Stratified Scarcity: Redefining the Standard of Care

Hall M.A. , “The Malpractice Standard Under Health Care Cost Containment” Law, Medicine and Health Care (this issue, 347).

Morreim E.H. , “Cost Containment and the Standard of Medical Care,” 75 Cal L Rev: 1719, at 1759 (hereafter, “CLR”). Hall errs in stating that the locality rule arose in deference to economic constraints such as resource limits and funding restrictions (Hall, 349–50). A closer review of medical history reveals that in the late 19th century when the locality doctrine was first articulated, (Small v. Howard 128 Mass. 131 (1880); Teft v. Wilcox 6 Kan. 46 (1870)) the differences between rural and urban physicians had little to do with money. Rather, slow and inadequate communication precluded the rural physician from learning as much or as quickly about the latest developments in medical practice, and a paucity of patients meant that he had fewer opportunities to keep his skills sharp. The lack of resources and facilities did not become a factor until much later, when medicine actually developed technologies that made a difference in patients' outcomes. Thus, recent modifications in the locality rule first began by acknowledging that improved communication and standardized education have largely erased earlier differences in skill and knowledge. Shilkret v. Annapolis Emergency Hospital Association 349 A.2d 245 (Md. App. 1975); Brune v. Belinkoff 235 N.E.2d 793 (Mass. 1968); A.H. McCoid, “The Care Required of Medical Practitioners” 12 Vanderbilt L Rev 549 (1959), at 569ff.

Morreim , CLR, supra note 2, see esp. pp. 1731 ff., 1735ff., and 1745. I do not believe that tort law's accommodation to economics can be quite so facile as Hall supposes, however. Though courts can embrace a wide variety of practice styles, including conservative approaches that reduce the quantity of care, they cannot readily accept clear reductions in the actual quality of care. A minority practice is not “respectable” if it leads to clearly poorer outcomes or markedly increased morbidity and mortality. Perhaps courts could accept a profession-wide “downshifting” of customs, yet those first individuals who would dare lead the drive toward lower, not just leaner standards, would indeed expose themselves to risk. Even cutbacks on marginally useful interventions carry some liability risk, where they exacerbate diagnostic or therapeutic uncertainties. See C.C. Havighurst, “Alternating the Applicable Standard of Care,” 49 Law and Contemporary Problems 265, at 269; C.C. Havighurst, “Private Reform of Tort-Law Dogma”, 49 Law and Contemporary Problems 143 (1986); CLR, supra note 2, at 1732–36; R. Bovbjerg, “The Medical Malpractice Standard of Care: HMOs and Customary Practice,” 1975 Duke Law Journal 1375 (1975), at 1404. Further, in the near future it will be increasingly easy for courts to identify practices that fall below recognized standards. Both the medical community and third party payers are aggressively undertaking “outcome studies” to determine which treatments are most effective for which ailments, and they are formulating “clinical protocols,” or “practice parameters” to guide physicians in the routine management of routine medical problems. As these emerge, it will become clearer which medical practices lead to substantially poorer outcomes, and which deviate significantly below the norms of the profession. See Roper W.L. Winkenwerder W. Hackbarth G.M. and Krakauer H. , “Effectiveness in Health Care,” 319 New England Journal of Medicine 1197 (1988); Ellwood P.M. , “Outcomes Management: A Technology of Patient Experience,” 318 New England Journal of Medicine 1549 (1988); Scheier R. , “Medicine by the Book,” American Medical News 1/6/89, pp. 1,14.

CLR, supra note 2, at 1721 ff.; see also Morreim E.H. , “Commentary: Stratified Scarcity and Unfair Liability,” 36 Case Western Reserve Law Review 1033 (1986); Morreim E.H. , “Cost Containment: Challenging Fidelity and Justice” 18(6) Hastings Center Report 20 (1988).

Hall has misread my CLR article at a number of points. He errs in supposing that my “central argument” is that “law is not capable of a general evolution in the direction of reduced care” (348), and in attributing to me the positions that: “the malpractice standard as presently stated precludes cost constraints” and that current law will not “accept a diminution of care” (347); “that the law is incapable in its present framework of responding to changed social circumstances” (350); and that “practice patterns will forever remain frozen in place” (349). As noted above, I acknowledge throughout my CLR article that malpractice law can embrace economic considerations, up to a point. What I do deny is that current law could tolerate diminution in the actual quality (as distinct from the quantity) of care or that it could countenance a “stratified” standard of care in response to the stratification of economic resources. See CLR 1724, 1730–45.

