Physicians' perceptions of the risk of being sued.

Journal of Health Politics, Policy and Law

Physicians' Perceptions of the Risk of Being Sued Ann G. Lawthers Harvard University A. Russell Localio Penn State University

Nan M. Laird Harvard Universit y Stuart Lipsitz Haward University Liesi Hebert Harvard University Troyen A. Brennan Harvard University Abstract We explore the deterrent effect of the tort system by assessing physician perceptions of the risk of being sued and the impact of those perceptions on their own practice. The data are from a mailed survey conducted in 1989 of a random sample of physicians who were practicing in New York State in 1984. The survey results were compared to the actual risk of suit using the between-group (Wald) test and logistic regression methods. We also surveyed physicians about practice changes undertaken in the last ten years, factors influencing practice standards, and the costs of being sued and included these in the analysis. On average, physicians estimate that 19.5 out of one hundred of their colleagues will be sued in a given year, approximatelythree times the actual rate, with significant differences by specialty, location, and suit history. Perceived risk is associated with self-reported changes in test-ordering frequency and reduction in practice scope. The median number of days lost from practice to defend a malpractice suit was three to five, and 6 percent of the physicians surveyed incurred some out-of-pocket expenses. These findings suggest that physicians respond to the messages sent by litigation in a manner consistent with the deterrent theory of tort litigation.

Most legal scholars agree that a major goal of tort law is deterrence, or the prevention of injuries caused by negligence (Prosser et al. 1984; Landes and Posner 1987). Traditional deterrence theory suggests that those who Supported in part by a contract from the New York State Department of Health, and by grant #I2415 from the Robert Wood Johnson Foundation, Princeton, N.J. Journal of Health Politics,Policy andlaw, Vol. 17, No. 3, Fall 1992. Copyright 0 1992 by Duke University.

Published by Duke University Press


464 Journal of Health Politics, Policy and Law

behave negligently will suffer economic sanctions, and, as a result, negligence will decrease overall. To determine whether malpractice litigation achieves this goal, it is important to know the answers to the following questions. First, do physicians perceive deterrent incentives in the tort system (see Geerken and Gove 1975)?If so, do such incentives lead physicians to avoid negligent behavior or engage in injury-reducing activities (see Hingson et al. 1987; Ross 1985; Paternoster et al. 1983)? Finally, what are the implications of these answers for policymakers? As part of a comprehensive investigation of medical injury and malpractice litigation in New York State (Harvard Medical Practice Study 1990) and to answer the first two questions, we conducted a mailed survey of physicians. In particular, we asked physicians what they perceived as their risk of being sued and whether they had undertaken any practice changes in the last ten years. While others (Weisman et al. 1989; ACOG 1988; Reynolds et al. 1987) have conducted mailed surveys of physicians to assess practice changes in response to the tort system, our study adds a new dimension in exploring how the perceived risk of a suit affects the chance that the physician reports a practice change. More importantly, we were able to compare physicians’ responses about their perceptions of risk and changes in practice with accurate estimates of the real risk of suit. This allowed us to make an objective assessment of physicians’ processing of the “tort signal,” that is, the message sent by the tort system that says negligent behavior will result in a malpractice suit. We also asked physicians to compare the tort system with other methods intended to prevent patient injury, such as hospital quality assurance programs and state or federal regulatory activities. Finally, we inquired about the time and out-of-pocket dollar costs of being sued, which are costs not covered by malpractice insurance. These costs represent the tort system’s direct financial incentive to avoid injury. The results of the survey provide evidence of a system that behaves in large part in accordance with the deterrence theory of torts. Methods Sample

The sample for the mailed survey was drawn from unpublished American Medical Association (AMA) Masterfile data for active New York State physicians in 1984 (52,764 physicians in total). It was stratified (1) by specialty group (specialties with a high risk of malpractice suit included obstetrics, neurosurgery, and orthopedics; those with medium risk



