Sorry Is Never Enough: How State Apology Laws Fail to Reduce Medical Malpractice Liability Risk

48 Pages Posted: 12 Dec 2016 Last revised: 18 Feb 2018

Benjamin J. McMichael

Vanderbilt University - Owen Graduate School of Management

R. Van Horn

Vanderbilt University - Strategy and Business Economics

W. Kip Viscusi

Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

Date Written: February 6, 2018

Abstract

Based on case studies indicating that apologies from physicians to patients can promote healing, understanding, and dispute resolution, 38 states have sought to reduce litigation and medical malpractice liability by enacting apology laws. Apology laws facilitate apologies by making them inadmissible in subsequent malpractice trials.

The underlying assumption regarding the potential efficacy of these laws is that, after receiving an apology, patients will be less likely to pursue a malpractice claim and will be more likely to settle those claims that are filed. However, once a patient has been made aware that the physician has committed a medical error, the patient’s incentive to pursue a claim may increase even though the apology itself cannot be introduced as evidence. The net effect on medical malpractice liability costs could be in either direction. Despite apology laws’ status as the most popular, recently enacted tort reform and one of the most widespread tort reforms in the country, there is little evidence that they achieve their goal of litigation reduction.

This Article provides critical, new evidence on the role of apology laws by examining a dataset of malpractice claims obtained directly from a large, national malpractice insurer. This dataset includes substantially more information than is publicly available and, thus, presents a unique opportunity to understand the effect of apology laws on the entire litigation landscape in ways that are not possible using publicly available data. Decomposing medical malpractice liability risk into the frequency of claims and the magnitude of those claims, we examine the malpractice claims against 90% of physicians in the country who practice within a single specialty over an eight-year period.

The analysis demonstrates that, for physicians who regularly perform surgery, which is a context in which patients should be aware of potential risks, apology laws do not have a substantial effect on the probability of facing a claim or the average payment made to resolve a claim. However, in situations of asymmetric information in which the physician has greater knowledge of the risks, the apology provides information that the patient does not have, thus providing a possible incentive to pursue a claim even though the apology cannot be introduced as evidence. For non-surgeons, we find that apology laws increase the probability of facing a lawsuit and increase the average payment made to resolve a claim, which is consistent with the presence of asymmetric information with respect to non-surgeons. Overall, our findings indicate that, on balance, apology laws increase rather than limit medical malpractice liability risk.

Keywords: Medical malpractice, apology law, tort reform, litigation

JEL Classification: I18, K13, K41

Suggested Citation

McMichael, Benjamin J. and Van Horn, R. and Viscusi, W. Kip, Sorry Is Never Enough: How State Apology Laws Fail to Reduce Medical Malpractice Liability Risk (February 6, 2018). Stanford Law Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2883693 or http://dx.doi.org/10.2139/ssrn.2883693

Benjamin J. McMichael (Contact Author)

Vanderbilt University - Owen Graduate School of Management ( email )

401 21st Avenue South
Nashville, TN Tennessee 37203
United States

Ray Van Horn

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37240
United States

W. Kip Viscusi

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
615-343-7715 (Phone)
615-322-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Vanderbilt University - Department of Economics

Box 1819 Station B
Nashville, TN 37235
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Owen Graduate School of Management

401 21st Avenue South
Nashville, TN 37203
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States

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