Damage Caps and Medical Malpractice Litigation: VI

Ok, one last posting on cap design, before I move on to the impact of caps on physician supply. As I noted previously, when California adopted the first non-econ cap in 1975, it set the level at $250,000, without an inflation adjustment. That approach has anchored subsequent debates over non-econ caps. Most state damage caps are not indexed for inflation, so their impact becomes stricter over time.

If the California non-econ cap was inflation adjusted, it would have been $855k in 2003, and $970k in 2007. The next table shows how not adjusting for inflation affects the impact of the California cap at various points over time. The first four rows estimate the payout reduction in tried cases if the cap had been set at the level that applied during the specified year. The last four rows estimate the payout reduction into the future, using two different assumptions about the inflation rate.

To summarize the last several postings, cap design is usually ignored, but it makes a big difference in cap impact. The moving parts include the absolute cap level, whether the cap is on non-econ damages or total damages, whether it affects all or only some cases, and whether it is inflation-adjusted or not.

BrockLanders (mail):
I used to work at plaintiff's firm that specialized in med mal. I can say without reservation that damage caps have absolutely nothing to do with weeding out frivolous cases and everything to do with cutting down the number of legitmate claims. Figure 2 to 4 years of litigation and $50,000 to $100,00 in costs. Throw in a jury pool that thinks they're paying high health insurance premiums because of "frivolous suits," and there you have it. We turned down 99 cases out of 100, and many were legitmate cases that just didn't have enough in the way of damages. I don't pretend to know enough about economics to to discuss the impact of caps beyond the extent to which they discourage filing even very strong claims, but let's not pretend this is about discouraging frivlous suits. Only lawyers who really don't know what they're doing go forward with a questionable med mal case.
12.7.2008 1:46am
Jon Roland (mail) (www):
There is another point such a study should explore. It is my position that for the government to limit liability it has to assume the liability above the cap. Respondeat superior. Otherwise it is infringing on the right of redress for injury, and that is fundamentally unconstitutional.
12.7.2008 8:14am
Ninja Zombie (mail):
BrockLanders: John Edwards seems to know what he is doing, and he made a career of pursuing questionable cases.

"She speaks to you through me and I have to tell you right now -- I didn't plan to talk about this -- right now I feel her. I feel her presence. She's inside me, and she's talking to you." -- John Edwards
12.7.2008 9:28am
Wrong John Edwards.

IMO, any law setting a nominal dollar amount (even the $20 figure in the 7A) is absurd and unreasonable on its face. These should be tied to inflation.
12.7.2008 12:05pm

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