Medical Malpractice: an Empirical Examination of the Litigation Process

50 Pages Posted: 18 Jun 2004 Last revised: 10 Jun 2008

See all articles by Henry S. Farber

Henry S. Farber

Princeton University; National Bureau of Economic Research (NBER)

Michelle J. White

University of California, San Diego (UCSD) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 1990

Abstract

New data on medical malpractice claims against a single hospital where a direct measure of the quality of medical care is available are used to address 1) the specific question of the role of the negligence rule in the dispute settlement process in medical malpractice, and 2) the general question of how the process of negotiation and dispute resolution in medical malpractice operates with regard to both the behavior of the parties and the outcome of the process. We find that the quality of medical care is an extremely important determinant of deferdants' medical malpractice liability. More generally, we find that the data are consistent with a model where 1) the plaintiff is not well informed ex ante about the likelinood of negligence and 2) the ex ante expected value to the plaintiff of a suit is high relative to the costs of filing a suit and getting more information. Thus, suits are filed even where there is no concrete reason to believe there has been negligence, and virtually all suits are either dropped or settled based on the information gained after filing. We conclude that the filing of suits that appear, ex post, to be nuisance suits can be rational eguilibrium behavior, ex ante, where there is incomplete information about care quality.

Suggested Citation

Farber, Henry S. and White, Michelle J., Medical Malpractice: an Empirical Examination of the Litigation Process (September 1990). NBER Working Paper No. w3428. Available at SSRN: https://ssrn.com/abstract=226697

Henry S. Farber (Contact Author)

Princeton University ( email )

Industrial Relations Section
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Michelle J. White

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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