At the same table: Alternative liability resolution

More doctors are considering mediation and other voluntary methods to avoid a costly, adversarial court system. But some say it's no panacea for doctors' liability woes.

By Amy Lynn Sorrel — Posted Feb. 2, 2009

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In their quest to keep medical liability disputes out of the courtroom, some Pennsylvania physicians have found some strange bedfellows. The Montgomery County Medical Society teamed up with the Montgomery Bar Assn. to launch a mediation pilot program in March 2008 at Abington Memorial Hospital. The project, four years in the making, aims to turn the tables on the traditional litigation system by bringing doctors, patients and lawyers to the table to voluntarily resolve issues without the tensions and costs of court.

"The key word is nonadversarial," said rheumatologist Mark A. Lopatin, MD, a county medical society board member who practices at Abington. "The goal is to bring both sides together to discuss the issue. We can talk about money and all those things [in court], but you lose sight of the human element in a lawsuit."

The Abington project, supported by the Pennsylvania Medical Society, evolved with a nudge from the state Supreme Court in 2004. To fend off rising medical liability claims and insurance rates and keep doctors in the state, the high court, at the urging of Gov. Ed G. Rendell, encouraged hospitals to explore mediation to settle cases more efficiently.

Unlike arbitration, mediators do not make final decisions, and both parties still have the option of going to court, important for lawyers. But often the courtroom is as trying an experience for patients as it is for doctors, said Robert F. Morris Jr., immediate past president of the Montgomery Bar Assn.

"The courts work well in just compensation for most patients," he said. "But it's a difficult thing to relive an injury through the court system, and if we can avoid all that and still reach a fair result, the public is well-served."

While the partnership may be unique, Pennsylvania doctors are not alone in their efforts. Legal experts say mediation and other voluntary, early intervention programs are attracting interest -- among plaintiffs and defendants -- as an alternative to the court system, particularly as tort reform efforts face ongoing challenges and the patient safety movement gains ground.

Open communication

Proponents tout mediation not only because it saves time and money, but primarily because it encourages open dialogue between both sides.

"Litigation is win or lose, and there's no in-between," said Jane Ruddell, founder and president of Health Care Resolutions LLC, a Pennsylvania firm specializing in alternative dispute resolution. "We saw mediation as a way of addressing patients' financial medical injury needs, but also as a way to talk about what can we learn from this experience," said Ruddell, who has assisted with mediation projects in the state.

While a typical lawsuit takes weeks or years, including trial and appeals, mediation can resolve a dispute in days or hours. Little discovery is involved, which means lower legal fees for both sides and a higher percentage of an award for patients. Confidentiality also encourages candid conversations because shared information cannot be used in court.

Abington's two-step process begins with an informal meeting between the patient and members of a cadre of hospital administrators, doctors or nurses trained in conflict resolution. Patients can seek counsel at any time. If the patient is not satisfied with the outcome of the discussion, the issue can proceed to formal mediation, where a trained physician-lawyer team helps both sides reach a mutual agreement. The physician typically will be in the appropriate specialty and can provide insight to the parties involved, as can the lawyer, Dr. Lopatin said.

Though in early stages, the Abington project is banking on success based on results elsewhere.

Chicago's Rush University Medical Center started a mediation program in 1995; since 2004, 95% of claims have been resolved through the process. Rush also uses a co-mediation model, with a team including a defense lawyer selected by the patient. Both sides in the case split the cost.

The process helps both sides evaluate the strengths and weaknesses of a case through a neutral party, said Max D. Brown, Rush's general counsel. "We are able to settle those cases that need to be settled and defend those that need to be defended at trial."

Rush won all but one of the remaining 5% of cases that went to court. Meanwhile, defense costs for the self-insured hospital dropped more than 60%, and the number of claims filed against Rush has remained relatively stable. Cooperation typically results in more reasonable settlements, versus often unpredictable or excessive jury verdicts, Brown said.

Mediation typically occurs after a claim has been made and lawyers have locked horns. But some programs are aiming to intervene earlier.

What started as an effort to cut costs at the University of Michigan Health System has evolved into an integral part of quality improvement, said Richard C. Boothman, the hospital system's chief risk officer. "We want to be more proactive at learning about unexpected outcomes long before lawyers are involved. So it's not just an alternative to court, it's upstream of court," he said.

