Ask the lawyer about tort reform laws

In My Humble Opinion
1

Tort reform is a hot item these days. While some surveys indicate a lack of public concern about the issue, the President seems intent on passing some sort of tort reform. Does anyone have questions about how tort law works, what sorts of tort reform have been tried, what the probable effect of proposed tort reform will be, or anything else about the practicalities of tort reform. I don’t want to discuss the political aspects of the issue here, but I’m available to answer questions about how tort reform works.

A word about my background. I passed my first bar exam in 1992. During law school, I clerked at a personal injury firm. My first job after law school was at a corporate law firm, where I did mostly defense work. Then I moved to another state, and took a job at a personal injury firm. My boss at this firm was beyond sleazy, and I left after a year, returning to the corporate firm to do more defense work. Then I was recruited by a high profile trial lawyer. I worked for him for a while, and then moved again, this time to a small firm, where I did both plaintiff’s and defense work. Now I am in-house counsel for a mortgage company. During all of this switching around, I had the opportunity to research the laws of Hawaii, Guam, Saipan, California, Nevada, Ohio, and Michigan.

2

Goody! Tort reform is one of my favorite political topics…

I’m biting my tongue really hard and trying to avoid political glurge. It’s tough… :wink:

[ol]
[li]Do any of the popular proposals include provisions to increase government enforcement of existing laws? I’m thinking workplace safety, environmental regulations, product safety, etc.[/li][li]Do any of the proposals, instead of capping the size of punitive damages, instead specify that they should go into some kind of fund (the treasury, the budget of a regulatory agency, etc.)?[/li][li]Can punitive damages be non-monetary? For example, if a corporation is found to have negligently caused death, could its charter be revoked? Are options like that ever discussed? Seriously?[/li][/ol]

(I reserve the right to ask more questions ;))

3

[li]Do any of the popular proposals include provisions to increase government enforcement of existing laws? I’m thinking workplace safety, environmental regulations, product safety, etc.[/li]
Certainly none of W’s proposals do.

Herehe mentions patient saftey, but not in the context of enforcement.

[li]Do any of the proposals, instead of capping the size of punitive damages, instead specify that they should go into some kind of fund (the treasury, the budget of a regulatory agency, etc.)?[/li]
Here is a case where a court did it on its own. Arnold has proposed such a system in CA, as well. Missouri has a statute that does exactly that.

http://www.moga.state.mo.us/statutes/c500-599/5370000675.htm

And here is another proposal.

from http://www.atra.org/show/7343

People are talking about it. But then again, they have been talking about it since I was in law school.

[li]Can punitive damages be non-monetary?[/li]
Damages are always monetary. A court, if asked, can give equitable relief, which could include an injunction.

For example, if a corporation is found to have negligently caused death, could its charter be revoked?

Back in the old days, corporate charters were very specific, and sometimes got revoked. Now that seldom happens. I am not aware of any state law that would permit charter revocation for negligence, or even reckless conduct.

Are options like that ever discussed?

I sometimes joke about enacting a state law that requires each corporation to designate a scapegoat. This person would go to prison for any crimes committed by the corporation and would be personally liable for any reasonably foreseable liability that is not covered by the corporations assets and insurance.
Seriously?

No.
[/ol]

4

First metacom, the President and the other advocates of so-called Tort Reform are not intent on limiting recovery of punitive or exemplary damages. What they are seeking now is immunity from paying compensation for very real loss and injury that is not economic – that is loss that is not loss of income or expenditure of money that would not otherwise have to be spent. Typically this is called “pain and suffering’ damages but the pain and emotional distress the injured person has suffered is only one of many elements of damage. Right now the emphasis is on medical negligence cases but the philosophy is equally applicable to, for instance, automobile accident cases and business torts.

For example – a doctor cuts of the wrong leg. Under the President’s theory the patient could recover for the income he lost because he had been negligently deprived of a leg and for the bill he got from the doctor for cutting off the wrong leg. Presumably there would be no award of damages for the cost of going back and cutting off the correct leg after the mistake was explained to the doctor. If the patent was an NFL running back then the loss of income damages would be substantial but if the patient was, say, a computed programer who did not need to run like a scalded cat then the loss of income would be minimal since a computer programer doesn’t need any legs at all to do his job. Under the President’s approach neither the NFL running back nor the computer would be able to get what ever a jury awarded in excess of the “cap” because they would have to spend the rest of their lives in wheel chairs, were in constant pain, needed help getting on and off toilets, could not drive a conventional automobile, could never walk a beach in the moon light, and any number of any other life altering circumstances traceable to being legless.

These things are real losses but recovery for them would be limited no matter what a jury said after hearing and impartially reviewing the evidence in the fairest trial in the world. That is the Tort Reform we are talking about here.

