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C H A P T E R 1 2 On Selling “No-Fault” D A V I D M . S T U D D E R T Introduction As an alternative to medical malpractice law for compensating patients who sustain injuries from health care, “no-fault” has a tragic public relations problem. Despite three decades of research painting a cautiously optimistic view of its merits, reasonably positive experiences with no-fault schemes in health care systems abroad, and attitudes among policymakers about the existing malpractice system that fluctuate between tolerance and panic, no-fault continues to live in the policy doghouse. It remains the darling of a small group of medico-legal researchers and is without champions among the most powerful stakeholders in American health care.1 Is no-fault’s pariah status deserved? Should it remain “championless”? This chapter addresses these questions in the context of recent developments in the field of patient safety and concludes that the answer to both questions is a resounding no. The primary failure of no-fault, and those who support it, has been translating its significant promise to the most important constituency of all—patients. Clear, careful, and broad-based articulation of the potential gains and the likely tradeoffs involved should lead health care consumers to demand, not merely tolerate, experimentation with this alternative approach to compensation. No-Fault Compensation: Principle and Precedent The current mechanism used to compensate patients who sustain injuries arising from medical care—the medical malpractice system—is a fault-based model of compensation. To obtain monetary payments for damages, patients must allege and prove that they suffered harm and losses due to a provider’s failure to meet the standard expected in their practice community, i.e., negligence (Keeton et al. 1984). By contrast, compensation programs that do not 203 c12 sharpe pp203-212 08/05/2004 17:04 Page 203 predicate compensation on proof of provider fault are popularly called “nofault ” systems (Bovbjerg and Sloan 1998). To qualify for compensation in these schemes, claimants must still prove that they suffered an injury, and that it was caused by an accident in a specific domain, such as the workplace, road, or hospital , but it is not necessary to demonstrate that the party who caused the accident acted negligently. Several no-fault compensation systems for medical injury exist abroad. Patients in New Zealand and several Scandinavian countries who believe they have been injured as a result of medical treatment may pursue remedies through no-fault systems in lieu of initiating medical malpractice litigation (Danzon 1994; Brahams 1988; Miller 1993). To be sure, the structures of health care financing and delivery in those countries differ from those in the United States; they have a considerably stronger public bent, and medical no-fault joins other relatively generous layers of social insurance. Nonetheless, I have previously argued that aspects of medical no-fault systems abroad could still provide useful insights for the design of models that would fit within the U.S. health care system (Studdert and Brennan 2001b). But no-fault systems are not completely foreign to American medicine. In response to soaring malpractice liability premiums in the mid-1980s and fears about the availability of obstetrical services, the legislatures in Florida and Virginia introduced administrative no-fault schemes for compensating the families of infants who sustained severe birth-related neurological injuries (Bovbjerg, Sloan, and Rankin 1997). These “carve out” schemes were supposed to displace tort litigation for this specific class of injuries. There is growing evidence to suggest they have been only moderately successful at achieving such jurisdictional hegemony (Studdert, Fritz, and Brennan 2000; Sloan et al. 1998). Nonetheless, most evaluations of the obstetrical no-fault schemes have reached quite favorable conclusions about their overall performance, especially with respect to their administrative efficiency and the accumulation of case management expertise by the compensation authority (Bovbjerg and Sloan 1998). For the most significant examples of no-fault compensation in operation in the U.S., however, one must look outside health care. A number of states have embedded no-fault structures into their schemes for compensating automobile injury.2 In addition, to avoid the onset of costly and complex mass tort litigation , the federal government has utilized a no-fault framework for several specific types of harm—most notably, the Federal Black Lung Program and the National Vaccine Injury Compensation Program. But the most far-reaching and visible examples of administrative no-fault compensation today are the workers’ compensation systems in operation...

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