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
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: Suggested Citation