Effects of tort reforms on the value of closed medical malpractice claims: a microanalysis

Tort reforms enacted by state legislatures mainly seek to reduce the rate of increase in medical malpractice insurance premiums and other costs of the professional liability system, such as "defensive medicine." We examine the effects tort reforms enacted during the 1970s have had on the probability that a claim will be paid, the amount of payment, and the speed with which the claim is resolved. Claims frequency is not used as a variable in this analysis, but findings from other studies pertaining to frequency are noted. This study uses two closed claims databases--one from the National Association of Insurance Commissioners, and one from the U.S. General Accounting Office. We merged the two data sets for purposes of this analysis. The observational unit was the individual claim. Data on tort reforms came from our own analysis of statutory changes by state. Dollar ceilings on recoveries ("caps") are shown to be the strongest reforms in terms of their impact on paid claim size. Most caps limit recovery for noneconomic loss, though some limit dollar awards. Other reforms that reduced payments per claim were costs awardable provisions and mandatory collateral offsets.