In any reforms encouraged by a government, it has proven to create a great impact on the lives of people. In an increasingly litigious society, tort reform is a subject that had brought about great debate. With costs never ceasing their inevitable rise, especially in the medical field, tort reform discussion has increased. The cause and effect of lawsuits, the cure for huge settlements live in a world of gray, and not black and white. Truly, something needs to be done, but the implementation of legislative controls is a very touchy subject, with powerful lobbies on both sides.
Is Tort Reform A Cure?
Tort Reform had been a popular political issue, especially in the United States. With its aim to improve the efficiency of courts and limit the compensation and tort litigation among victims, its concept had become an issue in past presidential elections. According to an article written by Shrager, Spivey, and Sachs, the method of tort reform has the tendency to limit the rights of victims and may even promote injustice to the oppressed wherein tort reform is believed to have emphasized in protecting the people causing harm or damage upon the victim. (Shrager, Spivey and Sachs, 2007)
The word tort came from the French legal term tort, which means ‘to have wronged.’ The cases under tort involve inflicting harm to a person’s reputation, security, financial sources or property. For instance, two of the main examples of tort cases are personal injury and medical malpractice, when a patient sues a surgeon; the surgeon would not be imprisoned. Instead, the surgeon is obliged to pay for the expenses and medical bills in order to recompense the suffering and damages caused to the patient. The tort law is described as disparate from criminal law or contract law because the purpose of a tort case is to find remedies and restore lost or damages through compensation. (Shrager, Spivey and Sachs, 2007)
However, some people believe that tort reform is just a waste of time and it has the tendency to describe the plaintiff to be only interested in gaining financially instead of focusing in concerns that are more important. A report on medical malpractice in Pennsylvania stated some facts on torts such as the following,
• “Juries are often characterized as biased against doctors, incompetent and irresponsible, but research shows that doctors win in more than two out of three cases tried to juries and that the amounts of jury awards are positively related to the seriousness of the injury. Trial judges and neutral medical experts tend to agree with jury verdicts…jury awards constitute only a small fraction (between 5 percent and 7 percent) of all medical malpractice payouts; most cases are settled prior to trial.”
• “An examination of the jury awards over $1 million shows that the patients in these cases suffered very severe injuries or death.”
• “Research shows that caps on pain and suffering are unfair to patients with the most severe injuries, to women, to elderly persons, and to children. While caps reduce the amounts of payments to negligently injured patients, research does not support the proposition that caps reduce the liability insurance premiums of doctors.”
• “Despite claims that Pennsylvania is losing doctors to other states as a result of high liability insurance premiums, official statistics from the American Medical Association and from the Federation of State Licensing Boards show an actual per capita increase in treating physicians.” (Vidmar, 2006)
Usually, the system of tort is compensating victims for damages done and those who suffered from accidental injuries. Even though compensation is given through legal claims, some believe that the tort system is still expensive and insufficient. An estimate of 46% collected from these rewards is given to the claimants or victims wherein it has been argued that the system would provide compensations to those who were insufficiently aided by social insurance programs. Also, another definition of tort reform is described as proposals limiting legal claims aided by personal injury lawyers and particularly a matter of common law and legislation. (http://www.newsbatch.com/tort.htm, 2006)
On the other hand, although tort reform is often criticized and disagreed by opposed parties, it has shown a positive result of economic benefits especially in improving the legal system in America. It has been criticized for its policy of being too costly and its incapacity to bring fair awards. In addition, it has increased financial burdens in families and businesses due to higher insurance premiums, higher medical costs, and reduced incentives. Although the effect of a tort system to an economy would be hard to measure, many have been suffering from increased insurances and the high cost of commodities. For instance, most business is affected by higher prices charged to them for insurance costs. Excessive litigation due to slow productivity and growth also brings negative effects to an economy since it tends to lessen risk and innovation. (Saxton, 1996)
However, there could also be benefits of saving money from tort reform through implementing the premise of contingency fee and Moore-Gephardt reforms and could be the basis on why tort reform is necessary. Under the contingency fee reform, the lawyer of the plaintiff would be able to receive a certain amount from the compensation of the client. It could also be a term referred to mechanisms used to compensate lawyers. An advantage of this reform is that it establishes a quicker and fairer settlement by only concerning on the manner of how lawyers are compensated. On the other hand, the Moore-Gephardt reform policy may be referred to as, “The framework of the Moore-Gephardt reform is as follows: If the defendant agrees to pay for all economic damages (as defined by state law) and reasonable attorneys’ fees, then that defendant is liable only for economic damages, and not for non-economic claims. Plaintiffs have the right to refuse such an early offer, but if they do so, it becomes harder to prove pain and suffering or punitive damages.” (Saxton, 1996)
The only weakness addressed by the Moore-Gephardt reform with regard to tort system is the encouragement to inflate damages in order larger amount or portion of awards. This reform reduces incentives by encouraging tort cases to be resolved quickly by making an early offer to injured or harmed victims, which make it hard to commit real justice.
