ISSUE 2:5, May 2014 – Recent Developments

The Law & Economics of the VA Fiasco

May 29, 2014

Over at the CATO blog, Roger Pilon discusses the unfolding VA fiasco that involves hospitals covering up their failures to provide acutely needed services to veterans and doctors working in a slowdown mode (as illustrated by an eight-person cardiology department that “sees as many patients in a week as a single private practice cardiologist sees in two days”). He describes this fiasco as a paradigmatic example of government failure and proposes a remedy: the government should steer away from actually providing medical care; instead, it should give veterans vouchers towards purchasing medical services on the competitive private market.

This proposal does not take into account the economies of scale and scope that the government can realize from centralizing the purchase of medical work, facilities and equipment, and from self-insuring against medical malpractice instead of buying expensive liability coverage. These economies dramatically reduce the cost of medical care and increase its affordability. Our market for medical care sets prices that many people, including veterans, cannot afford. The voucher system cannot bring those prices down. Making this system work without shortchanging veterans would therefore cost the taxpayers a fortune.

Privatization is not a silver bullet solution for all government failures. Legal penalties often do a far better job.

The VA fiasco provides a case in point. The VA officers and employees whose misfeasance or nonfeasance contributed to the denial of care and the cover-up should be removed from their jobs. Doctors who did not do their job properly should also be disciplined and reported to the National Practitioner Data Bank. Additionally, the aggrieved veterans and their families should be able to sue the government for negligence, misrepresentation, deceit, and medical malpractice pursuant to the Federal Tort Claims Act (after exhausting the administrative claim process with the VA). These measures will set the right incentives for the VA medical centers across the country and help our veterans realize their well-earned entitlement to medical care.

The Law Of Breast Cancer

May 28, 2014

Mammarella v. Evantash — A.3d —-, 2014 WL 1945621 (Del. 2014)

During an annual mammogram screening for breast cancer, the radiologist detects a nodule in the patient’s breast. The nodule is large enough to require a biopsy, but the radiologist prefers to schedule a follow-up appointment with the patient for six months later. This appointment reveals that the nodule had grown and the radiologist refers the patient to a biopsy. The biopsy is carried out four days later by a surgeon. The surgeon determines that the nodule was malignant and diagnoses the patient with breast cancer. The patient consults two breast cancer specialists who unanimously recommend mastectomy and chemotherapy. These procedures and the ancillary treatments prove successful. They make the patient cancer free in one year. The chemotherapy caused the patient to experience hair loss, pain, nausea, headaches and fatigue, but all these symptoms are now gone as well.

The patient is happy with the result but is still upset. She believes that a timely discovery of her cancer would have given her a far less painful and less disfiguring treatment option: lumpectomy followed by radiation therapy.

Can the patient successfully sue the negligent radiologist?

Unfortunately, she cannot. The patient cannot prove that the delay in biopsy caused her any harm or even increased her chances to develop a more severe form of cancer. There is no way to go back in time and evaluate the pathology of the nodule that appeared on the mammogram at the patient’s initial screening. Nor is it possible to tell whether an immediate biopsy would have shown that the nodule was malignant. Medical experts therefore cannot support the plaintiff’s causation claim to a reasonable degree of medical probability. Any support they can give to that claim would be nothing but speculative. For that reason, the plaintiff’s suit is doomed to fail even in the states that relax the causation requirements for patients who endured medical malpractice. The most recent statement of this “law of breast cancer” came two weeks ago from Delaware’s Supreme Court in Mammarella v. Evantash — A.3d —-, 2014 WL 1945621 (Del. 2014).

This law isn’t good: it creates a safe harbor for negligent radiologists while shifting the consequences of uncertainty to the wronged patient. For that reason, it was rejected by Israeli courts. These courts follow the “evidential damage” doctrine developed by Ariel Porat and myself in Tort Liability Under Uncertainty (Oxford University Press, 2001) and other writings. Under this doctrine, the radiologist should bear the legal consequences of the uncertain pathology because he created it by his negligence. This negligence denied the patient the much-needed information about the nodule in her breast. For that reason, the court must shift the burden of proof to the radiologist. The radiologist should pay for the patient’s damage unless he proves that his negligence caused no harm to the patient.

