Physicians' Insurance Limits and Malpractice Payments: Evidence from Texas Closed Claims, 1990-2003

45 Pages Posted: 20 Apr 2007 Last revised: 21 Mar 2008

Kathryn Zeiler

Boston University - School of Law

Bernard S. Black

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

Charles Silver

University of Texas at Austin - School of Law

David A. Hyman

Georgetown University

William M. Sage

University of Texas at Austin School of Law; University of Texas at Austin - Dell Medical School

Abstract

Physicians' insuring practices influence their incentives to take care when treating patients, their risk of making out-of-pocket payments in malpractice cases, and the adequacy of compensation available to injured patients. Yet, these practices and their effects have rarely been studied. Using Texas Department of Insurance data on 9,525 paid malpractice claims against physicians that closed 1990-2003, we provide the first systematic evidence on levels of coverage purchased by physicians with paid liability claims and how those levels affect out-of-pocket payments and patient compensation. We find that these physicians carried much less insurance than is conventionally believed, that their real primary limits declined steadily over time, that policy limits often act as effective caps on recovery, and that personal contributions by physicians to close claims were rare. Our findings call into question a number of common assumptions about the relationship between physician insuring practices and the medical malpractice liability system.

For a shorter, summary version of this research, see Charles Silver, Kathryn Zeiler, Bernard Black, David Hyman & William Sage, Malpractice Payouts and Malpractice Insurance: Evidence from Texas Closed Claims, 1990-2003, Geneva Papers on Risk and Insurance yyy-zzz (forthcoming 2008), available at http://ssrn.com/abstract=983199.

Keywords: medical malpractice, insurance, liability

JEL Classification: G22, K13, K41

Suggested Citation

Zeiler, Kathryn and Black, Bernard S. and Silver, Charles and Hyman, David A. and Sage, William M., Physicians' Insurance Limits and Malpractice Payments: Evidence from Texas Closed Claims, 1990-2003. Journal of Legal Studies, pp. s9-s45, 2008; Georgetown Law and Economics Research Paper No. 981192; NYU Law and Economics Research Paper No. 07-16; U Illinois Law & Economics Research Paper No. LE07-008; U of Texas Law, Law and Econ Research Paper No. 67. Available at SSRN: https://ssrn.com/abstract=981192

Kathryn Zeiler (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
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

Charles M. Silver

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States
512-232-1337 (Phone)
512-232-1372 (Fax)

David A. Hyman

Georgetown University ( email )

Washington, DC 20057
United States

William Matthew Sage

University of Texas at Austin School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

University of Texas at Austin - Dell Medical School ( email )

Austin, TX 78712

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