Geldzahler

Scott Geldzahler Business Law October 11th, 2012 Lecturer: Peter Kronberg Tort Reform In America Today; The numbers, the facts, and what action (if any) they support In order to make an argument supporting or opposing reform to the tort system in the United States, one must first understand the complex set of regulations that is the current way of handling torts in the United States. A tort is defined as a wrongful act other than a breach of contract for which relief may be obtained in the form of damages or an injunction1. When a tort is committed, the wronged party must initiate a lawsuit against the tort-feasor, setting off a civil suit, which may or may not reach trial, depending on the possibility of settlement, or another non-judicial resolution2. While seemingly simple in practice, there are countless organizations lobbying in state and federal governments with the goal of reforming the tort system. Unfortunately, these organizations are highly partisan in nature, and disagree on what type of reform is necessary to best encapsulate the interests of the public and business alike. Yet, is tort reform itself even needed in todays law system? If so, with whom does the burden of deciding these reforms lie; with the government, with the people, with lawyers, with outside organizations?
1

"tort." Merriam-Webster. Merriam-Webster, n.d. Web. 06 Oct. 2012. <http://www.merriam-webster.com/dictionary/tort>. 2 Roszkowski, Christie L. "Tort Law." Business Law: Principles, Cases and Policy. By Mark E. Roszkowski. 7th ed. [Champaign, Ill.]: Stipes, 2011. 90-110. Print.

Geldzahler There is a noticeable political and liturgical alliance between the Democratic Party and the status quo supporting collective of trial lawyers, as well as the Republican Party and those seeking reform. Organizations such as the right wing backed American

Tort Reform Association (ATRA) believes the current state of our judicial affairs leads to judicial hell holes of backed up cases, frivolous suits, unfair payouts from runaway juries, and general harm towards business and the economy, specifically small businesses.3 Other lobbies, such as the American Association for Justice (AAJ, formerly the Association of Trial Lawyers in America), believe that tort reform is unnecessary, and any change in the current practice would harm the wronged parties right to justice.4 The current battle over tort legislation began to show its face to the public in February 2005, when George W. Bush brought up the subject in his State of the Union Address.5 Said President Bush, To make our economy stronger and more competitive, America must reward, not punish, the efforts and dreams of entrepreneurs So we must free small businesses from needless regulation and protect honest job-creators from junk lawsuits. Justice is distorted and our economy is held back by irresponsible class actions and frivolous asbestos claims, and I urge Congress to pass legal reforms this year. 6

"ATRA's Mission: Real Justice in Our Courts." American Tort Reform Association. ATRA, n.d. Web. 08 Oct. 2012. <http://www.atra.org/about/mission>. 4 "Mission & History." Mission & History. AJJ, n.d. Web. 08 Oct. 2012. <http://www.justice.org/cps/rde/xchg/justice/hs.xsl/418.htm>. 5 Doroshow, Joanne. "Tort Reform: The Big Payoff for Corporations, Curbing the Lawsuits That Hold Them Accountable." Democracy Now! N.p., 04 Feb. 2005. Web. 07 Oct. 2012. <http://www.democracynow.org/2005/2/4/tort_reform_the_big_payoff_for>. 6 George W. Bush: "Address Before a Joint Session of the Congress on the State of the Union," February

Geldzahler George W. Bush has had a history of placing the protection of businesses as an integral part of his platform. While governor of Texas, George W. Bush signed into law many stipulations and caps directly attacking trial lawyers and their clients, including limiting