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included general surgery and associated specialties; and those with low risk, internal medicine and associated specialties); (2) by location (upstate, Long Island, Manhattan, and the non-Manhattan boroughs); and (3) by claims history (presence or absence of a claim filed since 1975). The specialty and location designations were taken from data reported to the AMA; the claims history was obtained from unpublished data provided by the New York State Department of Health. We drew a random sample with different sampling frequencies in each cell to achieve approximately equal numbers of physicians in each cell. We corrected for nonresponse by adjusting the initial sample weights (Kalton and Kasprzyk 1986). Definition of Variables

Each respondent’s specialty was grouped in one of the three risk categories just described. The location of practice was grouped in two ways for different analyses. When four groups were used, they consisted of (1) Nassau and Suffolk counties; (2) Bronx, Queens, Kings, Richmond, Rockland, and Sullivan counties; (3) New York, Ulster, Orange, and Westchester counties; and (4) all upstate counties. For some analyses, the first three groups were collapsed and compared with the fourth group. A history of litigation was recorded if a physician reported himself or herself as having been sued in the previous ten years. Age, sex, and primary professional activity (e.g. ,patient care, administration, research, other) were also self-reported.We measured the perceived risk of suit by asking, “In your opinion, for every 100 physicians in your specialty in New York State, how many do you think will be sued at least once this year?” Physicians were asked to check one of ten ordered categories, each category representing a range, e.g. , 10-15. For purposes of our analysis, we transformed the categories of this variable into numeric values by using the midpoint of the range checked. The actual risk of being sued was based on unpublished 1986 claims data from the New York State Department of Health and on 1986 AMA data on the number of physicians (AMA 1987). The year 1986 was chosen for the analysis as being both far enough in the past to have reasonably complete reporting of claims and yet near to the date of the survey ( 1989). For each physician specialty and location, we calculated the ratio of number of claims opened in 1986 to number of physicians active in patient care in 1986. The data for the numerator of the ratio were obtained from the New York State Department of Health and included approximately 550 claims for which physician specialty or location could not be deter-




mined (which amounted to 19 percent of all physician claims); these were distributed proportionally over all categories. Physicians in the AMA database with unspecified specialty were excluded from the specialty-specific denominator calculations but included in the overall calculation. The claims ratio is a proxy for the ratio of suits per one hundred physicians. A claim, as commonly understood, is a demand by a patient for compensation for injury and financial loss arising out of medical care. A suit is litigation in court. While suits arise from claims, claims do not necessarily lead to suits. We used claims for the ratio analysis because claims represent the only available large-scale source of data. All analyses presented in this paper that refer to suits are based on physicians’ reports of suits against themselves. We also asked physicians to estimate the chance of a patient’s filing suit if the patient suffered an unintended adverse outcome that caused disability because of either nonnegligent or negligent medical management. Practice changes were measured by asking physicians whether they (1) ordered more tests and procedures today than they did ten years ago; (2) took more time to explain the risks associated with diagnosis and treatment; (3) saw fewer patients or performed fewer clinical procedures; or (4) spent more time on paperwork, including the maintenance of the patient record. We asked about the influence of seven factors in maintaining standards of care on an ordered scale, ranging from O-“not an influence”-to 5“important influence.” These factors included peer relations; morbidity/ mortality conferences and tumor boards; medical journals; continuing medical education; implications of a possible malpractice suit; the peer review organization (PRO); and clinical care rules, guidelines, andlor standard operating procedures developed by the clinical department and/ or hospital. The costs of defense against a malpractice suit were measured by inquiring about days lost from practice, out-of-pocket attorney expenses (i.e., costs not covered by insurance), and direct payments to patients (not covered by insurance). Analysis

Our calculations of means and standard errors incorporate the sampling design (Shah et al. 1989).We used the Wald test, based on corrected standard errors, to test the equality of the means for multiple group comparisons (similar to an F-test from a one-way analysis of variance) (see Wald



