Estimating the Effect of Damages Caps in Medical Malpractice Cases: Evidence from Texas
The Journal of Legal Analysis, Vol. 1, No. 1, pp. 355-409, 2009
U Illinois Law & Economics Research Paper No. 07-16
U of Texas Law, Law and Econ Research Paper No. 106
56 Pages Posted: 26 Feb 2009 Last revised: 24 Dec 2009
Date Written: February 26, 2009
Using claim-level data, we estimate the effect of Texas's 2003 cap on non-economic damages on jury verdicts, post-verdict payouts, and settlements in medical malpractice cases closed during 1988-2004. For pro-plaintiff jury verdicts, the cap affects 47 percent of verdicts, and reduces mean allowed non-economic damages, mean allowed verdict, and mean total payout by 73 percent, 38 percent, and 27 percent, respectively. In total, the non-econ cap reduces adjusted verdicts by $156M, but predicted payouts by only $60M. The impact on payouts is smaller because a substantial portion of the above-cap damage awards were not being paid to begin with. In cases settled without trial, the non-econ cap affects 18 percent of cases and reduces predicted mean total payout) by 18 percent. The non-econ cap has a smaller impact on settled cases than tried cases because settled cases tend to involve smaller payouts. The impact of the non-econ cap varies across plaintiff categories. Deceased, unemployed, and (likely) elderly plaintiffs suffer a larger percentage reduction in payouts than living, employed, and non-elderly plaintiffs. We also simulate the effects of different caps, and find substantial differences in cap stringency across states. Different caps reduce aggregate payouts in tried cases (all cases) by between 16 percent and 65 percent (7 percent and 42 percent). Caps on total damages have especially large effects.
Keywords: damages caps, medical malpractice, texas, settlements
JEL Classification: K13
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Defense Costs and Insurer Reserves in Medical Malpractice and Other Personal Injury Cases: Evidence from Texas, 1988-2004
By Bernard S. Black, David A. Hyman, ...
The Hidden Victims of Tort Reform: Women, Children, and the Elderly
Settlement at Policy Limits and the Duty to Settle: Evidence From Texas
By David A. Hyman, Bernard S. Black, ...
The Demographics of Tort Reform
By Joanna Shepherd and Paul H. Rubin
Negotiating in the Shadow of 'Bad Faith' Refusal to Settle: A Game Theory Model of Medical Malpractice Pre-Trial Settlements and Insurance Limits
By Theodore H. Frank and M.e. Newhouse
The Effects of Jury Ignorance About Damage Caps: The Case of the 1991 Civil Rights Act
Tort Reforms’ Winners and Losers: The Competing Effects of Care and Activity Levels
Experimental Simulations and Tort Reform: Avoidance, Error and Overreaching in Sunstein Et Al.'s Punitive Damages
By Neil Vidmar