Making Hospitals Accountable: Hospital-Level Liability Could Revive the Dormant Deterrent Power of Tort Liability

By Peters, Philip G., Jr. | Regulation, Summer 2009 | Go to article overview

Making Hospitals Accountable: Hospital-Level Liability Could Revive the Dormant Deterrent Power of Tort Liability


Peters, Philip G., Jr., Regulation


Medical errors are far too common. Yet, researchers have found that the threat of tort liability currently does little to discourage them. Shifting liability from individual physicians to the hospitals in which they work would change that. In fact, a robust regime of hospital vicarious liability has more potential than any other medical malpractice reform to realign the deterrent power of tort law with the goal of patient safety.

In most industries, tort law makes an economic actor, like the corner pharmacy, legally responsible for all tortious injuries inflicted by its workers. This threat gives the organization a powerful incentive not only to select and supervise its workers carefully, but also to create workforce rules and workplace environments that minimize the risk of harm to customers and bystanders.

American hospitals have historically been insulated from this responsibility because physicians working within their walls were deemed to be independent contractors rather than employees. This conceptual model made sense in the late 19th and early 20th centuries, when medicine was practiced by solo practitioners and hospitals were little more than hospices where patients too poor for home-based care came to be quarantined or to die. Today, however, hospital care is delivered by large teams of highly trained physicians, nurses, technicians, and allied health professionals in a complex web of interactions that demand coordination, oversight, and overall accountability. As a result, patient safety advocates now call for greater accountability at the hospital level. Yet, today's tort law stands in the way of greater attention to organizational oversight. It is time for a legal regime crafted in the 19th century to be replaced by one fashioned to respond to the realities of the 21st century.

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The modern hospital has far more power than its individual physicians to improve the quality of care received inside its walls. Unlike individual physicians, hospitals possess both the system-wide vantage point needed to identify the high-risk stages of the delivery system and the resources needed to implement systematic improvement. Yet, tort law continues to place the responsibility for rational accident avoidance exclusively on individuals rather than on systems.

Over the past three decades, many respected legal scholars have called for expanded vicarious liability. In the past, however, advocates for an increased emphasis on enterprise responsibility found few allies in the health care community. That is now changing.

Today, hospital safety experts emphasize the need to shift our focus from the blaming of individual wrongdoers to the design of systems that anticipate and prevent human error. They have been joined by market-oriented health law scholars who also call for greater organizational-level accountability in health care. Those scholars advocate the use of "pay-for-performance" plans to improve health care quality and they, too, tend to focus on organizational outcomes as the preferred level of accountability.

Legislative adoption of hospital "enterprise" liability would align the deterrence incentives of tort law with the patient safety and pay-for-performance movements. Each sensibly recommends the shifting of greater accountability for system performance away from individuals and onto health care organizations, like hospitals and managed care organizations, with better information and greater resources--the actors best positioned to respond rationally to legal and economic incentives to reduce patient injuries.

Hospital enterprise also offers several other advantages over current legal doctrine, the most significant of which is its potential to dampen the extraordinary fear and anger that practicing physicians feel toward tort law. Their near-hysterical bitterness has negatively affected the way that they see their patients and has led them to seek and win a number of unfortunate tort reforms, like draconian damage caps, that have made the civil justice system less fair on balance than it was before. …

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