S. Y. Tan, MD, JD

Question: Which of the following is likely to run afoul of antitrust laws?

A. A medical center in a big city buys the practices of several retiring doctors.

B. The only two hospitals in a rural area agree to merge to integrate better delivery of health care at lower cost.

C. A medical association’s president advises members of the drawbacks of a new managed care health plan.

D. All of the above.

E. None of the above.

Answer: B. Choice B constitutes illegal monopolization, whereas A is not likely to wield market power and C, without more, does not amount to a boycott. This article, the last in the series on health care antitrust, will showcase several cases illustrative of recurring themes such as the "state action doctrine," exclusive dealings, and mergers.

One broad category of cases concerns the so-called "state action doctrine," which confers antitrust immunity to all state governmental agencies.

For doctors, the most dramatic example is probably Patrick v. Burget (108 S. Ct. 1658 [1988]), an adverse peer review action against a physician who challenged it as nothing less than an anticompetitive ploy. In 1973, Dr. Timothy Patrick, a surgeon, chose to leave the Astoria Clinic in Oregon to establish an independent practice in general and vascular surgery. He continued to have staff privileges at Columbia Memorial Hospital, Astoria, but experienced refusal of professional dealings by former colleagues who were still at the clinic. One of them lodged a complaint that Dr. Patrick had left a patient unattended following surgery. In due course, the hospital medical staff voted to revoke his privileges because of substandard care.

Dr. Patrick’s lawsuit alleged that the staff’s true purpose was to eliminate him as a competitor, rather than to improve quality. The U.S. Court of Appeals for the Ninth Circuit found that the state of Oregon had articulated a policy in favor of peer review and had supervised the process. It therefore held that the "state action doctrine" exemption protected the hospital staff from antitrust liability even if the peer review proceedings were abused to disadvantage a competitor.

However, in a unanimous decision, the U.S. Supreme Court reversed, finding that the "active supervision" requirement was not satisfied, because that required Oregon to exercise ultimate control over the conduct of peer review, not simply some state involvement or monitoring. The state’s agencies were the Oregon Board of Medical Examiners and the Health Division, neither of which had the authority to expressly supervise the peer review process.

In a recent merger case, Federal Trade Commission v. Phoebe Putney Health System Inc. (133 S. Ct. 1003 [2013]) the U.S. Supreme Court again refuted the use of the "state action doctrine" defense.

The state of Georgia had claimed immunity when county-owned Phoebe Putney Memorial Hospital, Albany, Ga., made a bid to purchase Palmyra Park Hospital, also in Albany, its chief competitor. The Eleventh Circuit acknowledged that the challenged transaction would substantially lessen competition. However, the court reasoned that the transaction was exempted from the antitrust laws because the legislature, under the Georgia Hospital Authorities Law, had given hospital authorities the power to acquire or lease out hospitals despite potential anticompetitive effects.

However, the U.S. Supreme Court disagreed and reversed, holding the doctrine inapplicable because the general grant of power to the hospital authority did not clearly articulate the state’s intent to restrict competition.

Another remarkable example of the "state action doctrine" at play is North Carolina State Board of Dental Examiners v. Federal Trade Commission (719 F.3d 359 [4th Cir. 2013]). The case, currently under appeal, deals with the North Carolina State Board of Dental Examiners’ (NCSBDE) actions to forbid nondentists from providing teeth-whitening services to the public at spas, salons, and various retail outlets. NCSBDE also urged mall owners not to lease space to such providers. The FTC argued that most of the board members were practicing dentists rather than state employees; so, for purposes of the antitrust laws, the NCSBDE should be deemed a private person rather than part of a state government. Because North Carolina did not actively supervise its actions, the NCSBDE could not hide behind the protection of the "state action doctrine."

The United States Court of Appeals for the Fourth Circuit sided with the FTC, holding that NCSBDE could not restrain competition through means such as the use of cease and desist letters. The U.S. Supreme Court has agreed to hear the case, which has major implications for the regulatory authority of professional licensing boards.

A different recurring antitrust issue concerns the exclusion of doctors from a provider network. In Little Rock Cardiology Clinic v. Baptist Health (591 F.3d 591 [8th Cir. 2009]), the Little Rock (Ark.) Cardiology Clinic sued Baptist Health for entering into an exclusive contract with Blue Cross/Blue Shield of Arkansas in order to monopolize the market for cardiac care services. However, the trial court as well as the U.S. Court of Appeals for the Eighth Circuit held that the complaint failed to identify the relevant geographic area, product, or service market, without which it was impossible to reach a finding of monopolization.

Can a professional organization advise its members of pitfalls or drawbacks of health care plans? In International Healthcare Management v. Hawaii Coalition for Health (332 F.3d 600 [9th Cir. 2003]), the Hawaii Medical Association (HMA), the state’s medical organization, was sued for allegedly organizing a boycott of two managed care organizations when it advised its doctor members of certain problems with the proposed provider contracts. HMA argued that it neither forged an agreement to act in concert nor encouraged its members to participate in any boycott. It won a summary judgment in the U.S. District Court dismissing the suit, which the U.S. Court of Appeals for the Ninth Circuit affirmed.

Finally, antitrust prosecutions may be expected to increase under Obamacare, which advocates the efficient integration and consolidation of quality health services to achieve health cost savings. Any action taken, however, must still pass antitrust scrutiny.

One scenario is the trend toward hospital acquisitions of physician practices. The case of Idaho’s St. Luke Health Systems, a nonprofit, six-hospital system based in Boise and the largest in the state, is a prime example.

In a recent decision, a federal judge sided with the FTC in blocking St. Luke’s Health System from acquiring the 40-doctor Saltzer Medical Group – an acquisition made in the name of better "integrated health care." The FTC had alleged that the merger would give St. Luke a nearly 60% share of the primary-care market, resulting in diminished competition among primary care physicians. Idaho’s attorney general, as well as two other competitor health systems in Boise, also joined in the suit.

The federal court ruled against St. Luke’s, claiming that there was a legal and less anticompetitive way to achieve its goal of improving health care delivery in the area. The acquisition had in fact taken place more than a year ago, and St. Luke’s is now left with the task of dismantling the acquisition.

Antitrust law is complex and difficult, some issues and results may appear surprising and counterintuitive, and penalties can be severe (such as treble damages). All business transactions including those that touch on health care should therefore proactively examine whether they illegally affect free market competition.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk," and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at siang@hawaii.edu.

Question: Which of the following is likely to run afoul of antitrust laws?

A. A medical center in a big city buys the practices of several retiring doctors.

B. The only two hospitals in a rural area agree to merge to integrate better delivery of health care at lower cost.

C. A medical association’s president advises members of the drawbacks of a new managed care health plan.

D. All of the above.

E. None of the above.

Answer: B. Choice B constitutes illegal monopolization, whereas A is not likely to wield market power and C, without more, does not amount to a boycott. This article, the last in the series on health care antitrust, will showcase several cases illustrative of recurring themes such as the "state action doctrine," exclusive dealings, and mergers.

One broad category of cases concerns the so-called "state action doctrine," which confers antitrust immunity to all state governmental agencies.

For doctors, the most dramatic example is probably Patrick v. Burget (108 S. Ct. 1658 [1988]), an adverse peer review action against a physician who challenged it as nothing less than an anticompetitive ploy. In 1973, Dr. Timothy Patrick, a surgeon, chose to leave the Astoria Clinic in Oregon to establish an independent practice in general and vascular surgery. He continued to have staff privileges at Columbia Memorial Hospital, Astoria, but experienced refusal of professional dealings by former colleagues who were still at the clinic. One of them lodged a complaint that Dr. Patrick had left a patient unattended following surgery. In due course, the hospital medical staff voted to revoke his privileges because of substandard care.

Dr. Patrick’s lawsuit alleged that the staff’s true purpose was to eliminate him as a competitor, rather than to improve quality. The U.S. Court of Appeals for the Ninth Circuit found that the state of Oregon had articulated a policy in favor of peer review and had supervised the process. It therefore held that the "state action doctrine" exemption protected the hospital staff from antitrust liability even if the peer review proceedings were abused to disadvantage a competitor.

However, in a unanimous decision, the U.S. Supreme Court reversed, finding that the "active supervision" requirement was not satisfied, because that required Oregon to exercise ultimate control over the conduct of peer review, not simply some state involvement or monitoring. The state’s agencies were the Oregon Board of Medical Examiners and the Health Division, neither of which had the authority to expressly supervise the peer review process.

In a recent merger case, Federal Trade Commission v. Phoebe Putney Health System Inc. (133 S. Ct. 1003 [2013]) the U.S. Supreme Court again refuted the use of the "state action doctrine" defense.

The state of Georgia had claimed immunity when county-owned Phoebe Putney Memorial Hospital, Albany, Ga., made a bid to purchase Palmyra Park Hospital, also in Albany, its chief competitor. The Eleventh Circuit acknowledged that the challenged transaction would substantially lessen competition. However, the court reasoned that the transaction was exempted from the antitrust laws because the legislature, under the Georgia Hospital Authorities Law, had given hospital authorities the power to acquire or lease out hospitals despite potential anticompetitive effects.

However, the U.S. Supreme Court disagreed and reversed, holding the doctrine inapplicable because the general grant of power to the hospital authority did not clearly articulate the state’s intent to restrict competition.

Another remarkable example of the "state action doctrine" at play is North Carolina State Board of Dental Examiners v. Federal Trade Commission (719 F.3d 359 [4th Cir. 2013]). The case, currently under appeal, deals with the North Carolina State Board of Dental Examiners’ (NCSBDE) actions to forbid nondentists from providing teeth-whitening services to the public at spas, salons, and various retail outlets. NCSBDE also urged mall owners not to lease space to such providers. The FTC argued that most of the board members were practicing dentists rather than state employees; so, for purposes of the antitrust laws, the NCSBDE should be deemed a private person rather than part of a state government. Because North Carolina did not actively supervise its actions, the NCSBDE could not hide behind the protection of the "state action doctrine."

The United States Court of Appeals for the Fourth Circuit sided with the FTC, holding that NCSBDE could not restrain competition through means such as the use of cease and desist letters. The U.S. Supreme Court has agreed to hear the case, which has major implications for the regulatory authority of professional licensing boards.

A different recurring antitrust issue concerns the exclusion of doctors from a provider network. In Little Rock Cardiology Clinic v. Baptist Health (591 F.3d 591 [8th Cir. 2009]), the Little Rock (Ark.) Cardiology Clinic sued Baptist Health for entering into an exclusive contract with Blue Cross/Blue Shield of Arkansas in order to monopolize the market for cardiac care services. However, the trial court as well as the U.S. Court of Appeals for the Eighth Circuit held that the complaint failed to identify the relevant geographic area, product, or service market, without which it was impossible to reach a finding of monopolization.

Can a professional organization advise its members of pitfalls or drawbacks of health care plans? In International Healthcare Management v. Hawaii Coalition for Health (332 F.3d 600 [9th Cir. 2003]), the Hawaii Medical Association (HMA), the state’s medical organization, was sued for allegedly organizing a boycott of two managed care organizations when it advised its doctor members of certain problems with the proposed provider contracts. HMA argued that it neither forged an agreement to act in concert nor encouraged its members to participate in any boycott. It won a summary judgment in the U.S. District Court dismissing the suit, which the U.S. Court of Appeals for the Ninth Circuit affirmed.

Finally, antitrust prosecutions may be expected to increase under Obamacare, which advocates the efficient integration and consolidation of quality health services to achieve health cost savings. Any action taken, however, must still pass antitrust scrutiny.

One scenario is the trend toward hospital acquisitions of physician practices. The case of Idaho’s St. Luke Health Systems, a nonprofit, six-hospital system based in Boise and the largest in the state, is a prime example.

In a recent decision, a federal judge sided with the FTC in blocking St. Luke’s Health System from acquiring the 40-doctor Saltzer Medical Group – an acquisition made in the name of better "integrated health care." The FTC had alleged that the merger would give St. Luke a nearly 60% share of the primary-care market, resulting in diminished competition among primary care physicians. Idaho’s attorney general, as well as two other competitor health systems in Boise, also joined in the suit.

The federal court ruled against St. Luke’s, claiming that there was a legal and less anticompetitive way to achieve its goal of improving health care delivery in the area. The acquisition had in fact taken place more than a year ago, and St. Luke’s is now left with the task of dismantling the acquisition.

Antitrust law is complex and difficult, some issues and results may appear surprising and counterintuitive, and penalties can be severe (such as treble damages). All business transactions including those that touch on health care should therefore proactively examine whether they illegally affect free market competition.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk," and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at siang@hawaii.edu.

Question: Which of the following is likely to run afoul of antitrust laws?

A. A medical center in a big city buys the practices of several retiring doctors.

B. The only two hospitals in a rural area agree to merge to integrate better delivery of health care at lower cost.

C. A medical association’s president advises members of the drawbacks of a new managed care health plan.

D. All of the above.

E. None of the above.

Answer: B. Choice B constitutes illegal monopolization, whereas A is not likely to wield market power and C, without more, does not amount to a boycott. This article, the last in the series on health care antitrust, will showcase several cases illustrative of recurring themes such as the "state action doctrine," exclusive dealings, and mergers.

One broad category of cases concerns the so-called "state action doctrine," which confers antitrust immunity to all state governmental agencies.

For doctors, the most dramatic example is probably Patrick v. Burget (108 S. Ct. 1658 [1988]), an adverse peer review action against a physician who challenged it as nothing less than an anticompetitive ploy. In 1973, Dr. Timothy Patrick, a surgeon, chose to leave the Astoria Clinic in Oregon to establish an independent practice in general and vascular surgery. He continued to have staff privileges at Columbia Memorial Hospital, Astoria, but experienced refusal of professional dealings by former colleagues who were still at the clinic. One of them lodged a complaint that Dr. Patrick had left a patient unattended following surgery. In due course, the hospital medical staff voted to revoke his privileges because of substandard care.

Dr. Patrick’s lawsuit alleged that the staff’s true purpose was to eliminate him as a competitor, rather than to improve quality. The U.S. Court of Appeals for the Ninth Circuit found that the state of Oregon had articulated a policy in favor of peer review and had supervised the process. It therefore held that the "state action doctrine" exemption protected the hospital staff from antitrust liability even if the peer review proceedings were abused to disadvantage a competitor.

However, in a unanimous decision, the U.S. Supreme Court reversed, finding that the "active supervision" requirement was not satisfied, because that required Oregon to exercise ultimate control over the conduct of peer review, not simply some state involvement or monitoring. The state’s agencies were the Oregon Board of Medical Examiners and the Health Division, neither of which had the authority to expressly supervise the peer review process.

In a recent merger case, Federal Trade Commission v. Phoebe Putney Health System Inc. (133 S. Ct. 1003 [2013]) the U.S. Supreme Court again refuted the use of the "state action doctrine" defense.

The state of Georgia had claimed immunity when county-owned Phoebe Putney Memorial Hospital, Albany, Ga., made a bid to purchase Palmyra Park Hospital, also in Albany, its chief competitor. The Eleventh Circuit acknowledged that the challenged transaction would substantially lessen competition. However, the court reasoned that the transaction was exempted from the antitrust laws because the legislature, under the Georgia Hospital Authorities Law, had given hospital authorities the power to acquire or lease out hospitals despite potential anticompetitive effects.

However, the U.S. Supreme Court disagreed and reversed, holding the doctrine inapplicable because the general grant of power to the hospital authority did not clearly articulate the state’s intent to restrict competition.

Another remarkable example of the "state action doctrine" at play is North Carolina State Board of Dental Examiners v. Federal Trade Commission (719 F.3d 359 [4th Cir. 2013]). The case, currently under appeal, deals with the North Carolina State Board of Dental Examiners’ (NCSBDE) actions to forbid nondentists from providing teeth-whitening services to the public at spas, salons, and various retail outlets. NCSBDE also urged mall owners not to lease space to such providers. The FTC argued that most of the board members were practicing dentists rather than state employees; so, for purposes of the antitrust laws, the NCSBDE should be deemed a private person rather than part of a state government. Because North Carolina did not actively supervise its actions, the NCSBDE could not hide behind the protection of the "state action doctrine."

