Manhatttan Institute: Medical Malpractice Awards, Insurance, and Negligence: Which Are Related?

From the Manhattan Institute: Civil Justice Report 10 | Medical Malpractice Awards, Insurance, and Negligence: Which Are Related?

Medical Malpractice Awards, Insurance, and Negligence: Which Are Related?

Alexander Tabarrok, Department of Economics, George Mason University and Amanda Agan, Department of Economics, George Mason University

Executive Summary

Doctors’ medical malpractice liability insurance premiums are at an all-time high. As has been widely reported in the press, escalating med-mal premiums have driven doctors to retire early, shut down their businesses, or reduce the scope of their practices. In areas of the country with particularly high premiums, there is concern that patients’ access to care has been compromised.

Insurance companies and most doctors conclude that the root cause of higher insurance costs is higher tort awards. The American Medical Association, for example, says that medical liability reform is their top priority because “rapidly increasing medical liability insurance premiums caused by escalating jury awards are seriously threatening patient access to care.”

On the other side of this debate are plaintiffs’ attorneys and their allied consumer groups who attribute the boom and bust “insurance cycle” to investment returns and, alternatively, accuse insurance companies of “price gouging.” Such claims are often picked up, uncritically, by the mainstream press.

Our study makes four contributions to this debate:

1. We show that medical malpractice premiums are closely related to medical malpractice tort awards. Over the long run, premiums closely track awards, and premiums adjust to short-run award variation as well. …

2. We show that medical malpractice premiums are not explained by insurance industry price gouging. For the price-gouging hypothesis to make sense, insurance industries must be exercising monopoly power. …

3. We show that medical malpractice tort awards are related to some factors not rationally related to injuries. For instance, states’ judicial electoral systems have predictive value on the expected level of tort award.

4. We show that malpractice tort awards and thus insurance premiums can vary dramatically for reasons having little or nothing to do with negligence. ….The tort system shows no or even a slight negative correlation with the board review system’s negligence determinations, suggesting that the system is influenced by factors not related to negligence.

Hmm, this is pretty much what we’ve been saying for a long time…


  1. TheNewGuy says:

    A week or so ago we had this incident down here in Florida:

    The plaintiff’s attorney had some ideas about where the blame belonged…

  2. Remember that when they tell you “It’s not personal”.

    It is.

  3. I totally empathize with this doc. Every time the phone rings at home these days, or I get mail, I’m afraid to look, thinking it’s another lawsuit. I sign 5000 charts a year, and people do die. There’s nothing in place to help us with this onslaught, and sometimes the pain can just get to be too much. But it’s “nothing personal”.

  4. quartered says:

    Why is it that more and more laypersons seem to have no problem self-directing their care in the ED (one of my PAs calls it “McMedicine-would you like a CAT scan with that?”), 2nd or 3rd or 4th opinion shopping or using the ED to “see the doctor”, blatantly disregard explicit instruction for continuity of care or follow-up, ramble on for precious ED encounter minutes about how this doctor or that “didn’t do nothing” or “didn’t tell me nothing”, cite WebMD entries as proof of whatever ailment they are certain they have despite your assurance to the contrary, etc-all suggesting that we don’t have a clue as to what we are doing? Yet, if something ever happens to them and they suffer a complication or poor outcome we are to blame because we should be omniscient and omnipotent as well as capable of controlling the behaviors of our patients. DS said it: we see sick people and sick people often a)get more sick, b)get really sick and/or c)die. The sheer volume of patients we see and the nature of their complaints should indicate that in a system of human practice that is based on both science and lore we will do our best but stuff is still going to hit the fan or fall through the cracks of an overburdened and imperfect care model. All we can do is our absolute best, right?

    This issue reminds me of a conversation I had a couple of years back with a friend who was training to be a commercial pilot. He was telling me that the cost and time commitment were immense,the competition fierce, and the compensation once he was finished would be pretty unimpressive unless he was eventually picked up by a large carrier. It seemed a tough row to hoe to me, full of uncertainty and potential for failure. He, on the other hand, thought I was DSM-IV material for working with such liability exposure in the ED. We agreed, though, that we were not simply pursuing jobs or even careers. Rather, we were fulfilling dreams and dreams are something you will pay dearly for because they are their own reward.

  5. It’s interesting that you would pick a study from a lobbying group to highlight, yet you ignore studies by other physicians and nonpartisan groups which contradict your claims. Oh well, all is fair in lobbying and politics, I guess.

    And as for the physician who killed himself, why is it that none of you want to hear the sad stories of people injured by malpractice, claiming it is just done to tug the heartstrings, but you tout it when it’s your own “victim”? Hypocrisy?

  6. doctordel says:

    “And as for the physician who killed himself, why is it that none of you want to hear the sad stories of people injured by malpractice, claiming it is just done to tug the heartstrings, but you tout it when it’s your own “victim”? Hypocrisy?”

    Matt,I cannot let you get away with that. Even you would have to admit that the stories of the med mal injured are essentially shoved down all of our collective throats while this story of the MD suicide is remarkable because of the paucity of coverage given to the impact of litigation on the “other side” by the lay media. If you have Lexus-Nexus access and can show this to be inaccurate, please edify me.

    Sincerely, you shouldn’t be so quick to dismiss people’s feelings, Matt; it just makes you come across as a callous trial attorney. Per our discussion last week I myself have a hard time questioning the empathy embodied by sworn practitioners of the healing arts and must believe that our opinions on this topic reflect how personally we take our roles in our patient’s lives.

  7. Dr. Del,

    I have not dismissed anyone’s feelings. I merely noted how physicians don’t like it when other’s personal stories are used in conjunction with policies they are against, but don’t hesitate to utilize them in support of their own. To suggest that the only reason this physician killed himself was because he lost a lawsuit strikes me as a little bold, though.

    I don’t doubt many of you care very much for your patients, and generally presume you do until it is shown otherwise.

    As for the “paucity” of information about the other side, I would beg to differ. But debating who gets what coverage in the media is a pointless argument.