Noneconomic Damage Caps Research Articles

The Impact of Malpractice Damage Caps on C-section Rates and Alternative Approaches.

About half of the states in the United States have had noneconomic damage caps in place for at least 8 years. National aggregate data shows that women are just as likely to give birth by cesarean section (C-section) in states with damage caps as in ones without. For the most recent year studied, the national C-section rate for births in states with damage caps was 33.04% compared with a 32.10% ratefor births in states without caps. Other initiatives (malpractice insurance reform, accessible public disclosure of hospital C-section rates, and improved compensation for vaginal delivery) should be considered to reduce C-section rates.

Do noneconomic damage caps reduce medical malpractice insurance premiums? Evidence from North Carolina

AbstractThe impact of medical malpractice reforms, especially caps on noneconomic damages, is of special interest to policymakers and physicians. Adopting such caps has become rare during the past decade, and most existing analyses study state reforms occurring during periods of dramatic rises in malpractice insurance rates. This study contributes to the literature by examining how caps implemented in noncrisis periods affect malpractice premiums. It examines the effect of the 2011 North Carolina's adoption of a noneconomic damages cap by comparing county‐level malpractice premiums for three specialties between North Carolina and states without caps both before and after the reform. It finds little evidence of pre‐existing trends, followed by a lagged but significant reduction in premiums for each of the studied specialties in North Carolina. The timing and size of the effects are comparable to findings from the literature studying malpractice reforms passed during times of more dramatic liability trends.

The Differential Effects of Malpractice Reform: Defensive Medicine in Obstetrics

Abstract Recent studies argue that different types of patients are affected differently by changes in malpractice pressure. We argue that defensive medicine causes these differential effects. Our theoretical model predicts that reduced malpractice pressure decreases health care spending among patients with good access to care, but increases spending among those with poor access. We test this theory by estimating the effects of tort reforms on birth by cesarean section. Reduced malpractice pressure through collateral source rule reform decreases C-section rates by 4.75% for mothers with timely initiation of prenatal care. On the other hand, reduced pressure through noneconomic damages caps increase C-section rates by 7.59% for mothers without timely initiation. These findings are consistent with defensive medicine. Further investigation suggests that reduced pressure improves access to care for vulnerable populations and reduces utilization among well-served consumers. These findings explain the literature’s conflicting assessments of defensive medicine, despite its practice being widespread.

Unintended Consequences of Products Liability: Evidence from the Pharmaceutical Market*

Abstract We explain a surprising effect of tort liability in the market for prescription drugs. Greater punitive damage risk seems to increase prescription drug utilization in states without non-economic damage caps but decrease utilization in states with such caps. We offer an explanation for this puzzle. The vertical production process for drugs involves national upstream producers (drug companies) and local downstream producers (doctors). When a single state reallocates liability from downstream to upstream producers, national drug companies see little reason to alter their nationwide output decisions, but local physicians have incentives to increase their prescriptions in that state. The net result is higher local output. We show how this dynamic can explain our puzzle by demonstrating that punitive damages shift liability upstream from doctors to drug companies, but not when non-economic damages caps limit physician malpractice liability. We provide evidence explaining when, how, and why this type of liability shifting occurs (JEL K13, I11, I18).

Status of current medicolegal reform in the United States: a neurosurgical perspective.

There are approximately 85,000 lawsuits filed against medical practitioners every year in the US. Among these lawsuits, neurosurgery has been identified as a "high-risk specialty" with exceptional chance of having medical malpractice suits filed. Major issues affecting the overall medicolegal environment include tort reform, the formation of medical review panels, the increasing practice of defensive medicine, and the rising costs of medical insurance. In this study, the authors provide a concise update of the current medicolegal environments of the 50 states and provide a general guide to favorable and unfavorable states in which to practice neurosurgery. Data were acquired related to state-by-state medical review panel status, noneconomic damage caps, economic damage caps, and civil suit filing fees. States were placed into 5 categories based on the status of their current medicolegal environment. Of the 50 states in the US, 18 have established a medical review panel process. Fifteen states have a mandatory medical review process, whereas 3 states rely on a voluntary process. Thirty-five states have tort reform and have placed a cap on noneconomic damages. These caps range from $250,000 to $2,350,000, with the median cap of $465,900. Only 8 states have placed a cap on total economic damages. These caps range from $500,000 to $2,350,000, with the median cap of $1,050,000. All states have a filing fee for a medical malpractice lawsuit. These costs range from $37 to $884, with the median cost for filing of $335. Medicolegal healthcare reform will continue to play a vital role in physicians' lives. It will dictate if physicians may practice proactively or be forced to act defensively. With medicolegal reform varying greatly among states, it will ultimately dictate if physicians move into or away from certain states and thus guide the availability of healthcare services. A desirable legal system for neurosurgeons, including caps on economic and noneconomic damages and availability of medical review panels, can lead to safer practice.

