In 2011, after years of unsuccessfully battling a Democrat controlled legislature, Oklahoma medical and business interests finally succeeded with a legislative initiative focused on adopting MICRA1 style tort reform. Political change, brought about by the 2010 mid-term elections, allowed Oklahoma to join more than one half of her sister states on the reform bandwagon. In all seventeen states adopted or strengthened tort reform laws this year.
OK, we all know that republicans favor the wealthy and big business with tax breaks and lawsuit reform while democrats protect the “helpless and downtrodden” with European style social democracy and a very politically active plaintiffs' bar. No news in that. Proponents of reform rejoiced that fundamental change had occurred in a system skewed in favor of wealthy trial lawyers, at the expense of physicians and job creators. Opponents rail at profiteering insurance companies extracting exorbitant premiums and then turning their backs on victims.
In all of this emotionally charged rhetoric, with the plaintiffs' bar on one side and business and medicine on the other, a few voices call for reason. I hope to be one of those voices. Today we are considering fundamental changes to a tort system that, while far from perfect, has protected individual rights by repeatedly citing open courts, trial by jury and equality before the law. We are faced with a question as to whether compensating individuals harmed by the misbehavior of others will continue to be the standard of our civil justice system or will we modify the law for “the good of society.” In other words is corrective justice more or less important than access to lower cost healthcare.
Regardless of your political stripe, many who are not directly involved in suing or defending medical providers feel at least a sense of discomfort at the rewriting of our tort system. Does arguably reducing the financial impact of malpractice on the delivery and availability of health care, justify eliminating a system which, although subject to occasionally absurd results, has served to reinforce traditional notions of corrective justice, compensation for victims and deterrence of wrongful conduct.
I seem to remember Professor Prosser’s admonition that the American tort system was based on one of two competing interests either discouraging socially unreasonable conduct or in protecting society generally.2 Professor Dobbs states that tort law is at least partially rights based (i.e., based on ideals of corrective justice, of righting wrongs, of accountability and personal responsibility for harmful conduct)3 and partly based on policy or utility (i.e., what is good for society as a whole). For example, defendants sometimes argue that they should not be required to pay full damages for harms they have caused because to do so would drive up the cost of insurance and might even cause some defendants to go out of business.4 Sound familiar? Sound conflicting?
In an environment of health care reform and assertions of a runaway civil justice system, we must question the wisdom of laws which limit certain types of damages to the extent that victims with valid claims cannot be “fairly” compensated and careless or outright wrongful behavior cannot be deterred?
Historically, “tort reform” or “lawsuit reform” was brought on in most jurisdictions by one of the several medical malpractice crisis which America has “enjoyed” since 1980. The Oklahoma “reforms” and the recent legislation in most other states is similar in most respects to the California’s MICRA model.5 These packages usually include:
- a cap on non-economic damages,
- abolition of the doctrine of joint and several liability,
- qualification of expert witnesses,
- apology protection,
- sanctions on frivolous lawsuits,
- prohibition on forum shopping,
- certificates of merit,
- statutes of limitation and repose,
- contingency fees,
- collateral source rule,
- periodic payments,
- pre-trial screening panels and
- enhanced reporting of medical liability loss information.6
All designed to lower potential recoveries, reduce the cost of professional liability insurance and thereby the cost of medical care.
