Tort Reform Research Articles

WHAT DRIVES TORT REFORM LEGISLATION? AN ANALYSIS OF STATE DECISIONS TO RESTRICT LIABILITY TORTS

ABSTRACTThis article studies the timing of state‐level tort reform enactments between 1971 and 2005. Using discrete‐time hazard models, we find the level of litigation activity—as measured by incurred liability insurance losses, the number of lawyers, and tort cases commenced—to be the most important and robust determinant of tort reform adoption. Political‐institutional factors and regional effects—such as Republican control of the state government, single‐party control of the legislature and governorship, and a (relatively) conservative political ideology among a state's Democrats—are also associated with quicker reform adoption.

Sorry is Never Enough: The Effect of State Apology Laws on Medical Malpractice Liability Risk

Based on case studies indicating that apologies from physicians to patients can promote healing, understanding, and dispute resolution, thirty-nine states (and the District of Columbia) have sought to reduce litigation and medical malpractice liability by enacting apology laws. Apology laws facilitate apologies by making them inadmissible as evidence in subsequent malpractice trials. The underlying assumption of these laws is that after receiving an apology, patients will be less likely to pursue malpractice claims and will be more likely to settle claims that are filed. However, once a patient has been made aware that the physician has committed a medical error, the patient’s incentive to pursue a claim may increase even though the apology itself cannot be introduced as evidence. Thus, apology laws could lead to either increases or decreases in overall medical malpractice liability risk. Despite apology laws' status as one of the most widespread tort reforms in the country, there is little evidence that they achieve their goal of reducing litigation. This Article provides critical new evidence on the role of apology laws by examining a dataset of malpractice claims obtained directly from a large national malpractice insurer. This dataset includes substantially more information than is publicly available, and thus presents a unique opportunity to understand the effect of apology laws on the entire litigation landscape in ways that are not possible using only publicly available data. Decomposing medical malpractice liability risk into the frequency of claims and the magnitude of those claims, we examine the malpractice claims against 90% of physicians in the country who practice within a particular specialty over an eight-year period.

The Effect of Tort Reform on Medical Malpractice Insurance Market Trends

In this article, we examine the extent to which the timing of reforms to the tort liability system coincides with changes in medical malpractice insurance market conditions. Our research is motivated by the fact that, while policy discussions and academic research pertaining to the merits of tort reform often center on ex post effects, it is unclear whether reforms to the tort liability system are responsible for softening conditions in a medical malpractice insurance market that was previously deteriorating. Our analysis of tort reforms in the mid‐2000s finds little evidence that state‐level medical malpractice insurance losses incurred, premiums earned, or incurred loss ratios were increasing in the years immediately prior to the enactment of various tort reforms, making it difficult to attribute the observed softening of the medical malpractice insurance market that occurred in the mid to late 2000s to the enactment of tort reforms. Our conclusion is that, while tort reforms are effective policy tools for lowering levels of medical malpractice insurance losses incurred and improving insurer profitability, there is little evidence to suggest that reforms are an effective method for softening a medical malpractice insurance marketplace that is otherwise steadily deteriorating.

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.

Resolving Malpractice Claims after Tort Reform: Experience in a Self-Insured Texas Public Academic Health System.

