Document Type

Working Paper

Publication Date

12-12-2016

SSRN Discipline

Legal Scholarship Network; HEN Subject Matter eJournals; Law & Society eJournals; Law & Society: Private Law eJournals; LSN Subject Matter eJournals; Health Economics Network; Political Science Network; Management Research Network; Health Law eJournals

Abstract

Based on case studies indicating that apologies from physicians to patients can promote healing understanding and dispute resolution 38 states have sought to reduce litigation and medical malpractice liability by enacting apology laws Apology laws facilitate apologies by making them inadmissible in subsequent malpractice trials The underlying assumption regarding the potential efficacy of these laws is that after receiving an apology patients will be less likely to pursue a malpractice claim and will be more likely to settle those claims that are filed However once a patient has been made aware that the physician has committed a medical error the patient's incentive to pursue a claim may increase even though the apology itself cannot be introduced as evidence The net effect on medical malpractice liability costs could be in either direction Despite apology laws' status as the most popular recently enacted tort reform and one of the most widespread tort reforms in the country there is little evidence that they achieve their goal of litigation reduction This Article provides critical new evidence on the role of apology laws by examining a dataset of malpractice claims obtained directly from a large national malpractice insurer This dataset includes substantially more information than is publicly available and thus presents a unique opportunity to understand the effect of apology laws on the entire litigation landscape in ways that are not possible using publicly available data Decomposing medical malpractice liability risk into the frequency of claims and the magnitude of those claims we examine the malpractice claims against 90 of physicians in the country who practice within a single specialty over an eightyear period The analysis demonstrates that for physicians who regularly perform surgery which is a context in which patients should be aware of potential risks apology laws do not have a substantial effect on the probability of facing a claim or the average payment made to resolve a claim However in situations of asymmetric information in which the physician has greater knowledge of the risks the apology provides information that the patient does not have thus providing a possible incentive to pursue a claim even though the apology cannot be introduced as evidence For nonsurgeons we find that apology laws increase the probability of facing a lawsuit and increase the average payment made to resolve a claim which is consistent with the presence of asymmetric information with respect to nonsurgeons Overall our findings indicate that on balance apology laws increase rather than limit medical malpractice liability risk

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