Malpractice mediation undermined by HHS ruling

A little-noticed HHS ruling on reporting medical malpractice claims could get in the way of state efforts to promote an alternative dispute-resolution method that several academic medical centers have used effectively to improve quality and reduce lawsuits and damage awards.

On May 22, then-HHS Secretary Kathleen Sebelius signed a memorandum concluding that healthcare providers in Oregon and Massachusetts must report the out-of-court settlements to the National Practitioner Data Bank, which tracks medical liability payments and physician sanctions. They must do so even though laws in those states waive reporting in certain cases handled through disclosure, apology and offer programs.

Such programs, pioneered by the University of Michigan, promote full disclosure of medical errors and allow providers to apologize and provide compensation for alleged negligence without that apology being used against them in court.

Sebelius' memo stated that all medical liability claims that include a written demand for payment must be reported to the databank even if the cases are resolved under those disclosure, apology and offer programs. The memo took aim at Oregon law's “early discussion and resolution” provision, which it described as having been “explicitly designed to avoid medical malpractice reporting to the NPDB for any claims that are part of the new process that do not proceed to litigation.”

Any case that generates “a written claim or written demand for payment” must be reported to the databank, HHS said. The Oregon law, which went into effect July 1 and has not processed any cases yet, states that a payment made to a patient under the measure's mediation mechanism “is not a payment resulting from a written claim or demand for payment.”

The Massachusetts law went into effect in November 2012 and a pilot program was initiated at six hospitals. It since has been expanded to include a seventh hospital and a multispecialty physician group. At issue is the definition of malpractice “claim,” which HHS said includes written demands for payment resulting from pre-litigation settlements. Massachusetts had proposed to only report cases where it was determined that a practitioner failed to meet the standard of care.

HHS said that cases had to be reported regardless of whether care was determined to be up to standards and that the state's “pre-litigation notice” to initiate the meditation process qualified as a “written claim” that must be reported.

The Oregon law arose from the work of a task force including representatives from the state medical and plaintiff lawyers' associations. “We were hoping we would get more data from adverse events … so we would get more information about what goes wrong with procedures,” said state Rep. Jason Conger, an attorney who sponsored the bill. “If by filing a notice of an adverse event you're triggering an obligation to report an incident of malpractice, there would be a lot fewer notices filed.”

Bethany Walmsley, executive director of the Oregon Patient Safety Commission, which administers the mediation program, said, “Oregon's only intent is to improve patient safety and streamline the process so that patients and families can receive the timely information, care and, if appropriate, compensation than what the traditional medical malpractice system has offered patients.”

According to the guidance the state received last month from HHS, she said, the only cases that won't get reported to the NPDB are ones in which no payment or compensation is exchanged.

HHS noted in the memo that the two state laws were reviewed after the agency received requests from Oregon Gov. John Kitzhaber; Public Citizen, a consumer advocacy group; and the Massachusetts Alliance for Communication and Resolution following Medical Injury, which includes insurers, providers and patient-safety advocates.

Last September, the Public Citizen Health Research Group sent a letter to Sebelius asserting that the 2013 Oregon law “undermines the usefulness” of the databank by allowing doctors who entered mediated settlements to move to another state where the incident would not be on the books.

Dr. Michael Carome, director of the Health Research Group, applauded HHS' decision. “Other states were likely to follow Oregon's lead and it would ultimately undermine reporting to the (databank) and ultimately undermine patient safety,” he said.

Dr. Alan Woodward, a past president of the Massachusetts Medical Society, said his state's goal is to roll out a methodology that has been successful at medical centers affiliated with the University of Michigan, University of Illinois, University of Washington and Stanford University. “It's not about minimizing compensation to anyone who is injured, it's about making sure you don't repeat similar events,” he said. “The number of new cases drops dramatically by learning from your mistakes.”

Follow Andis Robeznieks on Twitter: @MHARobeznieks