What Is Tort Reform - And Why Is It Bad For The Public?

There’s an interesting dichotomy regarding the public’s perception of lawsuits in America. On one hand, we love the little guys, Erin Brockovich, and the myriad crusaders for justice in John Grisham’s novels. We hate “big tobacco”, and cheer multibillion dollar settlements in the tobacco litigation. Americans, as a general rule, are distrustful of big corporations. The accounting scandals on Wall Street have left the public with the perception that the bigger the company, the deeper the corruption – remember Enron, Tyco, and Worldcom?

We’re enraged when we hear about companies that put the bottom line ahead of the safety of their customers. Yet, despite our predilection to root for the underdog, many Americans support tort reform.

What is a tort, and what is a tort reform? The classic legal textbook about Torts is called Prosser and Keeton on Torts. In that book, one definition offered of a tort is a “civil crime”; an act that is illegal, but is not criminal. Perhaps the most common type of a tort is an auto accident. Medical malpractice suits are also torts. Tort reform is the effort to “reform” lawsuits so as to prevent “runaway verdicts” that range into the millions of dollars.

Often, tort reform, or “tort deform” as its detractors call it, revolves around setting limits of awards for “noneconomic damages”. Noneconomic damages include things like pain & suffering, mental anguish, and in general, anything you don’t have a fixed bill for. To better illustrate, let’s say you’re in a car wreck and your car receives $5,000.00 in damage, and you need $5,000.00 in medical treatment. You would have $10,000.00 in economic damages. If you were to receive another $7,000.00 for pain & suffering that $7,000.00 would be noneconomic damages.

When you hear about multimillion dollar jury verdicts, they usually involve a form of noneconomic damages that are called either punitive or exemplary damages. Let’s take a look at what punitive/exemplary (P&E) damages are, and are not.

First, punitive damages are not intended to compensate or reward the individual who was wronged. The Merriam-Webster definition of punitive is “inflicting or aiming at punishment”, and the definition of exemplary, in this context anyway, is “to serve as a warning. That means that P&E damages are to punish a party who did something that the jury wants to make sure never happens again, such as knowingly selling a dangerous product, or hiring a bus driver that failed his drug test. Over time, it has been found that the most effective way to deter a company from engaging in unethical or illegal behavior is to punish them financially for their misdeeds. Juries do this by awarding punitive damages, and those awards could be considered a fine. Of course, rather than the state collecting a fine, the punitive damages go to the plaintiff of the lawsuit. From time to time, juries are outraged by a defendant’s behavior and award punitive damages that are far in excess of any suffering the plaintiff endured. These verdicts are what are reported to the public, and these verdicts create the perception of greedy plaintiffs and money-grubbing trial lawyers. However, what is rarely reported are the circumstances that caused a jury to award the large verdict.

Let’s take a burn case for an example. What if a company was making $1.3 million dollars a day selling a product that they admittedly knew routinely caused second and third degree burns to their customers? What if during the ten years they offered this product, over 700 people had been badly burned – some permanently disfigured – by this product? What if this product was sold as something harmless, even common, but this product would cause third-degree burns to the skin within two seconds of contact if it were accidentally dropped? Finally, what if that company called those 700+ burn victims “statistically trivial” and refused to fix the product, even though doing so would cost next to nothing?

What would a fair award be for the callous indifference of a multibillion dollar corporation that made $1,300,000.00 per day - $474,500,000.00 per year - by selling a product that burned over 700 men, women, and even infants?

This isn’t a fictitious case. This is the famed “McDonalds coffee case”, and in that case, six men and six women found that an appropriate punishment for McDonalds was to “fine” them the profit from just two days of nationwide coffee sales.

McDonalds sold their coffee at 180-190 degrees, a temperature that they admitted no human could drink, as it would cause third-degree burns within 2-7 seconds of contact with skin. Over 700 people had been burned within the ten years prior to the McDonald’s coffee case, yet McDonalds wouldn’t lower the temperature of their coffee.

Stella Liebeck was the woman who was burned. She was a 79 year old grandmother who received third-degree burns to her legs, thighs, and genitals when the cup accidentally spilled in her lap. The 190-degree coffee immediately soaked into her jogging pants, and she was unable to do anything to prevent her burns. She had to go through painful debridements (scrubbing with wire brushes), skin grafts, and her treatment lasted two years. Of course, at the end of the treatment, she was left with permanent scars. She offered to settle with McDonalds for the amount of her medical bills, and they refused. After that, she hired an attorney, and the rest became a media circus.

