely to win at trial as meritorious claims

And for God's sake all your 'tactic' profit' 'safety' and who knows what are just getting jaded. Bring on something new.

Posted by: Anirban | February 26, 2007 5:45 AM

All Americans should know that arbitration in general is closing the doors to the courhouse;if the insurance industry and other monied special interest groups have their way,it will be forever. Sadly,we all sign contracts without reading them first.Who has taken the time to read a car rental contract in full before signing on the dotted line? Whether it be the AAA or any other arbitration scheme that prevents a citizen from the "due process" our Constitution mandates,our days as a free society are numbered in short measure. As Bob Dylan so aptly stated, "some will rob you with a gun while others with a pen...". The right to a trial by jury was never intended to morph into something far less fair and impartial. I fear the courtroom doors are nearly barred forever. Who will preserve our most precious parchment, the Constitution, from this contagious disease. Unless checked, it will infect our very core of democracy.

Posted by: Richard Shapiro | February 27, 2007 10:38 AM

You first say, "Sadly,we all sign contracts without reading them first.Who has taken the time to read a car rental contract in full before signing on the dotted line?"

Then you ask, "Who will preserve our most precious parchment, the Constitution, from this contagious disease"?

Might I suggest that you start reading things before you sign them? Or are you proposing that all written contracts be abolished?

Posted by: Elliot | March 1, 2007 6:15 PM

Elliot,

You are comparing reading a rental car contract with reading the constitution?

They're rather different types of documents...don't you think?

Moreover, from a different angle, how many Americans have actually read the entire constitution?

Posted by: Cyrus Dugger | March 1, 2007 7:21 PM

I wasn't making that comparison at all, merely pointing out that the loss of the constitutional right to a jury trial can be avoided by simply reading a contract to see if it contains a waiver of jury trial or an arbitration clause.

But to take your analogy, yes, I'm sure most Americans have never read the Constitution. It's still binding.

I'm sure most people don't read the fine print in contracts, either. But they're still binding.

Can you propose a system of law under which written, signed contracts can be avoided by a claim that one signer didn't read them, but which would not bring our economy to a standstill?

Posted by: Elliot | March 2, 2007 12:36 PM

Anirban,

Quick response. This debate has already happened here, but let's discuss again.

Your stats paint a picture of a huge amount of "frivolous" lawsuits.

First of all could you please re-state the Harvard study's characterization of the implications of its own study (available in the initial summary)

Second could you please define the scope of what "non-meritorious" means.

You are talking about it as if it means "frivolous" or even maybe not "frivolous" were not filed in good faith. Please define the term for our readers.

Posted by: Cyrus Dugger | March 2, 2007 2:25 PM

Elliot,

Ah, I think you did compare them, because you discussed them in the same comment and, well, made a comparison – in a disparaging and condescending way no less

Putting that aside, as it’s not really important, you are basically, it seems, implying the point that people who are too “stupid” or too “lazy” to read an entire long contract in tiny font should be punished for their “stupidity” or “laziness.”

Or you might not defend or say be punished, but instead say reap the consequences of their actions (since saying punished would acknowledge that arbitration is generally a punishment)

This point of view is undercut on many levels which I will go into if this comment thread continues (a few of which are that its impossible not to sign these contracts for some basic or universally used products because they are used throughout an entire industry, people don’t know what arbitration actually means/have been made to think it is good, some people can’t even read the small print because it’s too small, contractual langauge can confuse even some lawyers and thus shoudl be stated in plain English).

But instead I’d rather hear from you. A couple of questions.

1. Do you really believe that the manner in which people come to “sign” these agreements is fair? How do you understand the variety of ways in which this happens? Can you defend them all?

2. Assuming that companies know people are less likely to read every detail of a contract the longer and harder to understand it becomes, if they purposefully make them longer and harder to understand so that people miss the arbitration clause, do you still feel the same way if people end up signing them? I’m just curious.

