Increased Perception of Malpractice Liability and the Practice of Defensive Medicine

The extent and existence of defensive medicine in the face of malpractice pressure are subjects of perennial policy and academic debate. In this article, we investigate the impact of a series of arguably exogenous court rulings in Taiwan that increased physicians' perceived liability exposure, and a subsequent amendment to the law that reversed the courts' rulings, on physicians' test‐ordering behavior and choice of delivery method. We find that obstetricians most at risk for liability increased laboratory tests in response to the ruling, but did not change the likelihood of delivery by Cesarean sections. We further show no consistent patterns of preventable complications, postdelivery emergency department visits, or hospital readmissions associated with physician behavioral change. The overall pattern of results is highly suggestive of the practice of defensive medicine among physicians in Taiwan, and that payment incentives and provider organizational forms may have mediated the impact of changing liability risks.