One fact that wasn’t reported very heavily was that the judge reduced the $2,700,000 award to $480,000.00 and Stella settled for an undisclosed figure less than that amount instead of going through a lengthy appeals process. This demonstrates the safety valve inherent in the systems of many states: A judge can often reduce a verdict he or she finds excessive.

Perhaps the most important fact of the case is that the day after the verdict, McDonalds lowered the temperature of their coffee to 158 degrees, a temperature that takes about a minute to cause severe burns; the justice system worked, and it worked because of a large jury verdict.

But America now ridicules a grandmother who received third-degree burns to her genitals: Ever receive a piece of e-mail called “The Stella Awards”? The “Stella Awards” are supposed jury verdicts that purportedly showcase how “broken” the justice system is. None of those verdicts are real; some are laughable. But every laugh at the “Stella Awards” is a laugh at a permanently disfigured grandmother. More importantly, every recipient of the “Stella Awards” is someone receiving misinformation that may influence them to support tort reform.

The real point of tort reform isn’t to prevent multimillion-dollar jury verdicts; most of those awards are reversed or overturned, and even if they weren’t, a $1 million dollar verdict isn’t much deterrent to a company that makes ten billion dollars a year. So what is the point of tort reform? It’s to keep the misdeeds of corporate America out of the public eye. After all, if a plaintiff’s “best day in court” is arbitrarily set at $250,000.00, there’s no incentive to go through a lengthy and expensive trial if the plaintiff is offered $250,000.00 by a company that sells a defective product. Such a settlement would almost certainly be confidential, and the company could continue selling their defective product and killing or maiming consumers without anyone knowing of the dangers of the product. Confidential settlements kept the problems with Firestone tires a secret for years before the recent lawsuits. To put a finer point on it, confidential settlements killed Firestone consumers; it wasn’t until public litigation began that Firestone recalled tires that they had for years known were defective.

The real effect of tort reform will be to ensure that corporations can keep their dirty laundry private, and to place the financial well-being of a corporation above the physical well-being of their consumers. It’s a sad commentary on our society’s values that corporations will pay more money for defrauding investors out of money than for knowingly selling products that kill their consumers.

Comments

[Kay]

I just wanted to thank you for giving me a better understanding of tort reform.

True. Merriam-Webster's definition of punitive is “inflicting or aiming at punishment”. However, Merriam-Webster's definition of punitive damages is "damages awarded in excess of normal compensation to the plaintiff to punish a defendant for a serious wrong."

[David Pysnik]

Well said! This article does a great job summing up what tort reform is all about, and I hope many people read this article; it was very informative.

There are cases out there that deserve attention and compensation, but what about the loads of frivolous cases out there? They drown out the deserving claims and cost the American people millions of dollars a year in raised prices and taxes. America needs tort reform.

[Justinian Lane]

How do lawsuits raise taxes? I hear this argument thrown about, but never get any concrete answers. If you have one, I'd love to hear it.

[sv]

Go to overlawyered.com for the facts. This sight is pathetic. Trial lawyers work on pure extortion.

[Justinian Lane]

Actually, trial lawyers work to protect innocent people from the corporate interests that punish people to protect profits. And I'm glad you enjoyed the "sight" so much. Tell your friends.

overlawyered.com? Are you serious? That site is run by Walter Olson, “longtime senior fellow at the Manhattan Institute”. The Manhattan Institute is one of the most conservative “think tanks” around. They are truly pro-corporation. Thank god for trial lawyers and the truth of this site.

[Adam]

You are an idiot. This website is total crap.
Any dollar that is for punitive damages is passed from doctors to the insurance companies through insurance premiums for doctors and the public, which is then factored into our costs for health insurance. Trial lawyers don't cause bad doctors to get their licenses revoked. The medical board does. You don't know what you are talking about. Tort Reform Now.

Adam, Please educate yourself. Insurance policies generally do not cover punitives, which, by the way, are limited in many states to a multiple of compensatory damages - often just three times. Your party line rings hollow. Being a dogmatic loser is no way to go through life(with apologies to Animal House).

