Real Tort Reform
It appears that the Missouri state Supreme Court may be poised to strike down the $350,000 cap on damages for pain and suffering in medical malpractice lawsuits. I’m fairly certain that some here will disagree with me, but I for one hope the cap is eliminated. From a legal perspective — keeping in mind that I am not a lawyer — the law seems inherently unequal, as it carves out a special exception in tort law for doctors. Furthermore, if doctors have this special exemption, they have less economic incentive to be careful in their work.
On the other hand, not having a cap can encourage too many lawsuits and add to medical cost inflation. However, it is important to keep the costs of excessive lawsuits in perspective. The Congressional Budget Office estimates that the savings for instituting a typical set of tort reforms (including but not limited to a cap on damages) saves 0.5 percent on total medical spending. This is not completely insignificant, but those savings would be totally swamped by a single year’s medical inflation.
There is a way to reform the tort system without giving anyone special privileges. Outside of the United States, most of the developed world uses what is usually referred to as the “loser pays” system, whereby whoever loses the lawsuit must pay both sides’ legal expenses. This system would have the salutary effect of eliminating frivolous lawsuits and lowering total lawsuit expenses. A 2008 Manhattan Institute study found that when compared to countries with the loser pays system (e.g. Britain, Australia, Germany), the United States spends at least twice as much on tort litigation as a percentage of GDP. If Missouri instituted loser pays, we could reap the benefits of lower litigation costs without creating a privileged legal class.
You are right about one thing – that some people here will disagree with you. You write, “Furthermore, if doctors have this special exemption, they have less economic incentive to be careful in their work.”
I would proposed that without the special exemption, doctors have more economic incentive to be way too careful in their work, by practicing defensive medicine, as in unnecessary tests designed less to treat the patient and more to defend against that one-in-ten-thousand risk of missing an obscure illness because you didn’t order numerous tests to find every single one-in-ten-thousand risk. Defensive medicine has far more costs to taxpayers and the public than malpractice cases do. This study estimated it costs the people of Massachusetts $1.4 billion per year: http://advance.uconn.edu/2009/090223/09022302.htm
I also think the idea that doctor’s will be less careful because they have the “special protections” to be something that sounds fair in theory but has little basis in reality. The caps may be a “special protection” but the protections afforded one group here benefit all of us by having more doctors practicing in Missouri, with more competition, and by potentially reducing the costs associated with defensive medicine. I honestly question whether Barnes would continue its major investments in the city of St. Louis if the caps are removed. They have long been at a disadvantage anyway with city venue.
Lower caps (it is important to note here that the 2005 reforms did not insitute caps in Missouri – they lowered the existing caps and clarified how many times they could apply per case, i.e. once. The trial bar was perfectly happy with the existence of caps under the old rules) might reduce the potential recovery of people with winning lawsuits, but a loser pays system is going to prevent access to the courts entirely for many people. “Loser pays” would exacerbate the venue problems already faced, with plaintiff lawyers refusing to file in all but the friendliest venues. What poor person could risk filing a lawsuit, no matter how worthy, if they lost the suit and ended up owing the defendents a quarter-million in attorney’s fees?
Courts are not markets. They are an institution of government that government itself has the right to control. People who don’t like the reforms should elect people to office who will change those controls via the hard work of democracy.
I have no problem with the legislature making reasonable increases to the caps as time goes on, when and if inflation ever returns, but it has every right to enforce caps. And I’ll end by saying I am not a lawyer either, but I come from a family of attorneys and may have learned a thing or two by osmosis (for example, the importance of venue).
Comment by David Stokes — January 15, 2010 @ 3:36 p.m.
I agree that defensive medicine is a substantial drag on our medical system, but I think a loser pays tort system would address that problem just as well as caps on damages by eliminating many frivolous lawsuits. However, I doubt that a loser pays system would exclude people from the system. If a case has merit, an attorney could take it on contingency. For lawyers not to take thousands of good cases would be the equivalent of leaving money lying in the street.
Comment by John Payne — January 19, 2010 @ 1:15 p.m.