Epstein R.A. , “Medical Malpractice: The Case for Contract,” 1975 American Bar Foundation Research Journal 87 (1976) at 94–5; Green J.A. , “Minimizing Malpractice Risks by Role Clarification,” 109 Annals of Internal Medicine 234 (1988) at 235; Robinson G.O. , “Rethinking the Allocation of Medical Malpractice Risks Between Patients and Providers,” 49 Law and Contemporary Problems 173 (1986) at 182; Huber P.W. , Liability: The Legal Revolution and its Consequences, New York: Basic Books, Inc., 1988, at 5,8,20; J. O'Connell, “The Interlocking Death and Rebirth of Contract and Tort,” 75 Michigan Law Review 659 (1977), at 659.

King J.H. Jr. , “In Search of a Standard of Care for the Medical Profession: the ‘Accepted Practice’ Formula” 28 Vanderbilt Law Review 1213 (1975), at 1234; McCoid A.H. , Note 2; Bovbjerg R. , note 3, at 1384–5; Note, “Rethinking Medical Malpractice Law in Light of Medicare Cost-Cutting” 98 Harvard Law Review 1004 (1985), at 1003–1010.

Shepherd J.C. , The Law of Fiduciaries. Toronto: The Carswell Co. Ltd., 1981, at 21; E.H. Morreim, “Conflicts of Interest: Profits and Problems in Physician Referrals,” 262 Journal of the American Medical Association 390 (1939), at 391–92. For an excellent discussion of fiduciary law and the physician-patient relationship see Mehlman M.J. , “Fiduciary Contracting: Limits on Bargaining between Patients and Health Care Providers,” 51(2) University of Pittsburgh Law Review, forthcoming in 1990.

Bayer v. Beran 49 N.Y.S.2d 2 (1944).

Canterbury v. Spence 464 F.2d 772 (U.S. Ct. App., D.C. Cir. 1972), at 782.

Anderson A.G. , “Conflicts of Interest: Efficiency, Fairness and Corporate Structure,” 25 UCLA Low Review 738 (1978).

Hunt Peterson v. , 84 P.2d 999 (Wash. 1938), at 1000; Kingston v. McGrath 232 F.2d 495 (9th Cir. 1956), at 498; Wilkinson v. Vesey 295 A.2d 676 (R.I. 1972), at 692.

Smith v. Yohe 194 A.2d 167 (Pa. 1963), at 173; Clark v. U.S. 402 F.2d 950 (4th Cir. 1968), at 953; Wilkinson v. Vesey 295 A.2d 676 (R.I. 1972), at 683; Hicks v. U.S. 368 F.2d 626 (4th Cir. 1966). Wilkinson requires the physician to “avail himself of all the scientific means and facilities available to him…” at 683, italics added.

Wilkinson v. Vesey; Clark v. U.S.; Kingston v. McGrath; Peterson v. Hunt; Price v. Neyland 320 F.2d 674 (D.C. 1963); Coleman v. Wilson 88 A.1059 (N.J. App. 1913); Ramberg v. Morgan 218 N.W. 492 (Iowa 1928); McCoid, supra note 2, at 575–577; Mehlman M. , “Rationing Expensive Lifesaving Medical Treatments,” 1985 Wisconsin Law Review 239 (1985) discussing Blake v. District of Columbia, at 287.

Clark v. U.S.; Smith v. Yohe; Wilkinson v. Vesey; Blair v. Eblen 461 S.W.2d 370 (Ky. App. 1970s Kingston v. McGrath.

CLR, at 1721–24; Morreim, “Cost Containment: Challenging….”, note 4, at 22; Morreim E.H. , “Fiscal Scarcity and the Inevitability of Bedside Budget Balancing,” 149 Arch. Int. Med. 1012 (1989). See also L.C. Thurow, “Learning to Say ‘No’,” 311 New England Journal of Medicine 1569 (1984); Fuchs V.R. , “The ‘Rationing’ of Medical Care,” 311 New England Journal of Medicine 1572 (1984); Reinhardt U.E. , “Health Insurance for the Nation's Poor,” 6(1) Health Affairs 101 (1987); Reinhardt U.E. , “Future Trends in the Economics of Medical Practice and Care,” 56 American Journal of Cardiology 50C (1985).

