Tort Reform

The objective of tort reform is to reduce the number of tort litigations and the amount of compensation awarded. Most tort cases are personal injury suits, but can include any situation involving injury to reputation, mind or body or personal property and that is not a contract dispute. Reform advocates charge that the number of lawsuits has increased dramatically over the past 20 years and that the damages paid out have become unreasonably large. Tort reform arguments are complicated by pervasive social issues that have been deeply affected by the civil justice system, such as rising health care costs attributed largely to medical malpractice suits and the seemingly never-ending asbestos and tobacco litigations.

Background

Two major types of proposals for tort reform are: 1) restricting lawsuits to reduce the number of frivolous lawsuits, and, 2) limiting monetary damages in successful suits. The American Tort Reform Association (ATRA) website provides a list of specific proposals of both types, which includes issues relating to appeal bonds, class action, collateral source rule, contingent fees, forum and venue, government retention of personal injury lawyers, joint and several liability, jury service, legal consumers bill of rights, medical liability, noneconomic damages, prejudgment interest, product liability, punitive damages, and teacher liability.

Some reform advocates seek to limit the number of tort injuries by imposing a statute of limitations which protects defendants by allowing lawsuits only where the evidence is still reasonably fresh, or imposing a “statute of repose” which bars any plaintiff from suing after a certain amount of time regardless of the date of discovery of the injury. Another tort reform proposal advocates limiting, or “capping,” non-compensatory damages. Reform activists claim that these measures will protect manufacturers, physicians and businesses, allowing them to pay less for insurance and pass their savings along to customers.

Injuries and Damages

Some argue that the benefits of reform may not outweigh the costs. Opponents of tort reform argue that proposed reforms change the justice system without really repairing anything. Instead, according to these industry observers, the suggested reforms prevent injured people from receiving appropriate compensation for their injuries while allowing manufacturers and other defendants to cut corners without risking liability. The arguments have been advanced that limiting non-compensatory punitive damages is unconstitutional, and would have the negative effect of encouraging corporations to consider their own economic loss before human losses.

Legislation and Regulation

Medical malpractice has received particular attention with respect to tort reform. Increased medical malpractice costs have resulted in increased premiums for insureds, and, reform advocates argue, increased costs for patients. As of 2018, most state laws cap malpractice damages, but in a few states such caps have been ruled unconstitutional.

Medical malpractice laws are consistently subject to legal and legislative challenges.
In 2017, in North Broward Hospital District v. Kalitan, 219 So. 3d 49 (Fl. Sup. Ct. June 8, 2017) the Florida Supreme Court ruled that a law limiting pain and suffering damages in medical malpractice cases was unconstitutional and violated equal-protection rights. The majority of justices disputed the existence of a malpractice insurance “crisis,” an argument that legislators used in their 2003 approval of limits on non-economic damages of $500,000 per claimant, with a higher cap for catastrophic damages.

In Missouri, the state legislature revised a statute in 2015 to reinstate caps on non-economic damages in medical malpractice claims, however, the issue is an area of ongoing litigation. A 2016 Missouri ruling, Dodson v. Ferrara, 491 S.W.3d 542 (Mo. Sup. Ct. May 24, 2016) affirmed the constitutionality of a cap on damages in medical negligence wrongful death actions but did not address the constitutionality of statutory caps where the negligence did not result in death, leaving some experts to state that an argument could be made that the non-economic damage cap in cases not resulting in death is unconstitutional.

A North Dakota state district judge ruled in early 2018 that the state law limiting damages in medical malpractice cases to $500,000 for such things as suffering and emotional distress is unconstitutional. The judge found that the law violated equal protection guaranteed by the state constitution by arbitrarily reducing damages for people who suffer the most severe injuries.
In 2014, California voters chose to keep a $250,000 cap on medical liability awards rather than raise it to approximately $1.1 million.

On the other hand, some states are seeking more novel solutions to address high-dollar areas of tort liability. For example, New York established the Medical Indemnity Fund in 2011 “to provide a funding source for future health care costs associated with birth-related neurological injuries.” Plaintiffs are individuals involved in medical malpractice actions who have received court-approved settlements or judgments that establish the neurological impairments to be birth-related.

