Is a no fault regime better than a negligence rule as a way of dealing with the causes and consequences of medical error?

What is the effect of tort law on the care taken by doctors to avoid medical error?

The current UK system of tort law is negligence-based; that is, a doctor will face liability if they breach their duty of care to the patient (there will inevitably be a duty of care towards patients on the part of their doctors), this causes damage of the type one would expect to be caused by the breach (Hughes v Lord Advocate), and the doctor's conduct falls below a certain reasonable standard. Thus under a negligence rule, doctors are incentivised to take care given the additional costs in the event that their conduct falls below the relevant standard.

Fenn et al, explain this with the following graph:

The graph explains why an idealised negligence system would bring socially optimal results. Here, the total costs of the accident are minimised at the point x*, the total costs of the accident being represented by the curve x + D(x), where x is equal to the costs of care, and D(x) the cost of resulting damage. Thus in such a situation, the doctor's utility of wealth is adversely affected by any choice other than D(x); as Fenn explains, where u(W) stands for the practitioner's utility of wealth, his level of care solves u(W - x) if x ≥ x*;u(W - x - D(x)) if x < x*.

However, this graph depends on an idealised system, and therefore perfect information; it requires the legal standard of negligence to be fixed and observable. The fact that this is not the case - as with any standard based on the nebulous concept of “reasonableness” - leads to additional costs. The uncertainty of the test leads to overhead costs for required litigation, can lead to non-financial costs on the part of the doctors themselves, such as in lost time and self-esteem (Weiler et al., 1993). In addition, it is thought to lead to “defensive medicine”. This is a situation in which individual doctors fear litigation to the extent that they will choose fields and treatments that, though reducing the cost of litigation, will ultimately increase costs. One example of this is through the ordering of unnecessary medical tests; Sloan et al (1989) also consider that doctors could shy away from offering treatments that, though with an element of risk, offer a greater overall benefit. Quinn (1998) points out that this effect is particularly pronounced in the case of junior doctors: given that they have yet to gain a reputation in their field, the threat to their own reputation is correspondingly greater, meaning that such doctors are always under-insured. The incentive to carry out wasteful defensive practices is therefore clear. As Danzon explains, a negligence-based system can be justified, but only insofar as the savings achieved through deterrence outweigh these costs.

The present test for deciding if a doctor is negligent is that found in the case of Bolam v Friern Hospital. Whereas the standard test for negligence is whether the standard of conduct fell below that of the “reasonable man” (Blyth v Birmingham Waterworks), this is adapted for medical negligence. It is higher, in the sense that a doctor is judged against reasonable doctors - but also broader, in that one will not be at fault if they follow any “practice accepted as proper by a responsible body of medical men” (per McNair J, at 487). This creates a particularly difficult variable, and one that is correspondingly inefficient given the costs of legal argument. The court will have to undertake an enquiry into what beliefs are held by responsible bodies, as well as making a judgment on which are “responsible”: in the subsequent case of Bolitho v City and Hackney HA, it was held that the courts must investigate whether a medical opinion has a “logical basis”. This leads to a situation in which “standards applied are unpredictable and possibly systematically biased” (Danzon). Craswell and Calfee (1996) go on to conclude that uncertain legal standards lead to non-optimal deterrence incentives, given that patients may be afraid to start claims on an uncertain legal basis.

It is these non-optimal incentives that have led many to suggest the possible implementation of a “no fault”, or strict liability scheme in the UK in the field of medical negligence law. Whereas the tort of negligence requires a breach of the duty of care, a no-fault system would, at its extreme, require only the element of causation to be proved - that is, the claimant need only prove that his injuries are caused by the medical treatment, and not the underlying condition that led him to seek it. Individual doctors or hospitals would then insure against this risk; the argument is then that the associated overhead costs and non-financial costs of litigation are eliminated.