Weissman J. and Epstein A.M. , “Case M x and Resource Utilization by Uninsured Hospital Patients in the Boston Metropolitan Area,” 261 Journal of the American Medical Association 3572 (1989); Nutter D.O. , “Medical Indigency and the Public Health Care Crisis,” 316 New England Journal of Medicine 643 (1988); Kellerman A.L. and Ackerman T.F. , “Interhospital Patient Transfer: The Case for Informed Consent,” 319 New England Journal of Medicine 643 (1988); Kellerman A.L. and Hackman B.B. , “Emergency Department Patient ‘Dumping’,” 78 American Journal of Public Health 1287 (1988); Friedman E. , “Public Hospitals Often Face Unmet Capital Needs, Underfunding, Uncompensated Patient-Care Costs,” 257 Journal of the American Medical Association 1698 (1987); Wall W.L. , “Cost Cuts are Seen Hurting Health Care,” Wall Street Journal 4/28/88, p.25; Shortell S.M. and Hughes E.F.X. , “The Effects of Regulation, Competition, and Ownership on Mortality Rates Among Hospital Inpatients,” 318 New England Journal of Medicine 110 (1988).

Wadlington W. Waltz J.R. and Dworkin R.B. , Law and Medicine; Mineola: The Foundation Press, Inc., 1980, at 470; Holder A.R. , Medical Malpractice Law, 2nd ed.; New York: Wiley Medical Publication, 1978, at 374; King J.H. Jr. , The Law of Medical Malpractice, 2nd ed.; St. Paul: West Publishing Co., 1986, at 26.

Gray v. Davidson 130 P.2d 341 (1942), at 345; Wadlington , supra note 18, at 470; Holder, supra note 18 at 374; King, supra note 18 at 26.

Wadlington , supra note 18, at 471; Holder, supra note 18, at 382.

Holder , supra note 18, at 376.

Wadlington , supra note 18, at 472; Holder, supra note 18, at 381–2.

Becker v. Janinski 15 N.Y.S. 675 (1891), at 677.

Holder , supra note 18, at 378; see also Gray v. Davidson, Becker v. Janinski; Note, supra note 7, at 1010; Ricks v. Budge 64 P.2d 208 (Utah 1937); Meiselman v. Crown Heights Hospital 34 N.E.2d 367 (N.Y. 1941); Bovbjerg, note 3, at 1385–6; Lanzafame R.P. , “Provider Liability Under Public Law 98–21: The Medicare Prospective Payment System in Light of Wickline v. State of California,” 34 Buffalo Law Review 1011 (1985); Lairson A.J. , “Reexamining a Physician's Duty of Care in Response to Medicare's Prospective Payment System,” 62 Washington Law Review 791 (1987).

Peterson v. Hunt, at 1000.

Wickline v. State of California 228 Cal.Rptr. 661 (Cal. App. 2 Dist. 1986), at 671.

Thurow L.C. , supra note 16; Fuchs V.R. , supra note 16; Reinhardt U.E. , “Health Insurance for the Nation's Poor,” supra note 16.

Egdahl R.H. and Taft C.H. , “Financial Incentives to Physicians,” 315 New England Journal of Medicine 59 (1986); Hall M.A. , “Institutional Control of Physician Behavior: Legal Barriers to Health Care Cost Containment,” 137 U. Penn. Law Rev. 431, (1988).

Bock R.S. , “The Pressure to Keep Prices High at a Walk-In Clinic,” 319 New England Journal of Medicine 785 (1988); Institute of Medicine, “Committee Report,” in Gray B.H. (ed.) For-Profit Enterprise in Health Care, Washington: National Academy Press, 1986; Hall, note 28, 1988.

Scovern H. , “A Physician's Experience in a For-Profit Staff-Model HMO,” 319 New England Journal of Medicine 787 (1988); Hillman A.L. , “Financial Incentives for Physicians in HMOs: Is There a Conflict of Interest?” 317 New England Journal of Medicine 1743 (1987).

Morreim E.H. , “Cost Containment: Challenging….,” supra note 4.

