The determinants of medical malpractice incidents: Theory of contingency fees and empirical evidence

Summary A common criticism of the contingent fee arrangement is that it increases the total number of claims [Dietzet al., 1973, pp. 87–167]. This is true. But without contingent fees, risk averse plaintiffs would not offer the fair value of an incident and, as a consequence, would bear more of the cost of medical malpractice. This conclusion was reached in Section II by examining an expected utility model of plaintiff's decision-making.Section III presented empirical evidence on the determinants of malpractice incidentsper capita. High income, exposure to surgical operations, and a favorable legal system encourage incidents. The supply price of lawyers' time is negative and significant.This project was supported by Grant Number HS 01971 to the Health Services Research Center of the University of North Carolina at Chapel Hill from the National Center for Health Services Research, HRA.