Male and Female Recoveries in Medical Malpractice Cases.
by Walter Simmons , Rosemarie Emanuele Abstract This study analyzes male and female recovery resulting from medical malpractice injuries to discern the importance to the recovery differential of gender differences in recoveries for medical malpractice injuries. We find that the pattern of recoveries follows one similar to that found in studying wage differentials between males and females. Differences in the relative magnitudes of foregone earnings and nonmarket loses are reflected in the composition of recoveries. In addition, we find a recovery gap in which females receive substantially less in recoveries when they receive male's average compensation for medical malpractice injuries. However, only a small portion of the male and female recovery differential is explained by the characteristics of the claims, leaving a substantial portion of the differential unexplained. Keywords: malpractice, litigation, recoveries, decomposition INTRODUCTION The growth in the number and size of medical malpractice claims has been a major public policy issue for almost thirty years. Concern over the issue led to two national malpractice insurance crises in the mid 1970s and 1980s, and a variety of tort reforms. The legislative reforms, which were enacted in all 50 states and the District of Columbia, addressed a variety of problems such as, alternative dispute resolution mechanisms, certificates of merit, limits on attorney fees, public access to National Practitioner Data Bank information on repeat offenders, collateral source offsets, periodic payment of awards, limits on damage awards, use of clinical practice guidelines, and enterprise liability. Medical malpractice litigation has become one of the largest components of the tort system and is widely held responsible in part for the high cost of health care both because its expense is passed along directly in insurance rates and because it compels physicians to practice costly defensive medicine (Harvard Medical Practice Study 1991). There is now a substantial body of work that evaluates the effects of tort reform legislation and other variables on medical malpractice legislation. Danzon (1984, 1986) analyzed the contributions of various factors, including tort reform laws, to changes in the frequency and severity of malpractice claims over time and across states. Sloan et al. (1989) used malpractice cases throughout the United States to analyze the effects of various tort reform laws on the probability that there will be a recovery, the amount of the recovery, and the time required for a claim to be resolved. Coyte et al. (1991) studied the determinants of the frequency and severity of Canadian malpractice claims. Barker (1992) used statewide data to analyze the effect of tort reforms on the relative price of malpractice insurance. Farber and White (1991), analyzing malpractice claims against a single hospital, found that the quality of medical care was important in determining malpractice liability, whether there is a recovery and, if so, the amount paid. Bovbjerg (1989) provides a useful survey of all types of legislation that have affected medical malpractice; laws concerning insurance regulation, the quality of medical care, and tort reform. Despite the enormous public and legislative interest about medical malpractice claims, developments in legal doctrines and legal procedures have not been able to comprehensively address the variety of medical malpractice problems. Research on the connection between negligent medical care and legal liability is essential in improving equitable fault determination and standards. There are several commonly held beliefs about the current legal processes relating to medical liability and malpractice. One theory proposes that lay juries are not capable of fact-finding in complicated medical cases. Another speculates that procedural rules and requirements for establishing legal causation are overly complex and do not include the scientific methodology necessary for accurate determination of medical causation, while yet another says that the legal process does not effectively reject merit less claims, while significant numbers of individuals injured by negligent medical care do not file claims. Other theories claim that compensation awards to persons injured by negligent medical care are not equitable, consistent, efficient, or predictable. One of the issues that have not been at the forefront of the medical malpractice debate is the gender difference in recoveries resulting from medical malpractice claims. In fact, relatively little empirical analysis and public debate have addressed the issue of gender differences in medical malpractice recoveries. Indeed, malpractice litigation and the recoveries resulting from them continues to be controversial. One of the main functions of the litigation system in resolving medical malpractice