Saying 'I'm sorry' is starting to pay off with reduced lawsuits and legal costs

Some providers seeing dramatic cutbacks in settlement amounts

Risk managers have spent the past several years promoting the idea of full disclosure and saying "I'm sorry" after an adverse event, but until now you've had to assure skeptics that apologies would reduce the number of lawsuits, not increase them.

Now the results are in: Organizations that urge staff and physicians to fully inform patients and apologize after a bad outcome are realizing significant savings.

One hospital's average lawsuit settlement dropped to only $16,000, compared to a national average of $98,000. Another hospital system cut its legal budget from $3 million to $1 million a year because the number of lawsuits fell so sharply. And a major insurer reports that saying "I'm sorry" almost always decreases the risk of a lawsuit.

Claims drop after full-disclosure policy

A full-disclosure policy, including apologies when appropriate, led to a 50% drop in claims over the past three years at the Ann Arbor-based University of Michigan Health System, says Rick Boothman, JD, chief risk officer for the organization.

Boothman notes that the system instituted several changes in the way it responds to adverse events, making it difficult to pin down any one strategy that caused the drastic reduction in claims. But he explains that the health system's full-disclosure approach doesn't make the organization a pushover for trial attorneys. Rather, the health system is trying to be honest and cut through much of the back-and-forth wrangling that usually accompanies a malpractice claim, regardless of the claim's merit.

One of the main strategies involves communicating more clearly with trial attorneys. Boothman spent much of the summer of 2001 meeting with local plaintiffs' attorneys to spell out the health system's new approach to lawsuits.

Boothman took each lawyer to lunch and laid out this basic message: If you bring a legitimate claim, we'll work honestly and candidly with you to reach a reasonable settlement. We won't automatically fight you. But if it is not legitimate, we will not write a settlement check just to make the case go away.

"Don't bring junk. If you have medically unsupported claims, we will never settle out of expediency," Booth recalls telling them. "If our care was reasonable, we have to defend it because we ask our staff to do a lot of difficult things. It's not fair to them to cut a check every time someone makes a claim that challenges their care."

The University of Michigan approach now calls for frank discussion of adverse events or claims as soon as possible, and often with the plaintiff's attorney, Boothman says. When the case is valid, University of Michigan officials do not hesitate to say so and to apologize directly to the patient.

"But when it's not, we sit down with patients and their lawyers very early and explain to them why we don't think they have a case," Boothman says. "They actually have been as appreciative of that candor as much as when we say we're sorry and move quickly to compensate them without need of a lawsuit."

Boothman says he gave the health system's outside attorneys a raise and also made sure they understood the new mandate. "When we're right, we fight like crazy to defend ourselves," he says.

Fears of hearing your comments repeated in court should not deter an open conversation, Boothman says. If you are truly committed to an honest exchange, you should be willing to say in court the same thing you said privately to the patient, he says.

Defusing parent's anger with open admission

Boothman recalls a recent case in which a seriously injured patient with a decubitus ulcer was transferred to a University of Michigan facility from another hospital. The ulcer got much worse, and everyone involved in his care agreed that it should not have.

"We sat down with the mother of this patient, and she brought a lawyer, thinking it would be an adversarial meeting," he says. "The first thing I said was, 'You must have so much on your mind with a son who is now quadriplegic, and I'm sorry to have created this problem for you. You didn't need this, and we should have done better.'"

That comment defused all of the mother's anger. Boothman continued by telling her that the health system was ready to resolve the claim without litigation or expenses, and that the hospital was eager to do all it could to help heal the patient. The claim was settled in about four months, with no litigation.

"That case might have cost us $75,000 to $100,000 to litigate, only to arrive at the same conclusion," he says. "So we eliminate that cost, we truncate the time down from two and a half years to four months, and we assure the patient that he can continue to see his neurosurgeons and rehab people."