Liability and Insurance

The goals of tort reform can generally be described as an effort to make the filing of a lawsuit more difficult or to limit damages awarded in a lawsuit. While reform as related to compensation for personal or other injuries in any setting can be controversial, tort reform in medicine is an area that has been especially hotly contested for decades. Medical tort reform advocates argue that it is the answer to expensive frivolous medical malpractice lawsuits, and to the costs of doctors practicing “defensive medicine” only to prevent lawsuits. The objectors to medical tort reform, however, dispute this interpretation.

Litigation

Prior to the end of WWI, substantial barriers blocked access to the legal system for citizens with limited financial resources. In the post-WWII era, however, tort rights were expanded, partly due to the ending of defendant-friendly immunities and defenses, an emerging concern about toxic exposures and the adoption of strict liability in certain circumstances. Injured individuals were encouraged to seek a remedy in court as the civil justice system acknowledged premises liability and product liability, judicially recognized special relationships, rulings in consideration of comparative negligence statutes and elimination of some contributory negligence laws.

Tort reform supporters responded to the expansion of liability. Private sector industries blamed tort lawsuits for a rise in insurance premiums and cancellations and turned to public relations campaigns to make their points. State legislatures responded with reforms, such as passing pain and suffering damages caps, placing limits on punitive damages and modifying joint and several liability rules.

Despite the reform movement, however, consumer, employee and bystander rights have expanded over time and placed increased responsibilities on employers, manufacturers and professionals. New or more aggressive tort laws have allowed plaintiffs to take action against product manufacturers and retailers, provided for more tenant rights against landlords, established new avenues for the investigation of malpractice suits against professionals, placed limitations on employers’ power to hire and fire employees at will, and limited the use of waivers to avoid liability. Also, the civil justice system has, over time, acknowledged “emotional harm” as a distinct and compensable injury. Some authorities connect the increased recognition of psychic injury to larger awards for pain and suffering damages. Finally, business-to-business tort litigation has increased in the past few decades.

Future Outlook

In all areas of torts, insurers will need to continue to monitor the back and forth on limiting lawsuits and awards. Alternatives, like New York’s Medical Indemnity Fund, may also play a part as suggested reforms seek to balance the competing interests of those paying premiums, the business needs of insurers, and those seeking recompense for injury.

In the News

2024

• US Chamber of Commerce: Nuclear Verdicts’ Amount, Frequency Continue to Increase - Chad Hemenway, Insurance Journal (06/10/2024)
  A recent report from The U.S. Chamber of Commerce Institute for Legal Reform (ILR) has found that nuclear verdicts of $10 million or more are on the rise. Looking at verdicts from 2013 to 2022, ILR said the median nuclear verdict was $21 million. The average nuclear verdict during this time was $89 million, according to Nuclear Verdicts: An Update on Trends, Causes, and Solutions.

2020

• GOP lawmakers look to limit car accident claims in Louisiana - Melinda Deslatte, Associated Press (05/13/2020)
  Louisiana’s Republican lawmakers Tuesday advanced proposals to limit damage claims against businesses in car wreck lawsuits, pushing ahead with the pre-coronavirus priority as Democrats argued the debate was inappropriate amid a pandemic.
  
  
• Fight over medical malpractice in Pa. rages as report fails to settle the dispute - Charlotte Keith, Pennsylvania Post (02/20/2020)
  In 2003, with the state’s health care industry warning that doctors were fleeing in record numbers as a result of soaring malpractice insurance costs, the Pennsylvania Supreme Court agreed to make a highly controversial move.

2019

• Court: Landlords can be liable for racially harassed tenants - Larry Neumeister, ABC News (12/06/2019)
  Landlords can be held liable in limited circumstances under federal law when a tenant racially harasses another tenant, a federal appeals court said Friday.
• Rising legal costs from more sympathetic courts bedevil underwriting model - Calvin Trice, S&P Global (10/23/2019)
  Social inflation has been pushing up loss trends in commercial insurance and forcing companies to adjust underwriting and claims to keep pace with costs, according to a number of industry executives.
• Greek Shipowner Torched Tanker in $77 Million Fraud, Judge Says - Franz Wild, Kit Chellel, Bloomberg (10/08/2019)
  A Greek shipowner orchestrated a plan for men posing as pirates to attack and set fire to his tanker, in an elaborate fraud to seek $77 million in insurance money, a London judge found.
• Proposed ballot initiative targets California’s lawsuit caps - Adam Beam, Associated Press News (09/26/2019)
  A proposed California ballot initiative would let patients get more money in medical malpractice lawsuits.