The United States Court of Appeals for the Fourth Circuit sided with the FTC, holding that NCSBDE could not restrain competition through means such as the use of cease and desist letters. The U.S. Supreme Court has agreed to hear the case, which has major implications for the regulatory authority of professional licensing boards.

A different recurring antitrust issue concerns the exclusion of doctors from a provider network. In Little Rock Cardiology Clinic v. Baptist Health (591 F.3d 591 [8th Cir. 2009]), the Little Rock (Ark.) Cardiology Clinic sued Baptist Health for entering into an exclusive contract with Blue Cross/Blue Shield of Arkansas in order to monopolize the market for cardiac care services. However, the trial court as well as the U.S. Court of Appeals for the Eighth Circuit held that the complaint failed to identify the relevant geographic area, product, or service market, without which it was impossible to reach a finding of monopolization.

Can a professional organization advise its members of pitfalls or drawbacks of health care plans? In International Healthcare Management v. Hawaii Coalition for Health (332 F.3d 600 [9th Cir. 2003]), the Hawaii Medical Association (HMA), the state’s medical organization, was sued for allegedly organizing a boycott of two managed care organizations when it advised its doctor members of certain problems with the proposed provider contracts. HMA argued that it neither forged an agreement to act in concert nor encouraged its members to participate in any boycott. It won a summary judgment in the U.S. District Court dismissing the suit, which the U.S. Court of Appeals for the Ninth Circuit affirmed.

Finally, antitrust prosecutions may be expected to increase under Obamacare, which advocates the efficient integration and consolidation of quality health services to achieve health cost savings. Any action taken, however, must still pass antitrust scrutiny.

One scenario is the trend toward hospital acquisitions of physician practices. The case of Idaho’s St. Luke Health Systems, a nonprofit, six-hospital system based in Boise and the largest in the state, is a prime example.

In a recent decision, a federal judge sided with the FTC in blocking St. Luke’s Health System from acquiring the 40-doctor Saltzer Medical Group – an acquisition made in the name of better "integrated health care." The FTC had alleged that the merger would give St. Luke a nearly 60% share of the primary-care market, resulting in diminished competition among primary care physicians. Idaho’s attorney general, as well as two other competitor health systems in Boise, also joined in the suit.

The federal court ruled against St. Luke’s, claiming that there was a legal and less anticompetitive way to achieve its goal of improving health care delivery in the area. The acquisition had in fact taken place more than a year ago, and St. Luke’s is now left with the task of dismantling the acquisition.

Antitrust law is complex and difficult, some issues and results may appear surprising and counterintuitive, and penalties can be severe (such as treble damages). All business transactions including those that touch on health care should therefore proactively examine whether they illegally affect free market competition.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk," and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at siang@hawaii.edu.

Question: An 85-year-old woman with a hip fracture received a narcotic following open reduction and internal fixation. Over the first post-op hour, she received two intravenous doses of 0.5 mg Dilaudid (hydromorphone), followed by an additional 2 mg in divided doses over the next 4 hours. She sustained a cardiorespiratory arrest shortly thereafter. Which of the following statements is correct?

A. This is a likely case of opiate-induced respiratory arrest.

B. The dose of Dilaudid is relatively small and cannot be the cause of the arrest.

C. Monitoring of respiratory rate and pulse oximetry will always detect early opiate-induced respiratory depression.

D. This complication is unlikely to occur in previously healthy young adults.

E. Lawsuits over iatrogenic injuries are impossible to defend even if the doctor followed community standards regarding dosage, indication, and disclosure of risks.

Answer: A. Opiate-related complications typically occur in the first post-op day, and some physicians remain unaware of the updated guidelines regarding dosage reduction for Dilaudid.

For example, it has been recommended that the intravenous order for this drug be 0.2-0.6 mg every 2-3 hours for opiate-naive patients rather than the previous 1-2 mg every 2-4 hours. Respiratory depression is the feared complication; importantly, bradypnea and desaturation in those already on oxygen are late signs. Furthermore, seemingly healthy young adults may succumb, especially where there is the concurrent use of alcohol or other CNS-modifying drugs.

Preventable adverse injuries from medication errors are a common phenomenon, estimated by the Institute of Medicine to occur in at least 1.5 million cases in the United States each year. Not all medication-related adverse events are the result of an error, as some are unforeseen or unavoidable. An effective defense for the prescribing doctor is to always adhere to community standards and document all relevant patient discussions.

Under the law of negligence, medication-related claims against the doctor require the plaintiff to prove deviation from the standard ordinarily expected under the circumstances. In addition, the patient has to show proximate causation, that is, the medication at issue both factually and legally caused the injury.

Thus, in a lower-court case in which the plaintiff suffered a perforated bowel purportedly from the use of cholestyramine and codeine that resulted in severe constipation from huge fecaliths, the doctor defendant was able to escape liability because the patient failed to exclude a barium enema procedure as the cause of the perforation.

Remember that disclosure of material treatment risks is always necessary, as well as documentation that such a discussion took place and that the patient understood and accepted the risks. The required level of disclosure may vary from jurisdiction to jurisdiction, but it is best to use the patient-centered standard, that is, what a reasonable person would want to know under the circumstances, rather than the physician-centered standard, which stands for what a reasonable doctor would disclose.

One class of drugs – opiates – bears highlighting. The therapeutic window for these drugs is narrow. The doctor should always consider accidental or deliberate overdosing, especially in the elderly, drug abusers, or those using alcohol or other drugs – especially antidepressants. In 2010, nearly 40,000 deaths resulted from drug overdoses – three quarters of the overdoses being unintentional and 17% suicidal (JAMA 2013;309:657-9). Most were from prescription drugs.

The presence of comorbid states such as cardiorespiratory disease, hypothyroidism, and renal insufficiency can also predispose to opiate-related respiratory depression.

Doctors should take a detailed and careful drug history, especially in those patients exhibiting drug-seeking behavior. Another caveat is to avoid all online prescriptions, in particular for controlled substances. Both disciplinary actions as well as potential criminal sanctions may visit the professional who is prescribing over the Internet without an established doctor-patient relationship, or where the prescription is filled in a state where the doctor is unlicensed.

Finally, recall that under the learned intermediary doctrine, the doctor, not the drug manufacturer, is liable for injuries arising out of prescription drug use. This doctrine was recently endorsed by the Supreme Court of Texas in Centocor Inc. v. Hamilton (372 S.W.3d 140 [2012]), where a lupus-like syndrome resulted from the use of infliximab (Remicade) in a woman with Crohn’s disease. All states have adopted this doctrine except for West Virginia and New Jersey, which provide for manufacturer liability where there is direct marketing of a product to consumers.

On the other hand, so-called strict liability theories for "defective" products have been repeatedly held to be inapplicable to doctors who, unlike manufacturers, are not usually considered to be sellers of the product. Strict liability is the basis for most product liability lawsuits, and all the plaintiff has to show is that the product is defective, that is, unreasonably dangerous with foreseeable consequences. No proof of fault or negligence is necessary.

Still, doctors would do well to distance themselves from companies with negligent standards. In the recent steroid-preparation scandal that led to fatal fungal meningitis in some 45 patients nationwide, some of the prescribing doctors now face lawsuits, the compounding pharmacy at issue having declared bankruptcy in the interim.

Dr. Tan is emeritus professor of medicine and a former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu.

Question: An 85-year-old woman with a hip fracture received a narcotic following open reduction and internal fixation. Over the first post-op hour, she received two intravenous doses of 0.5 mg Dilaudid (hydromorphone), followed by an additional 2 mg in divided doses over the next 4 hours. She sustained a cardiorespiratory arrest shortly thereafter. Which of the following statements is correct?

A. This is a likely case of opiate-induced respiratory arrest.

B. The dose of Dilaudid is relatively small and cannot be the cause of the arrest.

C. Monitoring of respiratory rate and pulse oximetry will always detect early opiate-induced respiratory depression.

D. This complication is unlikely to occur in previously healthy young adults.

E. Lawsuits over iatrogenic injuries are impossible to defend even if the doctor followed community standards regarding dosage, indication, and disclosure of risks.

Answer: A. Opiate-related complications typically occur in the first post-op day, and some physicians remain unaware of the updated guidelines regarding dosage reduction for Dilaudid.

For example, it has been recommended that the intravenous order for this drug be 0.2-0.6 mg every 2-3 hours for opiate-naive patients rather than the previous 1-2 mg every 2-4 hours. Respiratory depression is the feared complication; importantly, bradypnea and desaturation in those already on oxygen are late signs. Furthermore, seemingly healthy young adults may succumb, especially where there is the concurrent use of alcohol or other CNS-modifying drugs.

Preventable adverse injuries from medication errors are a common phenomenon, estimated by the Institute of Medicine to occur in at least 1.5 million cases in the United States each year. Not all medication-related adverse events are the result of an error, as some are unforeseen or unavoidable. An effective defense for the prescribing doctor is to always adhere to community standards and document all relevant patient discussions.

Under the law of negligence, medication-related claims against the doctor require the plaintiff to prove deviation from the standard ordinarily expected under the circumstances. In addition, the patient has to show proximate causation, that is, the medication at issue both factually and legally caused the injury.

Thus, in a lower-court case in which the plaintiff suffered a perforated bowel purportedly from the use of cholestyramine and codeine that resulted in severe constipation from huge fecaliths, the doctor defendant was able to escape liability because the patient failed to exclude a barium enema procedure as the cause of the perforation.

Remember that disclosure of material treatment risks is always necessary, as well as documentation that such a discussion took place and that the patient understood and accepted the risks. The required level of disclosure may vary from jurisdiction to jurisdiction, but it is best to use the patient-centered standard, that is, what a reasonable person would want to know under the circumstances, rather than the physician-centered standard, which stands for what a reasonable doctor would disclose.

One class of drugs – opiates – bears highlighting. The therapeutic window for these drugs is narrow. The doctor should always consider accidental or deliberate overdosing, especially in the elderly, drug abusers, or those using alcohol or other drugs – especially antidepressants. In 2010, nearly 40,000 deaths resulted from drug overdoses – three quarters of the overdoses being unintentional and 17% suicidal (JAMA 2013;309:657-9). Most were from prescription drugs.

The presence of comorbid states such as cardiorespiratory disease, hypothyroidism, and renal insufficiency can also predispose to opiate-related respiratory depression.

Doctors should take a detailed and careful drug history, especially in those patients exhibiting drug-seeking behavior. Another caveat is to avoid all online prescriptions, in particular for controlled substances. Both disciplinary actions as well as potential criminal sanctions may visit the professional who is prescribing over the Internet without an established doctor-patient relationship, or where the prescription is filled in a state where the doctor is unlicensed.

Finally, recall that under the learned intermediary doctrine, the doctor, not the drug manufacturer, is liable for injuries arising out of prescription drug use. This doctrine was recently endorsed by the Supreme Court of Texas in Centocor Inc. v. Hamilton (372 S.W.3d 140 [2012]), where a lupus-like syndrome resulted from the use of infliximab (Remicade) in a woman with Crohn’s disease. All states have adopted this doctrine except for West Virginia and New Jersey, which provide for manufacturer liability where there is direct marketing of a product to consumers.

On the other hand, so-called strict liability theories for "defective" products have been repeatedly held to be inapplicable to doctors who, unlike manufacturers, are not usually considered to be sellers of the product. Strict liability is the basis for most product liability lawsuits, and all the plaintiff has to show is that the product is defective, that is, unreasonably dangerous with foreseeable consequences. No proof of fault or negligence is necessary.

Still, doctors would do well to distance themselves from companies with negligent standards. In the recent steroid-preparation scandal that led to fatal fungal meningitis in some 45 patients nationwide, some of the prescribing doctors now face lawsuits, the compounding pharmacy at issue having declared bankruptcy in the interim.

Dr. Tan is emeritus professor of medicine and a former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu.

Question: An 85-year-old woman with a hip fracture received a narcotic following open reduction and internal fixation. Over the first post-op hour, she received two intravenous doses of 0.5 mg Dilaudid (hydromorphone), followed by an additional 2 mg in divided doses over the next 4 hours. She sustained a cardiorespiratory arrest shortly thereafter. Which of the following statements is correct?

A. This is a likely case of opiate-induced respiratory arrest.

B. The dose of Dilaudid is relatively small and cannot be the cause of the arrest.

C. Monitoring of respiratory rate and pulse oximetry will always detect early opiate-induced respiratory depression.

D. This complication is unlikely to occur in previously healthy young adults.

E. Lawsuits over iatrogenic injuries are impossible to defend even if the doctor followed community standards regarding dosage, indication, and disclosure of risks.

Answer: A. Opiate-related complications typically occur in the first post-op day, and some physicians remain unaware of the updated guidelines regarding dosage reduction for Dilaudid.

For example, it has been recommended that the intravenous order for this drug be 0.2-0.6 mg every 2-3 hours for opiate-naive patients rather than the previous 1-2 mg every 2-4 hours. Respiratory depression is the feared complication; importantly, bradypnea and desaturation in those already on oxygen are late signs. Furthermore, seemingly healthy young adults may succumb, especially where there is the concurrent use of alcohol or other CNS-modifying drugs.

Preventable adverse injuries from medication errors are a common phenomenon, estimated by the Institute of Medicine to occur in at least 1.5 million cases in the United States each year. Not all medication-related adverse events are the result of an error, as some are unforeseen or unavoidable. An effective defense for the prescribing doctor is to always adhere to community standards and document all relevant patient discussions.

Under the law of negligence, medication-related claims against the doctor require the plaintiff to prove deviation from the standard ordinarily expected under the circumstances. In addition, the patient has to show proximate causation, that is, the medication at issue both factually and legally caused the injury.

Thus, in a lower-court case in which the plaintiff suffered a perforated bowel purportedly from the use of cholestyramine and codeine that resulted in severe constipation from huge fecaliths, the doctor defendant was able to escape liability because the patient failed to exclude a barium enema procedure as the cause of the perforation.

Remember that disclosure of material treatment risks is always necessary, as well as documentation that such a discussion took place and that the patient understood and accepted the risks. The required level of disclosure may vary from jurisdiction to jurisdiction, but it is best to use the patient-centered standard, that is, what a reasonable person would want to know under the circumstances, rather than the physician-centered standard, which stands for what a reasonable doctor would disclose.

One class of drugs – opiates – bears highlighting. The therapeutic window for these drugs is narrow. The doctor should always consider accidental or deliberate overdosing, especially in the elderly, drug abusers, or those using alcohol or other drugs – especially antidepressants. In 2010, nearly 40,000 deaths resulted from drug overdoses – three quarters of the overdoses being unintentional and 17% suicidal (JAMA 2013;309:657-9). Most were from prescription drugs.

The presence of comorbid states such as cardiorespiratory disease, hypothyroidism, and renal insufficiency can also predispose to opiate-related respiratory depression.

Doctors should take a detailed and careful drug history, especially in those patients exhibiting drug-seeking behavior. Another caveat is to avoid all online prescriptions, in particular for controlled substances. Both disciplinary actions as well as potential criminal sanctions may visit the professional who is prescribing over the Internet without an established doctor-patient relationship, or where the prescription is filled in a state where the doctor is unlicensed.

Finally, recall that under the learned intermediary doctrine, the doctor, not the drug manufacturer, is liable for injuries arising out of prescription drug use. This doctrine was recently endorsed by the Supreme Court of Texas in Centocor Inc. v. Hamilton (372 S.W.3d 140 [2012]), where a lupus-like syndrome resulted from the use of infliximab (Remicade) in a woman with Crohn’s disease. All states have adopted this doctrine except for West Virginia and New Jersey, which provide for manufacturer liability where there is direct marketing of a product to consumers.

On the other hand, so-called strict liability theories for "defective" products have been repeatedly held to be inapplicable to doctors who, unlike manufacturers, are not usually considered to be sellers of the product. Strict liability is the basis for most product liability lawsuits, and all the plaintiff has to show is that the product is defective, that is, unreasonably dangerous with foreseeable consequences. No proof of fault or negligence is necessary.

Still, doctors would do well to distance themselves from companies with negligent standards. In the recent steroid-preparation scandal that led to fatal fungal meningitis in some 45 patients nationwide, some of the prescribing doctors now face lawsuits, the compounding pharmacy at issue having declared bankruptcy in the interim.

Dr. Tan is emeritus professor of medicine and a former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu.