claims is to deter injuries and to compensate victims. Calculations of damages resulting from medical negligence are expected to follow general rules (Brookshire 1987, Blumstein et al. 1991). In determining individual loss factors such as market loss, non-market loss, and pain and suffering are considered. However, the tort system expects the litigation process to avoid the over and under estimates of loss. Although calculations of damages are expected to follow general rules, the lack of detailed information to guide the calculation of damages, coupled with the fact that many assumptions underlie almost any calculations of loss can result in extremely varied outcomes across comparable cases. Such variability introduces inequities in recoveries and may also encourage nuisance suits (Cooter and Rubinfeld 1989). The issue of whether there is a difference between recoveries in similar cases involving men and women should provide some insights and implications about the efficiency and fairness of the medical malpractice system. If such a difference exists, it may arise from different opportunity costs for time by men and women or a difference in life expectancies. It may, however, indicate a difference in the value society puts on the lives and livelihood of women. A difference in life expectancies would tend to give women greater recoveries, while differences in opportunity costs would tend to give women smaller recoveries. Whether there is a differential, and if so, in what direction, is therefore an empirical question. We examine the data to determine if the litigation system may perceive the opportunity cost of women and men differently, and award substantially different amounts for similar medical malpractice injuries. We also evaluate the merits of the litigation system in terms of its fairness in disposing of medical malpractice claims. OVERVIEW OF THE MEDICAL MALPRACTICE SYSTEM The story of the medical malpractice insurance crisis has been at the forefront of health care debates and tort legislation over the past three decades. The American Medical Association (AMA) estimated that as recently as the late 1950s only one doctor in seven had ever faced a malpractice claim in their entire professional career. In general, large recoveries were uncommon, and malpractice insurance premiums were affordably priced. Policymakers started to take notice of medical malpractice insurance problems in the late 1960s, as insurance and medical professionals became concerned about the rising frequency of claims and costs of insurance. Congressional hearing resulted, and an executive commission was convened, but found no crisis (Bovbjerb 1989). The first major malpractice crisis was declared in 1974-75. Many sets of interrelated events initiated the problems and compelled public attention. For reasons that are still poorly understood, the frequency and severity of malpractice claims, which had risen only modestly through the 1960s, increased sharply in the mid 1970s. (1) During that period many medical malpractice insurance companies withdrew from the market or announced very large price increases. Some physicians in states such as California and New York could not find coverage at virtually any price. The lack of availability forced many physicians to seek regulatory relief from rate hikes as well as reform of tort law and the liability insurance system. The mid to late 1970s saw an abundance of tort legislation across the country. However, in the mid 1980s another component of medical malpractice problems emerged. Some believe that the problems in the 1980s were more one of "affordability" than of availability. In the 1980s the problems of non-medical insured's were at center stage. Day care centers, liquor stores, city council members, and, most ordinary seekers after liability insurance were finding coverage expensive and difficult to obtain (Bovbjerb 1989). In the 1990s the problems of increased frequency and severity persisted but emphasis shifted to problems such as the quality of care, and issues such as defensive medicine, caps on recoveries, alternative disposition methods, and physicians' fees and incomes became the dominant theme. In general, the medical malpractice problems over the past three decades resulted in all 50 states passing some form of legislations to address problems such as, insurance availability, medical quality, and legal rules and process. However, there are some persistent issues that remain prominent. Empirical analysis has shown strong effects from some of the changes, such as limitations on recoveries, but the issue of fairness to claimants and others with medical malpractice injuries is still unresolved. The analysis in this study provides some evidence and implications about gender differences in medical malpractice recoveries. DATA DESCRIPTION The data analyzed in this study consist of closed medical malpractice claims from the Michigan's