Tort reform refers to proposed changes in the civil justice system that aim to reduce the ability of victims to bring tort litigation or to reduce damages they can receive.
Tort actions are civil common law claims first created in the English commonwealth system as a non-legislative means for compensating wrongs and harm done by one party to another person, property or other protected interests (e.g. physical injury or reputation, under libel and slander laws). Tort reform advocates focus on personal injury common law rules in particular.
In the United States, tort reform is a contentious political issue. US tort reform advocates propose, among other things, procedural limits on the ability to file claims, and capping the awards of damages. Supporters of the existing tort system, including consumer advocates, argue that reformers have misstated the existence of any real factual issue and criticize tort reform as disguised corporate welfare.
In Commonwealth countries as well as U.S. states including Texas, Georgia, and California, the losing party must pay court costs of the opposing party.
Some legal scholars propose to replace tort compensation with a social security framework that serves victims without respect to cause or fault. In 1972, New Zealand introduced the first universal no-fault insurance scheme for all accident victims, which provides benefit from the government-run Accident Compensation Corporation without respect to negligence. Its goal is to achieve equality of compensation, while reducing costs of litigation. In the 1970s, Australia and the United Kingdom drew up proposals for similar no-fault schemes but they were later abandoned.
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The tort system
Tort requires those responsible (or "at fault") for harming others to compensate the victims, usually in money. Typical harms can include loss of income (while the person recovers); medical expenses; payment for pain, suffering, or even loss of a body part; or loss of future income (assuming that said loss can be proven to be reasonably likely to occur. See speculative damages).
The classical purpose of tort is to provide full compensation for proved harm. This is known under the Latin phrase restitutio in integrum (restoration to original state). In other words, the idea underpinning the law of tort is that if someone harms someone else, they should make up for it. Compensation should be, in the words of Lord Blackburn in Livingstone v Rawyards Coal Co,
"that sum of money which will put the party who has been injured in the same position as he would have been if he had not sustained the wrong for which he is now getting his compensation or reparation."
Texas Personal Injury Statute Of Limitations Video
Themes of the tort reform debates
A number of recurrent issues can be identified in the debates about tort reform.
Economic effects
The primary criticism of the tort system is economic. Critics decry the cost of compensation payments themselves, especially when they are out of proportion to the damage. Even if it is held that extreme compensation is a worthy goal -- litigation is arguably an inefficient method of giving compensation. In Britain, for instance, it has been argued that 85p is spent on litigation for every £1 of compensation paid. In contrast, the social security system costs 8p or 12p for every £1 delivered. This figure is disputed, because there is no easy method for accounting for transaction costs particularly when pre-litigation settlements are considered.
Three particular charges are levelled at the tort system, for having distorting economic effects. First, the costs of litigation and compensation payouts raise the cost of insurance. Because most tort claims will be paid from the pockets of insurance, and because the public generally pays into insurance schemes of all kinds, tort reform proponents assert that reducing tort litigation and payouts will benefit everyone who pays for insurance.
Secondly, and related to insurance in countries which do not have universal health care (i.e., national health insurance), the costs of the tort system, and in particular medical malpractice suits, raise the costs of health care. The difficulty in this area is to distinguish between public and private health care providers. In the UK, the cost was £1.6B a year as for 2014, increasing at 10%+ yearly Rising from £446m a year a decade earlier. The UK, however, has exceptionally low claims, as tort claims have been restricted, for instance in disallowing loss of chance cases. The Medical Defence Union actively combats, and attempts to settle all cases where potential negligence claims are at stake. While successful, the costs of litigation to the health system are steadily growing,. In the United States, it is easier for victims of medical malpractice to seek compensation through the tort system. The American medical record in hospitals is poor, with around 195,000 deaths due to negligence per year, which itself leads to a higher number of claims. It is open to debate as to whether a change in the law of tort either way would lead to significant reductions in cost or changes in practice. According to Bloomberg Businessweek, "Study after study shows that costs associated with malpractice lawsuits make up 1% to 2% of the nation's $2.5 trillion annual health-care bill and that tort reform would barely make a dent in the total."
Third, there is an argument that tort liability could stunt innovation. This argument usually comes in connection with product liability, which in every developed country is strict liability, subject to a "state of science" defence. If a product is faulty, and injures somebody who has come across it (whether they are the buyer or not) then the manufacturer will be responsible for compensating the victim regardless of whether it can be shown that the manufacturer was at fault. The standard is lower in other injury cases, so that a victim would have to prove that a tortfeasor had been negligent. It can be argued that strict liability deters innovation, because manufacturers could be reluctant to test out new products for fear that they could be subjecting themselves to massive tort claims. This argument is characteristic of the law and economics movement. It may be somewhat confused about the relevant law because it misses the state of science defence. This defence means that a manufacturer can always say "there was no warning or evidence in the scientific literature that this new product could be dangerous."
Equality in treatment
Equality of treatment is the central issue for reforms in New Zealand and in the Commonwealth more generally. If someone has an accident then they have a statistical 8% chance of finding a tortfeasor responsible for their injury. If they are lucky enough to have been injured by someone else's fault, then they can get full compensation (if the tortfeaser is not judgment proof). For others--for those injured by natural accidents, by themselves, by disease or by environmental factors; no compensation is available, and the most that can be gained for their losses will be meager state benefits for incapacity.
