Damage Caps Research Articles

Five Myths of Medical Malpractice

We identify five myths of medical malpractice that have wide currency in medical circles. The myths are as follows: (1) Malpractice crises are caused by spikes in medical malpractice litigation (ie, sudden rises in payouts and claim frequency), (2) the tort system delivers "jackpot justice," (3) physicians are one malpractice verdict away from bankruptcy, (4) physicians move to states that adopt damages caps, and (5) tort reform will lower health-care spending dramatically. We test each assertion against the available empirical evidence on the subject and conclude by identifying various nonmythical problems with the medical malpractice system.

Losers and losers: Some demographics of medical malpractice tort reforms

Our research examines how recent reforms have affected a key aspect of patients’ implicit insurance present in medical malpractice torts. Specifically, we estimate how non-economic damages caps affected pre-trial settlement speed and settlement amounts. Maximum entropy (most likely) quantile regressions emphasize that the post-reform settlement effects most informative for policy evaluation differ greatly from OLS (mean) estimates and clarify the conclusion emerging. In particular, the effect of the tort reform here can best be thought of as a 25% tax on the asset value of settlements that exempts settlements involving infants. The social welfare effects of tort reform are less clear than the asset reduction effects due to likely health state dependent utility.

Defensive Medicine and Obstetric Practices

Using data on physician behavior from the 1979–2005 National Hospital Discharge Surveys (NHDS), I estimate the relationship between malpractice pressure, as identified by the adoption of noneconomic damage caps and related tort reforms, and certain decisions faced by obstetricians during the delivery of a child. The NHDS data, supplemented with restricted geographic identifiers, provides inpatient discharge records from a broad enough span of states and covering a long enough period of time to allow for a defensive medicine analysis that draws on an extensive set of variations in relevant tort laws. Contrary to the conventional wisdom, I find no evidence to support the claim that malpractice pressure induces physicians to perform a substantially greater number of cesarean sections. Extending this analysis to certain additional measures, however, I do find some evidence consistent with positive defensive behavior among obstetricians. For instance, I estimate that the adoption of a noneconomic damage cap is associated with a reduction in the utilization of episiotomies during vaginal deliveries, without a corresponding change in observed neonatal outcomes.

Medical Malpractice Liability and Physician Migration

This paper uses national data on individual physicians and two control groups to provide evidence on the extent to which each of five medical malpractice reforms impacts the decision to move one's medical practice to another state. We find robust evidence that states that have implemented noneconomic damage caps experience less out-migration of physicians than states that do not have these reforms. In addition, we find some evidence that joint and several liability reforms and patient compensation funds also impact the migration decisions of physicians.

Does Medical Malpractice Deter? The Impact of Tort Reforms and Malpractice Standard Reforms on Healthcare Quality

Despite the fundamental role of deterrence in the theoretical justification for medical malpractice law, surprisingly little evidence has been put forth to date bearing on its existence and scope. Using data from the 1979 to 2005 National Hospital Discharge Surveys and drawing on an extensive set of variations in various tort measures (e.g., damage caps) and malpractice standard-of-care rules (Frakes 2012a), I estimate a small and statistically insignificant relationship between malpractice forces and two metrics of healthcare quality emphasized by the Agency for Healthcare Research and Quality: avoidable hospitalization rates (reflective of outpatient quality) and inpatient mortality rates for selected medical conditions. At most, the evidence implies an arguably modest degree of malpractice-induced deterrence. For instance, at one end of the 95% confidence interval, the lack of a non-economic damages cap (indicative of higher malpractice pressure) is associated with only a 4% decrease in avoidable hospitalizations.

Will Tort Reform Bend the Cost Curve? Evidence from Texas

Will tort reform “bend the cost curve?” Health-care providers and tort reform advocates insist the answer is “yes.” They claim that defensive medicine is responsible for hundreds of billions of dollars in health-care spending every year. If providers and reform advocates are right, once damages are capped and lawsuits are otherwise restricted, defensive medicine, and thus overall health-care spending, will fall substantially. We study how Medicare spending changed after Texas adopted comprehensive tort reform in 2003, including a strict damages cap. We compare Medicare spending in Texas counties with high claim rates (high risk) to spending in Texas counties with low claim rates (low risk), since tort reform should have a greater impact on physician incentives in high-risk counties. Pre-reform, Medicare spending levels and trends were similar in high- and low-risk counties. Post-reform, we find no evidence that spending levels or trends in high-risk counties declined relative to low-risk counties and some evidence of increased physician spending in high-risk counties. We also compare spending trends in Texas to national trends, and find no evidence of reduced spending in Texas post-reform, and some evidence that physician spending rose in Texas relative to control states. In sum, we find no evidence that Texas’s tort reforms bent the cost curve downward.