The effects of medical malpractice tort reform on physician supply an analysis of legislative changes from 2009 to 2016

AbstractAdvocates of tort reform blame medical malpractice lawsuits for rising healthcare costs, prompting politicians in some states to pass tort reform capping noneconomic damages. In this analysis, I examine the effects of caps on noneconomic damages between 2009 and 2016 on the supply of physicians. I use multiple model specifications, examine physicians in high‐risk specialties, young physicians, and physicians in state‐border counties, and explore the potential for asymmetric effects using instances where tort reform has been declared unconstitutional and removed. I find few statistically significant effects. Supplemental analyses show that this may be because the noneconomic damage caps do not significantly affect malpractice insurance premiums, payouts, or claims in the first place.

Reducing Medical Malpractice Loss Reserve Volatility Through Tort Reform

This study examines how tort reform affects uncertainty in insurance markets by testing whether noneconomic damage caps influence reserving volatility for medical malpractice insurers. Using a panel of insurers from 1986 to 2009, we estimate the determinants of loss reserve error volatility and focus on how this volatility is influenced by the percent of premiums an insurer writes that are subject to noneconomic damage caps. We find empirical evidence that tort reform reduces reserve volatility over the subsequent 3- and 5-year periods, consistent with tort reform improving insurers’ loss forecasting ability. Our findings address outcomes of tort reform that are prominent concerns of legislators, regulators, and policyholders. This article contributes both to the literature examining the insurance market effects of tort reform and to the literature examining loss reserving practices.

Healthism in Tort Law

This article draws on the author's recently published book, Healthism: Health Status Discrimination and the Law (with Jessica L. Roberts) (Cambridge University Press 2018), examining tort law doctrine and policy for examples of differential treatment of health status or behaviors. Just as scholars previously have drawn attention to discrimination based on race, sex, age, and other protected categories in tort law, the article urges similar examination of tort law's potential to discriminate against the unhealthy. The article discusses the potential for healthism in the reasonably prudent person standard of care, contributory negligence, assumption of the risk, noneconomic damages caps, impaired driver and physician cases, failure to mitigate, intentional infliction of emotional distress, and other tort law rules. It concludes by applying the book's decisional rubric for distinguishing between permissible and impermissible health status differentiation to specific examples from tort law.

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.

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 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.

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.

HOW DOES TORT LAW AFFECT CONSUMER AUTO INSURANCE COSTS?

AbstractAlthough proponents of tort reform argue that it will benefit consumers through lowered insurance premiums and increased insurance availability, to date there is limited empirical evidence linking tort law to consumer outlays. Using data from the Consumer Expenditure Survey and a differences‐in‐differences research design, this article examines whether any of several common state‐level modifications to tort law affect consumer costs for auto insurance. Expenditures on auto insurance fall by 12 percent following no‐fault repeal and 6 percent following relaxation of collateral source restrictions, but are not measurably affected by bad faith reform, modifications to joint and several liability, or noneconomic damage caps. None of the modifications to tort law generate measurable increases in auto insurance take‐up. There is little variation in the impact of the reforms across income, education, and age groups, but no‐fault repeal and collateral source reform do disproportionately benefit consumers with lower cost policies.

Tort reform and physician labor supply: A review of the evidence

There is a large empirical literature examining the relationship between medical liability reform and the supply of physician services. Despite the general consensus that malpractice reform leads to an increase in physician supply, usually targeted amongst a subset of physicians, debates rage at the state level over the effectiveness of any given reform. This paper reviews the evidence on the relationship between tort reform and physician supply and assess the implications for any given state. Although our difference in difference methodology prevents drawing conclusions about the impact of reforms on overall physician supply, we find that noneconomic damage caps increase the supply of physicians in high risk specialties. However, these effects, even for the high risk specialties, vary significantly across states. It is unclear whether these differences represent heterogeneous treatment effects across states, or simply random error in the estimates. New approaches are needed to estimating state-specific effects of tort reform to have the most impact on local policy debates.

The impact of non-economic damages caps on obstetrics: Incentives versus practice style

This paper uses 1989–2010 county-level data to reexamine the effect of non-economic damages caps on the field of obstetrics. Previous literature found that caps on damages lead to both changes in the number of physicians and changes in treatment patterns. This paper investigates whether the changes in procedures are attributable to changes in incentives or to selection when new entrants could have a different practice style than incumbents. First, I find that the relationship between non-economic damages caps and the number of physicians and procedures identified in previous literature is not robust to the inclusion of the newer policy changes. Second, over the period when such changes were observed, the impact on procedures is concentrated in areas with the greatest changes in the number of obstetricians/gynecologists per capita, suggesting that most of the effect on procedures is driven by differences in practice style between entrants and incumbents.