This was the basis for much of Professor Patrick Atiyah's scholarship as articulated in Accidents, Compensation and the Law (1970). Originally his proposal was the gradual abolition of tort actions, and its replacement with schemes like those for industrial injuries to cover for all illness, disability and disease, whether caused by people or nature. Such a system was developed in New Zealand following recommendations from the Royal Commission in 1967 for 'no fault' compensation scheme (see The Woodhouse Report). Over the 1980s Atiyah's views shifted. He still argued that the tort system should be scrapped. But instead of relying on the state, he argued people should have to take out compulsory first party insurance, like that available for cars, and this model should be spread progressively.
Limits on noneconomic damages
Other tort reform proposals, some of which have been enacted in various states, include placing limits on noneconomic damages and collecting lawsuit claim data from malpractice insurance companies and courts in order to assess any connection between malpractice settlements and premium rates.
Reduction in the statute of limitations of action
A different reform is not to limit the amount of legitimate recovery, but to reduce the time to sue--the statute of limitations of actions. New York law now requires that:
An action for medical, dental or podiatric malpractice must be commenced within two years and six months of the act, omission or failure complained of or last treatment where there is continuous treatment for the same illness, injury or condition which gave rise to the said act, omission or failure; provided, however, that where the action is based upon the discovery of a foreign object in the body of the patient, the action may be commenced within one year of the date of such discovery or of the date of discovery of facts which would reasonably lead to such discovery, whichever is earlier....
Punitive awards and juries
Another head of damages that can be awarded is called "punitive damages", or sometimes "exemplary damages". The word "punitive" means punishment and the word "exemplary" implies that damages should "make an example" of the wrongdoer. The purpose of such damages are twofold: to deter wrongful conduct by other actors, and to serve a normative function of expressing social shock or outrage at the defendant's actions.
In most jurisdictions, punitive damages are not available. They are considered contrary to public policy, because the civil justice system in many countries does not have the same procedural protections as the comparable criminal justice system. Therefore, allowing punitive damages would have the effect of punishing actors for wrongful conduct without allowing them the ordinary procedural protections that are present in a criminal trial. The fear is that punitive damages encourage a vindictive, revenge seeking state of mind in the claimant and society more generally. In the UK, Rookes v Barnard limited the situations in which punitive damages can be won in tort actions to where they are expressly authorised by a statute, where a defendant's action is calculated to make profit, or where an official of the state has acted arbitrarily, oppressively or unconstitutionally. In the United States, though rarely awarded in tort cases, punitive damages are available, and are sometimes quite staggering when awarded. For example, in 1999, a Los Angeles County jury awarded $4.8 billion in punitive damages against General Motors to a group of six burn victims whose 1979 Chevrolet Malibu was rear-ended by a drunk driver, causing it to catch fire. That was later reduced to $1.2 billion by the judge.
It is argued by some that extraordinary damage awards in the United States are a result of the jury system. In federal courts in the United States, the right to a jury trial in most civil cases is entrenched in the Seventh Amendment of the United States Constitution. Many state constitutions have similar clauses to protect the right to a jury trial in state court proceedings. In many countries, particularly in continental Europe, juries are not used at all even in criminal cases due to the cost of protracted trials necessitated with a jury present and confidence in judicial impartiality. In the United Kingdom, juries are available in criminal cases and for tort cases involving defamation, false imprisonment and malicious prosecution. Even in these limited areas of tort there have been growing concerns about the juries' role. In particular, the disparity between awards in defamation cases (which invariably concern celebrities, politicians and the rich) and awards for personal injuries has been growing. Inevitably, the awards rose in a way that a fixed system of damages under judicial scrutiny does not allow. Juries are unseasoned with a daily exposure to tragic accidents in tort litigation. When confronted with their first case they may be shocked and outraged, which inspires a willingness to teach the wrongdoer by a big damages award that "tort does not pay".
Awards for pain and suffering
Tort compensation easily applies to property damage, where the replacement value is a market price (plus interest), but it is difficult to quantify the injuries to a person's body and mind. There is no market for severed legs or sanity of mind, and so there is no price which a court can readily apply in compensation for the wrong. Some courts have developed scales of damages awards, benchmarks for compensation, which relate to the severity of the injury. For instance, in the United Kingdom, the loss of a thumb is compensated at £18,000, for an arm £72,000, for two arms £150,000, and so on.
Even more difficult to reckon are damages for the pain and suffering of an injury. But while a scale may be consistent, the award itself is arbitrary. Patrick Atiyah has written that one could halve, or double, or triple all the awards and it would still make just as much sense as it does now.
Another likely factor driving up punitive damages are quota litis agreements between lawyers and clients, in which a share of the awarded punitive damage is awarded to the lawyer recovering it, giving the trial lawyer a direct economic incentive in high damages. Such a quota would usually amount to 25% to 30%. Such agreements, while lawful in the US, are considered unethical in the European Union.
