Background: Since 2001, the University of Michigan Health System (UMHS) has fully disclosed and offered compensation to patients for medical errors.

Objective: To compare liability claims and costs before and after implementation of the UMHS disclosure-with-offer program.

Design: Retrospective before-after analysis from 1995 to 2007.

Setting: Public academic medical center and health system.

Patients: Inpatients and outpatients involved in claims made to UMHS.

Measurements: Number of new claims for compensation, number of claims compensated, time to claim resolution, and claims-related costs.

Results: After full implementation of a disclosure-with-offer program, the average monthly rate of new claims decreased from 7.03 to 4.52 per 100,000 patient encounters (rate ratio [RR], 0.64 [95% CI, 0.44 to 0.95]). The average monthly rate of lawsuits decreased from 2.13 to 0.75 per 100,000 patient encounters (RR, 0.35 [CI, 0.22 to 0.58]). Median time from claim reporting to resolution decreased from 1.36 to 0.95 years. Average monthly cost rates decreased for total liability (RR, 0.41 [CI, 0.26 to 0.66]), patient compensation (RR, 0.41 [CI, 0.26 to 0.67]), and non-compensation-related legal costs (RR, 0.39 [CI, 0.22 to 0.67]).

Limitations: The study design cannot establish causality. Malpractice claims generally declined in Michigan during the latter part of the study period. The findings might not apply to other health systems, given that UMHS has a closed staff model covered by a captive insurance company and often assumes legal responsibility.

Conclusion: The UMHS implemented a program of full disclosure of medical errors with offers of compensation without increasing its total claims and liability costs.

Primary funding source: Blue Cross Blue Shield of Michigan Foundation.