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January 18, 2005



I've got a better idea for a post: Why George W. Bush isn't a conservative President. Basically, everything you say about his stance re tort reform can be said about all his policies. . . . W makes Clinton look like Barry Goldwater.


The most meaningful form of tort reform would involve some form of renumeration to the defendant when the plaintiff does not prevail. Something which would make valid defense more attractive than settling a nusiance suit.

For example, if filing a lawsuit implied posting a $10,000 bond, with said bond to be awarded to the defendant under nearly all circumstances where the defendant prevails, or essentially prevails, truly frivolous lawsuits would disappear overnight. Win less than $10,000, and the defendant gets to keep the difference. Win $10k or more, and you get your bond back. Organizations, or even businesses would appear, willing to put up the bond for valid cases.

Even better: if the bond were 10% of the sought after remedy. Sue for $1million, you've got to put up $100k, and win $100k just to break even.


couple of thoughts here.

In your example, the lawyer gets $400,000.

The plantiff does not know ahead of time that they will only get 35% of the take if they win.

I contend that right there are two economic incentives for making more lawsuits.

Next. As a personal example, I work at a hospital in Kentucky. I was eating lunch with the CFO and we were discussing the high cost of our health insurance. The Kentucky Constitution prohibits jury award caps, so our insurance is much higher than say, Indiana. I specifically asked, so if I had a job at Hospital X in Indiana, where there are damage caps from malpractice awards, then the cost of health insurance would be say $300 less (I just picked a number out of thin air) per month? The response was, "Yes."

I am not saying that $250,000 is great for non-economic awards, but as fasr as I can tell, it's the only plan being offered right now.

Abu Qa'Qa

Are you saying that plaintiff's attorneys in med mal suits have chosen to close down operations in Florida and California because of the $250k cap? That ordinary citizens are now being denied access?

I have no specific information to dispute you, but IMHO trial lawyers are just as plentiful in those two states today as before the restrictions.

I'm for denying class action suits as well.

Old George is on to something when the lawyers start squealing.

Felicia Kleland

I disagree with your suggestion there is "no connection". The best you can say is that there is no *direct* connection. It takes very little critical analysis (which ironically you accuse The Telegraph and Captain Ed of lacking) to draw quite satisfactory connections.

Courts, juries, and lawyers do not operate in a vacuum. High percentage splits for attorneys fees spur on lawyers to seek awards in an ever expanding range of cases, of ever higher amounts. Courts and juries are prone to increase awards, in the knowledge that little trickles down to the meritorious plaintiff.

Jurisprudence has expanded beyond any sensible boundaries the scope of "non-economic damages" to encompass a great deal that is *anything but* fair and reasonable compensation for injury. However, at the same time, the definition of economic damages has been much more stable.

No doubt, the cap on "non-economic" would be Procrustean in a number of cases that a trial lawyer like yourself could elucidate, or demagogue upon endlessly, but do not blame the Bush Administration for settling upon this remedy.

In the face of decades of judicial activism, and a legal profession enjoying the strictures of professional licensure -- reducing entry and facilitating rent seeking behaviors opposed to the common interest -- clear cut legislative boundaries are needed.

Bush is on the right track here. At the same time, I fully expect the legal profession to haul burn victims, the wheelchair bound, disfigured children and other fearsome sights in front of the relevant Congressional committees, to play upon the nation's emotion and crowd-out rational discussion of reform.

The idea that it's the *pro*-reform side that's lacking in critical analysis here is ridiculous.

Just how would you, sir, craft a federal proposal that would reduce by 2/3rds the aggregate awards paid out by the health care industry, and better target the dispersal to meritorious plaintiffs?

John Tabin

A $250,000 reward for non-economic damages isn't enough? Why on earth not? No amount of money is going to bring a uterus back (and if it could, then that would become an economic damage, right?). But $250K is a huge chunk of change (an annual income of $293,000 or more puts you in the top 1% of earners, last I checked).