The impact of tort reform on intensity of treatment: Evidence from heart patients

This paper analyzes the effect of non-economic damage caps on the treatment intensity of heart attack victims. We focus on whether a patient receives a major intervention in the form of either a coronary artery by-pass or angioplasty. We find strong evidence that treatment intensity declines after a cap on non-economic damages. The probability of receiving a major intervention in the form of either an angioplasty or bypass declines by 1.25–2 percentage points after non-economic damage caps are enacted, and this effect is larger a year or two after reform. However, we also find clear evidence of substitution between major interventions. When doctors have discretion to perform a by-pass and patients have insurance coverage, caps on non-economic damages increase the probability that a by-pass is performed. The effect of non-economic damage caps on costs is not always statistically significant, but in models with state-specific trends, total costs decline by as much as four percent. We conclude that tort reform reduces treatment intensity overall, even though it changes the mix of treatments. Using the Center for Disease Control's Vital Statistics data, we find that tort reform is not associated with an increase in mortality from coronary heart disease; if anything, mortality declines.

Medical Malpractice Reform, the Supply of Physicians, and Adverse Selection

AbstractMalpractice reforms tend to reduce physicians' liability for harming patients. Because these reforms are passed at the state level, the costs of harming patients vary widely by geographic location. In this paper, I test whether malpractice reforms affect where physicians choose to practice and whether physicians who relocate in response to reforms are particularly prone to commit malpractice. Because a state’s own reforms cannot separately distinguish moral hazard from adverse selection, and because those reforms are likely to have direct effects on measures of malpractice via the legal market, I focus attention on neighboring states’ reforms. I find that when a state’s neighbor passes a cap on noneconomic damages, both the physician-to-population ratio and the malpractice rate fall. This suggests that physicians who relocate in response to noneconomic damages caps are more likely to commit malpractice.

When Itts Broken, Donnt 'Fix' It: Why Noneconomic Damage Caps Fatally Flaw Federal Due Process Jurisprudence

All state civil jury trial clauses, like their federal counterpart, find their interpretative basis in the English common law and all states recognize the historic origin of the civil jury trial right. Nevertheless, tort reformists have argued that excessive jury verdicts in personal injury cases have caused significant increases in tort litigation expenses and insurance premiums for medical professionals. Sufficiently convinced that civil jury trial procedure was broken, many state legislatures imposed fixed caps on recovery for noneconomic damage in personal injury cases. But no preliminary finding of excessiveness triggers any state’s noneconomic damage cap. Moreover, the Court has established the compensatory award, which consist of economic and noneconomic damages, as the starting point of a due process reasonableness review of a punitive award. This starting point erroneously assumes plaintiffs receive full compensation for the noneconomic value of an injury. This Article investigates state law statutory caps on noneconomic damage awards in personal injury cases. This Article discusses cap-affirming jurisprudence, which primarily relies on legislative authority to mandate juryless fact-finding but fails to reconcile traditional constitutional and common law norms. This Article also explores cap-disapproving jurisprudence, which primarily relies on the traditional fact-finding role of the civil jury but fails to address claims of excessiveness. This Article analogizes a similar tension in federal criminal jury trial clause jurisprudence between legislative authority to mandate juryless fact-finding at sentencing and the criminal jury trial right. This Article implores cap-approving state supreme courts to recognize traditional limits on legislative authority to alter constitutional rights and argues that noneconomic damage caps in common law-based personal injury cases significantly flaw the Court’s Due Process Clause reasonableness review of punitive damage awards. This Article maintains that caps are unnecessary, as excessive and arbitrary awards are a violation of due process. Unlike other works on this subject, this Article proposes a framework that advances the state’s dual interests to protect civil defendants from unreasonably high awards and severely injured plaintiffs from arbitrarily low awards. This framework also addresses and cures the constitutional defect that noneconomic damage caps produce in federal due process punitive damage jurisprudence.

Medical malpractice reform: noneconomic damages caps reduced payments 15percent, with varied effects by specialty.

The impact of medical malpractice reforms on the average size of malpractice payments in specific physician specialties is unknown and subject to debate. We analyzed a national sample of malpractice claims for the period 1985-2010, merged with information on state liability reforms, to estimate the impact of state noneconomic damages caps on average malpractice payment size for physicians overall and for ten different specialty categories. We then compared how the effects differed according to the restrictiveness of the cap ($250,000 versus $500,000). We found that, overall, noneconomic damages caps reduced average payments by $42,980 (15percent), compared to having no cap at all. A more restrictive $250,000 cap reduced average payments by $59,331 (20percent), and a less restrictive $500,000 cap had no significant effect, compared to no cap at all. The effect of the caps overall varied according to specialty, with the largest impact being on claims involving pediatricians and the smallest on claims involving surgical subspecialties and ophthalmologists.