The Patient Protection and Affordable Care Act authorizes the Secretary of Health and Human Services (HHS) to award grants to states for the development, implementation, and evaluation of alternatives to current tort litigation. These models should put patient safety first and work to reduce preventable injuries; foster better communication between doctors and their patients; and ensure that patients are compensated in a fair and timely manner for medical injuries. This provision is aimed at reducing the incidence of frivolous lawsuits and lowering liability premiums.

Specifically, participating states must develop an alternative liability reform that allows for the resolution of disputes over injuries allegedly caused by health care providers or organizations, and promotes a reduction of health care errors by encouraging the collection and analysis of patient safety data.

As part of the grant, each state must identify the sources from and methods by which compensation would be paid, as well as demonstrate that its proposed alternative to tort litigation meets certain goals and criteria. Each state must submit to the Secretary a report that discusses the effect of patient safety activities and the availability and price of medical liability insurance. Any state can apply for a grant; even those that already have liability reforms in place (e.g., caps on damages) can apply to pursue additional liability reforms.

Funding for this program will be appropriated for five years, beginning in fiscal year 2011.

In addition, the federal government will provide $25 million in funding for demonstration projects on innovative medical liability reforms. This past June, HHS's Agency for Healthcare Research and Quality funded three-year demonstration grants for five health care systems and two states (i.e., New York and Massachusetts). Eleven more health care systems and two more states (i.e., Oregon and North Carolina) were funded for one-year planning grants of up to $300,000 each.

These demonstration and planning grants support the creation of a judge-directed negotiation program, the development of "health courts," the development of "safe harbors" for state-endorsed evidence-based care guidelines, and early disclosure and prompt compensation models. An evaluation project, designed to develop the evidence base that will inform long-term solutions to the medical liability problem, was awarded to JBA/RAND.

The law also includes a provision that allows patients to opt out of these alternatives at any time and pursue their liability claims in court.

In addition, it extends medical liability protections under the Federal Tort Claims Act to officers, governing board members, employees, and contractors of free clinics. This provision allows potential defendants free liability coverage and an altered tort process that has no jury trials, no punitive awards, and limits attorneys' fees.

Finally, the law authorizes the Government Accountability Office (GAO) to determine if the development, recognition, or implementation of guidelines, standards, or payment adjustments (e.g., health-care acquired conditions) specified in sections throughout the law would result in new causes of action or claims against health care providers.