Obama Budget Addresses Malpractice Reform

In his State of the Union address last month, President Barack Obama offered to work with Republicans on malpractice reform. That forum is not a place for details, so there’s been some question as to how far the President was willing to go on this issue. The budget the President introduced this week provides some of that meaningful detail.

Specifically, the Administration is proposing to provide federal funds to help states change their medical liability laws. The proposed budget would spend $100 million on these grants in 2012 with expenditures of $50 million in each of the next three years. The funds would be distributed by the Department of Justice in consultation with the Department of Health and Human Services.

The state reforms funded by the grants could not be used to put caps on jury awards. These caps are a top priority of most Republican and of the American Medical Association. They are an anathema to trial lawyers, most consumer groups and many Democrats.  GOP lawmakers will no doubt push for such caps, so that issue won’t go away. However, the Obama Administration’s proposal can be used by states to enact some interesting reforms that should appeal to Republican lawmakers.

One reform which the Associated Press cites as topping the Administration’s list is the creation of special health courts. Specially trained judges would hear and decide malpractice cases in these courts without the participation of juries. (It is not uncommon for juries, whether through outrage, a sense of justice or emotion, to award huge damages to plaintiffs — damages which are often reduced substantially on appeal). Further, these judges would make awards based on a set schedule.

Another reform states can use the grants to implement would establish a defense for providers who follow clinical guidelines and use electronic records. And another would allocate malpractice payments in proportion to responsibility for determined damages. This would replace the current practice of holding all providers responsible for the full award. Which means if one provider fails to pay damages, the other providers must step in and make up the difference.

 What’s significant is that these funds would not be used to study malpractice reform, but to actually implement it. Equally important, this approach leaves it to each state to fashion its own malpractice system. What can $250 million over four years actually accomplish? Quite a lot actually. For example, the Associated Press reports a source as claiming it “would cost $5 million to $7 million for a midsize state to set up health courts.”

The failure to allow for caps on damages will no doubt draw outrage from Republicans. While they’ll pursue legislation to impose limits on rewards, the likely defeat of that proposal in the Senate will probably not be enough to derail the ideas contained in the President’s proposal. At the same time, the Administration will need to fend off plaintiff attorneys who will vociferously oppose the creation of non-jury health courts.

Malpractice reform is a tough issue with powerful interests seeking incompatible ends. Finding solutions acceptable to Republicans, who control the House of Representatives, and to Democrats, who occupy the White House and have a majority in the Senate, will be no easy task. But the Obama Administration has made a start on the process.

2 thoughts on “Obama Budget Addresses Malpractice Reform

  1. In their counter proposal to the original Healthcare Bill the Republicans proposed an Alternative Dispute Resolution for Medical malpractice. The proposal had some merit but it did have some flaws, with the major flaws being the criteria that the impartial Arbiter must use to find for the petitioner(e.g. Clear and Convincing Evidence, as opposed to the Civil Court Standard of Preponderance of the Evidence; proof of Intent by the Physician(s))

  2. Well I think it’s a lousy start Alan – your description brings me to the same conclusion once again: This country is being divvied up between red and blue states. The laws and ideas that come out of Washington should be uniform and help all Americans everywhere equally. As your post clearly points out, just as with the PPACA legislation, this approach is going to land differently on the backs of citizens based on their zip code and that is just flat out wrong Alan. Federal funds should not be used to help states veer one way or the other.

    You can’t have it both ways Alan: Either we’re all Americans living under and benefiting from the same laws or we’re just a confederation of 50 states who hang out together and only band together when it’s time to throw some more young lives into that bottomless pit of waste known as Afghanistan.

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