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1945). This test compensates for the problem of multiple comparisons and thereby avoids overstating the significance of the results. Comparisons between two groups were based on a weighted t-test (using the corrected standard errors). We employed multiple logistic regressions to analyze questions about practice changes within the last ten years. The purpose of the modeling was to examine the relative impact of a selected set of variables on the outcomes in question. Some potential variables of interest-for example, whether the physician incurred out-of-pocket expenses-were omitted because the numbers of cases in the database were insufficient. Standard errors were adjusted for the sampling design (see Shah et al. 1981). To analyze the influence of various factors on standards of care, we first calculated the weighted average perceived influence of each factor. We then used the Wald test to determine the equality of these means. To test for differences between the influence of malpractice litigation and the other factors, we calculated individual differences and used the least-significantdifference method (Snedecor and Cochran 1980; Kleinbaum et al. 1980). As with the Wald test, the least-significant-differencemethod is used to adjust for the potential problem of finding significant results by chance when making multiple comparisons. ResuIt s

Response

Of the 2,103 physicians sampled, we could not find mailing addresses for 62 (2.9 percent), and 218 (10.4 percent) of the questionnaires were ultimately returned as undeliverable. Thus 1 ,823 were located (86.7 percent). The number responding to the survey was 739 and the effective response rate was 40.5 percent (739/ 1,823), which compares favorably with similar surveys (Weisman et al. 1989; ACOG 1988; Peters et al. 1986; Charles et al. 1984; Charles et al. 1985). We found differences between respondents and nonrespondents on all demographic variables except specialty. The specialty distribution of respondents and nonrespondents was essentially the same, while respondents tended to be older than nonrespondents (mean age, fifty-one years versus forty-eight years), male (92 percent versus 86 percent), from upstate (32 percent versus 21 percent), board-certified (65 percent versus 45 percent), and U.S. medical school graduates (73 percent versus 61 percent). Respondents were also more likely to have had a claim filed against them in the past (51 percent versus 36 percent).




As described above, we corrected for the nonresponse by adjusting the initial sampling weights. We used subclasses based on a cross-classification of age and location for two reasons. First, age is correlated with claim experience and board certification. Older physicians are more likely to have had a claim filed against them and to be board-certified. Second, location is associated with foreign medical graduate status. The New York City counties of Kings (Brooklyn), Queens, Bronx, and Richmond (Staten Island) have proportionally more foreign medical graduate doctors than other parts of the state. We did not adjust for sex differences because there were few women in the original sample ( 12 percent). Perceived Risk

Physicians tend to overestimate the risk of being sued, but the estimates do correlate with specialty and location risk gradients. Table 1 shows that there were substantial and significant differences in perceived risk among specialty groups, locations, and suit status. High-risk specialties (obstetrics, orthopedics, and neurosurgery) had a perceived risk of being sued that was almost three times that of low-risk specialties (internal medicine and associated subspecialties) and 76 percent higher than the overall average perceived risk of 19.5 suits per one hundred physicians, for all respondents. In contrast, low-risk specialties perceived their risk of being sued as approximately 35 percent less than the overall average. When perceived risk was contrasted with actual risk, all specialty groups substantially overestimated the true chance of being sued. Low-risk groups overestimated the risk of being sued by a factor of 3, whereas high-risk groups overestimated the risk by 1.6. Physicians in Long Island counties had the highest perceived risk of being sued, while those in the New York City area had the lowest. All groups overestimated the chance of being sued, with upstate physicians overestimating the risk by a factor of 3.8 and Long Island physicians by a factor of 2.4. Individuals who had previously been sued had a higher perceived risk of being sued than those who had not. The perceived risk of suit from an adverse outcome or medical injury caused by negligence is quite high. Physicians believed they had a 45 percent chance of being sued for cases in which a patient suffered an unintended adverse outcome that caused a disability because of nonnegligent medical management. If negligence was involved, physicians believed they had a 60 percent chance of being sued.



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Table 1 Physicians’ Perception of the Risk of Being Sued, New York State, 1989 Number Weighted Ratio of Average Actual Perceived/ Physicians Perceived Standard Risk in Actual Responding Risk Error 1986 Risk