3. If arbitration is so “awesome” why not just give people the option of doing it when they bring a claim against you, instead of attempting to lock them into it before anything has even happened. If it really is awesome they would opt into it most of the time.

Interestingly, you don’t defend the outcome or substantive reality of mandatory binding arbitration in general or in the above posts.

It seems you actually have no sympathy for or would likely privately disparage those unfortunate people discussed in the above post.

My response really should have been, defend arbitration itself, defend having people sign arbitration when they’re injured or vulnerable, or explain why even arbitration companies implicitly acknowledge the unfairness of their processes when they initially refused let them apply to medical malpractice – but you still think it’s good.

Posted by: Cyrus Dugger | March 2, 2007 2:40 PM

I am not defending arbitration as such. Having represented clients in arbitrations, I think it is often a lousy system. The fact remains that, since the Federal Arbitration Act was enacted way back in 1925, the validity of a contract to arbitrate must be judged by the same standards as any other contract.

Lots of people sign contracts containing fine print without reading them. Hell, I often do that myself, and I am a lawyer. People therefore often find themselves bound by things they never actually intended to agree to.

My point is not that people who sign things without reading them are "stupid" or "careless," but that our economy literally couldn't function if we couldn't depend on the validity of written contracts. The result of holding people to what they signed is often unfair in practice, but I cannot conceive of a way to have a functioning economic system otherwise.

That is why I asked-- in an absolutely non-sarcastic way-- if you could "propose a system of law under which written, signed contracts can be avoided by a claim that one signer didn't read them, but which would not bring our economy to a standstill?"

Posted by: Elliot | March 2, 2007 4:40 PM

The word "frivolous" never appears in Anirban's comments. Why can't Cyrus address the point that Anirban actually raises instead of trying to change the subject? He similarly tries to derail the conversation when Elliott asks him a pointed question that he has no answer to, but utterly refutes him.

Posted by: Ted | March 4, 2007 12:13 AM

He similarly tries to derail the conversation when Elliott asks him a pointed question that he has no answer to, but utterly refutes him.

Yes, I noticed that, too...

Posted by: Elliot | March 5, 2007 5:47 PM

Cyrus,

What I just tried to challenge one man’s contention that it is the lawsuits which follows the error ,and always errors , and pointed out that lumping all physicians of all specialities into a single homogenous cohort , is an exercise in vein and so its conclusion

Now coming to the Stats.
Out of 1452 cases

Error in 889 (63%)
1. No payment in 236 (27%)
2. Payment in 653 (73%)

 Bad for plaintiff indeed

No error in 515 (37%)

Why do they say that accounts of "frivolous litigation are overblown" when they found that about 40 percent of malpractice claims show no error or physical injury?

No payment in 370 (72%) if plaintiffs' lawyers truly believe that meritless lawsuits are "bad business," why are there so many? And so many lost? Payment in 145 (28%) “Claims without merit were generally resolved appropriately: only one in four resulted in payment” , were “fairly small” averaging $313,205 “so small” that even trees of Harvard Campus can grow that . Even when that evidence is at hand, after spinning it to their own sweet will ,comes this gem of a conclusion Overall, the malpractice system appears to be getting it right about three quarters of the time,” said Studdert the lead researcher. “That’s far from a perfect record, but it’s not bad, especially considering that questions of error and negligence can be complex.”

When the last time I heard from them treating different people ,and clinical-decisions could ever be complex, or Hospitals were not rife with medical errors or we shouldn’t be giving our Legal System considerable leeway so that the holy cow should always , remains unscathed (if not untouched)and we can ever master the chutzpah to do that

But am I missing something ? Who are these people and how they operate? What is their motivation? A little research on the World Wide Web yielded some information on

How they railed against owning a gun here here and here
candy cigarettes

Greeted New york over Trans-fat ban

and those Video games
that awful globalization
And finally a gem on the top of the crown like this and the foot in mouth coverage

Ring any bell? perhaps the philosophy bodes well into the conclusion , Isn’t it .Or I have no choice ,but to take solace in Dr. Martin Henry Fischer

A conclusion is the place where you got tired thinking.