Class action lawsuits in the United States
Mass actions are lawsuits where a group of claimants band together to bring similar claims all at once. Class actions are lawsuits where counsel for one or more claimants bring claims on behalf of similarly situated claimants. These do not exist in most countries, and what will usually happen is that one case will be funded as a "test case", and if judgment falls in the claimants' favour the tortfeasor will settle remaining claims. Class actions are justified on the basis that they ensure equal treatment of similarly situated victims, avoid the risk of conflicting judgments on similar issues, and allow an efficient resolution of a large number of claims. In the US, class actions have been used (and by some views abused) in order to overcome the differences applicable in different jurisdictions, including the perceived predispositions of judges, juries, and differences in substantive or procedural law. So if one claimant lives in State X, where courts and laws are unfavourable to their claim, but another claimant lives in the more favorable jurisdiction of State Y, they may bring a class action together in State Y. Strictly speaking, State Y must not adjudicate the claim unless it is found that the applicable law is similar or identical in both states, but as a practical matter this rule is often disregarded in favor of efficient resolution of claims. Another measure particular to the U.S. is the introduction of "proportionate liability", in place of joint and several liability.
Claimed inefficiency of legal system
According to economist Reed Neil Olsen, "...tort law generally and medical malpractice specifically serve two legitimate purposes. First, the law serves to compensate victims for their losses. Second, the threat of liability serves to deter future accidents." Tort reformers maintain that the present tort system is an expensive and inefficient way to compensate those injured.
According to a 2004 study of medical malpractice costs, "program administration--defense and underwriting costs--accounts for approximately 60 percent of total malpractice costs, and only 50 percent of total malpractice costs are returned to patients. These costs are high even when compared with other tort-based systems, such as automobile litigation or airplane crashes, that determine fault and compensate victims. Moreover, most patients that receive negligent care never receive any compensation. The Harvard Medical Practice Study found that only one malpractice claim was filed for every eight negligent medical injuries." Of the legal changes proposed by tort reformers, this study found that states capping payouts and restricting non-economic damages saw an average decrease of 17.1% in malpractice insurance premiums. However, more recent research provided by the insurance industry to the publication Medical Liability Monitor indicated that medical malpractice insurance rates had declined for four straight years. The decrease was seen in both states that had enacted tort reform and in states that had not, leading actuaries familiar with the data to suggest that patient safety and risk management campaigns had had a more significant effect. Similarly, Klick/Stratman (2005) found that capping economic damages saw an increase in doctors per capita.
There is no guarantee, however, that any savings from tort reform would be efficiently distributed. Tort reform in Texas during the 1990s created $600 million in savings for insurance companies while the fraction of policy dollars needed to cover losses fell from 70.1 cents in losses in 1993 to 58.2 cents in 1998.
Opponents of these liability-limiting measures contend that insurance premiums are only nominally reduced, if at all, in comparison to savings for insurance companies. Further, opponents claim that parties are still being injured at similar or higher rates, due to malpractice not being deterred by tort claims and the attraction of lower quality physicians to "tort reformed" states.
Special medical malpractice courts
Tort reform advocate Common Good has proposed creating specialized medical courts (similar to distinct tax courts) where medically trained judges would evaluate cases and subsequently render precedent-setting decisions. Proponents believe that giving up jury trials and scheduling noneconomic damages such as pain and suffering would lead to more people being compensated, and to their receiving their money sooner. Critics of the health courts concept contend that it is ill-conceived, that it would be unfair to patients, that it would be unlikely to achieve its objectives, and that much of its goals as are reasonable can be achieved more fairly and with greater efficiency under the existing civil justice system. In addition, experts have suggested that health courts would be inevitably biased towards physicians, and that the bureaucracy needed to introduce safeguards against such bias would negate any cost savings. Still, a number of groups and individuals have supported this proposal.
United States
In general, tort reform advocates contend that too many of the over 15 million lawsuits filed in the United States each year are "frivolous" lawsuits.
The term "frivolous lawsuit" has acquired a broader rhetorical definition in political debates about tort reform, where it is sometimes used by reform advocates to describe legally non-frivolous tort lawsuits that critics believe are without merit, or award high damage awards relative to actual damages.
Tort reform advocates argue that the present tort system is too expensive, that meritless lawsuits clog up the courts, that per capita tort costs vary significantly from state to state, and that trial attorneys too often receive an overly large percentage of the punitive damages awarded to plaintiffs in tort cases. (The typical contingent fee arrangement provides for the lawyer to retain one-third of any recovery.) A Towers Perrin report indicates that U. S. tort costs were up slightly in 2007, are expected to significantly increase in 2008, and shows trends dating back as far as 1950. More recent research from the same source has found that tort costs as a percentage of GDP dropped between 2001 and 2009, and are now at their lowest level since 1984. High-profile tort cases are often portrayed by the media as the legal system's version of a lottery, where trial lawyers actively seek the magic combination of plaintiff, defendant, judge, and jury. Advocates of tort reform complain of unconstitutional regulation caused by litigation, and that litigation is used to circumvent the legislative process by achieving regulation that Congress is unwilling or unable to pass.
Tort reform is also proposed as one solution to rapidly increasing health care costs in the United States. In a study published in 2005 in the Journal of the American Medical Association, 93% of physicians surveyed reported practicing defensive medicine, or "[altering] clinical behavior because of the threat of malpractice liability." Of physicians surveyed, 43% reported using digital imaging technology in clinically unnecessary circumstances, which includes costly MRIs and CAT scans. Forty-two percent of respondents reported that they had taken steps to restrict their practice in the previous 3 years, including eliminating procedures prone to complications, such as trauma surgery, and avoiding patients who had complex medical problems or were perceived as litigious.