Physician Charactenstic Specialty Group Low-Risk: Internal Medicine a

300

12.1b

0.9

3.8

3.2

Medium-Risk: General Surgery

182

23.4b

1.6

10.9

2.1

High-Risk: Obstetrics, Orthopedics, Neurosurgery

243

34.3b

1.7

20.8

1.6

141

25.5d

2.3

10.8

2.4

Bronx, Kings, Queens, Richmond, Rockland, Sullivan Counties

156

15.7d

1.3

5.8

2.7

New York , Orange, Ulster, Westchester Counties

210

18.4d

1.4

5.9

3.1

Upstate New York

214

20.9d

1.2

5.5

3.8

6.6

3 .O

Geographic Location Nassau, Suffolk Counties

Suit Status Never Sued Sued at Least Once Overall f

248

1.2

484

1.o

732

19.5

0.7

Note. The question asked of physicians was: “In your opinion, for every 100 physicians in your Specialty in New York State, how many do you think will be sued at least once this year?” a. Includes associated specialties such as family practice, gastroenterology, neurology, and others. b. Wald test for equality of means: GSQ 151.4,2 d.f., p < .OO01. c. Includes associated specialties such as ophthalmology, plastic surgery, urology, and others. d. Wald test for equality of means: GSQ 16.5,3 d.f., p = .OOO9. e. t = 6.03,~ < .01. f. Overall N slightly higher than sum of specialty/location/suitcategories due to nonresponse on specialty/location/suitquestion.




Table 2 Practice Changes Made 1988-1989 by New York State Physicians as Reported in 1989

Change Order More Tests and Procedures Take More Time to Explain Risks Reduced Number of Patients or Procedures Spend More Time on Paperwork

Number of Physicians Responding

Weighted Percent Making Changes

653 654 653 655

81.2 77.7 39.5 90.0

Effect of Perceived Risk

Physicians appear to take several steps in light of the risk of suit. Table 2 presents the weighted proportion of individuals reporting a particular practice change within the last ten years. The most common reported change was increased paperwork, including maintenance of the patient record; the least common was reduced scope of practice. Various groups of physicians choose different strategies in the face of tort deterrence. Table 3 shows the results of logistic regression analyses examining practice changes. The table presents the odds of a physician with a particular characteristic undertaking a practice change relative to all the odds of all other physicians undertaking the same change. Because relative odds are dependent upon the underlying units of measurement, even apparently small relative odds can be statistically and practically significant. Age was significantly associated with a reduction in the scope of practice: a sixty-five-year-old physician was 53 percent more likely than an otherwise similar fifty-five-year-oldphysician to have decreased the scope of his or her practice. Older physicians were also significantly more likely to order more tests and procedures; a fifty-five-year-old physician was 40 percent more likely to order more tests than a forty-five-year-old physician, other things being equal. Those doctors who expressed higher perceived risk of suit behaved in the same manner. For example, a physician with average characteristics who perceived that the risk of being sued was 25 per 100 physicians was 50 percent more likely to order more tests and 14 percent more likely to initiate a practice reduction than a similar average colleague who estimated the risk to be 15 per 100 physicians. Physicians who had been sued, on the other hand, were more likely to spend time discussing risks of medical care with patients. For the outcome



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Table 3 Relative Odds of Surveyed Physicians Undertaking Practice Changes, by Characteristicsof Physicians, New York State, 1989 Odds of Change in Outcome Variable a

Explanatory Variable Ageb GenderC Location d High-Risk Specialtye Medium-Risk Specialty f Non-HMO Office Practiceg Ever Suedh Perceived Risk of a Suit i

Order More Tests and Procedures 1.03* 0.50 0.78 1.51 0.91 2.19* 0.94 1.04*

Explain Risks

Reduce Number of Patients or Procedures

Do More Paperwork

1.01 0.70 1.19 1.25 1.35 1.28 1.89* 1.42

1.05* 1.15 0.77 1.18 1.10 2.10* 0.66 1.01*

0.98 0.45 1.49 0.95 1.85 1.89 1.44 1.01

a. Odds presented in the table are ep ,corresponding to odds of change in the outcome variable for a unit change in explanatory variable. b. Odds of undertaking a practice change for every one-year increase in age. c. Odds that a male physician undertakes a practice change, relative to a female physician undertaking a practice change. d. Odds that a physician on Long Island or Greater New York City undertakes a practice change, relative to upstate physicians. e. Odds that a physician in the specialties of obstetrics, orthopedics, or neurosurgery undertakes a practice change, relative to physicians in internal medicine and related medical specialties. f. Odds that a physician in the specialties of general surgery and other surgical specialties undertakes a practice change, relative to physicians in internal medicine and related medical specialties. g. Odds that a physician with a primary professional activity self-reported as patient care in a private practice setting undertakes a practice change, relative to physicians in other settings, such asHMOs. h. Odds that a physician with a self-reported history of a malpractice suit undertakes a practice change, relative to physicians without a malpractice suit. i. Odds of undertaking a practice change for every unit of change in perceived risk.

