Disclosure of Medical Adverse Events: A Study of the University of Michigan Health System Model

Issue Vol. 9 No. 1 January 2007 By M. Kate Welti, Esq.

Disclosure of medical adverse events by health care institutions is a relatively new development in the effort to improve patient safety and contain escalating medical liability costs. A notable example of this approach was implemented by the University of Michigan Health System (“UMHS”) starting in 2001, with significant positive results.[1]

The UMHS model has garnered widespread attention by the media as well as the health care community, and offers a complement or alternative to statutory tort reform. The UMHS chief risk officer, Richard Boothman, recently testified before the U.S. Senate in a hearing held to examine medical malpractice reforms. He also advised Sens. Hillary Rodham Clinton and Barack Obama in the creation of their 2006 MEDiC Act, a bill promoting disclosure of medical adverse events.[2]

Given the demonstrated benefits of the UMHS approach, it is likely that similar efforts will increasingly be made by Massachusetts health care institutions, with significant implications for the local health care, insurance and legal communities.

In 2001, UMHS was experiencing the challenges that health care systems nationwide continue to face today with respect to medical liability and safety issues. In general, malpractice litigation was costly and too often displayed only a tenuous relationship to actual incidences of negligence.[3]

At the same time, there was a gathering movement to improve patient safety. A 1999 Institute of Medicine study reported that up to 98,000 deaths result annually from medical errors, with 90 percent of those deaths arising from failed systems and procedures. [4] Health policy analysts recognized that reporting and analyzing adverse events permitted more effective ways to reduce error, yet disclosure was often avoided by providers due to fears of malpractice lawsuits.[5] Ironically, several studies show that a significant reason why patients sue physicians or hospitals is anger over a sense of stonewalling, with a lawsuit seen as a means to obtain more information about their care.[6] Thus, the non-disclosure mentality had the opposite of its intended effect; injured patients seeking accountability and answers often had no alternative but to hire a lawyer.

UMHS did have the benefit of tort reform measures, which were enacted by the state of Michigan in 1994. Among other provisions, the statutes instituted a pre-suit notice requirement. The requirement created a six-month “cooling off period” in which the patient provided notice that they intended to file a lawsuit. Tort reform, however, had little effect on the UMHS claims numbers and even less impact on the way in which it responded to claims. The six-month notice period was not utilized to respond to claims in an attempt to head off litigation, or even to prepare for litigation. The reforms also failed to prompt any initiation of systems that would allow UMHS to learn how to improve patient safety from the adverse events.

As of August 2001, UMHS had 262 open claims, which included pre-suit notices and active litigation. The portfolio for reserves was valued at more than $70 million. Annual litigation costs were approximately $3 million. The average time to resolution of claims and lawsuits was 20.3 months. At that time, UMHS created and implemented a disclosure policy of medical adverse events. The results were startling. By August 2005, the number of claims had decreased to 114. Total reserves on medical malpractice claims dropped by more than two-thirds. Annual litigation costs were down to $1 million. The average time to resolution of claims was 9.5 months.

The UMHS disclosure policy is based on three principles, which were publicized at the outset to UMHS staff, plaintiff and defense counsel in southeastern Michigan, and the courts. The first is that UMHS will compensate quickly and fairly when inappropriate medical care causes injury. Second, UMHS will defend medically appropriate care vigorously. Finally, UMHS will reduce patient injuries (and therefore claims) by learning from mistakes.

According to Boothman, the key to implementing the disclosure policy principles is first understanding the difference between reasonable and unreasonable care, and then determining whether, and to what extent, the patient’s outcome was adversely affected. The pre-suit notice window is crucial to that process. In 2001, UMHS began to utilize that period by creating a claims analysis infrastructure and system that uses that time to make a determination as to whether the care was reasonable or not, and accordingly, to decide whether to proceed to litigation or settlement.

After UMHS learns of a concern, claim or a potential claim, the following process takes place, with some variation. First, if risk management learns of an adverse event near or at the time of the occurrence, they will contact the patient or family in order to meet with them about the incident. The lines of communication are open at this point to assist the patient or family in responding to the adverse event. If risk management learns of the adverse event by way of notice of a claim, there may or may not be an initial contact with the patient. Risk management then undertakes an initial legal triage and assessment of the claim.

Following the initial assessment, there is a more in-depth legal/risk management investigation, and analysis of risk and value of the claim. Expert opinions are obtained to assist in the determinations of the reasonableness of the care, and the matter is reviewed by a medical committee. At the conclusion of the process, UMHS makes a determination of the reasonableness of the care. It engages in a dialogue with the patient, and, if the patient is represented, with the patient’s lawyer. Expert opinions are exchanged, and the decision is made among the parties whether to litigate the claim, settle it or agree that there is no valid claim.