A friend of mine works part time for a malpractice lawyer. The lawyer is thinking about buying a private jet, a Boeing 727. Another friend is a former docter who is living on Social Security because malpractice insurance premiums ruined his practice. Another friend is a doctor who had to take a pay cut last year because of high insurance costs. If Federal tort reform is not the answer then maybe we could provide the leadership to get the states to reform the system. Making it possible for doctors to practice independent of HMO's and insurance company oversight is a conservative idea.


Well, I'm not averse to loser pays, but where is the federal jurisdiction to pass that sort of legislation?

Admittedly, no one pays attention to that sort of thing anymore, but I do wonder.


I think what a lot of people don't realize is that med mal happens -- it happens a lot -- and when it does, it can be absolutely devastating.

Let's argue about tort reform, sure -- but let's keep in mind the positive effect of *legitimate* cases: keeping the pressure on hospitals to institute procedures that help the most.

These guys spoil it for everyone. Here's a case where no one in the administration did anything to stop this doctor from doing continuously sloppy work. This pathologist failed to catch cancer diagnoses on more than one occasion, and worse -- called for hysterectomies in patients who had no cancer at all. People's lives are ruined because of this man, and the system did nothing to stop him.

The question really becomes: will reducing awards do anything to help this situation? Will anything that's currently proposed? This isn't all about the insurance companies. Terrible things happen when doctors get careless, and it's to everyone's benefit to institute some policy that will address not only the frivolous lawsuits that are screwing everyone, but also punish the doctors who continually screw up (like this one) and the administrations that refuse to deal with it.

Dave Johnston

Unfortunately for them, heavy regulation is coming directly at the trial bar. For years, the vast majority of tort firms - represented by the likes of the ATLA - have supported political players who side with those who seek to heavily regulate business. For years, these same players have built obstacles to a truly free market. It is now sweet irony to see Tort, Inc. staring directly at similiar boundaries to their "free market" of lawsuits. All of a sudden, regulation is "unconservative" and anathema to the business of tort law.

Well, you're exactly right. It is anathema to a free market for med mal cases, et. al. But this is simply years of abusing the market by both political and judicial means coming back around to smack this 'industry' right in the face. The cost to society is becoming too high in relation to the perceived benefit. When lawsuits put whole professions out of business - all in the name of 'recourse' - eventually people notice.

Tort awards in this country exceed $200 billion annually - more than 2% of GDP...which is completely ridiculous. That number is growing at nearly 15% per year. Medical malpractice insurance premiums have risen an average of 35% per anum since 2000. And you say there is no correlation? HOW CAN YOU DENY A DIRECT CORRELATION? Some states are in full OB/GYN crisis.

Unecessary tests, needless referrals to specialists, etc. etc. all so doctors can overcompensate for fear of a lawsuit. Meanwhile some just call it quits and refuse to treat high-risk patients.

There's an elephant in the room, and nobody with an ATLA membership card wants to glance at it.

But it's too late, tort reform is going to happen.

Scott Pierce

"Looser pays" has to be part of the equation. There has to be disincentives. To say that plaintiffs will not be represented is foolhardy as the market will always pony up someone to take the case. Lawyers today are setting policy and it isn't right (and I'm not talking about laywer/politicians but trial lawyers).

Mike K

I am a retired surgeon who has reviewed med-mal cases for lawyers, both plaintiff and defense for 30 years in California. You are mostly wrong with a few things right. The California reforms of 1975 got one big thing right. What insurance can't handle is uncertainty. Once the caps on non-economic damages held up (It took 10 years of appeals) premiums went down and stayed down. In 1972 my malpractice premium was $3500. In 1974 it went to $35,000 and my former carrier went into bankruptcy. I had been "going bare" and didn't know it. All the commercial carriers left California or went broke. Why is a long story but the crisis was real. The reforms have worked. Maybe the cap is too low now but no one wants to start the battle again except your pals in ATLA.

The other part of the crisis now is the limits on physician gross income because of managed care. Docs can no longer raise fees to pay higher premiums.

The present system of contingency fees has one big negative. What about the plaintiff who has a bad outcome but doesn't have a lot of damages? No one will take the case. Instead, we see TV ads trolling for parents of cerebral palsy babies when all the science says that cerebral palsy is NOT a birth injury. Ask John Edwards how rich you can get by fooling juries. The state medical board in California is a joke. There is almost no enforcement except by plaintiff lawyers. I know lots of honest ones and they are not the ones getting rich.

