Courts, Scheduled Damages, and Medical Malpractice Insurance

Paola Bertoli

University of Economics, Prague

Veronica Grembi

Copenhagen Business School

December 2013

Baffi Center Research Paper No. 2013-145

We assess the impact of the introduction of schedules of non-economic damages (i.e. tiered caps systems) on the behavior of insurers operating in the medical liability market for hospitals while controlling the performance of the judicial system, measured as court backlog. Using a difference-in-differences strategy on Italian data, we find that the introduction of schedules increases the presence of insurers (i.e. medical liability market attractiveness) only in inefficient judicial districts. In the same way, court inefficiency is attractive to insurers for average values of schedules penetration of the market, with an increasing positive impact of inefficiency as the territorial coverage of schedules increases. Finally, no significant impact is registered on paid premiums. Our analysis sheds light on a complex set of elements affecting the decisions of insurers in malpractice markets. The analysis questions whether schedules of non-economic damages, as well as other limitations on compensations to medical malpractice victims, are an effective way to improve the payoff of health care providers.

Number of Pages in PDF File: 41

Keywords: Schedules of Non-Economic Damages, Courts, Medical Malpractice Insurance, Di fference-in-Di fferences

JEL Classification: I10, K32, K40

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Date posted: December 14, 2013  

Suggested Citation

Bertoli, Paola and Grembi, Veronica, Courts, Scheduled Damages, and Medical Malpractice Insurance (December 2013). Baffi Center Research Paper No. 2013-145. Available at SSRN: http://ssrn.com/abstract=2367218 or http://dx.doi.org/10.2139/ssrn.2367218

Contact Information

Paola Bertoli
University of Economics, Prague ( email )
Czech Republic
Veronica Grembi (Contact Author)
Copenhagen Business School ( email )
Solbjerg Plads 3
Frederiksberg C, DK - 2000
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