Damage Caps and Medical Malpractice Litigation: IV

Today, I want to focus on cap design. But first, one clarification from yesterday. Of course, we should expect caps on non-economic damages to hit those with large non-economic damages harder. How much harder is a different question – particularly when past studies that have addressed that issue have used verdicts (and not payouts) to study that point. The problem with using verdicts is that even without a damages cap, defendants in our dataset don't pay what juries award. So, using verdicts instead of payouts gives you a inflated/misleading answer about the effect of the cap (both in the aggregate, and on specific plaintiff categories). That's why the aggregate figures for cap effect (37% reduction in verdict dollars v. 27% reduction in payout dollars on a far-smaller base) look the way they do. In dollar terms, the damages cap "takes away" $156M in verdict dollars, but only $60M in actual payout dollars.

To make it easier to see that point, I’ve re-done the tables from my last posting, to include the impact on both verdict and payout.

In each instance, the cap has a larger impact – sometimes much larger – on verdicts than on payouts. So, those who are basing their hopes (or fears) regarding the overall impact of a non-econ cap on their perception of what will happen to the largest/most salient verdicts should moderate their expectations.

I'll post later on cap design.