The great abuse is in class action. The asbestos thing is a travesty. I hope there is a God and a hell for those lawyers. The silicone thing is mostly gone now but it damaged medicine seriously. 25 years from now silicone breast implants will be back and no one will remember the controversy except historians of public delusions. Tobacco has very little science behind the class action suits. The danger of tobacco was known after 1950. Anyone who took up smoking after that should be on his or her own.

Tort reform is coming and it's about time. It probably won't hurt the worthy plaintiff if done right. Unfortunately, most legislators are lawyers. If they get it right it will be a miracle.

Sydney T

As a former claims adjuster, risk manager and Plaintiff's PI lawyer, I agree with just about everything you say. But there is more. If you cap benefits for a plaintiff, the badly injured plaintiff has no choice but to rely on social security and other tax programs for survival. The tort system is designed to relieve the taxpayer of that burden and place it where it belongs. Capping benefits will result in foisting that burden back on the tax payer who is already paying for it with the price of medical care. And we all know that cost is not going down.


You present the empirical evidence that states with strong tort reform laws don't seem to have lower insurance rates. But another empirical fact that goes in the other direction is that some areas (such as suburban Maryland) are rapidly losing certain categories of doctors because they're driven out of business by high insurance premiums (over $70K a year for OB/GYNs, for example) These costs are passed on to patients through higher direct charges and health insurance premiums, so when you consider tort reform limiting people's access to the courts, the other side of that coin is that high damage awards and the resulting insurance premiums severely limit people's access to health care. It's a double whammy: medical services become more expensive due to the higher costs of a single category of insurance, and then prices are driven up further by practitioners getting out of the business, resulting in more patients chasing fewer doctors.

Shannon Love

The major problem with the current tort system is accuracy. There is little connection between whether one caused harm and whether one gets sued or not. Asbestos and Silicone breast implants are just to glaring examples where junk science leads to industry destroying awards.

I think our current system relies to heavily on lay people judging the actions of those working in heavily technical fields. We would think it madness to 12 lay people make technical decisions (like your medical treatment) before hand, so how can we rely on them to judge the quality of the decisions post facto?

Presenting dueling "expert" witnesses is pointless. How can lay people reliably decide between conflicting experts? If an individual has no specialized background in a field, how do they tell when expert is shoveling BS?

We should get juries out the business of making technical judgments. Expert witness should be appointed by the courts. Juries can then make decisions based on advice from neutral 3rd party.


A cap on damages would be worthwhile if it reduced the incentives for plaintiffs' lawyers to search for gold mines. I have posted some interesting advice from the American Bar Association under "Swinging from the Heels" (linked).


Nobody wants to see a case where medical incompetence results in a 6 year old with brain damage get stuck with a $250k cap.

On the other hand, your colleagues are consistently gaming the system re: class action, venue and frivolous actions.

If the lawyers don't fix this themselves, the government will. There are cases out there awarding millions in dart-out cases where little kids ran out from between parked cars under the trailer wheels of a tractor-trailer.

Companies that built machinery in the 1930's are subject to product liability suits today.

There are abuses and overreaching on both sides.


Let's say that you have an award after trial of $1 million. The plaintiff's lawyer might easily have about $100k in costs sunk into that, so those costs come off the top right away, reducing the total award to $900k. The attorney takes (typically after trial) 40% of that, reducing the plaintiff's collection to about $540k. But then an insurer might have the right to collect $200k from the plaintiff by right of subrogation, thus reducing the plaintiff's take to $340k.

So, assuming your numbers are ballpark accurate, what you are telling me is that the attorney is being paid $460,000 on costs of $100,000? That equates to a profit margin of 360%.....just a RIDICULOUSLY high number.

This is the spot where the current system should be fixed...the cap should be on the attorney fees, not on the plaintiff award.


There's a positive-feedback-loop on uncapped damages:

no-damage-cap leads to high damages
which leads to higher premiums
which leads to MDs stopping their practices
which leads to fewer MDs _in_ or _entering_ a particular field in a particular state
which leads to higher workloads
which leads to more mistakes
which leads to more lawsuits
which leads to higher premiums (LOOP!)

