First of all, the OP, like many of all ages considering medicine was worried about whether major preventable mistakes occur in medicine. Not unreasonably, premeds of all ages are afraid that they may be responsible for hurting or killing someone. Those who are a bit farther along have a different perspective and it is worthwhile sharing this with premeds.
So, let me return to this original question before going back to the side-issue of tort reform.
In medicine, those taking care of very sick patients make a lot of decisions constantly and also do procedures to patients. In that setting, being human, mistakes are made. Sometimes we just make a decision that turns out badly and then mentally go back and think about what we should have done. In thinking about it, we may decide that we did the best we could at the time with the information we had, or we may decide that we really made a bad decision. If it's the latter, then, it's a chance to learn from it.
Actually, what can happen is that people will go to far with this. Many times I'll hear one of my colleagues say something like "I'll never give a patient with X disease Y treatment again because last time I did that to a similar patient they had Z bad event happen". This may be wrong because it isn't consistent with the evidence OR may deny a patient a treatment that would help.
In general, situations like this do not lead to lawsuits however as they are within the range of acceptable medical practice and criticism of our decisions comes from within or from others who took care of the patient. Again, this is an inevitable part of medical practice, especially common in those who are taking care of very sick people. Over time, good physicians learn how to deal with these situations. They may remember some things they REALLY wish they'd done differently for a patient, but it shouldn't control how they practice medicine. There's a lot more I could say about this, but I hope this is a start.
Now, a second type of mistake, that I believe is less common, but does occur is when something is actually done that is unquestionably incorrect. This can be a wrong dose of a medication being given, the wrong medication being given or surgical errors that should not have occurred. There is certainly a "gray zone" between the first type of "I wish I had done it differently" mistake and "flat out undeniable" mistakes, but conceptually, it's useful to separate them.
In this case, an investigation can and should occur. Current thinking is that most of these mistakes are caused by multiple failures in the system. For example, if the wrong medicine is given based on an incorrect order, this should have been caught by the pharmacy and by the bedside nurse. but the person who wrote the order also has some of the blame. In preventing and evaluating these mistakes (often called "Sentinel events"), hospitals will look at every step of the system and try to figure out how to prevent them. Although not everyone will make one of these mistakes as a physician, just making one is not the end of ones career. That is, most people will write a medicine dose wrong at some point, and usually it is caught or causes no harm. Even if it isn't caught and some harm occurs, usually the person will not lose their license, although certainly a malpractice case is a risk.
As practicing physicians, we come to understand that the risk of mistake is inherent in our practice of medicine. The more patients we see, the sicker they are, the more likely a bad outcome is for some of them. Thus, we or others may consider "mistakes" to have occurred. Our patients rely on us to do the best we can, but we also have to learn how to both limit mistakes AND to learn from those we (or our colleagues) make.
To return to tort reform, an interesting topic and one hotly debated throughout the medical world, I am doubtful that it will lead to a decrease in what is called "defensive" medicine. I have some doubts as to what is actually defensive medicine however - one's view of this changes with time as well. That however, wasn't the point of this thread.
And once again, Tired steps in with the QOTD. 
