Administration of Medical 'No-Fault': Goals and Achievements
Posted: 18 Feb 1999
Abstract
"No-fault" is the leading alternative to traditional liability systems for resolving medically caused injuries, but the U.S. has only two operational examples: In the late 1980s, Virginia and Florida created non-tort compensation systems for newborns with severe birth-related neurological impairments, largely on the model of Workers Compensation. This paper offers the first detailed evidence on the administrative performance of these pioneering programs over seven years. For both states, it presents results from legislative history, executive interviews, as well as administrative and claims data. Using Florida's unusual data base on closed malpractice claims, it also compares no-fault speed of resolution and level of administrative cost with those of similar obstetrical tort cases. Key empirical findings are that < Both programs are small relative either to predictions or to injuries < Many Florida cases featured little dispute, but half involved major issues of eligibility/severity of injury or causality < No fault cases are resolved a third faster than tort, saving a full year < All of the time savings occur after filing, not before; it appears that lawyers take just as long to file no-fault as tort cases < No fault's "overhead" costs above benefits payments and reserves are far lower than tort's, especially with regard to attorneys' fees on both sides.
Based on its qualitative and quantitative review, the paper concludes that: 1. No-fault operations are feasible even in this contentious area of tort, notwithstanding the predictions of some no-fault opponents. 2. Even with limited scope, the programs achieve major gains in efficiency compared with tort (speed and cost). 3. Reaching the eligible population requires more than just legislating benefits and a claims process; outreach is needed, and attention must be paid to administrative mechanisms, incentives, and financing. 4. The survival of tort remedies is an Achilles heel for no-fault. 5. An expanded no-fault program could be more satisfactory in terms of compensation and injury prevention. 6. Larger no-fault programs, however, would have to operate under more formal rules and would face more attacks from the trial bar and more judicial scrutiny. Larger size could achieve some new economies of scale, but there might also be new costs of inevitable bureaucratization.
Note: Most data were complete through 1996; claims rates were updated as of early 1998 (note 102, page 88). The law review date ran a year behind actual chronological appearance.
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