Will Tort Reform Bend the Cost Curve? Evidence from Texas

Will tort reform “bend the cost curve?” Health‐care providers and tort reform advocates insist the answer is “yes.” They claim that defensive medicine is responsible for hundreds of billions of dollars in health‐care spending every year. If providers and reform advocates are right, once damages are capped and lawsuits are otherwise restricted, defensive medicine, and thus overall health‐care spending, will fall substantially. We study how Medicare spending changed after Texas adopted comprehensive tort reform in 2003, including a strict damages cap. We compare Medicare spending in Texas counties with high claim rates (high risk) to spending in Texas counties with low claim rates (low risk), since tort reform should have a greater impact on physician incentives in high‐risk counties. Pre‐reform, Medicare spending levels and trends were similar in high‐ and low‐risk counties. Post‐reform, we find no evidence that spending levels or trends in high‐risk counties declined relative to low‐risk counties and some evidence of increased physician spending in high‐risk counties. We also compare spending trends in Texas to national trends, and find no evidence of reduced spending in Texas post‐reform, and some evidence that physician spending rose in Texas relative to control states. In sum, we find no evidence that Texas's tort reforms bent the cost curve downward.

Numerical simulation of impact tests on reinforced concrete beams

This paper focuses on numerical simulation of impact tests of reinforced concrete (RC) beams by the LS-DYNA finite element (FE) code. In the FE model, the elasto-plastic damage cap (EPDC) model, which is based on continuum damage mechanics in combination with plasticity theory, is used for concrete, and the reinforcement is assumed to be elasto-plastic. The numerical results compares well with the experimental values reported in the literature, in terms of impact force history, mid-span deflection history and crack patterns of RC beams. By comparing the numerical and experimental results, several important behavior of concrete material is investigated, which includes: damage variable to describe the strain softening section of stress–strain curve; the cap surface to describe the plastic volume change; the shape of the meridian and deviatoric plane to describe the yield surface as well as two methods of incorporating rebar into concrete mesh. This study gives a good example of using EPDC model and can be utilized for the development new constitutive models for concrete in future.

The Impact of Noneconomic Damages Cap on Health Care Delivery in Hospitals

Previous literature focused on narrowly defined treatments reached conflicting conclusions about the association between tort reforms and treatment intensity. Using county-level panel data, I evaluate the impact of noneconomic damages caps on broadly defined measures of health care delivery in hospitals. Caps adoption leads to a 3.5% decrease in surgeries, a 2.5% decrease in admissions, a 4.5% decrease in outpatient visits but has no significant effect on emergency care. These results are not driven by spillovers across state borders or by improvements in health and are accompanied by an increase in mortality from complications of medical and surgical care.

Playing against an Apparent Opponent: Incentives for Care, Litigation, and Damage Caps under Self-Serving Bias

This paper presents a strategic model of incentives for care and litigation under asymmetric information and self-serving bias, and studies the effects of damage caps. We contribute to the behavioral economics literature by generalizing the perfect Bayesian equilibrium concept to environments with biased litigants. Our main findings are as follows. First, our results suggest that self-serving bias might be welfare-reducing. The negative impact of this cognitive bias on social welfare is explained by the reduction in the level of care, and the increase in the likelihood of disputes. We also find that self-serving bias helps litigants commit to tough negotiation positions. However, it is economically self-defeating for the informed plaintiff. Second, our findings indicate that caps on non-economic damages might reduce the level of care. Importantly, we find that the positive effect of damage caps on lowering the likelihood of disputes, commonly attributed to caps, does not necessarily hold in environments with biased litigants: Caps might induce higher likelihood of disputes. Our findings are aligned with empirical and experimental evidence.

Do Damages Caps Reduce Medical Malpractice Insurance Premiums?: A Meta-Analysis of the Empirical Literature

Do Damages Caps Reduce Medical Malpractice Insurance Premiums?: A Meta-Analysis of the Empirical Literature

Defensive Medicine and Obstetric Practices

Using data on physician behavior from the 1979–2005 National Hospital Discharge Surveys (NHDS), I estimate the relationship between malpractice pressure, as identified by the adoption of non-economic damage caps and related tort reforms, and certain decisions faced by obstetricians during the delivery of a child. The NHDS data, supplemented with restricted geographic identifiers, provides inpatient discharge records from a broad enough span of states and covering a long enough period of time to allow for a defensive medicine analysis that draws on an extensive set of variations in relevant tort laws. Contrary to the conventional wisdom, I find no evidence to support the claim that malpractice pressure induces physicians to perform a substantially greater number of cesarean sections. Extending this analysis to certain additional measures, however, I do find some evidence consistent with positive defensive behavior among obstetricians. For instance, I estimate that the adoption of a non-economic damage cap is associated with a reduction in the utilization of episiotomies during vaginal deliveries, without a corresponding change in observed neonatal outcomes.

