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Tort Reform: What a Waste of Time

— April 29, 2015



There aren’t too many dirtier words for lawyers than “tort reform.” Well actually, it’s properly referred to as tort “reform,” the placement of the quotation marks being all-important. Much like platform shoes, tort reform’s time is over. Frankly, it shouldn’t have even begun. Hence, the rallying cry of “Tort reform: what a waste of time!”

Over the next four weeks, I’m going to highlight the major points supporting the demise of tort reform. Since tort reform has largely been a waste of time, I like to think of these four posts as “Waste of Time Wednesday” installments. I’ll present the professed reasons behind tort reform, the failure of these goals and its impact on law and medicine.

Tort reform began as a means of lower insurance rates, plain and simple. In the 1970s, the insurance market was changing and insurance rates were skyrocketing. On top of this, some carriers were considering refusing to write medical policies. Doctors came together and complained to their legislators, asking for limitations to be imposed on what they perceived as the culprit: a broken personal injury system. Certain states adopted such legislation and the tort reform movement began.

Jump ahead to the 1980s and another surge in insurance rates, again blamed on the tort system. This time though, the movement had political support in the Reagan administration. The early 2000s saw tort reform as a major talking point of the Bush administration and several states passed laws to tackle the issue.

One favored method of tort reform is the cap on or elimination of damages. This was accomplished via statutory changes limiting the amount that could be awarded as damages, as well as, in some states, limiting non-economic damages (pain and suffering, loss of consortium, etc.) and doing away with punitive damages entirely. Certain statutory changes limited joint & several liability (restitution from multiple parties); others dealt with the cases in which damages may be offset by a third party payer (insurance companies) and some gave defendants the ability to pay over time.

So, did it work? That all depends on whom you ask. The goal of medical treatment, for example, is to return the patient to as close a state of perfect health as possible by eliminating or managing disease conditions. It can certainly be said that excising cancerous tissue stops the disease from spreading. However, removal of the patient’s lungs most certainly results in death. The treatment was successful, but the patient died.

The same is true of caps on damages. Studies showed that this method of tort reform resulted in a 42% reduction of filings in states with tort reform as compared to 24% in states without it. Given that the goal of tort reform was lowering insurance rates, the true test of its success is not in the reduction of claims filed, but in the reduction of insurance premiums.

The short answer is: the patient died. In other words, filings may have dropped, but insurance premiums ultimately did not. Tort reform’s first leg has just been kicked out from under it. In next week’s installment of “Waste of Time Wednesday: The Tort Reform Edition,” I’ll tell you what actually happened to insurance rates and, together, we’ll kick out leg number two.

See you then!



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