August 31, 2011 Articles

New Health Care Law Affects Medical Liabilities and Drives New Plaintiff Options

By James T. O'Reilly and Michele L. Young

The 2010 Patient Protection and Affordable Care Act (PPACA), Pub. L. No. 111-148, deepens the trench that separates injured plaintiffs from access to compensation under traditional medical malpractice law. You who defend products and hospitals are about to experience the caseload of former malpractice suits, now being recast as "negligent credentialing," "inadequate oversight," "failure to warn," "false claims for reimbursement," and "defective design" causes of action. Like squeezing a balloon at one end with so-called tort "reform" shielding errors by doctors, the balloon of needed compensation for victims is going to exert more pressure on device and drug firms as well as hospital administrators.

The PPACA is not designed as a products liability law, but its impact will be felt by defenders and plaintiffs' counsel alike. First, the new Affordable Care Organizations' members are allowed to keep savings they can negotiate from patient care, encouraging much tougher price negotiation for catheters, mammography services, pacemakers, or syringes. Next, these pricing pressures will be accompanied by new taxes on device marketers and research-driven pharmaceutical companies; some argue this will drain funds previously used for premarket safety review. Third, tougher liabilities for misconduct in pricing and promotion, and more incentives for leaks and whistleblower reports among the company's downsized former employees, will generate huge liability verdicts against the firms that more aggressively promoted "off-label" devices and drugs. The prospect of shrinking payments from Medicaid's shared state and federal funds may pressure the current allies—device maker, hospital, and surgeon—into an internecine warfare manifested in testimony or document releases during products liability litigation. And, finally, significant changes to the False Claims Act affect product makers in ways that few have foreseen.

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