Direct Regulation of Medical Malpractice Premiums: The Least Dangerous Reform

Abstract

Medical malpractice is a wrong that society tries to prevent, in part, through its tort system. Like all tort awards, medical malpractice verdicts serve two societal goals: deterrence and victim compensation. Unlike other torts, however, medical malpractice operates in the arena of health care and is therefore the subject of tremendous scrutiny. In response to a perception that medical malpractice lawsuits have an adverse effect on both health care access and health care cost, lawmakers across the country have set their attention on reforming the medical malpractice system. Common reforms change the tort litigation landscape by affecting the ability of plaintiffs to (1) initiate litigation (e.g., reducing the statute of limitations or requiring plaintiffs to obtain certification from experts that their claims have merit); or, (2) litigate the issues (e.g., changing expert testimony requirements); or, most commonly, (3) be compensated upon a verdict or settlement in their favor (e.g. capping damages, limiting joint and several liability, capping attorneys’ fees). Many of these reforms—most notably, damage caps—retard the traditional tort goals of victim compensation and deterrence and impose a substantial cost on the state. This note argues for an alternative reform: direct regulation of malpractice insurance companies and the premiums they charge.