Posted by: Anirban | March 6, 2007 4:24 AM

Anirban,

You say a lot here. But I'll just focus on the first thing that popped out at me. you are incorrect in your assertion

You say above

"Why do they say that accounts of "frivolous litigation are overblown" when they found that about 40 percent of malpractice claims show no error or physical injury?"

This is an incorrect understanding of the study. Almost all of the cases they studied involved physical injury, I believe it was between 97-99% (off the top of my head). The "about 40%" you cite are cases where there was an injury but malpractice could not be proved based on the available evidence....doesn't mean that it didn't happen.

You also further misstate the study's findings by saying

"Why do they say that accounts of "frivolous litigation are overblown" when they found that about 40 percent of malpractice claims show no error or physical injury?"

The study's use of the term non-meritorious is not interchangeable with the legal term frivolous. Non-meritorious means claims that could not be proven to be malpractice...injuries occurred. You're misstating the study findings.

Here is Harvard's own analysis of its own studies findings:

http://www.hsph.harvard.edu/press/releases/press05102006.html

Study Casts Doubt on Claims That the Medical Malpractice System Is Plagued By Frivolous Lawsuits
System Does a Good Job of Rejecting Claims Without Merit, but Administrative Costs Are Exorbitant

For immediate release: Wednesday, May 10, 2006

Boston, MA – The debate over medical malpractice litigation, which raged during the last presidential campaign, continues as a hot-button political and health care issue in the U.S. The Senate is expected to vote soon on legislation to impose a federal cap on noneconomic damages in malpractice suits, following on similar bills that passed the House of Representatives but stalled in the Senate last year. One popular justification for tort reform is the claim that “frivolous” medical malpractice lawsuits—those lacking evidence of substandard care, treatment-related injury, or both—enrich plaintiffs’ attorneys and drive up health care costs. A new study by researchers from the Harvard School of Public Health (HSPH) and Brigham and Women’s Hospital challenges the view that frivolous litigation is rampant and expensive.

The researchers analyzed past malpractice claims to judge the volume of meritless lawsuits and determine their outcomes. Their findings suggest that portraits of a malpractice system riddled with frivolous lawsuits are overblown. Although nearly one third of claims lacked clear-cut evidence of medical error, most of these suits did not receive compensation. In fact, the number of meritorious claims that did not get paid was actually larger than the group of meritless claims that were paid. The findings appear in the May 11, 2006 issue of The New England Journal of Medicine.

“Some critics have suggested that the malpractice system is inundated with groundless lawsuits, and that whether a plaintiff recovers money is like a random ‘lottery,’ virtually unrelated to whether the claim has merit,” said lead author David Studdert, associate professor of law and public health at HSPH. “These findings cast doubt on that view by showing that most malpractice claims involve medical error and serious injury, and that claims with merit are far more likely to be paid than claims without merit.”

The authors reviewed 1,452 closed claims from five malpractice insurance companies across the country. They focused on four clinical categories: surgery, obstetrics, medication and missed or delayed diagnosis, areas that collectively account for about 80% of all malpractice claims filed in the U.S. Specialist physicians in each of these clinical areas reviewed the claims and the associated medical records to determine whether the plaintiff had sustained an injury from care. If an injury had occurred, the physicians judged how likely it was to have been due to medical error.

The reviewers found that almost all of the claims involved a treatment-related injury. More than 90% involved a physical injury, which was generally severe (80% resulted in significant or major disability and 26% resulted in death). The reviewers judged that 63% of the injuries were due to error. The remaining 37% lacked evidence of error, although some were close calls.