A few of the changes frequently advocated include limits on punitive damages, limits on non-economic damages, limiting the collateral source doctrine, use of court-appointed expert witnesses, elimination of elections for judges, reducing appeal bond requirements for defendants faced with bankruptcy, "venue reform", which limits the jurisdictions within which one can file a lawsuit, limits on contingency fees, the adoption of the English Rule of "loser pays" (the defeated party must pay both the plaintiff's and the defendant's expenses), and requiring that class action lawsuits with nationwide plaintiffs be tried in federal courts, eliminating awards for pre-judgment interest. Many of these measures tend to benefit defendants; others, such as the English rule, sanctions for delay, and early-offer settlement requirements, could have benefits to plaintiffs in some cases.
Not all tort reform supporters support all proposed tort reforms. For example, there is a split over whether the collateral source doctrine should be abolished, and there is a healthy debate over whether it would be beneficial to further restrict the ability of attorneys to charge contingent fees.
Disputed issues
Critics of tort reform contend that real purpose of the proposed changes is to shield businesses, especially large corporations, from having to pay just compensation to consumers, patients and clients for damages incurred from fraud, negligence, medical malpractice or other legitimate tort claims. They contend that limitations on punitive damages and other restrictions on plaintiff's traditional rights will reduce corporate accountability. Because corporations typically engage in a cost-benefit analysis before considering whether to stop a wrongful action (such as polluting or not enacting proper measures for safety), they contend that corporations will decide that the cost of changing a wrongful practice would be greater than the cost of continuing it, unless there is the chance that the cost of continuing will be made greater by a successful lawsuit. In this view, the prospect of paying a small damage award would have little or no effect in correcting the wrongdoing, and would essentially allow the corporation to continue an unsafe practice unless state or federal regulators interceded.
Tort reform supporters argue that this precisely describes the problem: lawsuits over socially beneficial practices increase the costs of those practices, and thus improperly deter innovation and other economically desirable activity. They further suggest that small businesses are hurt worse by the threat of litigation than large corporations are, because the legal expenses from a single lawsuit can bankrupt a small businessperson.
How would tort reform affect safety?
Proponents of the existing tort system contend that tort reform advocates exaggerate the costs and ignore the benefits of the current tort system. For example, consumer advocates and legal scholars contend that lawsuits encourage corporations to produce safer products, discourage them from selling dangerous products such as asbestos, and encourage more safe and effective medical practices. Beginning in the early 1980s, Professor Stephen Teret and other faculty at The Johns Hopkins University School of Public Health argued that tort litigation was an important tool for the prevention of injuries. While Teret acknowledged that the primary purpose of tort lawsuits usually is to recover money damages for the injured persons, as compensation for their medical and other costs, he identified several ways that litigation can also enhance safety for everyone, including:
(1) to avoid paying future damages, the creators of dangerous products or conditions may voluntarily make them safer; (2) where conduct is particularly egregious, courts may award punitive damages to deter that conduct in the future; (3) the process of gathering information prior to trial - called 'discovery' - can bring information to light that can be used by policy-makers to create new laws or regulations.
In contrast, a 2006 study by Emory University professors Paul Rubin and Joanna Shepherd argued that tort reform actually saved tens of thousands of lives because "lower expected liability costs result in lower prices, enabling consumers to buy more risk-reducing products such as medicines, safety equipment, and medical services, and as consumers take additional precautions to avoid accidents." They also concluded that "caps on noneconomic damages, a higher evidence standard for punitive damages, product liability reform, and prejudgment interest reform lead to fewer accidental deaths, while reforms to the collateral source rule lead to increased deaths."
Tort reform advocates cite a 1990 study of auto safety improvements by Harvard University professor John D. Graham for a conference at the Brookings Institution found that
The case studies provide little evidence that expanded product liability risk was necessary to achieve the safety improvements that have been made. In the absence of liability risk, the combined effects of consumer demand, regulation, and professional responsibility would have been sufficient to achieve improved safety. In some cases, however, liability seemed to cause safety improvements to occur more quickly than they would have in the absence of liability.
Graham further notes that
there is no evidence that expanded liability for design choices has been a significant cause of the passenger safety improvements witnessed since World War II. Graham concludes by endorsing reform, noting that case studies of the current product liability system "suggest that manufacturers may be inclined to delay design improvements when they fear that improvements will be used against them [in court].
However, design improvements to increase safety cannot be used against manufacturers in court to show that the product was unsafe. Rule 407 of the Federal Rule of Evidence specifically states, "evidence of the subsequent measures is not admissible to prove: negligence; culpable conduct; a defect in a product or its design; or a need for a warning or instruction." This means that evidence of changing the design of a product after an accident cannot be used in court against the manufacturer to prove it is liable for the damage.
It is true, however, that the evidence could be introduced to prove "ownership, control, or the feasibility of precautionary measures." But, a lawyer representing the manufacturer could concede ownership and control, and thus prevent the evidence from being introduced for that purpose. And a lawyer for the manufacturer could seek to prevent the introduction of the evidence to show feasibility of precautionary measures if he/she argued such evidence would violate Rule 403 of the Federal Rules of evidence. Rule 403 bars evidence that is relevant, but overly prejudicial.