Bureau of Health Services (MBHS). Since 1987, the Michigan Legislature has required all medical malpractice insurers, self insurers, and both plaintiffs' and defendants" attorneys to file closed claims with the MBRS Malpractice Unit. Michigan's experience is important because it is somewhat average. Its experience is a microcosm that closely reflects the changes in medical malpractice litigation that occurred throughout the United States during the period covered by the data. As was noted in the previous section, nearly all states went through the same phases of an initial malpractice crisis from 1974-75, when commercial insurers withdrew from the market, and during a subsequent crisis in the 1980s resulting from substantial increases in the frequency and severity of claims. In effect, our study of gender differences in medical malpractice recoveries in Michigan provides an economic analysis of gender differences in medical malpractice claims in the United States as it evolved during the period of the data. Moreover, the issue that we consider here, gender differences in medical malpractice recoveries, transcends state borders. The data set which contains information on cases that were closed between 1986 and 1991, provides detailed description about the characteristics of the dispute and disputants, such as the name and license number of the defendants, the severity of the injury, the type of insurance the claimant had, the amount of recovery, and the manner in which the claims were resolved. A description of the variables and their respective means are presented in Table 1. Severity of injury is measured on a 9-point scale. Level 1 (emotional distress only) is the least severe type of injury and level 9 (death) the most severe. In general, the amount of recovery is likely to be higher for more severe injuries from which medical expenses and loss of income are greater than in less severe cases. For cases resulting in death, the future medical expenses are zero, so damages are expected to be lower than in cases involving more serious types of injuries such as those labeled as permanent grave. Table 1 shows that awards for both female and male increased with the higher levels of severity. Plaintiffs who suffered permanent major and grave injuries were awarded larger damages than death cases, because of the higher opportunity cost of lost wages and future medical costs. The findings here are consistent with those of other studies. For example, a Harvard Medical study (Taragin et al. 1992) found that the amount of recovery for malpractice claims correlated closely with the severity of injury, even when the 9 levels of severity were grouped as low severity, medium severity, and high severity levels. We coded three dichotomous indicators to represent Medicaid, Medicare, and Private insurance, with other or no insurance as the reference group. We belief that these variables should be related to the plaintiffs level of income. Payment by Medicaid may indicate a low income, and payment by health insurance will generally indicate a high income. Using the type of insurance as a proxy for income introduces the possibility of measurement error, thus interpretation of this variable should consider this limitation. For example, the insurance types can also proxy age (although this is included as a direct measure), disability, and being in certain industries or having certain preexisting conditions that make it difficult to obtain private health insurance. More specifically, the insurance coverage of a plaintiff may be associated with the employment of the spouse. Hence, a worker in a low paying job may have excellent health coverage (private insurance) as a result of a high paying job for the spouse. The results in Table 1 show that men with Medicaid and private health insurance received larger awards than women. However, women with Medicare and other types of insurance received larger mean awards. The size of the award should be positively related to the life expectancy of the plaintiff. Ceteris paribus, we can expect younger plaintiffs to receive larger recoveries than older plaintiffs. Three variables capturing the manner in which a malpractice claim is resolved are included as independent variables. A claim can be resolved through mandatory mediation, through voluntary negotiated settlement, and through trial verdict. In general most claims are disposed through some form of settlement with approximately 10 percent going to trial (Payne et al. 1985, Danzon and Lillard 1985, Priest and Klein 1985, Taragin et al. 1992). THEORETICAL AND EMPIRICAL ANALYSIS Standard litigation analysis has produced theoretical and empirical studies on how and why legal disputes are settled and litigated (Landes 1971, Gould 1973, Posner 1973, Shavell 1982, Priest and Klein 1984, Cooter and Rubinfeld 1989). The models regard the litigation process as a choice between a certain settlement and an