Do Damages Caps Reduce Medical Malpractice Insurance Premiums?: A Meta-Analysis of the Empirical Literature

Do Damages Caps Reduce Medical Malpractice Insurance Premiums?: A Meta-Analysis of the Empirical Literature

The Receding Tide of Medical Malpractice Litigation

The U.S. has experienced three medical malpractice (“med mal”) crises in the past forty years. In response, thirty-one states now have caps on non-economic or total damages. Researchers have studied the impact of these caps, relative to control states without caps, but have not studied trends in no-cap states or overall national trends. We find that the per-physician rate of paid med mal claims has been dropping for 20 years and in 2012 is less than half the 1992 level. Lawsuit rates, in the states with available data, are also declining, at similar rates. “Small” paid claims (payout $50,000) have been dropping since 2001. Payout per large paid claim was roughly flat. Payout per physician have been dropping since 2003, and by 2012 were 48% below their 1992 level. The “third wave” of damage cap adoptions over 2003-2006 contributed to this trend, but there are also large declines in no-cap states.A companion article, The Receding Medical Malpractice Part 2: Effect of Damage Caps, is available at: http://ssrn.com/abstract=2285230.

THE DETERMINANTS OF STATE‐LEVEL CAPS ON PUNITIVE DAMAGES: THEORY AND EVIDENCE

Under the standard economic model of torts, punitive damages correct for imperfect detection. Incorporating litigation costs into the model provides a justification for punitive damage caps. At the optimum, caps balance deterrence against the cost of litigation. Empirical testing of the model is performed via Cox proportional and parametric hazard analyses, using a panel dataset from 1981 to 2007. The results reveal a positive relationship between legal services employment (a proxy for legal costs) and cap enactment, and a negative relationship between state gross state product (a proxy for damages) and cap enactment. Cap enactment is also influenced by political ideology. (JEL K13, K41, L51)

What is the Effect of Tort Reform on African-American Access to Health Care?

This study examines the impact of tort reform on minority access to medical care. Past research has investigated tort reform, but this is the first study to consider minority healthcare access. I examine 261 Metropolitan Statistical Areas (MSAs) from 1993-2000 to test the impact of non-economic damage caps on physician supply overall and in individual specialties (family, primary care, general, OB/GYN, pediatrics, and internal medicine). Results show that tort reform reduces the negative effect of minority presence on physician availability and enhances minority medical care access.

Professionally Responsible Malpractice Reform

Medical malpractice reform is both necessary and desirable, yet certain types of reform are clearly preferable to others. We argue that "traditional" tort reform remedies such as stringent damage caps not only fail to address the root causes of negligence and the adverse effects that fear of suit can have on physicians, but also fail to address the needs of patients. Physicians ought to view themselves as professionals who are dedicated to putting patients' interests ahead of their own. Professionally responsible malpractice reform should therefore be at least as patient-centered as it is physician-centered. Examples of more professionally responsible malpractice reform exist where institutions take a pro-active approach to identification, investigation, and remediation of possible malpractice. Such programs should be implemented more generally, and state laws enacted to facilitate them.

Losers and Losers: Some Demographics of Medical Malpractice Tort Reforms

Our research examines individual differences in the effects of medical malpractice tort reforms on pre-trial settlement speed and settlement amounts by age and most likely settlement size. Findings of note include that, unlike previously assumed, both absolute and percentage losses from tort reform are small for infants in an asset value sense and that the prime-aged working population is the group most negatively affected by tort reform. Maximum entropy quantile regressions highlight the robustness of our conclusions and reveal that the settlement losses most informative for policy evaluation differ greatly from mean regression estimates. Key Words: Medical Malpractice, Tort Reform, Texas Closed Claims, Damage Caps, Quantile Regression, Maximum Entropy JEL No. I 11, C 21

686: Primary cesarean delivery in the U.S.: the impact of noneconomic damages caps

686: Primary cesarean delivery in the U.S.: the impact of noneconomic damages caps

Direct Regulation of Medical Malpractice Premiums: The Least Dangerous Reform

Medical malpractice is a wrong that society tries to prevent, in part, through its tort system. Like all tort awards, medical malpractice verdicts serve two societal goals: deterrence and victim compensation. Unlike other torts, however, medical malpractice operates in the arena of health care and is therefore the subject of tremendous scrutiny. In response to a perception that medical malpractice lawsuits have an adverse effect on both health care access and health care cost, lawmakers across the country have set their attention on reforming the medical malpractice system. Common reforms change the tort litigation landscape by affecting the ability of plaintiffs to (1) initiate litigation (e.g., reducing the statute of limitations or requiring plaintiffs to obtain certification from experts that their claims have merit); or, (2) litigate the issues (e.g., changing expert testimony requirements); or, most commonly, (3) be compensated upon a verdict or settlement in their favor (e.g. capping damages, limiting joint and several liability, capping attorneys’ fees). Many of these reforms—most notably, damage caps—retard the traditional tort goals of victim compensation and deterrence and impose a substantial cost on the state. This note argues for an alternative reform: direct regulation of malpractice insurance companies and the premiums they charge.