Effect of Tort Reform on Medical Malpractice Litigation

Abstract

The efficiencies of tort reform in the US in regards to medical malpractice have been widely debated, with perspectives examining its effects on the victims, the medical field, and insurers. Using monetary payment and case data collected by the National Practitioners Database, this paper addresses the specific consequences of noneconomic damages caps within states on the behavior of medical malpractice victims with a two-way fixed effect difference-in-difference model, fixing the state the case occurred in and the year of its filing. The results portray the effect of a cap on the number of cases and amount of payment received by the victims, and the regression captures the behavior of victims, practitioners, insurers, and attorneys. Overall, the paper finds the existence of a noneconomic damages cap results in an insignificant decrease in payouts per case from practitioners to victims, and there is an insignificant increase in the number of cases filed when a cap is in place, implying the behaviors of practitioners and victims in particular are acting in opposition to each other. Possible interpretations of the results include victims reacting to the cap because the cap brings to their attention the possibility of suing, and medical practitioners exercising less care with a cap in place.