Boothman is currently handling another claim in which a patient thinks his emergency department care was inadequate. After investigating, Boothman concluded that the care was sufficient. But rather than just shooting that back in a message to the lawyer, he arranged a meeting with the patient, his attorney, and the doctor who cared for the patient. The doctor explained why the patient was treated the way he was and why there was no wrongdoing.

"When you do that, you find out that people are a hell of a lot more forgiving than we give them credit for," Boothman says. "The patient said he understood what happened, he appreciated the explanation, and he didn't want to file a lawsuit after all."

Open communication with the patient can preserve the doctor/patient relationship, Boothman says. He makes a point of telling claimants that their relationship with their physicians need not change, no matter how the case is resolved.

Measurable results from new approach

The University of Michigan approach leaves officials there feeling satisfied that they are doing the right thing for their patients and staff, but it also has yielded measurable results. Boothman outlines these effects from the strategy of open disclosure and apology:

•Before 2001, the health system had between 250 and 275 pending claims and lawsuits every month. (That was all open claims, not just new claims filed that month.) After implementation of the new strategy, the number now averages 120 per month and is steadily decreasing.

•The cost per case averaged $70,000 before the open-disclosure policy. Now it is down to an average $30,000 per claim.

•The elapsed time for a claim — the time between when the claim is filed and when it reaches a disposition of some sort — used to average 1,200 days. The average elapsed time is now 300 days.

"That reduction in elapsed time came even though we were digging our heels in on some cases without merit and taking them to trial," Boothman says. "The big savings comes when you eliminate so much of the adversarial element that drags things out. We take a proactive approach and either admit we were wrong and settle it quickly, or we go to court and fight it."

•The health system's annual legal budget was cut from $3 million to $1 million, directly as a result of having fewer claims and lower litigation costs.

Good results also were seen at the Veterans Administration hospital in Lexington, KY, which adopted a full-disclosure policy in 1990, when it was still considered a radical idea. Ginny Hamm, JD, a VA staff attorney, says the policy states that once clearly identified, clinical mistakes should be fully communicated to the patient or patient's family, along with an apology, an explanation of the facts, evidence of what you've done in response, and some attempt at resolution, which may include compensation.

Average size of settlement plummets

Ten years later, the average lawsuit settlement had dropped to $16,000, only one-sixth of the $98,000 national average at that time, Hamm says. The hospital has not compiled similar data since then, but she says the trend has continued. The savings comes from reducing court costs and other expenses arising from cases that are drawn out longer than necessary.

The VA hospital's policy calls for corporate apologies on behalf of the institution rather than having individuals apologize for their actions. But the corporate apology must come from someone of sufficient stature.

"We apologize to the patient on behalf of the center, and generally the apology comes from the chief of staff," Hamm says. "If you get a bum car from General Motors, it's nice if the guy at the dealership calls to apologize, but it's something else entirely if the president of General Motors calls to apologize."

The key is to avoid any appearance that you are stonewalling or trying to cover up. That will only antagonize patients and family members, she says.

"They will get madder and madder, and the madder they get, the more money they want," she says. "I can't blame them for that. Our philosophy is that you don't let them get to that point."

Hamm notes that a full-disclosure policy can help with the hospital's public image, as well. She recently had a case in which a patient was awarded several hundred thousand dollars for malpractice, but the media reported heavily on how the hospital had been forthcoming with a full disclosure and had not tried to deny that some compensation was justified.

She cautions, however, that clinicians must be educated about how a full-disclosure policy works. They must understand that a disclosure comes after initial investigation and is delivered by people with some authority.

"Full disclosure doesn't mean we want everyone who feels bad to rush into the patient's room and start pouring their hearts out about how they did such a terrible thing," she says. "That's not going to help anyone, including the patient. And they might not be accurate about what happened."

That's where the risk manager comes in, Hamm says. The risk manager should be the intermediary among all the involved parties and should ensure that the proper investigation process is followed before a disclosure is made.