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Seducing the States With Tort Reform


Among the army of zombie talking points deployed to battle health care reform are canards about "tort reform." For years the Right and its corporate sponsors forestalled health care reform by blaming rising health care costs on out-of-control malpractice suits. In fact, medical malpractice damage awards are less than one percent of the total cost of U.S. healthcare.

Limiting citizens' Seventh Amendment rights to file personal injury lawsuits has been a winning issue for the Republican Party since the 1980s. "Tort reform" not only protects big corporations from responsibility and screws the little guy -- a win/win right there -- but it also turns trial lawyers (who tend to vote for Democrats) into the scapegoats for many of the nation's ills.

However, in recent years the real fight over "tort reform" has been waged in the states. Well-funded astroturf organizations woo state legislatures with promises of cheaper health care. And through the magic of tort reform, they whisper enticingly, states also can have stimulated economies, lower costs of living and more jobs.

Then the bill is signed by the governor and the astroturf organizations move on, leaving behind laws that cap damage awards even for catastrophic losses and raise the burden of proof a plaintiff must hurdle to file his suit. In some cases people who have suffered real injury find they cannot file suit at all, but must submit to an arbitration system that's set up to favor the defendant.

Oh, and about those lowered health care costs, stimulated economies and new jobs? More than half of the states have passed tort reform laws, some more than 20 years ago, so we have a number of "laboratories" in which to see what tort reform really does. Let's take a look.

Fact: Tort reform has not lowered health care costs in a single state.

Limiting malpractice suits usually does lower the cost of medical malpractice insurance, which pleases doctors, but these savings are not passed on to the health care consumer. Tort reform doesn't appear even slow down the rate at which health care costs are increasing.

In April Newt Gingrich penned an op-ed for the Philadelphia Inquirer in which he claimed tort "States that have enacted tort-reform measures have significantly improved access to health care, reduced costs, and strengthened economies." As Exhibit A he trotted out a comprehensive tort reform law enacted by Texas in 2003.

The problem with that picture is that health care costs in Texas not only continued to rise after 2003; they rose more than in most of the rest of the country. In 2008, the Robert Wood Johnson Foundation found that Texans enjoyed the third fastest increase in health insurance premiums in the nation. And for many years Texas has led the nation in the percentage of its citizens without health insurance. The 2003 tort reform didn't change that.

But what about the cost of "defensive medicine"? All those extra tests and procedures doctors do to cover their butts in case they are sued? In a recent survey of physicians in Connecticut, 83 percent of doctors estimated that between 18 percent and 28 percent of tests, procedures, referrals, etc. were ordered as a precaution against malpractice liability.

However, there is no empirical evidence that significant numbers of physicians stop ordering extra stuff after tort laws have been "reformed." There is evidence that some physicians order extra stuff when such orders increase their revenues. For a must-read analysis, see "Annals of Medicine: The Cost Conundrum" by Atul Gawande in the New Yorker. See also "The Defensive Medicine Myth" from Americans for Insurance Reform.

Fact: Significant numbers of physicians are not dropping out of medicine or moving their practices to "tort reform" states.

The American Association for Justice -- yes, a trial lawyers' association -- looked at the recent "Physician Characteristics and Distribution" report from the American Medical Association. The data show no correlation between capping malpractice awards and attracting more doctors to a state. In fact, "Using data from 2007, the analysis concludes that states without caps actually have more doctors per 100,000 (319) than states that set limits (283), a difference of 13%."

Fact: Tort reform's ability to stimulate an economy and grow jobs is ambiguous.

Right-wing think tanks have no end of impressive-sounding white papers on the stimulating properties of tort reform. I've yet to find one that isn't number salad, filled mostly with what I call NoMOs -- numbers of mysterious origin. If you try to track down where and how these numbers were crunched, usually you hit a dead end.

One frequently cited study is from a small Texas consulting firm called The Perryman Group. It may be a perfectly valid study, but I was unable to find it on the Web or learn how to obtain a copy. Even so, Newt Gingrich cited the Perryman study in his above-linked op ed, where he implied the study showed Texas enjoying a half million new jobs as a result of the tort reform act of 2003. However, the same study is cited on the website of Texans for Lawsuit Reform, which says the study tracks results from a 1995 tort reform law, not the 2003 law.

When he ran for President in 2000, Texas governor George W. Bush called the 1995 tort reform act one of his greatest accomplishments and touted its benefits on the campaign train. But in "Bush Calls Himself Reformer; the Record Shows the Label May Be a Stretch," published March 20, 2000, Richard A. Oppel and Jim Yardley of the New York Times documented that few of the results Bush claimed for the 1995 law could not be attributed to other causes.

Lawrence Chimerine and Ross Eisenbrey (Economic Policy Institute, May 2005) analyze some of the claims and say there is no evidence the tort system has reduced real wages and caused job loss, or that tort reform will result in more jobs. See also "The Tort Number Crunch."

Fact: If you want to reduce the cost of insurance, reform insurance companies, not tort.

One of the ways tort reform is supposed to stimulate the economy is by reducing insurance rates, particularly liability insurance. However, the tort system is not the cause of insurance premium increases in recent years. The real reason is that insurance companies have taken a hit in investment income.

Insurance companies make most of their income from investments, not premiums. During a profitable investment cycles, insurance companies underprice their products and take higher-risk customers to get the cash for more investment. When Bu interest rates fall and the stock market plummets, premiums are jacked up, coverage is reduced, and insurance companies try to cover their losses by blaming personal injury litigation.

Fact: The tort system isn't perfect.

I am not arguing that personal injury law in the U.S. is perfect, or that it is never abused. Further, there are a number of thorny issues that need to be resolved regarding specific types of claims, such as mesothelioma resulting from decades-past asbestos exposure, if the law is going to be fair to both complainants and defendants.

My argument, however, is that before citizens allow state and federal legislatures to reduce their rights to take grievances to court, we all need to clearly understand the arguments being made for tort reform. Most of those arguments are flat-out lies.

Supreme Court nominee Judge Sonia Sotomayor wrote in the Suffolk University Law Review, 1996, that placing arbitrary limits on jury verdicts in personal injury cases "is inconsistent with the premise of the jury system." Instead, "the focus must be shifted back to monitoring frivolous claims, uncovering pervasive misrepresentation in court and educating the public that no system of justice is perfect."


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Still, assuming that malpractice suits only make up 1% (or less) health care costs, that's still a 1% worth shaving.

A health care reform bill that includes tort reform (that wouldn't have to necessary include caps) would be a bipartisan effort to tackle the whole problem of health care costs...not just whatever part is convenient to tackle.

How about instead of putting caps on the amount of money in damages, why not put a cap on the amount of money lawyers can profit from a case ruling?

But of course Democrats won't put tort reform in the health care bill. They're too busy being seduced by the campaign contributions of trial lawyers.

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April Newt Gingrich penned an op-ed for the Philadelphia Inquirer in which she choose car shipping rates to have their cars moved, and also in which he claimed tort "States that have enacted tort-reform measures have significantly improved access to health care, reduced costs, and strengthened economies."

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Barbara O'Brien

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Barbara O'Brien is the owner/proprietor of The Mahablog. She writes about Buddhism for About.com and and now blogs on behalf of the Mesothelioma and Asbestos Awareness Center on their new mesothelioma blog. She has guest blogged at the Take Back America Conference and for Crooks and Liars.

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