Question: Criticisms of the current tort system for compensating medical injuries include all of the following, except:

A. It’s a lottery-style system where worthy cases go uncompensated and some frivolous ones end up with windfall verdicts.

B. It is inefficient and raises medical costs.

C. The United States is about the only country with such an adversarial system, as other developed countries have adopted a no-fault approach.

D. Annual medical liability premiums can exceed $100,000 in high-risk specialties.

E. Defensive medicine is believed to be an adverse consequence of unbridled malpractice litigation.

Answer: C. Justice, compensation, and deterrence are the ostensible objectives of the tort system, but its use in litigating injuries arising out of medical treatment can lead to unfair and inefficient results.

Only relatively few injured people file actions, and they typically wait many years for resolution. Even with soaring insurance premiums, it has been said that the system returns some 28 cents of every insurance dollar to the victim, with the remainder gobbled up by legal, expert, and court fees and by profits and transactional overhead.

In some jurisdictions, high-risk specialists pay six-figure premiums for coverage. The fear of being sued leads to excessive testing, termed defensive medicine, and that adds to health care costs.¹

Still, the tort approach is used in most countries to resolve medical liability allegations, with the United States at the forefront of reform efforts to improve the system.

Tort reforms are nothing new. In the 1980s, the U.S. Attorney General’s Tort Policy Working Group released findings in strong support of tort reform. The group concluded that "while there are a number of factors underlying the insurance availability/affordability crisis, tort law is a major cause."

The best-known reform proposal is a cap on noneconomic losses such as pain and suffering, typically without abridging compensation for medical expenses and lost wages. The rationale is to provide some predictability because noneconomic damages are difficult to quantify and jury sympathy may result in unrealistically high payments. California was one of the pioneers in this area, and many others have since followed suit, including Florida, Illinois, Kansas, Missouri, and Texas. Statutory caps vary somewhat from state to state but are typically $250,000-$500,000.

Predictably, caps on damages have been challenged as a violation of equal protection and the patient’s right to a jury trial. By and large however, they have been upheld, as in California and, most recently, Texas and Kansas.

The California Supreme Court for example, ruled that reforms passed by the legislature in 1975 under its Medical Injury Compensation Reform Act (MICRA)² – which, among other measures, limits noneconomic recovery in medical negligence cases to $250,000 – are constitutional because they are rationally related to the legitimate legislative goal of reducing medical costs.

Other jurisdictions, however – notably Georgia and Missouri – have ruled them unconstitutional. In 2010, the Supreme Court of Illinois famously held that the state’s $500,000 cap for noneconomic damages violated the separation of powers doctrine.³

Notwithstanding arguments from trial lawyers and others, most doctors and insurers believe that limits on pain and suffering can reduce insurance premiums.

A 2004 study reported that states with caps evidence a loss ratio (losses plus costs over premiums) that is 12% lower than in those without damage caps.⁴ Lower premiums in turn are linked to greater physician entry into the locality, especially high-risk specialists. In addition, caps may have a salutary effect on the wasteful practice of defensive medicine. A 2007 report by the American Medical Association (AMA) confirmed and extended an earlier study that reached such conclusions.⁵

Screening panels and arbitration

Two other tort reforms that have seen good acceptance are the use of screening panels and arbitration.

Many states have set up screening panels, with the objective of weeding out frivolous or nuisance suits. Some are mandatory, as they are in Massachusetts, while others are optional, such as Alaska. In some states, such as New Hampshire, unanimous panel findings are admissible as evidence at a subsequent trial, whereas states like Hawaii do not allow panel findings in court.

A 2008 study commissioned by the AMA revealed that states with screening panels had 20% lower medical liability insurance rates, corresponding to lower claim costs.

Critics, however, contend that pretrial screening panels only prolong the litigation process and increase costs without substantial corresponding benefit. In Ohio, pretrial screening panels were tried and abandoned for these reasons.

In a recent New Hampshire case, the state Supreme Court allowed the jurors to hear the unanimous panel findings absolving a defendant alleged to have delayed making a diagnosis of meningitis. The court upheld the constitutionality of the statute and rejected the argument that such a screening process impermissibly encroaches on core judicial functions. ⁶

Mandatory or optional arbitration or mediation are sensible reform suggestions, as these methods of dispute resolution are less combative, more efficient, cheaper, and faster in bringing closure. Unfortunately, relatively few doctor-patient encounters incorporate a contract to submit disputes to arbitration, and these usually relate to disputes over fees rather than to injuries.

Other reform proposals that have been proposed include mandatory structured periodic payments in lieu of lump-sum payments, penalties for frivolous suits, shortened statutes of limitations, stricter standards for expert witnesses, making the "loser" pay all attorney fees and court costs, and limiting attorney contingency fees.

No-fault alternative?

Then there is the no-fault solution.⁷ In many instances, fault simply cannot be ascertained when an individual is injured during the course of medical treatment, as harm may be a natural and unavoidable consequence of the underlying illness or treatment. Medical no-fault must therefore embrace in some fashion the concept of compensating only avoidable injuries.

Herein lies the dilemma: How to identify the avoidable injury, or the so-called compensable event?

In 1974, New Zealand’s no-fault compensation system came into effect under its Accident Compensation Act. All accidental injuries, including medical injuries, were removed from the tort system and covered by this act. In practice, about 40% of malpractice claims were denied.

Because of escalating payout costs, however, a special Medical Misadventure Account was created in 1992 to specifically handle malpractice damages. Professional liability premiums, which are experience rated, fund this account.⁸

Under the initial scheme, injured patients did not have to prove fault but merely establish "medical, surgical, dental, or first aid misadventure." Although negligence was not necessary, what constituted medical misadventure was not defined. At the same time, the law stipulated that "not all medical negligence comes within the scope of medical misadventure," and common law tort actions for medical negligence remained available.

Despite this lack of both definitional and functional clarity, the Accident Compensation Commission was quite definite that it was not necessary to show negligence before a claim for medical misadventure would succeed.

However, the revised Act of 1992 now requires the claimant to show "medical error," which is defined as "the failure of a registered health professional to observe a standard of care and skill reasonably to be expected in the circumstances." With this definition, which is the legal language for negligence, the no-fault system of compensating medical injuries in New Zealand has effectively been subsumed by the fault-based tort system.

Fine-tuning no-fault insurance

At the height of the malpractice crisis in the 1970s, Jeffrey O’Connell, J.D., advanced a novel approach to address some of these no-fault concerns.⁹ His proposal gives the medical provider the option to tender payment to the patient for economic loss within 6 months of injury in exchange for foreclosure of future tort action by the injured victim. Compensation benefits for net economic loss include 100% of lost wages, replacement service loss, medical treatment expenses, and reasonable attorney’s fees. Noneconomic losses are not reimbursable, and payment is net of any benefits from collateral sources.

H.R. 5400, entitled the Alternative Medical Liability Act (AMLA), incorporated many of these features and came before the 98th U.S. Congress in 1984. Both the American Medical Association, which favors traditional tort reforms, and the Association of Trial Lawyers of America opposed the bill. The bill died in committee and was reintroduced the following year in the 99th Congress as the Medical Offer and Recovery Act, H.R. 3084. It was referred to five committees but no hearings were held. There has been no action on the proposal since.

The prognosis for comprehensive meaningful reform is guarded at best. It should be emphasized that not everyone believes the current tort system needs fixing.

As one observer put it nearly a decade ago: "Overall, the total payout for medical malpractice insurers in the United States is about $4 billion a year, which is about half of what we spend annually on cat and dog food."¹⁰

Dr. Tan is emeritus professor of medicine at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu. This column, "Law & Medicine," regularly appears in Internal Medicine News.

References

1. See Internal Medicine News, May 1, 2012, Defensive Medicine.

2. Medical Injury Compensation Reform Act of 1975, Cal. Civ. Proc. Code § 3333.2 (West 1982).

3. Lebron v. Gottlieb Mem’l Hosp., 930 N.E.2d 895 (Ill. 2010).

4. Kenneth E. Thorpe, The Medical Malpractice Crisis: Recent Trends and the Impact of State Tort Reforms, 4 Health Affairs 20 (2004).

5. American Medical Association Policy Research Perspectives: "The Impact of Liability Pressure and Caps on Damages on the Healthcare Market: An update of Recent Literature."

6. In Re: Petition of Southern New Hampshire Medical Center & a.

7. Tan, S.Y. The Medical Malpractice Crisis: Will No-Fault Cure the Disease? Univ. Haw. Law Rev. 9:241-274, 1987.

8. Gellhorn, W. Medical Malpractice Litigation (U.S.) Medical Mishap Compensation (N.Z.). Cornell L. Rev. 1988;73:170.

9. O’Connell, J. No-Fault Insurance for Injuries Arising from Medical Treatment: A Proposal for Elective Coverage. Emory L. J. 1975;24:21.

10. Doroshow, J. Are Caps the Answer to the Malpractice Crisis? Internal Medicine News, Dec. 1, 2004, p. 8.

Question: Criticisms of the current tort system for compensating medical injuries include all of the following, except:

A. It’s a lottery-style system where worthy cases go uncompensated and some frivolous ones end up with windfall verdicts.

B. It is inefficient and raises medical costs.

C. The United States is about the only country with such an adversarial system, as other developed countries have adopted a no-fault approach.

D. Annual medical liability premiums can exceed $100,000 in high-risk specialties.

E. Defensive medicine is believed to be an adverse consequence of unbridled malpractice litigation.

Answer: C. Justice, compensation, and deterrence are the ostensible objectives of the tort system, but its use in litigating injuries arising out of medical treatment can lead to unfair and inefficient results.

Only relatively few injured people file actions, and they typically wait many years for resolution. Even with soaring insurance premiums, it has been said that the system returns some 28 cents of every insurance dollar to the victim, with the remainder gobbled up by legal, expert, and court fees and by profits and transactional overhead.

In some jurisdictions, high-risk specialists pay six-figure premiums for coverage. The fear of being sued leads to excessive testing, termed defensive medicine, and that adds to health care costs.¹

Still, the tort approach is used in most countries to resolve medical liability allegations, with the United States at the forefront of reform efforts to improve the system.

Tort reforms are nothing new. In the 1980s, the U.S. Attorney General’s Tort Policy Working Group released findings in strong support of tort reform. The group concluded that "while there are a number of factors underlying the insurance availability/affordability crisis, tort law is a major cause."

The best-known reform proposal is a cap on noneconomic losses such as pain and suffering, typically without abridging compensation for medical expenses and lost wages. The rationale is to provide some predictability because noneconomic damages are difficult to quantify and jury sympathy may result in unrealistically high payments. California was one of the pioneers in this area, and many others have since followed suit, including Florida, Illinois, Kansas, Missouri, and Texas. Statutory caps vary somewhat from state to state but are typically $250,000-$500,000.

Predictably, caps on damages have been challenged as a violation of equal protection and the patient’s right to a jury trial. By and large however, they have been upheld, as in California and, most recently, Texas and Kansas.

The California Supreme Court for example, ruled that reforms passed by the legislature in 1975 under its Medical Injury Compensation Reform Act (MICRA)² – which, among other measures, limits noneconomic recovery in medical negligence cases to $250,000 – are constitutional because they are rationally related to the legitimate legislative goal of reducing medical costs.

Other jurisdictions, however – notably Georgia and Missouri – have ruled them unconstitutional. In 2010, the Supreme Court of Illinois famously held that the state’s $500,000 cap for noneconomic damages violated the separation of powers doctrine.³

Notwithstanding arguments from trial lawyers and others, most doctors and insurers believe that limits on pain and suffering can reduce insurance premiums.

A 2004 study reported that states with caps evidence a loss ratio (losses plus costs over premiums) that is 12% lower than in those without damage caps.⁴ Lower premiums in turn are linked to greater physician entry into the locality, especially high-risk specialists. In addition, caps may have a salutary effect on the wasteful practice of defensive medicine. A 2007 report by the American Medical Association (AMA) confirmed and extended an earlier study that reached such conclusions.⁵

Screening panels and arbitration

Two other tort reforms that have seen good acceptance are the use of screening panels and arbitration.

Many states have set up screening panels, with the objective of weeding out frivolous or nuisance suits. Some are mandatory, as they are in Massachusetts, while others are optional, such as Alaska. In some states, such as New Hampshire, unanimous panel findings are admissible as evidence at a subsequent trial, whereas states like Hawaii do not allow panel findings in court.

A 2008 study commissioned by the AMA revealed that states with screening panels had 20% lower medical liability insurance rates, corresponding to lower claim costs.

Critics, however, contend that pretrial screening panels only prolong the litigation process and increase costs without substantial corresponding benefit. In Ohio, pretrial screening panels were tried and abandoned for these reasons.

In a recent New Hampshire case, the state Supreme Court allowed the jurors to hear the unanimous panel findings absolving a defendant alleged to have delayed making a diagnosis of meningitis. The court upheld the constitutionality of the statute and rejected the argument that such a screening process impermissibly encroaches on core judicial functions. ⁶

Mandatory or optional arbitration or mediation are sensible reform suggestions, as these methods of dispute resolution are less combative, more efficient, cheaper, and faster in bringing closure. Unfortunately, relatively few doctor-patient encounters incorporate a contract to submit disputes to arbitration, and these usually relate to disputes over fees rather than to injuries.

Other reform proposals that have been proposed include mandatory structured periodic payments in lieu of lump-sum payments, penalties for frivolous suits, shortened statutes of limitations, stricter standards for expert witnesses, making the "loser" pay all attorney fees and court costs, and limiting attorney contingency fees.

No-fault alternative?

Then there is the no-fault solution.⁷ In many instances, fault simply cannot be ascertained when an individual is injured during the course of medical treatment, as harm may be a natural and unavoidable consequence of the underlying illness or treatment. Medical no-fault must therefore embrace in some fashion the concept of compensating only avoidable injuries.

Herein lies the dilemma: How to identify the avoidable injury, or the so-called compensable event?

In 1974, New Zealand’s no-fault compensation system came into effect under its Accident Compensation Act. All accidental injuries, including medical injuries, were removed from the tort system and covered by this act. In practice, about 40% of malpractice claims were denied.

Because of escalating payout costs, however, a special Medical Misadventure Account was created in 1992 to specifically handle malpractice damages. Professional liability premiums, which are experience rated, fund this account.⁸

Under the initial scheme, injured patients did not have to prove fault but merely establish "medical, surgical, dental, or first aid misadventure." Although negligence was not necessary, what constituted medical misadventure was not defined. At the same time, the law stipulated that "not all medical negligence comes within the scope of medical misadventure," and common law tort actions for medical negligence remained available.

Despite this lack of both definitional and functional clarity, the Accident Compensation Commission was quite definite that it was not necessary to show negligence before a claim for medical misadventure would succeed.

However, the revised Act of 1992 now requires the claimant to show "medical error," which is defined as "the failure of a registered health professional to observe a standard of care and skill reasonably to be expected in the circumstances." With this definition, which is the legal language for negligence, the no-fault system of compensating medical injuries in New Zealand has effectively been subsumed by the fault-based tort system.

Fine-tuning no-fault insurance

At the height of the malpractice crisis in the 1970s, Jeffrey O’Connell, J.D., advanced a novel approach to address some of these no-fault concerns.⁹ His proposal gives the medical provider the option to tender payment to the patient for economic loss within 6 months of injury in exchange for foreclosure of future tort action by the injured victim. Compensation benefits for net economic loss include 100% of lost wages, replacement service loss, medical treatment expenses, and reasonable attorney’s fees. Noneconomic losses are not reimbursable, and payment is net of any benefits from collateral sources.

H.R. 5400, entitled the Alternative Medical Liability Act (AMLA), incorporated many of these features and came before the 98th U.S. Congress in 1984. Both the American Medical Association, which favors traditional tort reforms, and the Association of Trial Lawyers of America opposed the bill. The bill died in committee and was reintroduced the following year in the 99th Congress as the Medical Offer and Recovery Act, H.R. 3084. It was referred to five committees but no hearings were held. There has been no action on the proposal since.

The prognosis for comprehensive meaningful reform is guarded at best. It should be emphasized that not everyone believes the current tort system needs fixing.