To describe the litigation experience in a state with strict tort reform of a large public university health system that has committed to transparency with patients and families in resolving medical errors. Secondary data collected from The University of Texas System, which self-insures approximately 6,000 physicians at six health campuses across the state. We obtained internal case management data for all medical malpractice claims closed during 1year before and 6 recent years following the enactment of state tort reform legislation. We retrospectively reviewed information about malpractice claimants, malpractice claims, and the process and outcome of dispute resolution. We accessed an internal case management database, supplemented by both electronic and paper records compiled by the university's Office of General Counsel. Closed claims dropped from 244 in 2001-2002 to an annual mean of 96 in 2009-2015, closures following lawsuits from 136 in 2001-2002 to an annual mean of 28 in 2009-2015, and paid claims from 60 in 2001 to an annual mean of 20 in 2009-2015. Patterns of resolution suggest efforts by the university to provide some compensation to injured patients in cases that were no longer economically viable for plaintiffs' lawyers to litigate. The percentage of payments relating to cases in which lawsuits had been filed decreased from 82 percent in 2001-2002 to 47 percent in 2009-2012 and again to 29 percent in 2012-2015, although most paid claimants were represented by attorneys. Unrepresented patients received payment in 13 cases closed in 2009-2012 (22 percent of payments; mean amount $60,566) and in 24 cases closed in 2012-2015 (41 percent of payments; mean amount $109,410). Even after tort reform, however, claims that resulted in payment remained slow to resolve, which was worsened for claimants subject to Medicare secondary payer rules. Strict confidentiality became a more common condition of settlement, although restrictions were subsequently relaxed in order to further transparency and improve patient safety. Malpractice litigation risk diminished substantially for a public university health system in Texas following legal changes that reduced rights to sue and available damages. Health systems operating in a low-tort environment should work with policy makers, plaintiffs' attorneys, and patient groups to assist unrepresented patients, facilitate early mediation, limit nondisclosure obligations following settlement, and expedite the resolution of Medicare liens.

Do tort reforms impact the incidence of birth by cesarean section? A reassessment.

Investigations into the existence and impact of defensive medicine in obstetrics have produced mixed and often conflicting implications. The most widely-cited and accepted results in this literature find that less severe malpractice environments cause an increase in the use of cesarean section. This has been interpreted as "offensive medicine"; taking advantage of lenient malpractice environments by providing unnecessary services in order to raise revenue. In this article we show that an assumption concerning births with an unknown method of delivery, which is not explicitly stated in the literature, is pivotal in obtaining these results. Using data on tort reforms and birth outcomes from 1989 to 2001 in 24 US states, we show that for the 98.4% of births with a confirmed method of delivery, the estimated effects of tort reform on C-section rates are insignificant. Therefore, without this assumption, there is little evidence to support an interpretation of offensive medicine.

Jennifer Drobac: Sexual Exploitation of Teenagers: Adolescent Development, Discrimination, and Consent Law

In Sexual Exploitation of Teenagers: Adolescent Development, Discrimination and Consent Law, Jennifer Drobac delivers arguments and suggestions for change in this controversial field. In a fair, simple, and clearly well-researched manner, Drobac summarizes the key aspects of what makes adolescents who they are, how they stand in society, what makes them vulnerable in both psychological and legal contexts, and how adolescents are currently treated in the United States federal and state legal systems. Utilizing contemporary research in the fields of adolescent psychology and jurisprudence, Drobac connects presently flawed federal and state statutes, in combination with state and federal case law, to these subjects to further strengthen the many arguments found throughout the book. Also, Drobac’s use of tragic, yet very real, situations of adolescents who have been sexually exploited by their work supervisor, school teacher, or family relative, breathes life into her argument and leaves an impression on the reader that these situations are very real and sadly occur quite frequently. In the introduction, Drobac draws the reader into the sad reality of sexual exploitation of teenagers by telling the audience how a girl named Sara was sexually abused by her work supervisor, a registered sex offender. She then follows this story with an outline of how the book is planned out and gives definitions of common legal terms used throughout the book. The given outline delineates how Chapter Two will explain how adolescents face more situations of sexual harassment in work/school then adults, Chapter Three describes adolescent psychological development and how this development distinguishes them from adults, and Chapters 4–9 describes historical current United States criminal and civil law and how the two differentiate in certain instances. In essence, the book offers more factual information in the first six chapters, but hints at arguments for change throughout. Chapters 7–9 focus more on antidiscrimination laws and how they unfairly and inconsistently treat adolescents. The book then concludes with Drobac offering more policy suggestions and improvements on how to treat adolescents more fairly in both criminal and civil domains. Throughout reading the book, one could state the main argument of her book is that there needs to be a change in the current system in order to ensure adolescents’ safety at work, school, and home and consistency throughout the legal system for adolescents. This includes reforming strict liability statutes, consent and legal capacity laws, civil tort reform, and possibly introducing legal assent instead of consent for adolescents. Chapter One, ‘‘Introductions: Sara’s Case, Sexual Exploitation and Legal Terms’’ tells the chilling story of Sara. Sara, a 15 year old, worked at a movie theatre supervised by an individual named Michael Cosio. Over the ensuing years, Cosio bought Sara gifts, gave her cash, and listened to her problems. Cosio began to make sexual advances toward Sara, to which Sara eventually acquiesced or as one could possibly argue ‘‘consented.’’ In order to get Sara to submit to his sexual advances, Cosio told Sara he had a brain tumor. Cosio’s conduct then turned hostile, becoming verbally abusive and threatening to release the details of their relationship to her family. As a consequence of this relationship, Sara experienced academic and emotional deterioration. As a result, her parents suspected something was wrong. Sara opened up and told her parents about Cosio and confided in them. Cosio was then prosecuted under the California criminal code. The story Drobac tells about Sara effectively introduces the reader to the & Jacob E. Hawkins jaedhawk@indiana.edu

