Strict Liability for Medical Injuries? The Impact of Increasing Malpractice Liability on Obstetrician Behavior: Evidence from Taiwan

Policy makers and academics have long debated the existence and extent of defensive medicine in the face of medical malpractice liability pressure. In this paper, I investigate how physicians’ test-ordering behavior and propensity to perform cesarean sections were affected first by a series of court rulings in Taiwan that increased physicians’ liability risks, and then by a subsequent amendment to the law that reversed the courts’ rulings. I find that physicians faced with higher malpractice pressure increased laboratory tests as expected but unexpectedly reduced cesarean sections. The reduction in cesarean deliveries may be due to the fact that liability risks were more closely aligned with physicians’ standard of care after the court rulings. After the law was amended to negate the court decisions, physicians reversed their previous behavior, reducing laboratory tests and increasing cesarean deliveries. This pattern of behavior strongly suggests that physicians in Taiwan practice defensive medicine.