uncertain resolution of the dispute at trial. They also described the process whereby the parties in a dispute formed their expectations about trial in deciding whether to accept or reject a settlement offer. In these models a party's decision to settle or to litigate is guided by the objective of maximizing a plaintiffs net return or minimizing a defendant's total loss. In the litigation of medical malpractice claims standards exist for resolving disputes and courts apply specific standards in deciding disputes. These standards, which are based on legal rules and precedent, are not necessarily uniform across courts, but the substantive issues of the process are assumed to be applied consistently by the courts. In medical malpractice cases the decision standard in determining the outcome of a medical malpractice claim is based on the negligence rule. The negligence rule requires health care providers to provide a minimum quality level of care (Danzon 1985, Shavell 1987, Farber and White 1991). In medical malpractice breach of accepted medical practices by a health care provider is considered professional negligence. Medical malpractice results when it can be determined that the particular standard of care provided does not comply with any of the accepted standards of care and consequently resulted in injury. To determine the effects of various factors on the recovery amount we estimate a single equation model for both male and female. The estimation is done by ordinary least square on the log of total recovery. The distributions of log recoveries are a better approximation to the normal distribution than the distribution of recoveries (Farber and White 1991). The model expresses the natural log of recovery (Ln R) as a linear function of a vector of k independent variables (Xk): (1) Ln R = [SIGMA] [B.sub.k][X.sub.k] + [e.sub.1])] where [B.sub.k] represent k coefficients to be estimated, and e is a normally distributed error term. The independent variables include severity of injury measured on a nine point scale, age, two dummy variables to capture the stage of resolution, and three dummy variables to capture type of medical insurance. Table 2 displays the estimated results for total recoveries. The coefficients for the severity dummy variables are to be interpreted in relation to the missing level, death. The signs of the coefficient adhere to the theoretical predictions, with negative coefficients for lower severity levels, such as emotional injury, and positive coefficients on the more severe levels of injury, such as permanent grave. The results are consistent with the findings that medical malpractice recoveries tend to increase with the level of severity (Sloan and Wert 1991). An interesting outcome is observed when one compares the significant levels for lower levels of injuries for male and female. The severity for lower levels of injury such as "emotional only" are highly significant for women but not for men. However, men with permanent major injuries have a significant advantage over women with similar injuries. This outcome may imply that judges and juries award compensation according to traditional perceptions of the division of labor between men and women. They may place a larger value on the domestic duties of women, and are more likely to award compensation to women who experience minor injuries and are diverted from domestic duties but not necessarily from earning income. They may also place a larger value on the earning power of men, discounting the earning potential of women and are therefore more likely to award recoveries for major injuries for men. In general, the standard analysis used in computing estimates of the costs of a medical malpractice claim does not only reflect assumptions made about future market and household productivity losses during an individual working life. Other relevant measures such as, future medical care, life expectancy (life tables), whether losses were discounted to present value, and, if so, which discount rate was used, are utilized (Sloan et al. 1991). Thus, the size of award can be related to life expectancy and the working life of the plaintiff. Medical injuries can extend beyond working life and are often based on life expectancy. For example, plaintiffs whose injuries result in permanent injuries such as paraplegia, quadriplegia, and even emotional damage, are compensated for loss of potential future income and also the ability to sustain themselves for the rest of their lives. In addition, assuming that the length of working lives between the two groups is the same may not alter gender compensation differences. In general, males have higher earnings losses over their working lives than females because of high rates of participation in the labor force and higher wage rates. The age variable is negatively correlated with recovery, indicating that younger plaintiffs are significantly more likely to receive