As one observer put it nearly a decade ago: "Overall, the total payout for medical malpractice insurers in the United States is about $4 billion a year, which is about half of what we spend annually on cat and dog food."¹⁰

Dr. Tan is emeritus professor of medicine at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu. This column, "Law & Medicine," regularly appears in Internal Medicine News.

References

1. See Internal Medicine News, May 1, 2012, Defensive Medicine.

2. Medical Injury Compensation Reform Act of 1975, Cal. Civ. Proc. Code § 3333.2 (West 1982).

3. Lebron v. Gottlieb Mem’l Hosp., 930 N.E.2d 895 (Ill. 2010).

4. Kenneth E. Thorpe, The Medical Malpractice Crisis: Recent Trends and the Impact of State Tort Reforms, 4 Health Affairs 20 (2004).

5. American Medical Association Policy Research Perspectives: "The Impact of Liability Pressure and Caps on Damages on the Healthcare Market: An update of Recent Literature."

6. In Re: Petition of Southern New Hampshire Medical Center & a.

7. Tan, S.Y. The Medical Malpractice Crisis: Will No-Fault Cure the Disease? Univ. Haw. Law Rev. 9:241-274, 1987.

8. Gellhorn, W. Medical Malpractice Litigation (U.S.) Medical Mishap Compensation (N.Z.). Cornell L. Rev. 1988;73:170.

9. O’Connell, J. No-Fault Insurance for Injuries Arising from Medical Treatment: A Proposal for Elective Coverage. Emory L. J. 1975;24:21.

10. Doroshow, J. Are Caps the Answer to the Malpractice Crisis? Internal Medicine News, Dec. 1, 2004, p. 8.

Question: Criticisms of the current tort system for compensating medical injuries include all of the following, except:

A. It’s a lottery-style system where worthy cases go uncompensated and some frivolous ones end up with windfall verdicts.

B. It is inefficient and raises medical costs.

C. The United States is about the only country with such an adversarial system, as other developed countries have adopted a no-fault approach.

D. Annual medical liability premiums can exceed $100,000 in high-risk specialties.

E. Defensive medicine is believed to be an adverse consequence of unbridled malpractice litigation.

Answer: C. Justice, compensation, and deterrence are the ostensible objectives of the tort system, but its use in litigating injuries arising out of medical treatment can lead to unfair and inefficient results.

Only relatively few injured people file actions, and they typically wait many years for resolution. Even with soaring insurance premiums, it has been said that the system returns some 28 cents of every insurance dollar to the victim, with the remainder gobbled up by legal, expert, and court fees and by profits and transactional overhead.

In some jurisdictions, high-risk specialists pay six-figure premiums for coverage. The fear of being sued leads to excessive testing, termed defensive medicine, and that adds to health care costs.¹

Still, the tort approach is used in most countries to resolve medical liability allegations, with the United States at the forefront of reform efforts to improve the system.

Tort reforms are nothing new. In the 1980s, the U.S. Attorney General’s Tort Policy Working Group released findings in strong support of tort reform. The group concluded that "while there are a number of factors underlying the insurance availability/affordability crisis, tort law is a major cause."

The best-known reform proposal is a cap on noneconomic losses such as pain and suffering, typically without abridging compensation for medical expenses and lost wages. The rationale is to provide some predictability because noneconomic damages are difficult to quantify and jury sympathy may result in unrealistically high payments. California was one of the pioneers in this area, and many others have since followed suit, including Florida, Illinois, Kansas, Missouri, and Texas. Statutory caps vary somewhat from state to state but are typically $250,000-$500,000.

Predictably, caps on damages have been challenged as a violation of equal protection and the patient’s right to a jury trial. By and large however, they have been upheld, as in California and, most recently, Texas and Kansas.

The California Supreme Court for example, ruled that reforms passed by the legislature in 1975 under its Medical Injury Compensation Reform Act (MICRA)² – which, among other measures, limits noneconomic recovery in medical negligence cases to $250,000 – are constitutional because they are rationally related to the legitimate legislative goal of reducing medical costs.

Other jurisdictions, however – notably Georgia and Missouri – have ruled them unconstitutional. In 2010, the Supreme Court of Illinois famously held that the state’s $500,000 cap for noneconomic damages violated the separation of powers doctrine.³

Notwithstanding arguments from trial lawyers and others, most doctors and insurers believe that limits on pain and suffering can reduce insurance premiums.

A 2004 study reported that states with caps evidence a loss ratio (losses plus costs over premiums) that is 12% lower than in those without damage caps.⁴ Lower premiums in turn are linked to greater physician entry into the locality, especially high-risk specialists. In addition, caps may have a salutary effect on the wasteful practice of defensive medicine. A 2007 report by the American Medical Association (AMA) confirmed and extended an earlier study that reached such conclusions.⁵

Screening panels and arbitration

Two other tort reforms that have seen good acceptance are the use of screening panels and arbitration.

Many states have set up screening panels, with the objective of weeding out frivolous or nuisance suits. Some are mandatory, as they are in Massachusetts, while others are optional, such as Alaska. In some states, such as New Hampshire, unanimous panel findings are admissible as evidence at a subsequent trial, whereas states like Hawaii do not allow panel findings in court.

A 2008 study commissioned by the AMA revealed that states with screening panels had 20% lower medical liability insurance rates, corresponding to lower claim costs.

Critics, however, contend that pretrial screening panels only prolong the litigation process and increase costs without substantial corresponding benefit. In Ohio, pretrial screening panels were tried and abandoned for these reasons.

In a recent New Hampshire case, the state Supreme Court allowed the jurors to hear the unanimous panel findings absolving a defendant alleged to have delayed making a diagnosis of meningitis. The court upheld the constitutionality of the statute and rejected the argument that such a screening process impermissibly encroaches on core judicial functions. ⁶

Mandatory or optional arbitration or mediation are sensible reform suggestions, as these methods of dispute resolution are less combative, more efficient, cheaper, and faster in bringing closure. Unfortunately, relatively few doctor-patient encounters incorporate a contract to submit disputes to arbitration, and these usually relate to disputes over fees rather than to injuries.

Other reform proposals that have been proposed include mandatory structured periodic payments in lieu of lump-sum payments, penalties for frivolous suits, shortened statutes of limitations, stricter standards for expert witnesses, making the "loser" pay all attorney fees and court costs, and limiting attorney contingency fees.

No-fault alternative?

Then there is the no-fault solution.⁷ In many instances, fault simply cannot be ascertained when an individual is injured during the course of medical treatment, as harm may be a natural and unavoidable consequence of the underlying illness or treatment. Medical no-fault must therefore embrace in some fashion the concept of compensating only avoidable injuries.

Herein lies the dilemma: How to identify the avoidable injury, or the so-called compensable event?

In 1974, New Zealand’s no-fault compensation system came into effect under its Accident Compensation Act. All accidental injuries, including medical injuries, were removed from the tort system and covered by this act. In practice, about 40% of malpractice claims were denied.

Because of escalating payout costs, however, a special Medical Misadventure Account was created in 1992 to specifically handle malpractice damages. Professional liability premiums, which are experience rated, fund this account.⁸

Under the initial scheme, injured patients did not have to prove fault but merely establish "medical, surgical, dental, or first aid misadventure." Although negligence was not necessary, what constituted medical misadventure was not defined. At the same time, the law stipulated that "not all medical negligence comes within the scope of medical misadventure," and common law tort actions for medical negligence remained available.

Despite this lack of both definitional and functional clarity, the Accident Compensation Commission was quite definite that it was not necessary to show negligence before a claim for medical misadventure would succeed.

However, the revised Act of 1992 now requires the claimant to show "medical error," which is defined as "the failure of a registered health professional to observe a standard of care and skill reasonably to be expected in the circumstances." With this definition, which is the legal language for negligence, the no-fault system of compensating medical injuries in New Zealand has effectively been subsumed by the fault-based tort system.

Fine-tuning no-fault insurance

At the height of the malpractice crisis in the 1970s, Jeffrey O’Connell, J.D., advanced a novel approach to address some of these no-fault concerns.⁹ His proposal gives the medical provider the option to tender payment to the patient for economic loss within 6 months of injury in exchange for foreclosure of future tort action by the injured victim. Compensation benefits for net economic loss include 100% of lost wages, replacement service loss, medical treatment expenses, and reasonable attorney’s fees. Noneconomic losses are not reimbursable, and payment is net of any benefits from collateral sources.

H.R. 5400, entitled the Alternative Medical Liability Act (AMLA), incorporated many of these features and came before the 98th U.S. Congress in 1984. Both the American Medical Association, which favors traditional tort reforms, and the Association of Trial Lawyers of America opposed the bill. The bill died in committee and was reintroduced the following year in the 99th Congress as the Medical Offer and Recovery Act, H.R. 3084. It was referred to five committees but no hearings were held. There has been no action on the proposal since.

The prognosis for comprehensive meaningful reform is guarded at best. It should be emphasized that not everyone believes the current tort system needs fixing.

As one observer put it nearly a decade ago: "Overall, the total payout for medical malpractice insurers in the United States is about $4 billion a year, which is about half of what we spend annually on cat and dog food."¹⁰

Dr. Tan is emeritus professor of medicine at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu. This column, "Law & Medicine," regularly appears in Internal Medicine News.

References

1. See Internal Medicine News, May 1, 2012, Defensive Medicine.

2. Medical Injury Compensation Reform Act of 1975, Cal. Civ. Proc. Code § 3333.2 (West 1982).

3. Lebron v. Gottlieb Mem’l Hosp., 930 N.E.2d 895 (Ill. 2010).

4. Kenneth E. Thorpe, The Medical Malpractice Crisis: Recent Trends and the Impact of State Tort Reforms, 4 Health Affairs 20 (2004).

5. American Medical Association Policy Research Perspectives: "The Impact of Liability Pressure and Caps on Damages on the Healthcare Market: An update of Recent Literature."

6. In Re: Petition of Southern New Hampshire Medical Center & a.

7. Tan, S.Y. The Medical Malpractice Crisis: Will No-Fault Cure the Disease? Univ. Haw. Law Rev. 9:241-274, 1987.

8. Gellhorn, W. Medical Malpractice Litigation (U.S.) Medical Mishap Compensation (N.Z.). Cornell L. Rev. 1988;73:170.

9. O’Connell, J. No-Fault Insurance for Injuries Arising from Medical Treatment: A Proposal for Elective Coverage. Emory L. J. 1975;24:21.

10. Doroshow, J. Are Caps the Answer to the Malpractice Crisis? Internal Medicine News, Dec. 1, 2004, p. 8.

Question: A patient in his 30s presented to Dr. C with atypical substernal chest pain. There was no family history of heart disease, he had no cardiac risk factors, and the examination was normal. Although the clinical picture was not that of myocardial ischemia, Dr. C obtained an EKG and serum creatine phosphokinase (CPK) and troponin levels, all of which were normal. In recent years, Dr. C, a cardiologist, has given up doing invasive procedures to reduce malpractice exposure. Which of the following is best?

A. The work-up of chest pain in this patient can be considered defensive medicine if it’s done primarily out of malpractice fear.

B. Questionnaire surveys generally conclude that virtually all doctors practice defensive medicine.

C. Giving up "high-risk" procedures purely for medicolegal reasons (malpractice concerns) is a form of defensive medicine.

D. There is controversy over what constitutes defensive medicine, how much it costs, and whether it is in fact widely practiced.

E. All are correct.

Answer: E. Almost all doctors admit they practice defensive medicine, which has been defined as "deviation from sound medical practice that is induced primarily by a threat of liability" (JAMA 2005;293:2609-17). Positive defensive medicine, centering on assurance behavior, provides additional services that are of no medical value. An example is obtaining a head CT in all cases of headaches. Negative defensive medicine speaks to avoidance behavior, with the doctor foregoing interventions that he or she perceives as increased malpractice risk, such as performing invasive procedures.

A 2003 survey of specialists in Pennsylvania found that 93% practiced defensive medicine. Assurance behavior – such as ordering tests, performing diagnostic procedures, and referring patients for consultation – was very common (92%). A particularly widespread defensive act was the use of imaging technology in clinically unnecessary circumstances. Avoidance of litigation-prone procedures and patients was also widespread. Forty-two percent of respondents reported that they had taken steps to restrict their practice in the previous 3 years including avoiding trauma surgery as well as patients with complex medical problems or who were perceived as litigious.

In a 2005 study, emergency physicians in the upper tertile of malpractice fear were found to use more diagnostic tests and were more likely to hospitalize patients at low risk for coronary artery disease (Ann. Emerg. Med. 2005;46:525-33).

Defensive medicine also was found to be widespread (83%) among 900 doctors in a survey recently conducted by the Massachusetts Medical Society.

It is widely believed that defensive medicine adds to the nation’s medical bill. By correlating professional liability insurance with cost of services, the AMA estimated that in the 1980s, defensive medicine cost $12.1-$13.7 billion each year (JAMA 1987;257:2776-81).

In an oft-cited study by Kessler and McClellan (Q. J. Econ. 1996;111:353-90), the authors measured the effects of malpractice liability reforms using data on elderly Medicare beneficiaries treated for serious heart disease and found that reforms that directly reduced provider liability pressure led to reductions of 5%-9% in medical expenditures. If such Medicare savings, which amounted to $600 million per year for cardiac disease, were extrapolated across the health care system, the total annual savings would amount to $50 billion. A more conservative study estimated that system-wide savings from aggressive malpractice reform would approach $41 billion over 5 years (J. Am. Health Policy 1994;4:7-15).

Skeptics, however, question the way the profession defines defensive medicine, pointing out that malpractice concerns may be one, but not the only or even the primary reason as most interventions add some marginal value to patient care. Besides, physicians in low litigious jurisdictions display similar behavior, for example, in Japan, where 98% of 131 gastroenterologists in Hiroshima admitted to the practice although only three (2%) respondents had been sued and most respondents (96%) had liability insurance (World J. Gastro. 2006;12:7671-5).

Above all, skeptics argue that there is no acceptable method for measuring the extent and use of defensive medicine, and survey reports are apt to be misleading because of bias and the lack of controls and baseline data.

Several reports challenge the belief that the practice of defensive medicine is widespread and therefore adds hugely to health care costs (J. Health Polit. Policy Law 1996;21:267-88).

The Klingman study used simulated clinical scenarios and concluded that the extent of defensive medicine was at most 8%. The study by Glassman et al. found no correlation between individual malpractice claims experience to use of resources among 835 physicians including internists. Nor did they find a correlation between malpractice claims experience and an individual physician’s concern about malpractice, tolerance for uncertainty or perception of risk.

Finally, in an interview of 29 physicians and 17 administrators about their use of the more expensive low-osmolar contrast agent and the cheaper high-osmolar agent, investigators found that clinical and cost concerns were more important than were the legal factors (J. Health Polit. Policy Law 1996;21:243-66).

They concluded that "clinical factors dominate the decision-making process, making it unlikely that a policy focus on reducing incentives for defensive medicine will substantially reduce health care costs."

Dr. Tan is an emeritus professor of medicine at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu.

Question: A patient in his 30s presented to Dr. C with atypical substernal chest pain. There was no family history of heart disease, he had no cardiac risk factors, and the examination was normal. Although the clinical picture was not that of myocardial ischemia, Dr. C obtained an EKG and serum creatine phosphokinase (CPK) and troponin levels, all of which were normal. In recent years, Dr. C, a cardiologist, has given up doing invasive procedures to reduce malpractice exposure. Which of the following is best?

A. The work-up of chest pain in this patient can be considered defensive medicine if it’s done primarily out of malpractice fear.

B. Questionnaire surveys generally conclude that virtually all doctors practice defensive medicine.

C. Giving up "high-risk" procedures purely for medicolegal reasons (malpractice concerns) is a form of defensive medicine.

D. There is controversy over what constitutes defensive medicine, how much it costs, and whether it is in fact widely practiced.

E. All are correct.

Answer: E. Almost all doctors admit they practice defensive medicine, which has been defined as "deviation from sound medical practice that is induced primarily by a threat of liability" (JAMA 2005;293:2609-17). Positive defensive medicine, centering on assurance behavior, provides additional services that are of no medical value. An example is obtaining a head CT in all cases of headaches. Negative defensive medicine speaks to avoidance behavior, with the doctor foregoing interventions that he or she perceives as increased malpractice risk, such as performing invasive procedures.