Bayesian semiparametric density ratio modelling with applications to medical malpractice reform

This study examines the efficacy of tort reforms instituted throughout the country during the last decade, improving upon existing semiparametric density ratio estimation (DRE) methodologies in the process. DRE is a well-known semiparametric modelling technique that has been used for well over two decades. Although the approach has been demonstrated to be extremely useful in statistical modelling, it has suffered from one main limitation—the methodology has thus far not been capable of modelling individual-level heterogeneity. We address this issue by presenting a novel adaptation of DRE to model individual level heterogeneity. We do so by marginalizing the associated empirical likelihood function involving density ratios to provide an overall distribution of the entire population despite having extremely limited initial information about each individual in the dataset. We apply this approach to medical malpractice loss data from the previous decade to quantify the probability of changes in tort losses. Our results demonstrate the success of a number of recently implemented malpractice reforms. Comparisons to existing DRE methods, as well as standard regression methods, illustrate the efficacy of our approach.

Association Between State Medical Malpractice Environment and Surgical Quality and Cost in the United States.

The US medical malpractice system is designed to deter negligence and encourage quality of care through threat of liability. To examine whether state-level malpractice environment is associated with outcomes and costs of colorectal surgery. Observational study of 116,977 Medicare fee-for-service beneficiaries who underwent colorectal surgery using administrative claims data. State-level malpractice risk was measured using mean general surgery malpractice insurance premiums; paid claims per surgeon; state tort reforms; and a composite measure. Associations between malpractice environment and postoperative outcomes and price-standardized Medicare payments were estimated using hierarchical logistic regression and generalized linear models. thirty-day postoperative mortality; complications (pneumonia, myocardial infarction, venous thromboembolism, acute renal failure, surgical site infection, postoperative sepsis, any complication); readmission; total price-standardized Medicare payments for index hospitalization and 30-day postdischarge episode-of-care. Few associations between measures of state malpractice risk environment and outcomes were identified. However, analyses using the composite measure showed that patients treated in states with greatest malpractice risk were more likely than those in lowest risk states to experience any complication (OR: 1.31; 95% CI: 1.22-1.41), pneumonia (OR: 1.36; 95%: CI, 1.16-1.60), myocardial infarction (OR: 1.44; 95% CI: 1.22-1.70), venous thromboembolism (OR:2.11; 95% CI: 1.70-2.61), acute renal failure (OR: 1.34; 95% CI; 1.22-1.47), and sepsis (OR: 1.38; 95% CI: 1.24-1.53; all P < 0.001). There were no consistent associations between malpractice environment and Medicare payments. There were no consistent associations between state-level malpractice risk and higher quality of care or Medicare payments for colorectal surgery.

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.