recoveries. (2) The type of insurance indicates that private health insurance plays a more significant role in determining men's recovery while Medicaid is just marginally more significant in determining female recoveries. Both males and females are significantly more likely to resolve claims through settlement and trial than through a mandatory mediation process. (3) DECOMPOSING THE RECOVERIES DIFFERENTIAL This paper offers two empirical analyses of recoveries in medical malpractice cases. The first test presented above draws comparisons between male and female recoveries from the impact of identical variables. The second approach draws adjusted comparisons by asking what the recoveries of females would be if they faced the structure of recoveries that determine the recoveries of men. More specifically, we attempt to answer the question, by what percentage would female compensation change if they received men's compensation structure. Using the logarithmic recoveries differential, the raw compensation differential between men and women can be written as (2) Ln [R.sub.M] - Ln [R.sub.F] = [X.sub.M][[beta].sub.M] - [X.sub.F][[beta].sub.F] where X and [beta] are the vectors of mean levels of the independent variables and parameter estimates, and [R.sub.i] is the average logarithm of recoveries to sex group i. Equation 3 can be decomposed to (3) Ln [R.sub.M] - Ln [R.sub.F] = ([X.sub.M] - [X.sub.F])[[beta].sub.M]] + ([[beta].sub.M] - [[beta].sub.F])[X.sub.F] The first term on the right of equation 3 is the difference between the mean levels of claim characteristics. It is part of the recovery gap that is attributable to differences between males and females due to observed characteristics such as age and severity of injury. The second term on the right is the X weighted differences in parameter estimates. It is the portion of the gross recovery gap that cannot be attributed to differences between male and female in their observed characteristics, and is considered unexplained. (4) We find a recovery differential of approximately 28 percent between male and female awards. This means that female awards are 72 percent of male awards and it implies that females would experience an increase in recovery if they received male's average compensation for medical malpractice injures. We then decompose the compensation differential into a portion that is due to differences in characteristics between males and females, and a portion that remains unexplained. (5) The empirical framework used to address such question was developed by Oaxaca (1973) and Blinder (1973). Based on this model the raw compensation differential between males and females from equations 3 are presented in Table 3. The recovery gap that would result from this differential treatment of male and female claims is unobservable and can be attributed to many different factors. In the literature on labor market earnings many studies attribute the wage differential between men and women or between black and white either to discrimination or to unobservable differences in ability and skill level between the groups (Oaxaca and Ranson 1994, Card and Lemieux 1996). According to the results of our analysis in Table 3, the male and female recovery differential is substantially unexplained by differences in mean levels of characteristics between the two groups. Claim characteristics such as severity, age, and medical insurance generate only 0.00314 and -0.073 recovery differential when evaluated at male and female mean levels. Unexplained factors account for the residual of approximately 0.99686 and 1.073 percent of the recovery gap. These values are similar to those found in the literature on wage differentials between men and women (Kosters 1991). The fact that claims characteristics accounts for such small portion of medical malpractice injury is not a great surprise in light of the nature of the current litigation system. Many explanations can be given for the large unexplained portion. In general terms, controversy prevails about the accuracy and fairness of jury verdicts in medical malpractice cases. The law governing medical malpractice leaves considerable room for extraneous factors to influence jury valuation of cases, for the law of damages is incredibly vague and governed by ad hoc decisions. Jury instructions are mainly qualitative rather than quantitative, and the law lacks a specific mechanism for achieving consistency across cases (Bovbjerg and Metzloff 1991). As a result, unmeasurable factors such as jury sympathy with injured plaintiff's, and biased towards defendants with deep pockets may encourage higher awards for similar injuries. Another plausible reason for the large unexplained factor may be that variation in the valuation of injury may also result because plaintiff lawyers disproportionately select cases of uncertain liability where subjective damages are higher. One noted observation in the state of