Damage Caps Research Articles

Damage Caps and Defensive Medicine: Reexamination with Patient-Level Data.

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.

Removal of Non-economic Damage Caps Is Not Associated with Reductions in Early Imaging for Low Back Pain.

Supporters of medical liability reform contend that caps on non-economic damages will decrease defensive medicine. We examined whether removal of caps on non-economic damages affect one type of defensive medical practice, early imaging for new-onset low back pain. Using administrative claims data, we retrospectively studied adult patients evaluated for new-onset low back pain from 2007 to 2012. We included patients from two states that had caps on non-economic damages struck down in 2010 (n = 462,604) and patients from adjacent states (n = 781,963). Using a difference-in-differences approach, we evaluated the impact of non-economic damage caps on early imaging while adjusting for physician specialty, patient characteristics, and year- and state-level fixed effects. There was no association between non-economic damage caps and early imaging for low back pain among all providers. Removal of a non-economic damage cap was also not associated with a significant change in early imaging within the two cap-removal states. Subgroup analysis by physician specialty demonstrated significantly increased use of early imaging for low back pain by orthopedic or neurological surgeons in the first 12months following cap removal in one state (but this difference did not persist beyond 12months). In the other cap-removal state, early imaging increased among orthopedic and neurological surgeons more than 12months after cap removal. We found no association between caps on non-economic damages and early imaging for low back pain among all physicians. However, our subgroup analysis suggests that physician specialties may respond to non-economic damage cap policies differently.

Beyond Physicians: The Effect of Licensing and Liability Laws on the Supply of Nurse Practitioners and Physician Assistants

The increased use of nurse practitioners (NPs) and physician assistants (PAs) represents an important option for increasing access to healthcare. I explore the effect of two types of laws on the supply of NPs and PAs: occupational licensing laws that limit the practices of NPs and PAs and caps on noneconomic damages. Relaxing licensing laws to allow NPs to practice with less physician oversight increases the supply of NPs in areas with few practicing physicians by 60 percent—though the size of this increase decreases as the supply of physicians grows. I find similar, but weaker, evidence for granting PAs more autonomy. Noneconomic damages caps increase the supply of both NPs and PAs by about 60 percent at the lowest levels of physician supply. Examining the effects of these laws on the prevalence of health professional shortage areas, I find that licensing laws have meaningful effects on access to care.

The Effect of Damage Cap Reforms on Medical Malpractice Insurance Market Conditions During Periods of Crises

ABSTRACT This article evaluates whether and how tort reform, specifically damage caps, stabilizes medical malpractice insurance markets. We examine state‐level medical malpractice insurance market performance in the United States for the period 1994–2010, a period characterized by a significant variation across states in their legal environments. First, we find that states with damage caps are less likely to have a crisis. Second, we find that the magnitude of crisis events is attenuated in states with damage caps, while the volatility of performance is not significantly different across states with and without damages caps. Finally, conditional on a state entering a crisis, we find that states with damage caps improve more quickly following the crisis than states without damage caps. Overall, our results suggest that damage caps stabilize medical malpractice insurance markets.

Damage Caps and Defensive Medicine: Reexamination with Patient Level Data (Appendix)

Full paper is available at: http://ssrn.com/abstract=2816969 This Appendix contains additional methods details and results for Moghtaderi, Farmer, and Black, Damage Caps and Defensive Medicine: Reexamination with Patient Level Data (working paper 2018).