Thus, in a causation-only system, liability would be based simply on the fact that the act of a doctor has led to the worsening of the patient's medical condition. However, the direct cost savings from simply removing the requirement of fault are not to be ovestated. For example, the issue of causation is in itself a difficult issue, particularly in the medical context, where patients are likely to have serious underlying health conditions - it creates a situation of “multiple causes”, whereby a number of events could each have caused the damage. The process is complicated, and therefore expensive: this is exacerbated, given that the courts' approach in such cases has not always been consistent. For example, there is divergence between authority requiring “probable cause” (as in Wilsher v Essex AHA) - that is, it must be shown that it was more probable that one event caused the damage, than it is that any other event did - and other authority requiring merely a “material increase in risk” (McGhee v National Coal Board). A similar point can be made in relation to quantifying the costs of injury; even if it is clear that medical action was the cause of the patient's eventual condition, it may be the subject of much argument as to what extent the damage is greater than it otherwise would have been, and the precise level of damages required.

However, an argument for a no-fault system could perhaps be made, albeit in terms of relative institutional competence. As nebulous and indeterminate a concept as the Bolam test seemingly is, it nonetheless appears to be as precise as the courts are able to be. The judiciary, not being medically trained, would not be able to - and therefore should not be asked to - make judgments based on the validity of differing bodies of medical opinion. Given this, however, we might also argue that the courts are relatively unfit to judge the reasonability of a choice made by a doctor, at all: they lack the necessary expertise. This is perhaps one respect in which we may argue that medical negligence should be allowed to differ from negligence of other types - and should perhaps qualify alone for a “no-fault” system: though “reasonable man” is a standard which the judiciary can appropriately judge, the same is not true of “reasonable doctor”, which requires medical knowledge.

Though there exists relatively little empirical evidence on the subject of defensive medicine itself, Kessler and McClellan (1996) sought to quantify the benefits through a comparison between jurisdictions in which various liability-limiting reforms had been enacted (for example, a cap on the total damages), and those without such reforms. The data indicated that states with such reforms had reduced expenditures of between five and nine percent between 3-5 years. The conclusion reached here is that doctors do indeed practice defensive medicine. A Harvard Medical Practice Study (1990) also reported that doctors found themselves affected by the threat of lawsuits in selecting treatment, though the same study found no correlation between medical costs and the probability of litigation. Dubay et al. (1999) attempted to support the existence of widespread defensive practices by comparing the probability of a tort action for medical malpractice with Caesarian section rates in different states, and again concluded that limitations of liability led to reduced costs - though in this case of a much smaller magnitude, at 0.27%. However, the academic opinion appears split; though the Kessler and Dubay studies do show a cost decrease, indicating defensive medicine in certain states for certain narrow categories of ailment, a 2004 Congressional Budget Office study, based on different, broader data, found “no statistically significant difference in per capita health care spending”. Nonetheless, some of the alternatives put forward to explain certain defensive tactics - it is argued, for example, that extra tests are often ordered not to reduce the risk of liability, but rather to increase a doctor's income - appear unconvincing. The Kessler study would appear, by comparing tort laws to total expenditure, to have eliminated this variable. Though it may perhaps be the case that defensive procedures occur unevenly through fields of medicine, and that the costs are relatively small, I would conclude that the evidence does appear to support its existence to some extent..

There has recently been a trend within the UK for hospitals to shift the liability for negligence away from doctors, and onto hospitals themselves. Fenn (2004) points out that since 1990, the NHS has assumed negligence liability for all hospitals under its control, and offers an argument in favour of this: hospitals are more able to enact wide-ranging risk management strategies. At the same time, however, the enacted system must be careful to retain the deterrence incentive; individual doctors must still be incentivised to take the appropriate care level.

According to Danzon (2000), the UK in 1990 “in effect, the UK thus established a form of enterprise liability”. However, she argues that “in practice, health authorities are probably too far removed from the delivery of care” to introduce informed risk management strategies, and the net effect, she concludes, is most probably one of lessened deterrence. Though on a lower level - by the individual trust hospitals, for example - there is a greater chance of informed strategies being enacted, this in turn depends on trusts having an incentive to do so, through being held responsible for their own liabilities. But as Danzon points out, the introduction of re-insurance arrangements through the Clinical Negligence Scheme, with almost all hospitals choosing the lowest possible excess (£25,000), again reduces deterrence incentives. This attempt at maintaining the traditional tort system while reducing the financial and non-financial costs to doctors, appears to have done so at the loss of deterrence.

