Damages Caps in Medical Malpractice Cases

This article contains a review of the empirical literature on the effects of capping jury awards in medical malpractice cases. The authors consider three main questions: whether damages caps reduce the cost of medical liability insurance, improve access to medical care and/or lower the cost of health insurance. The article summarizes the research on damages caps and explores the impact of these studies on policy decisions by courts and legislatures. With the sharp increase in medical malpractice premiums, interest in this topic has revived. Considering empirical analyses conducted since 1990, the authors conclude that malpractice premiums are lower in the presence of damages caps. Their effect, however, on the practice of defensive medicine, physician's location decisions and the cost of health care to consumers are less clear. The one study that considered the issue of whether consumers benefited from lower health insurance premiums as a result of damages caps found no impact. There is, however, some evidence to suggest that caps expand the available supply of physicians. Some state courts have ignored the empirical evidence that caps are effective.

The authors suggest the courts and legislative policy-makers should recognize that damages caps do achieve some of their purported purposes, but the limitations on awards for seriously injured victims may not be justified by the possibility of lower health care costs.