“Take more time to explain the risks associated with diagnosis and treatment ,”only litigation history was a significant influence. Sued physicians were almost twice as likely as similar nonsued colleagues to report taking more time to explain risks. The outcome variable “Spend more time on paperwork, including the maintenance of the patient record ,” had no significant associations. We also ran models substituting the perceived risk of suit if the patient had a bad outcome and perceived risk of suit if the patient’s injury was due to negligence for the overall perceived risk of being sued. With these




Table 4 Influence of Various Factors in Maintaining Standards of Care as Reported by New York State Physicians, 198ga ~

~~~

Number of Physicians Weighted Standard Responding Mean Error

Factor Continuing Medical Education

656

3.73*

0.05

Medical Journals

654

3.61*

0.05

Peer Relations

652

3.27*

0.07

Implications of a Possible Malpractice Litigation

654

2.54

0.08

Clinical Care Rules, Guidelines, Standard Operating Procedures Developed by Clinical Department and/or Hospital

654

2.52

0.08

Morbidity/Mortality Conferences and Tumor Boards

652

2.33

0.07

External Organized Peer Review

654

1.78*

0.07

Note. Wald test for equality of means: GSQ 767.73,6 d.f., p < .001. a. “To what extent do each of the following factors help you maintain standards of care in your practice?” Responses scored 0 to 5 with 0 = not an influence, 5 = important influence. *Significantly different from “Implications of a Possible Malpractice Litigation” at p < .05, least significant difference.

models, both of these explanatory variables were significantly associated with all outcome variables, even “Spend more time on paperwork.” The significance of the other explanatory variables remained unchanged. Tort System and Quality Improvement Alternatives

Table 4 shows the various factors that doctors reported as influencingthem to maintain standards of care in their practice. Our analyses found little variation in mean score for each factor by specialty, region, or suit status. The factors physicians reported as most influential in maintaining their standards of care were continuing medical education and medical journals; peer relations placed third, The threat of a malpractice suit is said to be significantly less important than these factors. It has about the same importance as clinical care rules and morbidity and mortality conferences and ranks about average (2.5) in relevance on a scale of 0 to 5. It is significantly more influential than the least regarded factor, external review, such as the peer review organization. Published by Duke University Press


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Perceptions 473

Economic Impact of Litigation

The median number of days lost from practice to defend a malpractice suit was three to five (Table 5). At approximately $ 1,119 per day gross income, this translates into a loss of $3,357 to $5,595 to defend a malpractice suit (AMA 1989). Of the fifty physicians who retained their own attorney, thirty-one reported incurring any out-of-pocket expenses, and most expenses were in the $1,000 to $4,999 range. Thus, 6 percent (weighted) of all sued physicians had out-of-pocket attorney expenses. Almost 3 percent of physicians reported incurring out-of-pocket settlements to patients, with 1 percent reporting expenses of greater than $25,000. Discussion

Judgments about the risk of being sued are central to traditional deterrence theory. Perceptions of the certainty and severity of sanctions will influence the degree to which individuals refrain from injury-producing activities (Erickson et al. 1977). In tort law, the threat of suit is intended to decrease negligent behavior that leads to injuries. Yet there is very little empirical information on the manner in which potential defendants process the deterrent signal. While physicians have been surveyed in the past, the studies did not try to correlate physician perceptions with the deterrent signal (see Weisman et al. 1989; ACOG 1988; Reynolds et al. 1987). According to risk assessment literature, individuals base such judgments of risk on subjective assessments of a variety of factors, both environmental and internal, including the similarity of the situation about which they are making a judgment to those of which they have personal knowledge and experience (Tversky and Kahneman 1982;Kahneman and Tversky 1982; Vlek and Stallen 1980; Brehmer 1987). Many physicians report that malpractice litigation seems quite irrational to them, frequently producing claims in cases in which the standard of care apparently was met (Harvard Medical Practice Study 1990). This factor, combined with the complexities of patient care and the influences of professionalism, could presumably lead to quite irrational perceptions of and reactions to tort deterrence on the part of doctors. This in turn would undermine one of the major justifications for malpractice litigation: its purported influence on preventing patient injuries. Our findings show that the deterrent signal is processed in a rational fashion by physicians. Perceptions correlate closely with gradients in real risk, especially between specialties, though less so between locations. We also find that physicians overestimate the actual risk of being sued.




