The Myth of Tort Reform
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Injuries have many causes, including economic activities: consumers are injured or killed by defective products, workers are hurt on the job, train passengers are injured by derailments, and patients are harmed by medical errors.  Markets provide broad incentives to control the number and costs of such injuries.  For example, employers can save on wage costs by making jobs less hazardous; drivers with good safety records pay lower insurance premiums; and enhanced safety features can give a product a marketing advantage over its competitors.  In addition, the insurance market responds to people's desire to reduce the financial uncertainty associated with potential injuries.

Society uses three tools to augment the safety incentives and insurance opportunities provided by the market: regulation, public compensation programs, and tort liability.  In particular, the U.S. tort liability system is intended to reduce the number of injuries--by providing incentives for individuals and firms to take appropriate care--and to compensate those who are harmed.

"Tort" is defined very broadly in law as an injury to "one's person, reputation or feelings" or damage to "real or personal property." Tort liability is the court-enforced obligation of a "tortfeasor" (injurer) to pay for a victim's losses.

Tort law is almost exclusively contained in state law, and the large majority of tort cases are filed in state courts.  Not surprisingly, therefore, most past efforts to reform the tort liability system in the United States have taken place at the state level.  In particular, most states have adopted one or more reforms favoring defendants during the past 30 years--especially in 1986, when a perceived insurance crisis led to 41 new state laws.  The courts have also taken action at various times: recently, for example, the U.S. Supreme Court reiterated an earlier ruling that the Due Process Clause of the Constitution establishes limits on punitive damages.

Still, many critics of the current tort system say that additional federal action is needed for several reasons.  At the general level, they argue that the system's costs are too high, particularly because of excessive transaction costs (mainly compensation to plaintiffs and defendants attorneys) as well as excessive and arbitrary awards for noneconomic losses (pain and suffering) and for punitive damages.  Such high costs sometimes have perverse negative effects on safety, they argue--for example, by discouraging firms from conducting safety research that could create a legal paper trail or by raising the prices of risk-reducing goods and services, such as medical care.  Critics also contend that plaintiffs frequently bring frivolous lawsuits when they know that the defendant is inclined to settle out of court to avoid the costs of litigation.

The tort system's critics also take issue with specific types of cases. They argue that medical malpractice claims are contributing to a crisis in the cost and availability of certain health care services, that claims for exposure to asbestos by people who show no evidence of illness are burdening the courts and pushing firms into bankruptcy, and that misuse of the class-action mechanism is allowing local judges and juries who are biased against distant corporate defendants to bring verdicts that have damaging national implications.

Supporters of the current tort system question the factual basis of some of those criticisms.  They note that the number of tort cases filed nationwide has been falling since 1996.  Moreover, they say, large awards for punitive damages are rare and are often reduced before payment is made.  They further argue that the costs of the tort system are worthwhile given the system's contributions to the social goals of compensating victims, holding injurers responsible for their actions, and improving safety.  Supporters of the present system also maintain that proposed reforms are generally too broad and that fewer negative consequences would occur if the Congress allowed the states and the judiciary to address any real problems that exist.

Related Topics:

Medical Malpractice Reform

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personal injury lawyers
personal injury lawyers
Eckman, Strandness & Egan P.A.A.

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Last modified: Friday, October 24, 2014