Medical device companies may not have proper bedside manners, but the right words toward injured patients may forestall costly product liability claims and suits. A focus on the right words has spurred interest in medical malpractice, with some doctors and hospitals adopting so-called “apology programs.”
Medical product firms may reflexively resist the notion of such an approach. Many may harbor skepticism about if saying “I’m sorry” works, or whether they will end up being sorry for having implemented such a program.
Device manufacturers may resist such programs for many reasons:
- They feel that their device was not defective and/or did not cause a patient’s adverse outcome;
- They fear that patients will view an expression of remorse as an invitation to file a claim or lawsuit;
- They lack the customer service staff to handle these interactions; or
- Their lawyers have cautioned and conditioned them to admit nothing, especially with respect to the cause of any adverse patient outcome.
For various reasons, managers and executives at device firms may feel that, while apology programs are fine for doctors and medical malpractice claims, they are irrelevant to product liability exposures facing medical device companies. Is that a well-founded assumption, though?
Apology Programs & Cost Savings
Various physician liability insurance and medical malpractice programs have captured savings in claim frequency and severity through so-called “sorry works” programs. Before exploring how such programs might apply to device product liability, it helps to understand the features of these programs in a medical malpractice setting. Typically, protocols call for specific steps to unfold after an adverse patient outcome.
- The physician or healthcare professional promptly contacts the patient and/or family to express regret over the adverse outcome (Note, this is NOT an admission of fault, negligence or liability);
- The physician or healthcare provider tells the patient or family that an investigation is being conducted into the cause of the adverse outcome;
- The physician or healthcare provider promises the patient or family that he or she will get back with them to share the findings of this fact-finding process;
- The physician or healthcare provider asks if there is anything that they can do to make the family more comfortable or to help them; and
- The doctor or hospital makes an early offer of resolution to the patient or family if the ensuing investigation shows negligence or culpability.
Here is what follows:
- XYZ Medical promptly contacts the patient and the patient’s family. The representative says, “We are sorry to hear about the complication and the injury. We don’t yet know exactly what happened but, regardless of the cause, we regret to hear that you suffered.”
- The XYZ Medical representative tells the patient and/or the patient’s family that XYZ is investigating the cause and trying to get to the bottom of it.
- The XYZ Medical representative pledges, “We will get back in touch with you when we learn more and have something to report.”
- The XYZ Medical representative asks, “Is there any way, in the meantime, that we can help? Arrange transportation, cover meal expense—any way we can help?”
- After testing is performed, the XYZ Medical representative reports to the patient or family, “We are unable to determine any defect or malfunction in the device…” Or, the representative reports, “There may be some issue with the device’s performance. We’d like to see what we can do to make this right.”
Would it Work for Product Liability?
Would this approach work in product liability? Virtually all high-profile apology program systems have been in the medical malpractice realm. There is, though, a prominent example of this resolution strategy being used in a product liability context. Toro, a major lawnmower manufacturer, has an early intervention program for consumer injuries that it activates upon learning of injuries associated with their lawnmowers.
When Toro learns of an adverse outcome, two employees hop on a plane to visit the consumer. This tiny team includes an engineer and a paralegal. The paralegal speaks to customers, sympathizes with the toll the accident has taken on them and their families. Meanwhile, an engineer examines the machine. Even if the engineer feels that the accident was due to consumer error, Toro does not blame the consumer. Instead, it offers tips on what could have been done to avoid the accident.
Toro then asks customers what kind of compensation they are seeking. Resolution may encompass reimbursing medical expenses, lost wages, money for pain and suffering, and a replacement machine.
Settlements range from $0-$500,000.
Does this work? Since starting in 1994, the program has reportedly cut Toro’s average per claim expense from $115,000 to about $35,000. And we’re not talking about trivial injuries. Adverse events from lawnmowers range from burns and amputations to occasional fatalities.
Lawnmowers to Medical Devices?
Could a Toro-type model transfer to the medical device realm? Admittedly, Toro makes lawnmowers and snow blowers. Medical device firms manufacture a wide range of products ranging from the mundane (tongue-depressors) to high-tech (implantable hearts). At first blush, it seems that there would be no obvious impediment to a medical device company adopting a comparable approach and protocol.
Clearly, this would require investment in personnel. Depending on the frequency of adverse events, a device firm would need the budget, time and willingness to put two people on an airplane when the company first learns of a patient injury. Executing this approach requires time, money and staff.
However, savings in litigation costs may cushion or even offset these outlays. Using the conventional “admit nothing” approach, device companies incur significant costs in time, staff and attention.
Defending a lawsuit consumes gobs of time. It is labor-intensive and expensive, even if a company has product liability insurance.
Another yellow caution light looms. Some insurance companies may balk at the idea. Policyholders might risk their insurance coverage by traveling this path. Insurance company claim departments usually prefer to do their own investigating. Moreover, they want to be the ones deciding whether there is liability or not. Furthermore, if there is any merit to exploring settlement, insurers prefer to make offers and handle negotiations. In addition, many insurance policies contain a cooperation clause. They also include a provision that states that no insured shall, except at its own expense, make any offers to settle or pay without the insurance company’s consent. A “DIY” claims-handling effort could prompt an insurer to challenge or deny insurance coverage.
Before adopting a “Sorry Works” program for early intervention and resolution, get buy-in from the product liability insurer. Toro may be self-insured. Firms that self-insure need not answer to an insurer about what they can and can’t do. If you want to “call the shots” on claims handling, you can self insure. If, however, you want the financial protection from insurance, you cede control—especially in claims handling—to an insurance company. That is a tradeoff.
If the device firm persuades the insurer to accommodate this approach, this is all the better. Prepare a cogent business case as to why such a protocol is in their best financial interest and yours. If the firm cannot make that case or if the insurer is unmoved, the “Sorry Works” idea may be stillborn. Then, the device firm either can abandon the idea or implement it, understanding the insurance coverage risk. That becomes a business decision. Not all business decisions need be dictated by insurance considerations, a case of “the tail wagging the dog.” The time to broach the idea is when you are about to renew or place coverage with an insurer, not when you are midstream in a policy term. When you are about to renew an existing policy or place coverage with a “new” insurer, you have maximum bargaining leverage.
Mark Twain once said, “The difference between the right word and the almost-right word is like the difference between lightning and the lightning bug.” The right words—heartfelt and timely delivered—from medical device representatives after adverse patient outcomes may hold the key toward a new tactic for managing the financial risk of product liability claims.
1. “What’s an Apology Worth? Decomposing the Effect of Apologies on Medical Malpractice Payments Using State Apology Laws,” Journal of Empirical Legal Studies, Vol. 8, pp. 179-199, 2011.
Kevin Quinley, CPCU, is principal of Quinley Risk Associates in the Richmond, Va., area. He has more than 25 years of risk management experience with medical device companies. You can reach him at www.kevinquinley.com or at firstname.lastname@example.org.