Washington DC Metro Injury & Disability Lawyer & Attorney : Greenberg & Bederman : Accidents, Falls, Medical Malpractice : Maryland, DC, Virginia

Noneconomic damage caps. Non economic damages compensate for injuries and losses not easily quantified by a dollar amount, such as loss of enjoyment of life, loss of consortium, or severe physical impairment. This compensation is for the family of the victims who have died or been severely injured. There has been a lot of publicity in connection with huge awards running into the tens of millions of dollars.  Noneconomic damage caps limit the amount for a victim who wasn't damaged economically. In contrast, if the same person's capacity to earn money were damaged as a result of noneconomic damages, there would be no limits on that figure.

Punitive damages caps. These awards are designed to punish outrageous behavior such as companies or individuals who knowingly injure others. Reform opponents argue that by capping punitive damages, there is less cost to companies who put out defective products. Those in favor of tort reform deny that companies would benefit in any way by manufacturing and marketing defective products.

Contingency-fee limits. In many tort cases lawyers do not charge their clients an up-front fee, but  receive a percentage of any monetary award the client receives. Limits on contingency fees would curb the large amounts some lawyers and law firms make on such cases, tort reform advocates say. On the other hand, anti-tort reform groups believe that many poor consumers who were wronged wouldn't have access to effective legal representation if such fees were capped because lawyers couldn't afford to spend the time and money necessary to win such cases.

Other tort reform issues include:

·         Limits on prejudgment interest that would either abolish or greatly restrict the amount of interest on a consumer's award between the time the suit is filed and when a judgment is rendered.

·         Restrictions on a company's liability to compensate victims when several companies are found at fault. In this case, if one or more of the at-fault companies goes bankrupt, consumers who were wronged could receive substantially less than awarded by a judge or jury. While under the current system, consumers may recover the amount of full award from a single defendant regardless of whether the other defendants are solvent.  

·         Rules that would allow juries and judges to reduce the amount of compensation by the amount of any insurance or disability coverage the victim will get.

A factor often overlooked by the proponents of tort reform is not what judicial awards cost the big companies, but what injury and accidents cost the economy and society in terms of lost productivity and the impact on family members who have to take care of the disabled. Some opposed to tort reform claim that accident costs dwarf the costs in the tort system.

Most states have instituted some type of tort reform during the past 10 years. Virginia has done a lot over the last 25 years to enact liability reform. The state has a cap on liability, which has gone from $750,000 to $1 million to $1.6 million. The cap covers economic and non-economic grievances. Furthermore, those caps cover all providers involved in an alleged incident of malpractice, so if the hospital, doctor and nurse are each sued, the caps apply to all parties taken together, not individually. Maryland initiated tort reform in 1986, limiting the amount of non-economic damages patient may receive in medical malpractice cases. The current cap of $1.4 million increases with inflation. These reform efforts has had mixed success, but proponents are working at the federal level to pass laws dealing with class action lawsuits, medical malpractice and asbestos-related claims, among others.

Although The United States is a country with more tort lawsuits than most other countries, in most countries that have lower tort lawsuits, there is a more extensive social safety net. Our country has a free market approach to health care, disabilities and other social issues which also become economic problems. Our tort system is designed with our economic system considered in order to compensate for the lack of social services. In many countries with tort reform, there are more stringent regulation and provisions for health care, disability, and wage replacement, leaving its citizens with basic necessities if injured. In America, many injured people are facing destitution if they are badly hurt.  

First, most claims are not frivolous. Hospitals self-report injuries that occur due to doctor malpractice. There is an extreme difference between the number of cases reported by hospitals and the number of claims actually filed (an estimated 1,000,000 injuries per year versus 85,000 lawsuits). This statistical gap leads to two conclusions. Most injured patients do not pursue a claim against the responsible doctor(s). Also, the system filters claims – preventing the frivolous from coming to court.

No doubt the greatest signal barrier to reducing the number of frivolous claims is the plaintiffs’ lawyer. Because plaintiffs’ lawyers frequently work under a contingency fee arrangement, there is a strong economic incentive to pursue only those claims that have a high likelihood of recovery and a high potential recovery value. Professor Herbert Kritzer of the University of Wisconsin surveyed plaintiffs’ attorneys in Wisconsin regarding acceptance rates of medical malpractice cases. Professor Kritzer found that 80% of all medical malpractice cases were declined at the initial contact with attorneys. Another study looked at how particular attorneys handled such inquiries. The lawyers’ office received calls from 730 people over 10 randomly selected days. Only 1 in 30 calls resulted in litigation – lawyers rejected 97% of potential plaintiffs. Greenberg & Bederman has accepted only 5% of medical malpractice inquiries in 2007. Additionally, cases that are initially accepted by lawyers are dropped because they turn out to be weak. In short, lawyers must screen potential cases because:

• the contingency fee economic model requires that lawyers select only those cases that have a high likelihood of succeeding.
• the costs of pursuing a claim are extremely high – court costs, discovery costs, expert fees, etc.

• medical malpractice claims take longer to resolve than other types of civil cases.

• provider-defendants win at least 73% of all cases taken to trial

These facts create an incentive system for lawyers to only select the most meritorious claims.

Second, there has not been an increase in the amount of medical malpractice pay-outs. As stated before, when insurance premiums spike the go-to explanation is an increase in claim pay-outs. A Texas study from 1988 to 2002 found that no sudden changes in the number or amount of pay-outs occurred during the period of dramatic premium spikes in late 1999. A Florida study from 1990 to 2003 found that pay-outs per 100 doctors dropped from 3.98 in 1990 to 3.33 in 2003. These studies (and others) have lead researchers to claim that "factors outside the medical malpractice system were responsible for the premium spikes." One can only speculate then as to what those outside factors might be. Personally, I favor two explanations:

1. insurance companies are corporate entities and thus seek to maximize profits. Increasing premiums will effectuate this goal. The negative publicity this generates can be safely passed on as the work of legal boogeymen

2. insurance companies need to compensate for poor corporate investment strategies (sub-prime markets, dot-coms, Enron, etc.)

Either way, doctors should not look to plaintiffs’ lawyers as the cause of premium increases. Instead, the AMA should require insurance providers to explain the need for premium increases based on actual statistics rather than rhetoric. And, voters should ask politicians to find real problems on which to base campaigns.

Citations:

Prof. Herb Kritzer's article is Risks, Reputations, and Rewards: Contingency Fee Legal Practice in the United States (Stanford University Press, 2004).

Suggested Reading:

David A. Hyman and Charles Silver, Medical Malpractice Litigation and Tort Reform: It's the Incentives, Stupid, 59 Vand. L. Rev. 1085 (May 2006).

Jason Fernandez

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