The Efficiency of Medical Malpractice Law Theory and Empirical Evidence

ABSTRACT. This paper empirically tests the hypothesis that the medical malpractice system, despite the common perception of a crisis, has efficiently responded to changes in medical relationships by increasing physician liability. The empirical testing is based upon a tort liability model, which demonstrates that increased physician liability would be optimal when physicians become more productive, especially by increased technological ability, when the opportunity costs of physicians ' time increases, or when the cost to physicians of defending against malpractice claims decreases. The empirical results, based upon closed malpractice claims from the mid-1980s, consistently support the hypothesis that medical malpractice law does change physician liability optimally. I