Settlement out of court: the disposition of medical malpractice claims

by Patricia Munch Danzon, Lee A. Lillard


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The main purpose of this paper is to present empirical estimates of a model of the disposition of claims through the courts. A second purpose of the paper is to provide evidence relevant to the policy debate over tort reform. The theoretical model is described in Sec. 2. Section 3 discusses estimation and describes the data. Section 4 reports empirical results, including goodness of fit of the model and parameter estimates. Section 5 provides estimates of the probability of winning at verdict for cases settled out of court. Section 6 analyzes the discrepancy between mean award at verdict and settlement and the extremely skewed distribution of dollar payout. Section 7 discusses the effects of actual and hypothetical tort reforms and simulates their ramifications on the entire disposition process. Section 8 contains concluding remarks.

This report is part of the RAND Corporation Paper series. The paper was a product of the RAND Corporation from 1948 to 2003 that captured speeches, memorials, and derivative research, usually prepared on authors' own time and meant to be the scholarly or scientific contribution of individual authors to their professional fields. Papers were less formal than reports and did not require rigorous peer review.

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