Journal Article

Estimating the Effect of Damages Caps in Medical Malpractice Cases: Evidence from Texas

David A. Hyman, Bernard Black, Charles Silver and William M. Sage

in Journal of Legal Analysis

Published on behalf of The John M. Olin Center for Law, Economics and Business at Harvard Law School with the support of the Considine Family Foundation

Volume 1, issue 1, pages 355-409
Published in print January 2009 | ISSN: 2161-7201
Published online January 2009 | e-ISSN: 1946-5319 | DOI: http://dx.doi.org/10.4159/jla.v1i1.16
Estimating the Effect of Damages Caps in Medical Malpractice Cases: Evidence from Texas

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Using claim-level data, we estimate the effect of Texas's 2003 cap on non-economic damages on jury verdicts, post-verdict payouts, and settlements in medical malpractice cases closed during 1988–2004. For pro-plaintiff jury verdicts, the cap affects 47-percent of verdicts and reduces mean allowed non-economic damages, mean allowed verdict, and mean total payout by 73-percent, 38-percent, and 27-percent, respectively. In total, the non-econ cap reduces adjusted verdicts by $156M, but predicted payouts by only $60M. The impact on payouts is smaller because a substantial portion of the above-cap damage awards were not being paid to begin with. In cases settled without trial, the non-econ cap affects 18-percent of cases and reduces predicted mean total payout by 18-percent. The non-econ cap has a smaller impact on settled cases than tried cases because settled cases tend to involve smaller payouts. The impact of the non-econ cap varies across plaintiff categories. Deceased, unemployed, and (likely) elderly plaintiffs suffer a larger percentage reduction in payouts than living, employed, and non-elderly plaintiffs.

We also simulate the effects of different caps and find substantial differences in cap stringency across states. Different caps reduce aggregate payouts in tried cases (all cases) by between 16-percent and 65-percent (7-percent and 42-percent). Caps on total damages have especially large effects.

Journal Article.  0 words. 

Subjects: Jurisprudence and Philosophy of Law

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