2018

• Wisconsin high court caps some malpractice damages at $750K - TODD RICHMOND, AP (ABC NEWS) (06/27/2018)
  The Wisconsin Supreme Court upheld the state's cap on noneconomic medical malpractice damages on Wednesday, reversing an appellate ruling that awarded $15 million to a woman who had all four limbs amputated after a mishandled infection. . . . The court ruled 5-2 in a long-running case closely watched by doctors, hospitals and the insurance industry. Chief Justice Patience Roggensack wrote that the cap doesn't run afoul of equal protection guarantees and that the Legislature had a rational basis for setting it at $750,000. She noted that lawmakers argued the cap would keep health care affordable and provide reasonable compensation for injuries.
• Law Limiting Malpractice Damages Ruled Unconstitutional - AP (01/10/2018)
  A state district judge has ruled that North Dakota's law limiting damages in medical malpractice cases is unconstitutional. . . . The Bismarck Tribune reports the ruling came in a case involving a Fort Yates woman who suffered a disabling stroke due to a botched surgery at a Bismarck hospital. A jury last April awarded 35-year-old Chenille Condon $3.5 million. . . . South Central District Judge Cynthia Feland has denied a motion from CHI St. Alexius Health to reduce the jury's verdict under a law that puts a $500,000 limit on damages for such things as suffering and emotional distress. . . . Feland ruled the law violates equal protection guaranteed by the state constitution by arbitrarily reducing damages for people who suffer the most severe injuries.

2017

• Ohio law may shield Fire Ball manufacturer in fatal fair accident - John Futty, Columbus Dispatch (09/11/2017)
  The manufacturer of the Fire Ball ride that broke apart at the Ohio State Fair, killing one person and injuring seven others, could be protected from liability by a state law approved more than a decade ago. . . . What was then called “tort-reform” legislation now will “make the fight for justice much more difficult to achieve” for the victims of the ride failure, said Columbus attorney Michael Rourke. He represents Tamika Dunlap, a 36-year-old woman whose legs were shattered when one of the ride’s gondolas broke loose and crashed to the ground on July 26. . . . Lawsuits that are certain to be filed in the case will be affected by legislation that took effect in 2005, Rourke said. . . . That legislation got much of its attention for placing caps on jury awards for businesses and individuals in lawsuits. But the law also set a 10-year limit on a manufacturer’s liability for a product’s defects
• Iowa Senate passes bill that would cap medical malpractice awards - Chelsea Keenan, The Gazette (03/21/2017)
  Cedar Rapids lawyer Tim Semelroth settled a medical malpractice case recently in which a client who went in for spinal surgery had the wrong portion of his spine operated on. . . . The client suffered significant physical problems that confined him to a bed, put him in a wheelchair and limited the mobility of his hands, Semelroth said. . . . “He had to sleep in a hospital bed in his basement,” Semelroth said. “He was basically a prisoner in the basement of his own home who couldn’t interact with his family.” . . . The settlement with the physician allowed his client and his family to move from the split-level house to a ranch-style home where they all could live on the same floor. . . . But Semelroth worries that a piece of legislation making its way through the statehouse could negatively affect future clients harmed by medical professionals. The bills, SF 465 and HF 487, would cap non-economic damages — damages awarded for pain, suffering, physical impairment, inconvenience and mental anguish among others — at $250,000 as well as create a certificate of merit, requiring plaintiffs’ lawyers to submit proof of medical malpractice at the beginning of the case.
• Lawmakers seek to cap damages in medical malpractice cases - SHEILA KAPLAN, STAT (02/28/2017)
  Doctors who worry about medical malpractice lawsuits would get major relief under legislation that was approved by a House committee Tuesday and that would make it harder for patients to come after their money. . . . The legislation, approved by the House Judiciary Committee in an 18-17 vote, would cap damages that can be paid by doctors, hospitals, and nursing homes. (Many states already limit awards paid by individual providers.) It would cover individuals who are insured under Medicare, Medicaid, veterans or military health plans, and the Affordable Care Act, and could also impact people covered under COBRA or health savings plans
• Consumer Activists Decry Bill to Limit Class-Action Lawsuits, Competitive Enterprise Institute - Competitive Enterprise Institute (WSJ) (02/22/2017)
  Dozens of civil rights and consumer-protection groups have signed on to letters sent to the Judiciary Committee opposing the bill. A committee of federal judges also voiced opposition, arguing that a rule-making process already under way by the courts is more effective than changes being made by Congress.
• 'Tort reform' bill targets storm-related lawsuits against insurers - James Drew, Houston Chronicle (02/13/2017)
  Declaring the start of the latest round in Texas "tort reform," Lt. Gov. Dan Patrick and a key legislator said a bill filed Monday will crack down on a small group of attorneys they say are abusing the system by filing unnecessary lawsuits after hailstorms. Patrick acknowledged that legislative changes in recent decades have targeted the civil justice system. But he added that tort reform is needed again to address the most recent problem - a sharp increase in lawsuits over damage caused by hail and other storms.

