“It is no longer viable from a practical and business standpoint”: damage caps, “hidden victims”, and the declining interest in medical malpractice cases

Abstract

This article investigates two propositions concerning the effects of a key tort reform measure in the United States – non-economic damage (i.e., pain and suffering) caps in medical malpractice cases. The first says plaintiffs' lawyers, who rely on contingency fees, will stop representing certain clients in such cases. The second goes farther, saying lawyers will handle fewer malpractice cases generally. Using survey and interview data from plaintiffs' lawyers in Texas, the article presents strong evidence for both propositions. In doing so, it provides an excellent illustration of the theoretical idea of plaintiffs' lawyers as rational actors constantly adjusting their practices – their businesses – to changes in their working environment. The findings show how a cap on non-economic damages affects the practices of plaintiffs' lawyers by limiting damages to a degree that significantly alters the incentive structure that lies at the heart of the contingency fee system.