A 2003 survey of specialists in Pennsylvania found that 93% practiced defensive medicine. Assurance behavior – such as ordering tests, performing diagnostic procedures, and referring patients for consultation – was very common (92%). A particularly widespread defensive act was the use of imaging technology in clinically unnecessary circumstances. Avoidance of litigation-prone procedures and patients was also widespread. Forty-two percent of respondents reported that they had taken steps to restrict their practice in the previous 3 years including avoiding trauma surgery as well as patients with complex medical problems or who were perceived as litigious.

In a 2005 study, emergency physicians in the upper tertile of malpractice fear were found to use more diagnostic tests and were more likely to hospitalize patients at low risk for coronary artery disease (Ann. Emerg. Med. 2005;46:525-33).

Defensive medicine also was found to be widespread (83%) among 900 doctors in a survey recently conducted by the Massachusetts Medical Society.

It is widely believed that defensive medicine adds to the nation’s medical bill. By correlating professional liability insurance with cost of services, the AMA estimated that in the 1980s, defensive medicine cost $12.1-$13.7 billion each year (JAMA 1987;257:2776-81).

In an oft-cited study by Kessler and McClellan (Q. J. Econ. 1996;111:353-90), the authors measured the effects of malpractice liability reforms using data on elderly Medicare beneficiaries treated for serious heart disease and found that reforms that directly reduced provider liability pressure led to reductions of 5%-9% in medical expenditures. If such Medicare savings, which amounted to $600 million per year for cardiac disease, were extrapolated across the health care system, the total annual savings would amount to $50 billion. A more conservative study estimated that system-wide savings from aggressive malpractice reform would approach $41 billion over 5 years (J. Am. Health Policy 1994;4:7-15).

Skeptics, however, question the way the profession defines defensive medicine, pointing out that malpractice concerns may be one, but not the only or even the primary reason as most interventions add some marginal value to patient care. Besides, physicians in low litigious jurisdictions display similar behavior, for example, in Japan, where 98% of 131 gastroenterologists in Hiroshima admitted to the practice although only three (2%) respondents had been sued and most respondents (96%) had liability insurance (World J. Gastro. 2006;12:7671-5).

Above all, skeptics argue that there is no acceptable method for measuring the extent and use of defensive medicine, and survey reports are apt to be misleading because of bias and the lack of controls and baseline data.

Several reports challenge the belief that the practice of defensive medicine is widespread and therefore adds hugely to health care costs (J. Health Polit. Policy Law 1996;21:267-88).

The Klingman study used simulated clinical scenarios and concluded that the extent of defensive medicine was at most 8%. The study by Glassman et al. found no correlation between individual malpractice claims experience to use of resources among 835 physicians including internists. Nor did they find a correlation between malpractice claims experience and an individual physician’s concern about malpractice, tolerance for uncertainty or perception of risk.

Finally, in an interview of 29 physicians and 17 administrators about their use of the more expensive low-osmolar contrast agent and the cheaper high-osmolar agent, investigators found that clinical and cost concerns were more important than were the legal factors (J. Health Polit. Policy Law 1996;21:243-66).

They concluded that "clinical factors dominate the decision-making process, making it unlikely that a policy focus on reducing incentives for defensive medicine will substantially reduce health care costs."

Dr. Tan is an emeritus professor of medicine at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu.

Question: A patient in his 30s presented to Dr. C with atypical substernal chest pain. There was no family history of heart disease, he had no cardiac risk factors, and the examination was normal. Although the clinical picture was not that of myocardial ischemia, Dr. C obtained an EKG and serum creatine phosphokinase (CPK) and troponin levels, all of which were normal. In recent years, Dr. C, a cardiologist, has given up doing invasive procedures to reduce malpractice exposure. Which of the following is best?

A. The work-up of chest pain in this patient can be considered defensive medicine if it’s done primarily out of malpractice fear.

B. Questionnaire surveys generally conclude that virtually all doctors practice defensive medicine.

C. Giving up "high-risk" procedures purely for medicolegal reasons (malpractice concerns) is a form of defensive medicine.

D. There is controversy over what constitutes defensive medicine, how much it costs, and whether it is in fact widely practiced.

E. All are correct.

Answer: E. Almost all doctors admit they practice defensive medicine, which has been defined as "deviation from sound medical practice that is induced primarily by a threat of liability" (JAMA 2005;293:2609-17). Positive defensive medicine, centering on assurance behavior, provides additional services that are of no medical value. An example is obtaining a head CT in all cases of headaches. Negative defensive medicine speaks to avoidance behavior, with the doctor foregoing interventions that he or she perceives as increased malpractice risk, such as performing invasive procedures.

A 2003 survey of specialists in Pennsylvania found that 93% practiced defensive medicine. Assurance behavior – such as ordering tests, performing diagnostic procedures, and referring patients for consultation – was very common (92%). A particularly widespread defensive act was the use of imaging technology in clinically unnecessary circumstances. Avoidance of litigation-prone procedures and patients was also widespread. Forty-two percent of respondents reported that they had taken steps to restrict their practice in the previous 3 years including avoiding trauma surgery as well as patients with complex medical problems or who were perceived as litigious.

In a 2005 study, emergency physicians in the upper tertile of malpractice fear were found to use more diagnostic tests and were more likely to hospitalize patients at low risk for coronary artery disease (Ann. Emerg. Med. 2005;46:525-33).

Defensive medicine also was found to be widespread (83%) among 900 doctors in a survey recently conducted by the Massachusetts Medical Society.

It is widely believed that defensive medicine adds to the nation’s medical bill. By correlating professional liability insurance with cost of services, the AMA estimated that in the 1980s, defensive medicine cost $12.1-$13.7 billion each year (JAMA 1987;257:2776-81).

In an oft-cited study by Kessler and McClellan (Q. J. Econ. 1996;111:353-90), the authors measured the effects of malpractice liability reforms using data on elderly Medicare beneficiaries treated for serious heart disease and found that reforms that directly reduced provider liability pressure led to reductions of 5%-9% in medical expenditures. If such Medicare savings, which amounted to $600 million per year for cardiac disease, were extrapolated across the health care system, the total annual savings would amount to $50 billion. A more conservative study estimated that system-wide savings from aggressive malpractice reform would approach $41 billion over 5 years (J. Am. Health Policy 1994;4:7-15).

Skeptics, however, question the way the profession defines defensive medicine, pointing out that malpractice concerns may be one, but not the only or even the primary reason as most interventions add some marginal value to patient care. Besides, physicians in low litigious jurisdictions display similar behavior, for example, in Japan, where 98% of 131 gastroenterologists in Hiroshima admitted to the practice although only three (2%) respondents had been sued and most respondents (96%) had liability insurance (World J. Gastro. 2006;12:7671-5).

Above all, skeptics argue that there is no acceptable method for measuring the extent and use of defensive medicine, and survey reports are apt to be misleading because of bias and the lack of controls and baseline data.

Several reports challenge the belief that the practice of defensive medicine is widespread and therefore adds hugely to health care costs (J. Health Polit. Policy Law 1996;21:267-88).

The Klingman study used simulated clinical scenarios and concluded that the extent of defensive medicine was at most 8%. The study by Glassman et al. found no correlation between individual malpractice claims experience to use of resources among 835 physicians including internists. Nor did they find a correlation between malpractice claims experience and an individual physician’s concern about malpractice, tolerance for uncertainty or perception of risk.

Finally, in an interview of 29 physicians and 17 administrators about their use of the more expensive low-osmolar contrast agent and the cheaper high-osmolar agent, investigators found that clinical and cost concerns were more important than were the legal factors (J. Health Polit. Policy Law 1996;21:243-66).

They concluded that "clinical factors dominate the decision-making process, making it unlikely that a policy focus on reducing incentives for defensive medicine will substantially reduce health care costs."

Dr. Tan is an emeritus professor of medicine at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu.

Question: A 60-year-old postmenopausal woman was placed on 2.5 mg of prednisone daily for rheumatoid arthritis. Six months later, she developed back pain and was found to have an L4 vertebral fracture. She had not been warned that steroids could cause osteoporosis, and was not placed on supplemental calcium, vitamin D, or a bisphosphonate. In a lawsuit for negligence, which of the following is best?

A. Osteoporosis is an uncommon complication of glucocorticoid therapy, so there is no need to warn of this complication.

B. The incidence of glucocorticoid-induced osteoporosis can be reduced by decreasing the dose and/or duration of therapy, but not by adding a bisphosphonate.

C. To prevail in her lawsuit, the patient must show that it is the standard of care to use a bisphosphonate to treat all osteoporotic women.

D. The doctor’s defense may be to show that the vertebral fracture was caused by postmenopausal osteoporosis or rheumatoid arthritis rather than prednisone, as her steroid dose was not excessive and the period of exposure relatively short.

E. If she had been given alendronate and developed osteonecrosis of the jaw, she would have a cause of action against the doctor irrespective of whether she had been informed of this risk.

Answer: D. Osteoporotic fractures are a surprisingly common malpractice issue, with cases arising from failure to diagnose, warn, or treat. Postmenopausal women are at particular risk, but the condition can also affect men and certain patient groups such as those with rheumatoid arthritis or hypogonadism, or those taking long-term glucocorticoids. Pharmacologic doses of steroids can lead to bone loss and fractures, and can aggravate or cause other serious complications such as aseptic necrosis, diabetes, hypertension, and cataracts.

Fracture risk rises with increasingly higher steroid doses (equivalent of greater than 5-10 mg of prednisone daily) and duration of therapy (greater than 3-6 months). Recent studies indicate that a bisphosphonate added to oral calcium and vitamin D can significantly attenuate this risk, and its use has therefore been recommended in patients requiring long-term steroids.

In the above hypothetical, the plaintiff need not prove that it is the standard practice to treat all women at risk of osteoporosis with a bisphosphonate, just those on steroids. However, she received a relatively low dose, and there are other risk factors in her case. As a result, her doctor may be able to mount a defense.

In Weil v. Seltzer, a 1989 D.C. decision, Dr. Seltzer treated his patient, Dr. Weil, for more than 20 years with steroids, telling the patient that it was an antihistamine. The patient developed steroid complications, including blood pressure changes, infections, and hip and vertebral fractures. He died suddenly at age 54 from a saddle block embolism, which contained bone marrow fragments believed to have arisen from osteoporotic bone. Dr. Seltzer had ordered 1.3 million tablets of cortisone from 1980 to 1984. The defense raised legal arguments of contributory negligence, assumption of risk, and intervening cause, but was unsuccessful.

In Fuller v. Merten, a 2001 Oregon case, a patient taking steroids for arthritis developed osteoporosis of the cervical spine, which fractured after an automobile accident. The court applied the "eggshell skull" rule for the serious injuries as the tortfeasor "takes the victim as he finds him."

In yet another case, a mechanic who was allergic to petroleum-based solvents developed severe contact dermatitis and required parenteral treatment for more than 20 years with adrenocorticotropic hormone, Kenalog, and oral steroids. He developed cataracts and osteoporosis, but lost the lawsuit against the doctor and the manufacturer because he did not have expert witnesses to testify to the standard of care and adequacy of the warning label.

The most dramatic osteoporosis case is probably Warren v. Schecter, where the plaintiff won a $9.6 million judgment against her surgeon for his failure to disclose a remote risk of osteoporosis. Her surgeon did not believe osteoporosis, osteomalacia, and bone pain were risks of peptic ulcer surgery, and so did not discuss those risks with her. The plaintiff testified at trial that had the doctor warned her of the risk of metabolic bone disease, she would not have consented to surgery. A second operation was undertaken after she developed postop dumping syndrome and alkaline reflux gastritis, and the surgeon again failed to advise her of the risk of metabolic bone disease. The plaintiff subsequently developed severe osteoporotic fractures, and won a malpractice lawsuit under an informed consent theory.

A physician is obligated to warn patients of the side effects of a prescribed drug. All drugs can have serious adverse effects, and anti-osteoporosis drugs are no exception. A rare but serious complication associated with bisphosphonates is osteonecrosis of the jaw. This complication is particularly apt to occur in bisphosphonate-treated patients undergoing dental procedures or in those with an underlying malignancy who had received radiation to the head and neck. Predictably, lawsuits including class-action suits have targeted the drug manufacturers, but physicians may also be roped in on the basis of lack of informed consent and failure to warn. Similarly, doctors would do well to inform patients of the more recent concern over atypical femur fractures allegedly linked to alendronate.

Finally, it is important to recognize the compelling evidence showing that treating postmenopausal osteoporosis can significantly reduce fracture risk. Fracture of the hip is a very serious disability, especially in the elderly, so the failure to diagnose and treat osteoporosis may amount to a negligent omission – with implications for legal liability.

Dr. Tan is an emeritus professor at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu.

Question: A 60-year-old postmenopausal woman was placed on 2.5 mg of prednisone daily for rheumatoid arthritis. Six months later, she developed back pain and was found to have an L4 vertebral fracture. She had not been warned that steroids could cause osteoporosis, and was not placed on supplemental calcium, vitamin D, or a bisphosphonate. In a lawsuit for negligence, which of the following is best?

A. Osteoporosis is an uncommon complication of glucocorticoid therapy, so there is no need to warn of this complication.

B. The incidence of glucocorticoid-induced osteoporosis can be reduced by decreasing the dose and/or duration of therapy, but not by adding a bisphosphonate.

C. To prevail in her lawsuit, the patient must show that it is the standard of care to use a bisphosphonate to treat all osteoporotic women.

D. The doctor’s defense may be to show that the vertebral fracture was caused by postmenopausal osteoporosis or rheumatoid arthritis rather than prednisone, as her steroid dose was not excessive and the period of exposure relatively short.

E. If she had been given alendronate and developed osteonecrosis of the jaw, she would have a cause of action against the doctor irrespective of whether she had been informed of this risk.

Answer: D. Osteoporotic fractures are a surprisingly common malpractice issue, with cases arising from failure to diagnose, warn, or treat. Postmenopausal women are at particular risk, but the condition can also affect men and certain patient groups such as those with rheumatoid arthritis or hypogonadism, or those taking long-term glucocorticoids. Pharmacologic doses of steroids can lead to bone loss and fractures, and can aggravate or cause other serious complications such as aseptic necrosis, diabetes, hypertension, and cataracts.

Fracture risk rises with increasingly higher steroid doses (equivalent of greater than 5-10 mg of prednisone daily) and duration of therapy (greater than 3-6 months). Recent studies indicate that a bisphosphonate added to oral calcium and vitamin D can significantly attenuate this risk, and its use has therefore been recommended in patients requiring long-term steroids.

In the above hypothetical, the plaintiff need not prove that it is the standard practice to treat all women at risk of osteoporosis with a bisphosphonate, just those on steroids. However, she received a relatively low dose, and there are other risk factors in her case. As a result, her doctor may be able to mount a defense.

In Weil v. Seltzer, a 1989 D.C. decision, Dr. Seltzer treated his patient, Dr. Weil, for more than 20 years with steroids, telling the patient that it was an antihistamine. The patient developed steroid complications, including blood pressure changes, infections, and hip and vertebral fractures. He died suddenly at age 54 from a saddle block embolism, which contained bone marrow fragments believed to have arisen from osteoporotic bone. Dr. Seltzer had ordered 1.3 million tablets of cortisone from 1980 to 1984. The defense raised legal arguments of contributory negligence, assumption of risk, and intervening cause, but was unsuccessful.

In Fuller v. Merten, a 2001 Oregon case, a patient taking steroids for arthritis developed osteoporosis of the cervical spine, which fractured after an automobile accident. The court applied the "eggshell skull" rule for the serious injuries as the tortfeasor "takes the victim as he finds him."

In yet another case, a mechanic who was allergic to petroleum-based solvents developed severe contact dermatitis and required parenteral treatment for more than 20 years with adrenocorticotropic hormone, Kenalog, and oral steroids. He developed cataracts and osteoporosis, but lost the lawsuit against the doctor and the manufacturer because he did not have expert witnesses to testify to the standard of care and adequacy of the warning label.

