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1 Summary of Conclusions and :Recommendations During the past decade, medical professional liability issues have been of great concern to health care providers, insurers, patients, and state legislators. Much has been writ- ten about the financial and legal aspects ofthe problem, such as the cost of insurance and the size of jury awards. Much less attention has been devoted to analyzing the effects of medical professional liability issues on the delivery of health care and the practice of medicine. MEDICAL PROFESSIONAL LIABILITY CONTROVERSY There is no consensus about the cause of the medical professional liability controversy in the health care delivery system, except that most observers agree it is unlikely that any single factor is responsible. Physicians and other health care providers tend to blame attorneys, whom they allege are encouraging plaintiffs to bring nonmeritorious medical malpractice suits. Attorneys, joined by some consumer advo- cates, frequently argue that the increased number of suits reflects an increase in negligent medical practice. Still another view is that pa- tients are more willing to sue their physicians, partly because of the rapidly increasing costs of medical care and the failure of physicians to establish effective relationships with their patients. It is also suggested that the roots of the medical professional liability problem lie in the insurance industry and its management practices. 1 .

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2 MEDICAL PROFESSIONAL LIABILITY: VOLUME I In response to proliferating malpractice claims,1 49 of the 50 states enacted tort reforms in the past decade to modify medical malpractice liability laws. These attempted remedies often have included limits on awards to plaintiffs and attorneys and changes in tort doctrine. Despite these legislative reforms, the number of medical malpractice claims has continued to increase during this period. The number of claims filed against physicians nationwide rose at an average rate of 10 percent per year from 1982 to 1986 alone. Not only were there more claims, the severity of the claims-that is, the amounts paid out in both jury verdicts and settled claims-has risen considerably. Medical malpractice insurance premiums have reflected this upsurge in claims and payments. The American Medical Association (AMA) estimates that premiums for all physicians increased 81 percent be- tween 1982 and 1985; premiums for obstetrician-gynecologists averaged an increase of 113 percent during the same period. Premiums are af- fected not only by the frequency and severity of claims but also by the high cost of processing them. PROBLEM MOST ACUTE IN OBSTETRICS These trends have been most pronounced in the practice of obstetrics. Claims against obstetrician-gynecologists are currently two to three times more numerous than the average for all other physicians and are comparable only to a handful of other high-risk surgical specialties. According to a 1987 survey by the American College of Obstetricians and Gynecologists (ACOG), 70 percent of obstetricians reported that they had had at least one claim filed against them at some time in their careers. The U.S. General Accounting Office (GAO) reports that the claims frequency for all physicians was 16.5 per 100 physicians in 1984, ranging from 8.6 in Arkansas to 35.7 in New York. These numbers mask another story: the continued increase in the frequency and severity of claims against obstetricians is compromising the delivery of obstetrical services in this country; that effect, in turn, is reducing access to obstetrical services for certain groups of women. The committee devoted much of its resources to investigating and document- ing the problems posed by professional liability in obstetrics, both in the delivery of and access to care and in the way in which obstetrics is practiced. iThe term "claim" is used throughout this report to refer generally to complaints lodged with medical malpractice insurers alleging violations of the standard of care. Insurers are not uniform in their usage of the term. Many claims are accompanied by lawsuits; others are resolved, or closed, without suit.

