Another Way to Cut Medical Malpractice Damages?

By Christopher Robertson

To limit liability and increase predictability, scholars and policymakers have long focused on capping damages awards.  In particular, they have been worried that there are many runaway jury awards for non-economic damages (i.e., pain and suffering).  Because these are not based on tallies of medical bills or lost wages, these are the least predictable component of the jury’s award.   Still, statutory caps on damages effectively nullify the jury’s determination (and the trial judge’s oversight) of how much to compensate a plaintiff for pain and suffering.  The laws substitute an arbitrary maximum instead (which, in many states, has not adjusted with decades of inflation).

There is now a cottage industry of scholarship that tries to understand the effects of these state caps on payouts, the supply of physicians, liability insurance, economic damages awards, and the aggregate cost of medical care (which may decrease or increase).  (See a synthesis of the literature.)

In new work with John Cambpell and Bernard Chao, I study a different way to cabin jury awards for non-economic damages.  Rather than capping runaway awards ex post, some states have tried to prevent them in the first place, by manipulating what a jury hears in closing arguments.  

Our review of caselaw from all states and DC revealed that fifteen jurisdictions regulate the way that plaintiff attorneys can argue pain and suffering damages to the jury.  Thirteen of these states prevent the attorney from quantifying the years, days, and hours of suffering, which is known as a “per diem” argument. Of these, four states also prohibit attorneys from asking for a specific amount of pain and suffering damages (a “lump sum”), on the fear that such a demand could create an irrationally high anchor (a phenomenon we have studied in other work).  Two states allow per diem arguments, but prohibit lump sum requests.

Scholars could use our coding of these states to examine whether these legal variations affect jury awards or aggregate liability at the state level.  However, these states are quite different in a number of other ways, which would confound such an observational strategy, and it is difficult to tell whether the cases announcing these rules are changing or reflecting the preexisting local legal culture.  Instead, we used a randomized mock jury experiment to examine the effects of these three different regimes (alongside a fourth permissive regime, which exists in 24 states).

Long story short:   regulating attorney per diem arguments does not substantially reduce damages awards.  Or, to put our finding another way, jurors do not seem to be irrationally drawn towards per diem arguments, even though they can yield millions of minutes of suffering (and thus a potential anchor).  Interestingly, we did find that per diem arguments slightly improve the plaintiff’s chances of winning anything at all, perhaps by helping the juror understand the reality of plaintiff’s injury.    Check out the paper.

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