Stanford University

Strict Liability for Medical Malpractice? The Impact of Increasing Malpractice Liability on Obstetrician Behavior in Taiwan

-

The extent and existence of "defensive medicine" -- excessive medical care to defend a physician against malpractice claims -- is a perennial subject of both policy and academic debate.  For example, malpractice liability and associated defensive medicine are among the most-cited reasons for escalating health-care spending in the United States.

In this colloquium, Dr. Brian Chen will present results from his research investigating the extent of defensive medicine in Taiwan. He studies the impact of a series of court rulings in Taiwan that increased physicians’ liability risks, and a subsequent amendment to the law that reversed the courts’ rulings, on physicians’ test-ordering behavior and propensity to perform Caesarean sections.  He finds that physicians faced with higher malpractice pressure increased laboratory tests as expected, but unexpectedly reduced Caesarean sections.  (The reduction in Caesarean deliveries may be due to the fact that liability risks were more closely aligned with physicians’ standard of care after the court rulings.) After the law was amended to negate the court decisions, physicians reversed their previous behavior by reducing laboratory tests and increasing Caesarean deliveries.

This pattern of behavior is highly suggestive of the existence of defensive medicine among physicians in Taiwan. In other words, by studying physicians' response to legal changes in Taiwan, we find that greater malpractice liability may, under certain circumstances, prompt physicians to perform more services without necessarily improving patient health.

Dr. Brian Chen recently completed his Ph.D. in Business Administration in the Business and Public Policy Group at the Haas School of Business, University of California at Berkeley. He received a Juris Doctor from Stanford Law School in 1997, and graduated summa cum laude from Harvard College in 1992.

Philippines Conference Room

Brian Chen

Shorenstein APARC
Stanford University
Encina Hall, Room E-301
Stanford, CA 94305-6055

(650) 736-0771 (650) 723-6530
0
2011 AHPP/CEAS Visiting Scholar
IMG_5703.JPG JD, PhD

Dr. Brian Chen is currently a visiting scholar with the Asia Health Policy Program and Center for East Asian Studies at Stanford University. He was recently Shorenstein Asia-Pacific Research Center's 2009-2010 postdoctoral fellow in Comparative Health Policy. As a visiting scholar, Dr. Chen will conduct collaborative research about health of the elderly and chronic disease in China.

As an applied economist, Chen’s research focuses on the impact of incentives in health care organizations on provider and patient behavior. For his dissertation, Chen empirically examined how vertical integration and prohibition against self-referrals affected physician prescribing behavior. His job market paper was selected for presentation at the American Law and Economics Association’s Annual Meeting, the Academy of Management, the Canadian Law and Economics Association, the Conference on Empirical Legal Studies, and the First Annual Conference on Empirical Health Law and Policy at Georgetown Law Center in 2009.  The paper was also nominated for best paper based on a dissertation at the Academy of Management.

Chen comes to the Shorenstein Asia-Pacific Research Center not only with a multidisciplinary law and economics background, but also with an international perspective from having lived and worked in Taiwan, Japan, and France. He has a particularly intimate knowledge of the Taiwanese health care system from his experience as an assistant to the hospital administrator at a medical college in Taiwan.

During his past residence as a postdoctoral fellow with the Asia Health Policy Program, Chen conducted empirical research on cost containment policies in Taiwan and Japan and how those policies impacted provider behavior. His work also contributed to the program’s research activities on comparative health systems and health service delivery in the Asia-Pacific, a theme that encompasses the historical evolution of health policies; the role of the private sector and public-private partnerships; payment incentives and their impact on patients and providers; organizational innovation, contracting, and soft budget constraints; and chronic disease management and service coordination for aging populations.

Dr. Brian Chen recently completed his Ph.D. in Business Administration in the Business and Public Policy Group at the Haas School of Business, University of California at Berkeley. He received a Juris Doctor from Stanford Law School in 1997, and graduated summa cum laude from Harvard College in 1992.