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SUMMARY OF CONCLUSIONS ED RECOMMENDATIONS 3 LIABILITY'S BROADER SCOPE . In approaching the medical malpractice issue the committee was keenly aware that the U.S. civil litigation system generally has under- gone explosive growth in certain kinds of tort liability in recent years. This growth has attracted wide attention because of dramatic, often breathtaking, jury awards and settlements. Premiums have risen sub- stantially for many lines of commercial liability insurance. Moreover, the general explosion in litigation is being blamed by some persons for slowing growth in productivity, thwarting research and development efforts, and consequently undermining the competitive position of the United States. These persons contend that only fundamental reform of the American civil justice system will solve these problems. Others deny that there is a tort liability difficulty, arguing instead that the problem lies with the insurance industry. In their view, insurance companies have made enormous and costly underwriting errors that have been compounded by slowed returns on their portfolio investments and have engaged in collusive behavior. The proffered solution is rigorous regula- tion of the insurance industry. Acknowledging that the problems posed by medical professional lia- bility are part of a broader controversy, the committee nevertheless concluded that medical professional liability exhibits special features that will most likely require unique solutions. Accordingly, the commit- tee evaluated data relating only to the medical professional liability problem and evaluated proposed legal solutions only as they addressed medical professional liability issues. Many believe that the medical professional liability problem is exac- erbated by inflated consumer expectations of modern medicine coupled, paradoxically, with declining respect for the medical profession. There is no question that the American public expects a great deal from modern medicine. Public opinion polls consistently reveal that Americans want early benefits of advances in medical technology and that they are willing to pay even for risky and inordinately expensive treatments such as organ transplantation and artificial organs. Further, it seems that many Americans expect the medical system not only to treat their ills but to cure them as well. Many observers have written about the changing public perception of the medical profession. Viewed as virtually infallible earlier in this century, physicians now are increasingly being regarded warily by some patients. The rapid transformation of the health care delivery system in the decades since the enactment of Medicare and Medicaid has contrib- uted to this lack of confidence. The phenomena of corporate for-profit medicine, proprietary chain nursing homes and hospitals, commercial

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4 MEDICAL PROFESSIONAL LIABILITY: VOLUME I laboratory services, health maintenance organizations, preferred pro- vider plans, and other market-oriented approaches to health care deliv- ery can transform the doctor-patient relationship into a producer- consumer relationship. Behind many medical malpractice claims is a disappointed consumer who believed he or she was purchasing a cure, is disappointed with the results, and, often without any other avenue of compensation, is seeking relief through the legal system. ETHICAL CONSIDERATIONS Ethical issues loom large in any serious policy debate of the medical professional liability problem in obstetrics, yet they are among the most difficult issues to resolve in a morally pluralistic society. As a result, there is a tendency to concentrate on procedural, pragmatic, and con- sensus-forming positions rather than on more substantive ethical is- sues, about which disagreement is likely to occur. The committee recognized that the pragmatic approach is the only feasible one when confronting ethical issues as complex and volatile as those arising from society's obligations to care for mothers and infants. Although ethical matters deserve more attention than the committee was able to devote to them, the committee believed that it was important to raise the issues and to state the ethical assumptions underlying its recommendations. By doing so, it hoped to heighten the public's aware- ness of the complexities in the problem of obstetrical malpractice. The ethical issues deemed most important by the committee were grouped under two headings: (1) the obligations of society to pregnant women and to fetuses and (2) the obligations of the medical professions to pregnant women and to fetuses. The fundamental question regarding the obligations of society is whether or not pregnant women and fetuses have some moral claim on society that entails access to obstetrical care. If they do, how does it square with other legitimate moral claims for other forms of health care by other members of society? For example, what is society's obligation to a damaged infant? How should society balance the claims of damaged infants against the claims of other sick persons? The obligations of the health professions to pregnant women and to fetuses depend on the way health professionals are regarded. If they are seen to be like any other service profession in the U.S. economy, only one obligation is entailed: competent performance of tasks that are contrac- tually bargained for in the marketplace. In ordinary market transac- tions, producers of goods and services are not required to abnegate self- interest to any appreciable degree. The medical profession, however, has long instilled a different ethic in its members, who are generally ex

