1. ^aSchool of Law, University of Texas at Austin, 727 E. Dean Keeton St., Austin, TX 78731, U.S.A. E-mail: csilver@law.utexas.edu
2. ^bGeorgetown University Law Center, 600 New Jersey Ave., NW, Washington, DC 20001, U.S.A.
3. ^cRed McCombs School of Business, University of Texas at Austin, 727 E. Dean Keeton St., Austin, TX 78731, U.S.A.
4. ^dColleges of Law and Medicine, University of Illinois at Urbana-Champaign, 504 East Pennsylvania Avenue, Champaign, IL 61820 U.S.A.
5. ^eVice-Provost for Health Affairs, University of Texas at Austin, 727 E. Dean Keeton St., Austin, TX 78731, U.S.A.

^*The authors thank James Forman, Kris Henning, Greg Klass, Russell Localio, John Mikhail, Nick Rosencranz, Stephen Salop, and David Vladeck for comments. Versions of this article were presented at the Boston University School of Law, the Georgetown University Law Center, New York University School of Law, the Northwestern University Law School, the University of Chicago Law School, the University of Michigan Law School, and the University of Texas at Austin School of Law. We are grateful for comments received on these occasions. We owe special thanks to Vicky Knox at the Texas Department of Insurance and to JaeJoon Han, An-Shih Liu, and Rachel Miras-Wilson for research assistance. Funding for this study was provided by the Columbia Law School, the Georgetown University Law Center, the University of Illinois College of Law, and the University of Texas at Austin School of Law.

Abstract

Using medical malpractice claims with payments of $25,000 or more that closed in Texas from 1990 to 2003, this study quantifies physicians' insurance limits and examines the connection between policy size and payments on claims. It finds that most physicians had less than $1 million (nominal) in coverage, that real policy size declined, that settlements at the policy limits were common, that payment size was stable or falling, and that payments above the policy limits were rare. It also finds that physicians rarely made out-of-pocket payments, suggesting the policy limits often cap recoveries, and that the frequency of out-of-pocket payments declined as policy size increased. Results are presented separately for "perinatal physicians."