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

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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.

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