Medical Malpractice Newsroom

People In Favor Of Federal Action Contend That Such A Lack Of Uniformity In State Laws Increases The Costs To Businesses

Many legal scholars agree that tort liability has expanded over the past 30 years; the opportunity for victim compensation has increased, particularly in the area of product liability.(4) That growth was facilitated by a notion that more extensive tort liability would serve to compensate injured parties and reduce the level of accidents. However, many people have voiced concern that the tort system has gone too far; they say that businesses are saddled with excessive costs that lead to higher prices for consumers. Critics also express several other specific concerns about the tort system: The "transaction costs" of the system, particularly attorneys' fees, are too high; Punitive damages and compensatory damages for pain and suffering are often awarded arbitrarily, with no beneficial effect on safety; The class-action mechanism (whereby many claims that cover similar factual ground are combined into a single larger case) is too easily abused by plaintiffs' attorneys; Medical malpractice lawsuits are driving up the costs of liability insurance for physicians to the point that some of them are restricting their practices or retiring; and Fair compensation for victims of torts is limited by frivolous lawsuits and excessive awards of noneconomic damages, which increase the likelihood of bankruptcy for firms.

Since the mid-1980s, a large majority of states have enacted statutes to restrict tort lawsuits.(5) Those statutes were enacted in response to problems in insurance costs and availability. The idea behind those changes was that limiting the liability exposure of firms would reduce liability insurance premiums.

Despite those reforms at the state level, some people see a role for a federal approach. They note that tort reforms have not been universally undertaken in the states and that those states that enacted changes have done so in a less than uniform way. People in favor of federal action contend that such a lack of uniformity in state laws increases the costs to businesses that manufacture and sell goods and services in multiple states and that federal legislation unifying tort laws across the country could reduce those costs. Uniform tort laws would also limit "venue shopping"--the ability of the plaintiff to choose the jurisdiction where a lawsuit is tried. In addition, proponents point to various large and unique liability cases--for asbestos exposure, for example--as special situations that warrant a national approach allowing victims to receive timely and fair compensation.

Opponents of tort reform argue that a lack of evidence on the benefits and costs of tort liability in general, as well as the economic effects of state reforms, makes a broad federal approach risky. Limited data on the deterrent effect of the tort system is available to counter the charges of excessive costs, but opponents of reform argue that those costs, to the extent that they exist, are justified by the system's role in compensating victims, ensuring that injurers face the total costs of their actions, and improving safety. They contend that proposed reforms are too broad and that the states and the judiciary are better positioned to make adjustments to the system in response to existing problems.

Only a small number of studies have been conducted that analyze the effects of state-level tort reforms on various outcomes, including tort court filings, damage awards, health care providers' behavior, liability insurance premiums, and insurance availability. However, whether or not tort reforms have had a significant effect on those measures says little about the overall functioning of the tort system in terms of efficiency and equity. For instance, whether damage caps reduce the number of lawsuits filed says nothing about whether it is more efficient or equitable to discourage marginal tort cases.