Cumberland School of Law

We examine the impact of the Affordable Care Act (ACA) on medical liability and the controversy over whether federal medical reform including a damages cap could make a useful contribution to health care reform. By providing guaranteed access to health care insurance at community rates, the ACA could reduce the problem of under-compensation resulting from damages caps. However, it may also exacerbate the problem of under-claiming in the malpractice system, thereby reducing incentives to invest in loss prevention activities. Shifting losses from liability insurers to health insurers could further undermine the already weak deterrent effect of the medical liability system. Republicans in Congress and physician groups both pushed for the adoption of a federal damages cap as part of health care reform. Physician support for damages caps could be explained by concerns about the insurance cycle and the consequent instability of the market. Our own study presented here suggests that there ...

Using a panel study design, we examined the effects of different types of texting bans on motor vehicular fatalities. We used the Fatality Analysis Reporting System and a difference-in-differences approach to examine the incidence of fatal crashes in 2000 through 2010 in 48 US states with and without texting bans. Age cohorts were constructed to examine the impact of these bans on age-specific traffic fatalities. Primarily enforced laws banning all drivers from texting were significantly associated with a 3% reduction in traffic fatalities in all age groups, and those banning only young drivers from texting had the greatest impact on reducing deaths among those aged 15 to 21 years. Secondarily enforced restrictions were not associated with traffic fatality reductions in any of our analyses.

To describe the growth of any willing provider (AWP) and freedom of choice (FOC) laws applicable to managed care firms and to explore empirically the determinants of their enactment. A 1996 compendium of state laws and state-level data from the 1991-1994 period. Pooled cross-section time-series logistic regression of the decision to enact various types of AWP and FOC laws. Analysis uses a public choice framework to examine enactment. Key variables include proxy measures of proponent and opponent strength and the political environment. The model works well for laws affecting hospitals, but performs poorly for physician and pharmacy laws. More providers are associated with the enactment of AWP and FOC laws. More large employers are associated with a reduced likelihood of enactment of some forms of the laws but not others. Conservative states are more likely to enact laws limiting selective contracting with hospitals and physicians. States with greater interparty competition are also m...

Under both a cap-and-trade system and a greenhouse gas tax, the government will regulate energy suppliers and distributors, utility companies, and large manufacturers. These parties will bear the statutory incidence of the regulation. However, the financial impacts of regulating greenhouse gas emissions will be borne primarily by consumers. Consumers will bear the economic incidence of the regulation in the form of increased costs of gasoline, electricity, and home heating fuels and in increased consumer prices for all goods manufactured or distributed using fossil fuels. Greenhouse gas regulation will also generate significant revenue. This Article addresses the question of what should be done with those revenues. Models of the economic incidence of the two systems indicate that while high-income households will bear a larger portion of the distributional impacts because they consume more, low-income households will bear a disproportionate burden as a percentage of their household ...

Communities are increasingly looking to private governance institutions, rather than formal government, to set public policy and to manage the environmental and social impacts of globalization. Private governance institutions, sets of rules and structures for governing without government, remain undertheorized despite an expanding literature. Questions remain about why they have arisen, what functions they serve, and whether they are effective. This article advances that literature in several ways. First, the article outlines the inherent limitations of the conventional taxonomy, which groups these institutions based on the identity of their constituent organizations (business interests, civil society, and government entities and their hybrid permutations), as a descriptive and analytical tool. Second, the article offers an alternative typology, viewing private governance institutions through an economic lens and sorting the institutions according to their function in overcoming government and market failures. The article identifies the demands for governance that arise at each stage of the regulatory process, the barriers that may keep formal government from meeting that demand and the structures private governance institutions have developed to overcome those barriers. By inquiring into the reasons that there is a demand for governance at each stage of the regulatory process and identifying the structures each institution uses to address those demands, this article turns a spotlight on institutional strengths and weaknesses, suggesting ways private governance institutions (and formal government) may be improved.

