claims. Helland and Tabbarok (2003) found that caps on contingency fees tend to lower the number of low quality cases—cases that are less likely to result in a positive judgment or settlement for the plaintiffs. More generally, evidence on the net impact of contingency fees on social welfare is inconclusive. 4 · H.R. 5—Other provisions Additional provisions under H.R. 5 include caps on punitive damages, revisions to the collateral source evidence rule, and periodic payment of future damages. Recent scholarly reviews (including RAND COMPARE and Mello, 2006, 2011) suggest that there is no strong empirical evidence that these forms of tort intervention have been effective in states that have adopted them, either in reducing litigation costs or in reducing the volume of MM litigation. Potential Impact of President Obama’s FY 2012 Budget/National Commission on Fiscal Responsibility and Reform Provisions The President’s Budget for FY 2012 calls for a $250 million grant program to fund the states in implementing new legal MM reforms. According to several media accounts, key types of state reforms that might be supported by the new federal grant program include health courts, establishing safe harbors from MM liability based on best clinical practice guidelines, establishing hospital-based early apology and compensation programs, and possibly other sorts of legal reforms (such as instituting a “fair share” rule in MM litigation). These specific proposals correspond closely to those suggested in the December 2010 report of the bipartisan National Commission on Fiscal Responsibility and Reform. We briefly comment on each of these points in turn. · Establish health courts in which judges, rather than juries, determine liability and damages At present, there is little empirical literature to document the impact of health courts on MM litigation or costs, mainly because no state has yet enacted such a system. It seems plausible that a health court system that eliminated jury trials and awarded damages based on a predetermined schedule of damages might be able to reduce aggregate MM payouts and legal expenses. However, the impact would depend on the details of how such a health court is organized, what its procedural rules are, and what kinds of rights litigants would have in such a court. To reduce aggregate payouts and expenses, any hypothetical health court system would need to be more administratively efficient than the current litigation scheme, reduce payments made to attorneys, or reduce awards paid to plaintiffs. Each of these possibilities for savings would involve similar trade-offs to those with the provisions discussed above. · Create a legal safe harbor to MM for doctors and hospitals based on best practice guidelines Such a safe harbor is not a new idea, several states experimented with safe harbors in the 1990s but those four states (ME, FL, MN and VT) abandoned them. There is no empirical evidence to document the litigation or cost effects of a safe harbor statute. The simplest version of a safe harbor, which would permit best practice guidelines to be entered as evidence for the standard of care in an MM trial, might not represent much of a departure from the status quo in many states. Stronger versions of a safe harbor could have more dramatic effects on physician liability and the practice of “defensive medicine,” but this cannot be proven without real-world evidence. As is true with the concept of health courts, implementation details and varying approaches among states could be very important. The details of 5 how a particular safe harbor statute is structured will be influential in determining its effects on MM litigation and associated costs. · Encourage or mandate early apology and compensation programs in health care facilities There is some empirical evidence to suggest that early apology programs can reduce the incidence of MM litigation (Gallagher, Studdert & Levinson, 2007). Due to the many possible variations of hospitalbased early apology and compensation programs, and of state laws designed to protect, facilitate, or incentivize those programs, the details of the programs and laws will be very important in determining their ultimate effects on MM litigation and related costs. · Change legal rules to substitute a “fair share” rule in place of joint-and-several liability Similar to the H.R. 5 §4 provision, according to RAND COMPARE, empirical evidence concerning the effectiveness of eliminating joint-and-several liability in reducing MM litigation or its associated costs has been weak and mixed. CBO commented on joint-and-several liability reform specifically in its 2009 letter to Orrin Hatch and observed that this kind of reform might actually increase utilization and defensive medicine costs in some circumstances (CBO, 2009). Summary There are long-standing concerns about the medical malpractice system that have made it a common target of reform efforts. There is evidence that the system is inefficient, costly, does a poor job of targeting true negligence and increases healthcare costs (Localio et al., 1989; Kessler & McClellan, 1996; Thomas et al., 2000; Mello et al., 2006; Lakdawalla and Seabury, 2009). This memo summarizes what is known about the potential effects of current proposals to reform the malpractice system at the federal level based on the current state of empirical evidence. Many