Continuing his Opinionator series on ways to reduce health care spending, Dr. Ezekiel Emmanuel points out that each year administrative costs account for $360 billion of our health care spending, roughly fourteen percent of our health care tab.

The administrative costs of our health care system dwarf the amount we spend on all aspects of medical malpractice — from treating the malpractice to paying victims and lawyers for the injuries.

These administrative costs include the amount that insurance companies spend processing (and denying) claims, the amount that doctors spend on office staff needed to interact with the insurance companies and the amounts spent on third-party billing services.

Dr. Emanuel suggests that switching over to digital medical records could save at least $32 billion a year.

Of course, the single biggest thing that we could do to reduce administrative expenses is switch over to a single-payer “Medicare for all” system. But it would be imprudent for someone in the administration actually to say that.

…Which is why, oftentimes, I will see a quite bloggable story but not get around to blogging it. By the time I do have a spare moment to sit down and pen (er, keyboard) a blog post about the story, the story’s expiration date will often be up, leaving me no choice but to pass the story over. (This blog is cutting-edge, people!).

But fortunately, a recent post by Walter Olson at Overlawyered.com gives me a chance to circle back around to one story that I intended to blog about but never did (until now):  the weeks-old saga of a $43,000 lawsuit brought against a wedding photographer by the (now) divorced groom, which seeks to force the photographer to recreate the wedding.

The story was originally published several weeks ago by The New York Times.

The story sparked outrage on many legal blogs because the groom’s claim for “specific performance” (i.e., having the photographer recreate the wedding so that satisfactory pictures could be taken) seemed so disingenuous. After all, why would the (now divorced) groom want pictures of what is presumably a bad memory? The lawsuit seemed like the ultimate frivolous/shakedown lawsuit.

Other blogs picked up on a different angle to the story:   the groom is the son of Shepard M. Remis, a partner in the Boston office of the national law firm Goodwin Procter, LLP.

A number of blog posts focused on the absurdity of seeking $43,000 in damages when the original contract called for the photographer to be paid only several thousand dollars for his taking the pictures.

Even the judge in the case, in ruling on a motion, said that the damages plaintiff sought are way too high.

What I didn’t see any bloggers saying is that, theoretically, the plaintiff could collect far more in damages than the contract price for the photography. There’s actually a quite famous contract case right on point. The case, Mieske v. Bartell Drug Co., is from Washington state. In Mieske, a woman paid a drug store to splice together a bunch of her home movies onto a single reel. The drug store, however, wound up losing the film.

Mieske filed suit. The question presented to the Washington Supreme Court was: What should the measure of Mieske’s damages be? Are damages limited to the amount that she paid the drug store to splice together the film? Or do proper damages include the emotional value that the film had for Mieske?

The Washington Supreme Court carved out a middle ground. The Court held that Mieske could recover more than the contract price in damages; in other words, Mieske could recover more than the several dollars she paid the drug store to splice together the film.

But a jury was not to value the film simply by the subjective value that Mieske put on it either. To the extent that Mieske was an overly sentimental person, the jury should not compensate her oversentimentality.

What the jury should do, the Supreme Court ruled, is compensate Mieske for the amount that a typical person would place on the emotional loss of the film.

The Mieske case, and others like it, mean that our divorced and disgruntled groom can (theoretically) recover far more than the contract price of the wedding photos.

And such a rule makes sense. Mieske’s loss was much greater than the several dollars spent on film development. And if your wedding photographer screwed up all the pictures of your wedding, the lost value to you would be much greater than the fee you paid the photographer.

In a post yesterday at Overlawyered.com, Walter Olson reported on another situation where emotional damages surpass contract cost: the loss of a pet. Texas’ Supreme Court recently overruled a 12o-year old case saying that pet owners can only recover the purchase price of their pet when someone kills it. The new rule in Texas allows for pet owners to recover emotional distress.

The legal rules found in the Mieske case and the new Texas case make a great deal of sense. But unfortunately, as the recent wedding photography lawsuit shows, they are susceptible to abuse.

And there’s not really much that a judge can do to stop lawsuits like the groom’s. A judge can’t say that the photographs obviously have no emotional value to the groom because the groom is now divorced; that’s something for a jury to decide, not a judge. And from what I’ve read, if this case ever goes to trial, it will result in a defense verdict.

Unfortunately in the meantime, the photographer will have to shell out to pay a lawyer to defend the case.

….and his lab coat too.

We’ve known for a couple decades now that doctors’ clothing are big germ carriers.