Table 5 Costs of Malpractice Litigation among New York State Physicians Ever Sued, 198ga Number of Responses

Weighted Percent

51 109 156 91 31 31 469

14.4 24.2 31.8 17.3 6.4 5.9 100.0

0 $1-999 $1,000-4,999 $5,000-9,999

437 6 18 6

Greater than $lO,OOO Total

468

93.6 1.1 4.1 1 .o 0.2 100.0

Cost Category Days Lost from Practice Because of Suit 0 Days 1-2 Days 3-5 Days 6- 10 Days 11-20 Days 20+ Days Total Legal Expensesb

Out-of-pocket Paid to Patient 0

$1-4,999 $5,OOo-9,999 $10,ooO-1 9,999 $20,OOO-24,999 Greater than $25,OOO Total

1

440 2 1 1

2 4 450

97.8 0.3 0.5 0.2 0.4 0.9 100.0

a. Physicians were asked: For your most recent closed suit (whether the suit was dropped, settled, or paid): How many days did you lose from your practice, including depositions, attorney’s meetings, other time spent in preparation of your defense, and court appearances? What were your out-of-pocket attorney expenses, that is, expenses not covered by insurance? How much did you have to pay the patient directly for settlement or judgment, that is, amount not covered by insurance? b. These represent out-of-pocket attorney expenses, to the physicians, not covered by insurance.



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This overestimate may be explained several ways. The publicity surrounding malpractice premiums and large malpractice awards may generate an atmosphere of anxiety among physicians, which then leads them to estimate a risk of suit far in excess of the actual likelihood of being sued (Bell 1984). Or it may be personal knowledge of an individual who has been sued that causes physicians to attribute a higher probability to being sued than actual facts warrant (Tversky and Kahneman 1982). Most physicians know at least one colleague who has endured an unpleasant litigation experience and may feel that only good fortune stands between them and a malpractice suit (Harvard Medical Practice Study 1990). Factors such as dread of the outcome (being sued) and feelings that the outcome is uncontrollable are often associated with assessments of higher risk (Slovic et al. 1980; Hale 1987). For physicians in low-risk specialties, the high perceived risk relative to actual risk may in part reflect the tendency to exaggerate low-frequency events such as malpractice suits (Kahneman and Tversky 1979). Perhaps the most interesting fact on physicians’ perception of the risk of suit is that they believe that 60 percent of negligent adverse events lead to suits. This perception varied by specialty (55 percent-low-risk versus 69 percent-high-risk), location (55 percent-New York City versus 67 percent-Nassau and Suffolk counties), and suit status (56 percent-not sued versus 62 percent-sued). While 60 percent is far from a standard of always being sued for negligence, it is thirty times higher than the actual risk of being sued for negligence. We found that fewer than 2 percent of all patients in New York State injured due to negligence, as defined by the Medical Practice Study protocol, actually filed malpractice claims (Localio et al. 1991). This overestimate is in many ways beneficial to the aims of the tort system. While our research on claims and medical injuries suggests the real tort deterrent signal is weak, physicians’ processing of the signal leads to a much higher perception of suit and, presumably, more effort to avoid future suits. On the other hand, there are also negative aspects of the deterrent signal: physicians perceive a substantial chance of being sued for nonnegligent adverse events (45 percent). Perceptions varied by specialty (41 percent-low-risk versus 57 percent-high-risk), location (41 percentNew York City versus 52 percent-Nassau and Suffolk counties), and suit status (42 percent-not sued versus 48 percent-sued) . Apparently physicians perceive the tort system’s signal as potentially sanctioning al€ adverse outcomes, not just those involving negligence. This could lead to behavior on the part of physicians which does not produce better care, but




rather generates more expensive care-so-called defensive medicine-or leads to limitations on access to care. Alternatively, physicians may misperceive the risks of being sued because they have difficulty making any type of risk assessment. If this were true, one might argue that patients have cause for concern when their doctor recommends a treatment with potentially negative outcomes. Our data suggest that physicians do not make accurate assessments of the risk of being sued, but then, physicians receive little truly unbiased and objective information about these risks. The risk assessment literature suggests that individuals modify their risk assessments based on information available to them (Tversky and Kahneman 1982; Kahneman and Tversky 1982). With respect to risk assessments associated