Association of Medical Liability Reform With Clinician Approach to Coronary Artery Disease Management

Physicians often report practicing defensive medicine to reduce malpractice risk, including performing expensive but marginally beneficial tests and procedures. Although there is little evidence that malpractice reform affects overall health care spending, it may influence physician behavior for specific conditions involving clinical uncertainty. To examine whether reducing malpractice risk is associated with clinical decisions involving coronary artery disease testing and treatment. Difference-in-differences design, comparing physician-specific changes in coronary artery disease testing and treatment in 9 new-cap states that adopted damage caps between 2003 and 2005 with 20 states without caps. We used the 5% national Medicare fee-for-service random sample between 1999 and 2013. Physicians (n = 75 801; 36 647 in new-cap states) who ordered or performed 2 or more coronary angiographies. Data were analyzed from June 2015 to January 2018. Changes in ischemic evaluation rates for possible coronary artery disease, type of initial evaluation (stress testing or coronary angiography), progression from stress test to angiography, and progression from ischemic evaluation to revascularization (percutaneous coronary intervention or coronary artery bypass grafting). We studied 36 647 physicians in new-cap states and 39 154 physicians in no-cap states. New-cap states had younger populations, more minorities, lower per-capita incomes, fewer physicians per capita, and lower managed care penetration. Following cap adoption, new-cap physicians reduced invasive testing (angiography) as a first diagnostic test compared with control physicians (relative change, -24%; 95% CI, -40% to -7%; P = .005) with an offsetting increase in noninvasive stress testing (7.8%; 95% CI, -3.6% to 19.3%; P = .17), and referred fewer patients for angiography following stress testing (-21%; 95% CI, -40% to -2%; P = .03). New-cap physicians also reduced revascularization rates after ischemic evaluation (-23%; 95% CI, -40% to -4%; P = .02; driven by fewer percutaneous coronary interventions). Changes in overall ischemic evaluation rates were similar for new-cap and control physicians (-0.05%; 95% CI, -8.0% to 7.9%; P = .98). Physicians substantially altered their approach to coronary artery disease testing and follow-up after initial ischemic evaluations following adoption of damage caps. They performed a similar number of ischemic evaluations but conducted fewer initial left heart catheterizations, referred fewer stress-tested patients for left heart catheterizations, and referred fewer patients for revascularization. These findings suggest that physicians tolerate greater clinical uncertainty in coronary artery disease testing and treatment if they face lower malpractice risk.

Linda Babcock: Go‐getter and Do‐gooder

AbstractIn this tribute to the 2007 recipient of the winner of the Jeffrey Z. Rubin Theory‐To‐Practice Award from the International Association for Conflict Management (IACM), we celebrate Linda Babcock's contributions to diverse lines of research, her tireless and effective efforts to put the insights of her research into practice, and at a personal level, the impact she has had on each of our lives. Innovative ideas and novel methods have been the hallmarks of Linda's research on diverse topics: the impact of self‐serving conceptions of fairness on negotiations, the labor supply behavior of cab drivers, the impact of damage caps on settlements, the propensity of men and women to initiate negotiations, and the readiness of each gender to volunteer for, and work on, “nonpromotable tasks.” Linda won this award, however, not only for her path‐breaking academic research, but for her interest in and ability to convert it into actionable initiatives. From founding the Program for Research and Outreach on Gender Equity in Society (PROGRESS), whose mission is to develop tools to teach women and girls how to harness the power of negotiation, to her leadership of the Carnegie Mellon Leadership and Negotiation Academy for Women, Linda shows how academics can play a leading role in translating theory into practice.

Damage capitation in the modern liability climate: a primer for neurosurgeons and systematic review of the literature