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SUMMARY OF CONCLUSIONS AN:D RECOMMENDATIONS 5 pected to have a fiduciary relationship with their patients. The commit- tee does not view its role as prescribing moral standards for health care providers. It does believe, however, that any permanent solution to the obstetrical medical professional liability problems outlined in this re- port will require that health professionals, policymakers, and legisla- tors consider carefully what the ethical obligations of obstetrical pro- viders are in such matters ensuring equity in access of care. STUDY FOCUS AND FINDINGS The committee grouped its inquiry into six areas: (1) the delivery of maternity care in the United States, (2) the effects of medical profes- sional liability issues on the availability of obstetrical providers, (3) the effects of medical professional liability issues on access to obstetrical care for particular segments of the population, (4) the effects of profes- sional liability issues on the practice of obstetrics, (5) the role of the insurance industry in obstetrical professional liability issues and their resolution, and (6) an evaluation of the current tort litigation system for resolving medical malpractice claims and various alternatives to the tort system that have been proposed. Chapters 2 through 7 present detailed discussion of these six areas of inquiry. Brief descriptions are given below. Maternity Care in the United States Maternity services in the United States are delivered by three groups of providers: obstetrician-gynecologists, other physicians (primarily family physicians), and other practitioners, including certified nurse- midwives and, in some states, lay midwives. Most obstetrical care is provided by obstetrician-gynecologists, who practice primarily in met- ropolitan areas. According to estimates prepared for the committee, family physicians provide two-thirds of all private obstetrical care in rural areas. Thus, most women receive prenatal care in private physi- cians' offices, whether from obstetrician-gynecologists or from family practitioners. Approximately one in five, however, receives care from a public provider, such as a hospital outpatient department, a Community or Migrant Health Center, or a health department. There are 2,000 to 2,500 practicing certified nurse-midwives in the United States, and more than one-third of them practice in areas in which most of the patients are poor. To analyze the ejects of medical professional liability problems on the supply of obstetrical providers and on issues of access, the committee attempted to find out how much obstetrical care is needed in the United

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6 MEDICAL PROFESSIONAL LIABILITY: VOLUME I States and what determines the need. Estimating need is difficult be- cause of the number of variables involved. However, two clear observa- tions emerged: (1) there is mounting evidence of existing shortages of obstetrical care, especially for poor women in rural and inner-city areas, and (2) there is good reason to believe that the need for obstetrical services in the United States will increase in the near future. The evidence presented in this report that professional liability problems are driving physicians and other obstetrical providers from practice and raising barriers to access must be understood as one element of a broader problem of impaired access to obstetrical services for some American women. Availability of Obstetrical Prowlers Numerous reports in recent years have averred that obstetricians, family physicians, and nurse-midwives are increasingly eliminating or limiting obstetrical practice because of professional liability problems. Review of existing data and new studies commissioned by the committee addressed the following questions: Are obstetrical providers eliminating or limiting obstetrical practice? Are high-risk women underserved? Are obstetrical services in short supply in rural areas? The committee reviewed the results of 30 surveys in 23 states, along with 9 national studies, relating to the question of whether professional liability worries are causing providers to eliminate obstetrical practice. The data suggest that significant numbers of each ofthe provider groups studied are eliminating obstetrical practice, or limiting it earlier in their careers than they might otherwise have done, because of profes- sional liability concerns. In addition, significant numbers of obstetrical providers report that they are cutting down on services to high-risk women because they fear being sued. Although this reduction in avail- able obstetrical care may affect the entire population, the evidence suggests that it particularly affects Tow-income women. From an examination of 21 state studies and 5 national studies ad- dressing professional liability issues and their effects on family physi- cians, the committee concluded that the proportion of family physicians giving up obstetrical practice is even higher than the proportion of obstetricians. The delivery of obstetrical services in rural areas is seri- ously threatened by this development. Estimates prepared for the com- mittee indicate that the number of obstetrical providers in non- metropolitan areas has fallen by approximately 20 percent in the last five years.

