by Phil Kent, President, and Prof. Lynn Hogue, Legal Advisory Board Chairman
As appeared in The Atlanta Business Chronicle, Feb. 14, 2003
"Tort reform," a term popularized by former U.S. Vice President Dan Quayle in a speech before the American Bar Association right here in Atlanta, is really an issue about lawyers - whether there is simply too much litigation at too high a price in America. In legal parlance, a tort is a "civil wrong," but left unchecked, tort law may be a wrong of its own.
As a significant and highly publicized matter, medical malpractice is a useful point of departure for thinking about tort reform.
Juries can bring in excessive awards that tax the ability of insurance companies to pay. To the extent that insurance is a pass-through, what insurance companies pay out has to be recouped through higher premiums.
If premiums become so high as to make medicine financially unrewarding, doctors can leave the state or leave practice altogether. Likewise, insurance companies may withdraw from states where jury awards become onerous.
One piece of this puzzle that must be accounted for is the jury. Juries determine negligence and award damages, but they can be moved to excess. Unless reined in, they can become a power unto themselves that precipitates a crisis in the system. Georgia trial lawyers ask for proof that our state has a problem with runaway juries. Certainly juries in states like Alabama and Mississippi are now infamous for the "runaway verdict."
More activist states like California have attacked the cost issue by requiring insurers to roll back premiums. California is famous for its intrusive regulation of portions of markets - witness the disastrous electricity deregulation scheme the "opened" the state's wholesale electricity but prohibited passing costs through to retail consumers.
But if regulation is not promising, then what? There is hope in Georgia for tangible, effective tort reform regarding medical malpractice. An alternative is a state-run medical malpractice insurance pool that would supplant reliance on private insurance companies. Medical service providers would pay into the pool and awards would be paid out. The costs of administering the program would have to be paid (and administrative costs may well be higher than comparable costs in well-run private insurance companies), but there would be no profit taxed to the program. It could more clearly function as a pass-through in which premiums go for damage awards.
Such as system would afford a number of incidental advantages as well. All Georgia medical providers would be required to participate and would be protected and indemnified by a single system. Note to Georgia lawmakers: This proposal bears serious consideration as reform.
Currently, Georgia medical providers are subject to suit in the courts of other states utilizing state long-arm statutes and in federal court under diversity jurisdiction. A state-sponsored system would stand the greatest chance of enforcing a robust cap on damages.
What about injured patients? They would be allowed actual medical expenses without limit. Awards for pain and suffering should be capped; $250,000 has been touted widely as a cap. A better way, if possible, would be to allow the state-run insurance pool administrator to set the cap within a prescribed range as an aspect of regulating the pool's operation and preserving its fiscal integrity.
Medical service providers would be protected against malpractice awards and Georgians would be assured of medical care without the unpredictability produced by the current legal system. The relative handful of physicians sued many times successfully might be subject to review by the pool and perhaps should lose coverage.
Lawyers would continue to bring cases, as they should. However, with the stakes lowered by the cap, the reward would be less. After all, our legal system was designed to right legitimate wrongs - not to become a marketplace force unto itself.
The journey toward comprehensive tort reform should properly begin with fixing the medical malpractice crisis. But it should not end there.
Kent is president of Southeastern Legal Foundation, an Atlanta-based constitutional public interest law firm founded in 1976. Hogue, a Georgia State University College of Law professor, is the foundation's legal advisory board chairman.
