Turning from Damage Caps to Information Disclosure: An Alternative to Tort Reform

Abstract

With the 2004 U.S. presidential election close at hand, George W. Bush and his Administration resurrected a previously-killed federal proposal to cap medical malpractice damage awards. The Bush Administration once again claimed that the United States is experiencing a medical malpractice insurance crisis and that frivolous medical malpractice lawsuits are the cause of this crisis. According to the current Administration, large jury awards lead to significant increases in medical malpractice insurance premiums, driving physicians from the practice of medicine. Indeed, an array of policymakers continue to argue that damage caps will quell sharply increasing medical malpractice premiums, despite the fact that empirical evidence regarding the impact of damage caps on premiums is inconclusive. This Case Study argues that imposing statutory caps on medical malpractice damages is not an effective method of remedying the medical malpractice insurance crisis; therefore, policymakers should consider alternatives to damage caps. In particular, evidence suggests that implementing mandatory disclosure of the contract terms between managed care organization (MCOs) and physicians for the provision of services to enrollees reduces medical malpractice insurance premiums.