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

54 Pages Posted: 11 Nov 2013 Last revised: 2 May 2015

Date Written: February 15, 2015

Abstract

A principal goal of tort law is to deter negligent behavior, but there is little empirical evidence on whether it does so. We study that question for medical malpractice liability, where prior studies have found weak, often null results. We examine whether state adoption of caps on non-economic damages – a central legal reform that reduces liability risk for providers – affects in-hospital patient safety. We use Patient Safety Indicators (PSIs) – measures of adverse events developed by the Agency for Healthcare Research and Quality – as proxies for overall safety. In difference-in-differences analyses of five states that adopt caps on non-economic damages during 2003-2005, we find strong evidence that patient safety gradually falls after the reforms, relative to control states. We also innovate in methodology, using a new, randomization inference-based approach to assess the statistical reliability of our results.

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 (February 15, 2015). 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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