In a case involving roughly similar facts, the Jerusalem District Court held that the aggrieved patient was entitled to a presumption that her cancer had grown as fast as in the worst scenario reported by medical experts. Based on this presumption, the court calculated the tumor’s size backwards and estimated that it was small enough to give the patient an excellent chance to recover from her breast cancer, given proper treatment. C.A. 733/91, Sharvit v. Shaarey Zedek Hospital.

American courts should adopt the same approach. All they need to do in order to fix the bad law of breast cancer is expand the “spoliation of evidence” doctrine. Patients should not suffer from the loss of information resulting from their doctors’ negligence.

Fixing California’s Tort Reform

May 17, 2014

California’s referendum initiative to make an inflation-based adjustment to the state’s 39-years old $250,000 cap on noneconomic damages for medical malpractice moves forward. See here.

The California Medical Association (CMA) unsurprisingly opposes this initiative. According to CMA, “The $250,000 cap on non-economic damages is an effective way of limiting frivolous lawsuits.”

This is hilarious. I am yet to see a frivolous plaintiff who looks down at a $250,000 windfall. Discouraging frivolous suits by capping noneconomic compensation is as good as deterring hypochondriacs and malingerers by kicking them out of the doctor’s office after five consecutive visits. The best way to deter frivolous medical-malpractice suits is to set up a categorical rule that requires plaintiffs to file an affidavit from a qualified medical expert that verifies the complaint against the defendant physician by specifying her deviation from the medical profession’s practices and protocols. This suit-screening rule has proven most effective both in theory and as an empirical matter. Unlike many other states, California has not yet implemented it, though. Therefore, instead of trying to defend California’s unreasonable cap, CMA will do well to urge the legislature to implement this rule.

The $250,000 limit on noneconomic compensation is arbitrary and unconscionable. When John Doe is killed while crossing the street on a green light, his widow will recover from the reckless driver $1M or a close amount for her lost consortium. Why should she recover less money when her husband is killed by a reckless doctor who forgot to take a biopsy and allowed John to develop incurable cancer?

Two months ago, the Florida Supreme Court decided that Florida’s $1M cap on noneconomic damages for a patient’s wrongful death violates equal protection. For my discussion of that important decision, see here. This decision is remarkable in its reliance on empirical research that discredits the factual claims underlying the tort reform. I estimate that this decision will be used to revive constitutional attacks on the caps in other states as well. California’s $250,000 cap is particularly vulnerable to this renewed attack.

Suits against labs for failure to identify illness or genetic disorder sound in ordinary negligence rather than medical malpractice

May 9, 2014

Ho–Rath v. Rhode Island Hospital, — A.3d —, 2014 WL 1765421 (R.I. 2014)

Last week, the Supreme Court of Rhode Island decided that suit against a lab for failure to identify illness or genetic disorder sounds in ordinary negligence and not in medical malpractice. The “ordinary negligence” sound is music to the plaintiffs’ ears: it exempts them from the statutory caps on damages, from the restrictive limitations and repose provisions, from demanding requirements for expert testimony, and from other procedural burdens. See here.

This ruling was based on Rhode Island’s statutory definition of healthcare provider. The Court held that this definition excludes labs because they do not treat patients and have a separate licensing system. In the case at hand, the Court’s ruling enabled the plaintiffs to toll the statute of limitations by invoking the broad undiscoverability exception not available in suits for medical malpractice.

Doctrinally, this precedent exposes labs to an increased prospect of tort liability, but I doubt that it will affect lab prices. The lab industry follows established protocols that minimize errors. Compliance with those protocols indicates adequate care that virtually guarantees the lab an immunity against suit. Also: the vast majority of lab errors result from mistakes made by clinicians and hospital administration. See here.