Logically, this will lead to the elimination of entire medical-care-categories in certain states.


In bad situations, sometimes there are only bad answers since _every_ answer has negative consequences.

In this case, loss of entire medical fields is a _very_bad_consequence_.

Society has a decision to make ... a political decision ... on the relative value of our existing tort system or the existence of our medical system.

An argument can be made that Society made that decision in 2004 given the current debate on tort reform, the presence of a trial-lawyer on an all-lawyer presidential ticket and the whole-hearted financial support of trial lawyers for that campaign team. By my recollection, tort reform was a campaign issue, and by that standard, the lawyer's side lost.


Rich LaRocco

I have a few common questions that I never see addressed. It's my first time on this blog and you all seem to have a serious grasp of all of the details that would never make it onto the local news.

Dave Johnston said:
"Tort awards in this country exceed $200 billion annually - That number is growing at nearly 15% per year. Medical malpractice insurance premiums have risen an average of 35% per anum since 2000."

Dave - Why are rate increases growing (up 35%) faster than awards (up 15%)?

The insurers, the ones that remain in a risky and competitive business, are still making a profit. It seems like the rate increases are gratuitous when the insurer is profitable.

I understand about running a business, I run one myself, but why is a rate increase of 50k driving an OB/GYN who is making 300k out of business? Are the doctors actually making NO money or LESS money than before. I have nothing against docs making a good living, but it muddies the water about why docs are going out of business.


Hi. My first visit here. Good post.

A couple things: First (and this only strengthens your argument) most personal injury lawyers take their share of the recovery (say 40 percent, as in your example) and then reimburse themselves for out-of-pocket expenses. So in your example, the million drops to $600,000, then the $100,000 in expenses comes off; so your plaintiff is down to $500,000 (before paying off the medical liens, as you note).

Second: One of the commenters notes that malpractice insurance may cost an Indiana doctor a few hundred dollars less per year than a Kentucky doctor. That's a societal cost to Kentuckians, to be sure. But Indiana has a system that makes California's look drunkenly generous. Indiana caps ALL damages; I think the current cap is $1.5 million. Heaven forbid that malpractice causes your child to be born severely handicapped and in need of decades of intensive medical and personal care. $1.5 million (or the portion of it you'd get after fees, costs and pre-existing medical liens) wouldn't even get you out of the starting gate. If you're not exceedingly wealthy to start with, you're screwed, and that's a societal cost, too.


Tartan 69 --

The lawyer's costs are not $100K. Those are his out-of-pocket costs. There is also the cost of his time and his overhead. All of that is paid for often years before any money comes in.

And then you need to recognize that he is also assuming the risk of losing -- writing off his time and the money he's advanced -- or winning and being unable to collect on the judgment.

Which points out the flaw in the loser pays argument. An attorney who brings losing cases does pay. He's out his time, his overhead, and his case specific costs. Those can amount to hundreds of thousands of dollars in a med-mal case. Bringing frivolous cases is a great way to go broke.



Thanks for that explanation. I mistakenly inferred the $100k included the attorney's hourly billing rate (as well as overhead costs for paralegal time, support staff, etc).

Based on those ballpark numbers, I wonder what level of staff the additional $360k (minus profit margin) would support based on the attorney's billing rate plus the billing rates for associates, paralegals, and support staff? And for how long?


"Strikingly, plaintiffs received less than half the money awarded by the courts in 2002, while 54 per cent – or $126 billion - went to the lawyers and to pay administrative costs. As a result, doctors and hospitals are weighed down by expensive insurance policies that further inflate medical costs for Americans."

This quote is very persuasive to me, and should be to everyone. On the one hand you are saying tort reform is bad because the current system puts money where it should go- to the wronged. But imagine a charity in which over 50% of the donations went to administrative costs.



If, as is the case (as explained in the original post), a big chunk of recoveries goes to pay the plaintiff's medical bills --- either to the health care providers themselves, or to, say, the plaintiff's health insurance company (which paid the bills in the first place and is not entitled to reimbursement) --- it seems a bit illogical to suggest this is driving up health care costs.

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