OBJECTIVE Neurosurgery, and particularly spine surgery, is among the most highly litigated medical specialties in the US, rendering the current malpractice climate of primary importance to spine surgeons nationwide. One of the primary methods of tort reform in the civil justice system is malpractice damage capitation (or "caps"); however, its efficacy is widely debated. The purpose of this article is to serve as a review for the practicing neurosurgeon, with particular emphasis on short- and long-term effects of damage caps and on the current debate regarding their utility, based on a systematic review of the literature. METHODS The Meta-Analysis of Observational Studies in Epidemiology (MOOSE) guidelines for systematic review of observational studies were used in the design of the study. Multiple medical and legal online databases (MEDLINE, Scopus, EMBASE, and JSTOR) were queried using the key words "malpractice" and "damage capitation" for articles from 2000 to 2014. A total of 96 abstracts were screened for inclusion and exclusion criteria. Of these, 22 articles were reviewed in full and another 15 were excluded for study design or poor quality of data. Five more studies were added after cross-checking the bibliographies of the included articles. The resulting 12 articles were evaluated; relevant data were extracted using a standardized metric. RESULTS Five studies were found showing varying effects of capitation on physician availability, with only 1 of these specifically showing increased availability of neurosurgery and elective spine coverage in states with capitation. Four studies demonstrated that capitation overall succeeds in decreasing jury awards and frequency of claims filed. Last, 3 studies were found showing an overall decrease in malpractice premiums for states that passed damage capitation. CONCLUSIONS There is evidence in the literature showing that total and noneconomic damage capitation has the potential to improve the practice environment for neurosurgeons nationwide. Additionally, there are other factors that affect malpractice premium rates, such as the investment markets, which are not affected by these laws. All of these are important for spine surgeons to consider and be aware of in advocating for appropriate reform measures in their states.

Beyond Physicians: The Effect of Licensing and Liability Laws on the Supply of Nurse Practitioners and Physician Assistants

The increased use of nurse practitioners (NPs) and physician assistants (PAs) represents an important option for increasing access to healthcare. I explore the effect of two types of laws on the supply of NPs and PAs: (1) occupational licensing laws that limit the practices of NPs and PAs and (2) caps on noneconomic damages. I find that relaxing licensing laws to allow NPs to practice with less physician oversight increases the supply of NPs in areas with few practicing physicians by 60 percent — though the size of this increase decreases as the supply of physicians increases. I find a similar effect of licensing laws that grant greater PA autonomy on the supply of PAs, but this effect is not consistently statistically significant. Noneconomic damages caps increase the supply of both NPs and PAs by about 60 percent at the lowest levels of physician supply, but the size of this increase decreases as the physician supply grows. I also examine the effects of these laws on the probability that a county contains a health professional shortage area. The results of this analysis indicate that licensing laws have meaningful effects on access to care.

The Punitive Damages Calculus: The Differential Incidence of State Punitive Damages Reforms

State punitive damages reforms have altered how courts award punitive damages. We model the decision to award punitive damages as a two-step process involving the decision to award any punitive damages and the decision of what amount to award. Using samples of trial court verdicts from the Civil Justice Survey of State Courts, we find that punitive damages caps reduce the amount of damages awarded but do not affect whether they are initially awarded. Additionally, we find that maintaining lower evidentiary standards increases both the probability that punitive damages are awarded and the size of those awards.

The Punitive Damages Calculus: The Differential Incidence of State Punitive Damages Reforms

State punitive damages reforms have altered how courts award punitive damages. We model the decision to award punitive damages as a two-step process involving the decision to award any punitive damages and the decision of what amount to award. For the Civil Justice Survey of State Courts samples of trial court verdicts, punitive damages caps reduce the amount of damages awarded but do not affect whether they are initially awarded. In contrast, the effect of punitive damages reforms on blockbuster punitive damages awards of at least $100 million is to reduce the incidence of these awards, but not their amount.

The effects of malpractice non-economic damage caps on the supply of physician labor: Heterogeneity by physician age and risk

We explore the impact of malpractice caps on non-economic damages that were enacted between 2003 and 2006 on the supply of physician labor, separately for high-malpractice risk and low-malpractice risk physician specialty types, and separately by young and old physicians. We use physician data from the Area Resource File for 2000–2011 and malpractice policy data from the Database of State Tort Law Reforms. We study the impact of these caps using a reverse natural experiment, comparing physician supply in nine states enacting new caps to physician supply in ten states that had malpractice caps in place throughout the full time period. We use an event study to evaluate changes in physician labor compared to the prior year. We find evidence that non-economic damage caps increased the supply of high-risk physicians <35years of age by 0.93 physicians per 100,000 people in the year after the caps were enacted. Non-economic damage caps were cumulatively associated with an increase of 2.1 high-risk physicians <35years of age per 100,000 people. Stronger non-economic damage caps generally had a larger impact on physical supply.