Another presenter at the same Brooking Institution conference, Murray Mackay of the University of Birmingham, claimed safety (and other) innovations were inhibited by fear of lawsuits:
[S]trict liability has had a negative influence on innovation. It has held back new designs, consumed resources that might otherwise have been directed at design improvement, and added on costs to the consumer. ... [I]n Western European countries ... liability risks are low and the marketplace pays a premium for innovative technology in safety as well as other areas. As a result, most safety-related advances in recent years have come from European manufacturers and, more recently, from the Japanese. ...
The effect of tort reform on medical outcomes has been studied with mixed results. A 2008 study found worse childbirth outcomes for mothers and infants in states with caps on non-economic damages. The Klick/Stratman paper cited above found several effects of specific tort reforms on infant mortality that lost statistical significance when looked at more closely--that is, correlation with other state-specific factors wiped out apparent increases in mortality from joint and several liability reform but also wiped out apparent decreases in mortality from capping economic damages and restrictions on contingency fees. The only tort reform effect that proved robust was a negative effect of collateral source reform on black infant mortality.
Proponents of tort reform counter by pointing to data from New Zealand, which has abolished its medical tort system but has medical error rates close to those in the United States. Tort reform advocates, including Paul Offit, also argue that litigation has driven from the U.S. marketplace many useful and safe medical advances, including Bendectin (the withdrawal of which has led to a doubling of hospital admissions for morning sickness) and vaccines for Lyme disease and Group B Streptococcal disease, which kills one hundred infants per year.
Frivolous lawsuits
Under some interpretations of the law, a frivolous lawsuit is one that cannot reasonably be supported under existing legal precedent or under a good-faith argument for a change in the law. However, the term has a broader rhetorical definition; in political debates, "frivolous" is also used to describe tort lawsuits where there is only a remote link between the conduct of the defendant and the injuries alleged by the plaintiff or where the damages sought by the injured plaintiff are perceived to be too high for the injuries sustained. Tort reform advocates also complain about lawsuits that are brought based on purely hypothetical damages where the plaintiffs have suffered no tangible harm whatsoever, or where the harm caused could be traced to elements of excessive negligence or irresponsibility on the part of the claimant. Real or fictional frivolous lawsuits are a popular target of American humor. Proponents of tort reform claim that frivolous lawsuits are common, costly, and based on the contingent-fee system of paying lawyers, while critics point out that summary judgments address those issues.
Existing rules, however, regulate the prosecution of "frivolous" lawsuits. Under already existing law in every U.S. jurisdiction, if a defendant or the judge believes that a plaintiff has misrepresented the facts or the law or has brought a "frivolous" pleading, the defendant, or the court on its own initiative, may ask for the action to be thrown out and for the attorney bringing the action to be penalized with a variety of sanctions. For example, Rule 11 of the Federal Rules of Civil Procedure provide in part: "By presenting to the court a pleading, written motion, or other paper--whether by signing, filing, submitting, or later advocating it--an attorney or unrepresented party certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances: . . . (2) the claims, defenses, and other legal contentions are warranted by existing law or by a non-frivolous argument for extending, modifying, or reversing existing law or for establishing new law; [and] (3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery." If the court decides that the plaintiff has violated this rule, it has wide discretion to sanction the offending party, the party's attorney or both, including the discretion to dismiss the plaintiff's claim or claims, order the plaintiff, the plaintiff's attorney or both to pay money, reprimand the attorney and/or refer the offending attorney to the applicable disciplinary authorities, among other things. Ethical rules also forbid attorneys from filing "frivolous" lawsuits. State courts and bar associations typically publish sanctions imposed on attorneys for violations of these rules. A simple review of these published opinions demonstrates that courts take violations of their pleading and ethical rules seriously.
Tort reform in Texas has imposed a requirement in medical malpractice cases that only a physician practicing or teaching in the same specialty as the defendant can serve as an expert witness in the matter. Additionally, a report from that witness showing evidence of negligence must be filed with the court within 120 days of the filing of the case. Failure to do so results in liability for the defendant's legal fees. Filing an action but failing to find a suitable expert or failure to file adequate reports within the time frame provided can result in hardship for a plaintiff who may already be crippled by physical injuries and bankrupted by medical fees.
Regulation through litigation
Advocates of tort reform also complain of regulation through litigation, the idea that litigation is being used to achieve regulatory ends that advocates would not be able to achieve through the democratic process. For example, Rep. Rick Boucher (D-VA) argued in support of a 2005 federal tort reform that gave immunity to gun manufacturers in certain lawsuits because such lawsuits were "nothing more than thinly veiled attempts to circumvent the legislative process and achieve gun control through litigation"; reform supporters complained that (and the Pentagon supported the bill on the grounds that) the plaintiffs were trying to "sue [gun manufacturers] out of existence" by forcing them to incur $250 million in legal defense expenses, while gun control supporters argued that the legislation took "away the right of victims to be able to have their day in court," that the bill gave unprecedented immunity to a single industry, and claimed that the law was unconstitutional.
Healthcare industry
Tort reform advocates argue that by limiting the threat of frivolous lawsuits, the medical industry would migrate away from practicing defensive medicine. This would reduce the number of unnecessary tests and procedures, typically performed under patient request, thereby reducing the costs of medical care in general. As an argument against the current system, tort reformers link the rising costs of premiums for physicians' medical malpractice insurance to the rising cost of personal and group policy health insurance coverage. California's Medical Injury Compensation Reform Act has been cited as a model for tort reform in health care.
