Saturday, December 12, 2009

Tort Reform

Michael Getnick, President of the NY State Bar Association, published last weekend, this editorial in the NY Daily News, discussing tort reform.  Having been a personal injury attorney, Getnick predictably opposes tort reform.  I neither oppose nor support tort reform per se, but would like to see it as part of a discussion about health care reform. Which is why I become so frustrated by knee-jerk reactions like Getnick’s, which exudes false exasperation.

What is Tort Reform?

Some light googling will provide you more information than I care to relate here, but very briefly, tort reform usually involves placing limits on civil litigation.  Most typically, these limitations would control when a plaintiff may sue and/or how much money he or she may recover.[1]  Numerous shades of each type of limitation exist, so when someone refers to tort reform categorically, you may need to ask for a definition of terms before proceeding with the discussion.  For now, let’s just say that the biggest fight is over limiting the monetary award a plaintiff may receive.

Lately, tort reform is mentioned almost exclusively in relation to medical malpractice, as part of health care reform.  Typically, those who support universal health care oppose tort reform, seeing it largely as a thinly veiled attempt to shield big businesses from liability.  Meanwhile, those who oppose recent efforts at universal health care tend to support tort reform, arguing that it would do more to reduce health care costs than a public option would.

So What’s Going on Here?

Within this context, Getnick pointed out that “approximately 100,000 people die each year due to medical malpractice.”  Echoing some common anti-reform arguments, he suggests that these deaths were all preventable, and that while governmental authorities lack sufficient power to curb these losses, litigation keeps care providers in line.  So in his rush to reiterate the typical arguments, Getnick fails to spot the fuzzy logic therein.  Opponents of tort reform, like Getnick, argue for the status quo of civil litigation, but it’s under the status quo that those 100,000 people die each year.  In other words, if litigation is the mechanism capable of preventing malpractice deaths, why do so many preventable deaths occur?

To be clear, I do not argue that medical tort reform would improve these statistics.  I merely point out that tort litigation utterly fails to effectively protect patients from malpractice.  The argument seems to be that threat of law suits encourages care givers to be more careful.  But if so, it fails to sufficiently do so, to the tune of 100,000 deaths per year.  So the argument lacks even a semblance of coherence.

Getnick’s piece also attempts to debunk some myths often mentioned in tort reform discussions.  But mainly, what he debunks amounts to one myth, which is actually a poor straw man in the first place.  The so-called myth goes something like this:  if we allow unlimited damages in malpractice cases, we’ll see an explosion of frivolous lawsuits.  But no one with a grain of sense actually takes up this notion.

Frivolous suits indeed concern those who want to reform civil litigation, but the current rules on damage awards have been in place for a while, and there is no reason to believe that, absent new plaintiff-friendly rules, we should see any increase in suits.  But even in knocking down the straw man of his own construction, Getnick fails to offer a coherent argument.

First, he points out that instead of a lawsuit explosion, the years 1998 to 2008 saw a decrease in the number of tort cases filed in New York, from just under 82,000 to just over 57,000.  Second, he reasons that because civil cases often take years to resolve, during which time a lawyer working on contingency fees won’t see a penny, no sane lawyer would file a frivolous suit.  Third, the threat of sanctions keeps out some frivolous suits, and both the appeals process and judicial reduction of damage awards serve to balance out the possibility of inflated and unfair jury awards.

Quick incidental question, Mr. Getnick:  do you actually believe that even 57,000 New Yorkers per year experience medical malpractice?  More importantly, stating that lawsuit filings have decreased does nothing to address the question of whether the current tort litigation system allows too many frivolous lawsuits.

Frivolous suits can be thought of like email spam.  Have you ever wondered why spammers send you such ridiculous and obvious scam attempts?  Why do they bother sending you this stupid crap about Nigerian diplomats?  Well, spamming costs relatively little, and if the spammer sends two million messages to get only one positive response, that one response pays for the entire enterprise.  If his success rate is only 0.00002%, that still likely amounts to more money than the average American earns in a year.  The same holds true for medical malpractice.  A one-third contingency fee from a $10 million judgment easily pays for a lifetime of failed lawsuits.

According to the AMA, more than 60% of medical malpractice claims never settle or go to court, resulting in zero payment for the plaintiff, but those cases cost an average of $22,000 to defend.  If the case actually goes to trial, and the care giver wins, she will still spend more than $110,000.  So staring down the barrel of $110,000 just to win, a defendant will obviously be motivated to settle.  Paying, say, $50,000 to a crackpot to make the suit go away, even if the doctor did nothing wrong, looks better than $110,000 to get a jury to agree that the doctor did nothing wrong.  And litigation attorneys know all this.  Which is why it’s easy to file a baseless suit.  Hey, you might get lucky and get 1/3 of a quick $50,000 settlement.  Not bad for a day’s dishonest work.  And that’s not to mention getting lucky and finding a likeable client with a sad story, an unlikeable defendant, and a sympathetic judge and jury, all of which could result in a big pay day, irrespective of the merits of the case.

