Use of Nondisclosure Agreements in Medical Malpractice Settlements by a Large Academic Health Care System.

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Abstract

IMPORTANCE:

Honesty and transparency are essential aspects of health care, including in physicians' and hospitals' responses to medical error. Biases and habits associated with medical malpractice litigation, however, may work at cross-purposes with compassion in clinical care and with efforts to improve patient safety.

OBJECTIVE:

To determine the frequency of nondisclosure agreements in medical malpractice settlements and the extent to which the restrictions in these agreements seem incompatible with good patient care.

DESIGN, SETTING, AND PARTICIPANTS:

We performed a retrospective review of medical malpractice claim files, including settlement agreements, for claims closed before (fiscal year 2001-2002), during (fiscal year 2006-2007), and after (fiscal years 2009-2012) the implementation of tort reform in Texas. We studied The University of Texas System, which self-insures malpractice claims that involve 6000 physicians at 6 medical campuses in 5 cities.

MAIN OUTCOMES AND MEASURES:

Nondisclosure provisions in medical malpractice settlements.

RESULTS:

During the 5 study years, The University of Texas System closed 715 malpractice claims and made 150 settlement payments. For the 124 cases that met our selection criteria, the median compensation paid by the university was $100,000 (range, $500-$1.25 million), and the mean compensation was $185,372. A total of 110 settlement agreements (88.7%) included nondisclosure provisions. All the nondisclosure clauses prohibited disclosure of the settlement terms and amount, 61 (55.5%) prohibited disclosure that the settlement had been reached, 51 (46.4%) prohibited disclosure of the facts of the claim, 29 (26.4%) prohibited reporting to regulatory agencies, and 10 (9.1%) prohibited disclosure by the settling physicians and hospitals, not only by the claimant. Three agreements (2.7%) included specific language that prohibited the claimant from disparaging the physicians or hospitals. The 50 settlement agreements signed after tort reform took full effect in Texas (2009-2012) had stricter nondisclosure provisions than the 60 signed in earlier years: settlements after tort reform were more likely to prohibit disclosure of the event of settlement (36 [72.0%] vs 25 [41.7%]; P < .001), to prohibit disclosure of the facts of the claims (31 [62.0%] vs 20 [33.3%]; P = .003), and to prohibit reporting to regulatory bodies (25 [50.0%] vs 4 [6.7%]; P < .001).

CONCLUSIONS AND RELEVANCE:

An academic health system with a declared commitment to patient safety and transparency used nondisclosure clauses in most malpractice settlement agreements but with little standardization or consistency. The scope of nondisclosure was often broader than seemed needed to protect physicians and hospitals from disparagement by the plaintiff or to avoid publicizing settlement amounts that might attract other claimants. Some agreements prohibited reporting to regulatory agencies, a practice that the health system changed in response to our findings.