New Study Reveals Caps on Damages are Potentially Ruining the Healthcare Industry
Monday, July 27, 2015
New Study Reveals Caps on Damages are Potentially Ruining the Healthcare Industr

Authors of recent studies examined five U.S. states that have “caps,” as well as what is known as Patient Safety Indicators (PSIs). More recently, caps have been placed on compensation for medical malpractice cases, or “tort reform.” These studies compared various data, and found evidence that, in those states where caps on recovery had been passed or recently come into existence, the states’ Patient Safety general ratings subsequently decreased.

More specifically, Bernard S. Black, David Hyman and Myungho Paik authored a study entitled “Do Doctors Practice Defensive Medicine, Revisited,” Northwestern University Law & Economics Research Paper No. 13-20; Illinois Program in Law, Behavior and Social Science Paper No. LBSS14-21 (October 2014). As a result of their study, they found that there have been rises in the rates of the Patient Safety Indicators after tort caps are implemented, and subsequently found “consistently gradual relaxation of care or failure to reinforce care standards over time.”

It was further determined that the “The decline is widespread, and applies both to aspects of care that are relatively likely to lead to a malpractice suit (e.g., … foreign body left in during surgery), and aspects that are unlikely to do so (e.g., … central-line associated bloodstream infection).” Additionally, this study stated that “we find evidence that reduced risk of med mal litigation, due to state adoption of damage caps, leads to higher rates of preventable adverse patient safety events in hospitals.” In other words, implementing these damage caps led to hospitals and health facilities eventually relaxing their care standards, which then led to an increase of otherwise preventable incidents, resulting in more malpractice suits.

These conclusions were also supported by a study authored by Bernard S. Black and Zenon Zabinski entitled, “The Deterrent Effect of Tort Law: Evidence from Medical Malpractice Reform,” Northwestern University Law & Economics Research Paper No. 13-09 (July 2014). Interestingly, this study found a correlation that suggested that one of the reasons for their findings might have to do with physicians practicing riskier medicine in states that have caps. For example, the physician might perform “high-risk services or procedures” that would be otherwise avoided in non-capped states, or in states with common laws where an uncapped tort system would provide further deterrence from such riskier procedures.

Additionally, the authors noted that “damage caps have long been seen by health policy researchers and policymakers as a way to control healthcare costs: “We find, in contrast, no evidence that adoption of damage caps or other changes in med[ical] mal[practice] risk will reduce healthcare spending.”



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