The most dramatic osteoporosis case is probably Warren v. Schecter, where the plaintiff won a $9.6 million judgment against her surgeon for his failure to disclose a remote risk of osteoporosis. Her surgeon did not believe osteoporosis, osteomalacia, and bone pain were risks of peptic ulcer surgery, and so did not discuss those risks with her. The plaintiff testified at trial that had the doctor warned her of the risk of metabolic bone disease, she would not have consented to surgery. A second operation was undertaken after she developed postop dumping syndrome and alkaline reflux gastritis, and the surgeon again failed to advise her of the risk of metabolic bone disease. The plaintiff subsequently developed severe osteoporotic fractures, and won a malpractice lawsuit under an informed consent theory.

A physician is obligated to warn patients of the side effects of a prescribed drug. All drugs can have serious adverse effects, and anti-osteoporosis drugs are no exception. A rare but serious complication associated with bisphosphonates is osteonecrosis of the jaw. This complication is particularly apt to occur in bisphosphonate-treated patients undergoing dental procedures or in those with an underlying malignancy who had received radiation to the head and neck. Predictably, lawsuits including class-action suits have targeted the drug manufacturers, but physicians may also be roped in on the basis of lack of informed consent and failure to warn. Similarly, doctors would do well to inform patients of the more recent concern over atypical femur fractures allegedly linked to alendronate.

Finally, it is important to recognize the compelling evidence showing that treating postmenopausal osteoporosis can significantly reduce fracture risk. Fracture of the hip is a very serious disability, especially in the elderly, so the failure to diagnose and treat osteoporosis may amount to a negligent omission – with implications for legal liability.

Dr. Tan is an emeritus professor at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu.

Question: A 60-year-old postmenopausal woman was placed on 2.5 mg of prednisone daily for rheumatoid arthritis. Six months later, she developed back pain and was found to have an L4 vertebral fracture. She had not been warned that steroids could cause osteoporosis, and was not placed on supplemental calcium, vitamin D, or a bisphosphonate. In a lawsuit for negligence, which of the following is best?

A. Osteoporosis is an uncommon complication of glucocorticoid therapy, so there is no need to warn of this complication.

B. The incidence of glucocorticoid-induced osteoporosis can be reduced by decreasing the dose and/or duration of therapy, but not by adding a bisphosphonate.

C. To prevail in her lawsuit, the patient must show that it is the standard of care to use a bisphosphonate to treat all osteoporotic women.

D. The doctor’s defense may be to show that the vertebral fracture was caused by postmenopausal osteoporosis or rheumatoid arthritis rather than prednisone, as her steroid dose was not excessive and the period of exposure relatively short.

E. If she had been given alendronate and developed osteonecrosis of the jaw, she would have a cause of action against the doctor irrespective of whether she had been informed of this risk.

Answer: D. Osteoporotic fractures are a surprisingly common malpractice issue, with cases arising from failure to diagnose, warn, or treat. Postmenopausal women are at particular risk, but the condition can also affect men and certain patient groups such as those with rheumatoid arthritis or hypogonadism, or those taking long-term glucocorticoids. Pharmacologic doses of steroids can lead to bone loss and fractures, and can aggravate or cause other serious complications such as aseptic necrosis, diabetes, hypertension, and cataracts.

Fracture risk rises with increasingly higher steroid doses (equivalent of greater than 5-10 mg of prednisone daily) and duration of therapy (greater than 3-6 months). Recent studies indicate that a bisphosphonate added to oral calcium and vitamin D can significantly attenuate this risk, and its use has therefore been recommended in patients requiring long-term steroids.

In the above hypothetical, the plaintiff need not prove that it is the standard practice to treat all women at risk of osteoporosis with a bisphosphonate, just those on steroids. However, she received a relatively low dose, and there are other risk factors in her case. As a result, her doctor may be able to mount a defense.

In Weil v. Seltzer, a 1989 D.C. decision, Dr. Seltzer treated his patient, Dr. Weil, for more than 20 years with steroids, telling the patient that it was an antihistamine. The patient developed steroid complications, including blood pressure changes, infections, and hip and vertebral fractures. He died suddenly at age 54 from a saddle block embolism, which contained bone marrow fragments believed to have arisen from osteoporotic bone. Dr. Seltzer had ordered 1.3 million tablets of cortisone from 1980 to 1984. The defense raised legal arguments of contributory negligence, assumption of risk, and intervening cause, but was unsuccessful.

In Fuller v. Merten, a 2001 Oregon case, a patient taking steroids for arthritis developed osteoporosis of the cervical spine, which fractured after an automobile accident. The court applied the "eggshell skull" rule for the serious injuries as the tortfeasor "takes the victim as he finds him."

In yet another case, a mechanic who was allergic to petroleum-based solvents developed severe contact dermatitis and required parenteral treatment for more than 20 years with adrenocorticotropic hormone, Kenalog, and oral steroids. He developed cataracts and osteoporosis, but lost the lawsuit against the doctor and the manufacturer because he did not have expert witnesses to testify to the standard of care and adequacy of the warning label.

The most dramatic osteoporosis case is probably Warren v. Schecter, where the plaintiff won a $9.6 million judgment against her surgeon for his failure to disclose a remote risk of osteoporosis. Her surgeon did not believe osteoporosis, osteomalacia, and bone pain were risks of peptic ulcer surgery, and so did not discuss those risks with her. The plaintiff testified at trial that had the doctor warned her of the risk of metabolic bone disease, she would not have consented to surgery. A second operation was undertaken after she developed postop dumping syndrome and alkaline reflux gastritis, and the surgeon again failed to advise her of the risk of metabolic bone disease. The plaintiff subsequently developed severe osteoporotic fractures, and won a malpractice lawsuit under an informed consent theory.

A physician is obligated to warn patients of the side effects of a prescribed drug. All drugs can have serious adverse effects, and anti-osteoporosis drugs are no exception. A rare but serious complication associated with bisphosphonates is osteonecrosis of the jaw. This complication is particularly apt to occur in bisphosphonate-treated patients undergoing dental procedures or in those with an underlying malignancy who had received radiation to the head and neck. Predictably, lawsuits including class-action suits have targeted the drug manufacturers, but physicians may also be roped in on the basis of lack of informed consent and failure to warn. Similarly, doctors would do well to inform patients of the more recent concern over atypical femur fractures allegedly linked to alendronate.

Finally, it is important to recognize the compelling evidence showing that treating postmenopausal osteoporosis can significantly reduce fracture risk. Fracture of the hip is a very serious disability, especially in the elderly, so the failure to diagnose and treat osteoporosis may amount to a negligent omission – with implications for legal liability.

Dr. Tan is an emeritus professor at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu.

Question: A patient in his 30s presented to Dr. C with atypical substernal chest pain. There was no family history of heart disease, he had no cardiac risk factors, and the examination was normal. Although the clinical picture was not that of myocardial ischemia, Dr. C obtained an EKG and serum creatine phosphokinase (CPK) and troponin levels, all of which were normal. In recent years, Dr. C, a cardiologist, has given up doing invasive procedures to reduce malpractice exposure. Which of the following is best?

A. The work-up of chest pain in this patient can be considered defensive medicine if it’s done primarily out of malpractice fear.

B. Questionnaire surveys generally conclude that virtually all doctors practice defensive medicine.

C. Giving up "high-risk" procedures purely for medicolegal reasons (malpractice concerns) is a form of defensive medicine.

D. There is controversy over what constitutes defensive medicine, how much it costs, and whether it is in fact widely practiced.

E. All are correct.

Answer: E. Almost all doctors admit they practice defensive medicine, which has been defined as "deviation from sound medical practice that is induced primarily by a threat of liability" (JAMA 2005;293:2609-17). Positive defensive medicine, centering on assurance behavior, provides additional services that are of no medical value. An example is obtaining a head CT in all cases of headaches. Negative defensive medicine speaks to avoidance behavior, with the doctor foregoing interventions that he or she perceives as increased malpractice risk, such as performing invasive procedures.

A 2003 survey of specialists in Pennsylvania found that 93% practiced defensive medicine. Assurance behavior – such as ordering tests, performing diagnostic procedures, and referring patients for consultation – was very common (92%). A particularly widespread defensive act was the use of imaging technology in clinically unnecessary circumstances. Avoidance of litigation-prone procedures and patients was also widespread. Forty-two percent of respondents reported that they had taken steps to restrict their practice in the previous 3 years including avoiding trauma surgery as well as patients with complex medical problems or who were perceived as litigious.

In a 2005 study, emergency physicians in the upper tertile of malpractice fear were found to use more diagnostic tests and were more likely to hospitalize patients at low risk for coronary artery disease (Ann. Emerg. Med. 2005;46:525-33).

Defensive medicine also was found to be widespread (83%) among 900 doctors in a survey recently conducted by the Massachusetts Medical Society.

It is widely believed that defensive medicine adds to the nation’s medical bill. By correlating professional liability insurance with cost of services, the AMA estimated that in the 1980s, defensive medicine cost $12.1-$13.7 billion each year (JAMA 1987;257:2776-81).

In an oft-cited study by Kessler and McClellan (Q. J. Econ. 1996;111:353-90), the authors measured the effects of malpractice liability reforms using data on elderly Medicare beneficiaries treated for serious heart disease and found that reforms that directly reduced provider liability pressure led to reductions of 5%-9% in medical expenditures. If such Medicare savings, which amounted to $600 million per year for cardiac disease, were extrapolated across the health care system, the total annual savings would amount to $50 billion. A more conservative study estimated that system-wide savings from aggressive malpractice reform would approach $41 billion over 5 years (J. Am. Health Policy 1994;4:7-15).

Skeptics, however, question the way the profession defines defensive medicine, pointing out that malpractice concerns may be one, but not the only or even the primary reason as most interventions add some marginal value to patient care. Besides, physicians in low litigious jurisdictions display similar behavior, for example, in Japan, where 98% of 131 gastroenterologists in Hiroshima admitted to the practice although only three (2%) respondents had been sued and most respondents (96%) had liability insurance (World J. Gastro. 2006;12:7671-5).

Above all, skeptics argue that there is no acceptable method for measuring the extent and use of defensive medicine, and survey reports are apt to be misleading because of bias and the lack of controls and baseline data.

Several reports challenge the belief that the practice of defensive medicine is widespread and therefore adds hugely to health care costs (J. Health Polit. Policy Law 1996;21:267-88).

The Klingman study used simulated clinical scenarios and concluded that the extent of defensive medicine was at most 8%. The study by Glassman et al. found no correlation between individual malpractice claims experience to use of resources among 835 physicians including internists. Nor did they find a correlation between malpractice claims experience and an individual physician’s concern about malpractice, tolerance for uncertainty or perception of risk.

Finally, in an interview of 29 physicians and 17 administrators about their use of the more expensive low-osmolar contrast agent and the cheaper high-osmolar agent, investigators found that clinical and cost concerns were more important than were the legal factors (J. Health Polit. Policy Law 1996;21:243-66).

They concluded that "clinical factors dominate the decision-making process, making it unlikely that a policy focus on reducing incentives for defensive medicine will substantially reduce health care costs."

Dr. Tan is an emeritus professor of medicine at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu.

Question: A patient in his 30s presented to Dr. C with atypical substernal chest pain. There was no family history of heart disease, he had no cardiac risk factors, and the examination was normal. Although the clinical picture was not that of myocardial ischemia, Dr. C obtained an EKG and serum creatine phosphokinase (CPK) and troponin levels, all of which were normal. In recent years, Dr. C, a cardiologist, has given up doing invasive procedures to reduce malpractice exposure. Which of the following is best?

A. The work-up of chest pain in this patient can be considered defensive medicine if it’s done primarily out of malpractice fear.

B. Questionnaire surveys generally conclude that virtually all doctors practice defensive medicine.

C. Giving up "high-risk" procedures purely for medicolegal reasons (malpractice concerns) is a form of defensive medicine.

D. There is controversy over what constitutes defensive medicine, how much it costs, and whether it is in fact widely practiced.

E. All are correct.

Answer: E. Almost all doctors admit they practice defensive medicine, which has been defined as "deviation from sound medical practice that is induced primarily by a threat of liability" (JAMA 2005;293:2609-17). Positive defensive medicine, centering on assurance behavior, provides additional services that are of no medical value. An example is obtaining a head CT in all cases of headaches. Negative defensive medicine speaks to avoidance behavior, with the doctor foregoing interventions that he or she perceives as increased malpractice risk, such as performing invasive procedures.

A 2003 survey of specialists in Pennsylvania found that 93% practiced defensive medicine. Assurance behavior – such as ordering tests, performing diagnostic procedures, and referring patients for consultation – was very common (92%). A particularly widespread defensive act was the use of imaging technology in clinically unnecessary circumstances. Avoidance of litigation-prone procedures and patients was also widespread. Forty-two percent of respondents reported that they had taken steps to restrict their practice in the previous 3 years including avoiding trauma surgery as well as patients with complex medical problems or who were perceived as litigious.

In a 2005 study, emergency physicians in the upper tertile of malpractice fear were found to use more diagnostic tests and were more likely to hospitalize patients at low risk for coronary artery disease (Ann. Emerg. Med. 2005;46:525-33).

Defensive medicine also was found to be widespread (83%) among 900 doctors in a survey recently conducted by the Massachusetts Medical Society.

It is widely believed that defensive medicine adds to the nation’s medical bill. By correlating professional liability insurance with cost of services, the AMA estimated that in the 1980s, defensive medicine cost $12.1-$13.7 billion each year (JAMA 1987;257:2776-81).

In an oft-cited study by Kessler and McClellan (Q. J. Econ. 1996;111:353-90), the authors measured the effects of malpractice liability reforms using data on elderly Medicare beneficiaries treated for serious heart disease and found that reforms that directly reduced provider liability pressure led to reductions of 5%-9% in medical expenditures. If such Medicare savings, which amounted to $600 million per year for cardiac disease, were extrapolated across the health care system, the total annual savings would amount to $50 billion. A more conservative study estimated that system-wide savings from aggressive malpractice reform would approach $41 billion over 5 years (J. Am. Health Policy 1994;4:7-15).

Skeptics, however, question the way the profession defines defensive medicine, pointing out that malpractice concerns may be one, but not the only or even the primary reason as most interventions add some marginal value to patient care. Besides, physicians in low litigious jurisdictions display similar behavior, for example, in Japan, where 98% of 131 gastroenterologists in Hiroshima admitted to the practice although only three (2%) respondents had been sued and most respondents (96%) had liability insurance (World J. Gastro. 2006;12:7671-5).

Above all, skeptics argue that there is no acceptable method for measuring the extent and use of defensive medicine, and survey reports are apt to be misleading because of bias and the lack of controls and baseline data.

Several reports challenge the belief that the practice of defensive medicine is widespread and therefore adds hugely to health care costs (J. Health Polit. Policy Law 1996;21:267-88).

The Klingman study used simulated clinical scenarios and concluded that the extent of defensive medicine was at most 8%. The study by Glassman et al. found no correlation between individual malpractice claims experience to use of resources among 835 physicians including internists. Nor did they find a correlation between malpractice claims experience and an individual physician’s concern about malpractice, tolerance for uncertainty or perception of risk.

Finally, in an interview of 29 physicians and 17 administrators about their use of the more expensive low-osmolar contrast agent and the cheaper high-osmolar agent, investigators found that clinical and cost concerns were more important than were the legal factors (J. Health Polit. Policy Law 1996;21:243-66).

They concluded that "clinical factors dominate the decision-making process, making it unlikely that a policy focus on reducing incentives for defensive medicine will substantially reduce health care costs."

Dr. Tan is an emeritus professor of medicine at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu.

Question: A patient in his 30s presented to Dr. C with atypical substernal chest pain. There was no family history of heart disease, he had no cardiac risk factors, and the examination was normal. Although the clinical picture was not that of myocardial ischemia, Dr. C obtained an EKG and serum creatine phosphokinase (CPK) and troponin levels, all of which were normal. In recent years, Dr. C, a cardiologist, has given up doing invasive procedures to reduce malpractice exposure. Which of the following is best?

A. The work-up of chest pain in this patient can be considered defensive medicine if it’s done primarily out of malpractice fear.

B. Questionnaire surveys generally conclude that virtually all doctors practice defensive medicine.

C. Giving up "high-risk" procedures purely for medicolegal reasons (malpractice concerns) is a form of defensive medicine.

D. There is controversy over what constitutes defensive medicine, how much it costs, and whether it is in fact widely practiced.

