Medical Malpractice Reform Study Examines Impact of Noneconomic Damage Caps

A wooden gavel with a stethoscope wrapped around it and an abstract pink and white grid background

October 29, 2014

A wooden gavel with a stethoscope wrapped around it and an abstract pink and white grid background

Captives writing medical professional liability (MPL) coverage should read the new study, “Medical Malpractice Reform: Noneconomic Damage Caps Reduced Payments 15 Percent with Varied Effects by Specialty,” which was released by Health Affairs.

The study was made possible by the RAND Institute for Civil Justice, the National Institute on Aging, and the National Institutes of Health.

“This study sheds critical light on the fact that MPL reforms work well in keeping costs down and promoting greater access to health care,” stated Brian K. Atchinson, president and CEO, PIAA, in a press release praising the study. “In states without medical liability reform, the health care system is excessively expensive. Sensible reforms like a $250,000 cap on noneconomic damages are necessary to ensure that our health care resources are directed toward providing care to patients."

Among the other research conclusions:

The moderation in nationwide MPL claim payments coincided with the implementation of MPL reforms. “The national average payment stabilization appears to coincide with increases in the number of states with noneconomic damage caps in 2003,” said the study authors.

The findings are relevant to ongoing policy debates about the size of noneconomic damage caps. According to the study authors, “A proposed ballot initiative in California would raise the noneconomic damages cap from $250,000 to $1.1 million. This would exceed the typical policy limit … and would effectively eliminate the cap for the majority of cases.”

Noneconomic damage caps are particularly effective for medical specialties with high average payment sizes, such as pediatrics and obstetrics.

Data for the study was obtained from the PIAA Data Sharing Project (DSP), the largest ongoing, independent, MPL claims database. The DSP was essential to this new, more focused, and detailed analysis. Researchers analyzed more than 200,000 claims, which represent approximately one-fourth of medical liability claims in the United States. PIAA (originally Physician Insurers Association of America) is a leading association representing the MPL insurance community.

October 29, 2014