Although it made only a small blip in the news radar, last week’s ruling by the Illinois Supreme Court that overturned a 2005 medical "tort reform" law may, down the road, prove to be a big deal. There are similar challenges to "tort reform" acts under review by the supreme courts of several other states. And if Illinois turns out to be a harbinger instead of an outlier, these challenges might not only impact the nation’s debate on health care reform; it also could bust one of the most successful scams ever put over on the American public.
In recent years one state legislature after another has been stampeded into passing "tort reform" laws to protect industries in those states from personal injury liability. Most of the "sales force" is made up of industry-funded astroturf groups that often are connected to the American Tort Reform Association. According to Sourcewatch, ATRA is "a coalition of medical professional associations and various industry groups — such as from the chemical, tobacco and drug industries — promoting changes to U.S legislation to limit corporate and professional liability for damage caused by their products and services."
The "tort reform" movement was begun in the late 1980s by the tobacco industry, which was facing massive lawsuits for diseases caused by its products. It was soon joined by other industries, such as asbestos manufacturers being sued by mesothelioma victims, and by the American Medical Association. Finally, political operatives such as Karl Rove identified "tort reform" as an ideal wedge issue for Republicans.
Here’s how the scam works — state legislators are sold on the fiction — and it mostly is a fiction — that their states are in crisis. They are told their states’ courthouses are swamped with frivolous lawsuits, and this is killing their states’ economies. Businesses and jobs are drying up; doctors are fleeing the state because of the outrageous cost of malpractice liability insurance. The state lawmakers are whipped into a frenzy of alarm and think something must be done right away.
And the one and only remedy to the crisis anyone has handy is "tort reform." There are several different reform provisions favored by the astroturfers, some of which make filing a lawsuit more burdensome for plaintiffs. Most state tort "reforms" also limit the amount of damages a successful plaintiff might receive. As of now, only 15 states have not imposed some kind of cap on damages.
It’s this second kind of reform, caps on damages, that drew the disapproval of the Illinois court. The Illinois court said that placing an arbitrary limit on court judgments is a violation of the state constitution’s separation of powers, because the law imposed the will of the legislature on matters that should be decided by courts.
Right now the supreme courts of Missouri, Georgia, and Mississppi are considering separation of powers challenges to their states’ tort laws. Last year the Arkansas Supreme Court struck down a portion of the state’s tort law for the same reason. In each of these cases plaintiffs have argued that the legislature has no constitutional right to tie the hands of courts by capping damage awards. There are some other similarities in these constitutional challenges as well.
In each of these five states, the law being challenged was enacted sometime between 2003 and 2005. In each state, ATRA and its network of "astroturf" organizations persuaded state lawmakers that their states were judicial "hellholes" driving doctors, insurers and employers out of their states. And the same traveling medicine show has been traveling to other state legislatures, selling the same snake oil. Tort reform creates jobs! It lowers health care costs! It will attract more physicians to practice in your state!
If you listen to ATRA, it seems that so many doctors were being driven out of so many states that one wonders where they were all going. But, according to the American Medical Association’s "Physician Characteristics and Distribution" data, the stories about doctors stampeding off to who knows where are, um, false. There is no clear pattern of doctors moving from one state to another because of malpractice law.
Further, in these states stories about a litigation "crisis" were wildly overblown. In fact, a key part of the constitutional challenge in Missouri is that the law was crafted based on a false assumption — that out-of-control lawsuits had created a “crisis” that was driving health care costs up and doctors out of the state. The legislature believed it had to write the law to respond to the crisis.
However, the truth is that the number of medical malpractice lawsuits in the Missouri long had been in decline when the law was enacted. There was no "crisis." Many states that have reformed tort see a reduction in the rate of malpractice and other personal liability litigation, but the rate of medical malpractice suits is down just about everywhere in the U.S., "tort reformed" or not. And in fact, adjusted for inflation, the rate of medical malpractice insurance premiums are at close to a 30-year low.
Further, in state after state, none of the other anticipated benefits of tort reform can be shown, without a doubt, to have materialized. Tort reformers generate data claiming every new job or new business in a "tort reformed" state is the direct result of the reform, but a comparison of economies in "reformed" and "not reformed" states shows no clear advantage for reform.
Possibly the phoniest claim of all is that tort reform lowers health care costs. If you closely monitor the nation’s health care reform debate, you’re aware that conservatives are in love with the idea that reforming tort will bring about an immediate, and dramatic, decrease in health care costs. But in not one state that has reformed its tort laws have these savings ever materialized, including the alleged savings in decreased "defensive medicine." Changing tort law doesn’t even slow down the growth rate of health care costs.
Yes, the Congressional Budget Office said last year that federal tort reform would save the federal budget $54 billion over ten years. But on page 4 of the same analysis, the CBO admitted that because so many states already have "reformed" tort, "a significant fraction of the potential cost savings has already been realized.” On pages 2 and 3, it admits that reducing the cost of medical malpractice liability by 10 percent would reduce total national health care expenditures by a whopping 0.2 percent.
And in contrast to the $54 billion over ten years, a recent PricewaterhouseCoopers study said that $210 billion of our health care dollars are wasted every year in the U.S. on paperwork.
Back to the damage caps — there are several different kinds of damages a plaintiff might be awarded. One type the tort reformers nearly always cap is called "noneconomic" damages, sometimes referred to as "pain and suffering" damages. Such awards have been made to sound ridiculous; why should somebody get paid for being in pain?
Explanation Under most state tort law, "economic" damages are those that can be documented at the time of the trial, such as with bills and receipts. But when an injury causes long-term or permanent disability, the injured person faces a lifetime of increased expense and probably lost income as well, and there is no way to document what those costs will be. Thus, "noneconomic" damages are not just "jackpots" but are intended to compensate injured people for real future costs.
The test case heard by the Illinois court involved Abigaile LeBron, now 4 years old, who allegedly was brain damaged at birth because of medical negligence. Abigaile’s parents sued a doctor and the hospital. The suit has not yet been resolved. But the Illinois law would have capped the noneconomic damages Abigaille might receive at $500,000 from a doctor and $1 million from a hospital. That might sound like a lot of money, but consider the lifelong needs of an individual whose brain damage is so profound she will never be able even to feed herself.
In the "tort reform" case now being reviewed in Georgia, a lower court judge argued that damage caps
“Of those injured by health care providers, there are two classification of victims – those who are most severely injured and, consequently, suffer the most pain and suffering, and those who are less severely injured.
“The cap’s greatest impact falls on those who are most severely injured, and creates classes of fully compensated victims and those only partially compensated. … In effect, the legislature has shifted the economic burden of medical malpractice insurance costs from the insurance companies and health care providers, including those negligent providers, to a small group of injured patients.”
It’s past time to call bullshit on the "tort reform" scam.