Most claims (72%) that did not involve error did not receive compensation. When they did, the payments were lower, on average, than payments for claims that did involve error ($313,205 vs. $521,560). Among claims that involved error, 73% received compensation. “Overall, the malpractice system appears to be getting it right about three quarters of the time,” said Studdert. “That’s far from a perfect record, but it’s not bad, especially considering that questions of error and negligence can be complex.” The 27% of cases with outcomes that didn’t match their merit included claims that went unpaid even though the injury was caused by an error (16%); claims that were paid but did not involve error (10%); and claims that were paid but did not appear to involve a treatment-related injury (0.4%).

However, the study did not paint a uniformly positive picture of the current malpractice system. The costs of litigating claims, including defense costs and contingency fees paid to plaintiffs’ lawyers, averaged $52,521 per claim. Overall, these administrative costs amounted to 54% of the compensation paid to plaintiffs. “Deciding negligence is a very expensive process,” said Studdert. The authors also found that it took an average of five years from injury to resolution of the claim—a long time for plaintiffs to wait for compensation and for defendants to endure the uncertainty that litigation entails.

Finally, the authors found that the claims that did not involve errors absorbed a relatively small piece of the costs of compensation. Eliminating those claims would decrease the system’s compensation and administrative costs by no more than 13% to 16%. “Many of the current tort reform initiatives, such as caps on noneconomic damages, are motivated by a perception that ‘jackpot’ awards in frivolous suits are draining the system,” explained Michelle Mello, an associate professor of health policy and law at HSPH and a co-author of the study. “But nearly 80% of the administrative costs of the malpractice system are tied to resolving claims that have merit. Finding ways to streamline the lengthy and costly processing of meritorious claims should be in the bullseye of reform efforts.”

In a separate study released May 10 by the Robert Wood Johnson Foundation’s Synthesis Project, Mello examined the effects of the recent increases in malpractice insurance premiums on the delivery of health care services and the impacts of state tort reforms. Reviewing existing studies, the report concluded that the deteriorating liability environment has had only a modest effect on the supply of physician services. “The best evidence shows, at most, a small overall decrease in the number of physicians practicing in high-liability states compared to lower-risk states, though some rural areas have been more affected,” Mello said. Aside from caps on noneconomic damages, most tort reforms adopted by states in response to malpractice crises have not been effective in boosting physician supply or reducing insurance or litigation costs. Damages caps “help constrain growth in litigation costs and insurance premiums over time, but disproportionately burden the most severely injured patients.” The study is available at http://www.rwjf.org/publications/synthesis/reports_and_briefs/issue10.html

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The work reported in the New England Journal of Medicine was supported by grants from the Agency for Healthcare Research and Quality and the Harvard Risk Management Foundation. The related study was supported by the Policy Synthesis Project of the Robert Wood Johnson Foundation.

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Posted by: Cyrus Dugger | March 6, 2007 11:29 AM

There is a saying among prosecutors “ if you can’t convict at least you can destroy someones reputation “
Should’nt we stop second-guessing ,if no evidence was found or Doctors are supposed to be ‘guilty until proven innocent’ ? .Can I second –guess the Harvard researchers 20/20 hind-sight also, that if you search well enough ,you will end up with some evidence but not necessarily it was the proximate cause of the error. It is also noteworthy that even if the researcher couldn’t find enough evidence , it was sufficient for a lawyer to file a case , and bloody hell , it also enabled him/her to bag on an average $313,205 settlement (as the study shows) in ~ 27% (1 in 3 )of such cases , that amounts to ($313,205 X 145 ) = $45.4 million (notwithstanding the defense cost regardless of any payment) with lawyer pocketing at a standard rate of (313,205 X 0.35) = $109,621 (almost a primary caregiver’s salary) in each case.
Now is there enough evidence to prove that there is sufficient incentive for bringing such frivolous(sorry,my stupid mouth) non-meritorious cases individually ?

Posted by: Anirban | March 6, 2007 1:12 PM