WHAT IS TORT REFORM AND IS IT NEEDED?

By: Guy O. Kornblum, Certified Civil Trial Advocate, National Board of Trial Advocacy and Member, Million Dollar Advocates Forum

Anyone reading the papers these days will see the topic of “tort reform” frequently mentioned in both Sacramento and Washington, D.C., among the politicians. What is “tort reform”? How should these so-called “reform” measures be viewed?

A “tort” is a civil wrong for which the law provides a remedy, usually in the form of monetary damages to compensate the victim for any injury caused. In addition, in the more egregious cases involving malice, fraud or oppression, punitive damages designed to punish and make an example of the wrongdoer are allowed. Compensatory damages are measured by actual losses. Punitive damages are a form of civil fine. Despite what you read in the papers, punitive damages are rare and require proof by “clear and convincing” evidence that a high degree of reprehensibility characterizes the wrongful conduct.

Over the years, certain business and professional interests have become “concerned” about what they perceive as the increasing size of jury awards in these cases of civil wrong. They argue that juries have been allowed to run wild, that the rules allow runaway verdicts, and that judges do not exercise their powers to prevent large, unwarranted verdicts in jury trials. Two of the primary complaints concern the size of awards for “non-economic” (i.e. pain and suffering and emotional injury) damages and the availability, as well as the amount, of punitive damages verdicts.

Normally, “tort reform,” which is an effort to curb these so-called undesirable results, comes in the form of legislation either at the state or national level. The first California piece of “tort reform” legislation was the Medical Injury Compensation Reform Act of 1975 (“MICRA”), which was designed to put the brakes on large medical malpractice verdicts against doctors and hospitals. That legislation primarily did three things: 1) it “capped” any award for “non-economic” damages at $250,000; 2) it made it more difficult to sue for punitive damages in medical malpractice cases; and 3) it provided for certain limits on attorneys’ fees by reducing the contingency percentages in order to discourage lawyers from pursuing these cases.

The “cap” of $250,000 has never been changed. There is MICRA-like legislation adopted in other states, but California has the lowest “cap” on “non-economic” damages. And, even though this “cap” was adopted 28 years ago, it has never been increased. I have been told that its “present value” in today’s dollars is roughly $60,000, which is a modest – and indeed inadequate – amount to compensate a victim of death, disfigurement or serious life-altering injury from below standard conduct by doctors, hospitals and their staff members. Still, despite efforts to increase this “cap,” the medical industry lobbies have always managed to defeat them and, in the process, “blamed” the “greedy” trial lawyers searching for new ways to increase recoveries and earn more fees. Of course, the trial lawyers are not interested in helping these victims obtain adequate compensation for their injuries!

There have been other “tort reform” measures in California. For example, in 1988 legislation was passed which raised the bar for obtaining punitive damages by adopting a much stricter standard and also increasing the burden of proof from a “mere preponderance” of the evidence to “clear and convincing” evidence. And do you know what? Insurance companies have still been hit for large punitive damages when they act outrageously by denying benefits to their insureds who pay premiums for insurance coverage and when they violate – in a significant way – the promises that the insurance companies make in their written representations to their insureds and in their policies.

Recently, UNUM/Provident, which is the largest writer of individual disability income policies in the U.S., suffered a significant punitive award of $30 Million in a jury trial in Marin County. While the judge subsequently reduced the punitive award to $5 Million because she thought it was “excessive,” she still allowed it to stand, serving as a warning to UNUM/Provident and other insurance companies that the citizens of California will not tolerate similar behavior by improperly denying an insured the coverage for which that insured, here a physician who was disabled from continuing his medical practice, had paid a substantial premium.

Now, there are efforts in Congress to adopt similar reforms on a national level and to pass legislation putting “caps” on “non-economic” recoveries in medical malpractice, elder abuse, pharmaceutical and HMO cases, and to go so far as to just eliminate punitive damages altogether. There have been efforts at the national level to impose limitations on recoveries in products liability cases. Also, the U.S. Supreme Court has been slowly trying to change the law of punitive damages to make it more difficult to keep them when they are reviewed by an appellate court. The question is whether these reforms, whether at the state or national level and whether by legislation or judicial opinion, serve the best interests of the public.

Is it really the civil justice system, runaway juries and ineffective judges that are the “cause” of the perceived inequities that occur? This question was recently discussed in an entire issue of The Forum, the monthly publication of the Consumer Attorneys of California, the organization for trial and appellate lawyers who regularly represent injured parties and victims of “torts.” I am a member of that organization and regularly represent these injured parties and victims of wrongs. I know how expensive it is to prosecute these civil cases, with all the litigation costs, and the time and money eaten up in working up these cases, carefully preparing them and pushing them through the trial court to resolution. Putting more barriers between lawsuits to right these wrongs and justice by artificially reducing – by blanket “caps” – the amounts that a victim can obtain is not advancing justice. Eliminating punitive damages in cases of reckless and intentional conduct will deprive the public of an important control over cases of serious corporate misdeeds. The referenced article cited 17 documented punitive cases where the punitive award influenced corporations to alter their practices or eliminate a dangerous product.

There are plenty of protections now available to any defendant against jury awards that are excessive. Our civil justice system does not need more artificial barriers to recoveries. As in the Marin County case, the trial judge, and later the appellate courts, have the power to reduce and even eliminate awards that are too high or not supported by the evidence. This is a time tested means of insuring that justice is done and that all parties are protected. The plaintiff suing has rights, as does the defendant who is sued. Allowing the judges to oversee the process has been the civil justice system’s long-standing means of seeing that the adversary system works properly on a case by case basis. That system should continue. Let the judges do their job as they have always done. In my experience, they do it well.

More on “tort reform” in later articles.

Mr. Kornblum invites your comments to him at gkornblum@kornblumlaw.com.

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