Designing a No-Fault Alternative

Abstract

A no-fault compensation scheme should rank at the very top of a list of long-term solutions to the perceived crisis in medical malpractice. The form of no-fault system most likely to be adopted would be one providing automatic compensation, not for all iatrogenic injuries, but for a limited set of designated compensable events. Such a compensation system would be closely integrated with the day-to-day activities of health care providersindividual practitioners, institutions, and health maintenance organizations (HMO's)-and would link compensation closely to the outcomes of medical intervention. In addition to providing quick and equitable compensation for a wide range of medically caused injuries, a properly designed system would supply strong incentives for modifying provider behavior to improve the quality of health care.' Although a no-fault scheme might be embodied in legislation, this idea has not yet been embraced by public policy makers. Nevertheless, it remains possible (subject to concerns about the enforceability of agreements modifying tort rights) for a no-fault scheme to be adopted privately in provider/patient contracts backed by a form of casualty insurance. In the current competitive environment of the health care industry, the availability of the voluntary no-fault alternative would greatly expand the freedom of choice of both providers and consumers of health care services.2