Criminal prosecution and physician supply

While there are many evidences of the effect of medical malpractice tort, research on the effect of medical malpractice criminal sanctions are scarce. This paper tries to identify the causal effect of criminal prosecution utilizing exogenous variations over the likelihood of criminal prosecution. In 2004, a medical accident occurred in Fukushima prefecture, Japan and an obstetrician was prosecuted one year after. This prosecution exogenously changed the likelihood of criminal prosecution in Fukushima prefecture. Using difference-in-differences and synthetic control approach, we estimate the causal effect of criminal prosecution. The prosecution decreased the number of obstetricians by 13% and some of them changed their business to gynecology, which involves lower risk. However, the effect is concentrated on obstetricians, not all physicians. While the relatively weak estimates of tort liability in the literature might suggest strengthening the present sanctions, we need to be cautious about such policy. In addition, the paper shows that the sentence of acquittal did not resolve the effect caused by the initial prosecution. This illuminates the importance of criminal prosecution itself and its social sanctions, not subsequent criminal sanctions. It also highlights the importance of risk perception of physicians.