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An Empirical Assessment of Early Offer Reform for Medical Malpractice

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  • Joni Hersch
  • Jeffrey O'Connell
  • W. Kip Viscusi

Abstract

The early offer reform proposal for medical malpractice provides an option for claimants to receive prompt payment of all their net economic losses and reasonable attorney fees. Using a large sample of closed individual medical malpractice claims from Texas supplemented by data from Florida, this article provides an empirical assessment of the consequences of the early offer reform. Noneconomic damages make up about two-thirds of paid claim amounts. The minimum payment amount for serious injuries will affect the magnitude of insurer savings and claimant compensation. Payments to claimants will be expedited by 2 years by the early offer reform, and litigation costs will be reduced by an average of $100,000-$200,000 per claim. (c) 2007 by The University of Chicago. All rights reserved.

Suggested Citation

  • Joni Hersch & Jeffrey O'Connell & W. Kip Viscusi, 2007. "An Empirical Assessment of Early Offer Reform for Medical Malpractice," The Journal of Legal Studies, University of Chicago Press, vol. 36(S2), pages 231-259, June.
    • Handle: RePEc:ucp:jlstud:v:36:y:2007:i:s2:p:s231-s259
    DOI: 10.1086/519464
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    References listed on IDEAS

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    1. Petroni, Kathy Ruby, 1992. "Optimistic reporting in the property- casualty insurance industry," Journal of Accounting and Economics, Elsevier, vol. 15(4), pages 485-508, December.
    2. W. Kip Viscusi & Patricia H. Born, 2005. "Damages Caps, Insurability, and the Performance of Medical Malpractice Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 72(1), pages 23-43, March.
    3. Jennifer J. Gaver & Jeffrey S. Paterson, 1999. "Managing Insurance Company Financial Statements to Meet Regulatory and Tax Reporting Goals," Contemporary Accounting Research, John Wiley & Sons, vol. 16(2), pages 207-241, June.
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    Cited by:

    1. 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.
    2. Patricia Born & W. Kip Viscusi & Tom Baker, 2009. "The Effects of Tort Reform on Medical Malpractice Insurers' Ultimate Losses," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(1), pages 197-219, March.
    3. Bernard Black & David A. Hyman & Charles Silver, 2010. "O'Connell Early Settlement Offers: Toward Realistic Numbers and Two‐Sided Offers," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 7(2), pages 379-401, June.
    4. Felli, Leonardo & Koenen, Johannes & Stahl, Konrad O., 2011. "Competition and trust: Evidence from German car manufacturers," ZEW Discussion Papers 11-072, ZEW - Leibniz Centre for European Economic Research.
    5. Zhou, J., 2010. "Access to justice : An economic approach," Other publications TiSEM 9d70f451-35c4-4878-92bf-7, Tilburg University, School of Economics and Management.
    6. Zhou, Jun, 2010. "The Timing of Out-of-Court Settlements Revisited: Theory and Cross- Sectional Evidence from Texas since 1988," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 347, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    7. Bernard Black & David A. Hyman & Charles Silver, 2009. "The Effects of “Early Offers” in Medical Malpractice Cases: Evidence from Texas," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 6(4), pages 723-767, December.
    8. Zhou, Jun, 2010. "Determinants of Noneconomic Damages in Medical Malpractice Settlements and Litigations: Evidence from Texas since 1988," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 348, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

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