David A. Hyman
, JD, MD
Richard W. and Marie L. Corman Professor
Director, Epstein Program in Health Law and Policy
University of Illinois College of Law

Estimating The Effect of Damage Caps in Medical Malpractice Cases: Evidence from Texas


December 7, 2007
12:00-1:30 PM
Colonial Penn Center Auditorium

Abstract

Biosketch:
Considered to be one of the country’s top health law scholars, Professor David Hyman, the Richard W. and Marie L. Corman Professor, teaches civil procedure and health care regulation. His principal research interests are the regulation of health care financing and delivery and empirical law and economics. Professor Hyman has published articles on a wide range of subjects, including medical malpractice, managed care, consumer protection, narrative, professional responsibility, tax exemption, and civil procedure.

Professor Hyman has been a Visiting Professor at the University of Texas and George Washington University Schools of Law, and a Professor at the University of Maryland School of Law. He is a member of the American Law Institute and was the chair of the section of law and social sciences of the American Association of Law Schools.

Professor Hyman served for three years as Special Counsel to the Federal Trade Commission, where he was responsible for coordinating hearings and a major report on health care and competition law and policy. He is on the editorial board of the American Journal of Law & Medicine, and is an adjunct scholar at the Cato Institute. He is admitted to practice before the 6th, 7th and 10th Circuit Courts of Appeal, and the United States Tax Court, and is a member of the bars of Illinois and the District of Columbia.

Professor Hyman earned a B.A., M.D., and J.D. from the University of Chicago.


Abstract:
Using claim-level data, we simulate the effect of Texas's 2003 cap on non-economic damages on jury verdicts, post-verdict payouts, and settlements in medical malpractice cases closed during 1988-2004. For pro-plaintiff jury verdicts, the cap affects 47% of verdicts, and reduces mean allowed non-economic damages, mean allowed verdict, and mean payout by 73%, 37%, and 26%, respectively. In total, the non-econ cap reduces adjusted verdicts by $156M, but predicted payouts by only $60M. The impact on payouts is smaller because a substantial portion of the above-cap damage awards were not being paid to begin with. In cases settled without trial, the non-econ cap affects 35% of cases; and reduces predicted mean payout for non-economic damages (predicted mean total payout) by 43% (20%). The non-econ cap has a smaller impact on settled cases than tried cases because settled cases tend to involve smaller payouts.

The impact of the non-econ cap varies across plaintiff categories. Deceased, unemployed, and elderly plaintiffs suffer a larger percentage reduction in payouts than living, employed, and non-elderly plaintiffs, these differences are statistically significant for the first two comparisons.

We also simulate the effects of different caps, and find substantial differences in cap stringency across states. Different caps reduce aggregate payouts in tried cases (settled cases) by between 5% and 58% (0.2% and 35%). Caps on total damages have especially large effects.

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