A system of liability by contract will not work in all cases. Many patients have a high probability of death or disability at the time they enter a hospital. Doctors are unlikely to want to pay the cost of those outcomes, should they be ruled “adverse,” and it would be unreasonable to expect them to do so. Further, when patients seek care at emergency rooms, no one has time to evaluate the likelihood of death or permanent injury prior to the delivery of care. Even in these cases, however, an alternative to the current system would seem to be desirable.

Accordingly, medical providers who offer their patients the opportunity to escape the current malpractice system by contract should have the chance to escape the system themselves in cases where contracts are impossible or impractical. In particular, these providers would be able to insist as a condition of treatment that all malpractice claims must be submitted to binding, unappealable arbitration. (The exception would be cases of gross negligence.)

Two questions immediately arise: Who would the arbitrators be? What criteria would they use to make decisions?

Many people already serve as arbitrators, including former judges. They are selected and agreed upon by plaintiff lawyers and defense lawyers in cases where the parties want to avoid the costs, burdens, and risks of trial by subjecting their cases to a respected, impartial third party. Since these arbitrators are already in the business and have reputations for integrity and good judgment, they are an ideal source for malpractice arbitration.

If there is a shortage of suitable arbitrators, other options exist. For example, a case could have two arbitrators—one with a history of representing plaintiffs, the other with a history of representing defendants. The two arbitrators must agree on a final resolution; if they cannot agree, neither gets paid, and two more arbitrators replace them.

What criteria should arbitrators use in deciding cases? Basically, the same criteria that would be relevant in a reformed tort system. However, unlike the liability-by-contract system, here the paramount issue is one of fault. Doctors (and their insurers) pay nothing unless they are found to be at fault, and the amount they would pay would be based on the degree to which they are at fault.

As in the case of liability by contract, doctors would be freed from the burden of the traditional malpractice system, provided they do certain things. For example, they must make their quality data available to all patients; they must cooperate with all safety bodies; and they must (in arbitration cases) make all relevant data available to the patient without costly discovery.

In future installments of this series, we will look at how malpractice reform could benefit expert witnesses and the courts. For more details, please consult my book, Priceless: Curing the Healthcare Crisis, published by the Independent Institute.

[Cross-posted at Psychology Today]