Will The Clintons Take A Scalpel To Legal Fees?

Dan Quayle lives.

That's one of the surprising messages Hillary Rodham Clinton is expected to deliver when she issues her blueprint for health-care reform in early May. A key part of the plan is likely to be the kind of legal reform the former Vice-President pushed in his frequent lawyer-bashing speeches: curbing medical-malpractice suits. Worried that the suits are driving up medical costs, the First Lady's task force could recommend replacing malpractice litigation with arbitration and shifting legal liability from individual doctors to groups of health-care providers. "If we're moving to a brave new world, we ought to take this on," says Randall R. Bovbjerg, senior research associate at the Urban Institute in Washington, D.C., who is advising the Clinton health-care task force.

How much of a dent these changes actually will make in the country's $800 billion medical bill is open to debate. But that won't stop medical-malpractice reforms from being included in the package. The reason is that politics will play as big a role as economics in the overhaul. Changes in the legal rules would shore up support for the plan among conservatives who might oppose other parts of a scheme that would increase government control over the nation's health-care system. It also is a carrot for doctors, scores of whom spent the week of Mar. 22 lobbying lawmakers for their version of health-care reform. "This is a pawn to placate doctors and attract Republicans," observes Daniel F. Creasey, president of Harvard Medical Institutions' Risk Management Foundation, who is also advising the task force.

Whatever the motivation, a consensus is growing for reforming a medical-malpractice system that now encourages litigation. In fact, many options on the task force's table are now being tried piecemeal by hospitals and doctors around the country. But federal rules would expand such efforts nationwide and speed up changes. "Federal legislation can encourage experiment and reform," says Clark C. Havighurst, a Duke University law professor.

The options span the political spectrum (table). For instance, the American Medical Assn., other health organizations, and conservatives back a nationwide expansion of a 1975 California law. It caps punitive damages for medical malpractice at $250,000 and cuts lawyers' contingency fees as awards increase. Malpractice-insurance rates for obstetricians and gynecologists in California, once the nation's highest, fell to one-third less than the national average in 1989. But a ceiling on damages will be bitterly opposed by consumer advocates and trial lawyers, a group that contributed heavily to Clinton's Presidential campaign. Says Philadelphia malpractice attorney David S. Shrager, former president of the Association of Trial Lawyers of America: "Those most grievously injured are most shortchanged."

'DEEP POCKETS.' The solution preferred by liberal academics--a system similar to workers' compensation--may fare no better. Under such a scheme, everyone who is injured gets some money from a taxpayer-supported federal fund, regardless of whether anyone was at fault. The system has the advantage of cutting out lawyers. But a recent Harvard Medical School study based on 1984 medical records at New York hospitals shows that no more than 13% of injuries caused by negligence currently result in claims, and that figure would likely soar if patients could avoid all the legal hassles and expense of hiring lawyers and enduring tedious courtroom procedures to recover damages. The potential costs could be staggering. "It will bankrupt the system," says attorney Shrager.

That's why the task force is likely to settle on less radical proposals that both lawyers and doctors endorse, including arbitration and allowing doctors to use adherence to standard medical guidelines as a defense against legal attacks. Arbitration and other alternatives to litigation, favored by both the AMA and Quayle, can be cheaper and far quicker than lawsuits. An award decided by an independent arbitration panel, for instance, avoids courtroom procedures that can bog down lawsuits for years, although lawyers still could be involved in the process. Kaiser Permanente of Oakland, Calif., has required patients to use arbitration in California, Colorado, Hawaii, Massachusetts, and the Pacific Northwest. "It results in less wear and tear for all parties," says Donald W. Parsons, Kaiser's government affairs representative in Washington, D.C.

Another expected initiative would shift legal liability from individual doctors to networks of health-care providers. This change seems inevitable as the health industry moves to a managed-care model, in which doctors no longer work for themselves but for large organizations that increasingly control how they practice medicine. Holding the groups responsible gives them a greater incentive to monitor the quality of care. Courts already are holding health maintenance organizations, rather than the individual physicians who work for them, responsible for malpractice claims. "We're not crazy about it," says Erling Hansen, general counsel of the Group Health Assn. But "courts have always looked for the deep pockets."

CLINICAL GUIDELINES. Some hospital groups already are voluntarily taking on the new legal responsibilities. The Federation of Jewish Philanthropies of New York, which insures five of the New York metropolitan area's largest teaching hospitals, has put affiliated physicians on the hospitals' malpractice-insurance policies since 1982. It assigns one lawyer for both the doctors and the hospitals when they are sued in the same case. In general, joint defenses--used except where there is a conflict of interest between parties--can slash lawyer fees by 20% to 30%, says Kenneth S. Abraham, a law professor at the University of Virginia.

The medical profession, meantime, is taking steps to insulate doctors from liability simply by improving medical practices. In the past decade, physicians increasingly have used clinical guidelines that specify accepted treatments for particular maladies. Maine, Vermont, Florida, and Minnesota now have laws that allow health-care providers who follow the guidelines to use their compliance as a defense in malpractice suits. Starting last year, some 80% of Maine's doctors signed on to a program giving them legal protection if they follow state guidelines in obstetrics, anesthesiology, emergency medicine, and radiology.

But development of such guidelines is still in its infancy. Doctors' groups, which have had a hard time agreeing on standards, have developed guidelines for only a few of the thousands of procedures. Improving the overall quality of health care--along with reducing the need to sue--clearly would be the ideal way to attack the medical-malpractice problem. But that could take some time. For now, some old cures for the ills of medical malpractice may get a new burst of support from the Clinton Administration.

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