5

No. He is proposing limits on punitive damages, too.

http://www.msnbc.msn.com/id/6789233/

http://www.whitehouse.gov/news/releases/2003/01/20030116.html

6

Dude, I agree, but:

I was just trying to oblige the OP. :wink:

7

If your joking about it, I assume the lack of corporate accountability to the legal system is perceived as a problem in some legal circles, then? Are there any proposals–even abstract, academic ones–that are seriously discussed for increasing it? Increasing it while also limiting damages awards to individuals (or some other nod towards fixing what citizens perceive as the excesses of the current system)?

Sorry for harping on the issue, but this is the most interesting aspect of tort reform for me–by not criminally prosecuting them and limiting civil damages against them, it seems that, far from being “equal” to a person in the eyes of the law, corporations would become vastly superior to individuals in some respects…

8

Of course, punitive damages are already, by definition, limited to cases where they are justified. A jury has to determine that the award is justified. The trial judge, state appellate judges, and the Justices of the Supreme Court all have a say, too.

Egregious?

Here are some examples of punitive damages standards.

“malice or reckless indifference”

http://library.lp.findlaw.com/articles/file/00332/000161/title/Subject/topic/Civil%20Remedies_Damages/filename/civilremedies_2_1164

“reckless disregard”

http://www.aana.com/legal/legbrfs/1992/06lb92.asp

“malice and oppression”

http://www.consumerwatchdog.org/ftcr/co/co004319.php3

“wilful and wanton"

http://www.wyominghealthcarecommission.org/_docs/BurmanOutline.doc
Furthermore, the Supreme Court already reviews punitive damage awards for reasonableness and proportionality, and has indicated that an award of more than nine times the compensatory damages in a case will probably be unconstitutional. In fact, it has said that four times the compensatory damages is close to the constitutional limit.

http://www.supremecourtus.gov/opinions/02pdf/01-1289.pdf

9

No. I’ve not seen any serious plans to make corporations more accountable. Of course various regulatory bodies require their industries to be more accountable in some ways. For instance, many state regulators of mortgage bankers require the mortgage banker to post a bond and prove that it has a certain net worth in order for the mortgage banker to be licensed. But there is no serious proposal to make corporations more “legally accountable.” A company can always shut down.

Every personal injury lawyer has encountered the case where the company that is liable to the lawyer’s client has vanished–distributed its assets to shareholders, shut its doors, and gone away. And there is little to do about it. A corporation has no soul to damn: no body to kick.

It would be nice, in any given case, to be able to sue the principals of the company, but that doesn’t work. One of the fundamental characteristics of a corporation is that its shareholders, officers, and directors are insulated from personal liability, except for their own conduct. So of course, the plaintiff’s bar is always looking for ways to make inroads against the vanishing defendant.

But it comes back to this: corporations were designed to permit people to get investors for businesses. And investors won’t invest if they could be sued for their investments.

None of the tort reform proposals are limited to corporations. But corporations do seem to have some privileges that individuals don’t.

10

Discuss what you want, but I think that political discussion belongs in GD.

11

All of the doctors in this state except for 3 quacks from Pakistan who don’t speak English anyway have already closed up shop because their malpractice insurance premiums were too high. Don’t we need tort reform to keep the 3 quacks from fleeing too?

12

The most interesting aspect for me is this:

Tort reform is nearly always proposed because “frivolous lawsuits” are causing insurance premiums to rise. But few tort reform statutes actually deal with frivolous lawsuits. They are already handled by existing statutes, court rules, and ethical rules.

E.g., http://www.mass.gov/obcbbo/rpc3.htm#Rule%203.1

Instead tort reform statutes tend to limit the recovery of plaintiffs whose cases have been found by judge and jury to be meritorious.

And insurers are not willing to talk about the merits of their need to increase premiums. When they do, they admit that their business is quite profitable. http://www.businessinsurance.com/cgi-bin/news.pl?newsId=3723. Their rates do not seem related to any sudden liability crisis.

Finally, while insurance companies are largely exempt from federal regulation, 15 U.S. Code § 1012 - Regulation by State law; Federal law relating specifically to insurance; applicability of certain Federal laws after June 30, 1948 | U.S. Code | US Law | LII / Legal Information Institute

they are asking for a federal law protecting them.

But I said I didn’t want to talk politics, so I am just making some basic observations here. . .

13

I’m a 1L, greatly enjoying my torts course but not at present inclined to go into tort law. Can you give me a sound bite on tort reform that I can casually drop into conversation to make my professor think I’m smart?

14

And by limiting non-economic damages recoveries, we will see reduced insurance premiums?

Here is a site (the authors definitely have an agenda, so take it with a grain of salt), that says premiums have not historically dropped in response to tort reform.

http://www.consumerwatchdog.org/insurance/tortreform.php3 (The Foundation for Taxpayer and Consumer Rights).

Here is one with a slightly different angle.

http://www.aafp.org/fpm/20021000/47unde.html#3 (American Academy of Family Physicians)

In other words, a non-economic damage cap might have little effect on the cost of medical liability–the size of the award is mostly due to *economic *damages.

