Targeting Bad Doctors: Lessons from Indiana, 1975–2015

• Author: Jing Liu,David A. Hyman
• DOI: http://doi.org/10.1111/jels.12214
• Published date: 01 June 2019
• Date: 01 June 2019

Journal of Empirical Legal Studies

Volume 16, Issue 2, 248–280, April 2019

Targeting Bad Doctors: Lessons from

Indiana, 1975–2015

Jing Liu and David A. Hyman*

For physicians, quality of care is regulated through the medical malpractice and profes-

sional licensing/disciplinary systems. The medical malpractice (med mal) system acts

through ex post private litigation; the licensing system acts through ex ante permission to

practice (i.e., licensure), coupled with ex post disciplinary action against physicians who

engage in “bad” behavior. How often do these separate mechanisms for ensuring quality

control take action against the same doctors? With what result? We study these questions

using 41 years of data (1975–2015) from Indiana, covering almost 30,000 physicians. Disci-

plinary sanctions are much less common than med mal claims—whether paid or unpaid.

Only a small number of physicians are “tagged” by both systems. Disciplinary risk increases

with the number of past med mal claims. Paid claims have a greater impact than unpaid

claims, and large payouts (100 k, 2015$) have a slightly greater impact than small pay-

outs on disciplinary risk. The risk of a paid claim increases with more severe disciplinary

sanctions (i.e., revocation and suspension). Our findings suggest an obvious model for the

interaction of these two systems.

I. Introduction

The medical malpractice (med mal) and state licensure/disciplinary systems are distinct

but related regulatory strategies. The med mal system targets injury that is the result of

negligence, and provides monetary damages. Professional discipline, on the other hand,

deals with issues ranging from substance abuse and sexual misconduct to fraud, incompe-

tence, and unlicensed practice.

In theory, the two systems can (but need not) work together to promote the delivery

of high-quality care. Repeat med mal claims could act as a signal to the disciplinary system.

Conversely, disciplinary sanctions could trigger patients to file med mal complaints, and

*Address correspondence to David A. Hyman, Professor, Georgetown University Law Center, 600 New Jersey Ave.,

Washington, DC, 20001; email: dah137@georgetown.edu. Liu is Associate Professor, East China University of Politi-

cal Science and Law.

We thank the Indiana Department of Insurance (InDOI) and the Indiana Professional Licensing Agency (PLA)

for providing access to the data we rely on in this article. We also thank attendees at the 2017 Conference on

Empirical Legal Studiesfor comments. We owe particular thanks to Ben McMichael, who commentedon this article

at CELS, and also provided detailedwritten comments.

248

disciplinary action might reduce med mal risk—in the short run by limiting a physician’s

scope of practice, and in the long run by deterring future negligence. Does any of this

actually occur? Do these systems actually work together to target a small number of “bad

docs”—or is there little or no overlap between the physicians targeted by these two

systems?

Using data from Indiana, we study the med mal and disciplinary histories of almost

30,000 physicians who practiced medicine in Indiana between 1975–2015. During this

period, a clear majority of physicians had no med mal claims and a small number of phy-

sicians accounted for a heavily disproportionate share of med mal claims. By comparison,

disciplinary complaints and sanctions were much less common. Only 1 percent of physi-

cians had both a med mal claim and a disciplinary complaint, and only 0.4 percent had a

paid claim and a disciplinary sanction. Disciplinary sanctions were not particularly severe,

even for physicians who were tagged by both systems. However, we do find evidence that

physicians targeted by the med mal system are at increased risk of a disciplinary

sanction—and vice-versa.

Section II reviews the literature on overlap of the med mal and disciplinary systems.

Section III describes Indiana’s licensing/disciplinary and med mal systems, and our data.

Section IV presents our results. Section V discusses our findings. Section VI concludes.

II. Literature Review

A. Repeat Players in the Med Mal and Disciplinary Systems

Prior studies have documented the existence of “claim-prone” doctors, with a small num-

ber of physicians accounting for a disproportionately large share of malpractice claims

and payouts. Physicians with prior claim histories were more likely to be sued later, even

after controlling for education, training credentials, and practice experience (Weycker &

Jensen 2000; Gibbons et al. 1994; Bovbjerg & Petronis 1994; Rolph et al. 1993; Sloan

et al. 1989). The risk of future paid claims increases with the number of previous paid

claims and is associated with distinctive physician characteristics(e.g., males, DOs, age > 35,

some specialties) (Studdert et al. 2016).

