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Journal of Law, Economics, and Organization Advance Access published online on September 7, 2009
Journal of Law, Economics, and Organization, doi:10.1093/jleo/ewp022
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© The Author 2009. Published by Oxford University Press on behalf of Yale University. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

Noneconomic Damage Caps and Medical Malpractice Claim Frequency: A Policy Endogeneity Approach

Christine Piette Durrance*

University of North Carolina-Chapel Hill

* Department of Public Policy, University of North Carolina-Chapel Hill, Campus Box 3435, Chapel Hill, NC 27599, USA. Email: christine.durrance{at}unc.edu.

Medical malpractice has received much attention in the media with highly publicized jury awards and reported consequences of excessive litigation. Health care and medical malpractice remain a prominent issue, especially in the current political climate. Policy endogeneity, however, plagues most analyses of various federal, state, or local policies. In this article, I analyze the effect of noneconomic damage caps on the frequency of positive payment medical malpractice claims, recognizing that these laws are likely endogenous. I construct a unique instrument using past and current values of state political composition and other factors. In contrast to previous literature, I find no evidence that caps on noneconomic damages are associated with a reduction in medical malpractice positive payment claim frequency. (JEL K13, I18)


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