Voluntary standards, certification and labeling systems are one of many forms of private governance institutions that have been developed in recent years to permit communities to govern without government. These institutions enhance efficiency by internalizing externalized social costs and by meeting consumer preferences associated with risk. This Article advances the existing literature in four ways. First, drawing from Calabresi and Melamed's seminal article, Property Rules, Liability Rules and Inalienability Rules: One View of the Cathedral, the Article explains how these institutions are "Rule 4" institutions-they facilitate the trade of entitlements by lowering steep transaction and information costs. Second, the Article observes that these systems are developed primarily in response to government void and government failure and identifies the rules and structures these systems supply to regulate in the absence of government. The institutions pose interesting implications for the Coase-theorem premise that the main obstacle to internalizing externalities through private sector solutions is the lack of properly defined property rights; these institutions have no authority to define or allocate property rights, and yet they facilitate the exchange of entitlements. Third, the Article identifies the strengths and weaknesses of the systems and suggests ways to support them. Finally, the Article suggests that where governments have adopted voluntary standards, certification and labeling systems to counteract their own allocation of entitlements, an overhaul of existing law to change the original allocation may be in order.

The shibboleth that “government should not be picking winners and losers” has dominated the public discourse over renewable energy subsidies. This way of framing the debate ignores the nation’s long history of support for fossil fuels and obscures the economic theory behind the subsidies. This article contributes to the discussion in four ways. First, the article examines economic justifications for government intervention in markets and evaluates the tax subsidies to both fossil fuels and renewable energy resources in that light. Second, the article contrasts the different market trajectories for those investments and explores possible reasons for their divergence, including their budgetary history. Third, the article examines the investment incentives that arise from the subsidy structures in terms of marketability, liquidity, information costs, transaction costs, risk, and uncertainty. Fourth, it examines the political economy associated with the development and continuation of the subsidies. A subsidy’s age, diversity, type, and beneficiaries affect its stability and longevity. These factors also determine whether taxpayers report having claimed the benefits and whether administrative agencies evaluate them. Finally, the article argues that the way Congress structures its subsidies can determine whether new energy technology is a winner or loser. The article develops a generalized framework for structuring tax incentives and examines recent proposals for reform.

The Green New Deal calls for the overhaul of our nation’s energy, transportation and manufacturing infrastructure to support the transition to a green economy, the adaptation of the built environment to climate change, the remediation of polluted areas, the conservation of fragile and threatened ecosystems, and the encouragement of sustainable farming practices. While Green New Deal proposals have been criticized as an example of “big government spending,” the U.S. has a history of huge investments when economic transformation has been required for national security and long-term prosperity. This article makes four contributions. First, it summarizes the features of the Green New Deal as first proposed and as envisioned by the four leading Democratic candidates for President, including details about revenue sources and funding mechanisms to the extent provided by the candidates. Second, it provides an economic analysis of each of the candidates’ plans to address climate change. Third, it contextualizes public investment in energy, transportation, manufacturing infrastructure, ecosystems and biodiversity, explains why private markets fail to provide these needed goods, and examines the array of federal structures the federal government has used to encourage private investment and state and local support. Finally, it clarifies the types of funding mechanisms that are likely to limit economic waste and encourage efficient and equitable outcomes as the country moves toward a carbon-neutral future.

Most businesses recoup their investments in property, plant, and equipment from the income they earn from using those assets. When changes in markets, technology, or regulations reduce income from those assets or increase operating costs, businesses may not recover their full investments in those "stranded assets." Unregulated firms generally contain these risks by diversifying assets and income streams, procuring insurance, or engaging in hedging transactions. Public utilities, however, must obtain a regulator's permission both to manage these risks and to pass the costs of those assets forward to consumers. Globally, over $20 trillion in global fossil fuel assets may be stranded as countries pass climate change legislation. To date, investor and consumer concerns about stranded costs have delayed the adoption of carbon pricing schemes, spurred the rejection of greenhouse gas regulation altogether, and formed the basis for bankruptcy filings, takings litigation, and demands for relief. This article makes four contributions. First, it clarifies that under the existing tax and regulatory rules, the economic benefits of substantial tax subsidies are currently being passed forward to consumers, artificially reducing fossil fuel electricity rates, encouraging waste, and increasing emissions. Second, it quantifies the extent of stranded assets held by public utilities in the United States, pulling data on unrecovered capital from the securities filings of the fifteen largest firms in the country. Third, it argues that U.S. tax measures have left fewer assets to be stranded, identifying "accumulated deferred income taxes" or "ADIT," the tax savings from deferral, as a source of recovery. Finally, the article proposes a change in tax and regulatory policy that will enhance efficiency, remove one of the supports for carbon lock-in, and help manage the threat of stranded assets, smoothing the transition to a carbon-neutral economy.