VI. John Kerry's Health Care Plan

Introduction

John Kerry is trying too hard to be everything to everyone. He is promising the moon and the stars but fails to articulate where the funding will come from (other than rolling back Bush's tax cuts). In theory, John Kerry's plan would be great. Kerry proposes having the federal government act in an umbrella capacity (i.e. having the government subsidize high cost medical claims) for employers providing insurance; he proposes giving all Americans access to Congress' health care plan; he plans to reduce frivolous claims by implementing a certification program; he proposes tax credits to certain small business employers who offer health insurance covering low to moderate income workers; and he plans to hold HMO's accountable for harm caused by denying patients necessary medical care. Kerry's plan is not feasible without substantial tax increases and will not significantly curb the trend of rising health care costs.

John Kerry's plan is interesting because it contains an obvious fundamental contradiction where Kerry cites frivolous claims as a problem (i.e. wants to implement a certification program) and then in the next breath he wants to hold HMO's accountable for harms caused by denying patients necessary medical care. Thus, his plan is looking to reduce litigation in one breath and increase litigation in the next. Today's post will focus on the problems with the certification program. Tomorrow's post will focus on the HMO accountability issue and its inconsistency with the certification program.

Certification Program

The certification program is intended to reduce the amount of frivolous malpractice claims. Kerry hopes to implement a federal medical certification agency that will review all medical malpractice claims and decide whether the claim is frivolous or not. In theory, the certification agency will be able to make this determination at less of a cost than a trial court could.

The problem with the certification program is that it will create a large federal bureaucracy that will ultimately raise the costs of all medical malpractice litigation. The first flaw in this program is the belief that there are a great amount of frivolous malpractice claims being filed (notice that tort reform makes this underlying assumption as well). A medical malpractice claim is extremely expensive to pursue all the way to trial. The cost of experts along with extensive discovery raises the costs of malpractice litigation well above the costs of other types of litigation. Therefore, an attorney will only aggressively litigate a malpractice case if they believe that a claim has merit. Yet, I am not naive enough to believe that there are not attorneys out there who will threaten litigation in the hopes of obtaining a quick settlement. The problem is that the certification program will not prevent lawyers from threatening litigation and it will raise the costs of bringing valid claims.

The certification program would require both the plaintiff and the defendant to proffer some evidence at an administrative hearing in order for the agency to make an informed decision (just reviewing the medical records would not be enough because of the complexity of malpractice cases). This would result in a sort of "mini-trial," thereby forcing the defendant doctor to gather evidence and formulate strategy to present a case. The "mini-trial will also inconvenience the doctor since he/she must take time out of his/her busy schedule to attend the hearing (along with any reputation damage incurred by claims). This "mini-trial" will create enough expense, inconvenience and reputation damage to force the doctors to settle minor frivolous claims just to avoid going to administrative hearing (much like employers will settle nuisance employment claims to avoid the expense associated with frivolous claims). Therefore, this system would have very little impact on the filing of frivolous claims in the pursuit of a quick buck.

Next, it needs to be determined whether the certification program is needed. The judicial system has a sort of built in certification program with summary judgment proceedings. Both summary judgment proceedings and administrative hearings would require about the same level of evidence and legal strategy to enable the decision-maker to formulate an informed decision about the frivolousness of the claim (note that in both cases a question of fact would ultimately go to trial). The only advantage that the administrative hearing would have over the summary judgment process is that the decision-maker in an administrative hearing would have a background in medical care. This is a big advantage over a regular judge but the advantage could be better accomplished by creating special regional malpractice courts where the trial judges have background in medicine (much like the court of chancery in Delaware for corporate law).

(It is important to note here that stiffer rule 11 sanctions against attorneys would also reduce the amount of frivolous claims being pursued in the judicial system)

The next problem with the certification program is the Due Process issues involved. To get over the Due Process hurdle the certification program would probably have to implement an appeals procedure. Once an appeals procedure is implemented, how much actual savings are being created? If a client truly feels that they have been wronged, they will appeal the negative agency ruling to a court. The court will then have to conduct a trial to make its determination (unless the administrative agency is given discretion to make broad findings of fact. But discretion to make broad findings of fact would greatly increase the costs of the administrative hearing). Therefore, a full court proceeding will have to occur somewhere along the line for an adequate determination to be made. This will not reduce the doctor's liability of costs in defending frivolous claims.

Another problem with the certification program is that it will raise the costs of bringing and defending malpractice claims with merit. The administrative hearing would add another proceeding to the judicial system, thereby raising the costs of litigating a malpractice claim. By raising the costs of defense, the certification program may actually raise the costs of malpractice insurance since the insurer will be called on to defend the action at both the administrative level along with all levels pursued in the judicial system.

For evidence that the certification program would ultimately fail in its goal of reducing frivolous claims one has to look no further than the field of employment law. If the certification program is implemented in a loose structure in an attempt to reduce the costs of defending such claims, then access to the program will become too easy (much like the EEOC). Once access becomes easy, attorneys will have another weapon to induce settlement of frivolous claims since the threat of bringing action becomes very real because the barrier to entry is lower. Thus, no matter how frivolous the claim is, there will always be an incentive to settle since the doctor will be forced to defend the claim (much like an employer will settle many frivolous employment claims because the costs of the nuisance are greater than the costs of settlement). If the certification structure has a rigid structure, then the process would look very "trial like" thereby not reducing the costs associated with defending the claim. In all, I believe the certification program would have very little impact on the amount of frivolous claims being brought and the potential dangers of such a program are great. The reduction of frivolous claims can better be achieved through other means.

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