2016

• Arkansas Court Asked to Block Measure on Medical Lawsuits - Andrew Demillo , McClatchy Washington Bureau (08/29/2016)
  A group opposed to a ballot proposal that would place limits on damages in medical lawsuits asked Arkansas' highest court Monday to block voting on the proposed constitutional amendment in November. Fairness for Arkansans, a group that was formed by the Arkansas Bar Association to oppose the measure, asked the state Supreme Court to remove the proposed amendment from the ballot or bar the secretary of state's office from counting any votes for the measure. The proposal, if approved by voters, would allow the Legislature to cap non-economic damages awarded for medical injury against health care providers, with a minimum cap of $250,000. The proposal would also put a limit on the contingency fees attorneys could receive in medical injury cases.

2015

• Closing the Courthouse Door to Insurance Disputes: Mandatory Arbitration Clauses in Insurance Policies Gain Traction - Darren S. Teshima, Celia Jackson, and Harry Moren, Orrick Policyholder Insider (05/27/2015)
  While at one time arbitration clauses were common only in policies issued by foreign insurers, they are now finding their way into policies issued by domestic insurers and in all types of coverages, including commercial liability insurance policies, D&O, E&O, employment liability, and cyber insurance.
• Md. Senate to weigh bill that would double cap of payouts in civil suits - Lynh Bui, Washington Post (04/08/2015)
  A Maryland bill that would increase the maximum payouts to those who have successfully sued a local government heads to the state Senate on Thursday, making way for an update to a law that has remained unchanged for 27 years.

2014

• Tort trends - Munich Re (12/01/2014)
  The Missouri Supreme Court struck down the state’s cap on punitive damages, while a trial court in Florida ruled its state’s exclusive remedy statute was unconstitutional.
• Florida’s Supreme Court tosses out financial limits on some malpractice suits - Niraj Chokshi, Washington Post (03/13/2014)
  Florida’s Supreme Court on Thursday joined a slew of other courts in throwing out a limit on how much can be awarded in certain kinds of medical malpractice suits.

2013

• Annual Report on “Judicial Hellholes” - Archis A. Parasharami and James Tierney, Mayer Brown Class Defense Blog (02/20/2013)
  The American Tort Reform Association has released its annual report on “Judicial Hellholes”—a term it popularized for jurisdictions in which defendants often contend that they can’t get a fair shake. This year’s report identifies California, Louisiana, New York City, West Virginia, Madison & St. Clair Counties (Illinois), and South Florida as the most unfavorable jurisdictions.

Additional Items

• Jozsef Pusuma, his wife Timea Daroczi and daughter Viktoria spent three years in sanctuary in a Toronto church before they were deported to Hungary in 2014. Their asylum case, prepared by disgraced lawyer Viktor Hohots, was heard in 2010 and later denied by the Immigration and Refugee Board. GTA Roma refugees’ lawsuit has been settled for $500,000. Now, their community wants an apology for Jason Kenney’s comments
  Three Toronto lawyers who were found guilty of professional misconduct in handling Roma refugees’ asylum claims have settled a class-action lawsuit by their former clients.