New York University Public Law and Legal Theory Working Papers

Document Type

Article

Comments

in 2011 EMPIRICAL STUDIES OF JUDICIAL SYSTEMS, Yun-chien Chang ed., 2013

Abstract

Empirical legal studies has transformed economic analysis of malpractice liability. Until recently, economic analysis of malpractice liability has been based on the traditional model of accidents. This model supports the conclusion that malpractice liability may not be needed if health insurers, not physicians, bear treatment costs. Moreover, this analysis implies that even when liability is welfare-enhancing, it need not be mandatory if patients are informed about the costs and benefits of liability. Empirical analysis of medical errors reveals that we cannot rely on the simple model of accidents to analyze optimal malpractice liability because patient safety depends on two different care decisions, only one of which is properly captured by the traditional model. Expanding the model to account for the two distinct ways that physicians protect patients reveals that malpractice liability is needed even when doctors want to select the right treatment. It also reveals why contractual malpractice liability is inefficient even when patients are informed about the costs and benefits of liability.

Date of Authorship for this Version

4-2013

Keywords

Torts, Malpractice Liability, Contractual Liability, Medical Error; Liability Reform, Damage Caps

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