Insurance Crisis or Liability Crisis? Medical Malpractice Claiming in Illinois, 1980-2010

Since 1980, Illinois has experienced three medical malpractice insurance crises—in the mid-1980s, mid-1990s, and early-2000s. Each time, Illinois responded by enacting tort reform. Using a previously unavailable database of closed medical malpractice (med mal) claims, maintained by the Illinois Department of Insurance, we analyze statewide trends in med mal claiming from 1980–2010, covering all three crises. Paid claim rates rose sharply from 1980–1985, roughly leveled off from 1986–1993, and then began a sustained decline. By 2010, paid claims rates were 75 percent lower than in the peak year (1991). Payout per claim has steadily increased since 1980, but these increases can be entirely explained by the virtual disappearance of smaller paid claims and claims involving less severe injuries. The total direct cost of med mal litigation (payouts and defense costs) rose sharply from 1980–1992, with a jump in 1991, and then declined steadily, with a more modest jump during 2000–2002, which persisted through 2006. Thus, of the three Illinois insurance crises, only the first coincided in time with a major change in claiming. Rather than becoming more generous over time, the Illinois med mal system has squeezed out claimants with less severe injuries and smaller claims.

Online Appendix, Codebook, Public Dataset, and Code, to Accompany Medical Liability Insurance Premia 1990-2015: Dataset, Literature Review, and Summary Information

This appendix offers a codebook for the MLM dataset available in “Medical Liability Insurance Premia 1990-2015: Dataset, Literature Review, and Summary Information,” plus detailed documentation on the procedures used to create the MLM dataset. We document features of the MLM and NAIC premium data with heat maps, comparing patterns in MLM premia to changes in tort reform laws and medical malpractice payout data from the National Practitioner Data Bank (NPDB).You can download this Appendix, together with the Codebook, statistical code, and the public version of the dataset (which includes MLM data from 1990-2002) from http://ssrn.com/abstract=2716911. To obtain the full dataset, with MLM data through 2015, you must first purchase a subscription to MLM. To do so, please contact Michael Matray, the editor of MLM, at editor@medicalliabilitymonitor.com. The current cost is $395 for a one-year subscription. MLM will confirm your subscription to us, and we will then provide the link to the full dataset to you.The overview document, Medical Liability Insurance Premia 1990-2015: Dataset, Literature Review, and Summary Information is available on SSRN at http://ssrn.com/abstract=2477120

The Myths of Macpherson

For a symposium marking the centenary of Macpherson v. Buick, we identify three common characterizations of Cardozo’s famous opinion that purport to explain its importance. Unfortunately, each of these characterizations turns out to be a myth. MacPherson is worthy of celebration, but not because it recognizes that negligence law’s duty of care is owed to the world, nor because it displays the promise of an instrumental, policy-oriented approach to adjudication, nor because it embraces a nascent form of strict products liability. These myths of MacPherson reflect deep misunderstandings of tort law, and of Cardozo’s distinctively pragmatic approach to adjudication. Ironically, although they have been largely fostered by progressives, the myths lend support to the cause of modern tort reform. By contrast, an accurate appreciation of MacPherson’s virtues permits an understanding of negligence, tort law, and common law adjudication that provides grounds for resisting regressive reforms.

Rejecting the Grand Bargain: What Happens When Large Companies Opt Out of Workerss Compensation?

