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Explores four questions regarding the impact of medical malpractice liability costs by analyzing data from a variety of sources. Examined are differences between states and overtime in malpractice payments and premiums, the physician workforce, use of and spending on medical procedures, and health insurance premiums. Findings indicate that indirect and anecdotal evidence on the effects may be misleading. Increases in malpractice payments do not seem to be driving premium increases. Increases in malpractice costs do not seem to affect the overall size of the physician workforce, although they may affect some subsets of the population more severely. The strongest effect of greater malpractice pressures is found in the increases use of imaging services, but little evidence is found of increased use of major surgical procedures. It is concluded that state-level tort reform is unlikely to affect medicine by averting local physician shortages.

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To describe the malpractice environment as it relates to defensive medicine, the authors studied omission-related claims from a large physician-owned malpractice insurer covering 70 percent of physicians in a northeastern state. During a 12-year period (1977-1989), claims resulting from alleged diagnostic omissions were considered important in less than 9 percent of claims and of central importance in 4 percent. Compared with other claim types, omission-related claims were more likely to be paid, had a higher median payment, and were more often associated with significant patient injury or death; the association with more frequent payments remained after controlling for physician specialty, geographic region, and degree of patient injury. Malpractice claims alleging diagnostic and monitoring omissions are relatively uncommon but appear difficult to defend relative to other claim types. Taken in light of the changing health care environment, these results highlight the limits of defensive medicine and support an expanded focus for medical liability reform.

AbstractWe analyze different scenarios of defensive medicine in a novel framework based on game theory and network analysis, where links in the network represent healing relationships between a physician and a patient. The physician should choose between providing the optimal treatment or an inferior one, which can amount to practicing defensive medicine. The patient should choose whether to litigate or not if an adverse event occurs. A major result of such analysis is that the steady state does not depend on the litigiousness of the initial system or the initial distribution of strategies among physicians or the distribution of patients over physicians. Moreover, reaching a virtuous steady state or an entirely defensive one appears to be independent of the fact that patients take into account the quality of treatments directly or they rely merely on popularity when choosing their physicians.

We estimate the extent of defensive medicine by physicians during labor and delivery, drawing on a novel and significant source of variation in liability pressure. In particular, we embrace the no-liability counterfactual made possible by the structure of liability rules in the Military Heath System. Active-duty patients seeking treatment from military facilities cannot sue for harms resulting from negligent care, while protections are provided to dependents treated at military facilities and to all patients—active-duty or not—who receive care from civilian facilities. Drawing on this variation and addressing endogeneity in the choice of treatment location by estimating mother fixed effects specifications and by exploiting exogenous shocks to care location choices stemming from base-hospital closures, we find suggestive evidence that liability immunity increases cesarean utilization and treatment intensity during childbirth, with no measurable negative effect on patient outcomes.