Arguably, neither is equality of care morally mandatory. See Morreim E.H. , “Cost Constraints as a Malpractice Defense,” 18(1) Hastings Center Report 5 (1988).

CLR, supra note 2, at 1757ff.

Shilkret v. Annapolis Emergency Hospital Association; Belinkoff Brune v. .

Becker v. Janinski.

King, supra note 7.

Schloendorff v. Society of New York Hospital 211 N.Y. 125 (N.Y. 1914).

Lockshin v. Blue Cross 434 N.E.2d 754 (Ohio App. 1980); Sarchett v. Blue Shield 729 P.2d 267 (Cal. 1987).

Melnick S.D. and Lyter L.L. , “The Negative Impacts of Increased Concurrent Review of Psychiatric Inpatient Care” 38:3 Hospital and Community Psychiatry 300 (1987); Hershey N. , “Fourth-Party Audit Organizations: Practice and Legal Considerations,” 14 Law, Medicine and Health Care 54 (1986).

Blum J.D. , “An Analysis of Legal Liability in Health Care Utilization Review and Case Management,” 26 Houston Law Review 191 (1989), at 200; Havighurst C.C. , “Private Reform…,” supra note 3, at 152.

James F.E. , “Blue Cross Plans Coverage Limits on Many Tests,” Wall Street Journal 4/1/87, p.29.

Hunt Peterson v. , at 1000.

Miller F.H. , “Secondary Income from Recommended Treatment: Should Fiduciary Principles Constrain Physician Behavior?” in Gray B.H. , ed., The New Health Care for Profit, Washington, D.C.: National Academy Press, Inc., 1983.

Wickline v. State of California, at 671.

Chew v. Meyer 527 A.2d 828 (Md. App. 1987), at 832.

The Wickline court hinted at this approach though, in a rather confusing move, the court also insisted that only physicians make clinical medical decisions such as to discharge a patient (p.671). To the extent that physicians are seen as the free and final cause of all clinical decisions, it is not clear how the court can see the third-party payer also to be directly causally implicated in those same decisions and patient outcomes. Other scholars, following Wickline, have made this same confusing claim. See, e.g. A.J. Lairson, supra note 24 (initially stating that third-party payers make only financial decisions and subsequently slipping into statements that they actually make treatment decisions).

Liability under corporate negligence doctrine may be expanding in its own right. See, e.g., Insinga v. LaBella 543 S.2d 209 (Fla. 1989), holding hospital corporately negligent for failing to take adequate care in selecting and retaining competent medical staff.

Blum J.D. , supra note 40, at 226, n.#222.

Epstein, supra note 6, at 94–5; Green, supra note 6, at 235.

Darling v. Charleston Comm. Mem. Hosp. 211 N.E.2d 253 (Ill. 1965).

Povar G. and Moreno J. , “Hippocrates and the Health Maintenance Organization: A Discussion of Ethical Issues,” 109 Annals of Internal Medicine 419 (1988), at 420; J.B.Stern, “Bad Faith Suits: Are They Applicable to HMOs?” 85 West Virginia Law Review 911 (1983).

At this point I must acknowledge that ERISA law could pose obstacles to any tort suits against third-party payers. Because the question is complex and controversial, however, I will leave it after thus acknowledging it. See Blum, supra note 40; Macaulay R.C. Jr. “Health Care Cost-Containment and Medical Malpractice: On a Collision Course” 21 Suffolk University Law Review 91 (1986).

Stipp D. , “Laws on Health Benefits Raise Firms' Ire,” Wall Street Journal 12/28/88, p.B-1.

R.S. 22: 657 (D).

Abraham K.S. , “Judge-Made Law and Judge-Made Insurance: Honoring the Reasonable Expectations of the Insured,” 67 Virginia Law Review 1151 (1981) at 1186ff.

Alexander Choate v. 105 S.Ct. 712 (1985), at 713, 722. See also Boone Tate v. 286 A.2d 26 (Pa. Commonwealth 1972).

