Soaring bill for medical errors

Would charging doctors an ACC levy mean better treatment for you, the patient? Health reporter MARTIN JOHNSTON ventures into a medical and political minefield.

The patient went to his doctor with an infection and was prescribed Augmentin, a common antibiotic - even though the doctor knew he was allergic to it.

The result: a severe rash and swelling - and a medical misadventure claim to the Accident Compensation Corporation.

ACC cites the case in a paper about medical failures by GPs which it has released in the hope of forcing down the number of misadventure cases involving all health workers.

The corporation is considering levying health workers for the mounting costs of medical misadventure, now paid for by earners and taxpayers.

ACC upheld more than 560 claims for medical-misadventure injuries last financial year, 483 of them for medical mishap and about 80 for medical error.

It defines error as the failure of a registered health worker to observe the expected standard of care and skill. This can include negligence. Mishap is defined as a rare but severe adverse consequence of correct treatment.

Cash payouts on claims this year are expected to reach $19.3 million, rising to $25.5 million in three years. By then, the outstanding liability for claims which may involve further payments for many years is expected to have reached $287 million, from $186 million last year. By last year, the corporation had 1419 ongoing misadventure claims on its books.

The idea of levying health workers is politically sensitive and would require law changes. Doctors have panned the idea, but patient advocates and some lawyers welcome it.

ACC legislation has permitted the levy since 1992, but Governments have not collected it. The Health and Disability Commissioner, Ron Paterson, sparked debate amid a Herald investigation into medical misadventure in February when, on his appointment, he asked why the levy had never been collected.

This week he argued that health workers bore a moral responsibility to contribute to the cost of remedying their mistakes. He believes that levying them to help pay the ACC bill could relieve the public pressure for a return to the right to sue doctors for compensatory damages.

Under our "no-fault" ACC system, patients can sue health workers only for exemplary, punitive damages. But they must first pass a stiff legal test to prove that gross negligence was involved.

An ACC report on the levy says that if it is to be collected, the law should change to allow the corporation to charge all people involved in health treatment. But it says further study is needed to confirm which providers it would be cost-effective to levy.

The present law says "registered health professionals" can be levied. That includes doctors, chiropractors, dentists, dental technicians, nurses, physiotherapists and optometrists, but not people such as audiologists, acupuncturists and osteopaths.

The report was sent 12 days ago to the Government, which is drafting legislation to reintroduce lump-sum compensation. The Minister for Accident Insurance, Michael Cullen, is still considering the document.

One reason for the rising cost is that ACC's medical misadventure account was set up only in 1992, so more claims are starting than ending. Some claimants with serious injuries, such as children who suffered brain damage at birth, are still young but will require treatment for the rest of their lives.

Ironically, ACC's report suggests that another reason for the cost increase is the advance of medicine. Greater complexity means greater scope for errors or mishaps in areas including heart bypass surgery, cervical-cancer screening and child health.

Based on ACC's estimates, if a levy was introduced paediatricians would pay the most, $26,000 a year, if forced to meet the full costs of all ACC claims in their area. Obstetrician-gynaecologists would pay $23,500, surgeons $21,000, and anaesthetists $2600. GPs, at $500, would come below chiropractors ($850) but ahead of nurses ($5).

Paediatricians have objected to their top ranking, which includes claims relating to perinatal care, the period from 12 weeks before a full-term birth to one week after. Professor Barry Taylor, president of the Paediatric Society, said those claims would normally be attributed to obstetrics.

Worldwide, the commonest compensation system for medical failures is litigation-based, forcing doctors to take out costly medical indemnity insurance. In the United States, obstetrician-gynaecologists pay $NZ94,000 a year, paediatricians $19,000 and GPs $22,000.

ACC says it found no evidence that the incidence of medical misadventure could be lowered by financial incentives such as making health workers pay a levy.

Most doctors already pay around $1000 to $1500 each a year to the Medical Protection Society for insurance cover.

Solicitors who have a sole practice or are partners in a firm pay $500 plus GST a year into a Law Society fidelity fund. Professional indemnity insurance varies widely but can cost big law firms up to $4000 a lawyer annually.

Doctors in private practice would pass ACC medical misadventure premiums on to patients or health funders "relatively easily," the corporation says.

However, ACC also acknowledges that premiums could make a difference in hospitals and other healthcare institutions - forcing them to lower their patient-risk levels - but only if the law was changed to allow the extension of "experience rating" from individual health workers to employers. Experience rating is the adjustment of premiums based on past performance.

The report says experience rating of individuals or employers would sheet home responsibility for medical misadventure, but might be perceived as a further step away from the founding principle of community responsibility.

There are also fears that if ACC charged doctors in each branch of medicine for the claims arising there, specialists would flee from the high-risk areas such as obstetrics, especially if experience rating was included.

The report says that some American states have been forced to set up no-fault schemes to cover some high-risk areas of medicine.

The report canvasses levying to cover just error claims (and not mishap claims) but concedes that since error comprises just 16 per cent of the value of medical misadventure claims this would be uneconomical.

Dr Pippa MacKay, chairwoman of the Medical Association, which opposes the levy, said it would be illogical to levy for mishaps as they were not usually the doctor's fault.

Midwives and doctors practising obstetrics would not be able to recoup all the premium as they received a fixed Government fee for maternity services, she said. The levy would worsen the funding difficulties which had forced many general practitioners out of maternity care.

The ACC report says the Medical Protection Society has warned that if the levy is imposed it will advise members to challenge all findings of medical misadventure against them.

A medico-legal adviser to the society, Dr Denys Court, said that under the present scheme, "a very good piece of social legislation," the society encouraged its members to support patients' claims for mishap cover.

But if they were to be charged to cover mishap costs, "where it has been found that their standard of care and skill has been appropriate ... there would be a natural reluctance to be involved in that process."

Waitemata Health's chief executive, Dwayne Crombie, said the levy was a "very trite" approach to a serious issue. He predicted that it would only add costs and perpetuate a defensive style of medicine.

He said a levy of $10,000 on doctors would cost his hospital and health service around $2 million a year - the equivalent of about 40 nurses' salaries.

"I don't know where we would find it. That's $2 million of healthcare we wouldn't be offering people."

Victoria University ACC specialist John Miller said doctors were "on a good number" compared with other professionals, who could be sued. Doctors should pay more towards the costs of the injuries they caused, although the levy raised difficult issues.

Auckland lawyer Stuart Grieve, QC, who represented women at the Gisborne cervical screening inquiry, said it "defies belief" that doctors are not required to pay the levy. He wants the return of the right to sue.

He said people who had suffered as a result of Gisborne pathologist Dr Michael Bottrill's misreading of cervical smears would have received hundreds of thousands in compensation in Australia.