The cost of just about everything in America - goods and services, health care, education, public services and the like - all come with a lawsuit attached. It has been estimated that American businesses, CONSUMERS, and governments spend upwards of $80 billion annually on litigation and liability insurance premiums. These costs are ultimately passed on down to you and me - the American consumer. We ALL pay - and we all LOSE.

Our current litigious landscape has serious implications for health care, particularly for ob.gyns. For example, a nationwide survey of ob.gyns. and other primary care physicians found that 67% do not provide childbirth services because of sky-rocketing malpractice insurance costs. Even some of our country's major medical centers are discontinuing or limiting their obstetrical services.

COPYRIGHT 2003 International Medical News Group:
DR. ELIZABETH B. CONNELL is professor emeritus of gynecology and obstetrics at Emory University School of Medicine, Atlanta

[RWP]

There will probably be several reasons why America will not continue to be THE world superpower over the next several generations. The trial lawyers will be one of those reasons, although they will no doubt be pointing their fingers at everybody else.
I find it interesting that the trial lawyers tend to talk about the "good old boy" network that apparently drives the evil corporate empire. I think the real dangerous good old boy network exists withing the ranks of the trial lawyers assocations and activist judges.
God help us - until you sue Him too!

[creditmonitoringsucks]

Tort reform is a very bad idea especially considering the persons who happen to be promoting it at this time. All I know is we deal daily with the damage that bad corporate practices have handed us. My husband and I are the victims of massive identity theft.

Furthermore while being victimized by the thiefs we were also sold products that "protect you" from identity theft.

Funny they sold that product to us KNOWING we were already victims when we ourselves did not know and they Concealed it from us.

Want to say its an accident or inadvertant? The credit bureaus advertise business collection products that can show you "Up To 20 consumers" all USING the same SSN.

While they told people we had bad credit were not the rightful holders of our own SSN's. That they falsly attributed the correct owner of the SSN to an undocumented alien in their credit files.

Trial lawyers are not the problem when the average person cannot afford to enter federal court system and that option is just not available to them. Do you know how hard and what it cost to find a lawyer to take our case?

The system is already rigged terribly in the favor of the corporations.

Now you sit here telling me mister anonymous that trial lawyers are the problem?

From where I sit I don't think so.

And to further quantify this statement I am a registered republican.

And as always creditmonitoringsucks.

[Chadi Ibrahim, MD]

Tort reform in healthcare is a must. Physicians do not lose their licenses because of lawsuits that reward large sums of money. There are medical boards that do that. I highly doubt that the argument of making large corporations liable for their misdeeds and intentional harm of the public applies to physicians. Physicians are humans and mistakes do happen, but rarely are those mistakes intentional. Without tort reform in this area, ultimately rising healthcare costs will ensure that patients and the physicians that treat them are the big losers in this system.

[KJD]

Tort reform is definitely needed. Unfortunately the big winners in the class action lawsuits are the lawyers. An article in the newspaper today, written by a medical doctor, stated the "It is the attorneys who are olding patients and doctors hostage." What did the lawyers in the MacDonalds case receive? I'm sure it was a lot more than the victim who suffered the burns.

[creditmonitoringsucks]

Class actions are not designed for the PLaintiffs to be the big winners.

They are a method for similar plaintiffs to SHARE the cost of a single litigation.

So of course the attorneys will always make more money than an individual plaintiff.

But when weighed against the aggragate Plaintiff award they get a percentage rather than a larger award than the plaintiffs.

Class actions that are worthless??

Coupon class actions ......where plaintiffs get a coupon for future business, I think those should be outlawed. Since you are then stuck trying to do business with a company that may have mistreated you previously.

Like Microsoft comes to mind. Rather than a $100 coupon we should have gotten a check for $100 so we could have bought Linux distros with it since it was an anti-trust case in the first place.

[Dean]

I agree that tort reform is a must. Prices of health care, education, and others will rise tremendously unless something is done to prevent these frivolous lawsuits that give people handouts. Yes, the government did spend some $80 billion dollars covering trial litigation. Also, the quality of health care is in risk of going down. Where is a doctor's incentive to practice when medical malpractice costs them nearly what they make? This country could wind up with too few doctors to even provide health care. If a doctor does 300 operations a year, and just five of them dissatisfy the patient, it is almost guaranteed that in today's world a lawsuit would be filed on one of those cases for some unintentional, prewarned side effect of the operation. How are drug companies supposed to develop new drugs for new procedures when they are all being frivolously tried for new appearing side effects in drugs that have been on the market for years? The entire system is hurting, and something needs to be done. And yes, I am a Democrat.