Michigan, from which the data was derived is that "Forum Shopping" (6) have resulted in legislation to restrict venue and prevent lawyers from finding cause to move cases to an area solely to obtain a larger recovery. SUMMARY AND CONCLUSION This study analyzes medical malpractice compensation for males and females with similar medical malpractice injuries. We estimate male and female recoveries equations to discern the importance to the recovery differential of gender differences in recoveries for medical malpractice injuries. We find that the pattern of recoveries follows one similar to that found in studying wage differentials between males and females. Differences in the relative magnitudes of foregone earnings and non-market losses are reflected in the composition of recoveries. Females receive significantly more recoveries for minor injuries involving more of an emotional nature, reflecting more anticipated non-market losses because of a greater number of non-market hours worked. Males recovered significantly more for more catastrophic injuries, reflecting their higher expected earnings losses because of high rates of participation in the labor force and higher wages. It also appears that the longer life expectancy of women has a small and perhaps negligible effect on the differential between male and female medical malpractice compensation. We find a recovery gap in which females receive substantially less in recoveries when they receive males' average compensation for medical injuries. However, only a small portion of the male and female recovery differential is explained by the characteristics of the claims, leaving over 90 percent of the differential as unexplained. There may be several possible reasons for the compensation differences between males and females. First, although non-market loss is fully accepted by economists, other participants in the dispute resolution process probably have not accepted this mechanism. Second, claimant females in particular, may elect to settle for less than the potential award at trial because of risk aversion or the substantial cost and delay incurred in bringing a case to trial. Third, legal rules, such as those limiting compensation for non-economic damages may lead to under compensating for females. Fourth, women plaintiffs may not be well represented by their attorneys. This may be because women do not have the economic power to hire the best attorneys or they may be more easily manipulated by their attorney and not push the case to its full potential. Although some medical malpractice cases take place on a contingency fee bases there are many factors that influence an attorney's decision to accept cases on a contingency basis. Attorneys are more likely to accept cases with a higher probability of winning large awards. Since, men in general, have greater potential market earning power than women, attorneys may consider it more productive to pursue the case of a male than that of a female. In addition, limitations on contingent fees for plaintiff's attorneys were enacted by several states. It is believed that limitations on contingent fees should lead attorneys to pursue fewer marginal claims (Danzon 1983). Finally, the "worthiness of the plaintiff" may result in judges and juries viewing women plaintiffs as less deserving of large compensation. This may imply that higher compensation will be given if the plaintiff is a male with a good lawyer. | |
Table 1. Variables, Definitions and Descriptive Statistics
Mean Mean
Variable Variable Description Recovery Recovery
Males Females
([X.sub.N]) ([X.sub.F])
Emotional only Fright, no physical 10.5882 9.2204
damage.
Temporary Lacerations, 8.5115 8.6678
insignificant concussions, minor
scars, rash. No delay.
Temporary Infections, misset 9.6460 9.7517
minor fracture, fall in
hospital.
Recovery delayed.
Temporary Burns, surgical material 10.2846 10.2499
major left, drug side effect,
brain damage.
Permanent Loss of fingers, loss of 10.3699 10.5580
minor damage to organs, non-
disabling injuries.
Permanent Deafness, loss of limb, 11.1700 11.2790
significant loss of eye, loss of
kidney or lung.
Permanent Paraplegia, blindness, 12.1790 11.7836
major loss of two limbs, brain
damage.
Permanent Quadriplegia, severe 12.6463 12.4892
grave brain damage, lifelong
care or fatal prognosis.
Death Injury resulted in death. 11.2101 11.6159
Age Plaintiff's age. 11.0660 11.0150
Mediation Case was resolved 10.2358 10.2665
through mandatory
mediation.
Negotiated Case was resolved 11.1763 11.1454
Settlement through negotiated
settlement.
Trial Verdict Case was resolved 11.2432 11.9202
through trial.
Medicare Plaintiffs health 10.4185 10.6483
insurance in Medicare.
Medicaid Plaintiffs health 11.4420 11.1002
insurance is Medicaid.
Private Plaintiffs health 11.1649 11.0172
Health insurance is Private
Insurance Health Insurance.
Other Plaintiffs health 10.3609 11.4289
Insurance insurance is other.