Others deny that medical malpractice suits play a significant role in the cost of health care. Including legal fees, insurance costs, and payouts, the cost of all US malpractice suits comes to less than one-half of 1 percent of health-care spending. Other recent research suggests that malpractice pressure makes hospitals more efficient, not less so: "The recent focus by the American Medical Association and physicians about the dramatic increases in medical malpractice insurance premiums, and their suggestion of a cap on non-economic damages, deserves a closer look. According to Baicker and Chandra (2004), increases in premiums are not affected by past or present malpractice payments, but may increase due to other unrelated factors. Chandra, Nundy, and Seabury (2005) find that the rising cost of medical services may explain the bulk of the growth of "compensatory awards". They also find that the greatest ten percent of the malpractice payments have grown at a smaller pace than the average payment for the years 1991 and 2003. This means that the "medical malpractice crisis" is not necessarily fueled by the growth in malpractice payments. Furthermore, malpractice pressure actually forces our hospitals to be technically more efficient. This implies that existence of the medical malpractice system is beneficial, and its strength should not be diluted by either putting caps on non-economic damages or by decreasing the statute of limitations."
There has been a noticeable drop in medical malpractice insurance premiums for physicians in states that have enacted Tort Reform. Particularly ones that capped non-economic damages such as Texas did in 2003. For example, The Doctors Company, a physician-owned medical liability insurer, was insuring OB/GYNs at a mature claims-made rate of $131,601, which was a 20% increase from the previous year. As of 2008, the most an OB/GYN was paying for a liability insurance policy with The Doctors Company was $64,714. States that have not enacted Tort Reform legislation tend to have a higher cost of professional medical liability insurance than states that do.
Opponents of tort reform legislation often reference the story of Frank Cornelius, whose New York Times op-ed piece, "Crushed by My Own Reform," told of allegedly negligent procedures performed by his physicians. In 1975, Cornelius had fought for damage caps, but he later came to repent of his role in that campaign.
Some say that federal licensing is a better approach and a strong central regulatory body is the answer to deal with negligent physicians who cross state lines.
Controversy over the impact on business
Some supporters of tort reform posit that reforms can significantly reduce the costs of doing business, thus benefiting consumers and the public in the long run. Harvard Business School professor Michael E. Porter stated: "product liability is so extreme and uncertain as to retard innovation. The legal and regulatory climate places firms in constant jeopardy of costly and ... lengthy product suits. The existing approach goes beyond any reasonable need to protect consumers, as other nations have demonstrated through more pragmatic approaches." A commission by the American Insurance Association and co-authored by Nobel Prize winner Joseph Stiglitz to look at the effects of bankruptcies from asbestos litigation on workers in the asbestos industry; the study estimated that 52,000 jobs were lost.
Critics of the tort reform movement dispute the claim that the current tort system has a significant impact on national or global economies. The Economic Policy Institute wrote that the effect on the economy of job loss resulting from lawsuits is negligible:
In an April 2002 paper, the CEA (President Bush's Council of Economic Advisors) examined the economic impacts of the tort system in somewhat greater depth. But that paper, too, failed to demonstrate any employment effects of the tort system and made no prediction about the impact of tort law change. Even if we assume that asbestos liability legislation could somehow have prevented the loss of 2,500 jobs per year resulting from asbestos-related bankruptcies (by, for example, limiting compensation for non-economic damages to the victims or their survivors, or by denying awards of punitive damages), the effect on overall employment and the national unemployment rate in an economy with more than 130 million payroll jobs would have been imperceptible (a change of less than two-thousandths of 1%).
Critics of tort reform also contend that the real purpose of the proposed changes is to shield businesses, especially large corporations, from having to pay just compensation to consumers, patients and clients for the harm incurred from fraud, negligence, medical malpractice, product liability or other legitimate tort claims.
Specific industry protections
In response to lawsuits filed against gun manufacturers by several municipalities, a bill was proposed by the U.S. Congress in 2005 that would provide immunity to gun manufacturers for most negligence and product liability actions (and prohibit the Bureau of Alcohol, Tobacco, Firearms, and Explosives from revoking a dealer's license, even in cases where a dealer has been identified as selling a relatively high number of guns subsequently used in violent crimes).
Organizations such as the United States Conference of Mayors oppose gun manufacturer immunity legislation. Others have argued that the legislation took "away the right of victims to be able to have their day in court," that the bill gave unprecedented immunity to a single industry, and that the law was unconstitutional to the extent that it conflicted with the Separation of powers.
Dispute over "litigation explosion" claims
The American Tort Reform Association (ATRA) claims that "The cost of the U.S. tort system for 2003 was $246 billion, or $845 per citizen or $3,380 for a family of four" and "The Growth of U.S. tort costs have exceeded the Gross Domestic Product (GDP) by 2-3 percentage points in the past 50 years". This claim is based on a 2002 study by Tillinghast-Towers Perrin.
