No, my school uses Class Average and Z-scores to calculate grades, though we use pass/HP/honors, and in the clinical years, it takes a lot to get a marginal or fail. As for peepshowjohnny's concern, my school takes clinical grades and adjusts them at semester's end to make the overall %ages of Passes/HP's/Honors grades meet the targets suggested by the administration (60/20/20). We have sequenced semesters (ie one semester in you're in the Family/Peds/Surgery block, the other is Med/OB-GYN/Psych) so you're with the same overall cohort (half the class) for the whole year, and at least in the Family/Peds/Surgery block, with the same group of classmates in each rotation. The idea is that in a semester's time, there's enough variety of professional aspirations to avoid an ultra-competitive group creating an outlier rotation.
There's nothing spectacular about a %age score that makes it any more valid for assigning letter grades than a bell curve. If an A is supposed to represent superior performance, then it needs to be assigned to only those people who actually performed at a superior level compared to the rest. If the class average was a 98%, there still needs to be some way to differentiate who did better than the rest.