Loss of Chance Rules and the Valuation of Loss of Chance Damages by ProQuest


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									Ralph Frasca. Loss of Chance Rules and the Valuation of Loss of Chance
Damages. Journal of Legal Economics 15(2): pp. 91-104.

Loss of Chance Rules and the Valuation of
Loss of Chance Damages
Ralph Frasca*

Abstract        The loss of chance doctrine is applicable to medical
malpractice cases in which negligence has a negative impact on the
patient’s chance of survival. In this paper, we discuss the loss of
chance framework. There are several formulations of loss of chance
damage valuation rules that differ by jurisdiction. In many
courtroom applications the framework is altered in ways that cause
damage awards to differ systematically from the amount suggested
by economic theory. The paper contrasts and compares the
calculation of economic damages under an all-or-nothing rule and
an incremental loss of chance rule.

I. Introduction
        All economic damages are determined by lost chances valued
at opportunity cost. The “loss of chance” discussed in this paper
specifically refers to a reduction in the chance of survival due to
medical malpractice. The concept may also be applied to other areas
of the law such as the loss of chance to obtain a promotion or some
other valued alternative.1 “Loss of chance” can also refer to loss of
chance to recover from an injury without permanent loss of some
physical ability that has been lost because of alleged medical
malpractice. In these situations, there may be what Shavell (1985)
has termed ambiguous causation; it is unclear whether the loss was
due to the malpractice or the preexisting condition. In the context of

  Frasca: Professor of Economics, Department of Economics, University of
Dayton, Dayton, Ohio.
  See Fischer (2001) for a discussion on the many disparate situations in which
loss of chance could be applied. Weigand (2003), p.302, lists cases in 24 states
where some variant of the incremental loss of chance rule has been adopted. It is
likely that the remaining states apply a variant of the all-or-nothing rule. For a
recently enacted statute that embodies a loss of chance
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