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SUMMARY OF CONCLUSIONS ANT) RECOMMENDATIONS 7 Obstetrical Care for Poor Women and Women Served by Medicaid Numerous authors have expressed alarm about the relationship of professional liability issues, physician participation in Medicaid, and the access of low-income women to obstetrical services. Drawingprimar- ily on the studies done by state and national organizations over the past several years, the committee attempted to determine whether the sense of alarm is justified and, if so, how the issue might be addressed. The general reductions in obstetrical practice among obstetricians, family physicians, and nurse-midwives reported in both state and national survey data appear to have a disproportionate effect on the availability of care for low-income women. Further, every relevant study identified by the committee found that physicians are increasingly reporting a reduction in their Medicaid caseloads, at least in part because of profes- sional liability concerns. Because Community Health Centers and Migrant Health Centers are a vital source of obstetrical care for low-income women, the committee decided early in its deliberations to commission a survey of the effects of medical professional liability issues on the delivery of care in these centers. Data were gathered from a random sample of 208 center direc- tors during April and May 1988. Sixty-seven percent of the respondents to the survey indicated that professional liability concerns reduced their center's ability to furnish obstetrical services or the scope of services they could offer. Much of the data relating to the question of whether medical profes- sional liability concerns are causing physicians to reduce obstetrical care to low-income women are imperfect or indirect. After putting the pieces of this puzzle together, however, the committee is persuaded that the effects of professional liability concerns in obstetrics are being dis- proportionately experienced by poor women and women whose obstetri- cal care is financed by Medicaid or provided by Community and Migrant Health Centers, and that this problem is, in turn, exacerbating the long- standing problems of financing and delivering obstetrical care to poor women. Practice of Obstetrics - How do medical professional liability concerns affect the way in which obstetrics is practiced? The committee reviewed survey data document- ing changes that obstetrical providers have made in response to profes- sional liability concerns. The committee also conducted an informal survey of academic medical centers to determine the effect of profes

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8 MEDICAL PROFESSIONAL LIABILIlY: VOLUME I signal liability concerns on the training of obstetrical residents. Al- though it is difficult to study, the committee also deemed it crucial to examine the effect of professional liability concerns on the physician- patient relationship. The committee commissioned papers on the subject and heard numerous reports by physicians describing the changes that professional liability concerns have created in this relationship. Professional liability concerns have brought about a variety of changes in the way that obstetrics is practiced in the United States. In the committee's view many of these changes have benefited patients. In particular, the committee noted that physicians have improved their recor~keeping, increased discussion with patients, increased their use of informed-consent documentation, and paid greater attention to their relationships with their patients. In addition, some committee members believed that, in response to liability concerns, physicians have in- creased diagnostic testing, some of which may be appropriate. Other changes worried the committee. After studying the data related to the rise in cesarean deliveries in the United States, the committee concluded that concerns about medical professional liability are among the factors causing the rise. Similarly, after reviewing the data indicat- ing that electronic fetal monitoring has not improved overall outcomes, the committee concluded that professional liability concerns are at least partly responsible for the continued use of this technology. The committee also conducted an informal survey of 132 heads of obstetrics and gynecology departments at university hospitals and aca- demic medical centers in the United States. Many report that medical professional liability concerns are having an adverse effect on the train- ing of obstetrical residents. They report that the current legal climate makes it difficult to provide residents with appropriate responsibility and that the cost of medical malpractice insurance for obstetricians is impeding the ability of academic medical centers to hire obstetrical faculty. Obstetrical Malpractice Insurance Because of the controversy surrounding the role of the insurance industry, the committee commissioned an outside study of the structure of the obstetrical malpractice insurance market, the availability and affordability of insurance, and the actual effect of the insurance indus- try on the obstetrical malpractice problem and its solution. In addition, the committee commissioned a survey of risk management activities implemented by insurers. The committee found consensus that the crisis of availability of medi- cal malpractice insurance for physicians that existed in the mid-1970s

