NCPA - National Center for Policy Analysis

An Alternative to Malpractice

April 27, 2011

About three decades ago, University of Chicago law professor Richard Epstein proposed a radical alternative to our system of malpractice liability.  He called it "liability by contract."  The idea: let patients and doctors voluntarily agree in advance how to resolve things if something goes wrong, says John C. Goodman, president of the National Center for Policy Analysis.  

One version of this idea in medicine has already been tried.

  • For years, hospitals asked admitting patients to sign a form agreeing not to sue the hospital or the doctors, no matter how negligent they were.
  • When these forms showed up at the courthouse, however, judges routinely dismissed them on the grounds that the patients were too sick, too scared and too uninformed for there to have been a true meeting of the minds.

Fortunately, there is a better way.

  • For the money we are now spending on a wasteful, dysfunctional malpractice system, we could afford to give the families $200,000 for every hospital-caused death.
  • We could give every injury victim an average of $20,000 -- with the actual amount varying, depending on the severity of the harm.

How exactly could this work?

  • Goodman and his colleagues propose to allow patients, doctors and hospitals a voluntary, contractual, no-fault alternative to the malpractice system.
  • In return for forgoing their common law rights to litigate, at the time of entry into the health care system patients would be assured that if they experience an adverse outcome for some reason other than the medical condition for which they seek care, the provider institution will write them a check -- without lawyers, without depositions, without judges and juries -- no questions asked.

To pay off the claims, hospitals would probably purchase insurance just as they purchase malpractice insurance today.  Insurers would become outside monitors of hospital quality and their premiums would reflect doctor and hospital experience.  Further, if patients desired to pay an additional premium and top up their potential compensation -- doubling or quadrupling the amount -- they would have that option as well.

Source: John Goodman, "An Alternative to Malpractice," John Goodman's Health Policy Blog, April 25, 2011.

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