If you’re like many Americans, you probably know only what the insurance industry wants you to know about tort reform. After all, lobbyists have wined and dined politicians for support and flooded mass media with the insurance industry’s version of what tort reform means.
The Tort Reform Lie
According to the insurance industry, a flood of frivolous personal injury claims needlessly raises auto insurance premiums for everyone. Medical malpractice lawsuits are driving doctors out of business. Product defect litigation and non-auto related personal injury claims are hindering the economy by costing companies big-time even when they have done nothing wrong.
State legislators should never limit whether or not a citizen is allowed to have a jury trial or compromise the jury’s responsibility to determine appropriate justice. Photo Credit: Wikimedia Commons (public domain).
As a public relations campaign, the message about tort reform was brilliant, but as an actual set of policies, it was misguided at best. With enthusiastic efforts by insurance industry lobbyists, tort reform laws became popular throughout the country, including two types of laws that are especially insidious:
- Laws that set limits on when individuals can make a claim (like the verbal and no threshold options in New Jersey and limited and full tort options in Pennsylvania auto insurance policies).
- Laws that impose damage caps on medical malpractice claims.
Even if you think that these restrictions make sense at first glance, they’re not just a way for insurance companies to wriggle into the legislative process – they’re an attempt to undermine the civil justice system entirely by limiting the function of the jury.
Cutting out the Jury
The right to a trial by jury is constitutionally protected. As the subject of the Seventh Amendment of the Bill of Rights, it’s as much of an unalienable right as free speech, freedom of religion, and the right to vote – or at least it’s supposed to be. But don’t worry, your friendly neighborhood insurance company is hard at work revoking that right in subtle but highly effective ways.
Consider the basic process of trial by jury. The members of the jury, along with the judge, hear both sides of the conflict. They then deliberate, considering the relevant laws and all evidence presented in the case. When the jurors have reached what they consider to be the most appropriate resolution, they submit their verdict, which in a civil claim may include a numerical amount of money to be paid to the defendant for his or her losses.
What tort reform really does is limit the rights of the jurors or, in some cases, remove the jury from the equation entirely. If the jury no longer has the power to decide what amount of compensation to award, can we really consider it a “trial by jury”?
In the case of injury thresholds, claimants are stripped of their right to a jury trial unless their injuries meet certain requirements, some of them very arbitrary. Often, the injuries must be permanent.
This isn’t fair to the claimant, and not because it deters frivolous lawsuits. If a person is severely injured in an accident, incurs large out-of-pocket medical expenses, misses work for a period of time and doesn’t have separate disability insurance, but recovers from those injuries in time, does that mean he or she should be stuck with no compensation for those damages? Most Americans can’t afford to miss weeks or months of work. Many can’t afford a sudden influx of medical bills, even if they personally only have to pay a few hundred dollars of a deductible and an additional 20 percent of the costs. Yet, because the victim has the good fortune to recover eventually, he or she should become the one financially responsible for all of the damages he or she suffered at the hands of someone else? There’s nothing fair about that.
Without these limitations on lawsuits, a victim could take their cases to a courtroom and let a jury decide, after hearing all of the evidence, whether or not the person deserves any compensation. There’s little real downside to the old, pre-tort reform system of doing things. Filers of frivolous lawsuits still wouldn’t get money they don’t deserve, and frankly, they would have a hard time convincing any credible attorney to represent them. For legitimate victims whose damages are serious even if their injuries don’t meet arbitrary thresholds, the old system would provide them with the fair chance to get the compensation they deserve rather than denying them their constitutional rights.
Caps on Damages Aren’t as Generous as You Might Think
Caps on damages in medical malpractice cases have a similar effect of weakening the civil justice system. Jurors go through the entire trial process, all the way up to the point of deciding how much compensation a victim deserves. Then their judgments, specific to the particular lawsuit and made after considering the evidence, are undone by laws set by politicians and insurance industry lobbyists who have no knowledge of a specific claim.
We tend to hear whatever numerical value is designated as the cap on damages – typically anywhere from $250,000 to $750,000 – and think, that’s a lot of money. We might wonder why anyone could possibly need more money than that… unless, as the insurance industry keeps trying to persuade us, people are just being greedy and trying to get rich quick.
But when your injuries are permanent and life-changing, $750,000 doesn’t stretch as far as you would like to think. Suppose that injuries from an automobile accident leave a young person paralyzed or a doctor’s medical error causes a serious birth defect that will make a child unable to ever live independently. The lifetime medical care plans for victims in situations like these can easily cost $5,000,000, $10,000,000, even $20,000,000 or more. If your (or your child’s) treatment plan is in the tens of millions of dollars, that $750,000 is less than 4 percent of what you will need just to survive. Four percent. How is a victim ever supposed to come up with the massive amounts of money to pay for that additional 96 percent of medical care, especially when their disabilities are so extreme that they will never be able to work for a living?
There’s no exception to damage caps. None at all. They apply regardless of age, severity of injuries, costs of future care. Tort reform absolutely hurts the victims who are suffering the most, and this capacity for damage is perhaps more clearly visible in the case of caps on damages than in any other aspect.
It’s not just the legal system that the insurance industry wants to control – it’s also the perceptions of the public, including your own (mis)understandings of lawsuits in America. For more about the insurance influence on the court of public opinion, check back soon for the next installment of The Insurance Industry: Perversion of a Great Idea.