Disabled Laborers And The Equal Employment Opportunity Commission’s (EEOCs) Nightmare

In 2012, EEOC v. Henry’s Turkey Service was one of the largest disability settlements in American history. Henry’s Turkey Service was ordered to pay $240 million for paying mentally disabled workers with I.Q.s estimated in the 60-70 range, 41 cents per hour and housing them in unsafe housing and health conditions (Hsieh, 2013). Over forty years, Henry’s Turkey Service relocated hundreds of mentally disabled workers from Texas to Iowa where they were subjected to horrendous living conditions with unlawful, minimal pay—about $65.00 per month, while they worked at a local turkey processing factory in West Liberty, Iowa. The actual case shows a pattern of violations of the Fair Labor Standards Act of 1938 and Americans with Disability Act, 1990. After a raid of the bright blue, florescent colored, century old school house in Atalissa, Iowa, these employers were brought to justice. This case study is about one of the largest EEOC settlements in the history of the United States; yet due to federal damage caps was cut to $1.6 million for all of the men and their estates. The graphic account of the inhumane treatment and degradation of the labors presented in this study is not provided for gratuitous or salacious purposes; rather, it places into context what can occur when governmental regulations and laws go unheeded, unenforced and when authorities are apprised of wrongdoing possibilities stand idly by and in this case, do nothing for 35 years.

Law, Belief, and Aspiration

This project examines the relationships between what the law is, what people believe the law to be, and what people aspire for the law to be. It takes seriously the possibility that people do not know perfectly what the law is, and tests the hypothesis that people’s beliefs about the law may sometimes be better explained by people’s aspirations for what the law should be, rather than what the law actually is.To test this hypothesis, the paper presents the results of a survey asking 869 Americans in six states (California, Florida, Illinois, Texas, Montana, and South Dakota) about ten of their own state laws: what they believed those laws to be, and what they thought those laws should be. The study then compares people’s reported beliefs to their aspirations, as well as to the actual state rules. Topics included in the study were: the death penalty, abortion waiting periods, handgun waiting periods, misprision of a felony, state income tax, drone deliveries, medical malpractice damage caps, state constitutional right to a clean environment, texting and driving, and at-will employment contract rules. The study finds that people often do not know the laws under which they live, even when they themselves believe those laws to be important. For example, 1 in 6 participants held inaccurate beliefs about whether their state has a state income tax; 1 in 4 participants held inaccurate beliefs about whether their state has a death penalty; 1 in 3 held inaccurate beliefs about whether their state has a waiting period for purchasing handguns; and fewer than half of participants knew whether they are legally required to report felonies. Somewhat disturbingly, participants were no more likely to know the law when they indicated that the topic was important, although they were more likely to know the law accurately when they felt confident about their knowledge.Furthermore, when people’s beliefs about the law are inaccurate, they tend to assume that the law reflects their aspirations for it: that the law already is whatever they believe it should be. In some cases, this wishful thinking is so strong that aspiration exceeds the actual rule in predicting people’s belief — or in other words, you can sometimes predict people’s beliefs about what the law is better by knowing what they think the rule should be, than by knowing what the rule in fact is.These findings have important implications for developing behavioral models that predict how people will respond to law: for example, behavioral theorists might question whether anyone is deterred by a law that no one knows. The findings also points to normative and democratic concerns: where citizens rely on a mistaken belief that their aspirations are already reflected in the law, they may not push for legal change, and even widely-held aspirations might fail to find reflection in the law.

