Policy Limits, Payouts, and Blood Money: Medical Malpractice Settlements in the Shadow of Insurance by Charles Silver, David A. Hyman, Bernard S. Black, Myungho Paik :: SSRN

In prior research, we found that policy limits in Texas medical malpractice (“med mal”) cases often served as de facto caps on recoveries in both tried and settled cases. We also found that physicians faced little personal exposure on malpractice claims. Out-of-pocket payments (OOPPs) by physicians were rare and usually small. Physicians could reduce their personal exposure to near zero by carrying $1 million in primary coverage ― a standard amount in many states. Finally, the real amount of insurance coverage purchased by physicians with paid claims declined substantially over 1988–1999, consistent with physicians learning over time how low the OOPP risk was and deciding to carry less coverage.

We now revisit our findings, using an extended dataset (1988–2005) that lets us study policies purchased through 2003, which encompasses the period during which Texas experienced a med mal insurance crisis (1999–2003) and adopted tort reform to limit med mal lawsuits (2003). Our updated findings are largely consistent with our original findings: policy limits continue to cap recoveries; physicians still rarely make OOPPs; most OOPPs are modest; and real policy limits continue to shrink. We also find evidence that, at the end of the extended period, physicians often purchased less coverage (i.e., policies with limits of $100,000–$200,000 instead of $500,000–$1 million).

Our findings have important policy implications. If physicians carry less real coverage over time, lawsuits should become less profitable. This will make it harder for injured patients to find plaintiffs’ lawyers willing to handle their cases; shift the cost of medical injuries away from providers and toward patients and first-party health insurers; weaken liability insurers’ incentives to monitor providers; and diminish the (already modest) deterrent effect of tort law. If these findings are representative, they may help explain the nationwide decline in med mal claiming that we document elsewhere. Finally, our findings raise questions about the explanatory power of Baker’s “blood money” norm, at least for med mal litigation.

Source: Policy Limits, Payouts, and Blood Money: Medical Malpractice Settlements in the Shadow of Insurance by Charles Silver, David A. Hyman, Bernard S. Black, Myungho Paik :: SSRN

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s