What alternatives are there to tort law in achieving medical accountability and compensating patients for the consequences of medical error?

Two instructive alternatives to the tort system in providing compensation for clinical negligence losses can be found in Sweden and New Zealand. The Swedish system is known as the Patient Compensation Insurance scheme; it represents a genuine attempt to decouple compensation from accountability, with the issues of discipline and compensation being dealt with by different bodies, with no information passed between them to ensure the doctors' co-operation (Danzon, 1994). The system operates as a voluntary alternative to tort; it therefore must, to incentivise its use, offer damages which are at least commensurate with the relevant damages in tort. The figures look initially attractive: Danzon (1994) points out that in Sweden, payouts for medical negligence make up just 0.16 of the total health care budget, compared to over 1% in the United States. However, Fenn (2004) puts this in context: Sweden already operates a much more generous system of social security than almost any other state. The role for tort is therefore much more limited, and the size of claims is accordingly more limited: compensation in the Swedish system for non-economic loss is only a tenth of that in the US (Danzon, 1994). Such a system would therefore not be transferable without substantially higher costs than in the Swedish model, as the cost of matching the higher tort payouts of other states would rise.

The New Zealand model is the Accidents Compensation Commission (ACC). It is broader in scope than the PCI, relating as it does to all injuries; in addition, it operates instead of the tort system. The removal of the voluntary element removes the problem of a PCI-type system - that is, of having to keep damages similar to those in tort. At first glance, then, it would appear that such a system would be more suited to legal systems such as in the UK and USA. However, as Danzon (1994) points out, such a system runs into philosophical difficulties. The original framing of the legislation excluded only injury from the original illness, and from normal risks of treatment. However, there would appear to be no moral difference between injury from medical causes and those from normal causes, particularly when the medical practitioner does not have to be at fault. Thus, a revised system was put into place, relying on a concept of “medical error”, which requires a failure “to observe a level or care and skill reasonably expected in the circumstances”. This is almost identical to the Bolam test as currently used in the UK. It would appear that whereas the apparent benefits of the Swedish system could not plausibly be transferred to the UK, a New Zealand type system would not bring any additional benefits, given that the eventual consensus appeared to swing back in favour of a negligence-based system.

Bell (1984) argues that the two aims of tort law in this area are, firstly, to fully compensate injured patients; and secondly, to provide some sort of deterrence. It might then be argued that a system such as the Swedish one, that decouples the two, can be successful, as long as each particular element is successful: that is, the compensation scheme compensates, and the disciplinary scheme deters. However, the decoupling of the two means that the doctor no longer has any personal stake in the case whatsoever; he will not have to argue about his own reasonable actions, but there will also be no incentive for him to argue that his actions were not causative of some or all of the patient's injuries. Such a system creates obvious inefficiencies, in that damages end up higher than they should deservedly be.

Thus, it is for a number of reasons, I would conclude that a no-fault compensation system would not be feasible in a UK context. Firstly, there is the projected cost: Fenn et al. (2004) estimate this at around £2.1bn per annum, around 6 times more than the current system. Secondly, there is the inevitable problem of decoupling compensation from accountability, and the subsequent reduction in deterrence incentives which it subsequently causes; it appears extremely difficult, if not impossible, to balance the necessity of deterrence with the problems of an individual fault system. Thirdly, philosophical problems exist with treating injury from medical negligence as different to that from other sources; fourthly, the removal of the requirement for fault will not necessarily make the necessary legal investigation somehow easier.

I would instead suggest that the problem with the current law is in the fact that the point at which the Bolam test imposes negligence is not a fixed and observable point. As mentioned above, this may be due to the limitations inherent in a judiciary that is not medically trained. An alternative could perhaps involve removing this element of the case from judges, and putting this element of the case in the hands of medical practitioners, to judge on medical standards. This prevents the problems of “decoupling”, and still produces significant deterrence incentives; however, in making the appropriate level of care more clear, and putting it in medical terms, we may hope that doctors are more able to find the optimal point of care - the point that Fenn et al. (2004) label as point x* on the graph above - this, it is hoped, should help to end the problem of “defensive medicine”, while maintaining rigorous care standards.

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