The Receding Tide of Medical Malpractice Litigation Part 2: Effect of Damage Caps
Hanyang University - College of Policy Sciences
Bernard S. Black
Northwestern University - School of Law; Northwestern University - Kellogg School of Management; European Corporate Governance Institute (ECGI)
David A. Hyman
University of Illinois College of Law
December 15, 2013
as published in 10 Journal of Empirical Legal Studies, pp. 939-669 (2013)
Northwestern Law & Econ Research Paper No. 13-24
Illinois Program in Law, Behavior and Social Science Paper No. LBSS14-02
Illinois Public Law Research Paper No. 13-56
We study the effect of damage caps adopted in the 1990s and 2000s on medical malpractice claim rates and payouts. Prior studies found some evidence that caps reduce payout/claim, but mixed and weak evidence on whether caps reduce paid claim rates and payout per physician. However, most prior studies do not allow for the gradual phase-in of damage caps, which usually apply only to lawsuits filed after the reform’s effective date, or only to injuries after the effective date. Once we allow for phase-in, we find strong evidence that damage caps reduce both claim rates and payout per claim, with a large combined impact on payout per physician. The drop in claim rates is concentrated in claims with larger payouts – the ones that would be most affected by a damages cap. Stricter caps have larger effects. Some prior studies also find a large impact of tort reforms other than damage caps. Once we allow for phase-in, we find that these other reforms have no significant impact on either claim rates or payout per claim.
A companion article, The Receding Medical Malpractice Part 1: National Trends, is available at http://ssrn.com/abstract=2109679.
Number of Pages in PDF File: 31
Keywords: medical malpractice, damage caps
JEL Classification: I18, K23, K32
Date posted: July 10, 2013 ; Last revised: January 28, 2015
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