Nationwide, 200,000 lawsuits are filed per year. Among them are between 66,000 and 85,000 medical malpractice cases; however, this number is uncertain. Between 22,000 and 44,000 of these culminate favorably for the plaintiff as a settlement or a verdict. The remainder, two-thirds of all malpractice claims, are dropped or otherwise end favorably for the defendant. These statistics suggest that many medical malpractice claims are frivolous yet are still represented, and medical malpractice is a very dysfunctional marketplace. The number of claims is unclear because disclosing the number uncovers the degree of dysfunction.

This article focuses on medical malpractice lawsuits. In every medical malpractice lawsuit, there is a complication. Many are caused by medical errors, but most by random errors of nature. Errors of nature are unavoidable and do not represent departures from applicable standards of care. In other words, there are no discernable grounds for a medical malpractice lawsuit, yet one is filed.

The elements of a dysfunctional marketplace

For every complication, there is a victim. For every victim, there is suspicion that the physician is at fault. For every physician, at fault or otherwise, there is malpractice insurance. For every lawsuit, there is a plaintiff attorney and a defense attorney. Now all the elements for a marketplace are present.

The victim seeks a service and is the consumer. The plaintiff and defense attorneys are the proprietors of the service. The complication is the reason for a service, the input. The lawsuit is the service. The physician is the supplier. The malpractice carrier pays all the output and is the bank. The mantra “do not break the bank” is the sustaining principle, which prevents the collapse of the marketplace.

The victim seeks compensation from the malpractice carrier. Premiums are always paid to the malpractice carrier by, or in the behalf of, the physician. Both attorneys are paid by the malpractice carrier; the plaintiff by contingency fee, the defense by hourly rate. What results is a service industry for medical malpractice lawsuits, which performs as a dysfunctional marketplace structured on the financial value of a complication which, in all likelihood, is an error of nature.

Abductive versus deductive reasoning in law

All medical malpractice lawsuits have common characteristics. They all have one dependent variable, the underlying complication, and two independent variables, the standard of care and the medical intervention. They all have an affirmatory hypothesis. They all use the same level of significance, which is “preponderance of evidence.” They all are presumed legitimate because 29 states require affidavits of merit and, in the 21 that do not, federal Rule 56 serves as the “gatekeeping” mechanism for merit. All are prosecuted or defended using abductive or inductive reasoning.

Abductive and inductive reasoning is traditional in medical malpractice because it adapts to these features. However, so does deductive reasoning. The independent and dependent variables are the same. Rather than using an inflexible affirmatory hypothesis, which asserts “the medical intervention departs from the standard of care,” deductive reasoning uses a flexible null hypothesis, which asserts “the medical intervention comports with the standard of care.”

Rather than using preponderance of evidence, which is 50 percent probability plus a scintilla, as the benchmark for decision making, deductive reasoning uses 95 percent probability. Rather than measuring merit by a certificate or by a federal rule, deductive reasoning measures merit according to reliability in data and in material facts. In fact, merit is a quantitative measurement, an actual number, which corresponds to reliability in data and in material facts.

Transforming the marketplace through tort reform

Abductive and inductive reasoning, which is the centerpiece for legal logic, suits this dysfunctional market because it does not definitively distinguish a random error of nature from a medical error. This incentivizes a frivolous lawsuit, which, in turn, incentivizes other dysfunctional forces, including high malpractice premiums, defensive medicine, and a multitude of distortions in the health care system.

Also, this dysfunctional marketplace encourages artificial intelligence platforms, such as EvenUp, ProPlaintiff, and MyCase, which, rather than measuring a complication as meritorious, measures it by its economic value.

However, deductive reasoning distinguishes an error of nature from a medical error with 95 percent confidence. Deductive reasoning encourages the development of CCC+C. It measures a complication by statistical confidence in merit.

Tort reforms are intended to reform torts, not marketplaces. Nevertheless, when a tort reform specifically requires that, whenever a case is filed, it is accompanied by a notarized report identifying qualified medical experts and specifically addresses four topics:

• conclusions
• methodology: abductive and inductive reasoning versus deductive reasoning
• admissibility: as articulated in the Daubert Decision
• type I error and type II error

Not only are torts reformed, but the medical malpractice marketplace is transformed from being dysfunctional into being functional. Whatever gets measured, gets managed.

Howard Smith is an obstetrics-gynecology physician.