Brian Chen Shorenstein-Spogli Fellow in Comparative Health Policy Speaker
Seminars

One Alliance, Two Lenses

News Type
News
Date
Paragraphs
In a recently published book (One Alliance, Two Lenses: U.S.-Korea Relations in a New Era) based on analysis of newly collected data from major American and Korean newspapers, Gi-Wook Shin, director of the Asia-Pacific Research Center, argues that U.S.-ROK relations, linked to the issue of national identity for Koreans, are largely treated as a matter of policy for Americans -- a difference stemming from each nation's relative power and role in the international system.
All News button
1

Economic Globalization and U.S.-Korea Relations

-

Korean Studies Program at the Shorenstein Asia-Pacific Research Center is hosting an international workshop on South Korean economic affairs on March 18-19 sponsored by Koret Foundation.  Leading scholars and former senior officials from Korea and the United States will explore key aspects of economic globalization and Korea's role, from policies and politics to the economic prospects of a unified Korean. This lecture is offered as a public event on the first day of the workshop for a larger audience from the community and the Bay area.

Ambassador Han was appointed by President Lee, Myung-bak as the new Ambassador Extraordinary and Plenipotentiary to the United States of the America on January 18, 2009. He presented his Letter of Credence to President Barack Obama on May 20, 2009.

Before the appointment, Ambassador Han served as the 38th Prime Minister of the Republic of Korea after his nomination was approved by the National Assembly on April 2, 2007, and he worked in that capacity until February 2008.

Prior to serving as Prime Minister, Ambassador Han held numerous high-ranking positions in the Korean government. In 2006, he was named Chairman of the Presidential Committee on Facilitating KORUS FTA following his service as Deputy Prime Minister and Minister of Finance and Economy. Before being named Minister of Government Policy Coordination in early 2004, he worked as President of the Korea Institute for Industrial Economics and Trade.

As Korea’s Permanent Representative to the Organisation for Economic Co-operation and Development, Ambassador Han went to Paris in 2001 before returning to Seoul later that year to serve at the Blue House, first as Senior Secretary to the President for Policy and Planning and later as Senior Secretary to the President for Economic Affairs. 

Ambassador Han was the Minister for Trade at the Ministry of Foreign Affairs and Trade from 1998 to 2001. Previously, he was Assistant Minister for International Trade and Vice Minister at the Ministry of Trade, Industry and Energy. From 1993 to 1994, he served as Secretary to the President for Economic Affairs.

During his distinguished career in government, Ambassador Han has made many contributions to the development and modernization of the Korean economy.  Deregulation, market opening and strengthening of the market economy have been the three pillars of his philosophy and framework for the economic policy of Korea.

Ambassador Han earned a B.A. in economics from Seoul National University, and an M.A. and Ph.D. in economics from Harvard University.  He has been awarded two Order of Public Service and Merit Medals.

This event is supported by a generous grant from the Koret Foundation.

Bechtel Conference Center

Duk-Soo Han Korean Ambassador to the United States Keynote Speaker
Conferences
Koret Workshop

Testifying on Capitol Hill will be a unique experience for Toyota execs, according to Shorenstein APARC scholar

Authors
News Type
News
Date
Paragraphs
In his testimony before the House Oversight Committee about Toyota's massive recall efforts, Akio Toyota will learn that you can't win such an encounter. But you can lose. Shorenstein APARC Associate Director for Research Daniel C. Sneider comments on a Japanese CEO learning the lessons of American business the hard way.
All News button
1

Dealing with North Korea: A Current Snapshot

-

Ambassador Bosworth will share his off-the-record thoughts with us.  No quotes or cameras of any kind please.

Stephen W. Bosworth is the Dean of The Fletcher School of Law and Diplomacy at Tufts University, a position he assumed in February 2001. Prior to his appointment at The Fletcher School, he served as the United States Ambassador to the Republic of Korea from November 1997 to February 2001.

From 1995-1997, Dean Bosworth was the Executive Director of the Korean Peninsula Energy Development Organization [KEDO], an inter-governmental organization established by the United States, the Republic of Korea, and Japan to deal with North Korea. Before joining KEDO, he served seven years as President of the United States Japan Foundation, a private American grant-making institution. During that period, he co-authored several studies on public policy issues for the Carnegie Endowment and the Century Fund. He also taught International Relations as an Adjunct Professor at Columbia University's School of International and Public Affairs from 1990 to 1994. In 1993, he was the Sol Linowitz Visiting Professor at Hamilton College.

