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By Marc Miller and Daniel Wax
The National Practitioner Data Bank (NPDB) was created under the Health Care Quality Improvement Act of 1986 (At Title IV of P.L 99-660), and is codified at 45 CFR Part 60. The purpose of the data bank is to "collect and release certain [negative] information relating to the professional competence and conduct of … health care practitioners." 45 CFR § 60.1. The information is used to help identify and discipline those who engage in unprofessional behavior and to "restrict the ability of incompetent physician s to move from State to State without disclosure or discovery of the physician's previous damaging or incompetent performance…which can be remedied through effective professional peer review."42 USC § 11101 et seq.
Three categories of negative information must be reported to the NPDB: (1) medical malpractice payments that result from a "claim" (§ 607); (2) licensure actions taken by boards of medical examiners (§ 60.8) and (3) adverse actions on clinical privileges (§ 60.9). In this article, we are concerned with the application of mediation programs and procedures on the medical malpractice payment reporting requirements of § 60.7.
"Each entity, including an insurance company, which makes a payment under an insurance policy, self insurance, otherwise, for the benefit of a physician…in settlement of or in satisfaction…of a claim or judgement against such physician…for medical malpractice must report the particulars] to the Data Bank."§ 60.7(a). This has resulted in an unfortunate, unintended side effect the chilling of pretrial settlements of malpractice actions due to the real, and perceived, misuse of the collected data.
Physicians fear that an NPDB listing (which includes their identification and the payment amounts) may be taken out of context. The raw data reported by an insurer for example does not reflect the fact that many settlement payments are the result of financial decisions of the carrier. These nuisance settlements are not uncommon, even where the probability of physician liability is low (and inspite of the fact that up to 80 percent of litigated malpractice actions result in verdicts for the defense.) Even where the liability issues is "gray," settlements that avoid protracted litigation and its high costs in money and aggravation can provide advantages to the claimant the physician and the carrier. Yet, despite efforts to carefully restrict access to the data bank, access is fairly easy and questionably unethical but legal subterfuges" have made the contained information essentially public knowledge subject to misuse and misinterpretation. (See generally, Richard S. Goodman, " The use -and Misuse - of the National Practitioner Data Bank," Medical Malpractice Law & Strategy, January 1999.)
The misinformation is exacerbated under the pressure of developing tort law. Hospitals, HMO's and now even employees have been subjected to common law liability and may be subject to an emerging duty of care in selecting and supervising physicians. They must be wary of the possibility that a jury could pace an adverse interoperation on the fact that they hired a physician whose name appeared in a federal data bank designed to track incompetent physicians. The popular press is replete with articles that imply that merely being listed "in the Data Bank means a physician is a "bad doctor'. Atkinson, "How the NPBD Affects Medical Malpractice Clients," 5 Prac. Litig. 35, 43,n 182, 1994.
These developments are all the more discovering because studies have not shown a clear relationship between malpractice suits and negligence. Ryzen "The National Practitioner Data Bank: Problems and Proposed Reforms,"13 J. Legal Med 409,431, December 1992. There is thus an understandable fear on the part of physicians of being listed. This results, in turn, in their reluctance to settle a claim short of a verdict on the merits.
Congress, as set forth in the NPND enabling legislation, was aware of the potential problem of misinterpretation and misuse of the data, and attempted to address it. The concern was articulated in the regulations ("A payment in settlement of a medical malpractice action or claim shall not be construed as creating a presumption that medical malpractice has occurred." 45 CFR § 60.7 (d) (emphasis added)). As explained above, the actual use and impact of the NPDB in the real world has tended to reduce that regulation to mere surplusage.
'Mandatory' Mediation
"Mandatory" mediation may, however, provide a defense to the misuse and reporting dilemma of the NPDB, concerning 60.7 Given that mediation is a voluntary, collaborative approach to conflict resolution, the mandatory is in quotes for a reason; it is not an oxymoron. All that is mandatory is the requirement set forth a mediation section in the patient contract, that the aggrieved patient sit down with the physician (or representative) for a short time under the guidance of a neutral third-party mediator, and talk about the problem. What is mandatory is a good faith presence at the table, which usually takes three to four hours. There is no risk, in that it does not in any way affect any other right of the patient to file an appeal, arbitration or litigation. If parties are dissatisfied with he outcome they need not sign the agreement. For these reasons, such clauses will probably not be subjected to the negative scrutiny with which the courts are currently viewing mandatory arbitration clauses. Our experience is, in fact that the majority of mediations succeed in solving the problem, and result in mutual agreement. The patient can then withdraw any other commenced action.
As explained below however, by linking a "mandatory" mediation clause to rationalized intake procedure and dispute resolution programs a physician or health care entity can help to avoid the medical malpractice reporting requirements of § 60.7. Only Payments Resulting From Written Demands Are Reportable Under the act, [m]alpractice action or claim means a written complaint or claim demanding a payment based on the physicians…provision of a failure to provide health care services, and includes the filing of a cause of action based on the law of tort." §60.3 (emphasis added). Thus, strictly oral demands from aggrieved patients that result in payment need not be reported to the NPDB because the payment is not the result of a "medical malpractice action or claim" as defined by the act. The definition was originally inserted to avoid burdening the data bank with a flood of de minim claims and resulting nuisance payments. But there is no cutoff and no reason why the oral claims carve-out cannot apply to any claim, no matter how large.
This has prompted some defense attorneys to encourage plaintiffs' attorney to call them about a case to discuss possible settlement before sending a written claim within the meaning of the regulation(Ryzen, p436). That is however a flawed approach to advantageous use of the act's definition of a malpractice claim. As on-site patient treatment problem may not be dealt with satisfactorily on the spot. Often the first institutional or physician awareness of a problem is a written demand letter by a disgruntled (or damaged) patient, even prior to the patients hiring an attorney. And attorneys are taught to record everything and to create defensible paper trails- especially when the claim may be large.
Institutional Oral Complaint Process
A rationalized oral complaint process that builds on an inserted contractual "mandatory" mediation clause can fully exploit the act's claim definition. The process may include a mandatory "800" complaint number, together with institutional procedures that guarantee routing it to educated personnel who can effectively inform the claimant of the possible advantages for settlement under an oral claim - and the absence of risk in at least trying it. A properly designed complaint process can maximize the probability that the first airing of the claim will be oral, in an organizational venue that can effectively deal with it. The result can be effective oral complaint resolution with a first crack at solving the claim in a way that requires no NPDB recording. It may even benefit the claimant with a negotiation pint. If the mediation fails, it will trigger a payment demand letter and, in turn, an automatic NPDB listing requirement for any subsequent payment.
The creative use of a complaint process based on contractual mandatory mediation may thus be used to the advantage of all parties to a medical malpractice claim. Not only can the mediation, in most cases. Not only can the high costs, time and aggravation of litigation or arbitration, but it may also results in the avoidance of physician NPDB listings for malpractice payments under 45 CFR § 60.7.
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