Medical Malpractice Reform

Noneconomic Damages Caps Reduced Payments 15 Percent, with Varied Effects by Specialty

Published In: Health Affairs, v. 33, no. 11, Nov. 2014, p. 2048-2056

Posted on RAND.org on January 01, 2014

by Seth A. Seabury, Eric Helland, Anupam B. Jena

Read More

Access further information on this document at content.healthaffairs.org

This article was published outside of RAND. The full text of the article can be found at the link above.

Research Questions

  1. Do caps on the damages that patients can receive in medical malpractice suits reduce malpractice payments?
  2. How does the relative size of the caps ($250,000 versus $500,000) affect the size of the payments?
  3. Does the impact of caps vary from specialty to specialty?

The impact of medical malpractice reforms on the average size of malpractice payments in specific physician specialties is unknown and subject to debate. We analyzed a national sample of malpractice claims for the period 1985-2010, merged with information on state liability reforms, to estimate the impact of state noneconomic damages caps on average malpractice payment size for physicians overall and for ten different specialty categories. We then compared how the effects differed according to the restrictiveness of the cap ($250,000 versus $500,000). We found that, overall, noneconomic damages caps reduced average payments by $42,980 (15 percent), compared to having no cap at all. A more restrictive $250,000 cap reduced average payments by $59,331 (20 percent), and a less restrictive $500,000 cap had no significant effect, compared to no cap at all. The effect of the caps overall varied according to specialty, with the largest impact being on claims involving pediatricians and the smallest on claims involving surgical subspecialties and ophthalmologists.

Key Findings

  • Caps on noneconomic damages (payments for pain and suffering, emotional distress, loss of companionship, and other intangible injuries) reduced average payments by approximately $43,000, or 15 percent.
  • The more restrictive the cap, the greater the reduction: a $250,000 cap reduced average payments by almost one-fifth.
  • Restrictive caps were associated with lower average payments across all specialties, with particularly large reductions among those with high average payments, namely pediatrics and obstetrics.
  • Across all specialties, a less restrictive cap ($500,000) generally had no significant effect on payments.

This report is part of the RAND Corporation External publication series. Many RAND studies are published in peer-reviewed scholarly journals, as chapters in commercial books, or as documents published by other organizations.

Our mission to help improve policy and decisionmaking through research and analysis is enabled through our core values of quality and objectivity and our unwavering commitment to the highest level of integrity and ethical behavior. To help ensure our research and analysis are rigorous, objective, and nonpartisan, we subject our research publications to a robust and exacting quality-assurance process; avoid both the appearance and reality of financial and other conflicts of interest through staff training, project screening, and a policy of mandatory disclosure; and pursue transparency in our research engagements through our commitment to the open publication of our research findings and recommendations, disclosure of the source of funding of published research, and policies to ensure intellectual independence. For more information, visit www.rand.org/about/principles.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.