Empirical Legal Analysis

Assessing the performance of legal institutions

Yun-chien Chang

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781317952169
• Edition: 1
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

This innovative volume explores empirical legal issues around the world. While legal studies have traditionally been worked on and of letters and with a normative bent, in recent years quantitative methods have gained traction by offering a brand new perspective of understanding law. That is, legal scholars have started to crunch numbers, not letters, to tease out the effects of law on the regulated industries, citizens, or judges in reality.

In this edited book, authors from leading institutions in the U.S., Europe, and Asia investigate legal issues in South Africa, Argentina, the U.S., Israel, Taiwan, and other countries. Using original data in a variety of statistical tools (from the most basic chi-square analysis to sophisticated two-stage least square regression models), contributors to this book look into the judicial behaviours in Taiwan and Israel, the determinants of constitutional judicial systems in 100 countries, and the effect of appellate court decisions on media competition. In addition, this book breaks new ground in informing important policy debates. Specifically, how long should we incarcerate criminals? Should the medical malpractice liability system be reformed? Do police reduce crime? Why is South Africa's democratic transition viable?

With solid data as evidence, this volume sheds new light on these issues from a road more and more frequently taken—what is known as "empirical legal studies/analysis." This book should be useful to students, practitioners and professors of law, economics and public policy in many countries who seek to understand their legal system from a different, and arguably more scientific, perspective.

2

Reality check

How malpractice facts changed malpractice liability theory

Jennifer Arlen¹

Introduction

States impose malpractice liability for medical negligence in order to induce medical providers to invest adequately in patient safety. The central challenge is how to structure liability to induce physicians and medical institutions to invest optimally in patient safety.

Scholars specializing in the economic analysis of law have long been at the forefront of efforts to analyze and reform medical malpractice liability. Initial efforts relied on the classic model of accidents. This produced a narrow and skeptical view of the role of malpractice liability and lent support to numerous efforts to curtail liability. Empirical legal studies has transformed the economic analysis of medical malpractice liability by altering our understanding of the central problems facing health care markets, and, in turn, has spurred theorists to develop a new model of malpractice liability. This new model, combined with the results of empirical analysis, has altered our understanding of the purposes of malpractice liability and reveals that many politically popular efforts to reform malpractice liability harm the people who are their purported intended beneficiaries, namely the patients and medical providers.

The traditional economic analysis of malpractice liability relies on the classic model of accidents. In this model, one party (here physicians) undertakes an activity that may injure another party (here patients). The injurer can reduce the risk of injury by investing in “care” (here treatment). Society wants potential injurers to make all cost-effective investments in care, and thus wants the injurer to select the level of care that maximizes social welfare. Liability is needed because injurers select the level of care that maximizes their own welfare. They thus take too little care when they bear the cost of care, but do not bear the cost of medical negligence. When properly designed, liability can remedy this problem by forcing injurers to pay for any injuries resulting from their failure to take optimal care.²

Scholars embracing this framework are, naturally, skeptical of malpractice liability. In this framework, liability is needed when physicians bear the cost of treatment, but is not needed when providers care about patients and do not bear the costs of “care”—as when patients are insured and medical providers can actually profit by providing higher quality treatment (care). Thus, in the case of patients with fee-for-service insurance, it would seem that the state need not intervene except in the case of incompetent (“bad apple”) physicians. Moreover, when malpractice is caused entirely by incompetent physicians, liability may not be needed if the state can adequately address the incompetent physician problem through licensing and regulation.³

Beyond this, the classic model promotes a skeptical view of malpractice liability because it implies that a well-functioning system will not generate successful malpractice cases in equilibrium. In the classic model, competent physicians should never be found negligent if the tort system functions properly because they are assumed to know when they are providing optimal care and providers facing optimal malpractice liability will never select negligent care if courts correctly apply the standard of care and impose the correct level of damages.⁴ Yet, competent physicians are regularly held liable for medical malpractice. This discrepancy would appear to suggest that malpractice is not functioning effectively and that most malpractice claims may be frivolous, brought by plaintiffs hoping to obtain large awards from pro-plaintiff, error-prone juries.⁵

