Fear of being sued by a patient is widely believed to affect how doctors do their jobs, causing them to order excessive tests and care. But a working paper published Monday suggests that the threat of malpractice lawsuits may shape behavior well beyond the clinic, pushing doctors to buy fancier, more extravagant homes in states where those assets are excluded from bankruptcy.
The researchers found that in states with unlimited "homestead" exceptions, which mean that financial assets in a house are protected if a person files for bankruptcy, physicians bought homes that cost on average 13 percent more than they would if that quirk of law didn't exist. Other professionals who made the same income — business executives and lawyers — did not buy bigger homes in those states. But dentists, who are also vulnerable to malpractice lawsuits, did.
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