The Deterrent Effect of Tort Law: Evidence from Medical Malpractice Reform

42 Pages Posted: 11 Nov 2013 Last revised: 23 Jan 2019

Date Written: January 21, 2019

Abstract

We examine whether caps on non-economic damages in medical malpractice cases affect in-hospital patient safety. We use Patient Safety Indicators (PSIs)—measures of adverse events—as proxies for safety. In difference-in-differences (DiD) analyses of five states that adopt caps during 2003-2005, we find that patient safety gradually worsens after cap adoption, relative to control states. Standard DiD inference can be unreliable with a small number of treated units. We therefore develop a randomization inference-based test for DiD statistical inference with few treated units but multiple, potentially correlated outcomes, and confirm statistical strength with this nonparametric approach.

The Online Appendix for this paper is available at: http://ssrn.com/abstract=3319933

Keywords: medical malpractice, torts, healthcare quality, patient safety

JEL Classification: I13, I18, K13

Suggested Citation

Zabinski, Zenon and Black, Bernard S., The Deterrent Effect of Tort Law: Evidence from Medical Malpractice Reform (January 21, 2019). Northwestern Law & Econ Research Paper No. 13-09. Available at SSRN: https://ssrn.com/abstract=2161362 or http://dx.doi.org/10.2139/ssrn.2161362

Zenon Zabinski

Bates White ( email )

1300 I Street NW
Washington, DC 20005
United States

Bernard S. Black (Contact Author)

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States
312-503-2784 (Phone)

Northwestern University - Kellogg School of Management

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5049 (Phone)

European Corporate Governance Institute (ECGI)

Brussels
Belgium

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