Dean Bosworth has had an extensive career in the United States Foreign Service, including service as Ambassador to Tunisia from 1979-1981 and Ambassador to the Philippines from 1984-1987. He also served in a number of senior positions in the Department of State, including Director of Policy Planning, Principal Deputy Assistant Secretary of State for Inter-American Affairs, and Deputy Assistant Secretary for Economic Affairs. He is currently serving as Special Representative for North Korea Policy.

Dean Bosworth is the recipient of several awards, including the American Academy of Diplomacy's Diplomat of the Year Award in 1987, the Department of State's Distinguished Service Award in 1976 and 1986, and the Department of Energy's Distinguished Service Award in 1979. In 2005, the Government of Japan presented him with the Order of the Rising Sun, Gold and Silver Star.

Bosworth is a former member of the Board of Directors of the Council on Foreign Relations and currently serves as a member of the Board of Directors of the Japan Society of Boston. He is also a member of the Trilateral Commission.

Bosworth is a graduate of Dartmouth College where he was a member of the Board of Trustees from 1992 to 2002 and served as Board Chair from 1996 to 2000.

Philippines Conference Room

Stephen W. Bosworth Dean of The Fletcher School of Law and Diplomacy Speaker Tufts University
Seminars

The Long Shadow of Vietnam

-

Please join Marvin Kalb to discuss the impact of the Vietnam War on presidential/strategic decisions about national security issues. 

Marvin Kalb is also a contributing news analyst for National Public Radio and Fox News Channel. In addition, he is frequently called upon to comment on major issues of the day by many of the nation's other leading news organizations.

Kalb had a distinguished 30-year broadcast career, working for both CBS News and NBC News, where he served as Chief Diplomatic Correspondent, Moscow Bureau Chief, and moderator of Meet the Press. Among his many honors are two Peabody Awards, the DuPont Prize from Columbia University, the 2006 Fourth Estate Award from the National Press Club and more than a half-dozen Overseas Press Club awards. He has lectured at many universities, here and abroad. Kalb was the founding director of the Joan Shorenstein Center on the Press, Politics, and Public Policy at the Kennedy School of Government at Harvard University.

A graduate of the City College of New York, Kalb has an M.A. from Harvard and was zeroing in on his Ph.D. in Russian history when he left Cambridge in 1956 for a Moscow assignment with the State Department. The following year, he joined CBS News, the last correspondent hired by Edward R. Murrow. Kalb has authored or co-authored 10 nonfiction books and two best-selling novels. His latest book, The Media and the War on Terrorism (co-edited with Stephen Hess), was the recipient of the 2004 Arthur Rowse Award for Press Criticism. He is currently engaged in research for a book on U.S. involvement in the Vietnam War and its impact on American politics and foreign policy.

Daniel and Nancy Okimoto Conference Room

Marvin Kalb James Clark Welling Presidential Fellow at The George Washington University and Edward R. Murrow Professor Emeritus at Harvard's Kennedy School of Government Speaker
Seminars

The Cost of the Bomb, The Cost of Slave Labor: Mutual Apology and Compensation as a Way to Address U.S. and Japanese Atrocities from World War II

February 2010 Dispatch - Strict Liability for Medical Injuries? The Impact of Increasing Malpractice Liability on Obstetrician Behavior in Taiwan

Authors
Brian Chen
News Type
News
Date
Paragraphs

Malpractice liability, along with medical technology and payment system distortions, regularly figures among the most-cited reasons for escalating health-care spending in the United States. On the one hand, Harvard economist Amitabh Chandra conservatively estimates that upwards of $60 billion, or 3 percent of total health care costs ($1.8 trillion), is spent annually as a result of direct litigation and indirect defensive medicine costs. On the other hand, tort reform advocates place the figure at $200 billion by extrapolating, to the entire U.S. population, the results of research conducted by Stanford professor Dan Kessler and Mark McClellan. Their 1996 study shows that tort reforms reduced provider liability costs for Medicare heart patients by 5 to 9 percent.

At the heart of these debates is the following question. Does medical malpractice liability achieve its dual goal of compensating victims of medical injuries and deterring medical errors, or does it merely encourage wasteful defensive medicine without improving patient health? Despite considerable empirical research, there is little evidence that malpractice litigation deters medical negligence. The evidence is much stronger—though still hotly debated—that malpractice fears actually encourage physicians to engage in defensive medicine. My work at Shorenstein APARC explores whether malpractice pressures affect physician behavior, patient health, and health care costs in Asia. Studying physicians’ response to legal changes in Taiwan, I find that greater malpractice liability may, under certain circumstances, prompt physicians to perform more services without necessarily improving patient health.