Mediation is just one tool to resolve potential medical liability disputes through a voluntary resolution program set up in 2001. In 1994, Michigan passed a law requiring a six-months notice before a lawsuit is filed formally. The university decided to take advantage of that time to investigate claims early, share information with both parties (with or without lawyers) and decide how best to handle a case, if it should be dropped, settled or defended.

"We said to ourselves, we're not going to abdicate our responsibility to the patient relationship just because something went wrong and we're not going to give deference to the legal system and assume court is the only place we have to fix these problems," Boothman said. The university has seen claims plummet more than 60%, while legal expenses and average claims processing time dropped by more than half.

No silver bullet

But critics warn that mediation and other voluntary methods are no silver bullet for resolving physicians' medical liability woes.

Such models, while gaining popularity, have yet to be tested widely, said American Medical Association Board of Trustees member Robert M. Wah, MD. The AMA is exploring alternatives to the current system, including mediation. But unlike caps on noneconomic damages, mediation has yet to prove it can markedly cut insurance premiums or lawsuits.

"Doctors are interested in anything that improves the current court-based system," he said. But despite anecdotal evidence of the benefits of mediation and other approaches, "it is not conclusive, and what we need to have is clear evidence."

Making the process mandatory also may carry problems, said Michael L. McCall of the physician-run liability carrier, Medical Mutual Insurance Co. of Maine. Vermont and Maine, among other states, require parties to go through court-ordered mediation before a case can proceed to trial. In such states, the process often turns out to be an extra cost in cases clearly defensible in court, said McCall, Medical Mutual's senior vice-president of insurance operations.

"When it takes place under statutory mandate, it's not nearly as effective as when it occurs voluntarily," McCall said. Even then, voluntary mediation programs could have the unintended consequence of increasing claims if every adverse outcome is mediated, he warned.

Rush University's Brown said the hospital's stable claims experience dispels the notion that mediation makes it "an easy target" for settlements. Caps can help keep settlements and claims frequency in check. But if limits disappear, such as through a pending constitutional challenge to Illinois' law limiting noneconomic awards, "it's even more reason to have mediation," he said.

Aside from money, however, if overall patient safety is a goal of mediation or other voluntary resolution efforts, confidentiality rules make it difficult for anyone outside of a closed forum to learn from the process, said A. Jenny Foreit, senior counsel of health care for Common Good, a bipartisan coalition that developed the health court concept.

Getting on board

There are other impediments to doctors' widespread acceptance of mediation. Settlements are reportable to the National Practitioner Data Bank. Some doctors mistake mediation for arbitration, which means a final decision. Others see it as an extra step on the path to litigation, rather than prevention. That's why the Pennsylvania Medical Society launched a program to educate and train doctors on mediation not long after the Supreme Court directive, said Ruddell, who helped develop the project.

Experts at Rush University and the University of Michigan said doctors have embraced the chance to talk about adverse issues before rushing to court, and cooperation from local lawyers also has been key.

Despite possible pitfalls, physicians and lawyers at Abington Memorial Hospital say mediation is worthwhile to help break down litigation barriers. Dr. Lopatin, the rheumatologist, said he would have welcomed the chance to discuss one patient's case openly, rather than endure lengthy depositions and what he saw as a frivolous settlement. "I would have loved to avoid that emotional ordeal and deal with it in a more humane way."

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How one system handles claims

[download pdf]

The University of Michigan Health System's voluntary, early intervention program aims to resolve potential liability issues before they get to court. It also encourages open communication between both sides. Here is how a claim may be handled.

1. Claim/adverse incident

2. Internal investigation by legal/medical committees (during statutory pre-suit notice period)

3. Findings shared with patient (go to steps 4, 5, 6, which may involve informal meetings or formal mediation)

4. Parties agree no claim/claim dropped (stop here)

5. Settlement discussions (go to step 7)

6. Agree to disagree/no dialogue (go to step 8)

7. Settlement or trial

8. Litigation

Source: University of Michigan Health System

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Resolving disputes

Two health systems have seen changes in their experiences with medical liability claims since they started using mediation and other voluntary methods to resolve potential disputes.

Here are the results for seen by the University of Michigan Health System and Rush University Medical Center:

Average legal expenses -50% -67%
Claims filings -62% No change
Average claims processing time -53% n/a

Sources: University of Michigan Health System, Rush University Medical Center

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