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• W3122513428 abstract "The theory that the prospect of liability for damages deters risky behavior has been developed in countless articles and books. The literature is far sparser, however, on how deterrence is operationalized. And prior work slights an equally important effect of damage actions, to incentivize claims management in addition to harm-reduction responses that are costrather than liabilityminimizing. This article works in the intersection of these two understudied areas, focusing on claims management steps taken by frequently sued organizations, and opening a window into the black box of deterrence to see how those steps may end up serving harm-reduction purposes as well. To summarize, I observe that damage actions regulate risky enterprise by inducing organizations to develop claims management capabilities—that is, the capacity to process any resulting disputes. I then argue that these claims management practices and personnel are sometimes used, secondarily but importantly, to improve safety, reduce risk, and increase compliance with external legal requirements. Organizations’ internal claims management operations can, though they need not, facilitate care-taking in four important ways: (a) promoting the gathering and analysis of claims information; (b) requiring the hiring of specialized personnel with a mission to reduce claim payouts; (c) encouraging bureaucratized procedures that may be harm-reducing, and (d) increasing the salience of claims to various actors within the organization. I discuss the theory underlying these four points, drawing on organizational economics and sociology, as well as on psychology and behavioral law and economics. Then I discuss these four channels of influence in particular factual settings which serve as case studies, looking at a single large retailer, and then more generally at hospitals and hospital doctors, and jails and prisons. Because organizational theory tells us that this kind of transformation or repurposing is quite ordinary, the preliminary evidence I canvass suggests that claims management should be included in any study of how damage action deterrence is operationalized within large risk-creating organizations. ∗Professor of Law, Washington University in St. Louis, and for Fall 2008, Visiting Professor, University of Michigan Law School. Thanks to participants in the 2008 Law & Society annual conference, the Insurance & Society Seminar, and law faculty workshops at Southern Methodist University and the University of North Carolina for useful comments on earlier drafts. I received helpful feedback, as well, from Ken Abraham, Pauline Kim, Kyle Logue, Michelle Mello, Bill Sage, Kent Syverud, an anonymous reviewer for the Journal of Tort Law, and, as always, Sam Bagenstos. All remaining errors are, of course, mine. This article thus makes two chief scholarly contributions. It proposes and theorizes concrete operational paths by which damage actions may elicit organizational compliance with external norms. And it describes in-house claims management, a heretofore underobserved arena in which law influences organizational activity. In the conclusion, I propose that who performs claims management functions may matter, as well, and suggest that in future research, claims management should be considered along with liability and loss prevention as the trio of liability-related operational areas in which firms must implement a “make-or-buy” decision." @default.
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• W3122513428 date "2008-01-22" @default.
• W3122513428 modified "2023-09-24" @default.
• W3122513428 title "Operationalizing Deterrence: Claims Management (In Hospitals, a Large Retailer, and Jails and Prisons)" @default.
• W3122513428 doi "https://doi.org/10.2202/1932-9148.1072" @default.
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