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    Issue: Tort Reform
    Debunk the myths, slice their arguments to shreds
    5.19.04

    Ask President Bush what his answer is to spiraling health care costs and the 43 million Americans who have no health insurance, and he'll give you two words: tort reform.

    What does "tort reform" mean? Put simply, it means making it harder for people to sue one another, or making sure they can't recover very much money when they do sue. A "tort" is a wrongful act for which someone can recover damages, and tort reformers would like to exclude some kinds of acts from the definition.

    The primary area of debate over tort reform is medical liability; tort reform advocates would like to limit non-economic damages (i.e. pain and suffering) in liability cases to figures like $250,000.

    Although the Bush administration hasn't delivered on its promise of tort reform, they still argue that it is the cure for any number of ills. So let's examine the arguments.

    Argument: Americans are absurdly litigious.
    Response: In fact, most lawsuits are not individuals suing businesses. Most lawsuits are businesses suing other businesses. And the number of lawsuits is not exploding - it has been fairly flat for the last decade, even showing a slight decline.

    Argument: What kind of system do we have when a woman who spills her coffee can sue for millions from McDonald's? Frivolous lawsuits are out of control.
    Response: First, let's deal with the McDonald's story, since it's such a staple of the tort reformer's arsenal. Before that suit, McDonald's used to heat their coffee to over 180 degrees, just short of boiling. The 79-year-old woman in question got third-degree burns from the coffee, requiring skin grafts. She asked for the relatively modest sum of $20,000 from McDonald's. The corporation refused to settle. With no other options, she pursued the lawsuit and won. She was awarded $160,000 in compensatory damages. The jury also awarded $2.7 million in punitive damages, due to the fact that McDonald's policy was to heat their coffee to a level that was far too hot to drink and would cause severe burns if it came in contact with human skin, a fact of which they admitted they had been aware for more than ten years (hundreds of people had been burned by McDonald's coffee, and a number had filed suit before).

    And what happens to truly frivolous lawsuits - like the one in which a woman sued McDonald's for making her fat? They get thrown out of court. When a jury comes up with an outrageously large judgment, it gets reduced on appeal. The system is easily able to handle it.

    So the question is, does a frivolous lawsuit that will get thrown out of court anyway so offend you that you're willing to deny everyone the right to sue even when they have legitimate claims?

    Argument: Jury awards have gone through the roof, and million-dollar awards are now the norm.
    Response: The median jury award in 2002 (the latest year for which data are available) was $30,000. This represented a decline of 30% from the year before.

    Argument: If juries didn't give such high awards in medical malpractice cases, malpractice insurance wouldn't be so high. So we need to cap jury awards in order to bring down insurance rates.
    Response: Despite the recent dramatic increases in malpractice insurance rates, payouts in lawsuits and settlements for medical malpractice have been relatively unchanged in inflation-adjusted dollars since the mid-1980s.

    In an attempt to hold down insurance costs, many states have instituted caps on jury awards in medical malpractice cases. And what happened? Rates continued to rise.

    So what explains the recent explosion in malpractice insurance costs? The insurance companies' fortunes in the stock and bond markets. Simply put, when the insurance companies lost money in the markets, they increased premiums they charge doctors in order to maintain their profits. Rates have skyrocketed in the last few years because low interest rates in the bond market and the stock market's fall in 2001 reduced insurance company profits; they raised their rates in response.

    The best way to bring down malpractice costs may be to weed out bad doctors. A study by Public Citizen revealed that 5% of doctors were responsible for 54% of all malpractice payouts. But only 7.6% of these dangerous doctors were ever disciplined by their states' medical boards. If doctors were willing to crack down on the incompetents in their own ranks - including revoking the licenses of the worst offenders - malpractice costs would decline dramatically.

    Wrapping up

    One good way to argue against tort reform, particularly when it comes to things like product liability, is to put it in terms of whom you can trust. Tort reform advocates are essentially saying that you can't trust juries made up of ordinary citizens, so instead we should simply trust corporations not to make products that harm people, or doctors not to make mistakes that can ruin people's lives. If something bad happens to you, tough luck.

    The jury system is one of the cornerstones of American democracy. Among other things, it ensures that people are accountable for their actions. And the decisions are meted out not by the powerful but by regular citizens. Didn't George W. Bush go around the country claiming, "I trust the people"? But here's a funny story: in 1999, Bush's daughter Jenna was involved in a fender-bender with someone driving an Enterprise rental car. Because the other driver had a suspended license, Bush sued Enterprise.

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