with the practice of medicine, physicians have access to considerable data and information in the scientific literature about treatments and their risks. These data allow the practicing physician to offer patients informed choices about the risks of treatment. Our analysis suggests that physicians take reasonable steps in response to the threat of suit. Like automobile drivers, who are more likely to change their behavior if they believe they are at greater risk for being stopped for speeding or drunk driving (Ross 1985), physicians appear to be influenced by perceptions of the likelihood of being sued. The two major practice changes reported as motivated by the general threat of a suit are an increased use of tests and procedures and a reduced scope of practice. Perception of the specific threat of being sued for negligent actions leads physicians to take more time to explain the risks of procedures to a patient and to increase paperwork, in addition to making the changes mentioned above. These changes of behavior are particularly striking in the malpractice context. The deterrent influence of tort law is mediated , theoretically, by imposition of monetary sanctions. In medical malpractice however, these sanctions are thought to be rather minimal since medical liability insurance usually insulates physicians from most of the financial consequences of their negligent actions (Danzon 1985). In theory, experience or merit rating (Rolph 1981; Sloan et al. 1989) could correct the problem by linking premiums to the level of care taken by the provider, but this option is rarely used (Phelps 1978). Our research shows lost time and income, as well as out-of-pocket payments for legal assistance. This means that monetary sanctions are real for some sued physicians. Of course, the changes in physician behavior may be due less to quantitative financial loss than to the psychological burden of being sued.



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Malpractice litigation can take on the quality of a “public degradation ceremony” (Bell 1984: 984) for physicians, with possible consequences including emotional distress, a deterioration of patient/physician relations, expended time and energy, and reduced independence (Bell 1984). And other studies demonstrate that being sued has significant adverse psychological and professional consequences for physicians (Charles et a1. 1984; Charles et al. 1985). Physicians interviewed as part of the Medical Practice Study often described the litigation process as extremely unpleasant (Harvard Medical Practice Study 1990). Thus both the risk of incurring lost time and out-of-pocket dollar costs, as well as the distress and anguish of being sued, lead to deterrence. What are the implications of these findings for policy? In terms of the tort system, these results demonstrate that physicians have received the message that tort system sanctions are unpleasant and to be avoided, In this paper, we have presented evidence about the receipt of the tort system’s deterrent signal, adding thereby to the debate about the nature of tort deterrence. In response to the signal, physicians appear to change behavior. True, the tort system’s deterrence seems to be based on misperception (an overestimation of risk), but the net result is actions that may have the potential for positively impacting the quality of medical care. Indeed, given physicians’ overestimation of the risk of suit, one must question the marginal utility of efforts to increase the number of malpractice suits brought by patients or to improve the identification of negligently practicing physicians. On the other hand, there may be an important decrease in negligent activities if the perceived certainty of suit (given negligence) increases from 60 to 90 percent. Without objective data on how injury rates vary as the deterrent signal varies, it is impossible to determine the appropriate amount of tort deterrence. One may speculate what happens to the deterrent signal as the tort system is modified through statutory reform, as has occurred in many states over the past decade (Committee on Ways and Means 1990). These reforms tend to decrease claims rates, providing relief from what physicians have characterized as a malpractice crisis. As the threat of litigation is reduced, then perceived risk of legal accountability may decline. To the extent that such perceived risk of accountability actually stimulates activities geared towards prevention, efforts to avoid injuries would also decline. However, it is reasonable to expect that other measures, such as hospital quality assurance activities and state and federal regulatory activities, could be substituted for the deterrent incentives of the tort system. In-