Variety Is the Spice of Life
In my home state of Oklahoma, legislation to reform the tort system was enacted piecemeal between 2004 and 2011. In several instances, parts of “reformed” law have been ruled constitutionally infirm. Common grounds for constitutional attack on legislation include "single subject," “access to the courts,” “certain remedy,” “retroactively eliminating a cause of action,” “special laws,” “right to a jury trial,” “right to due process,” “independence of the judiciary” and “separation of powers.” In many cases, after successful judicial challenge, these enactments have been redrafted in conformity with the court’s ruling and have been “reenacted.” Predictably, as soon as cases brought under the revised law wend their way through the courts, attacks will be renewed on other grounds. In practice, there doesn’t seem to be any way to bullet-proof tort reform law without a constitutional amendment similar to Texas’ Proposition 12.7
One example of a successful attack on state constitutional grounds was Lucas v. United States,8 where the Texas Supreme Court struck down a cap on noneconomic damages in malpractice cases, finding that a damage cap violated the “open courts” provision of the Texas constitution. The Missouri Supreme Court rejected a challenge to damage caps under Missouri’s “open courts” provision in their state constitution, finding that damage caps do not infringe on a plaintiff’s access to court or right to a jury trial. Oregon’s Supreme Court struck down a cap on noneconomic damages under their state constitution, finding that a jury determination of damages is a necessary part of the right to a jury trial. Illinois struck down a cap on noneconomic damages, finding that the cap violated Illinois’ constitutional prohibition on special legislation that arbitrarily discriminates in favor of a select group, and also that the damage cap violated the separation of powers doctrine.9
The 2011 Environment
Financial pressure on healthcare providers continues to increase. The federal government continues to reduce Medicare reimbursements and increase an already staggering compliance burden on healthcare providers. HIPAA10 HITECH,11 PPACA,12 EMR,13 the acronyms are endless and all of them make the business of medicine more complex and expensive. Medical providers are focused on controlling expenses including insurance premiums and expenses arguably related to potential tort liability. Exacerbating these concerns, medical professional liability insurers are anticipating increased rates brought on by the impending end of a six year “soft” market, an almost nonexistent rate of investment income and the impact of a series on natural disasters on the price of reinsurance.
The economy is shaky and only partially out of a two year recession. Continuing threats of European financial catastrophe, the potential default by the US on its bonds, budget deficits and record unemployment have left Americans uncertain and fearful. State legislatures currently under Republican control and business interests have long argued that a predictable civil justice system will help companies in all industries keep costs down and create more jobs.
In a 2008 study by the Perryman Group,14 an economic and financial analysis firm, found that tort reform has led to improvements in the Texas economy. Specifically, Perryman found that the total impact of tort reforms implemented since 1995 includes gains of $112.5 billion in spending each year as well as almost 499,000 jobs in the state.
- Reforms limiting non-economic damages in medical malpractice litigation alone lead to increases of $55.3 billion in spending per year and more than 223,000 jobs.
- Other positive benefits include an increase in the number of doctors, particularly in rural areas and other regions, which have been facing severe shortages.
Financial pressure on business generally and healthcare providers specifically will result in an increasing demand for controlling costs of the “system.” Increasing predictability and decreasing the size and frequency of tort claims will continue to be an attractive goal for business, medical and insurance constituencies.
Opponents of tort reform will continue to challenge tort reform on a constitutional grounds with some significant success and the resultant scramble by proponents to either reinstitute laws which can withstand constitutional scrutiny or amend state constitutions.15
The nature of the conflict between the two sides is clearly represented by two articles which appeared just this month. In the August 2011 edition of the American College of Obstetricians and Gynecologists' journal, an article examines the impact of tort reform in Mississippi on physicians, particularly ob/gyns, insured by Medical Assurance Company of MS. The article compares the number of PL suits against these physicians by year from 1986 to 2010. According to the article, the average number of lawsuits fell by 66% after tort reform.
On the other side of the coin, a circuit court judge filling in on West Virginia's Supreme Court criticized the high court's ruling last month to uphold the non-economic damage cap. Circuit Court Judge Ronald Wilson, wrote that the justices "capitulated to the West Virginia Legislature's political—and unconstitutional—mistreatment of medical liability victims, and by its decision, delivered the coup de grace to the rights of thousands of West Virginians to be fully compensated for the losses caused by the negligence of medical professionals." He also wrote that the legislature's attempt to lower insurance premiums by adopting the cap, while rational, was not sufficient to stripping the rights of those seeking redress from alleged medical malpractice. (Charleston Gazette (WV), 7/23)
As an advocate, I find getting personally involved in promoting the political interests of a client is way too easy. If I represent doctors, I begin thinking that all plaintiffs and their lawyers are all greedy opportunists. If I represent injured patients, I start believing that all doctors and their professional liability insurers are aligned with the dark side. As a lawyer, I must remind myself that our tort system is truly dynamic. It changes with the needs of the people and times. The objective of our tort system is mixed. On one hand, it serves corrective justice and personal responsibility and, on the other, it is driven by benefits to society as a whole. No shortage of tough choices for the foreseeable future.