In a move comparable to the Supreme Court's rejection of minimum benefit packages, some state governments have rejected the notion that all citizens are entitled to recover malpractice damages equally. Although the doctrine of charitable immunity has been declared by many observers to be moribund if not defunct, (see Rothenberg K.H. , “Who Cares?: The Evolution of the Legal Duty to Provide Emergency Care,” 26 Houston Law Review 21 (1989), at 26ff.; Note, “The Quality of Mercy: ‘Charitable Torts’ and their Continuing Immunity,” 100 Harvard Law Review 1382 (1987); King, supra note 18, at 295–6) the Supreme Judicial Court of Massachusetts has recently upheld that state's statute limiting liability of charitable institutions to $20,000. See English v. New England Medical Center 541 N.E.2d 329 (Mass. 1989).

In a somewhat analogous move, the State of Tennessee has brought certain sorts of charity care under its provisions of sovereign immunity. In its Community Health Agency Act of 1989, Section 15, (Pub.Chap.No.567; 68-2-1115) physicians or other primary care providers who are caring for indigent patients according to the provisions of the Act will be covered under the State Tort Claims Commission. That Commission restricts the total damages that citizens can be awarded in suits against the state to $300,000 per claimant and $1,000,000 per occurrence. (TN Claims Commission, 9-8-307, (s) (3)(e)). Although these are limits on damages that can be recovered in malpractice claims, rather than limits on the standard of care that the physician owes the patient in the first place, it is significant that in these and other charitable and sovereign immunity cases, states explicitly affirm that poorer citizens are not entitled to the same level of compensation for their malpractice injuries as wealthier citizens. Whether via a lower standard of care, or through a limitation on damage recovery, however, the result for the indigent patient is the same: a lower compensation for his injuries than he would receive under the same circumstances, if he were affluent.

Havighurst , “Private Reform…”, supra note 3; Robinson, supra note 6, at 183; Green, Note 6; Huber, Note 6; Epstein, supra note 6, at 149; Danzon P.M. , Medical Malpractice: Theory, Evidence, and Public Policy, Cambridge: Harvard University Press, 1985, at 209.

We will attend below to the question of the indigent, who have no contractual choices because they have no money.

Epstein , supra note 6; Havighurst , “Private Reform…”, supra note 3; Green, supra note 6; Robinson , supra note 6; Epstein R.A. , “Market and Regulatory Approaches to Medical Malpractice: The Virginia Obstetrical No-Fault Statute,” 74 Virginia Law Review 1451 (1988); see also Mehlman, supra note 8.

Havighurst , “Private Reform…”, supra note 3; Havighurst, “Altering…”, Note 3; Epstein, Note 6; Robinson , Note 6; Havighurst C.C. , “Reforming Malpractice Law through Consumer Choice,” 3 Health Affairs 633 (1984); Mehlman, supra note 8.

Epstein , supra note 60; Epstein, supra note 6; Robinson , supra note 6; Havighurst , “Altering…,” supra note 3; Havighurst , ‘Reforming’…” supra note 61.

Morreim , “Cost Containment: Challenging…,” supra note 4.

The contract-approach to the SRU outlined here does not fall prey to the arguments against private contracting and exculpatory clauses discussed in CLR at 1752ff. There, I argued that courts would probably reject any attempt to require the indigent to accept by contract a lower standard of care. The SRU contract-approach is entirely different: the indigent patient does not negotiate a lower standard of care with his physician, first because none of these contracts are with physicians, and second, because the indigent under our economic system do not negotiate their health care coverage at all (Alexander v. Choate 105 S.Ct. 712 (1985)). For better or worse, in the United States the indigent must simply accept (or not) whatever care is offered. The contract-based SRU simply acknowledges that (1) where there is a third-party payer, that payer must discharge its obligations in good faith and (2) whatever the level of resources available, the physician's SRU duties of advising and advocacy remain the same.

Abraham , supra note 55; Blum, supra note 40; Sarchett v. Blue Shield; Lockshin v. Blue Cross; Fields v. Blue Shield of California 209 Canl. Rptr. 781 (Cal. App. 4 Dist. 1985).

Mehlman , supra note 8.

Danzon , supra note 58, at 211; Robinson , supra note 6, at 185ff.

Abraham , supra note 55.

Epstein , supra note 60.

Havighurst , “Private Reform…”, supra note 3, at 168; Robinson , supra note 6, at 185ff.; Danzon , supra note 58, at 140ff.; Green, supra note 6, at 236; Blum , supra note 40; Abraham , supra note 55; Stern , supra note 51.