Insurance Crisis or Liability Crisis? Medical Malpractice Claiming in Illinois, 1980–2010

Abstract

Since 1980, Illinois has experienced three medical malpractice insurance crises—in the mid‐1980s, mid‐1990s, and early‐2000s. Each time, Illinois responded by enacting tort reform. Using a previously unavailable database of closed medical malpractice (med mal) claims, maintained by the Illinois Department of Insurance, we analyze statewide trends in med mal claiming from 1980–2010, covering all three crises. Paid claim rates rose sharply from 1980–1985, roughly leveled off from 1986–1993, and then began a sustained decline. By 2010, paid claims rates were 75 percent lower than in the peak year (1991). Payout per claim has steadily increased since 1980, but these increases can be entirely explained by the virtual disappearance of smaller paid claims and claims involving less severe injuries. The total direct cost of med mal litigation (payouts and defense costs) rose sharply from 1980–1992, with a jump in 1991, and then declined steadily, with a more modest jump during 2000–2002, which persisted through 2006. Thus, of the three Illinois insurance crises, only the first coincided in time with a major change in claiming. Rather than becoming more generous over time, the Illinois med mal system has squeezed out claimants with less severe injuries and smaller claims.

Screening Plaintiffs and Selecting Defendants in Medical Malpractice Litigation: Evidence from Illinois and Indiana

“…Success rates are lower for death cases than for cases with permanent major or permanent grave injuries. In other work, we find payouts in death cases are similar to cases with permanent significant harm, and well below those with permanent major or permanent grave harm (Rahmati et al ). Thus, plaintiffs achieve the highest success rates in the cases with the largest expected damages.…”

“…We begin by briefly describing our Illinois data and our analytical approach. Our Illinois dataset is described in detail in earlier work (Rahmati et al ; Hyman et al ). In brief, we obtained a closed claims database from the Illinois Department of Insurance (IDOI) covering every med mal case closed during 2000–2010, with or without payment.…”

“…Figure is about success rates, not recoveries. Conditional on success, greater injury severity is strongly associated with higher recoveries, apart from a “death discount” (Hyman et al ; Rahmati et al ).…”

“…Apart from a “death discount,” plaintiffs with more severe injuries receive greater compensation (Rahmati et al ).…”

Medical Malpractice Litigation and the Market for Plaintiff-Side Representation: Evidence from Illinois

“…We obtained nonpublic data from IDOI on all med mal claims closed from 2000-2010. 2 We describe the data in greater detail in an earlier article (Rahmati et al 2016). 1 Many hospitals, especially larger ones, are substantially self-insured; they often have some "catastrophic" coverage above a large deductible, perhaps through a reinsurer that does not report to IDOI.…”