On July 1, 2015, the Iowa legislature rolled out what is being heralded as its most significant medical liability reform of the past decade: enabling confidential “open discussions” between health care providers and patients following an “adverse health care incident” (often referred to as the “Candor” law). (A copy of the new law can be found here). The reform is the culmination of a rare joint effort between the Iowa Medical Society (“IMS”) and the Iowa Association for Justice (the membership organization for Iowa trial attorneys); the law passed both chambers of the Iowa legislature unanimously.

IMS has explained that “[t]he premise of Candor – Communication and Optimal Resolution – is the idea that more open communication between physicians and patients will not only strengthen the physician-patient relationship and improve the quality of care being delivered, but also reduce malpractice lawsuits and expedite patient resolution.” Communication and Optimal Resolution Policy Brief, Iowa Medical Society, Communication and Optimal Resolution, Policy Brief, IOWA MED. SOC’Y (2014); see Michael McCoy, The McCoy Report Policy & Strategy Recommendations of the IMS Ad Hoc Tort Reform Task Force, IOWA MED. SOC’Y (2013). This reform comes years after Iowa adopted its “apology law,” a rule of evidence that renders certain statements, gestures, and conduct related to the expression of regret or sorrow inadmissible in civil medical malpractice cases. See Iowa Code section 622.31 (“Evidence of Regret or Sorrow”). Iowa’s new Candor law builds upon the rule of evidence exclusion and works to facilitate voluntary, confidential communication with patients.

What You Need To Know

Following an “adverse health care incident” that occurs in a “health facility,” new Iowa Code chapter135P allows a “health care provider” or a health care provider jointly with a health facility to provide the patient (or legal representative) a specific written notice of a desire to engage in an “open discussion” with a patient related to the incident.

An “adverse health care incident” is defined as an objective and definable outcome arising from or related to patient care that results in the death or serious physical injury of a patient. A “health facility” is a hospital, hospice, home health agency, assisted living program, or clinic or community health center. A “health care provider” is a physician, a physician assistant, a podiatrist, or an advanced registered nurse practitioner. An “open discussion” means all communications made under the Candor Law, including all written documents or other materials prepared for or submitted in the course of the communication.

The health care provider and the health facility will be able to investigate the incident and discuss, with the patient, what went wrong and plans to prevent similar incidents. All open discussion under the Candor law are confidential and not subject to discovery or other means of legal compulsion in any subsequent legal proceeding, such as in a malpractice suit or in an administrative proceeding or arbitration. The statute also allows the health facility to orally communicate whether compensation for the adverse health care incident is warranted.

To facilitate the open discussion, the health care provider, or the health care provider jointly with the health facility, must provide written notice to the patient with specific information, including: the patient’s right to receive copies of medical records and right to authorize their release to third parties; the patient’s right to seek legal counsel; a copy of the applicable statute of limitations for malpractice claims; and a statement that all communications are confidential and not subject to discovery. This notification must be sent “within 180 days after the date on which the health care provider knew, or through the use of diligence should have known, of the adverse health care incident.”

If a patient agrees in writing to engage in an open discussion, the patient, health care provider, or health facility engaged in open discussions under the Candor law may include other persons in the open discussions. However, all such additional parties must first receive a written notice that the discussions are privileged and confidential and are not subject to legal compulsion for release or admissible in evidence in a judicial, administrative or arbitration proceeding. The notice must also state that communications or work product or other materials that were not prepared specifically for use in the open discussions under the Candor law that are otherwise subject to discovery are not confidential.

If a health care provider or health facility makes an offer of compensation and the patient is not represented by legal counsel, the patient must be advised of the patients’ right to seek legal counsel regarding the offer. The offer may be conditioned on the patient releasing claims against the health care provider and health facility.

To ensure the applicability of Iowa’s new Candor law, particularly where there may be conflicting federal law, health care facilities are encouraged to contact counsel.

Case Study

The University of Michigan Health System (UMHS) is the most widely cited example of a successful Candor program. The UMHS Candor program emphasizes transparency, focusing on open communication with patients and families. When an unanticipated health care outcome occurs, UMHS quickly investigates the incident, communicates with the patient, and implements improvements designed to prevent similar incidents from reoccurring.

The results at UMHS have been remarkable. From 2001 to 2009, the UMHS Candor program experienced a 55 percent drop in the number of new malpractice claims filed. Richard C. Boothman ET. AL., A Better Approach to Medical Malpractice Claims? The University of Michigan Experience, 2 J. HEALTH & LIFE SCI. L. 125, 143 (2009). Moreover, UMHS experienced a 56 percent reduction in the number of claims that resulted in a lawsuit. Allen Kachalia ET. AL., Liability Claims and Costs Before and After Implementation of a Medical Error Disclosure Program, 153 ANNALS INTERNAL MED. 213 (2010).

In the wake of UMHS’s success, Iowa follows Massachusetts and Oregon in enacting a similar Candor law, each with their own unique elements.

Considerations

A health care provider and health facility must consider a number of issues before engaging in open discussion with a patient or a patient’s legal representative under the Candor law. Below is a short list of issues to consider before proceeding.

1. Ensure that Adequate Notice to Patient is Provided as Required by the Statute

The Candor law provides for specific requirements as to the contents of the notice a patient must be given before engaging in an “open discussion.” See Iowa Code chapter 135P.3(1). It is important that the health care provider and/or health facility provide the patient all of the information required under the statute; failure to do so could mean that communications are not protected. Creating and utilizing a standardized notice form, which meets the statute’s requirements, will reduce the risk of error. Adopting a standard procedure when taking advantage of the Candor law will also help to ensure that all of the legal obligations are followed, such as sending notice to the patient or legal representative within the short 180 day time-frame required.

2. Identify and Outline the Different Roles and Responsibilities of Various Departments within the Health Facility

A number of things need to happen before an open discussion can occur, including, but not limited to: an investigation into the incident (which requires documentation gathering, interviews, review of the patient’s medical records, and other investigatory work); discussions with legal counsel and insurance carriers; and review and update of internal policies and procedures to reduce the risk of similar future incidents. These actions require the cooperation and coordination of many different departments within a health facility. Policies and procedures should be developed that outline these roles and responsibilities to ensure the appropriate information is gathered and dispersed to decision makers in a timely manner.

3. Determine Whether the Settlement Must be Reported to the Federal National Practitioner Data Bank

A payment made on behalf of a health care provider in settlement of a claim or judgment against a provider is reportable to the National Practitioner Data Bank (NPDB). The NPDB defines a medical malpractice claim as “a written claim or demand for payment based on a health care provider’s furnishing (or failure to furnish) health care services.” See NPDB Guidebook. The Candor law discusses both written and oral offers of settlement. The structure of the offer and settlement could affect whether it is reportable to the NPDB. Care should be taken to determine how to structure any offer of settlement under the provisions of the code to retain the confidentiality protections and comply with reporting requirements of the NPDB.

4. Train Providers and Administrative Staff on the New Law, any New Policies and the Use of any New Procedures and Forms

Providers and administrative staff should be trained on the provisions of the Candor law and on any new related policies and procedures adopted by the health facility. Making sure everyone knows their role and the expectation as to how “open discussions” with patients or a patient’s legal representative will take place ensures that the health care provider and/or health facility’s communications are protected under the statute.

Conclusion

To obtain the full benefits and protections of this medical liability reform, health care facilities should consider adopting policies and procedures designed to take advantage of Iowa’s new Candor law. Health care facilities are encouraged to contact counsel when developing policies and procedures to ensure compliance with, and before engaging in open discussion under, Iowa Code chapter 135P.