Opponents of tort reform deny that there has been a "litigation explosion" or "liability crisis", and contend that the changes proposed by tort reform advocates are unjustified. Records maintained by the National Center for State Courts show that population-adjusted tort filings declined from 1992 to 2001. The average change in tort filings was a 15% decrease. The Bureau of Justice Statistics, a division of the Department of Justice (DOJ), found that the number of civil trials dropped by 47% between 1992 and 2001. The DOJ also found that the median inflation-adjusted award in all tort cases dropped 56.3% between 1992 and 2001 to $28,000.
Tort reform advocates allege that these numbers are misleading. They claim that most liability costs come from pre-trial settlements, so the number of trials is irrelevant. Supporters further note that the number of "filings" is a misleading statistic, because modern filings are much more likely to be class actions with many more joined claims than the cases of decades ago. They also note that the choice of the 1992 start date is misleading, because the largest increase in the number of tort cases occurred between 1970 and 1992. They also argue that the use of the median, rather than the mean, is a misleading statistic for measuring the magnitude of the litigation problem.
Supporters frequently base their claims of an "explosion" in the costs of tort litigation based on annual studies by Tillinghast/Towers Perrin, a major consultant to the insurance industry. In 2008, Towers Perrin reported that the cost of liability litigation has outpaced the growth of the GDP growth of 9% in estimated annual tort costs between 1951 and 2007 as opposed to a 7% average annual growth in GDP--representing 2.2% of GDP in 2004 vs. just 0.6% in 1950 and 1.3% in 1970. More recent research from the same source has found that tort costs as a percentage of GDP dropped between 2001 and 2009, and are now at their lowest level since 1984. The Tillinghast/Towers Perrin study has been criticized by the Economic Policy Institute, a progressive think tank: "Although TTP's estimate is widely cited by journalists, politicians, and business lobbyists, it is impossible to know what the company is actually measuring in its calculation of tort costs, and impossible to verify its figures, because TTP will not share its data or its methodology, which it claims are 'proprietary.'" Tort reform supporters claim that the Towers Perrin numbers are underestimates in many ways.
Corporate lawsuit abuse
Tort reform opponents argue that corporations and insurance companies are the worst abusers of the litigation system. In particular, they contend, corporations often use their enormous resources to unfairly delay trial, pursue frivolous appeals, and contest claims in which liability is clear. In response, a number of tort reform supporters argue that that criticism is not a reason to oppose tort reform; such abuse would be deterred by proposed tort reforms such as "loser pays," which would prevent large corporations from using litigation as a cudgel against individuals and small businesses who cannot afford to defend themselves in court by providing an incentive for law firms to provide contingent defense. Opponents of tort reform contend that most private citizens would be afraid to sue wealthy corporations or insurers if they could be bankrupted by an award of the defendant's legal fees if they lost. This would limit legitimate claims, and effectively deny many citizens a forum to redress the harm caused them.
Changing definitions of torts
Tort reform in Texas changed the definition of negligence in the context of emergency room treatment to include only "willful and wanton" acts. This has been interpreted as including only acts intended to harm the patient.
Hailstorm litigation reform
In March and April 2012, the Lower Rio Grande Valley in Texas was hit with two severe hailstorms. Texas Monthly wrote, "Windows were shattered. Hail knocked holes in rooftops. Unfortunate animals were beaten to death." Insurers paid out $556 million in claims to homeowners and $47 million to car owners. After the storms, thousands of lawsuits were filed against insurers and adjusters. The lawsuits were based on allegations of "low-ball payments on claims." As a reaction, a state senator introduced legislation (Senate Bill 1628) to reform hailstorm litigation.
The bill represented "an almost visceral fight between the insurance industry, Texans for Lawsuit Reform and trial lawyers whose symbolic leader in storm-damage claims in Steve Mostyn of Houston." By 2014, there had been 2,000 lawsuits filed in Hidalgo County, Texas. "One local attorney had erected a billboard 'evoking fire and brimstone' to remind homeowners that they had to file a claim within two years." According to Texas Monthly, "By May [of 2014], there had been 5,972 lawsuits filed, with Mostyn and members of his firm filing 1,612 of them." Mostyn "had pioneered" lawsuits for storm damage after Hurricane Ike. He made over $86 million in legal fees.
In February 2017, a bill was introduced in the Texas state Senate that would aim "at ending hailstorm lawsuit abuse." Texas Lt. Gov. Dan Patrick supported the bill (Senate Bill 10) and said during his State of the State address, "Hailstorm litigation is the newest form of lawsuit abuse." Patrick said that storm litigation rates had risen dramatically, causing insurance companies to increase premiums and reduce coverage. The bill would still allow hailstorm insurance claimants to sue their insurance company. It would allow plaintiffs to sue for either deceptive trade practices or unfair settlement, but not both. According to SE Texas Record, "The bill also seeks to end barratry in hail litigation, as reports of lawyers employing contractors and insurance adjusters to drum up clients have continued to surface the past several years." The bill would also prevent plaintiffs from suing their individual insurance agent. An identical bill (HB 1774) was introduced in the Texas House of Representatives.
Debates over individual reforms in the United States
A number of proposals have been made by advocates of tort reform, although these proposals are not agreed on by all 'tort reformers' and are considered by many opponents a roll-back of the reforms of the twentieth century. The collateral source rule, for example, dates back to 1854.
