Acton Commentary

Touting Tort Reform


President Bush and the Congress have been looking at various tort reform measures during the past few months with the aim of limiting the legal liability of certain industries such as gun manufacturing and fast food restaurants. Earlier this year , for example, President Bush reiterated a plan supported by the American Medical Association to cap the amount of pain and suffering and punitive damages that could be awarded in medical malpractice suits. But everyone with an interest in justice should understand that the tort system has been creating a good deal of its own pain and suffering, and not just for big companies.

Tort costs in the United States are projected to reach $290 billion by 2005, according to the Center for Legal Policy at the Manhattan Institute, in its publication Trial Lawyers, Inc.: A Report on the Lawsuit Industry in America 2003 . Beyond purely economic considerations, there are numerous concerns surrounding the huge amounts being awarded in malpractice cases. The center reports with regard to medical care, “Nearly 80 percent of doctors say they order unnecessary tests and 74 percent say they make unnecessary referrals to specialists due to fear of being sued.”

These superfluous tests and referrals cannot help but raise medical costs, which are passed on first to insurance companies and eventually on to the patients. The ignored middle in many cases is the companies and employers who offer medical insurance coverage, which squeezes them between rising insurance premiums and maintaining employee benefits.

When businesses are faced with skyrocketing medical coverage, they must consider options beyond simply eating the raised rates: either pass some of the costs on to the employee in the form of paycheck deductions, reduce the amount and quality of coverage to contain costs, or some combination of the two. Indeed, the incentive to outsource jobs to other nations becomes that much more attractive when the demands and costs of medical coverage are much lower in nations competing with the United States for jobs.

Furthermore, some of the far-reaching consequences of medical costs include unemployment and reduction in the take-home pay for working people. And when workers are laid off, the distribution of unemployment and welfare benefits from the government affects all taxpayers alike. These negative effects of huge legal settlements on working Americans must be taken into account.

Change only for the sake of change is never wise, and proposed reforms of tort law need to be examined within a moral framework that seeks to maximize justice. One of the key concerns that must be weighed is access to the courts for the poor and for victims for whom the courts are the last resort for correcting injustice. A morally cognizant reform of the courts must be in accord with the biblical mandate to “administer true justice; show mercy and compassion to one another. Do not oppress the widow or the fatherless, the alien or the poor” (Zechariah 7:9-10 NIV).

The Bush plan to limit punitive damages and pain and suffering to $250,000 in medical malpractice cases would leave the actual damage amounts with no limit, restricting only the punitive and pain and suffering awards. Neither would it prevent access to the courts for those who really need it. The opponents of the Bush plan argue that the prime beneficiaries of the legislation would be insurance companies. To argue in this way, however, is to take an inadequate and narrow view of the complex interrelationships between humans and societal institutions. If costs to insurance companies are lowered, then the competition of the insurance market over time would tend to pass reduced costs on both to businesses and employees.

A limit on punitive damages and pain and suffering in medical malpractice suits only addresses a thin slice of the larger need for tort system reform. The looming crisis was noted by former Chief Justice of the Supreme Court Warren E. Burger as early as June 1977 when, in a Time magazine interview, he pointed to “the harsh truth … that ... we may well be on our way to a society, overrun by hordes of lawyers, hungry as locusts, and brigades of judges in numbers never before contemplated.” If the Bush plan is nothing more than a small but effective step in reforming the tort system, it ought to be embraced.