Damage Caps and Defensive Medicine: Reexamination with Patient‐Level Data

43 Pages Posted: 20 Feb 2019

See all articles by Ali Moghtaderi

Ali Moghtaderi

The George Washington University

Steven Farmer

George Washington University - School of Medicine and Health Sciences

Bernard S. Black

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

Date Written: March 2019

Abstract

Physicians often claim that they practice “defensive medicine,” including ordering extra imaging and laboratory tests, due to fear of malpractice liability. Caps on noneconomic damages are the principal proposed remedy. Do these caps in fact reduce testing, overall health‐care spending, or both? We study the effects of “third‐wave” damage caps, adopted in the 2000s, on specific areas that are expected to be sensitive to med mal risk: imaging rates, cardiac interventions, and lab and radiology spending, using patient‐level data, with extensive fixed effects and patient‐level covariates. We find heterogeneous effects. Rates for the principal imaging tests rise, as does Medicare Part B spending on laboratory and radiology tests. In contrast, cardiac intervention rates (left‐heart catheterization, stenting, and bypass surgery) do not rise (and likely fall). We find some evidence that overall Medicare Part B rises, but variable results for Part A spending. We find no evidence that caps affect mortality.

Suggested Citation

Moghtaderi, Ali and Farmer, Steven and Black, Bernard S., Damage Caps and Defensive Medicine: Reexamination with Patient‐Level Data (March 2019). Journal of Empirical Legal Studies, Vol. 16, Issue 1, pp. 26-68, 2019. Available at SSRN: https://ssrn.com/abstract=3337990 or http://dx.doi.org/10.1111/jels.12208

Ali Moghtaderi (Contact Author)

The George Washington University ( email )

950 New Hampshire Ave NW
Suite 609
Washington, DC 20052
United States

Steven Farmer

George Washington University - School of Medicine and Health Sciences ( email )

3200m St NW
Washington, DC 20037
United States

Bernard S. Black

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

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