When Should Physicians Be Liable for Innovation?

Abstract

Uncertainty pervades medicine. It is particularly acute when a physician deliberately deviates from generally accepted practices in an attempt to improve patient care. Unlike innovative drug and device manufacturers, treating physicians are not subject to mandatory ex ante public regulation. The question of how to constrain physician behavior thus largely falls to the tort system. Innovation by definition involves a departure from custom, so adherence to customary standards of care essentially requires physicians to solely bear the liability costs of innovative treatment. This regime of course protects patients from unnecessary risks associated with untested therapies, but also may unduly deter physicians from tailoring individualized treatment plans that address patients’ particular needs and preferences.

There are several possible alternatives to regulating physician innovation, ranging from the highly paternalistic to the highly libertarian. The public regulatory regime could be revised to require that all untested medical interventions undergo formal testing before physicians are permitted to use them in the treatment setting. But turning an individual from a patient in a treatment setting into a subject in a research setting fundamentally transforms her role in the medical decision-making process and the goals of the intervention. At the other extreme, we could adopt a contract-based model of physician liability that allows for more robust and coherent adherence to principles of patient autonomy. But physicians’ superior knowledge and patient vulnerabilities caution against treating a medical encounter as an arms-length negotiation.

This Article proposes a fiduciary framework to regulate physician innovation under conditions of endogenous uncertainty. The proposed approach could be described as a “libertarian paternalism” model of medical decision-making. It mandates close scrutiny of the decision-making process but deference to the substance of medical decisions. Under this framework, the physician should be held liable for failing to act in the patient’s best interests, taking into account the patient’s unique clinical condition and value preferences. Within these constraints, however, patients should have the freedom to choose – and assume the associated risks and uncertainties – from among a range of clinically acceptable alternatives. Properly applied, fiduciary principles can strike a desirable balance that respects patient autonomy, deters unreasonable risks, and encourages beneficial innovation.

Keywords: medical liability, innovation, medical decision-making, physician, fiduciary