deed, some tort reform explicitly requires such activities in return for measures that decrease claims (Brennan 1991). Our survey demonstrates that physicians already perceive hospital quality assurance efforts, such as tumor boards and clinical care guidelines developed by hospital clinical departments, to be at least as effective as the tort system in helping them maintain standards of care in their practice. This suggests that hospital quality assurance activities have face validity in the minds of physicians. Validity contributes to legitimacy, which in turn affects willingness to participate in a system (Tyler 1990). Thus, increases in hospital quality assurance and quality management activities may well be able to offset some changes in the risk of liability. What this study cannot answer is how tort system deterrence compares to other vehicles for promoting the quality of medical care. The tort system is not without drawbacks as a method for encouraging quality. First, it does not discriminate well between negligent and nonnegligent behaviors. Sanctions are visited upon any sued physician, not just those who have acted negligently. Secondly, it is not clear whether the responses to the tort system signal noted in this study contribute to better quality care. Some additional tests may be both necessary and beneficial, the appropriate response to deterrence; others might be wasteful or even harmful, and costly, the result of “over-deterrence” or defensive medicine. Reduced scope of practice may be an appropriate limitation to work within a physician’s expertise; alternatively, it may reduce access to essential services. Access to prenatal care and obstetrical care could suffer, if, for example, competent physicians with high perceived risk of suit chose to limit their practice to gynecology or low-risk patients. Finally, tort deterrence is essentially a negative incentive. Positive incentives may promote longer-lasting behavior changes. Several caveats attend our conclusions. First, we acknowledge that physician self-reports might be biased towards giving a socially desirable response. This no doubt affects the analysis of the importance of various programs to the maintenance of quality care, since it is to the physician’s advantage to minimize the effect of an influence, such as malpractice suits, that have negative repercussions. Second, we recognize concerns that the results may be biased due to nonresponse. Although our response rate was similar to that of other mailed surveys of physicians (Weisman et al. 1989; ACOG 1988; Peters et al. 1986; Charles et al. 1984; Charles et al. 1985), one might argue that respondents were more concerned about malpractice, therefore biasing their responses to survey questions. In particular, differential response



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rates among subgroups may affect the validity of results. We believe our reported differences among specialty groups are robust, since the response rates by specialty were essentially identical. We took steps to minimize the bias introduced by nonresponse in other groups by adjusting the weights in our sample to reflect response differences by age and location. Adjusting for differences in age implicitly adjusts for differences in claims experience. Since respondents were more likely to have had a claim filed against them, and hence potentially were more interested in malpractice, our results probably represent an upper bound on perceived risk. However, the differences we report between perceived and actual are so striking that even among low-response groups, the no-malpractice suit and New York City boroughs groups, the perceived risk of being sued for a negligent adverse event is 56 percent and 63 percent respectively, much higher than the actual chance of being sued (2 percent). Finally, our claims per one hundred physicians is lower than that reported by the widely cited General Accounting Office (GAO 1987) study. We have identified several possible sources of the difference between our estimate and the GAO’s. The GAO data probably include “potential claims,” which are adverse events reported by a provider to the insurer, not formal claims filed by the patient. This practice, although an accepted actuarial method of estimating future losses, can lead to severe overcounting of actual claims, because many of the potential claims never mature into actual claims. Moreover, we believe the GAO data might have included incidents incurred but not reported. Insurers often legitimately use such incidents to improve the accuracy of their actuarial predictions. All the claims we used had actually been filed, and the insurers had certified to the New York State Insurance Department that reporting was complete. Perhaps most importantly, our research addresses only part of the question of whether the tort system prevents negligent injuries. We have assessed physician experience of tort system incentives, both monetary and psychological. Through analysis of several measures of perceived risk, we find that physicians do receive the message that tort system sanctions are unpleasant and to be avoided. Physician response to the incentives apparently translates into actions and activities that have potential for reducing patient injuries. Consequently we show that perceived risk can influence behavior .




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