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Medical Malpractice in Michigan: An Economic Analysis

We analyzed the factors determining the amount of the recovery on claims based on medical malpractice. Our data set, which previously was not explored, consists of 20,428 claims arising within Michigan that were closed between 1978 and 1990. During this period, major changes were made in the law governing malpractice litigation. We determine the effect of these changes and of various other factors affecting medical malpractice claims. We analyze the effect of a statute that was designed to curtail "forum shopping" by attorneys for plaintiffs. This statute was initially successful in curbing such activity, but its effect seems to be diminishing. In addition, we compare mediation awards with settlement payments, and settlement payments with the expected value of claims in litigation. Evidence suggests that a mediation award is the mediation panel’s estimate of a settlement payment appropriate for the case, and that cases are settled for substantially less than their expected value at trial.