Feds shouldn't meddle with medical malpractice

THE idea that we should reform the way we handle allegations of medical malpractice is enjoying a new vogue. At the end of a long cover story for Time magazine on high U.S. health-care costs, Steven Brill suggested that doctors who follow the best practices in the field should be shielded from liability. Peter Orszag, writing for Bloomberg View, argued that this policy could do a lot to reduce costs. One of the few health-care ideas that almost all congressional Republicans have agreed on, meanwhile, is caps on medicalmalpractice awards. Another proposal comes from Philip Howard: Specialized "medical courts," he says, should hear malpractice cases, just as there are courts devoted to patents, tax law and other areas where expertise matters.

Supporters of these ideas say they would do more than control costs. They would also improve the practice of medicine. Doctors would no longer order unnecessary tests, for example, to protect themselves against future lawsuits.

All of these are attractive ideas. And I don't deny that medical-malpractice law needs reform. Every doctor I know has a horror story. But lawsuits over medical care have traditionally been governed by state law -- and they should continue to be.

The federal government should keep out of this area, first, because we don't really know the best way to reform the system. Would a legal "safe harbor" for doctors really work, or would trial lawyers find a way to get around it? Pharmaceutical companies thought that the federal drug-approval process would protect them from the whims of state courts. They thought wrong.

Even if the safe harbor proved legally effective, it could have negative effects. Doctors dislike the current system partly because it limits their ability to do what they think best for their patients, but a safe harbor for supposedly best practices could just put them in a tighter straitjacket. By placing the practice of medicine under more centralized control, the idea will magnify the effects of any mistakes the experts make.

Caps on medical liability would prevent outrageous verdicts, but a cap set too low could reduce the incentive for doctors to avoid errors. Where should the cap be set? We don't know.

The second reason the federal government should let states set their own rules is that they can do so without imposing costs outside their borders. If West Virginia chooses rules that punish obstetricians and gynecologists, some of them will move to Pennsylvania, and care will get more expensive. That's too bad for West Virginians, but it's also an incentive for them to elect legislators who will get the balance right.

Other areas of tort law don't offer this opportunity for competition and self-correction. In product-liability cases, people can sue out-of-state corporations in their own states' courts using their own states' laws. Companies with national markets have to adjust to the most demanding jurisdiction. The most punitive state or locality can thus set a de facto national policy. Federal action to stop states from hurting the rest of the country is justified: The Constitution wisely gives the federal government the responsibility to protect commerce among the states.

There's no such justification in the case of medical torts. No state can use its medical-malpractice rules to force outsiders to bear extra costs. It's true that state rules can inflate the costs of federal health-care programs (that fact helped persuade President George W. Bush to call for federal legislation to cap malpractice awards). But the federal government has voluntarily picked those costs up, and can't use its own decision as a basis for intrusions.

A recent study by Michael Frakes of Cornell Law School suggests that states that shield health providers from liability when they follow best practices have much lower health costs than other states. Proponents of that idea are pointing to the study to justify federal action. What it shows, though, is that states are capable of implementing such a policy on their own and can capture the benefits.

Notice that neither of those things is true in product- liability cases. No state can protect its companies from lawsuits elsewhere. And if it clamps down on abusive product- liability litigation inside its borders, much of the benefit will accrue to residents of other states. Ken Cuccinelli, the attorney general of Virginia, is one of the few Republicans to warn his party against attempting to reform medical-malpractice laws from Washington, even though, as he wrote in 2011, "I am concerned that our legal system encourages more lawsuits than are appropriate," and even though this imposes higher medical costs.