The subject of “discipline-prone” physicians has attracted much less study.

Although relatively few doctors are disciplined, many disciplined doctors are sanctioned

more than once (Grant & Alfred 2007; Tillinghast & Cournos 2000).

B. System Overlap

Prior research has found some evidence of overlap between the med mal and the disci-

plinary systems. In Texas, disciplinary actions significantly increased after the enactment

of tort reform in 2003 (Stewart et al. 2012). In states that enacted tort reform, those that

modified the rules on joint and several liability imposed more “serious” disciplinary sanc-

tions (i.e., probation, suspension, and revocation), but states with screening panels and

caps on attorney fees had fewer serious disciplinary actions (Lavenant et al. 2002;

Jesilow & Ohlander 2010).

Targeting Bad Doctors 249

How often do the med mal and disciplinary systems pursue the same physicians?

In Florida, only 8.4 percent of physicians with very high med mal payments had com-

plaints filed against them with the Florida Department of Professional Regulation, and

none had their license suspended or revoked (Sloan et al. 1989). Another Florida study

found an overall low rate of overlap between med mal and discipline, but physicians

with worse med mal records were more likely to be disciplined (Fournier &

Mcinnes 1997).

Studies using National Practitioner DataBank (NPDB) data typically find a low cor-

relation between med mal payment and disciplinary rates. In one study, most physicians

(85 percent) had only med mal payments (Oshel et al. 1995). Far fewer (12 percent) phy-

sicians had only disciplinary sanctions, and only 3 percent of physicians in the database

had both a paid claim and a disciplinary action. Another study found that most sexual

misconduct cases reported to the NDPB were handled by state licensing boards. Of those

cases handled by malpractice or the clinical privilege system, only 30 percent were also

disciplined by state licensing boards (AbuDagga et al. 2016).

Governmental rep orts analyzing NP DB data confirm that t he relationship

between malpractice payments and disciplinary actions is weak, whether analyzed at the

state or individual level. For example, in 2006 only 5 percent of physicians had both a

paid claim and a disciplinary sanction (U.S. General Accounting Office 2006:38). How-

ever, an earlier report found that as a physician’s number of paid claims increases, the

percentage of physicians with no disciplinary sanctions decreased—and vice versa. This

pattern reversed for physicians with nine or more reported events, suggesting that

claim- and discipline-prone physicians might be leaving practice (U.S. General Account-

ing Office 1996:21).

The closest study to ours uses Illinois data to evaluate the extent of overlap

between the med mal and disciplinary systems of Illinois physicians who held an active

license at any point from 1990–2012 (Hyman et al. in progress). That study quantifies

the specialty-specific risk of having a paid med mal claim, a disciplinary action, or both,

and how many physicians are sanctioned by both systems. The authors find that a small

number of “frequent flyers” (2+ paid claims or 2+ disciplinary actions) account for a

heavily disproportionate share of the activity of both systems. More concretely, physicians

with 2+ paid claims account for 2.6 percent of all licensed physicians, but 54 percent of

paid claims, and 52 percent of payouts. Similarly, physicians with 2+ disciplinary actions

account for 0.5 percent of physicians, but 38 percent of all disciplinary cases. The authors

also examine which factors predict the risk of a paid med mal claim and disciplinary

action, and show that frequent-flyer physicians are concentrated at a small number of

hospitals.

Many of these studies are dated, and some are limited by data availability or study

design. Studies based on the NPDB are limited to paid claims, and studies using court-

awarded damages do not have information on settled cases.

By comparison, our data from Indiana cover all med mal claims, paid and unpaid. and

our dataset covers 41 years, a much longer period than the NPDB or any other dataset previ-

ously employed to study these issues. On the other hand, our data are, of course, limited to

a single state—although our results are strikingly similar to those in the Illinois study.

250 Liu and Hyman