Tort Reform: Just What The Insurance Company Ordered
Tort reform has been skirting the edge of federal-level action for some time now. State-level tort reform allowed for a ‘trial run’ of sorts, and the results are surprising… or are they?
- The Complaint: Insurance premiums are at an all-time high.
- The Proposed Reason: Because of the multitude and magnitude of settlement pay-outs the insurance companies are forced to make, largely due to “frivolous lawsuits” that gum up the gears of our legal machine.
- The Solution: Tort Reform.
Tort reform takes many shapes. In the mid-80s, each state adapted their own style of tort reform in response to high premiums. Today, each state is again selecting their favorite style: limiting non-economic damages, restricting punitive damages, reforming joint-and-several liability rules. There is the option of offering federal payments as incentives to states that successfully improve the liability system and reduce lawsuits. Another option is to require litigious patients to first obtain a certificate from a panel of medical experts, showing that their case has merit. Another experiment is a program in which doctors disclose mistakes early, apologize, and then try to negotiate a payment to the patient.
Nevertheless, physicians and insurance companies across the country continue to demand further tort reform. Is it really that surprising? The insurance companies are the real benefactors! State-level tort reform was recently subject to a study by the American Association for Justice, the nation’s largest trial lawyers’ group. The AAJ analyzed data from the National Association of Insurance Commissioners and insurance companies’ annual statements. The resulting report revealed the following:
- In states where tort reform had been implemented, insurance companies were pulling in roughly 24% more in profits.
- In 2008, the insurers in these same states took in three times more in premiums than they paid out.
- In contrast, 98,000 people die per year due to medical errors.
Tort reform is not the answer. AAJ President Anthony Tarricone stated, “Insurers cried wolf and demanded tort reform, only to pocket the profits and never pass savings onto physicians or patients.” Tort reform does not lower insurance rates, health care costs or doctors’ premiums. Instead, it economically injures those who are already physically injured, and alleviates the pressure on medical professionals to avoid careless medical errors.
“We have an epidemic of medical malpractice, not of malpractice lawsuits.” ~ Tom Baker, University of Pennsylvania law professor
“The major problem out there is medical errors that are not compensated, rather than frivolous claims that are compensated.” ~ William Sage, University of Texas at Austin Vice Provost for Health Affairs.