[Jeff]

I am slightly disturbed by your comments on Tort Reform. I became personally interested in tort reform when my father (who is an orthopaedic surgeon) lost his practice because he could no longer practice due to expensive malpractice premiums. In Pennsylvania, no doctor is allowed to practice without malpractice insurance. I understand your analogy to McDonald's that makes Billions of dollars a year, but what about doctors, who at best, make roughly $500,000. A multimillion dollar case destroys their life. Also, what about doctors that make less. At best, my father made $200,000 to $300,000 a year and has been practicing for roughly 50 years. In recent years, insurance payouts for healthcare has been dropping and doctor's incomes have dropped. As a result, too many health professionals are forced into retirement or to move to a state that supports tort reform. To use as an example of a case that had an outrageous award: I know of a doctor and personal friend who had his life destroyed because of a malpractice case. His family now lives in poverty and he can never practice again because his reputation is scarred. One lady came into his office for a problem she was having. The doctor, who was an OB/GYN, requested X-rays and a CT scan. On the scans nothing significant appeared according to the radiologist at the time. The doctor treated as best to his knowledge and requested the lady return for a follow up. The lady never returned. Two years later, the lady was found to have a cancerous growth that apparently had been there a a couple of years. She died within a year. (Please excuse my abreviation of the story). Looking back at the previous scans to try to see if something showed up, a small spot was visible the size of a small pea. The lady's family sued and was awarded $15 million. Most of which to be payed out by the OB/GYN, and some by the Radiologist. On top of this, the lawyer was payed roughly $12 million and the family received around $500,000 after all was said and done. One happy lawyer. There are instences where tort reform is possibly a good idea. Most doctors have one to two suits against them per year. Most are dropped and some are settled out of court. Why would anyone who has to pay over $500,000 of schooling and loans and go to school for eight to ten years want to live that life? I hope you're happy.

[creditmonitoringsucks]

The problem with TORT reform is it is not aimed really at protecting Doctors so make no mistake about that.

It is aimed at protecting insurers and corporations.

So if you think the only aspiration of tort reform is to allow Small town Doctor to practice medicine.

I got a bridge I would love to sell you.

[Jeff]

If you think that Tort reform is for coporate America only. You are sadly mistaken. Please take the time to read this legislation in Pennsylvania. Unfortunately, I feel that it has no chance of passing because the Bar Association will never allow it. How dare anyone limit the amount a lawyer may receive in a medical liability case. Doctors are the easiest target in America. What is your alternative solution to the problem of failing healthcare? Medicine is an Art, not a science and there are constant risks.

PA legislation for Tort Reform:
http://www.legis.state.pa.us/WU01/LI/BI/BT/2003/0/HB2722P4102.HTM

just a small taste:
"4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby resolves as follows: ...
4 (b) In a medical professional liability action involving a
5 medical professional liability claim brought against a licensed
6 health care professional or a health care facility, the General
7 Assembly may, by statute, limit the recovery of noneconomic
8 damages for injuries resulting in death, or for injuries to
9 persons.
10 (c) In no other cases shall the General Assembly limit the
11 amount to be recovered for injuries resulting in death, or for
12 injuries to persons or property, and in case of death from such
13 injuries, the right of action shall survive, and the General
14 Assembly shall prescribe for whose benefit such actions shall be
15 prosecuted."

I don't appreciate personal attacks on my intelligence either.

[creditmonitoringsucks]

I don't think I personally attacked your intelligence; unless, you would in fact be interested in buying said bridge in which case:

If the shoe fits........

On other dribble,

The problem with medical services in general is they are NO LONGER controlled by doctors.

As a person who waited 90 days with an imploded disc that 4 surgeons recommended surgery for on day one. Insurers are a big part of DAMAGES.

I do know exactly what the issue is.

HMO's prevent care for patients that NEED care to save money, in exchange doctors are getting paid commissions for delaying and denying said care. So now you are saying if they do that for financial gain they shouldn't be held liable for that.

Please tell me what exactly is to the consumers benefit in tort reform as relates to medicine?

It will not lower prices since insurers are already price gouging to begin with.

Persons NOT insured and NOT US Citizens are getting free care that we are all compensating for. Fixing that problem would lower medical care prices but no one is even looking at that.

