The Deterrent Effect of Tort Law: Evidence from Medical Malpractice Reform
42 Pages Posted: 4 Feb 2019
Date Written: January 21, 2019
Appendix is available at: https://ssrn.com/abstract=3319933
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.
Keywords: medical malpractice, torts, healthcare quality, patient safety
JEL Classification: I13, I18, K13
Suggested Citation: Suggested Citation