DHA 715 Week 3 Liability and Litigation Risk Analysis Example

Disclose, Apologize, Resolve: Managing Liability Risk After a Wrong-Site Surgery in a Rural Hospital Region

[Student Name]

University of Phoenix

DHA/715: Risk Management in Complex Health Organizations

Week 3 Assignment

[Instructor Name]

[Date]

The rural hospitals, the claim, the claims history, costs and the resolution program are composites written for a model paper; research findings come from the sources cited.

Three months after the wrong-site knee surgery, the regional vice president received a copy of a letter from the patient's attorney requesting records and notice of a claim. The surgeon had apologized privately, but the hospital had said little, on the advice of its outside defense firm. The patient, a retired school bus driver, told a local reporter that no one had explained what happened. This paper analyzes the region's liability risk and proposes a different response.

What a Malpractice Claim Requires

To win, a claimant has to prove four elements: that the clinician owed a duty of care, that the care fell below the accepted standard, that the breach caused an injury and that the injury produced damages. In the knee case, duty and breach are clear, since operating on the wrong site falls below any standard. Causation and damages depend on how much lasting harm the unnecessary procedure caused.

How Claims Move

A claim begins with a notice or request for records, moves through investigation and expert review and ends in withdrawal, settlement or trial. Most claims close without trial, but the process takes years and generates legal costs on both sides even when no payment is made.

How Claims Relate to Errors

Claims are an imperfect signal of negligence. Studdert and colleagues reviewed 1,452 closed claims drawn from five insurers and found that 37% did not involve errors, most of which were not compensated, that 73% of claims involving injury from error were paid and that for every dollar paid to claimants, 54 cents went to administrative expenses such as lawyers and experts (Studdert et al., 2006). The system mostly separates meritorious from weak claims, but slowly and at great expense.

Exposure by Specialty

Liability risk concentrates in certain specialties. Using insurer data covering 40,916 physicians from 1991 to 2005, Jena and colleagues found that 7.4% of physicians had a claim each year and 1.6% a claim leading to payment; neurosurgeons faced claims at 19.1% a year, far above psychiatrists at 2.6%, and the study reported a mean payment of $274,887 and an estimate that by age 65, 75% of physicians in low-risk specialties and 99% in high-risk specialties had faced a claim (Jena et al., 2011).

The Region's Own Claims History

Over five years, the four rural hospitals and their employed physicians received 31 claims. General surgery, emergency medicine and obstetrics accounted for 22 of them. Delayed diagnosis in the emergency department was the most common allegation, followed by surgical complications and birth injuries. Nine claims led to payment, and total incurred costs, including defense, reached about $6.8 million.

What Drives the Region's Costs

Three drivers stand out. Defense costs were high because claims took an average of three years to close. Two large obstetric payments made up almost half of indemnity costs. And several claims began after patients said they felt ignored or misled, suggesting that communication failures, not only clinical ones, set claims in motion. Patients often sue to find out what happened, and silence answers that question in the worst way.

The Traditional Response

The region's past approach followed common advice: say little, route communication through risk management and counsel and defend unless liability is certain. The approach assumed that apology would be used as evidence and that disclosure would invite claims. The knee case showed its costs: the patient's anger grew with each month of silence, and the story reached the local paper.

Evidence From a Disclosure Program

Another approach exists. The University of Michigan Health System began fully disclosing medical errors and offering compensation in 2001. Comparing claims before and after the program, Kachalia and colleagues found that, measured per 100,000 patient encounters each month, the rate of new claims dropped to 4.52 from 7.03 and the lawsuit rate to 0.75 from 2.13; median resolution time shortened to 0.95 years from 1.36, and total liability costs showed a rate ratio of 0.41, though the before-after design could not prove causation (Kachalia et al., 2010).

Why Disclosure Fits the Region

Disclosure fits the rural region for three reasons. It is right: patients are owed an honest account of harm. It aligns with the safety program, which depends on learning from events rather than hiding them. And rural hospitals depend on community trust; a hospital seen as concealing errors loses patients to distant competitors.

Designing a Communication-and-Resolution Program

The program has six steps. Staff report harm events immediately. A trained responder contacts the patient or family within twenty-four hours to acknowledge the event and promise an explanation. The event is investigated using the safety program's systems approach. Findings are shared with the patient in a meeting, with an apology when care fell short. Where care was unreasonable, the region offers fair compensation early, with the patient encouraged to seek independent advice. Lessons are fed back into the safety program.

Roles

The regional risk manager leads the program. Physician and nurse responders at each hospital receive training in disclosure conversations. Defense counsel reviews compensation offers but no longer controls communication. A patient advocate supports families through the process.

Working With Insurers and Counsel

The network's captive insurance company must agree to early offers, and physicians covered by outside insurers need assurance that their carriers will participate. The region will negotiate a shared protocol with insurers covering reporting, offer authority and how payments are recorded. North Carolina law and the state's reporting requirements will be reviewed with counsel before launch.

Responding in the Knee Case

The region will apply the program immediately. The chief medical officer and the surgeon will meet the patient and his family, explain the investigation's findings, apologize and describe the changes made to surgical safety. The region will offer compensation for his additional surgery, lost function and distress, and cover the cost of an independent attorney review.

Anticipated Objections

Some surgeons fear disclosure will increase claims and harm their records. Evidence from Michigan suggests the opposite, and the program will protect physicians who participate in good faith. Some board members fear paying claims that might have been won. Payment is offered only where the review finds care fell short; where the standard was met, the region explains its findings and stands behind its clinicians. Clinicians who disagree with a review's conclusion can ask for a second opinion from a peer outside their hospital.

Measures

The program will track the time from event to first contact, the share of harm events disclosed, the number of new claims and lawsuits, time to resolution, defense and indemnity costs and patient and staff views of the process. Results will be reported quarterly to the regional risk committee.

Conclusion

The wrong-site surgery claim showed the cost of silence. Claims research shows a slow and expensive system, exposure concentrated in surgical and emergency specialties and a large share of costs spent on administration. Evidence from a disclosure-with-offer program suggests that honesty, apology and early fair compensation can reduce lawsuits and costs. A communication-and-resolution program, linked to the safety program, gives the rural region a better way to respond.

References

Jena, A. B., Seabury, S., Lakdawalla, D., & Chandra, A. (2011). Malpractice risk according to physician specialty. New England Journal of Medicine, 365(7), 629-636. https://doi.org/10.1056/NEJMsa1012370

Kachalia, A., Kaufman, S. R., Boothman, R., Anderson, S., Welch, K., Saint, S., & Rogers, M. A. (2010). Liability claims and costs before and after implementation of a medical error disclosure program. Annals of Internal Medicine, 153(4), 213-221. https://doi.org/10.7326/0003-4819-153-4-201008170-00002

Studdert, D. M., Mello, M. M., Gawande, A. A., Gandhi, T. K., Kachalia, A., Yoon, C., Puopolo, A. L., & Brennan, T. A. (2006). Claims, errors, and compensation payments in medical malpractice litigation. New England Journal of Medicine, 354(19), 2024-2033. https://doi.org/10.1056/NEJMsa054479