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Zenon Zabinski and Bernard Black, The Deterrent Effect of Tort Law: Evidence from Medical Malpractice Reform, available at SSRN.

In a provocative new piece, Zenon Zabinski and Bernard Black address one of the most stubborn questions within all of tort law: Does tort law deter? The idea of deterrence is so deeply embedded within tort law that it seems absurd that the answer isn’t clear cut. But alas, a full four decades after the law and economics movement propelled tort’s deterrent function onto center stage, the answer to the question has, so far, remained maddeningly inconclusive.

This is not for lack of effort or investigation. Indeed, over the past few decades, scholars have tried to assess tort’s deterrent function in a wide variety of contexts, using any number of methodologies, from interviews with organizational insiders, to targeted case studies, to experimental vignettes, to surveys to assess the behavior and motivations of everyone from physicians and corporate managers to in-house counsel and CEOs.

In addition, empirically-minded scholars have contributed to this sprawling literature, most notably by exploiting natural experiments. Thus, they’ve amassed data to evaluate external shocks to liability risk in “treated” environments to see whether accident rates go up when liability risk (for whatever reason) goes down.

One obvious natural experiment came along in the 1970s as various jurisdictions, both here and abroad, adopted automobile no-fault legislation. If deterrence works as law and economics scholars theorize, the shift to auto no-fault (which reduced the cost of negligent driving) should have resulted in more negligent driving, which in turn, should have resulted in a perceptible uptick in auto accidents. Whether it did, however, is hard to say. Examining accident rates in New Zealand and Quebec—jurisdictions with pure no-fault laws—some researchers have found that no-fault’s adoption was accompanied by a marked increase in motor vehicle fatalities. But other researchers, using U.S. state-level data and deploying ever-greater statistical sophistication, have found no effect. All told, after nearly a dozen runs at the question, the evidence is mixed, and tort law’s deterrent power in the motor vehicle context remains debatable.

Another external shock to the tort liability system involves medical malpractice—and is happening now. In their recent working paper, Zabinski and Black study the deterrent effect of medical malpractice litigation by examining whether a shock which reduced malpractice liability (namely, the enactment of caps on noneconomic damages) was accompanied by a meaningful increase in harm to hospitalized patients in affected states.

Specifically, Zabinski and Black use a very large data set to compare reported preventable adverse events in Florida, Georgia, Illinois, Texas, and South Carolina—the five “treated” states that enacted noneconomic damage caps between 2003 and 2005—as against twenty-six “control” states, which did not impose caps during the period. They find that the treated states’ adoption of damage caps was accompanied by a 10% to 15% increase in a broad range of reported avoidable iatrogenic injuries. This drop in liability risk followed by an increase in patient injury, they conclude, is “consistent with classic tort law deterrence theory—in which liability for harm induces greater care and relaxing liability leads to less care.”

Now, does this prove, once and for all, that tort law deters in the medical malpractice realm? Not by any stretch. For one, it is somewhat surprising that patient safety would deteriorate as liability risk falls. That’s because even those who believe that tort liability generally induces would-be tortfeasors to take cost-justified precautions may doubt deterrence’s efficient operation in the medical malpractice context, since negligent physicians don’t bear anything like the full cost of their carelessness. Full costs aren’t borne because not every victim of medical malpractice initiates a claim (only around 2% of negligently-injured patients sue); even when meritorious claims are initiated, they sometimes fail (one in six meritorious claims receives no payment); medical malpractice insurance is widespread (in most states, it’s compulsory); and an individual doctor’s medical malpractice insurance premium isn’t typically affected by her claims experience (meaning, careless doctors very rarely face financial penalties, even when liability is properly imposed). All this should, logically, muffle and distort tort law’s deterrent signal.

Also confounding matters, physicians, taught to “do no harm,” have lots of moral, ethical, and practical reasons to behave responsibly, quite apart from any distant threat of civil liability. There is some evidence that physicians are more responsive to the perceived, rather than to the real, liability environment—meaning that changes to the “real” liability environment might not much matter. And finally, many experts believe that, rather than promoting reasonable care, medical malpractice liability actually does the opposite by inhibiting error disclosure, thus driving mistakes underground. On that view, where there is more liability, we would expect more, rather than less, harm to the patient population.

Furthermore, the data on which Zabinski and Black rely in generating this surprising result is subject to various limitations. Their proxy for preventable iatrogenic injury (namely, Patient Safety Indicators (PSIs), developed by the Agency for Healthcare Research and Quality) relies on hospital billing records and is, they readily admit, under-inclusive. Further, though their results are quite consistent across PSIs and also across states, they concede: “It is possible that some change in the healthcare or regulatory environment, other than med mal reform, is the true driver of the apparent decline in inpatient safety in our . . . reform states.”

Also true, past studies don’t necessarily comport with Zabinski and Black’s finding. Indeed, as Zabinski and Black explain, prior research comparing medical malpractice reforms to patient safety measures has yielded only mixed results. This could be because previous research has tended to focus on patient mortality—and to the extent damage caps cause a deterioration in health care quality, Zabinski and Black agree that the deterioration is not reflected in a perceptible uptick in fatality rates. (In their words: “[W]e find evidence that hospitals and physicians make more mistakes after med mal reform, but the mistakes are usually not serious enough to result in death.”) Or it may be due to the fact that past research has zeroed in on the immediate post-reform period (i.e., right after the cap is imposed), while Zabinski and Black find that “[t]he drop in care quality occurs gradually.” Alternatively, of course, perhaps previous research got it right—capturing something essential Zabinski and Black miss. It’s too soon to know for sure.

Still, though it won’t be the last word, the Zabinski and Black paper marks an intriguing and ambitious contribution. Taking a run at one of the most persistent questions in all of tort law, it enriches our understanding of tort law’s deterrent function, adds to our understanding of the social utility of now-prevalent reforms to limit medical malpractice liability risk, and helps to usher in a promising new era of sophisticated empirical inquiry in this age of big data and massive computing capability.

Cite as: Nora Freeman Engstrom, Big Data and Deterrence, JOTWELL (March 4, 2015) (reviewing Zenon Zabinski and Bernard Black, The Deterrent Effect of Tort Law: Evidence from Medical Malpractice Reform, available at SSRN),