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The Receding Tide of Medical Malpractice Litigation Part 2: Effect of Damage Caps

31 Pages Posted: 10 Jul 2013 Last revised: 28 Jan 2015

Myungho Paik

Hanyang University - College of Policy Science

Bernard S. Black

Northwestern University - Pritzker School of Law; Northwestern University - Kellogg School of Management; European Corporate Governance Institute (ECGI)

David A. Hyman

Georgetown University

Date Written: December 15, 2013

Abstract

We study the effect of damage caps adopted in the 1990s and 2000s on medical malpractice claim rates and payouts. Prior studies found some evidence that caps reduce payout/claim, but mixed and weak evidence on whether caps reduce paid claim rates and payout per physician. However, most prior studies do not allow for the gradual phase-in of damage caps, which usually apply only to lawsuits filed after the reform’s effective date, or only to injuries after the effective date. Once we allow for phase-in, we find strong evidence that damage caps reduce both claim rates and payout per claim, with a large combined impact on payout per physician. The drop in claim rates is concentrated in claims with larger payouts – the ones that would be most affected by a damages cap. Stricter caps have larger effects. Some prior studies also find a large impact of tort reforms other than damage caps. Once we allow for phase-in, we find that these other reforms have no significant impact on either claim rates or payout per claim.

A companion article, The Receding Medical Malpractice Part 1: National Trends, is available at http://ssrn.com/abstract=2109679.

Keywords: medical malpractice, damage caps

JEL Classification: I18, K23, K32

Suggested Citation

Paik, Myungho and Black, Bernard S. and Hyman, David A., The Receding Tide of Medical Malpractice Litigation Part 2: Effect of Damage Caps (December 15, 2013). as published in 10 Journal of Empirical Legal Studies, pp. 939-669 (2013); Northwestern Law & Econ Research Paper No. 13-24; Illinois Program in Law, Behavior and Social Science Paper No. LBSS14-02; Illinois Public Law Research Paper No. 13-56. Available at SSRN: https://ssrn.com/abstract=2285230

Myungho Paik

Hanyang University - College of Policy Science ( email )

222 Wangsimni-ro Seongdong-gu
Seoul, 04763
Korea, Republic of (South Korea)

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

David A. Hyman

Georgetown University ( email )

Washington, DC 20057
United States

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