So to say that threat of sanctions or possibility of appeal helps thwart frivolous suits is specious at best, idiotic at worst.  And to point out that the number of lawsuits decreased in a given decade does nothing to address the problems that occur in relation to the suits that actually get filed.

Tort reform opponents also usually appeal to the larger societal good from lawsuits, and Getnick is no different.  True, people of little means cannot easily affect the political process, but they can fight back through the court system.  Suits often do cause companies to change their policies for the better.  Et cetera, et cetera.  So, basically, again with the straw man?  This response seems an overreaction to some perceived movement to drastically reduce or eliminate civil litigation.  But no tort reformer actually proposes that.

The most reasonable and reasoned proposed reforms suggest shortening the statute of limitations and limiting noneconomic damages.  That’s it.  Sure, changing the statute of limitations from 10 years to 3 years would ultimately lower the number of lawsuits, but what’s unreasonable about requiring a plaintiff to get his act together within 3 years of the alleged malpractice?  And as for limiting noneconomic damages, just look at California’s MICRA as an example.

The Medical Injury Compensation Reform Act (MICRA), passed in 1975, limits noneconomic damages awards to a maximum of $250,000.  Economic damages remain unlimited, so a patient can recover for every negative economic effect he has felt as a result of the malpractice, including future lost earning potential.  A plaintiff can be made whole again.  Additionally, punitive damages also remain unlimited.  Awards for economic plus punitive damages often reach well into the millions or tens of millions, so it’s not as though MICRA has caused victims of malpractice to lose out.

Getnick wrote, in opposition to limiting noneconomic damages, that the family of a malpractice victim “should not be told there is an arbitrary cap on the amount of damages they can receive.”  So, an arbitrary cap on the dollar amount we assign to an unmeasurable quantity like pain and suffering is bad, but arbitrarily giving a person’s pain and suffering a dollar value is all right?  His stunted argument amounts to this: pain and suffering are entirely subjective and abstract, so to compensate for them, we need to assign an arbitrary dollar amount, but placing an arbitrary limit on this arbitrary number is just plain wrong.  And please, won't someone think of the children?  Could this perhaps be because 1/3 of a limited number is usually less than 1/3 of an unlimited number?  (Go ahead and google California’s MICRA.  You’ll notice, curiously, that nearly all the sites stating that MICRA produced negative results belong to civil litigation attorneys.)

Unfortunately, the debate over tort reform has become like so much of today’s political discourse:  jammed with so much strident and useless rhetoric as to drown out any meaningful discussion.  Proponents of the proposed health care legislation won’t even entertain discussion of tort reform, seeing it as Big Business protecting its bottom line at the expense of The Little Guy.  Those anti-reformers like Getnick, who oppose tort reform as an issue discrete from health care, tend to be litigation attorneys who then come off (to me anyway) as ambulance chasers who don’t want limits put on the gravy train.  People who oppose the health care bills seem to shout about tort reform as an alternative to universal healthcare, as though the two can’t coexist, and propose laughable reforms that embody the same type of wrong-headedness as trickle down economics.

Those of us moderates stuck in the middle will have to continue waiting for an informed and intelligent debate.  Some reasonable reforms to civil litigation might actually solve some problems and perhaps even benefit the majority of Americans.  And I’d like to at least hear them enter the debate.  Minus the knee-jerk reactions, if you please, Mr. Getnick.

[1]  Some key terms and examples:

 Collateral Source Rule – Any evidence that insurance (or any other collateral source) will pay or has paid the plaintiff if the defendant is found guilty cannot be admitted into evidence.  Some seek to reform this rule to allow such evidence in order to arrive at a just award for monetary damages.  Litigation attorneys tend to dislike that notion as it would reduce damage awards, and thereby lower the amount they receive in contingency fees.

DamagesEconomic damages = everything that cost the plaintiff actual money.  E.g., his medical bills, lost wages for time he spent in hospital instead of at work.  Noneconomic damages = loss on which the plaintiff can’t put a price tag.  E.g., pain and suffering.  Punitive Damages = money the defendant must pay the plaintiff as a punishment; not tied to any specific harm the plaintiff experienced.  Since punitive (AKA exemplary) damages don’t represent harm done to the plaintiff by the defendant, most tort reformers want them limited or eliminated.  Some also want to limit noneconomic damages.  Opponents tend to like punitive damages as a deterrent (and as a way of increasing that contingency fee *wink wink*).

Statute of Limitations – Most states range from 1 to 10 years.  Tort reformers tend to advocate shorter limitations.  Anti-reformers want plaintiffs to have lots of time to find an attorney and sue.

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