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An Empirical Study of the Impact of Tort Reforms on Medical Malpractice Settlement Payments

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  • Ronen Avraham

Abstract

This paper evaluates the impact of six different types of tort reforms on the frequency, size, and number of total annual settlements in medical malpractice cases between 1991 and 1998. Medical malpractice data come from the National Practitioner Data Bank, which contains more than 100,000 malpractice settlement payments in the study time frame. Of the six tort reforms examined, two reforms (caps on pain and suffering damages and limitations on joint and several liability) reduced the number of annual payments, and two reforms (caps on pain and suffering damages and the periodic-payment reform) reduced average awards. Caps on noneconomic damages had an effect on total annual payments, although the statistical significance of that effect was weak. The joint effect of enacting all six reforms was statistically significant for reducing the number of cases but not the state-level average award or total payments. (c) 2007 by The University of Chicago. All rights reserved.

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  • Ronen Avraham, 2007. "An Empirical Study of the Impact of Tort Reforms on Medical Malpractice Settlement Payments," The Journal of Legal Studies, University of Chicago Press, vol. 36(S2), pages 183-229, June.
  • Handle: RePEc:ucp:jlstud:v:36:y:2007:i:s2:p:s183-s229
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    File URL: http://dx.doi.org/10.1086/527332
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    1. Viscusi, W. Kip & Zeckhauser, Richard J. & Born, Patricia & Blackmon, Glenn, 1993. "The Effect of 1980s Tort Reform Legislation on General Liability and Medical Malpractice Insurance," Journal of Risk and Uncertainty, Springer, vol. 6(2), pages 165-186, April.
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    3. repec:reg:rpubli:305 is not listed on IDEAS
    4. Babcock, Linda & Pogarsky, Greg, 1999. "Damage Caps and Settlement: A Behavioral Approach," The Journal of Legal Studies, University of Chicago Press, vol. 28(2), pages 341-370, June.
    5. George L. Priest & Benjamin Klein, 1984. "The Selection of Disputes for Litigation," The Journal of Legal Studies, University of Chicago Press, vol. 13(1), pages 1-56, January.
    6. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
    7. Danzon, Patricia, 1984. "The Frequency and Severity of Medical Malpractice Claims," Journal of Law and Economics, University of Chicago Press, vol. 27(1), pages 115-148, April.
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    Cited by:

    1. repec:kap:expeco:v:20:y:2017:i:2:d:10.1007_s10683-016-9486-z is not listed on IDEAS
    2. Andrew Friedson & Thomas Kniesner, 2012. "Losers and losers: Some demographics of medical malpractice tort reforms," Journal of Risk and Uncertainty, Springer, vol. 45(2), pages 115-133, October.
    3. Ethan M. J. Lieber, 2014. "Medical Malpractice Reform, the Supply of Physicians, and Adverse Selection," Journal of Law and Economics, University of Chicago Press, vol. 57(2), pages 501-527.
    4. Panthöfer, S., 2016. "Do Doctors Prescribe Antibiotics Out of Fear of Malpractice?," Health, Econometrics and Data Group (HEDG) Working Papers 16/31, HEDG, c/o Department of Economics, University of York.
    5. repec:kap:copoec:v:28:y:2017:i:4:d:10.1007_s10602-017-9235-0 is not listed on IDEAS
    6. repec:kap:ejlwec:v:44:y:2017:i:2:d:10.1007_s10657-016-9543-2 is not listed on IDEAS
    7. Matter, Ulrich & Stutzer, Alois, 2014. "The Role of Lawyer-Legislators in Shaping the Law: Evidence from Voting Behavior on Tort Reforms," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100452, Verein für Socialpolitik / German Economic Association.
    8. Daniel Carvell & Janet Currie & W. Bentley MacLeod, 2012. "Accidental death and the rule of joint and several liability," RAND Journal of Economics, RAND Corporation, vol. 43(1), pages 51-77, March.
    9. repec:spr:hecrev:v:7:y:2017:i:1:d:10.1186_s13561-017-0174-2 is not listed on IDEAS
    10. Paola Bertoli & Veronica Grembi, 2017. "Medical Malpractice: How Legal Liability Affects Medical Decisions," CERGE-EI Working Papers wp600, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    11. Ity Shurtz, 2014. "Malpractice Law, Physicians' Financial Incentives, and Medical Treatment: How Do They Interact?," Journal of Law and Economics, University of Chicago Press, vol. 57(1), pages 1-29.
    12. Álvaro Bustos & Ronen Avraham., 2008. "The Unexpected Effects of Caps on Non-Economic Damages," Documentos de Trabajo 353, Instituto de Economia. Pontificia Universidad Católica de Chile..
    13. Panthöfer, Sebastian, 2016. "Tort Reform and the Length of Physician Office Visits," UC3M Working papers. Economics 23861, Universidad Carlos III de Madrid. Departamento de Economía.
    14. Ulrich Matter & Alois Stutzer, 2015. "Politico-Economic Determinants of Tort Reforms in Medical Malpractice," Working papers 2015/02, Faculty of Business and Economics - University of Basel.
    15. Avraham, Ronen & Bustos, Álvaro, 2010. "The unexpected effects of caps on non-economic damages," International Review of Law and Economics, Elsevier, vol. 30(4), pages 291-305, December.
    16. Alberto Galasso & Hong Luo, 2016. "Tort Reform and Innovation," NBER Working Papers 22712, National Bureau of Economic Research, Inc.
    17. Galasso, Alberto & Luo, Hong, 2016. "Tort Reform and Innovation," CEPR Discussion Papers 11358, C.E.P.R. Discussion Papers.
    18. Cotet-Grecu, Anca, 2015. "The impact of non-economic damages caps on obstetrics: Incentives versus practice style," Economics & Human Biology, Elsevier, pages 29-41.
    19. Malani, Anup & Reif, Julian, 2015. "Interpreting pre-trends as anticipation: Impact on estimated treatment effects from tort reform," Journal of Public Economics, Elsevier, pages 1-17.
    20. Ulrich Matter & Alois Stutzer, 2015. "The Role of Lawyer-Legislators in Shaping the Law: Evidence from Voting on Tort Reforms," Journal of Law and Economics, University of Chicago Press, vol. 58(2), pages 357-384.
    21. Matter, Ulrich & Stutzer, Alois, 2016. "The role of party politics in medical malpractice tort reforms," European Journal of Political Economy, Elsevier, vol. 42(C), pages 17-35.
    22. Ulrich Matter & Alois Stutzer, 2013. "Do Lawyer-Legislators Protect Their Business? Evidence from Voting Behavior on Tort Reforms," Working papers 2013/09, Faculty of Business and Economics - University of Basel.

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