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SUMMARY OF CONCLUSIONS ~ ~C ~9 was adequately addressed by the creation of physician-owned com- panies, joint underwriting associations, and the conversion to cIaims- made policies. There is, however, continued concern in most quarters about the affordability of medical malpractice premiums and the avail- ability of insurance for nurse-midwives. After studying the question of whether medical malpractice premiums are affordable, the committee concluded that it was difficult to determine whether the premiums constitute a real economic burden for obstetrical providers. Data sug- gest that obstetrician-gynecologists as a group have maintained their average net real income in the decade between 1975 and 1985. However, the committee notes that these national statistics mask huge variations among obstetrical providers by region and experience. The data also strongly indicate that premiums are a greater burden for family physi- cians and nurse-midwives than for obstetrician-gynecologists. In its limited inquiry ofthe matter the committee found no evidence in major published studies available as of August 1988 to support claims that excessive profit taking on the part of insurers has been a major contributor to the medical malpractice problem in obstetrics. The princi- pal factors in the growth of premiums appear to be changes in the frequency and severity of claims and the lowering of interest rates in the larger economy, which has reduced insurers' investment income. The committee found a variety of efforts on the part of insurers to use their information bases to identify high-risk areas and to encourage more effective or appropriate methods of managing the risks of obstetri- cal care. Some efforts have taken place in commercial insurance com- panies, but most have been initiated in physician- and hospital spon- sored organizations. Several proposals have been advanced in the last decade to address the medical malpractice problem by altering the practices of medical malpractice insurers. The committee found that, although there has been some limited experience with these proposals in certain states, there is not yet enough experience or data to enable it to recommend any of these proposals for nationwide adoption. The Tort System and Its Alternatives In the course of its inquiry into the legal system the committee examined the role of the tort system in the medical professional liability problem, evaluated the data relating to the efficacy of tort reforms, and studied various proposed alternatives to the tort system. Although these are important issues in the medical malpractice debate, because of limited time and resources the committee did not examine the effective- ness of state licensing boards and peer review activities or the complex

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10 MEDiC~ PROFESSIONAL I: VOILE ~ issues raised by expert medical testimony. Similarly, the committee did not attempt to investigate the effectiveness of various alternatives to the tort system that have been implemented in other nations, such as New Zealand and Sweden. The committee believed that these~nations have health care delivery systems and legal systems that are quite different from those of the United States, making useful comparisons difficult in the absence of sustained study. Finally, the committee did not formally study the practices or evaluate the role of the plaintiffs' or defendants' bar in the obstetrical malpractice crisis. This is an enor- mously complex topic and one that the committee believed was outside the scope of this report. The committee's overall conclusions from the data are that the tradi- tional tort system is a slow and costly method of resolving obstetrical disputes and that it is contributing to the disruption of the delivery of obstetrical care in this nation. Moreover, the committee found that the threat of liability is having far-reaching and severe effects on access to and availability of obstetrical care, that the threat of liability is causing a variety of medically inadvisable procedures to be overused, and that both health care providers and patients have lost confidence in this method of resolving claims related to injuries occurring in the course of medical treatment. Studies to date suggest that, although the tort reforms implemented since the mid-1970s have slowed the increase in claims frequency and magnitude in some states, they have not had a dramatic effect on the costs, either direct or indirect, of the tort litigation system for resolving obstetrical malpractice claims. It is the committee's conclusion that, although some tort reforms already in place have merit, they do not appear likely to stem the exodus of obstetrical providers from the profes- sion or to solve the attendant problems caused by the current profes- sional liability climate. Accordingly, the committee makes additional recommendations. Although a number of alternatives to the civil justice system for resolving medical malpractice claims have been advanced in the past decade, the committee found a limited data base with which to measure the costs of these alternatives, the claims frequency under these regimes, or their effectiveness and fairness in resolving claims in the context of the U.S. health care delivery system. THE COMMITTEE'S RECOMMENDATIONS The committee has a modest number of recommendations to help lessen the recurrence of professional liability crises in the long run and to relieve some of the immediate problems stemming from professional