Number of observations 436 508
Amounts are in 1982-1984 dollars
Table 2: Log of Total Recoveries in Male and Female Medical
Malpractice Claims
Male Recovery
Variable Coefficient Standard T-ratio
([beta].sub.M]) Error
Constant 10.8317 0.2290 47.29
Emotional only -0.5948 0.6172 -0.96
Temporary insignificant -2.5405 0.4434 -5.73 (*)
Temporary minor -1.5260 0.2088 -7.31 (*)
Temporary major -1.07322 0.2974 -3.61 (*)
Permanent minor -0.7746 0.2086 -3.71 (*)
Permanent significant -0.0980 0.1797 -0.55
Permanent major 0.8781 0.2017 4.35 (*)
Permanent grave 1.3286 0.2585 5.14 (*)
Age -0.0061 0.0026 1 -2.38 (**)
Negotiated Settlement 0.5990 0.1822 3.29 (*)
Trial Verdict 0.7290 0.2981 2.44 (**)
Medicare -0.1499 0.2978 -0.50
Medicaid 0.3639 0.2288 1.59
Private Health Insurance 0.2523 0.1339 1.88 (***)
R-Squared 0.35
F Statistic 16.43 (*)
Number of observations 435
Female Recovery
Variable Coefficient Standard T-ratio
([beta].sub.F]) Error
Constant 11.1090 0.1948 57.02
Emotional only -2.5812 0.3637 -7.10 (*)
Temporary insignificant -2.8568 0.4136 -6.91
Temporary minor -1.8667 0.1816 -10.27 (*)
Temporary major -1.3629 0.2128 -6.40 (*)
Permanent minor -1.2056 0.1754 -6.87 (*)
Permanent significant -0.4254 0.1635 -2.60 (*)
Permanent major 0.1089 0.1906 0.57
Permanent grave 0.7463 0.3214 2.32 (**)
Age -0.0047 0.0027 -1.75 (***)
Negotiated Settlement 0.8315 0.1407 5.91 (*)
Trial Verdict 1.5368 0.2408 4.69 (*)
Medicare -0.3502 0.2408 -1.45
Medicaid 0.2911 0.1744 1.67 (***)
Private Health Insurance 0.0445 0.1372 0.32
R-Squared 0.37
F Statistic 21.40 (*)
Number of observations 507
Stars indicate significant at the 0.01 (*), 0.05 (**) and
0.10 (***) critical levels
Table 3: Decomposition of Males' Recovery Advantage
over Females' Recoveries (percent)
Evaluated at
Recovery Male Female
Advantage due to Means Means
Claim Characteristics 0.00314 -0.073
Unexplained 0.99686 1.073
Note: male and female recoveries differential are largely
unexplained by mean levels of characteristics across the sexes.
Outcome is based on the decomposition method (equation 3).
| | (1) During the early 1970s insurers' investment earnings unexpectedly fell because of the first oil crisis and the decline in the stock and bonds market. (Bovbjerb 1989). (2) When we categorize the age variables into groups (not shown in tables) we find that although the youngest age group, 18 and under females and males, represents approximately .05 and .06 of the plaintiffs in both groups, they received the highest injury awards. (3) In Michigan, mediation of malpractice claims became mandatory in 1986. The parties accepted the mediation awards in only 12.5 percent of the cases. Michigan's Mediation Tribunal noted that a rejected mediation award can be used an opportunity for subsequent negotiated settlement. (4) This process can be alternatively specified and the unexplained log difference can be weigh by men's recoveries rather than women's mean levels of characteristics. The result would be Ln [R.sub.M] - Ln [R.sub.F] = ([X.sub.M] - [X.sub.F]) [[beta].sub.F] + ([[beta].sub.M] - [[beta].sub.F])[X.sub.M] (5) The model attributes the unexplained portion of the wage differential as discrimination. However, defining discrimination as the compensation differential between observationally equivalent male and female is suspect. In fact, we seldom observe all the variables that make up an individual's capital stock. Therefore it will be incorrect to label recovery differences between males and females with the same injuries as discrimination. Despite the problems of interpretation the decomposition techniques has received prominent application in the legal system. (6) Forum Shopping is a practice whereby plaintiff's lawyers contrived various pretexts to file claims in counties where damage awards tend to be higher, such as the Wayne County, Detroit metropolitan area (Spurr and Simmons 1996). REFERENCES Barker, D. K. 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(1992) "The Influence of Standard of Care and Severity of Injury on the Resolution of Medical Malpractice Claims," Annals of Internal Medicine 17(9): 780-84. Walter Simmons (1) and Rosemarie Emanuele (2) (1) John Carroll University, University Heights, Ohio (2) Ursuline College, Pepper Pike, Ohio |
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