The efficiency of medical malpractice law: A new appraisal

Abstract

This paper analyzes the perception by researchers, public policy makers, and physicians that the medical malpractice system is in disarray and in need of reform. The perception of a medical malpractice crisis arose because of what was viewed as sudden and dramatic increases in physician liability for malpractice. Contrary to the common perception, however, previous research has shown that historical growth rates in physician liability are similar in magnitude to current growth rates. This paper focuses on explaining the conditions under which increased physician liability would be optimal. According to the theoretical model, increased physician liability would be optimal when (1) physicians become more adept at curing patients, especially by increased technological ability, (2) the costs of physicians' time increases, or (3) the cost to physicians of defending against malpractice claims decreases. The paper carefully examines the available historical evidence that indicates that these three reasons account for much of the increased liability of physicians in the United States. The finding that much of the historical increases in physician liability are consistent with the model, further questions the existence of a medical malpractice crisis.

Citation

Olsen, R.N. (2000), "The efficiency of medical malpractice law: A new appraisal", Research in Law and Economics (Research in Law and Economics, Vol. 19), Emerald Group Publishing Limited, Leeds, pp. 247-273. https://doi.org/10.1016/S0193-5895(00)19007-4