Both of these reforms have the ability to reduce tort costs, especially in the U.S., since it tends to propose an early offer which may exclude an individual from paying the most expensive costs of involving in tort cases that is the lawyer’s fee. The focus of these proposals is more on the tragedy such as professional mistake and on the fairness of a verdict and damage award. A probable benefit from these proposed reforms would be the following:
• Lawyers’ fees: Savings on payments to lawyers result for two reasons. First, these proposals would discourage many frivolous defenses as well as claims — for example, if claimants’ lawyers know that an early offer by the defendant could reduce the claimant’s lawyers’ fees. Second, under Moore-Gephardt in cases where there is little dispute of economic damages, lawyers’ fees on both sides would be significantly reduced. As to defense lawyers, the reform would extinguish the incentive of defendants in some cases to wear down the plaintiff through extensive legal proceedings. Alternatively, plaintiff’s attorneys would receive substantive contingency fee payments only when their efforts add value to the defendant’s early offer. It is likely that a significant portion of the over $45 billion in tort costs attributable to lawyers’ fees could be reduced by these proposals:
• Pain and suffering awards: The Moore-Gephardt reform does not cap or even necessarily eliminate pain and suffering awards. Rather, Moore-Gephardt encourages cases to be settled quickly based on the economic damages to the claimant. Nonetheless, there is room for considerable savings without having to deny such damages in cases stemming from egregious misconduct.
• Administration: Although most tort cases are settled out of court anyway, the early offer reforms would significantly speed up the process. With tort cases, often-lasting years before a settlement is reached or a final verdict is handed down, early offer reforms are one of the best ways to reduce the delays and attendant administrative costs of the tort system.
• Health care: Health care savings result from two sources. The first source of savings is the elimination of the collateral source rule, a change which would reduce the double payment of wage loss and medical bills. The second source of savings comes from changing the claiming behavior of accident victims. Without the incentive of $3 in awards for each $1 in medical costs, consumption of unnecessary medical services would be drastically reduced under Moore-Gephardt. (Saxton, 1996)
In line with these reforms, not only would millions of money be saved but the lives of people as well, since it would encourage people to avail of insurance through discounts and it would also enable to correct certain systems that discourage innovation. These proposals on tort reform simply result in higher progressive savings, lower transaction cost, eliminate frauds and improve rights in injured parties.
On the other hand, in an article written by Glauser, he stated that tort reform may be a form of marketing to the public, especially in medical care. For instance, some of its benefits may include preventing doctors and physicians from high-litigation specialties and states, enhancing access to health care, providing more health care services to people and producing defensive medicines for the federal government. (Glauser, 2004)
Just like other reforms, the tort reform also has limitations, and this is due to insurance industries. It is known that the main business of insurance companies is to make money, else, if bankrupt, an insurance company is forced to close down the business. For some, tort reform ensures fairness among individuals whether the victim or the defendant. It allows not only better business conditions but also better job opportunities and healthcare to people. (Glauser, 2004)
Usually, tort reforms occur when the legislators realize that the cost of compensation is higher than what an individual in the community can pay. It is important that the levels of damage be identified in order to ensure the affordability and availability of premiums. In some countries, the purpose of tort reform programs is to ensure that the liability of insurance is for the community at a reasonable cost, and not for profit organizations and small businesses alone. However, some argue that tort reform is, “Those who argue against tort reform believe justice dictates people who have been injured by the negligence of others should be able to claim damages. Some also assert that tort reform was not necessary in the first place, essentially by rejecting the actuarial evidence of claims costs and claims cost inflation.” (Booth, 2005)
In the world of tort, everybody seeks a fair and speedy conclusion. However, alas, money rears its ugly head. To have a meaningful attempt at tort reform, there will have to be a multi-pronged approach.
While companies would like to see their insurance costs go down, when legislation is passed to help them, there is no guarantee that the savings are passed on to the consumer or customer. Many lawyers like to see huge awards since their fee is usually a percentage. There is probably a lot of improvement to be gained in this facet of tort reform. People have a hard time believing that a person could be awarded in excess of $100 million dollars for an accident in which they were partial to blame. On the other hand, people also have a hard time believing that a law firm deserves to get billions as their share of an award (tobacco).
Juries are supposed to be a person’s peers. In modern society, jury selection has become a large part of cases, picking the “right” people can make or break a case. This brings up a vital point in tort reform; many people on juries believe that they should give large rewards because companies have deep pockets. Jury members need to understand that the costs of most cases are passed on to the consumer. Do they understand that some people are lost when it comes to common sense and that is no reason to punish the company or doctor? While jury selection should be an impartial event, I believe there are clearly instances where the information in the trial is way above their understanding. This side of tort reform would indeed be a touchy subject.
I believe that one side of tort reform that should be advanced is criminal charges against the people responsible. If a CEO or other high executive knows that a potentially deadly defect exists and allows it to remain without adequate warning to the public, they should go to jail. Of course, there are many problems with this idea: Who knew about the problem? Were the warnings sufficient? What is a justifiable attempt at making a safe product?. There is no product or act that can be made completely safe or idiot proof. This part of the solution goes hand in hand with the abilities of members of the jury.
I have not offered any concrete solutions to the area of tort reform, but some general ideas. Like anything else, ideas and laws have to be tweaked and improved over time since every potential problem cannot be foreseen.
Booth, D., Tort Reform in Australia. 24 January 2005. http://s2kmblog.typepad.com/rethinking_structured_set/tort_reform/index.html
Glauser, J. Does Tort Reform Work? Emergency Medicine News. Volume 26(10). October 2004. p 27
Saxton, J. Improving the American Legal System:
The Economic Benefits of Tort Reform. Joint Economic Committee Study. March 1996
Shrager, Spivey & Sachs. Understanding Tort Litigation and Your Legal Rights. 2007. http://www.shragerlaw.com/html/legal_rights.html
Tort Reform. May 2006. http://www.newsbatch.com/tort.htm
Vidmar, N. Medical Malpractice Litigation in Pennsylvania. A Report for the Pennsylvania Bar Association. Duke University. May 2006
What Is Tort Reform – And Why Is It Bad For The Public? 30 October 2003. http://www.corpreform.com/corpreform/2003/10/what_is_tort_re.html