MHA CEO Report — Medical Liability and Denney Damages

MHA Rounds Report - Brian Peters, MHA CEO

“I have gained this by philosophy; I do without being ordered what some are constrained to do by their fear of the law.” ― Aristotle

MHA Rounds Report - Brian Peters, MHA CEOIn last month’s CEO Report, we focused on the new political environment in Lansing, with a host of first-time lawmakers taking office, Democrats assuming majority control of both chambers of the legislature and a host of new leaders in key roles. The playing field has changed in a palpable way.

As healthcare leaders, the list of emerging challenges may seem endless today, ranging from unprecedented labor shortages, inflation, cybersecurity and much more. But as the new legislative session ramps up, we also can’t turn a blind eye toward issues from years past which have the potential to rear their ugly head once again. Medical liability is at the top of that list and merits our close attention.

One of the MHA’s signature achievements over the past thirty years was the passage of sweeping medical liability reforms in the early 1990s. Our leadership and collaboration with our friends in organized medicine and other partners helped to directly address a situation that had become untenable for Michigan: runaway verdicts in medical liability cases were threatening the financial viability of hospital-based service lines (and even entire hospitals). Doctors, particularly those in high-risk specialties, were leaving the state in droves and our recruitment efforts faced an extraordinarily high hurdle.

Since the passage of our reforms, which brought reason and predictability to the system, medical liability has been relatively stable for nearly three decades, even as the caps on noneconomic damages continued to grow with inflation. And over the years, the MHA has been extremely vigilant, advocating to preserve these reforms both in the legislative arena and in the courts, where we have filed countless amicus curiae briefs on behalf of our members and the healthcare field. However, a recent decision by the Michigan Supreme Court is bringing these concerns back to the forefront of our minds.

The case of Estate of Langell v McLaren Port Huron, heard by the Michigan Supreme Court in 2022, ultimately affirmed a Court of Appeals decision that a plaintiff’s estate can recover all earning potential that a decedent would have been able to earn and provide if a person who died due to medical malpractice had lived. This is now the law, even if that person was not responsible for the support of anyone else. The Court of Appeals cited the precedent established in Denney v Kent Road Commission. Since that decision, what a decedent’s estate can recover is referred to as “Denney damages.” Cases that once settled for $250,000 are now expected to be resolved for $700,000.

With “Denney damages,” the liability for healthcare organizations increase as earnings can be counted for any victim of medical malpractice, even those who have yet to establish any known talents, educational attainments or trainings typically used to calculate such earnings.

It is important to note that while we engage on this topic in the public policy arena, our ultimate priority is the safety and wellbeing of patients. Our hospitals and providers take the life of each patient in their care extremely seriously and there is nothing a hospital wants to avoid more than a medical error. To that end, we have “put our money where our mouth is” by establishing the MHA Keystone Center, which has become a true leader in this space, both in Michigan and nationally. The Keystone Center, which also operates a federally certified Patient Safety Organization, collects and analyzes data on medical errors and “near-misses,” serving as a North Star in our collective efforts to improve patient safety and quality. Our successes have been well-documented in peer-reviewed medical journals. Blue Cross Blue Shield of Michigan has provided significant funding to the MHA Keystone Center over the years, and so has the federal government through a series of contracts, as they have seen and valued the tangible improvements we have made and will continue to make.

Back to the issue at hand: our hospitals and providers are committed to doing right by patients, through the provision of the highest quality care possible. And for nearly three decades, Michigan’s medical liability laws have proven our system can fairly handle cases of medical malpractice that compensate patients and families fairly while maintaining hospital liability at sustainable levels that do not threaten the viability of an organization due to a single error. The system works and it is our intention to keep it that way.

As always, I welcome your thoughts.