Damage caps and defensive medicine, revisited

Does tort reform reduce defensive medicine and thus healthcare spending? Several (though not all) prior studies, using a difference-in-differences (DiD) approach, find lower Medicare spending for hospital care after states adopt caps on non-economic or total damages (“damage caps”), during the “second” reform wave of the mid-1980s. We re-examine this issue in several ways. We study the nine states that adopted caps during the “third reform wave,” from 2002 to 2005. We find that damage caps have no significant impact on Medicare Part A spending, but predict roughly 4% higher Medicare Part B spending. We then revisit the 1980s caps, and find no evidence of a post-adoption drop (or rise) in spending for these caps.

Online Appendix for Damage Caps and Defensive Medicine, Revisited

This online appendix contains additional results for Paik, Black, and Hyman (2016), Damage Caps and Defensive Medicine, Revisited.The underlying article is available from SSRN at http://ssrn.com/abstract=2110656.

Damage Caps and the Labor Supply of Physicians: Evidence from the Third Reform Wave

Nine states adopted caps on non-economic damages during the third medical malpractice reform wave from 2002–05, joining twenty-two other states with caps on non-economic or total damages. We study the effects of these reforms on physician supply. Across a variety of difference-in-differences (DiD), triple differences, and synthetic control methods, in both state- and county-level regressions, we find, with tight confidence intervals, no evidence that cap adoption leads to an increase in total patient care physicians, or in specialties that face high liability risk (with a possible exception for plastic surgeons), or in rural physicians.

Online Appendix to Accompany Paik, Black, and Hyman, Damage Caps and the Labor Supply of Physicians: Evidence from the Third Reform Wave

This online appendix contains additional results for Paik, Black, and Hyman (2016), Damage Caps and the Labor Supply of Physicians: Evidence from the Third Reform Wave. It also reconciles our results to Helland and Seabury (2015).The underlying article is published at 18 American Law and Economics Review 463-505 (2016); a nearly final version is available from SSRN at http://ssrn.com/abstract=2470370.

Caps on noneconomic damages’ effect on the number of paid malpractice claims in various American states

Background: Tort reform with caps on noneconomic damages, such as pain and suffering, has been proposed as a way of decreasing the national cost of healthcare in the United States. In this paper we measure the impact of noneconomic damage caps at the state level. Methods: Changes in the rate of paid claims are estimated using an interrupted time series design which identifies changes in trends following the implementation of an intervention. Data from the National Practitioner’s Data Bank are used to create yearly trends in state malpractice claims using a linear spline model with a knot at the year that noneconomic caps were implemented to estimate the effect of the noneconomic caps. The effect of statutes of limitations are also modeled with a spline model. Finally, a difference-in-difference design matches states that instituted or significantly changed noneconomic caps to states that did not. Findings: Of the fifteen states that implemented caps on noneconomic damages or significantly changed their caps since 2000, two had statistically significant differences in the absolute number of paid claims and six had significant changes to their trend of paid claims. Conclusions: Tort reforms that address caps on noneconomic damages, though facially similar, have significantly different results when implemented in individual states. Qualitative studies of the individual state policies need to evaluate how the state policies differ and why they led to different results to direct other states and the federal government as they consider similar policies.

The Direct and Indirect Effects of Medical Malpractice Reforms: Evidence from the Third Reform Wave

Does tort reform reduce defensive medicine and thus healthcare spending? Several (though not all) prior studies, using a difference-in-differences (DiD) approach, find lower Medicare spending for hospital care after states adopt caps on non-economic or total damages (“damage caps”), during the “second” reform wave of the mid-1980s. We re-examine this issue in several ways. We study the nine states that adopted caps during the “third reform wave,” from 2002-2005. We find that damage caps have no significant impact on Medicare Part A spending, but predict roughly 4% higher Medicare Part B spending. We then revisit the 1980s caps, and find no evidence of a post-adoption drop (or rise) in spending for these caps.The online appendix can be found at http://ssrn.com/abstract=2830255.