Economic Issues in Medical Malpractice: Dispute Resolution and the Shift to No-Fault

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Medical malpractice represents the intersection of patient concerns about the quality of medical care with the use of law to redress a perceived grievance. When patients are dissatisfied with the quality of the medical care they receive, they can either register a complaint at a hospital or file a lawsuit. If they register a complaint, the hospital's complaints office may respond by offering a forum for an individual to air a grievance, providing compensation in the form of forgiveness of a patient's outstanding bill, or by offering cash compensation. If an offer of compensation is made, the patient has a choice between accepting the offer or rejecting it, in which case (s)he may file a medical malpractice lawsuit. If no offer of compensation is made, the patient has a choice between filing a lawsuit or taking no further action. To date, very little research has been completed which seeks to examine how complaints evolve into settlements, and into medical malpractice lawsuits. Dr. White will fill this gap in medical malpractice research by collecting a rich set of data on complaints registered in a specific hospital and merging it with an existing data set concerning medical malpractice lawsuits from the same source. Utilizing the merged data set, models will be constructed to analyze what determines whether complaints evolve into lawsuits, assess which side benefits most from resolving disputes early, and estimate whether negligence matters in determining the hospital's expected liability at the complaint stage of the dispute management process. This phase of the project should provide considerable insight into the pre-litigation dispute resolution process in general and how the early stages of dispute processing influence the evolution of complaints into settlements or into lawsuits. Using a simulation approach, the second phase of the project investigates the costs and benefits of shifting from the current system of liability in medical malpractice to a hypothetical no- fault system. This phase of the project will investigate a series of important policy questions, including an estimate of the effect of a shift to no-fault on the level of total compensation paid and the cost of administering the compensation system.