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Damage Caps and Medical Malpractice Litigation: V

On to cap design. We've got 24 different cap variations, reflecting the dynamics in each of the 31 states that have damages caps. What is the impact of these variations on payout? Is a non-econ cap of $250k twice as strict as a cap of $500k? How should one compare the impact of a total damages cap with a non-econ cap?

To sort this issue out, we applied each of the 24 caps against the same set of tried and settled cases from Texas. This allows us to assess the comparative severity of each cap. To be sure, the impact of each cap is dictated by the mix of cases to which it is applied -- so we cannot say what the impact of any given cap will be in any given state. More bluntly, that means we're not saying that if a state adopts a particular cap, the figures in the table accurately predict the percentage impact on payouts in that state. Put another way, your mileage may vary.

The next table lists the state caps from most to least strict, based on percentage reduction in mean allowed verdict. It also shows the predicted reduction in mean payout in tried cases, settled cases, and all cases. The ranking of caps by verdict impact is similar, but not identical, to the ranking by payout-based impact. Across all states, the predicted impact in verdicts is larger than the predicted impact on payouts in tried cases, and the predicted impact on payouts in tried cases is larger than the predicted impact in settled cases.

As this table reflects, damages caps vary widely in stringency. At the high end, Louisiana's $500k total damages cap reduces mean allowed verdicts by 76%, payouts in tried cases by 65%, and payouts in settled cases by 41%. At the low end, Wisconsin's $750k cap on non-econ damages reduces verdicts by 28%, payouts in tried cases by 16%, and payouts in settled cases by 8%. The Texas cap, which varies based on number and type of defendants, is equivalent in overall effect to a simple $336k (1988$) non-econ cap, and is thus slightly less stringent than Oklahoma's $300k cap.

Total damages caps have an especially large effect on allowed verdicts. The total damages caps in Louisiana ($500k), New Mexico ($600k), Indiana ($1.25M), Nebraska ($1.75M) and Virginia ($1.95M) have a greater impact on allowed verdicts and (less sharply) post-verdict payouts than any of the non-econ caps, even though the non-econ caps often have much lower levels. However, the Nebraska and Virginia total damages caps are comparable to a $250k non-econ cap in their effect on payouts in settled cases. The lower effect on payouts in tried cases is because the large verdicts which are affected by these total damages caps tend to receive large haircuts. The lower effect on settled cases is because settled cases tend to be smaller than tried cases.

Finally, the relationship between cap level and cap impact is complex, and depends on various features of cap design. Focusing only on cap level, a cap of $250k reduces payout across all cases by 20.9%. Increasing the cap to $350k reduces payout across all cases by 16.9%. Increasing it again to $500k reduces payout to 12.8%. A further increase to $650k reduces payout by 12.6% -- virtually the same impact as the cap of $500k.

Tomorrow, more detail on cap design, including the impact of adjusting cap level for inflation.

SupremacyClaus (mail) (www):
Tort reform has always been a mildly effective remedy to the damage of medical malpractice business.

Problems not addressed:

1) The majority of medmal cases are weak or frivolous. Over 75% fail at every stage of litigation. The profit stems from the small number that generate an insurance award. The filing of a weak case may be ethical. However, it is lawyer malpractice.

2) All awards and all costs come from the public. Insurance covers these, but all insurance premiums come from doctor fees to the public. So these costs increase fees or decrease access. An example of a decrease in access is the growing rarity of family doctors and of maternity wards.

3) Medical malpractice prevents improvements in quality and reduction of medical errors. They force a cover on health care providers. All advice to the contrary, such as the apology movement, serves the discovery aims of the medmal plaintiff bar. Because most cases are weak, the barest minimum of cooperation is justified intellectually and morally. Furthermore, total e-discovery should be demanded against the adversaries of clinical care, the plaintiff, the plaintiff lawyer, and the judge after any adverse ruling.

4) The doctrines of torts, especially the idea of a chain of causation, does not apply to modern remedies or deterrence. Mishaps are better understood as clusters of factors coinciding for a horrible outcome.

What are better remedies?

1) End the privity obstacle to lawyer malpractice claims by adverse third parties. When a lawyer files a weak claim, the doctor has been damaged by lawyer carelessness and malpractice, and should be made whole. The litigation privilege is self-dealt by lawyers and judges, is unjust and violates the constitutions of the US and of many states.

2) If a patient suffers an injury by doctor error, they should receive Medicaid. Why should the tax payer be liable for the error of a doctor? The taxpayer is liable under today's medmal practice anyway, in the form of higher fees or decreased access to care. The Medicaid benefit for those damaged by medical error would be cheap, would provide care for the injury, and would cut out the massive rent seeking, worthless services of the lawyer, the court, and the insurance businesses. Because most of medmal awards are consumed by the costs of weak cases, fees, insurance profits, the cost of Medicaid benefits would be low. So, it could be easier, faster to get without conflict or time wasting for all parties.

3) In exchange for Medicaid benefits to all involved, regulators could demand total quality improvement. Every serious medical error deserves an airline crash style analysis of the multiple factors that clustered to cause it. Entire wings of hospitals could be closed by regulators until the causes were addressed. As a patient, that would be the greatest benefit. The results of the investigation should be posted to the web so that similar operations could benefit before they would hurt a patient.
12.5.2008 4:18pm
David Warner:
I'm wondering if posts this substantive violate OK's terms of service. More please. And warm thanks.
12.6.2008 11:59am

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