It’s become a bit of a theme on this blog lately: celebrated thinkers whose expertise lies outside of medical malpractice law dive into the medical malpractice debate, show how little they know about the issues and ultimately prove that, in this day and age of specialization for everyone from lawyers to policy wonks, they are out of their element. We saw it with Peter Orzag, the former White House budget director, whose New York Times op-ed on medical malpractice reform was so incoherent that I couldn’t figure out which of two proposals Orzag was making. In any event, either one of the proposals that Orzag might have been championing was a bad idea and the whole article just drove home to me that experts like Orzag, who is a savant when it comes to crunching budget numbers, should stick to what they know.
The same applies to law professor-turned-Obama administration figure Cass Sunstein. We’ve blogged about Sunstein before here. Sunstein has had a long and varied legal career, writing on issues ranging from constitutional law to economics. Most recently, Sunstein has become associated with the “libertarian paternalism” philosophy and behavioral economics ideas embodied in his 2008 book “Nudge.”
The premise of “Nudge” is that people should be free to make their own choices (that’s the libertarian part) but that government can nudge people in the right direction (the paternalistic part) by framing the choices in such a way that people make the wisest choice. So, for example, research shows that when most employees join a company with a 401(k) program, they have to check a box to opt in to the program. A fairly low percentage of employees make that choice. But when you change things up so that the 401(k) program is the default and employees have to check a box to opt out of it, an overwhelming number of employees will choose to participate in the 401(k). By framing choices in the right way (having employers make 401(k) participation the default), government can be both libertarian and help effect the most desirable outcome (more people saving for their retirement).
So far as Sunstein in “Nudge” sticks to these well-known experimental findings in behavioral economics, he’s on firm ground. But in one chapter of “Nudge,” Sunstein goes out on a limb and suggests that the health care system might benefit if patients or insurance companies were allowed to sign “medical malpractice waivers” – forms that would give up their rights to sue their doctor for any medical malpractice that the doctor committed, no matter how grossly negligent. Sunstein’s thinking is that patients would benefit from such waivers because the cost of health care would be lower: doctors wouldn’t have to pay for medical malpractice insurance or order unnecessary tests to make sure their patients didn’t sue them, and doctors could pass on the savings of avoiding those costs to their patients. Everyone’s a winner!
The idea is one that has received virtually no criticism or attention until the publication of an article by professors Tom Baker and Timothy Lytton in the most recent issue of the Northwestern University Law Review entitled, “Allowing Patients To Waive The Right To Sue For Medical Malpractice: A Response to Sunstein and Thaler.” You can read the article here. The article is a devastating and complete knockdown of the chapter in “Nudge” in which Sunstein proposes medical malpractice liability waivers.
Baker and Lytton point out that Sunstein (lazily) cites no empirical evidence in support of his claim that a medical malpractice “crisis” is driving up the cost of health care. Indeed, Lytton and Baker criticize Sunstein’s unsupported statements about the effect of medical malpractice lawsuits upon health insurance costs as being the kind of “polemical rhetoric” used by “tort reform advocates and widely discredited among scholars.”
Lytton and Baker also point out how many of the concepts from cognitive psychology that Sunstein invokes in other places in the book – including people’s bias toward thinking optimistically – are actually arguments against medical malpractice waivers because people will foolishly and optimistically assume that they won’t be injured by medical malpractice and accordingly will sign the waiver. Lytton and Baker also shred apart Sunstein’s analogizing a medical malpractice waiver to a waiver that would preclude someone from suing her hairdresser for a bad haircut.
For me, however, the best critique of why Sunstein’s empirical data-free proposal is flawed, is in looking at the numbers and asking: How much would medical malpractice waivers save the average patient? Well, the most recent and best estimate of how much medical malpractice adds to the cost of health care can be found in this summer’s study published in the medical journal Health Affairs, previously blogged about here. This study estimates the annual costs of medical malpractice at $45.6 billion, or about 2.4% of our nation’s annual health care tab. This figure includes both the direct costs of medical malpractice – insurance payouts to injured patients, fees paid to defense lawyers to defend med mal cases – and the best estimate of the costs of “defensive medicine” (tests that doctors do not think are necessary but that they order to defend themselves in medical malpractice claims).
So, if you signed a medical malpractice waiver, what sort of savings would you reap? The best case scenario would be that a doctor would agree to lop 2.4% percent off your medical bill. On a procedure that cost $1,000, that would mean that you (or your health insurer) would save a whopping $24! And if the doctor paralyzed you through his treatment, you would have no right to sue, even if the doctor was drunk or under the influence of drugs while performing the surgery.
Sunstein is a prolific author. But, in reading his work on medical malpractice waivers, it’s obvious that he’s been spending too much of his time writing and not enough of his time getting acquainted with the ins-and-outs of health care costs in this country. It’s a shame that his work in “Nudge” (which largely draws upon experimental work carried out by economists) will, merely by virtue of his legal celebrity, get more attention than the more careful and thoughtful work of Professors Lytton and Baker.

This blog is maintained by the Boston medical malpractice lawyers at The Law Office of Alan H. Crede, P.C. The blog neither contains nor offers legal advice.