HMO LIABILITY: Intended To Deter, Not Foster, Lawsuits

      Writing in the Washington Post, University of Southern California professor of medicine William Schwartz argues that the purpose of the malpractice insurance system, including making HMOs and other health plans subject to patient lawsuits, is to deter malpractice in the first place. Schwartz contends that both Democrats and Republicans fail to appreciate this goal. Republicans, he notes, believe the lawsuit provision would lead to an explosion of "capricious lawsuits," while Democrats say the current immunity enjoyed by health plans "siphons funds from patient services and directs it to the bottom line of the HMO balance sheet." Both views are misguided, Schwartz argues: "They each start with the erroneous assumption that the main goals is to compensate injured patients. In fact, the goal of a properly working liability system is to deter future negligent behavior by showing providers that negligence can have severe economic consequences for them." He continues: "If the protections for HMOs are struck down, will a flurry of capricious lawsuits by greedy lawyers follow? Not likely. Competent malpractice lawyers, virtually all of whom are paid through contingency fees, have no incentive to bring suits that have little or no merit. ... There will, however, be many valid suits as patients become aware they have a recourse not now available to them. These suits will be very much in society's best interests because they will stimulate more appropriate resource allocation by providers" (9/15) (Schwartz is also a senior fellow at the Pacific Center for Health Policy and Ethics.)