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Liability and the Crisis in Obstetrics

issue brief

Liability and the Crisis in Obstetrics

May 1, 1990
Legal ReformOther
Health PolicyDrug Development

It is no secret that obstetricians pay plenty for malpractice insurance, and get sued plenty too. But the precise figures continue to startle. Chicago-area practitioners shell out $160,000 a year for coverage. And most obstetricians—70 percent nationwide—have been sued at least once.

One needn't consult a logician to deduce that this state of affairs must somehow affect obstetric care. Ask any pregnant woman. She can no doubt recite a battery of tests her doctor has put her through to make sure every legal contingency has been covered. She also knows that she stands a much greater chance of undergoing a caesarian section delivery than her mother did. And if her pregnancy promises to be anything but completely normal, she may have a hard time even finding an obstetrician willing to deliver her child. Doctors readily concede that they routinely practice "defensive medicine"—some would call it bad medicine—solely to fend off charges of negligence in the event anything goes wrong at birth. Many clearly shun high-risk pregnancies.

But such anecdotal evidence, rich as it is, has remained just that. Although a wealth of data has long been available on the number and size of malpractice claims and the rising cost of insurance, there has been little firm evidence on how the tort climate has affected the practice of medicine, access to care, and ultimately patient health, which is after all what is ultimately at stake.

That data is now available with the release of a two-volume study, Medical Professional Liability and the Delivery of Obstetrical Care, from the National Institute of Medicine, an arm of the National Academy of Sciences. The study, directed by Victoria Rostow, contains the findings of an interdisciplinary committee that investigated the effects of litigation on obstetric practice, commissioning more than 20 research papers and three new surveys, and conducting an exhaustive review of more than 50 existing surveys, both state and national, as well as other scholarly research.

The news is not all bad. The committee to some extent lends credence to what trial lawyers have always heatedly maintained, namely that the explosive growth in obstetric litigation is making doctors more careful. They keep better records. They consult more often with other physicians. They discuss treatment with their patients.

Yet the most dramatic litigation trends appear to bear little relation to quality of care. If seven of every ten obstetricians have been sued, notes the committee, "it is abundantly clear that medical malpractice claims are not confined to the worst practitioners or the worst health care 'institutions." In Southern California, which offers some of the world's best medical care, insurance rates are seven times higher than in North Carolina. Something is clearly amiss.

In fact the broader picture is ominous and goes far beyond the insurance spiral itself (whose costs are immediately passed on to patients as higher fees—obstetricians' incomes have held steady even as premium expenses have soared. The committee documents a startling increase in the number of caesarian section births, which now account for one in every four deliveries, up from just 5 percent two decades ago. The number continues to rise. The nationwide cost of caesarian section deliveries may have topped $750 million annually, not including the costs of infection and sickness that sometimes attend this surgery. The committee discerned a clear link between caesarians and the tort system. In Massachusetts, for example, 80 percent of obstetrical malpractice claims included a charge of failure to perform a caesarian section.

In this history lies a telling illustration of how the current tort system has tragically institutionalized bad medicine. “The desire for and expectation of a normal baby are overwhelming," the committee says, "and the birth of a baby with brain damage, one of the more common and disturbing forms of abnormality, is devastating." Varying degrees of neurological handicap, most notably cerebral palsy, occur in between 5 to 10 percent of newborns. The primary causes of cerebral palsy were for some time thought to be such deliveryrelated events as premature birth, difficult labor or oxygen deprivation before or during labor (fetal asphyxia). So doctors got sued. Infant brain damage accounted for 31 percent of claims against obstetricians nationwide in 1987; in California in 1986, birth injuries constituted nearly 60 percent of all medical malpractice indemnity payments. One insurer ranked cerebral palsy as the second highest diagnosis (following breast cancer) in total obstetrics and gynecology indemnity, with payments averaging hundreds of thousands of dollars.

Electronic fetal monitoring, or EFM, was developed in 1972. The idea was that by monitoring the fetus the doctor could detect when it was in distress, intercede surgically to alleviate the distress, and ensure the birth of a normal baby. Before long cerebral palsy claims were commonly litigated on the grounds of "failure to monitor' or failure to respond to distress signals revealed by monitoring. As many as two-thirds of closed malpractice claims in one survey were related to electronic fetal monitoring.

There is just one problem. The most recent data, the committee found, including epidemiological evidence and massive clinical trials, "cast serious doubt" on the long-held assumption that most cases of brain damage are due to delivery events. It found that "the incidence of cerebral palsy, still popularly and erroneously believed by many to be the result of fetal asphyxia, has not been reduced by electronic fetal monitoring." One major study found that "no foreseeable intervention is likely to prevent a large portion of cerebral palsy" and that the results "suggest a relatively small role for factors of labor and delivery."

The committee found the evidence overwhelming: "EFM has simply not done what its proponents argued it would do; it has not reduced neonatal morbidity and death, and .... it has not reduced the frequency of developmental disability." Yet EFM not only remains in use, but is still considered standard procedure if an obstetrician hopes to defend himself against charges of negligence. Moreover, the committee found, the use of electronic fetal monitoring (ineffective though it is) inevitably leads to the performing of more caesarians, since failure to perform a caesarian section in the presence of an abnormal fetal tracing is a major source of malpractice claims.

With malpractice insurance premiums up from $2.3 billion in 1984 to $4.7 billion in 1988 (not including the costs of state-run underwriting pools and self-insurance), obstetricians have reacted sharply and predictably. Many are getting out of the business in whole or part. Although the numbers are rough, they all point in the same direction. In every state the committee found that sizable numbers of family physicians, 25 percent at the median, have eliminated obstetrics from their practices. Many obstetricians—25 percent in the median state—have also reduced or eliminated services to high-risk women. One common way to screen out high-risk pregnancies is to cut their Medicaid caseload. In 6 of 40 states examined in one survey, the cost of malpractice insurance all by itself was higher per delivery than the Medicaid reimbursement rate, often substantially so.

Public health centers might be expected to pick up the slack, but many are unable to offer maternity care because their own insurance costs have skyrocketed. Many have even eliminated prenatal care; doctors and nursemidwives at centers without insurance have to drop their patient at the time of delivery and hope she makes it to an emergency room, deliver a baby without malpractice coverage, or stop providing prenatal care altogether. Some university hospitals report that increasing numbers of indigent women are showing up for deliveries.

Trial lawyers and their allies among consumer groups often charge that insurance companies are to blame, having conspired to raise premiums and reap excessive profits. The committee found no evidence of such collusion. Higher rates, it says, are caused by the "increased frequency and severity of claims and the lowering of interest rates in the national economy."

The outlook for obstetrics remains bleak. While there have been reports that insurance rates may have peaked for the moment, it is at extremely high levels. The committee found that the various state reforms of the 1970s and early 1980s have been largely ineffective, aside from a few measures such as statutory caps on awards and attorneys' fees and modifications of the "collateral source" rule against consideration of a plaintiff's other sources of insurance coverage.

The committee concludes that the only solution is to remove medical malpractice disputes from a tort system that appears to be beyond redemption. Yet most of the various alternatives that the committee examined in detail, including nofault compensation and administrative review schemes, do not look much better. A more promising solution might be a system of private contracts between patients and doctors, as outlined for the committee by Richard Epstein of the University of Chicago. But to bring contract law to obstetrics would take an act of legislation that appears most unlikely. Congress seems more prone to let the system continue to slide down its present course, in which rising costs are leading inexorably to some form of national health insurance.