Stability, Not Crisis: Medical Malpractice Claim Outcomes in Texas, 1988-2002
Bernard S. Black
Northwestern University - Pritzker School of Law; Northwestern University - Kellogg School of Management; European Corporate Governance Institute (ECGI)
University of Texas at Austin - School of Law
David A. Hyman
University of Illinois College of Law
William M. Sage
University of Texas at Austin School of Law; University of Texas at Austin - Dell Medical School
U of Texas Law & Economics Research Paper No. 30; Columbia Law & Econ Research Paper No. 270; U Illinois Law & Economics Research Paper No. LE05-002
Using a comprehensive database of closed claims maintained by the Texas Department of Insurance since 1988, this study provides evidence on a range of issues involving medical malpractice litigation, including claim frequency, payout frequency, payment amounts, defense costs, and jury verdicts. The data present a picture of stability in most respects and moderate change in others. We do not find evidence in claim outcomes of the medical malpractice insurance crisis that produced headlines over the last several years and led to legal reform in Texas and other states. At least in Texas, the rapid rise in insurance premiums that sparked the crisis may reflect, in significant part, insurance market dynamics rather than changes in claim outcomes.
Controlling for population growth, the number of large paid claims (over $25,000 in real 1988 dollars) was roughly constant from 1990-2002. The number of smaller paid claims declined. Controlling for inflation, payout per large paid claim increased over 1988-2002 by an estimated 0.1% (insignificant) - 0.5% (marginally significant) per year, depending on the dataset we use to define "medical malpractice" claims. Jury awards increased by an estimated 2.5% (insignificant) - 3.6% (barely significant) per year, depending on the dataset, but actual post-verdict payouts in tried cases showed little or no time trend. Real defense costs per large paid claim rose by 4.2 - 4.5% per year. Real total cost per large paid claim, including defense costs, rose by 0.8 - 1.2% per year.
Number of Pages in PDF File: 48
Keywords: health care, medical malpractice, tort system, litigation, malpractice insurance
JEL Classification: I18, K13, K41
Date posted: March 6, 2005