Non-economic damages caps
Non-economic damages caps place limits on a jury's ability to award damages to victims for pain and suffering and loss of enjoyment of life as well as punitive damages. The purpose of these reforms is to allow for fair compensation for victims while preventing excessive, emotionally driven jury awards from bankrupting entire organizations and leading to job losses and cost increases for consumers.
Proposals to cap non-economic damages are one of the most frequently proposed tort reforms, and have generated controversy over their fairness, efficacy, and constitutionality. Critics complain that limitations on punitive damages and other restrictions on plaintiff's traditional rights will reduce corporate accountability. Because corporations engage in a cost-benefit analysis before considering whether to stop a wrongful action (such as polluting or not enacting proper measures for safety), caps on damages may well encourage corporate malfeasance. They contend that the prospect of paying a small damage award provides too little incentive to correct the wrongdoing, and would allow the corporation to profitably continue an unsafe practice.
For example, tort reform critics point to the story surrounding the Ford Pinto, where accountants determined that the expected payout in wrongful death suits would be less than making a design change to prevent the gas tanks from blowing up on minimum impact. "This cost-benefit analysis" that Ford completed found "that Ford should not make an $11-per-car improvement that would prevent 180 fiery deaths a year," because doing so would be a net cost. (This analysis valued human lives at $200,725 each.) In other words, it was cheaper for Ford to fend off wrongful death lawsuits than to implement the safety improvement. For tort reform critics, the prospect of unpredictably large damage awards would reduce the incentive that companies have to behave in this manner.
Joint and several liability
Tort reformers have had the most legislative success in limiting the common law rule of joint and several liability, often replacing it with a rule of proportionate liability. Of the forty-six states that had a joint and several liability rule, thirty-three states have abolished or limited the rule. Opponents of tort reform contend that the elimination of the rule would under-compensate people who had the misfortune to be hurt by more than one person, if at least one of the defendants does not have the financial means to pay his or her share of proportionate liability.
Loser pays
Nearly every Western democracy follows the "English rule," which requires the loser of a civil suit to compensate the winner for his or her attorney's fees. For example, after authors Michael Baigent and Richard Leigh lost their plagiarism litigation over The Da Vinci Code in a British court, they were ordered to pay the defendants' $1.75 million in attorneys' fees.
The "American rule" differs; in most cases, each party bears its own expense of litigation. Supporters of tort reform argue that loser-pays rules are fairer, would compensate winners of lawsuits against the costs of litigation, would deter marginal lawsuits and tactical litigation, and would create proper incentives for litigation, and argue for reforms that would require compensation of winning defendants some or all the time. In federal courts, debate has focused on the scope of Federal Rule of Civil Procedure Rule 11, which sanctions attorneys in some situations for making frivolous filings.
Opponents argue that such rules would have had a chilling effect on civil rights litigation. Proposals to limit frivolous lawsuits have been criticized on the grounds that the restrictions could be used to impede individuals attempting to enforce civil rights laws, according to The Federal Judicial Center's Study of Rule 11. Robert L. Carter, United States District Court Judge for the Southern District of New York, and Rep. Sheila Jackson Lee have both argued that Brown v. Board of Education would have been called frivolous. In response, reform supporters note that victorious civil rights litigation could hardly be deemed "frivolous"; that desegregation was accomplished through legislative, rather than judicial action; and that reform opponents overstate the importance of litigation in the civil rights movement.
Tort reform in US politics
Tort reform is controversial. George W. Bush made tort reform a centerpiece of his successful run for Texas governor and of his second-term domestic policy agenda. In the 2004 presidential election, Democratic vice presidential nominee John Edwards, a successful trial attorney, was criticized by tort reform advocates for lawsuits that he brought against obstetricians on behalf of children who suffered severe birth injuries; reformers criticized the suits as relying on "junk science", while Edwards denied the allegation.
Republican lobbyist Grover Norquist points out possible political motivations for tort reform, writing in American Spectator that "Modest tort reform, much of which has been actively considered by committees in both houses, would defund the trial lawyers, now second only to the unions, and this is debatable, as the funding source of the Left in America." But the debate over tort reform is not always a partisan affair. As a senator, Barack Obama voted for the Class Action Fairness Act of 2005 and for the FISA Amendments Act, which granted civil immunity to telecommunications companies that cooperated with NSA warrantless wiretapping operations. In the 2000 presidential election, the Democrats' vice presidential nominee, Senator Joe Lieberman, was a leading supporter of tort reform; former New Republic and Slate editor Michael Kinsley has often criticized products liability law. And the conservative pro-life group Center for a Just Society opposes many tort reform measures, arguing that litigation can be used to keep RU-486 off the market.
The United States Supreme Court sometimes weighs in on tort reform debates, but here too, the justices do not always vote according to their predicted ideological stereotypes. In the seminal case of BMW v. Gore, the court ruled that the Constitution placed limits on punitive damages, with liberal justices Stephen Breyer and John Paul Stevens in the majority and Justices Antonin Scalia and Ruth Bader Ginsburg dissenting. Under Chief Justice John Roberts, some expect the court to be more likely to take cases that could resolve tort reform debates.
Commonwealth nations
New Zealand
United Kingdom
- Pearson Commission (Royal Commission on Civil Liability and Compensation for Personal Injuries) 1979
- Sir Liam Donaldson, Making Amends (2003) Crown Copyright
- Proposed NHS Redress (Wales) Measure 2007
Source of the article : Wikipedia
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