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Stability, Not Crisis: Medical Malpractice Claim Outcomes in Texas, 1988-2002

Bernard S. Black
University of Texas at Austin - School of Law; McCombs School of Business, University of Texas at Austin; European Corporate Governance Institute (ECGI); Northwestern University - School of Law; Northwestern University - Kellogg School of Management

Charles Silver
University of Texas at Austin - School of Law

David A. Hyman
University of Illinois - College of Law

William M. Sage
University of Texas at Austin School of Law



U of Texas Law & Economics Research Paper No. 30; Columbia Law & Econ Research Paper No. 270; U Illinois Law & Economics Research Paper No. LE05-002

Abstract:     
Using a comprehensive database of closed claims maintained by the Texas Department of Insurance since 1988, this study provides evidence on a range of issues involving medical malpractice litigation, including claim frequency, payout frequency, payment amounts, defense costs, and jury verdicts. The data present a picture of stability in most respects and moderate change in others. We do not find evidence in claim outcomes of the medical malpractice insurance crisis that produced headlines over the last several years and led to legal reform in Texas and other states. At least in Texas, the rapid rise in insurance premiums that sparked the crisis may reflect, in significant part, insurance market dynamics rather than changes in claim outcomes.

Controlling for population growth, the number of large paid claims (over $25,000 in real 1988 dollars) was roughly constant from 1990-2002. The number of smaller paid claims declined. Controlling for inflation, payout per large paid claim increased over 1988-2002 by an estimated 0.1% (insignificant) - 0.5% (marginally significant) per year, depending on the dataset we use to define "medical malpractice" claims. Jury awards increased by an estimated 2.5% (insignificant) - 3.6% (barely significant) per year, depending on the dataset, but actual post-verdict payouts in tried cases showed little or no time trend. Real defense costs per large paid claim rose by 4.2 - 4.5% per year. Real total cost per large paid claim, including defense costs, rose by 0.8 - 1.2% per year.

Keywords: health care, medical malpractice, tort system, litigation, malpractice insurance

JEL Classifications: I18, K13, K41

Working Paper Series

Date posted: March 06, 2005 ; Last revised: August 14, 2005

Contact Information

Bernard S. Black (Contact Author)
University of Texas at Austin - School of Law ( email )
Austin, TX 78705
United States
512-471-4632 (Phone)
McCombs School of Business, University of Texas at Austin
Austin, TX 78712
United States
European Corporate Governance Institute (ECGI)
Brussels Belgium
Northwestern University - School of Law
375 E. Chicago Ave
Chicago, IL 60611
United States
Northwestern University - Kellogg School of Management
2001 Sheridan Road
Evanston, IL 60208
United States
David A. Hyman
University of Illinois - College of Law ( email )
504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
William Matthew Sage
University of Texas at Austin School of Law ( email )
727 East Dean Keeton Street
Austin, TX 78705
United States
Charles M. Silver
University of Texas at Austin - School of Law ( email )
727 East Dean Keeton Street
Austin, TX 78705
United States
512-232-1337 (Phone)
512-232-1372 (Fax)
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