E. All are correct.

Answer: E. Almost all doctors admit they practice defensive medicine, which has been defined as "deviation from sound medical practice that is induced primarily by a threat of liability" (JAMA 2005;293:2609-17). Positive defensive medicine, centering on assurance behavior, provides additional services that are of no medical value. An example is obtaining a head CT in all cases of headaches. Negative defensive medicine speaks to avoidance behavior, with the doctor foregoing interventions that he or she perceives as increased malpractice risk, such as performing invasive procedures.

A 2003 survey of specialists in Pennsylvania found that 93% practiced defensive medicine. Assurance behavior – such as ordering tests, performing diagnostic procedures, and referring patients for consultation – was very common (92%). A particularly widespread defensive act was the use of imaging technology in clinically unnecessary circumstances. Avoidance of litigation-prone procedures and patients was also widespread. Forty-two percent of respondents reported that they had taken steps to restrict their practice in the previous 3 years including avoiding trauma surgery as well as patients with complex medical problems or who were perceived as litigious.

In a 2005 study, emergency physicians in the upper tertile of malpractice fear were found to use more diagnostic tests and were more likely to hospitalize patients at low risk for coronary artery disease (Ann. Emerg. Med. 2005;46:525-33).

Defensive medicine also was found to be widespread (83%) among 900 doctors in a survey recently conducted by the Massachusetts Medical Society.

It is widely believed that defensive medicine adds to the nation’s medical bill. By correlating professional liability insurance with cost of services, the AMA estimated that in the 1980s, defensive medicine cost $12.1-$13.7 billion each year (JAMA 1987;257:2776-81).

In an oft-cited study by Kessler and McClellan (Q. J. Econ. 1996;111:353-90), the authors measured the effects of malpractice liability reforms using data on elderly Medicare beneficiaries treated for serious heart disease and found that reforms that directly reduced provider liability pressure led to reductions of 5%-9% in medical expenditures. If such Medicare savings, which amounted to $600 million per year for cardiac disease, were extrapolated across the health care system, the total annual savings would amount to $50 billion. A more conservative study estimated that system-wide savings from aggressive malpractice reform would approach $41 billion over 5 years (J. Am. Health Policy 1994;4:7-15).

Skeptics, however, question the way the profession defines defensive medicine, pointing out that malpractice concerns may be one, but not the only or even the primary reason as most interventions add some marginal value to patient care. Besides, physicians in low litigious jurisdictions display similar behavior, for example, in Japan, where 98% of 131 gastroenterologists in Hiroshima admitted to the practice although only three (2%) respondents had been sued and most respondents (96%) had liability insurance (World J. Gastro. 2006;12:7671-5).

Above all, skeptics argue that there is no acceptable method for measuring the extent and use of defensive medicine, and survey reports are apt to be misleading because of bias and the lack of controls and baseline data.

Several reports challenge the belief that the practice of defensive medicine is widespread and therefore adds hugely to health care costs (J. Health Polit. Policy Law 1996;21:267-88).

The Klingman study used simulated clinical scenarios and concluded that the extent of defensive medicine was at most 8%. The study by Glassman et al. found no correlation between individual malpractice claims experience to use of resources among 835 physicians including internists. Nor did they find a correlation between malpractice claims experience and an individual physician’s concern about malpractice, tolerance for uncertainty or perception of risk.

Finally, in an interview of 29 physicians and 17 administrators about their use of the more expensive low-osmolar contrast agent and the cheaper high-osmolar agent, investigators found that clinical and cost concerns were more important than were the legal factors (J. Health Polit. Policy Law 1996;21:243-66).

They concluded that "clinical factors dominate the decision-making process, making it unlikely that a policy focus on reducing incentives for defensive medicine will substantially reduce health care costs."

Dr. Tan is an emeritus professor of medicine at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu.

Question: Which of the following is not a violation of Medicare/Medicaid fraud statutes?

A. Referring patients to a lab of which your spouse is part owner.

B. Hospital "remuneration," such as below-market office leases or expensive tickets to events.

C. Forgiving the co-pay portion of a retired colleague’s bill.

D. Marketing Food and Drug Administration-approved drugs for off-label use.

E. Negligently submitting a wrong-patient Medicare claim.

Best answer: E. Choice E is analyzed under the False Claims Act, which imposes liability for knowingly submitting a payment demand to Medicare/Medicaid. Legally, this means having actual knowledge (scienter) that the claim is false or acting in deliberate or reckless indifference to the truth. However, an error that is negligently committed is insufficient to constitute a violation. Choice A is a direct violation of the Stark Law against self-referral, and B and C are violations of the Anti-Kickback Statute (AKS). The current 2011 threshold is $359 for "complimentary" tickets to events, and the government has warned that routinely waiving co-payments could implicate the AKS. Choice D, of special relevance to pharmaceutical and device manufacturers, is illegal under the False Claims Act. Whereas doctors are allowed to prescribe drugs or devices for an off-label indication, the law forbids a manufacturer from marketing its products for a non-FDA–approved use.

With an annual budget of almost $1 trillion, it is estimated that some 10% or up to $100 billion of Medicare/Medicaid funds are lost to fraud, waste, and abuse. The Office of Inspector General is the independent oversight agency regulating such sources of loss. "Fraud" includes the obtaining something of value through intentional misrepresentation or concealment of material facts, "waste" includes the incurring of unnecessary costs as a result of deficient management, practices, systems, or controls, and "abuse" includes any practice that is not consistent with the goals of providing patients with services that are medically necessary, meet professionally recognized standards, and are fairly priced. [See: A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse.]

To combat fraud, waste, and abuse, Congress has enacted three separate laws: The False Claims Act, the Anti-Kickback Statute, and the Physician Self-Referral Statute. In addition, states have their own versions of these laws. Stiff penalties for violations include fines, restriction of practice privileges, and imprisonment. More than 5,000 physicians in the United States are currently excluded from participation in Medicare/Medicaid programs because of violations (N. Engl. J. Med. 2011;364:102-3).

It is illegal under the False Claims Act to submit false or fraudulent claims for payment to Medicare or Medicaid (31 U.S.C. §§3729-3733). Private individuals, frequently former employees, consultants, even competitors, can file a so-called qui tam action alone or in concert with the government, and they stand to collect a substantial bounty in the event the prosecution proves successful. The Act originated during the Civil War, when increased government procurement led to fraudulent claims by contracting parties, prompting President Abraham Lincoln to state: "Worse than traitors in arms are the men who pretend loyalty to the flag, feast and fatten on the misfortunes of the Nation while patriotic blood is crimsoning the plains of the South, and their countrymen are moldering in the dust."

In the health care field, claims may be false if the service is not actually rendered to the patient, is provided but already covered under another claim, is miscoded, or is not supported by the medical record. Intent to defraud is not a required element; deliberate ignorance or reckless disregard of the truth will suffice. Whistle-blowers, that is, qui tam plaintiffs, can receive up to 30% of any False Claims Act recovery. Penalties are severe, and include treble damages, costs and attorney fees, and fines of $11,000 per false claim. Imprisonment and criminal fines are additional penalties. One of the latest criminal schemes to defraud Medicare involved organized crime’s establishment of more than 100 bogus clinics in 25 states, using stolen identities of doctors and patients. The government became suspicious when submitted bills purportedly came from ophthalmologists for bladder tests, ENT surgeons for ultrasounds, and office visits from a forensic pathologist. The Department of Justice has reportedly arrested 28 people linked to this fraud (BMJ 2010;341:c5865).

Under the Anti-Kickback Statute (42 U.S.C. §1320a-7b), it is illegal to knowingly or willfully offer, pay, solicit, or receive remuneration, directly or indirectly, in cash or in kind, in exchange for referring an individual or furnishing or arranging for a good or service, and for which payment may be made under Medicare or Medicaid. Importantly, the case of the United States v. Greber established that there is statutory violation even if only one purpose of the remuneration is to induce referrals. It is relatively easy for a medical center to run afoul of this law, and several hospitals have paid multimillion dollar settlements for kickback "remunerations."

The Physician Self-Referral Statute, commonly called the Stark Law, prohibits a physician from making a referral to an entity for the furnishing of a designated health service for which payment may be made under Medicare or Medicaid if the physician or an immediate family member has a financial relationship with the entity, unless an exception applies. This being a strict liability law, no proof of specific intent is required. There are strict, complex, and narrowly construed "safe harbors" and exceptions to both the Anti-Kickback and Stark laws, but the field is complex, so providers contemplating health care business deals should proceed cautiously and seek specific advice from experienced legal counsel.

Dr. S.Y. Tan is a former professor of medicine and adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author.

Question: Which of the following is not a violation of Medicare/Medicaid fraud statutes?

A. Referring patients to a lab of which your spouse is part owner.

B. Hospital "remuneration," such as below-market office leases or expensive tickets to events.

C. Forgiving the co-pay portion of a retired colleague’s bill.

D. Marketing Food and Drug Administration-approved drugs for off-label use.

E. Negligently submitting a wrong-patient Medicare claim.

Best answer: E. Choice E is analyzed under the False Claims Act, which imposes liability for knowingly submitting a payment demand to Medicare/Medicaid. Legally, this means having actual knowledge (scienter) that the claim is false or acting in deliberate or reckless indifference to the truth. However, an error that is negligently committed is insufficient to constitute a violation. Choice A is a direct violation of the Stark Law against self-referral, and B and C are violations of the Anti-Kickback Statute (AKS). The current 2011 threshold is $359 for "complimentary" tickets to events, and the government has warned that routinely waiving co-payments could implicate the AKS. Choice D, of special relevance to pharmaceutical and device manufacturers, is illegal under the False Claims Act. Whereas doctors are allowed to prescribe drugs or devices for an off-label indication, the law forbids a manufacturer from marketing its products for a non-FDA–approved use.

With an annual budget of almost $1 trillion, it is estimated that some 10% or up to $100 billion of Medicare/Medicaid funds are lost to fraud, waste, and abuse. The Office of Inspector General is the independent oversight agency regulating such sources of loss. "Fraud" includes the obtaining something of value through intentional misrepresentation or concealment of material facts, "waste" includes the incurring of unnecessary costs as a result of deficient management, practices, systems, or controls, and "abuse" includes any practice that is not consistent with the goals of providing patients with services that are medically necessary, meet professionally recognized standards, and are fairly priced. [See: A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse.]

To combat fraud, waste, and abuse, Congress has enacted three separate laws: The False Claims Act, the Anti-Kickback Statute, and the Physician Self-Referral Statute. In addition, states have their own versions of these laws. Stiff penalties for violations include fines, restriction of practice privileges, and imprisonment. More than 5,000 physicians in the United States are currently excluded from participation in Medicare/Medicaid programs because of violations (N. Engl. J. Med. 2011;364:102-3).

It is illegal under the False Claims Act to submit false or fraudulent claims for payment to Medicare or Medicaid (31 U.S.C. §§3729-3733). Private individuals, frequently former employees, consultants, even competitors, can file a so-called qui tam action alone or in concert with the government, and they stand to collect a substantial bounty in the event the prosecution proves successful. The Act originated during the Civil War, when increased government procurement led to fraudulent claims by contracting parties, prompting President Abraham Lincoln to state: "Worse than traitors in arms are the men who pretend loyalty to the flag, feast and fatten on the misfortunes of the Nation while patriotic blood is crimsoning the plains of the South, and their countrymen are moldering in the dust."

In the health care field, claims may be false if the service is not actually rendered to the patient, is provided but already covered under another claim, is miscoded, or is not supported by the medical record. Intent to defraud is not a required element; deliberate ignorance or reckless disregard of the truth will suffice. Whistle-blowers, that is, qui tam plaintiffs, can receive up to 30% of any False Claims Act recovery. Penalties are severe, and include treble damages, costs and attorney fees, and fines of $11,000 per false claim. Imprisonment and criminal fines are additional penalties. One of the latest criminal schemes to defraud Medicare involved organized crime’s establishment of more than 100 bogus clinics in 25 states, using stolen identities of doctors and patients. The government became suspicious when submitted bills purportedly came from ophthalmologists for bladder tests, ENT surgeons for ultrasounds, and office visits from a forensic pathologist. The Department of Justice has reportedly arrested 28 people linked to this fraud (BMJ 2010;341:c5865).

Under the Anti-Kickback Statute (42 U.S.C. §1320a-7b), it is illegal to knowingly or willfully offer, pay, solicit, or receive remuneration, directly or indirectly, in cash or in kind, in exchange for referring an individual or furnishing or arranging for a good or service, and for which payment may be made under Medicare or Medicaid. Importantly, the case of the United States v. Greber established that there is statutory violation even if only one purpose of the remuneration is to induce referrals. It is relatively easy for a medical center to run afoul of this law, and several hospitals have paid multimillion dollar settlements for kickback "remunerations."

The Physician Self-Referral Statute, commonly called the Stark Law, prohibits a physician from making a referral to an entity for the furnishing of a designated health service for which payment may be made under Medicare or Medicaid if the physician or an immediate family member has a financial relationship with the entity, unless an exception applies. This being a strict liability law, no proof of specific intent is required. There are strict, complex, and narrowly construed "safe harbors" and exceptions to both the Anti-Kickback and Stark laws, but the field is complex, so providers contemplating health care business deals should proceed cautiously and seek specific advice from experienced legal counsel.

Dr. S.Y. Tan is a former professor of medicine and adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author.

Question: Which of the following is not a violation of Medicare/Medicaid fraud statutes?

A. Referring patients to a lab of which your spouse is part owner.

B. Hospital "remuneration," such as below-market office leases or expensive tickets to events.

C. Forgiving the co-pay portion of a retired colleague’s bill.

D. Marketing Food and Drug Administration-approved drugs for off-label use.

E. Negligently submitting a wrong-patient Medicare claim.

Best answer: E. Choice E is analyzed under the False Claims Act, which imposes liability for knowingly submitting a payment demand to Medicare/Medicaid. Legally, this means having actual knowledge (scienter) that the claim is false or acting in deliberate or reckless indifference to the truth. However, an error that is negligently committed is insufficient to constitute a violation. Choice A is a direct violation of the Stark Law against self-referral, and B and C are violations of the Anti-Kickback Statute (AKS). The current 2011 threshold is $359 for "complimentary" tickets to events, and the government has warned that routinely waiving co-payments could implicate the AKS. Choice D, of special relevance to pharmaceutical and device manufacturers, is illegal under the False Claims Act. Whereas doctors are allowed to prescribe drugs or devices for an off-label indication, the law forbids a manufacturer from marketing its products for a non-FDA–approved use.

With an annual budget of almost $1 trillion, it is estimated that some 10% or up to $100 billion of Medicare/Medicaid funds are lost to fraud, waste, and abuse. The Office of Inspector General is the independent oversight agency regulating such sources of loss. "Fraud" includes the obtaining something of value through intentional misrepresentation or concealment of material facts, "waste" includes the incurring of unnecessary costs as a result of deficient management, practices, systems, or controls, and "abuse" includes any practice that is not consistent with the goals of providing patients with services that are medically necessary, meet professionally recognized standards, and are fairly priced. [See: A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse.]

To combat fraud, waste, and abuse, Congress has enacted three separate laws: The False Claims Act, the Anti-Kickback Statute, and the Physician Self-Referral Statute. In addition, states have their own versions of these laws. Stiff penalties for violations include fines, restriction of practice privileges, and imprisonment. More than 5,000 physicians in the United States are currently excluded from participation in Medicare/Medicaid programs because of violations (N. Engl. J. Med. 2011;364:102-3).

It is illegal under the False Claims Act to submit false or fraudulent claims for payment to Medicare or Medicaid (31 U.S.C. §§3729-3733). Private individuals, frequently former employees, consultants, even competitors, can file a so-called qui tam action alone or in concert with the government, and they stand to collect a substantial bounty in the event the prosecution proves successful. The Act originated during the Civil War, when increased government procurement led to fraudulent claims by contracting parties, prompting President Abraham Lincoln to state: "Worse than traitors in arms are the men who pretend loyalty to the flag, feast and fatten on the misfortunes of the Nation while patriotic blood is crimsoning the plains of the South, and their countrymen are moldering in the dust."