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SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS 11 liability concerns. The committee's goal in making these recommenda- tions is to increase access to high-quality, affordable obstetrical care for all women, regardless of their ability to pay, where they live, or where the care is delivered. In the committee's view a doctor-patient relation- ship based on mutual trust is essential to high-quality medical care. It is difficult to formulate a series of precise recommendations in this regard, however, the committee urges individual providers, provider groups, patients, insurers, the legal profession, policymakers, and educators to join in supporting this objective. Long-Term Recommendations 1. States should consider alternatives to the tort system. The commit- tee recommends that states focus their future reform efforts on develop- ing alternative methods of resolving medical malpractice claims. Al- though there has been little practical experience with alternatives to the tort system for resolving medical malpractice claims in the United States, the committee determined that, based on the theoretical litera- ture available, three of them appear particularly promising. The com- mittee recommends that states evaluate these three proposals for imple- mentation on a limited basis: the no-fault designated compensable events scheme (including the variants enacted in Virginia and Florida providing no-fault compensation for certain neurologically impaired infants), the AMA-Specialty Society's fault-based administrative sys- tem, and legislation authorizing the use of private contracts to stipulate arrangements for resolving medical professional liability disputes be- tween providers and patients. 2. The federal government should support demonstration projects. The committee believes that the primary responsibility for resolving the medical malpractice problem rests with the states, but it also believes that the federal government should stand ready to assist the states. To that end, it recommends that the federal government, through the Department of Health and Human Services (DHHS), fund pilot projects for various solutions and studies of proposed state legislation. 3. A national data base on malpractice claims should be developed. The federal government, through DHHS, should assist in the develop- ment of a national data base on medical malpractice claims to assist the states in their efforts to understand and solve the medical malpractice problem. The Health Care Quality Improvement Act of 1986 mandates a data bank for information related to licensing, sanctioning, and disci- plining of health care providers. The committee approves of this legisla- tion but believes that a more extensive data base is required to facilitate further study of the problem. It recommends that the national data base

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12 MEDICO PROFESSIONS CITY: VOICE ~ include required disclosures by medical malpractice insurers regarding rates, payouts, settlements, and claims; by hospitals and hospital groups and by other providers and provider groups regarding claims; and by relevant state agencies. 4. Systematic technology assessment is needed. The committee joins other groups, such as the Health Care Financing Administration's Effectiveness Initiative, the National Center for Health Services Research's Health Care Technology Assessment Program on Outcomes Research, and the Institute of Medicine's Council on Health Care Tech- nology, in recommending that sufficient primary data be generated to determine the safety, effectiveness, and other attributes of new technol- ogies relevant to obstetrics and other fields of medicine. The committee's examination of electronic fetal monitoring and other practice changes in obstetrics has led it to conclude that systematic effort is required to establish the appropriateness, reliability, and effectiveness of new med- ical procedures before they are widely disseminated and become the accepted standard of care. Short-Term Solutions 5. States should address the access problems of the poor at once. Although the committee believes that efforts to develop alternatives to the tort system hold the most promise, it also urges states to address immediately the disruptions and deterioration in maternity services for the poor that have been worsened by professional liability concerns. The committee recommends that the states and the federal government consider several short-term solutions simultaneously with their efforts to resolve the medical professional liability crisis generally. These ap- pear as recommendations 6 through 8 below. 6. Federal tort claims act coverage, or its equivalent, should be ex- tended to certain obstetricaZpractitioners. To lessen the immediate prob- lems posed by professional liability issues in government-financed Com- munity and Migrant Health Centers, Congress should authorize the extension of the personal immunities offered by the Federal Torts Claims Act, or equivalent coverage, to all practitioners of obstetrical care at these centers. Such an action would relieve practitioners of steep malpractice insurance and of personal liability, while providing plain- tiffs a legal remedy. 7. States should contribute to professional liability coverage for Medi- caidproviders. As a temporary measure to ensure full access to obstetri- cal care for women whose care is financed partly by Medicaid, the committee recommends that states follow the examples of Missouri, Hawaii, and Montgomery County, Maryland, which have taken actions

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SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS 13 to reduce the professional liability risk of providers of obstetrical ser- vices to poor women. The committee recommends that, until the obstet- rical professional liability issue is fully resolved, states should imple- ment programs that would either indemnify or subsidize the medical professional liability premiums of obstetrical providers who participate in Medicaid or otherwise provide care to low-income women. 8. The National Health Service Corps should be expanded. The com- mittee recommends that the National Health Service Corps, whose resources have been severely restricted in recent years, be revived and expanded. Congress should reinstate general scholarships, expand the program of scholarships for students with exceptional financial need, and increase loan repayment options to increase the number of physi- cians in underserved areas.