So pray tell please exactly HOW is tort reform exactly going to lower the cost of medicine?

Oh and just remember that NON ECONOMIC injury your talking about? In some cases refers to the LOSS of SPOUSE, LOSS OF PARENT. etc. That person is LOST to their family for their entire LIVES.

So what your really saying is your momma is only worth $250,000 when some quack makes a HUGE bonafide error like being drunk in the operating room. Because tort reform doesn't differentiate the CAUSES of the injury.

Cause frankly I don't see it benifiting anyone who is a consumer of medical services.

I do see it benefiting a whole lot of medical providers, insurance companies, and wealthy corporations.

this is sticky situation--and to some extent I agree with what you are saying--if my parent went into surgery and died because of some drunk quack, i would be livid. YET, THINGS HAPPEN FOR A REASON. because we are guided by a higher power we have no right to say what should have happened "if". we most certainly can assume we are knowledgable in TRYING to promote life, but we do not hold the DIRECT power of life. no amount of money could ever replace my parent; therefore i see no appropriate supplement, if even for millions of dollars. justification comes in many forms for the innocent. i simply see tort reform as a tool to contain the "runaway" verdicts to those WHO ARE TRYING to "fool" the system.

[creditmonitoringsucks]

Not everyone believes in a higher power and therefore is not comgforted by that fact.

And GOD taking your life away by accident is one thing gross negligence is an entirely different matter.

Things don't always happen because God wills it.

God has imbued man with free will and thererfore not all deaths are because God has willed it.

What I am talking about are MINOR children who will grow up without their parent, in need of financial support for the rest of their lives.

What is it worth to never see your parent again? You parent to not attend your wedding? Your College graduation? Your High School graduation?

You have to remember tort reform is being applied with a wide brush in current legilation it will impact every lawsuit just and unjust alike. Fair and unfair alike with no mercy, no compassion, no exception.

Just remember a lawsuit is only frivolous until it is YOUR lawsuit, and your damages.

[Mark Novitsky]

Listen, We are LONG overdue for REAL / Legitimate Tort Reform. First, the legal industry needs to be regulated just like every other service/industry. By an external and impartial disciplinary/regulatory review board. NOT by its own TRADE ASSOCIATION. Second, The American adversarial legal system and the "right" of the legal profession to continue as self-regulated IS NOT the best system out there. It is a monopolistic, extrodinarily expensive, and self-serving inefficiencies do not put the best interests of the public as its priority. Which should eliminate its ability to function without adequate protections and reasonable oversight. Antiquated "Unauthorized Practice of Law" statutes keep the access and costs to basic fundemental legal redress unavailable to (AMA) 38 Million Americans per year. These are not frivolous lawsuits- but basic legal needs that can be undertaken just as "expertly" for divorce, bankruptcy, real estate, accountng and tax services, etc. for a dramatically reduced cost. Undertaken by certified Para-Legals and or accountants. "CHOICE"- Market Driven services... why isn't this an option? Aren't these alternatives AMERICAN FREE ENTERPRISE? /// MEDICAL MALPRACTICE??? The GAO, CBO, and the federal Natitional Practitioner Databank (along with Pol's, the AMA, and the Insurance industry) KNOW that data and analysis from the NPDB report that 5.1% of doctors in the US are responsible for 54.2% of all Med-Mal payouts. Of practicing physicians with 5 or more payouts only 13.3% have ever been disciplined. This is outrageous. Impartial and non-partisan studies report as between 44,000 to 95,000 innocent American victims annually DIE from medical "errors". A 1990 HARVARD study reported as many as 195,000 deaths. This make deaths by medical "errors" between the 3 and 8th LEADING CAUSE OF DEATH IN THE US!!! Physicians HEAL and POLICE Thyself!!! Why are these things allowed to occur? The public lacks information, interest, and a LOBBY. Those Congressman that voted for Med-Dis "reform" will have blood on their hands when these numbers skyrocket if this legislation is passed by the Senate after the election and becomes law. HealthPartners-a Minnesota insurance company- recently implemented a policy of no longer paying for HUGE costs associated to mediacal errors. WHAT DOES HEALTHPARTNERS KNOW THAT OUR POLICY MAKERS FAILED TO CONSIDER??? Thanks for the forum. "Mainstream" media chooses to ignore these problems.