In the health care field, claims may be false if the service is not actually rendered to the patient, is provided but already covered under another claim, is miscoded, or is not supported by the medical record. Intent to defraud is not a required element; deliberate ignorance or reckless disregard of the truth will suffice. Whistle-blowers, that is, qui tam plaintiffs, can receive up to 30% of any False Claims Act recovery. Penalties are severe, and include treble damages, costs and attorney fees, and fines of $11,000 per false claim. Imprisonment and criminal fines are additional penalties. One of the latest criminal schemes to defraud Medicare involved organized crime’s establishment of more than 100 bogus clinics in 25 states, using stolen identities of doctors and patients. The government became suspicious when submitted bills purportedly came from ophthalmologists for bladder tests, ENT surgeons for ultrasounds, and office visits from a forensic pathologist. The Department of Justice has reportedly arrested 28 people linked to this fraud (BMJ 2010;341:c5865).

Under the Anti-Kickback Statute (42 U.S.C. §1320a-7b), it is illegal to knowingly or willfully offer, pay, solicit, or receive remuneration, directly or indirectly, in cash or in kind, in exchange for referring an individual or furnishing or arranging for a good or service, and for which payment may be made under Medicare or Medicaid. Importantly, the case of the United States v. Greber established that there is statutory violation even if only one purpose of the remuneration is to induce referrals. It is relatively easy for a medical center to run afoul of this law, and several hospitals have paid multimillion dollar settlements for kickback "remunerations."

The Physician Self-Referral Statute, commonly called the Stark Law, prohibits a physician from making a referral to an entity for the furnishing of a designated health service for which payment may be made under Medicare or Medicaid if the physician or an immediate family member has a financial relationship with the entity, unless an exception applies. This being a strict liability law, no proof of specific intent is required. There are strict, complex, and narrowly construed "safe harbors" and exceptions to both the Anti-Kickback and Stark laws, but the field is complex, so providers contemplating health care business deals should proceed cautiously and seek specific advice from experienced legal counsel.

Dr. S.Y. Tan is a former professor of medicine and adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author.

Question: Which of the following is not a violation of Medicare/Medicaid fraud statutes?

A. Referring patients to a lab of which your spouse is part owner.

B. Hospital "remuneration," such as below-market office leases or expensive tickets to events.

C. Forgiving the co-pay portion of a retired colleague’s bill.

D. Marketing Food and Drug Administration-approved drugs for off-label use.

E. Negligently submitting a wrong-patient Medicare claim.

Best answer: E. Choice E is analyzed under the False Claims Act, which imposes liability for knowingly submitting a payment demand to Medicare/Medicaid. Legally, this means having actual knowledge (scienter) that the claim is false or acting in deliberate or reckless indifference to the truth. However, an error that is negligently committed is insufficient to constitute a violation. Choice A is a direct violation of the Stark Law against self-referral, and B and C are violations of the Anti-Kickback Statute (AKS). The current 2011 threshold is $359 for "complimentary" tickets to events, and the government has warned that routinely waiving co-payments could implicate the AKS. Choice D, of special relevance to pharmaceutical and device manufacturers, is illegal under the False Claims Act. Whereas doctors are allowed to prescribe drugs or devices for an off-label indication, the law forbids a manufacturer from marketing its products for a non-FDA–approved use.

With an annual budget of almost $1 trillion, it is estimated that some 10% or up to $100 billion of Medicare/Medicaid funds are lost to fraud, waste, and abuse. The Office of Inspector General is the independent oversight agency regulating such sources of loss. "Fraud" includes the obtaining something of value through intentional misrepresentation or concealment of material facts, "waste" includes the incurring of unnecessary costs as a result of deficient management, practices, systems, or controls, and "abuse" includes any practice that is not consistent with the goals of providing patients with services that are medically necessary, meet professionally recognized standards, and are fairly priced. [See: A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse.]

To combat fraud, waste, and abuse, Congress has enacted three separate laws: The False Claims Act, the Anti-Kickback Statute, and the Physician Self-Referral Statute. In addition, states have their own versions of these laws. Stiff penalties for violations include fines, restriction of practice privileges, and imprisonment. More than 5,000 physicians in the United States are currently excluded from participation in Medicare/Medicaid programs because of violations (N. Engl. J. Med. 2011;364:102-3).

It is illegal under the False Claims Act to submit false or fraudulent claims for payment to Medicare or Medicaid (31 U.S.C. §§3729-3733). Private individuals, frequently former employees, consultants, even competitors, can file a so-called qui tam action alone or in concert with the government, and they stand to collect a substantial bounty in the event the prosecution proves successful. The Act originated during the Civil War, when increased government procurement led to fraudulent claims by contracting parties, prompting President Abraham Lincoln to state: "Worse than traitors in arms are the men who pretend loyalty to the flag, feast and fatten on the misfortunes of the Nation while patriotic blood is crimsoning the plains of the South, and their countrymen are moldering in the dust."

In the health care field, claims may be false if the service is not actually rendered to the patient, is provided but already covered under another claim, is miscoded, or is not supported by the medical record. Intent to defraud is not a required element; deliberate ignorance or reckless disregard of the truth will suffice. Whistle-blowers, that is, qui tam plaintiffs, can receive up to 30% of any False Claims Act recovery. Penalties are severe, and include treble damages, costs and attorney fees, and fines of $11,000 per false claim. Imprisonment and criminal fines are additional penalties. One of the latest criminal schemes to defraud Medicare involved organized crime’s establishment of more than 100 bogus clinics in 25 states, using stolen identities of doctors and patients. The government became suspicious when submitted bills purportedly came from ophthalmologists for bladder tests, ENT surgeons for ultrasounds, and office visits from a forensic pathologist. The Department of Justice has reportedly arrested 28 people linked to this fraud (BMJ 2010;341:c5865).

Under the Anti-Kickback Statute (42 U.S.C. §1320a-7b), it is illegal to knowingly or willfully offer, pay, solicit, or receive remuneration, directly or indirectly, in cash or in kind, in exchange for referring an individual or furnishing or arranging for a good or service, and for which payment may be made under Medicare or Medicaid. Importantly, the case of the United States v. Greber established that there is statutory violation even if only one purpose of the remuneration is to induce referrals. It is relatively easy for a medical center to run afoul of this law, and several hospitals have paid multimillion dollar settlements for kickback "remunerations."

The Physician Self-Referral Statute, commonly called the Stark Law, prohibits a physician from making a referral to an entity for the furnishing of a designated health service for which payment may be made under Medicare or Medicaid if the physician or an immediate family member has a financial relationship with the entity, unless an exception applies. This being a strict liability law, no proof of specific intent is required. There are strict, complex, and narrowly construed "safe harbors" and exceptions to both the Anti-Kickback and Stark laws, but the field is complex, so providers contemplating health care business deals should proceed cautiously and seek specific advice from experienced legal counsel.

Dr. S.Y. Tan is a former professor of medicine and adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author.

Question: Which of the following is not a violation of Medicare/Medicaid fraud statutes?

A. Referring patients to a lab of which your spouse is part owner.

B. Hospital "remuneration," such as below-market office leases or expensive tickets to events.

C. Forgiving the co-pay portion of a retired colleague’s bill.

D. Marketing Food and Drug Administration-approved drugs for off-label use.

E. Negligently submitting a wrong-patient Medicare claim.

Best answer: E. Choice E is analyzed under the False Claims Act, which imposes liability for knowingly submitting a payment demand to Medicare/Medicaid. Legally, this means having actual knowledge (scienter) that the claim is false or acting in deliberate or reckless indifference to the truth. However, an error that is negligently committed is insufficient to constitute a violation. Choice A is a direct violation of the Stark Law against self-referral, and B and C are violations of the Anti-Kickback Statute (AKS). The current 2011 threshold is $359 for "complimentary" tickets to events, and the government has warned that routinely waiving co-payments could implicate the AKS. Choice D, of special relevance to pharmaceutical and device manufacturers, is illegal under the False Claims Act. Whereas doctors are allowed to prescribe drugs or devices for an off-label indication, the law forbids a manufacturer from marketing its products for a non-FDA–approved use.

With an annual budget of almost $1 trillion, it is estimated that some 10% or up to $100 billion of Medicare/Medicaid funds are lost to fraud, waste, and abuse. The Office of Inspector General is the independent oversight agency regulating such sources of loss. "Fraud" includes the obtaining something of value through intentional misrepresentation or concealment of material facts, "waste" includes the incurring of unnecessary costs as a result of deficient management, practices, systems, or controls, and "abuse" includes any practice that is not consistent with the goals of providing patients with services that are medically necessary, meet professionally recognized standards, and are fairly priced. [See: A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse.]

To combat fraud, waste, and abuse, Congress has enacted three separate laws: The False Claims Act, the Anti-Kickback Statute, and the Physician Self-Referral Statute. In addition, states have their own versions of these laws. Stiff penalties for violations include fines, restriction of practice privileges, and imprisonment. More than 5,000 physicians in the United States are currently excluded from participation in Medicare/Medicaid programs because of violations (N. Engl. J. Med. 2011;364:102-3).

It is illegal under the False Claims Act to submit false or fraudulent claims for payment to Medicare or Medicaid (31 U.S.C. §§3729-3733). Private individuals, frequently former employees, consultants, even competitors, can file a so-called qui tam action alone or in concert with the government, and they stand to collect a substantial bounty in the event the prosecution proves successful. The Act originated during the Civil War, when increased government procurement led to fraudulent claims by contracting parties, prompting President Abraham Lincoln to state: "Worse than traitors in arms are the men who pretend loyalty to the flag, feast and fatten on the misfortunes of the Nation while patriotic blood is crimsoning the plains of the South, and their countrymen are moldering in the dust."

In the health care field, claims may be false if the service is not actually rendered to the patient, is provided but already covered under another claim, is miscoded, or is not supported by the medical record. Intent to defraud is not a required element; deliberate ignorance or reckless disregard of the truth will suffice. Whistle-blowers, that is, qui tam plaintiffs, can receive up to 30% of any False Claims Act recovery. Penalties are severe, and include treble damages, costs and attorney fees, and fines of $11,000 per false claim. Imprisonment and criminal fines are additional penalties. One of the latest criminal schemes to defraud Medicare involved organized crime’s establishment of more than 100 bogus clinics in 25 states, using stolen identities of doctors and patients. The government became suspicious when submitted bills purportedly came from ophthalmologists for bladder tests, ENT surgeons for ultrasounds, and office visits from a forensic pathologist. The Department of Justice has reportedly arrested 28 people linked to this fraud (BMJ 2010;341:c5865).

Under the Anti-Kickback Statute (42 U.S.C. §1320a-7b), it is illegal to knowingly or willfully offer, pay, solicit, or receive remuneration, directly or indirectly, in cash or in kind, in exchange for referring an individual or furnishing or arranging for a good or service, and for which payment may be made under Medicare or Medicaid. Importantly, the case of the United States v. Greber established that there is statutory violation even if only one purpose of the remuneration is to induce referrals. It is relatively easy for a medical center to run afoul of this law, and several hospitals have paid multimillion dollar settlements for kickback "remunerations."

The Physician Self-Referral Statute, commonly called the Stark Law, prohibits a physician from making a referral to an entity for the furnishing of a designated health service for which payment may be made under Medicare or Medicaid if the physician or an immediate family member has a financial relationship with the entity, unless an exception applies. This being a strict liability law, no proof of specific intent is required. There are strict, complex, and narrowly construed "safe harbors" and exceptions to both the Anti-Kickback and Stark laws, but the field is complex, so providers contemplating health care business deals should proceed cautiously and seek specific advice from experienced legal counsel.

Dr. S.Y. Tan is a former professor of medicine and adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author.

Question: Which of the following is not a violation of Medicare/Medicaid fraud statutes?

A. Referring patients to a lab of which your spouse is part owner.

B. Hospital "remuneration," such as below-market office leases or expensive tickets to events.

C. Forgiving the co-pay portion of a retired colleague’s bill.

D. Marketing Food and Drug Administration-approved drugs for off-label use.

E. Negligently submitting a wrong-patient Medicare claim.

Best answer: E. Choice E is analyzed under the False Claims Act, which imposes liability for knowingly submitting a payment demand to Medicare/Medicaid. Legally, this means having actual knowledge (scienter) that the claim is false or acting in deliberate or reckless indifference to the truth. However, an error that is negligently committed is insufficient to constitute a violation. Choice A is a direct violation of the Stark Law against self-referral, and B and C are violations of the Anti-Kickback Statute (AKS). The current 2011 threshold is $359 for "complimentary" tickets to events, and the government has warned that routinely waiving co-payments could implicate the AKS. Choice D, of special relevance to pharmaceutical and device manufacturers, is illegal under the False Claims Act. Whereas doctors are allowed to prescribe drugs or devices for an off-label indication, the law forbids a manufacturer from marketing its products for a non-FDA–approved use.

With an annual budget of almost $1 trillion, it is estimated that some 10% or up to $100 billion of Medicare/Medicaid funds are lost to fraud, waste, and abuse. The Office of Inspector General is the independent oversight agency regulating such sources of loss. "Fraud" includes the obtaining something of value through intentional misrepresentation or concealment of material facts, "waste" includes the incurring of unnecessary costs as a result of deficient management, practices, systems, or controls, and "abuse" includes any practice that is not consistent with the goals of providing patients with services that are medically necessary, meet professionally recognized standards, and are fairly priced. [See: A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse.]

To combat fraud, waste, and abuse, Congress has enacted three separate laws: The False Claims Act, the Anti-Kickback Statute, and the Physician Self-Referral Statute. In addition, states have their own versions of these laws. Stiff penalties for violations include fines, restriction of practice privileges, and imprisonment. More than 5,000 physicians in the United States are currently excluded from participation in Medicare/Medicaid programs because of violations (N. Engl. J. Med. 2011;364:102-3).

It is illegal under the False Claims Act to submit false or fraudulent claims for payment to Medicare or Medicaid (31 U.S.C. §§3729-3733). Private individuals, frequently former employees, consultants, even competitors, can file a so-called qui tam action alone or in concert with the government, and they stand to collect a substantial bounty in the event the prosecution proves successful. The Act originated during the Civil War, when increased government procurement led to fraudulent claims by contracting parties, prompting President Abraham Lincoln to state: "Worse than traitors in arms are the men who pretend loyalty to the flag, feast and fatten on the misfortunes of the Nation while patriotic blood is crimsoning the plains of the South, and their countrymen are moldering in the dust."

In the health care field, claims may be false if the service is not actually rendered to the patient, is provided but already covered under another claim, is miscoded, or is not supported by the medical record. Intent to defraud is not a required element; deliberate ignorance or reckless disregard of the truth will suffice. Whistle-blowers, that is, qui tam plaintiffs, can receive up to 30% of any False Claims Act recovery. Penalties are severe, and include treble damages, costs and attorney fees, and fines of $11,000 per false claim. Imprisonment and criminal fines are additional penalties. One of the latest criminal schemes to defraud Medicare involved organized crime’s establishment of more than 100 bogus clinics in 25 states, using stolen identities of doctors and patients. The government became suspicious when submitted bills purportedly came from ophthalmologists for bladder tests, ENT surgeons for ultrasounds, and office visits from a forensic pathologist. The Department of Justice has reportedly arrested 28 people linked to this fraud (BMJ 2010;341:c5865).

Under the Anti-Kickback Statute (42 U.S.C. §1320a-7b), it is illegal to knowingly or willfully offer, pay, solicit, or receive remuneration, directly or indirectly, in cash or in kind, in exchange for referring an individual or furnishing or arranging for a good or service, and for which payment may be made under Medicare or Medicaid. Importantly, the case of the United States v. Greber established that there is statutory violation even if only one purpose of the remuneration is to induce referrals. It is relatively easy for a medical center to run afoul of this law, and several hospitals have paid multimillion dollar settlements for kickback "remunerations."

The Physician Self-Referral Statute, commonly called the Stark Law, prohibits a physician from making a referral to an entity for the furnishing of a designated health service for which payment may be made under Medicare or Medicaid if the physician or an immediate family member has a financial relationship with the entity, unless an exception applies. This being a strict liability law, no proof of specific intent is required. There are strict, complex, and narrowly construed "safe harbors" and exceptions to both the Anti-Kickback and Stark laws, but the field is complex, so providers contemplating health care business deals should proceed cautiously and seek specific advice from experienced legal counsel.

Dr. S.Y. Tan is a former professor of medicine and adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author.