Damages caps in medical malpractice cases

Caps on medical malpractice damages mean lower insurance premiums for doctors, according to a new review from two Alabama universities.

“There's been substantial controversy over whether caps do what they're supposed to — reduce malpractice insurance premiums,” said lead author Leonard J. Nelson III, of the Cumberland School of Law at Samford University in Birmingham. “The rates of increase in malpractice insurance premiums are lower in states that have caps.”

In their analysis of 10 studies conducted since 1990, Nelson and co-authors from the Lister Hill Center for Health Policy at the University of Alabama found no evidence that caps affect consumers' health insurance costs.

However, they did say there is evidence of “small-to-modest effects” of damages caps on so-called defensive medicine and some evidence that more physicians will practice in areas where there are caps. Doctors practice defensive medicine when they avoid high-risk patients or procedures to reduce their exposure to malpractice suits.

The study appears in the latest issue of The Milbank Quarterly .

In one study that examined 12 years of data, researchers found that damages caps reduced premiums for general practitioners, general surgeons and OB/GYNs by 13.4 percent, 14.3 percent and 16.9 percent, respectively, in the short term and by 40 percent to 58 percent longer term.

Lower malpractice insurance premiums for physicians indirectly help patients, said David Studdert, adjunct professor at the Harvard School of Public Health.

“If doctors' fear of litigation, stimulated in part by pricey premiums, prompts them to deliver treatments and order tests designed to cover them — not improve the patient's care — then the patient may suffer,” Studdert said. “Lower premiums may, and probably do, reduce the incidence of such defensiveness.”

Nelson said that caps might have “some good effects,” but that “they can be unfair because people who are severely injured don't get adequately compensated.” One effect of caps, he said, is that they discourage lawsuits.

More than half of the states have damages caps. Thirteen states and the District of Columbia never passed laws instituting caps and they were ruled unconstitutional in nine others states.

The Milbank Quarterly : Contact Heidi Bresnahan, publications manager, at (212) 355-8400.

Nelson LJ, III, Morrisey MA, Kilgore ML. Damages caps in medical malpractice cases. The Milbank Quarterly 85(2), 2007.