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Courts, scheduled damages, and medical malpractice insurance

Paola Bertoli and Veronica Grembi

Empirical Economics, 2018, vol. 55, issue 2, No 19, 854 pages

Abstract: Abstract We study how the functioning of the judicial system affects the availability and affordability of medical liability insurance, as proxied by the number of insurers and the premiums paid. We use two unique datasets collected in Italy from 2000 to 2010. Using the first dataset—insurance contracts for hospitals—we estimate the average treatment effect of schedules on insurers and premiums paid, conditional on judicial efficiency and proxied by different measures. Our identification rests on the partial overlap between healthcare districts and judicial districts, meaning that the caseload of a court and malpractice events at the healthcare provider level are not perfectly correlated. On average, the adoption of schedules does not produce any significant effect on insurers or on premiums paid. However, adopting schedules has a robust and significant effect on the number of insurers, but only in inefficient courts. We further investigate these findings using a second dataset comprising 17,578 malpractice insurance claims. We find evidence of a composition effect among claims that is triggered by higher levels of judicial inefficiency: As a court’s inefficiency increases, the likelihood for a case to not be decided on the merits decreases and the levels of reserve and recovery per claim decrease.

Keywords: Medical liability insurance; Judicial inefficiency; Scheduled damages (search for similar items in EconPapers)
JEL-codes: I10 K32 K40 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s00181-017-1279-5

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