A longstanding issue in the health care industry is whether physicians' malpractice fears lead to defensive medicine. We use national birth certificate data from 1990 through 1992 to conduct a county fixed-effects analysis of the impact of malpractice claims risk on cesarean-section rates and infant health. Malpractice claims risk is measured by obstetricians' malpractice premiums. The study provides evidence that physicians practice defensive medicine in obstetrics but that the impact of increased cesarean sections that results from malpractice fears on total obstetric care costs is small. The study also finds that physicians' defensive response varies with the socioeconomic status of the mother.