“So, when do you expect the class action bill to come up in the Senate again?”
“Definitely mid-February.” “Probably early March.” “Not until May at the earliest - and maybe not until next year.”
These are responses from people “in the know” in Washington when asked this question over the past two months. Congressional staffers. Administration officials. And, of course, lobbyists. Their answers reveal the plain truth about the prospects for real tort reform: It is a problem that isn’t likely to be dealt with any time soon. And that is a problem.
America’s civil justice system is broken. The problem extends well beyond class actions, into the medical malpractice, mass torts and product liability arenas. Our current system neither fairly compensates victims nor adequately deters wrongful behavior, and its extraordinarily high costs create a multibillion-dollar drag on the economy.
The failure of our civil justice system has led to a crisis in the availability of medical care in many states. Overwhelmed by skyrocketing malpractice insurance premiums, doctors have staged or threatened strikes in eight states. In many small cities in Mississippi, there are literally no obstetricians to deliver babies because they simply can’t afford the malpractice premiums.
Cries for reform from the medical and business communities are met with arguments that tort reform threatens individual victims’ rights to compensation for harm suffered at the hands of wrongdoers. Such arguments prevailed a few months ago when the Class Action Fairness Act was blocked from consideration in the Senate, and again last week in defeating a medical malpractice measure.
Critics of tort reform ignore the fact that our current system allots victims less than half the funds expended, compensates only a small percentage of those harmed and provides a windfall to some who are not truly injured. Something has to change.
A “grand bargain” could restore fairness and efficiency to our civil justice system by reducing the debilitating costs of the current system while better protecting the rights of the injured.
The first part of the bargain would rein in runaway jury verdicts and end frivolous lawsuits. A recent Supreme Court decision placed constitutional limits on punitive damages awards, and Congress should clarify these limits by statute. Punitive damages awards should be capped at some multiplier of economic damages, to be determined by Congress. “Pain and suffering” damages, which often simply serve as punitive damages or attorney fees in disguise, should also be limited by caps - a proven means of slowing increases in malpractice insurance premiums. To deter bogus lawsuits, lawyers found to have filed a frivolous claim should be required to pay the defendant’s expenses, and any attorney who brings three frivolous suits should be barred from the practice of law.
And, as for that class action bill - reform must stop the abuses taking place under the current system, in which plaintiffs’ lawyers can “forum shop” for jurisdictions with track records for large verdicts. National suits should be brought in federal court. When coupons are used to compensate class members, the attorneys’ cut should be based on coupons actually redeemed, not the value of the coupons awarded.
But any reform effort must consider both fairness and efficiency in order to be politically palatable. A grand bargain for reform should improve victim compensation as well as deter abuse of the system.
Today, less than 2 percent of medical malpractice victims are compensated for their injuries, while the rest are left in the cold. Replacing the “contingency fee” arrangement for paying plaintiffs’ attorneys with a fee shifting structure would open the doors of justice to these individuals. Defendants found liable at trial should be required to pay reasonable attorney fees to the opposing party. Plaintiffs’ attorneys would then be willing to accept more cases with a high likelihood of success, even if the amount of money at stake is not large.
Finally, true reform should encourage quick and fair compensation for those who have been harmed. Potential defendants should be encouraged to make an offer of compensation soon after an incident in order to avoid the costs and risks associated with litigation. If the plaintiff chooses not to accept such an offer, the plaintiff’s attorney would receive fees only on the amount of an ultimate award above the offer value.
Washington can keep reform on the back burner, but in the meantime, victims and the economy will continue to suffer. This proposal isn’t the only workable solution, but the time to strike a grand bargain on tort reform is now.