rewards to $200,000, or twice the economic damages caused by the tort, and capped pain, mental anguish, and suffering damages at $750,000.7 As president, he sought to bring these types of reform to the federal level. Many trial lawyers, particularly those specializing in plaintiff representation, obviously opposed those reforms. The most oft-cited examples of tort reform are those that restrict the plaintiff and enhance the liturgical powers of the defendant. These proposed changes, such as the previously mentioned monetary cap on damages, enhancement of the statute of limitations, and tweaking liability rules and payouts.8 These potential reforms vary vastly from state to state; Texas and Alaska, for example, have instituted a loser pays policy, in which, much like in commonwealth states, the loser of a civil case must pay the winners legal fees (in Texas, this policy is limited to cases that have no basis in law or in fact).9 According to former presidential candidate Rick Perry, after enacting the loser pays policy through Proposition 12 in 2003, Texas gained 21,000 doctors as a direct result of the reform.10 Unfortunately, that does not seem to be the case. In fact, not only is the number almost 10,000 doctors less, but it was found that the only reason for that
2, 2005. Online by Gerhard Peters and John T. Woolley, The American Presidency Project. http://www.presidency.ucsb.edu/ws/?pid=58746 7 Mencime, Stephanie. ""Tort Reform" Lone Star Style." Southern Exposure Oct. 2004: n. pag. Southern Studies. Web. 7 Oct. 2012. 8 "What Is Tort Reform? An Actuarial Perspective on Medical Professional Liability Reforms." American Academy of Actuaries, Oct. 2009. Web. 07 Oct. 2012. <http://actuary.org/>. 9 Roszkowski, Christie L., Business Law: Principles, Cases and Policy. By Mark E. Roszkowski. 7th ed. [Champaign, Ill.]: Stipes, 2011. 90-110. Print. 10 "Closing the Lottery; Tort Reform." The Economist (US) 10 Dec. 2011: n. pag. Print.

Geldzahler growth was simple boom in population11. Unless tort reform is somehow increasing the number of children being born, Perrys defense is a hollow one. Tort reform has changed some things though, unfortunately not for the better of the citizen. Limits in plaintiff rewards have been written into law across a variety of states, yet these payouts have not been updated and remanded to account for inflation.

For example, when the Medical Injury Compensation Reform Act (henceforth referred to as MICRA) was passed in 1975, it included a capped damages reward of $250,000 per claim.12 The problem is, that number has not been adjusted for inflation. According to the Bureau of Labor Statistics inflation calculator, the buying power of $250,000 back in 1975 is approx. $1,070,534.39 today.13 If the truth is in the numbers, than tort reformers have some explaining to do. In healthcare, perhaps the most debated field targeted by tort reformers, it has oft been theorized by Republicans and pro-reform legislators that adding new regulations and caps that decrease frivolous lawsuits, limit the power of class action cases, and reducing wild punitive damages would save hundreds of billions on healthcare. According to Arizona Republican Senator Jon Kyl; Almost everybody agrees that we can save between $100 billion and $200 billion if we had effective medical malpractice reform.14

11

Greenberg, Jon. "Rick Perry Says Texas Added 21,000 Doctors Because of Tort Reform." PolitiFact. Tampa Bay Times, 25 Aug. 2011. Web. 07 Oct. 2012. <http://www.politifact.com/truth-ometer/statements/2011/aug/25/rick-perry/rick-perry-says-texas-added-21000-doctors-because-/>. 12 Kornblum, Guy O. "Tort Reform Parts I and II: Is It Best for the American Legal System & You?" San Francisco Personal Injury Attorneys. N.p., n.d. Web. 10 Oct. 2012. <http://www.kornblumlaw.com/Understanding- Lawsuits/Tort-Reform-Parts-I-and-II-Is-it-Bestfor-the-American-Legal-System-You.shtml>. 13 "Inflation Calculator: Bureau of Labor Statistics." U.S. Bureau of Labor Statistics. U.S. Bureau of Labor Statistics, n.d. Web. 10 Oct. 2012. <http://www.bls.gov/data/inflation_calculator.htm>.

Geldzahler Yet, an analysis by a Non-partisan Congressional Budget Office committee proves otherwise, showing that these malpractice changes would only decrease spending by an uncircumstantial half a percent.15 In terms of cutting down punitive damages, the numbers look even worse for reformers. In a release by the United States Department of Justices Bureau of Justice Statistics released in 2000, it was found that the median

amount of damages in all tort related cases across 76 of the largest counties in the country in the year 1996 was only $30,500, and not the million and billions that runaway juries often give in cases.16 Not to mention that only 3% of plaintiffs were awarded any sort of punitive damages, even though the plaintiff won in almost half of the cases surveyed (48% of them to be exact). Nationally, according to a report by the same source, in 2005 the number of casing seeking punitive damages was only 12%, and of that party, only about a third were actually awarded them.17 Changing the current system could also cause a great deal of harm to all parties as well. For example; in Florida, during the 1980s, a very strict loser pays policy was enacted specifically for medical malpractice cases, in order to curb higher healthcare rates, cut down on frivolous suits, and unclog the swamped court system of the state at