Experts recommend that doctors wear shortsleeves to avoid spreading germs.

But a short-sleeved, tie-liess doctor does not convey to people a very professional image.

A doctor’s dress plays a big part in our conceptions of his competence. As one doctor noted a generation ago:

“The physician’s dress should convey to even his most anxious patient a sense of seriousness of purpose that helps to provide reassurance and confidence that his or her complaints will be dealt with competently. True, the white coat is only a symbol of this attitude, but it has also the additional practical virtues of being identifiable, easily laundered, and more easily changed than street clothes if accidentally soiled…. Casual or slovenly dress is likely to convey, rightly or wrongly, casual or inattentive professional handling of their problem….”

Now we’re beginning to see reformers like Julia Hallisy (who lost a daughter to a hospital-borne infection) campaigning for a change in doctors’ uniforms.

Doctors know better than to wear germ-carrying ties. But the blame for patients’ preconceptions of what a doctor should look like. We should trust our doctors based on training and credentials, not based on their fashion sense.

Last week, AbnormalUse marked its 500th post.

This week there’s another milestone in the torts law blogosphere worthy of congratulations: the third birthday of Prof. Alberto Bernabe’s Torts blog. Prof. Bernabe has blogged 1145 posts since Nov. 7, 2008.

1145 posts: all I can say is “Wow.” I hope to make it there someday too — if carpal tunnel does not derail me first.

  Dr. Ezekiel Emanuel (brother of Rahm and Ari) had an op-ed in last week’s New York Times that hammered home how big you really have to think if you want to stabilize health care costs. As Emanuel pointed out, lots of conservatives and liberals have their own pet ideas for how to rein in the cost of health care. But most of these ideas are too small to really make a dent in health care spending.

We spend $2.6 trillion a year on health care. Our health care spending is growing at a rate of $100,000,000,000.00 annually. So, if your proposal for trimming the cost of health care comes to less than 100 billion annually, health care spending will still be growing, despite your reform. Emanuel proposes that any health care reform proposal should have to net at least $26 billion in savings. That’s one percent of our (current) health care spending.

By this criterion, $250,000 caps on damages in medical malpractice fail the test. As Emanuel notes, caps on medical malpractice damages would only save at most $11 billion a year. And they might even lead to higher health care costs as doctors become more careless. (Gee whiz, given that avoidable medical errors are our sixth-leading cause of death, do you think so?).

I thought Emanuel’s op-ed made a lot of sense but one thing that surprised me was the disparaging tone he took toward the idea of identifying “million dollar babies” (patients whose health care tabs run into the millions of dollars). Emanuel seemed to suggest that once we identify the “million dollar babies,” there’s no way to reduce spending on them, other than cutting them off from more health care services. Have you heard of hotspotting, Zeke? Maybe that’s worth a shot.

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  Insurers always deny they’re acting in bad faith when they delay and dispute claims. They insist that they need to take so long to sort out the facts and determine if they are liable.

Trial lawyers and others have long insisted that these excuses are designed to conceal the insurance companies’ financial motives for stretching everything out.

This week, courtesy of a column by Arthur Licata in Massachusetts Lawyers Weekly, I came across a lengthy quote from Warren Buffet (a quote I don’t recall previously seeing) that perfectly explains how the insurance industry works.

Of course, the insurance business is a mainstay of Buffet’s Berkshire Hathaway and GEICO insurance and others are owned by Berkshire.

This is how Buffet explained the insurance component of Berkshire Hathaway in his 2009 letter to Berkshire shareholders:

“Insurers receive premiums up front and pay claims later. In extreme cases, such as those arising from certain workers’ compensation accidents, payments can stretch over decades. This collect now, pay later model leaves us holding large sums — money we call ‘float’ — that will eventually go to others.

“Meanwhile, we get to invest this float for Berkshire’s benefit. Though individual policies and claims come and go, the amount of float we hold remains remarkably stable in relation to premium volume. Consequently, as our business grows, so does our float.

“If premiums exceed the total of expenses and eventual losses, we register an underwriting profit that adds to the investment income produced by the float. This combination allows us to enjoy the use of free money — and better yet, get paid for holding it.”

What tort reformers and others don’t want you to understand is that the insurance business is really the investment business. When doctors’ medical malpractice premiums go up, doctors, ignorant of the insurance business, blame medical malpractice suits, instead of understanding that medical malpractice premiums are really controlled by investment returns, rather than payouts.

The next time sometime tells you they’re from an insurance company, think of it as a “getting paid-to hold-free money” company.

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