Tort Reform and the Myth of Malpractice

Seth Simon

By Seth Simons

 

Let’s talk about tort reform.

 

We are in the midst of a litigation explosion, the rhetoric goes, a surge of frivolous lawsuits championed by plaintiffs’ lawyers hungry for lucrative jury payouts. Since it’s insurance companies who make these payouts, each multimillion-dollar jury verdict raises premiums for everyone who has insurance. It is therefore in our collective best interest to cap the dollar amount that injured people can win at trial.

 

Make sense?

 

Spoiler alert: not exactly. In practice, many of the problems tort reform claims to solve are nonexistent, and empirical research demonstrates that tort reform robs justice from the people who need it most.

 

A brief history

As Scott DeVito and Andrew W. Jurs write in their 2014 paper, “Doubling-Down” for Defendants: The Pernicious Effects of Tort Reform” (Penn State Law Review), there have been three major waves of tort reform in the United States: in the 1970s, the 1980s and the early 2000s.

 

The original impetus – and still a driving factor – for reform was a perceived crisis in medical liability insurance. Here’s how the American Tort Reform Association frames the issue:

 

In state civil justice systems that lack reasonable limits on liability, multi-million dollar jury awards and settlements in medical liability cases have forced many insurance companies to either leave the market or substantially raise costs. Increasingly, physicians in these states are choosing to stop practicing medicine, abandon high-risk parts of their practices, or move their practices to other states.

 

Tort reform’s solution is to cap the noneconomic damages plaintiffs can recover – thus allowing insurers to remain profitable and health care professionals to operate without fear of skyrocketing premiums.

 

The problem with caps

The tort reform lobby would like us to believe there are more malpractice lawsuits than there is malpractice. This is false: between 210,000 and 440,000 patients die in hospitals each year from preventable medical errors. Hundreds of thousands more are injured. Roughly one-eighth of these people file malpractice claims. Let’s be honest: in a better world, that fraction would be much bigger.

 

Lawsuits are unpleasant – no one particularly enjoys suing or being sued – but the civil courts are often the only route to justice for people who have been harmed, people who are generally not of means. And whether you like them or not, lawsuits serve a crucial welfare-enhancing function in society. They deter wrongdoing – by companies that pollute the environment, but automakers that peddle unsafe cars, by doctors who fail to meet a basic standard of care. More importantly, they give victims of wrongdoing a chance to rebuild their lives.

 

Tort reform solves the problem for wrongdoers but not for victims. As George Boehm writes in the Yale Journey of Health, Policy, and Ethics, damages caps disproportionately target claimants who truly deserve compensation – those who are severely injured in the “most egregious” incidents of malpractice:

 

Two recent studies have confirmed that caps on damages in medical malpractice cases, such as California’s draconian $250,000 cap on non-economic damages, are most devastating to those who suffered the most heinous injuries, those killed by the defendants’ acts, and those who suffered the greatest loss to their quality of life.

 

Caps harm more than just plaintiffs who recover less than they deserve. Contingency attorneys in states affected by tort reform are disincentivized from taking on malpractice cases – even very good ones. A 2009 study by Steven Garber found that “the likelihood of an attorney accepting a high-payoff case decreased more than for low-payoff cases in the event of tort reform, since those high-payoff cases are more likely to have significant damage reductions by caps.”

 

It’s in vogue to complain about contingency attorneys, but there’s no denying they make justice accessible to millions who would otherwise receive none. Without lawyers willing and able to (profitably) advocate for the harmed, the law is meaningless. Of course, for the tort reform lobby, this side-effect is a feature, not a bug.

 

Frivolous? Not so fast.

The access-limiting effects of tort reform seem all the more egregious when we consider that the movement’s very premise is flimsy. Numerous studies in numerous states find no evidence of skyrocketing premiums, fleeing physicians, or increased malpractice filings preceding reform. In fact, insurance companies continued to raise premiums even as litigation declined in post-tort reform states. More damning still is Boehm’s observation that

 

When confronted with a report showing that tort reform does not lead to reduced premiums, the American Insurance Association responded, “Insurers never promised that tort reform would achieve specific savings.”

 

The truth is usually more complicated than fiction, but tort reform is a compelling fiction. It uses anecdotal evidence to tap into a common paranoia toward the lawsuit: an unfounded conviction that every claim is frivolous but one’s own. Its proponents indicate that patients win only about 27% of cases, arguing that if the cases were meritorious, the number would be much higher.

 

Hard to win

But this argument holds no water. As Boehm observes, a Federal Trade Commission/Department of Justice report found that malpractice lawsuits filed by doctors against hospitals are even less successful: doctor-plaintiffs win 14% of the time. Physicians possess far greater knowledge than do plaintiffs as to what constitutes malpractice; it is difficult to imagine they would file so many meritless claims.

 

“The fact,” Boehm cautions, “is that some types of cases are difficult to win, even when they are legitimate––that they will have low win percentages is not a reflection of frivolity.”

 

Tort reform addresses a symptom of medical malpractice in the United States but not the cause. Perhaps a more effective means of reducing lawsuits would be temper the negligence that leads to malpractice itself. We need a solution that helps people who have been harmed – not one that simply harms them again.