Welcome to part three of “Waste of Time Wednesday: the Tort Reform Edition.” This segment could aptly be titled, “Equal Access for All – Except You.” As you remember, the ultimate goal of tort reform was to lower insurance rates. One way of doing this was by establishing artificial caps on non-economic damages and eliminating them altogether in some cases. There’s another, insidious way of going about this, too. If you’ve been following along, you’ll know the answer to my next question before you read another line. Was it effective?
In a word: No.
We like to believe that we all have guaranteed access to the legal system. In criminal cases and certain civil cases, it’s actually a constitutional guarantee. However, that’s not true in personal injury cases. Most American citizens aren’t learned enough in the law to appear on behalf of themselves, especially against the usually heavy-hitting insurance company lawyers. The advocates of tort reform know this well and play it to their advantage.
Many plaintiffs in PI cases cannot afford to retain an attorney, especially when faced with medical bills and loss of wages. Enter the contingency fee system: for a set percentage (typically 33%, but sometimes more), an attorney will agree to take the case. This fee is only paid if the plaintiff prevails. One of the means to the unachievable end of tort reform is to reduce the amount that can be claimed as a contingency fee through applied caps.
A study of the issue conducted by Pace, Golinelli and Zakaras in California showed that attorneys’ fees fell by about 30% due to these caps. The result? Many lawyers became less likely to take PI cases due to the fact that they were no longer economically worth it. The caps were actually changing the legal “marketplace” such that the average PI plaintiff was less likely to be able to retain counsel and, therefore, less likely to file suit. In addition, public opinion of tort plaintiffs shifted such that many lawyers believed that juries no longer found for the plaintiff that often and, in the cases in which they did, the damages were severely reduced.
Other procedural changes were also implemented which made it less likely that cases would be filed. These included expert witness requirements, reduced time frames to file a claim and lower statutes of limitations on certain claims, all of which served to make it more difficult and more expensive to pursue justice.
That part of the plan worked! Studies have shown anywhere from a 42% – 65% reduction in filings due to tort reform. This is a cause for celebration if you’re a proponent of tort reform. Not so much if you’re an injured potential plaintiff. As you already guessed (and as I pointed out last week) insurance rates did not decrease despite a drop in filings. What decreased is the American people’s access to the legal system.
Next week, we’ll wrap up the mess of tort reform by looking at another access issue: physician access.
See you then!