The “grand bargain” of workers’ compensation, whereby workers relinquished the right to sue their employers in exchange for no-fault occupational injury insurance, was one of the great tort reforms of the Twentieth Century. However, there is one U.S. state that has always permitted employers to decline workers’ compensation coverage, and in which many firms (“nonsubscribers”) have chosen to do so: Texas. This study examines the impact of Texas nonsubscription on fifteen large, multistate nonsubscribers that provided their Texas employees with customized occupational injury insurance benefits (“private plans”) in lieu of workers’ compensation coverage between 1998 and 2010. As economic theory would lead one to expect, nonsubscription generated considerable cost savings. My preferred estimates suggest that costs per worker hour fell by about 44 percent. These savings were driven by a drop in the frequency of more serious claims involving replacement of lost wages, and by a decline in costs per claim. Both medical and wage-replacement costs fell substantially. Although the decline in wage-replacement costs was larger in percentage terms than the drop in medical costs, the latter was equally financially consequential since medical costs comprise a larger share of total costs. The second stage, which compares the effect of nonsubscription across different types of injuries, finds that non-traumatic injury claims were more responsive to nonsubscription than traumatic ones. In part, this disparity reflects the fact that private plans categorically exclude some non-traumatic injuries from the scope of coverage. Yet even those non-traumatic injuries that were not excluded from coverage declined more than traumatic injuries, consistent with aggressive claim screening by employers and/or a decline in over-claiming and over-utilization by employees in the nonsubscription environment. The third stage examines the effect of nonsubscription on severe, traumatic injuries, which are generally the least susceptible to reporting bias and moral hazard. The sizable and significant decline in such injuries is consistent with an improvement in real safety, although it could also be explained by aggressive claim screening. The final stage of the study probes whether four ubiquitous features of private plans – non-coverage of permanent partial disabilities, categorical exclusion of many diseases and some non-traumatic injuries, capped benefits, and lack of chiropractic care – explain the observed trends. Surprisingly, these features account for little of the estimated cost savings. Although many study participants describe limited provider choice and 24-hour reporting windows as major cost drivers, data limitations preclude me from identifying their respective impacts. Overall, my findings suggest an urgent need for policymakers to examine the economic and distributional effects of converting workers’ compensation from a cornerstone of the social welfare state into an optional program that exists alongside privately-provided forms of occupational injury insurance.

Insurance Crisis or Liability Crisis? Medical Malpractice Claiming in Illinois, 1980-2010

Since 1980, Illinois has experienced three med mal insurance crises – in the mid-1980s, mid-1990s, and early-2000s. Each time, Illinois responded by enacting tort reform. Using a previously unavailable database of closed medical malpractice (“med mal”) claims, maintained by the Illinois Department of Insurance, we analyze statewide trends in med mal claiming from 1980-2010, covering all three crises. Paid claim rates rose sharply from 1980-1985, roughly leveled off from 1986-1993, and then began a sustained decline. By 2010, paid claims rates were 75% lower than in the peak year (1991). Payout per claim has steadily increased since 1980, but these increases can be entirely explained by the virtual disappearance of smaller paid claims and claims involving less severe injuries. The total direct cost of med mal litigation (payouts and defense costs) rose sharply from 1980-1992, with a jump in 1991 and then declined steadily, with a more modest jump during 2000-2002, which persists through 2006. Thus, of the three Illinois insurance crises, only the first coincided in time with a major change in claiming. Rather than becoming more generous over time, Illinois’ med mal system has squeezed out claimants with less severe injuries and smaller claims.

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.

Candor Laws Growing, but Are They Effective?

Candor Laws Growing, but Are They Effective?

Tort reform, plaintiffs' lawyers, and access to justice

Tort reform, plaintiffs' lawyers, and access to justice

Intangible Damages in American Tort Law: A Roadmap

This paper is meant to provide a succinct roadmap to the many pathways taken in providing recovery for intangible harm in tort. The paper was initially prepared for a comparative law conference, and in that setting, I assumed a lack of close familiarity with the historical origins and surprisingly broad expanse of recovery for intangible harm in American tort law. While succinctly presented, the present revised treatment, for those conversant with the US system, is meant to be comprehensive, addressing defamation and privacy, no-fault and tort reform, as well as the more conventional common law topics of intangible damages in cases of intentional and accidental harm.

The role of party politics in medical malpractice tort reforms

The U.S. tort system has experienced various reforms over the last three decades. While there is an extensive literature on the consequences of these reforms, very little is known about their determinants. In this study, we investigate the role of party politics in the reform process across U.S. states. In order to test whether any party effect goes beyond voter preferences, we apply the idea behind regression discontinuity studies based on close electoral outcomes to semi-parametric proportional hazards models. We find that in states with close election outcomes, a narrow Republican majority in the lower house is associated with a 50 to 150% higher risk of tort reform enactment compared to a narrow Democratic majority. Our results indicate that party politics plays a role in tort reforms over and above potential underlying preferences in the constituency.