14

Weissert, William G., and Carol S. Weissert. Governing the Politics of Health Policy. 4th ed. Baltimore: Johns Hopkins UP, 2012. Print. 15 Hart, Alexander C. "Medical Malpractice Reform Savings Would Be Small, Report Says." LA Times. Los Angeles Times, 10 Oct. 2009. Web. 10 Oct. 2012. <http://articles.latimes.com/2009/oct/10/nation/na-malpractice10>. 16 Rottman, David B., Sidra L. Gifford, and Carol J. DeFrances. "Tort Trials and Verdicts in Large Counties, 1996." Bureau of Justice Statistics (BJS). U.S. Department of Justice, Aug. 2000. Web. 10 Oct. 2012. <http://bjs.ojp.usdoj.gov/index.cfm?ty=dcdetail>. 17 Cohen, Thomas H. "Punitive Damage Awards in State Courts, 2005." Bureau of Justice Statistics (BJS). U.S. Department of Justice, Mar. 2011. Web. 10 Oct. 2012. <http://bjs.ojp.usdoj.gov/index.cfm?ty=pbdetail>.

Geldzahler the time18. While it did indeed free up the system by reducing the number of suits, in terms of lowering payouts and protecting doctors, it failed miserably because it did the exact opposite. Many stronger cases got to court because the system cleared out, so the

average reward actually rose quite substantially. In addition, the losing parties were often unable to pay their possible millions of dollars in legal fees as well as their opponents, leading to widespread call for repeal of the law.19 Perhaps the most famous, or infamous case made to support tort reform is the Liebeck v. McDonald's Restaurants case of 1994. In this case, defendant Leibeck sued McDonalds for damages sustained from burns and injury from spilling the coffee and subsequent car crash, claiming that the product was defective and indeed dangerous.20 Stella Liebeck was awarded $2.7 million in punitive damages along with $160,000 to cover medical expenses21. This caused many articles to be published consequently berating a legal system that allowed this to happen, supporting capped payments, and discussing the merits of the United States entire civil and tort law system in general. There was even a yearly award presented between 2002 and 2007 given to the most frivolous lawsuits filed in those years, with the tagline OPPORTUNISTS AND SELFDESCRIBED VICTIMS vs. ANY AVAILABLE DEEP POCKETS AND THE U.S. JUSTICE SYSTEM22

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"Loser Pays Medical Malpractice Legislation Introduced." Atlanta Personal Injury Attorney. N.p., n.d. Web. 10 Oct. 2012. <http://www.mlnlaw.com/lawyer-attorney-1832683.html>. 19 Closing the Lottery; Tort Reform." The Economist (US) 10 Dec. 2011: n. pag. Print. 20 Liebeck v. MacDonald, 531 F.2d 196, (4th cir. 1976), rev'd, 435 U.S. 850 (1992). 21 "The Mcdonalds' Coffee Case." The Actual Facts about the Mcdonalds' Coffee Case. N.p., n.d. Web. 11 Oct. 2012. <http://www.lectlaw.com/files/cur78.htm>. 22 http://www.stellaawards.com/

Geldzahler Tort reform is a subject that involves a wide variety of changes, thus it intrinsically encapsulates a broad range of opinions. Many, specifically trial lawyers and left wing Democrats believe that no reform is needed at all in todays world, at a federal or a state level, and that any sort of change to the carefully honed system that the United

States has developed could be detrimental to a persons right to due process, and a fair and speedy trial. On the other side of the coin, many businesses, corporate litigators, and Republican legislators believe that the path to fair and equal protection under for all citizens and businesses requires changes to the current tort trial practices. Perhaps the path to appease both sides lies somewhere in the middle. If cases such as Liebeck v. McDonald's Restaurants are allowed to award outrageous sums in damages, then obviously there will be citizens with the hope that they could also fill their pockets at the expense of big business, and thus continue to file frivolous lawsuits. Yet, current ideas such as capping damages at a certain cash amount or loser pays legislation have all failed when they were put to the test, and can treat the plaintiff, winning or losing, unfairly, be it a reward that doesnt cover damages, or having a single mother pay for a corporations millions in legal fees. The road to equality amongst plaintiffs and defendants in tort law lies not in an overhaul or addition to the current system, but taking trials such as Liebeck v. McDonald's Restaurants, learning from the mistakes that allowed that to happen, and enforcing new policy. Trying to change the tort system preemptively can, and has, lead to disaster.