The Impact of Tort Reform on Medical Malpractice Payments

This study 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. Previous studies have failed to correctly identify the effective dates of reforms, to account for the retroactive applicability of striking down reforms, or used highly selected samples of jury verdicts or litigated cases. I employ a new legal data set of tort reforms, which carefully evaluates effective dates as well as when certain laws were overturned. Medical malpractice data comes from the National Practitioner Data Bank, which contains more than 100,000 malpractice settlement payments in the study time frame. The data represent the universe of cases in which doctors paid a positive settlement. Thus, the present study has significant advantages over previous work for being the first study to systematically and adequately explore the impact of tort reform on settlements (in contrast to judgments). Of the six tort reforms examined, only one reform (caps on pain-and suffering damages) reduced the number of annual payments, and two reforms (caps on pain-and-suffering damages and limitation on the collateral source rule) reduced average awards. Caps on non-economic damages also 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 average award or total payment