In particular, I focus on how increased medical malpractice liability affects physicians in Taiwan who provide treatment to pregnant women. I have studied how a series of court rulings as well as an amendment to Taiwanese law between 1997 and 2004 impacted physicians’ test-ordering behavior and decisions to perform Caesarian sections. Traditionally, Taiwanese doctors are held accountable for medical malpractice under two bodies of law: tort law in the Civil Code, and criminal law for harm resulting from negligent acts in the course of professional operations. The latter, prosecutorial approach is rare among industrialized nations.

In January 1998, a Taipei District Court decision in favor of plaintiffs in a civil suit for damages sent shockwaves through the medical community. The district court judge disregarded the traditional tort requirement of proving the defendant’s negligence (or fault), and applied the “strict liability” doctrine of the Consumer Protection Law to impose liability on a medical provider without any showing of wrongdoing. The court decision—subsequently affirmed by the Taipei High Court on September 1, 1999 and by the Supreme Court on May 10, 2001—sparked resentment among medical professionals. Passions flared in heated debates between medical and legal scholars about whether medical services should be considered a covered “service” under the Consumer Protection Law. Economists and legal academics questioned whether the traditional justifications for imposing strict liability apply in the highly unpredictable practice of medicine, especially in obstetrics. The saga concluded in April 2004, when the legislature amended the Medical Law to require negligence or fault in medical malpractice cases.

My research considers the effect of these court rulings and legal amendments on physicians’ test-ordering behavior and their propensity to perform Caesarean sections. I identify two sources of variation in perceived risks of malpractice liability: (1) the differences between the level of exposure to malpractice risks due to the ownership structure and size of the physicians’ place of practice; and (2) the differences in perceived risks based on the physicians’ geographical location.

My results are consistent with the existence of defensive medicine. First, with respect to their propensity to increase laboratory tests and reduce Caesarean sections, physicians who own their clinics (“physician-owners”) in Taiwan reacted more strongly to the legal changes than did physicians who are salaried employees at larger hospitals (“nonowners”). Physician-owners’ behavior did not change, however, in discretionary expenditures that were not associated with defensive medicine. Second, physician-owners working in areas under the jurisdiction of the Taipei District Court reacted more strongly to legal change than did those practicing in Kaohsiung, Taiwan’s second largest city, at the opposite end of the island.

The negative connection between the likelihood of Caesarean deliveries and increased malpractice liability deserves special mention, since most published studies find a positive association between malpractice liability risks and Caesarean rates. However, economists Janet Currie and Bentley MacLeod at Columbia University suggest that reforms in which liability is closely aligned with defendant’s actual levels of care may produce the opposite effect. In the Taiwan context, increased medical malpractice liability accrues directly to the physician-owners. Since Caesarean sections are generally riskier than natural deliveries, it seems logical that higher tort liability in Taiwan may actually decrease the likelihood of deliveries by Caesarean sections. In this sense, my study confirms Currie and MacLeod’s predictions and empirical results.

My work contributes to our understanding of health law and policy in several concrete ways. First, I add support to the existence of defensive medicine, even in a non-Common Law jurisdiction. Since I focus on Taiwan—an environment that lacks malpractice insurance, in which physicians are either owners or employees at providers of varying sizes—my research isolates the pure effect of malpractice liability to a greater extent than do many current studies. Second, I show that interaction between the payment and legal systems may either enhance or mitigate the hypothetical pure effects of legal policies. In a fee-for-service system, physicians subject to higher malpractice risks appear much more willing to increase laboratory tests than to reduce profitable Caesarean sections. Third, my research indicates that, by altering physicians’ exposure to risks, different organizational forms and ownership structures of health care provision may affect defensive medicine at differing rates.

In sum, the practice of “defensive medicine” appears not to be a uniquely American phenomenon. Indeed, it may also play a role in health care cost escalations in Asia, especially under heightened physician liability regimes.

-------------------

Shorenstein APARC Dispatches are regular bulletins designed exclusively for our friends and supporters. Written by center faculty and scholars, Shorenstein APARC Dispatches deliver timely, succinct analysis on current events and trends in Asia, often discussing their potential implications for business.

All News button
1
Subscribe to United States