Scholars adopting the traditional framework have naturally tended to embrace a skeptical view of the optimal scope of malpractice liability. In response, they have pushed for reforms designed to restrict the scope of malpractice liability, focusing on proposals designed to indirectly limit malpractice liability by allowing medical providers to offer patients contracts that restrict or eliminate patients’ right to sue providers for medical negligence.⁶ Similarly, state legislatures have embraced the idea that frivolous litigation and pro-plaintiff juries are the leading problems plaguing malpractice liability.⁷ In response, state after state has adopted reforms to curtail damages or to otherwise restrict suits.⁸

Empirical analysis has turned most of this conventional wisdom on its head. In so doing, it has demonstrated that many reforms favored by politicians and traditional scholars make patients and providers worse off.

Empirical analysis of medical error shows that the core premises underlying the traditional approach to malpractice liability are incorrect. Specifically, empirical analysis reveals that the traditional model of accidents does not capture the root causes of most medical error. The traditional model assumes that negligence results when an individual injurer knowingly decides to take suboptimal care.⁹ As applied to medicine, this framework assumes that medical negligence results from a decision by a medical provider to knowingly select a suboptimal treatment. Such a doctor is reasonably viewed as a “bad apple.” By contrast, empirical analysis reveals that patients regularly are injured by medical errors and that most medical errors are caused by otherwise competent medical providers. Moreover, medical errors generally are accidental, in the sense that the provider did not knowingly select an erroneous treatment.¹⁰ They occur because the physician accidentally misdiagnosed the patient, selected the wrong treatment, or provided the treatment incorrectly, often believing that he was providing appropriate care.¹¹ These accidental errors nevertheless warrant intervention because they are not inevitable. Instead they often result from doctors’ (and medical institutions’) failure to invest adequately in “expertise” (or “preventative interventions”)—defined as investments by the physician or medical institution in the provider’s capacity to correctly diagnose the patient, identify the correct treatment, and provide treatment without accidental preventable error.¹² These preventative interventions include investment by physicians and medical care institutions (hospitals) in medical expertise, procedures, supervision, and healthcare technology. This suggests that in order to optimally protect patients, malpractice liability must be designed to induce optimal investment by providers and medical institutions in expertise and various preventative interventions (including supervision, error detection/prevention systems—such as check lists—and healthcare technology).¹³ Accordingly, in order to determine the proper scope of liability, we need a model of malpractice liability that recognizes that medical providers can err accidentally and can reduce the probability of error through investments in expertise and other forms of prevention.

Responding to empirical analysis, scholars have developed a model of medical negligence that explicitly recognizes that medical providers can affect patient welfare through decisions about how much to invest in expertise (and other forms of prevention), as well as through decisions about whether to try to provide the optimal treatment.¹⁴ The latter decision determines whether the provider knowingly provides suboptimal care. The former investment determines the likelihood that the provider will err accidentally.¹⁵

Analysis of medical care markets employing this model reveals that optimal malpractice liability serves multiple goals: operating to regulate both investments in expertise and treatment choice. When patients are insured and medical providers are compassionate—in that they want to provide the right treatment—then providers will not deliberately provide suboptimal care, just as in the classic model. Nevertheless, unlike in the classic model, malpractice liability is still needed. Malpractice liability is needed—even if all physicians would happily provide the optimal treatment if they are able to correctly diagnose the patient and identify the optimal treatment—to ensure that physicians and institutions invest adequately in the expertise needed to enable them to determine and provide optimal treatment. Absent liability, physicians will not invest as much in expertise as patients want them to because physicians bear the full cost of expertise but do not obtain the full benefit.¹⁶ This result holds even when doctors are other-regarding and care about patients’ welfare—assuming, as is reasonable, that patients injured by medical error suffer more than their physicians (and thus have a higher willingness to pay to avoid error).¹⁷ This analysis also shows that medical care is more sensitive to the magnitude of expected damage awards than is implied by the classic model of torts.¹⁸

Empirical analysis not only has transformed malpractice liability scholarship by inducing a revision in the model of negligence, it also has dramatically altered the debate about optimal malpracti...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• List of tables
• List of contributors
• Foreword
• Introduction
• Africa
• North America
• South America
• Asia
• Israel
• Global
• Index