The UMHS policy also reflects the view that injured patients are seeking answers and assurances that the event will not happen to another patient rather than the financial windfall that a lawsuit judgment may bring. Quality improvement mechanisms are accordingly prominent in the model. When a claim is referred to the medical committee during the pre-suit investigation, the incident is reviewed from a patient safety perspective, to determine whether any systemic changes could be implemented to decrease the likelihood of re-occurrence. Peer review may also be undertaken at this juncture.

When the policy was first initiated, the disclosure process was only triggered by the threat of a claim. Over time, the quality improvement component has expanded so that any time risk management is made aware of an event that may have patient safety, quality improvement or peer review implications, they will route the event through the same system as potential claims in order to make improvements in their care.

The UMHS model goes against the grain of conventional wisdom in several respects. One of the most obvious is disclosing its findings and expert opinions on the reasonableness of care prior to the commencement of suit. The UMHS view is that if it concluded that the care was unreasonable, it would be moving to resolve the claim. It is not clear, based on available information, what effect disclosure of these negative views has in litigation if the patient refuses to settle, or whether it would increase the settlement figure. On the other hand, if UMHS finds that the care was reasonable, disclosure of those findings would not prejudice them if the patient pursued litigation after the disclosure.

The apparent successes of the UMHS approach are many. As set forth above, claims and transaction costs have significantly declined. There may also be other advantages that may be harder to quantify, such as reduction in medical errors due to clinical quality improvement measures.

The model has also received positive reviews from two usually disparate camps: medical faculty and plaintiff attorneys. According to a 2006 survey of UMHS faculty physicians, 98 percent fully approved of the UMHS approach to malpractice claims. A survey of the Southeastern Michigan plaintiffs’ bar at the same time showed that 81 percent said they had changed their approach in response to the new UMHS model, and the same percentage said that their costs were lower. Eighty-six percent of attorneys agreed that UMHS transparency allowed them to make better decisions about the claims they chose to pursue, and 57 percent admitted that they declined to pursue cases after 2001 that they believed they would have pursued before the changes were employed. Finally, 71 percent admitted that when they settled cases with UMHS, the settlement amount was less than anticipated.

In spite of the benefits UMHS has reaped from its model, it remains an open question as to whether it can be successfully applied in Massachusetts. Tort reforms enacted by the state of Michigan, particularly the pre-notice period for claims, were essential to the initial effort. The pre-notice period continues to provide valuable lead-time for investigating adverse events and offering settlement outside of a lawsuit. Although a disclosure policy may be applied locally without difficulty if the patient is engaged before they file a claim, if the institution first learns of the adverse event through the filing of a lawsuit, it becomes more problematic. Settlements of civil claims on behalf of a physician are reported and publicly available on the Board of Registration in Medicine Web site.

Massachusetts physicians would thus be understandably nervous about disclosure and would be likely to exert pressure on their affiliated hospitals to avoid adopting policies that involve disclosure after a suit has been filed. These differences are not insurmountable, however, as at least one Massachusetts facility, Fallon Clinic, has instituted a disclosure policy.[7] It appears likely that more health care systems will follow suit with some form of a disclosure policy, even if not as extensive as the UMHS model.

[1] The information in this article regarding the UMHS disclosure policy is taken from the following materials: “Medical Justice: Making the System Work Better for Patients and Doctors,” Testimony of Richard C. Boothman, Chief Risk Officer, University of Michigan Health System before the United States Senate, Committee on Health, Education, Labor and Pensions, Thursday, June 22, 2006; Materials from a presentation at Fallon Clinic on September 27, 2006, featuring Richard Boothman, entitled Disclosure of Medical Adverse Events; and correspondence from Richard Boothman, dated October 30, 2006, responding to questions of the author.  The information is used and reprinted with permission of Richard Boothman.

[2] National Medical Error Disclosure and Compensation (MEDiC) Bill (S. 1784).  The bill is currently in committee. 

[3] Sage, William M., Medical Liability and Patient Safety, Health Affairs, 22, No. 4 (2003): 26-36.  See also, Mariner, Wendy K., Miller, Frances H., Medical Error Reporting: Professional Tensions Between Confidentiality and Liability.  Issue Brief.  Boston: Massachusetts Health Policy Forum, Nov. 6, 2001: 1-35. A Harvard Medical Practice study published in 1991 showed that fewer than 0.2 percent of patients injured by negligence actually filed a claim.

[4] Clinton, Hillary R., Obama, Barack, Making Patient Safety the Centerpiece of Medical Liability Reform, N.Engl.J.Med. 2006; 354:2205-2208.

[5] Mariner, Wendy K., Miller, Frances H., Medical Error Reporting: Professional Tensions Between Confidentiality and Liability.  Issue Brief.  Boston: Massachusetts Health Policy Forum, November 6, 2001: 1-35.

[6] Id. at 13.

[7] Based upon conversation with Risk Management Department of Fallon Clinic on October 30, 2006.  The policy went into effect on October 1, 2006.