The Reform of Medical Malpractice Law:

Abstract

The AMERICAN JOURNAL of ECONOMICS ^w^ SOCIOLOGY Published QUARTERLY in lhe iiitercsi of constructive .synthesis in the social sciences, iindt'r grams from the FRANCIS NFI[.SON FUND and the ROBERI' SOIALKF.NHACII r'ABSTRACT. The major stimulus for the extensive, state level, reform of medical malpractice during the past two decades was the widespread belief in a malpractice crisis. The perception of a crisis arose in the 1960s largely because of what was viewed as sudden and dramatic increases in the malpractice liability ot physicians. However, historical data demonstrate that the common perception that physician liability increased suddenly and dramatically beginning in the 1960s Is incorrect. Since malpractice reform has been based upon the false premise that the medical malpractice liability .system, previously working smoothly, was in disarray, the soundness of much of the malpractice reform which has occurred in the past two decades is questioned.

Regulation of medical professions

“…From the mid 1960s to the mid to late 1980s, claim frequency rose on average 7 to 10 percent annually. In general, however, claim frequency showed modest increases in the 1960s, rapid increases in the early 1970s, a leveling off in the mid 1970s, and more modest increases in the late 1970s and early 1980s (Danzon, 1985b;Olsen, 1996; US Department of Health and Human Services, 1987).…”

“…Second, the belief in the malpractice crisis also relies upon the well-established facts, as detailed above, that all of these measures Although the latter view is well-established empirically, the former is not. Olsen (1996) uses available historical data to demonstrate that medical malpractice cases were not rare events prior to the 1950s as has been assumed by most studies of medical malpractice. More importantly, Olsen (1996) demonstrates that growth rates in malpractice frequency and severity over most of the US history from 1820 on were comparable to more recent growth rates (see also DeVille, 1990;Sandor, 1957;Sadusk, 1956).…”

“…Olsen (1996) uses available historical data to demonstrate that medical malpractice cases were not rare events prior to the 1950s as has been assumed by most studies of medical malpractice. More importantly, Olsen (1996) demonstrates that growth rates in malpractice frequency and severity over most of the US history from 1820 on were comparable to more recent growth rates (see also DeVille, 1990;Sandor, 1957;Sadusk, 1956). Hence, these data suggest that if a medical malpractice crisis does exist, it has been an ongoing crisis for more than 150 years.…”

“…Malpractice severity simply measures the average size of the awards paid by defendants and their insurance companies for cases they lose. As malpractice frequency, probability, or severity rise, the cost of providing insurance coverage increases and companies react by increasing malpractice insurance premiums (Olsen, 1996).…”

“…A few of the more popular US reforms, for example, include limiting plaintiff attorney fees, shortening the statute of limitations for malpractice claims, offsetting malpractice awards when plaintiffs have insurance which pays for injuries (collateral source rule), payment limits on malpractice awards, periodic payment of awards, arbitration, sometimes mandatory, of claims, and pre-trial screening of malpractice claims to establish merit (Olsen, 1996;Weiler, 1991;AMA, 1989;Bovbjerg, 1989;Danzon, 1985b). Malpractice reform of this nature has been extensive in the US.…”