Finally, Illinois, the home of the tort reform ground zero, MSN | Outlook, Office, Skype, Bing, Breaking News, and Latest Videos, already has a non-economic damage cap and other tort reform provisions on the books. Unfortunately for tort reformers, the state supreme court decided that most of the provisions violated the state constitution. DCBA Brief - Home - DuPage County Bar Association.

The proposal is to create a federal law capping damages.

This raises some serious federalism concerns.

  1. If the regulation of insurance is the business of the states, 15 U.S. Code § 1012 - Regulation by State law; Federal law relating specifically to insurance; applicability of certain Federal laws after June 30, 1948 | U.S. Code | US Law | LII / Legal Information Institute, shouldn’t the states be responsible for fixing the insurance premium problem? If not, why should insurance companies remain exempt from federal regulation, including antitrust laws?

http://www.proassurance.com/pdf/McCarran-Ferguson%20Repeal.pdf
http://www.cato.org/pubs/regulation/reg15n2b.html
http://www.ftc.gov/opa/predawn/F87/oliverins.txt

  1. How does limiting the amount that a jury can award, under state tort law, affect interstate commerce any more than a law about guns in schools, U.S. V. Lopez, or a law allowing suits for gender-related violence? U.S. v. Morrison.
15

Ok. Here is a top ten list . . .

  1. Tort reform is the opposite of welfare reform.
  2. Tort reform is one of the most regressive taxes going.
  3. I’ve got an idea for tort reform. What if we cap punitive damages, statutory damages, and attorney fee awards for corporations? Or better yet, make them taxable at a 95% rate?
  4. Tort reform is neither tort nor reform. Discuss.
  5. Tort reform is inefficient because it allows tortfeasors to leave their externalities with those least able to spread the risk.
  6. Tort reform? What about the Coase theorem?
  7. The goal of damages in tort actions is to make the injured party whole through the substitutionary remedy of money to compensate for tangible and intangible losses caused by the tort.
  8. If it was good enough for King Solomon, it’s good enough for me.
  9. Hey, what’s a life worth, anyway? I trust our President to decide.
  10. “Too many OB-GYNs aren’t able to practice their love with women all across this country.”
16

Here’s a question: do any US states have Canadian-style costs rules (‘loser pays’ - usually not all, but most, of a winner’s costs; with a complete indemnity for suits found frivolous, and complex settlement rules which basically encourage settlement one way or the other of cases)?

These, combined with a culture in which punitives are truly reserved for the most egregious cases, are rarely awarded, and are low in quantum, seem to reasonably control tort issues in Canada.

17

G.Dub said that in my home town of Poplar Bluff, MO. Not that I’m proud of that or anything.

Anyway, I do have a couple of questions.

  1. Can the amount of money added to the cost of the average hospital visit by “frivolous lawsuits” be determined?

  2. If this tort reform did pass, is it probable that a) malpractice insurance providers would lower their premiums and b) doctors would pass these savings on to the patient?

18

According to this, Oklahoma and Oregon both have enacted limited loser pays rules.

Also many statutes have provisions that award fees to the prevailing party. And there are fee shifting mechanisms built into many court imposed systems that are designed to encourage early settlements.

Here is a link about loser pays. It says Alaska has loser pays too.

http://overlawyered.com/topics/lpays.html

A major problem with loser pays, is that in many cases, the loser does not have the money to pay, so it can be a toothless tiger.

19

Everybody forgets two things:
-Lawyers have a built-in conflict of interest. They want to extract the maximum amount of money that they can. So no lawyer will ever argue for tort reform. In cases where the lawyer’s interest conflicts with the client’s, the lawyer dictates what will happen. take the famous Woburn, MA cancer case (as recounted in the movie “A CIVIL ACTION”). The defendent (WR Grace Corp.) wanted to settle the claims for $8 million. The lawyer wanted more money-so he lost the chance for the plaintiffs to recover.
-Payments for damages come from everybody. That is why medical malpractice insurance rates keep going up. Some medical specialties cannot obtain malpractice coverage at any price. is society BETTER off WITHOUT doctors? See if your lawyer will treat your heart attack or cancer.
Finally, the tort system in this country is bizarre-a small number of people get a huge amount of money. Most people get nothing. Of course, the lawyers ALWAYs get their cut. Should damage awards be limited? Suppose you have a severely retarded child, paraylized and virtually non-functional (as the result of birth trauma). How will this child’s life be made any better twith an extra $5 million? I’m sure the lawyers will argue differently-but in any case. society pays.

20

That possibility may be handled through the mechanism of court-imposed security for costs arrangements in some cases (Ontario Rules of Civil Procedure provide for a motion for security for costs).

To my mind, the most difficult aspect of fee-shifting is that it may discourage legitimate litigation by poor plaintiffs, by making it too risky.

However, this problem is always present in a system where lawyers cost money, and is offset by the availability of contingency fees and class action mechanisms (in Canadian class proceedings, counsel often indemnify representative plaintiffs for costs).

In general, I think that fee-shifting may provide part of the answer to the Tort Reform issue.