Mistakes and Lost Opportunities
in Medical Malpractice Litigation
Midwest Actuarial Forum
September 24, 2003
Richard C. Boothman
University of Michigan
Office of the General Counsel
University of Michigan Health System
Disclaimers
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Observations are unscientific: derived from 21
years as a trial attorney
Expedient ≠ best
Litigation serves important societal interests
Trials overwhelmingly lead to the right result
Litigation must be improved to be relevant
Risk can be better managed internally
Thoughtful claims management can reduce
present costs and future loss
Risk
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Michigan’s tort reform capped non-economic damages only;
presently does not apply in death cases.
Ohio has untested, modest tort reform and is a punitive
damages state.
Michigan physician discipline actions following med mal
settlements/verdicts increasing.
Planned National Practitioner Data Bank reporting
requirements will increase costs and complexity in claims
management.
Risk of single catastrophic loss is
low.
Most medical institutions are conservative
and risk-averse.
Risk of Major Financial Loss
Through Less-Than-Optimal
Settlements, Unnecessary
Expenses and Unrealized
Opportunities is High.
Opportunity cost is tougher to appreciate, tougher to
measure, but cost is insidious, significant and real.
The expense can be reduced.
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Immediately through improved claims
management.
In the near future through improved risk
management.
For the future through connections to
institutional quality improvement, patient
safety, staff education, integrating claims
experience in business planning and tort
reform.
Improve Claims Management
Immediately
Principles
 Pro-activity
 Prophylaxis
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Principles
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What should be a thoughtful decision is often
overlooked altogether, left to the idiosyncrasies of
claims managers or lawyers outside the institution
or company.
Few institutions or insurance companies give
thought to the options.
Even fewer institutions or insurance companies
integrate those options with their business goals,
long range strategies, identities.
Honoring and serving institutional
principles in claims management.
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Economic realities – forced risk aversion?
Recognition that options have consequences on
staff and other constituencies, plaintiff’s bar,
courts, public perceptions as well as transactional
costs and risk.
Choices impact credibility in the litigation arena
which in turn, impact future litigation outcomes.
University of Michigan Litigation
Principles
We will defend medically appropriate
care aggressively.
We will seek to compensate quickly
and fairly when inappropriate medical
care causes injury.
Principled Approach
Signals to the plaintiffs’ bar that there is a penalty to
bringing medically dishonest claims.
Signals to the plaintiffs’ bar that there is a premium to
client and lawyer for legitimate claims.
Signals to the courts that UM defends only meritorious
claims.
Principled approach in practice
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Tried 7 cases between August, 2001 and September, 2002.
Total exposure (assuming all seven were lost): est. $7.5 –
8.5 million
Won 6 outright. Lost 1, but verdict ($150,000) far below
settlement demand ($550,000) and was recently settled.
Cost of settling all seven: est. $2.5 million
Cost to try all seven: est. $320,000
$2 million savings
Immediate response from shift to
principled approach
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Increase in early resolutions
Altered the plaintiff’s attorneys’ approach
Altered mediators’ approaches
We believe (too early to know for sure) that fewer
questionable cases are being filed
Sharp, palpable improvement in staff attitude
about claims, with greater personal investment
and improvement in morale
Altered Courts’ attitude
Shift to principled approach required:
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Agreement on benchmark
Resolve to hew sensibly to the benchmark
Change in selection of trial counsel
Change in our contractual relationships
Change in culture toward claims
Experience in litigation to assess the risks
Pro-Activity
Evaluating potential claims for early
resolution without litigation.
Selecting cases for aggressive defense.
Offers Opportunity to Preempt
Catastrophic Loss.
• Requires experience
• Requires confidence
• Requires resolve to confront the
problem
• Requires the will to engage the
opposition
Pro-activity
Health systems largely ignore the
opportunity.
Health systems manage claims on the
cheap.
Health systems use the wrong people.
Pro-activity at UM Health System
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Marry trial experience with Risk Management and
UM expertise to evaluate claims from both legal
and medical perspectives during pre suit period.
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Approach confidently and creatively with novel
ways of engaging plaintiffs, resolving what needs
to be resolved before litigation, increasing chances
for success at trial with early trial preparation and
dissuading plaintiffs in selected cases.
Risks and benefits of
pro-activity
Benefits
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Risks
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Saves defense/transactional costs.
Saves anxiety, distraction, productivity, time.
Avoids licensing complaints.
Controls risk.
Increases staff confidence.
Chance that defenses left unasserted.
Chance that litigation would produce better
result.
Prophylaxis
If discussed at all in the health care
industry, “claims management” is mostly
discussed in the context of administrative
overhead, not opportunity – not
opportunity to save, not opportunity to
learn, not in terms of prophylaxis and most
definitely, not patient safety.
Possible reasons:
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Psychological and cultural avoidance;
Accounting partitions;
Resignation that “claims, like the poor, will
always be with us;” cost of doing business.
Claims expense is often incurred long after the
patient injury occurred;
Sometimes, care adjustments have been made
independent of the claim;
Consequence: a vicious cycle
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Missed opportunities to avoid future patient
injuries or teach medical self defense.
Leads to missed opportunities to avoid curse of
history repeating itself.
Leads to continued serious med mal expense
draining valuable resources from patient care and
personnel retention.
Reinforcement of resignation and avoidance.
Attacking the problem
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Identify the barriers:
 Courts/laws need to allow discussions – potential
target of tort reform.
 Break down the culture of avoidance and
resignation.
 Develop connections between claims experience
and initiatives for improvement of care.
 Cost – benefit business analyses need to include
claims cost.
Prophylaxis - recent progress within UM
Health System
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Promoting education and study of losses on the
clinical level.
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Using claims experience for Grand Rounds.
Risk Management rounds – reviews claims experience
for trends and vulnerability.
Created a claims management structure that connects
to peer review and patient safety and quality
improvement.
Beginning to integrate claims experience in business
strategies.
Areas of opportunity – UM Health
System goals
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Improved staff education in self defense.
Focused risk management for every division and
department.
Maintain systems integral to safety and defensibility.
Continue to streamline process for improving clinical
services in response to identified need.
Consciously attack culture of avoidance, resignation and
accounting partitions.
Really only two ways of reducing risk:
Improve Patient Care
and
Teach and Engage in Self
Defense
No-Fault Tort System
Be careful what you wish for . . .
No Fault System Defined
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In the abstract, concept calls for elimination
of administrative expense and legal costs in
favor of a predictable, non-adversarial
approach to compensation of people injured
by the delivery of medical care.
Is not designed to reduce insurance costs.
Is designed to spread reasonable
compensation across to more “victims.”
Problems with No-Fault
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Disincentive to improvements in care.
Expensive.
Cannot work like worker comp because
threshold determination will still require
litigation of some form.
Demoralizing effect on healthcare staff.
Social safety net at the expense of the
healthcare industry.
What we can do – reform the present
system
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Under the present system, caregivers are not
judged by a “jury of their peers.”
Junk science and “charlatans.”
Establish some consistency in damage
awards.
The value of pre suit notice.
Physician apology protection.
Catastrophic injury assistance.