TY  - JOUR
AU  - Farber,Henry S.
AU  - White,Michelle J.
TI  - Medical Malpractice:  An Empirical Examination of the Litigation        Process
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3428
PY  - 1990
Y2  - September 1990
UR  - http://www.nber.org/papers/w3428
L1  - http://www.nber.org/papers/w3428.pdf
N1  - Author contact info:
Henry S. Farber
Industrial Relations Section
Firestone Library
Princeton University
Princeton, NJ 08544-2098
Tel: 609/258-4044
Fax: 609/258-2907
E-Mail: farber@princeton.edu

Michelle J. White
Department of Economics
University of California, San Diego
La Jolla, CA  92093-0508
Tel: 858/534-2783
Fax: 858/534-7040
E-Mail: miwhite@ucsd.edu
AB  - New data on medical malpractice claims against a single hospital where a direct measure of the quality of medical care is available are used to address 1) the specific question of the role of the negligence rule in the dispute settlement process in medical malpractice, and 2) the general question of how the process of negotiation and dispute resolution in medical malpractice operates with regard to both the behavior of the parties and the outcome of the process. We find that the quality of medical care is an extremely important determinant of deferdants' medical malpractice liability. More generally, we find that the data are consistent with a model where 1) the plaintiff is not well informed ex ante about the likelinood of negligence and 2) the ex ante expected value to the plaintiff of a suit is high relative to the costs of filing a suit and getting more information. Thus, suits are filed even where there is no concrete reason to believe there has been negligence, and virtually all suits are either dropped or settled based on the information gained after filing. We conclude that the filing of suits that appear, ex post, to be nuisance suits can be rational eguilibrium behavior, ex ante, where there is incomplete information about care quality. 
ER  -