Tort Reform

Date: Sep 27, 2020
Category: Informative

Abstract

The American tort law pursuits the goal of defending the right of injured victims to compensation of losses they received and their health recovery. However, comparing to some world practices such as in Germany or New Zealand, the United States has a more archaic system that requires payment of legal fees from both sides of defendant and plaintiff. In addition, there is comparably higher percentage of bills the victim must pay for legal service and unreasonable fees. In practice, it can neglect all compensation the injured person deserves in terms of unclear principles of deductibility or non-deductibility of damages and losses. Thus, the tort reform is a prospective opportunity to provide comprehensive and rational change in the approach to relationship between the injured, defendant and state. 

 

The national prominence of tort reform appeared in 2010 when the Republicans won elections and gained control of the House of Representatives. The Republicans maintained the idea of reforming tort laws sphere through involvement of federal tools. However, over the years of debates between supporters and opponents of this reform, the society did not receive clarification of benefits or losses it can bring. In the United States, there are four ways of personal injury compensation that in more or less proper way regulate technical process of execution of decisions on payment fees and losses. The paper contains meaning analysis of the tort law and reform from the perspective of personal observations and case studies. The author maintains the opinion that the American tort system must be comprehensively reformed with establishment of reasonable fees and in terms of clarifications in deductibility or non-deductibility in implementing tort law.

Tort Reform and Its Meaning

One of the first necessary things to understand is that tort reform is not an object of single law even despite the fact that it is one of the most litigated and expensive spheres of the American legal system. According to the research represented by HG.org, “Torts are, in essence, legal wrongs that infringe on the rights of another and lead to some form of civil liability”. In conditions when tort reforms are broad by their nature and interpretation, American jurisprudence can be involved in its implementation. Today, the major part of tort reforms has core concept; consequently, the verdicts in separate cases became too large. The mass media spread disinformation between people that tort reform leads to “out of control jury verdicts” and “frivolous actions”, even though the popularity of this reform grows. In fact, the tort reform has at least three core consequences that appear from the key goals implemented by supporters: 1) limitation of the financial amounts the American citizens can recover in lawsuits; 2) complications in obtaining a jury trial in civil action processes; and 3) complications when citizens file lawsuits. However, the media and experts did not properly describe and explain some of the goals. For instance, people suffering injuries usually require enormous sums of money to retain previous quality of life. It is not related to their entitlement or greediness, but such people abruptly become burdened with loss of income and simultaneous enormous living, treating and nutrition expenses. Hence, despite the fact that the financial expenses of millions of dollars may seem exorbitant for maintaining human life requiring regular medical care, “that number may suddenly dwindle to merely what will be required to allow that person to continue to live”. Despite the fact that payment of such burdening amount of money can be detrimental for business that caused the injury, there are no preoccupations for decreasing compensation to the injured patient. 

The law of torts has passed through its evolution for several centuries beginning from the primary provisions of the English Common Law. Consequently, the authors introduced a concept that those who are responsible for causing injury for a person have to bear the burden of treatment and recovery until the victim has primary condition. If there is undeniable evidence that the company rendered its worker, client or visitor permanently disable, it automatically gets major responsibility for maintaining treatment and rehabilitation conditions and quality of life as the victim had before accident. The absence of such measures of responsibility will lead to the companies’ attitude toward safety with minor financial and legal consequences. Consequently, the arguments against tort reform with regard to disadvantages of preventive and punishment measures are incorrect. The only harm for business tort reform does is the material expenses for entrepreneurship that harms people. Thus, the entrepreneurship that provides proper safety and care measures and has responsible attitude to people’s well-being will never meet losses within this reform. 

American Tort Reform Association

American Tort Reform Association (ATRA) is the leading U.S. organization that united supporters of the tort reform willing to improve the civil justice system in America. The American Council of Engineering Companies along with the American Medical Association signed a collaboration agreement pursuing double goal. First, it is passing important laws able to reform the system. The second goal is change of people’s mindset with regard to civil litigation and responsibility. As a comparably young organization, it has strong advocacy capacity due to strong mutual trust between its representatives, judges and champion elected officials who have a will to improve the system. According to the purpose depicted on ATRA’s website, “Our innovative “Judicial Hellholes” program has curbed lawsuit abuse in the most egregious trial courts” (“About ATRA,” n.d.). Indeed, its informational tactics include interviewing an injured victim who met oppression in the access to health care, and making wrongdoer/employer pay a lawsuit tax for victim’s repairmen. They collect and publicize materials about complicated cases with bureaucracy and biased decisions about availability of vital products for victims. In this context, ATRA supporters speak not only about local prejudices but also about interests of separate politicians lobbying abolition of tort reform.

The ATRA members fight in the courts and state legislatures and provide advocacy campaigns in Congress along and in cooperation with civil servants and the mass media. According to ATRA official website, “today, America’s $246 billion civil justice system is the most expensive in the industrialized world” (“About ATRA,” n.d.). The obstacles to tort reform are lawsuits that perform for losses of society and business. With the purpose to enlarge their own business, they discriminate affordable access to health care, punish consumers by establishing expensive costs for products and services, and undermine the notion of commercial responsibility. The attorneys of injuries frequently prefer to extend the case, leaving it unresolved so that the client would perpetuate the process of lawsuit abuse. This unrecognized business industry has roots in political agreements that cover stagnation in providing fast and optimal reforms, and they have resources for pushing people to agree with them through informational campaigns against the reform. 

In opposition, ATRA has a well-developed network of its supporters and advocates united into state coalitions. Each of those coalitions advances information, explanation and meaning of tort reform in every state capital through informational and scientific discourse. According to ATRA, their work has got large support of more than “135,000 citizens” who have joined together in state and local grassroots groups” (“About ATRA,” n.d.). As a result, almost each American state accepted and enacted proposals provided in legislative agenda of ATRA. There is vast successful experience of acceptance of civil justice reform laws, as it was in 2002, when ATRA supported liability protection for principals and teachers. Earlier, in 1997 after long-lasting advocacy, the Congress approved of the law of immunity for volunteers, but now there is necessity for the improvement of health care liability.

Few Medical Cases and Explanation of Tort Lawsuits

Under the jurisdiction of tort law, the injured party has the right to demand indemnity for irresponsible and careless actions of an employer, other entrepreneurship subject or injury malpractice that led to physical, mental and financial losses of victim. However, there are some secondary consequences such as overtreatment or obstacles to accessing care, undertreatment when a doctor has fear of malpractice. There are some cases when doctors abandon risky treatment (obstetrical etc.) or even migrate from the states with strict and widely supported tort laws. 

One of the cases depicting suitability of tort law is dedicated to the case named Day v. Ouachita Parish School Board et al. A West Monroe High School student and football player Morgan Day was a team member for few years and had a healthy sportive shape. During one of the classes, Morgan was doing exercises such as carrying weights and suddenly injured his back. The next day, the coach allowed him to play the game despite the fact that he felt pain and sought medical treatment. The orthopedic surgeon examined him and provided with a “written medical excuse which stated 1) no football for 1 week; 2) no weightlifting, squats or power cleans. Diagnosis-lumbar strain and injured L-5 disc”. Additionally, Morgan’s class was supervised by at least five coaches controlling sixty players in total (12 players per each coacher’s subgroup). 

Consequently, Day did not play football during one week, but the difference is that his coach interpreted that one week is also limitation for lifting weights, while in fact this ban was longer. However, in one week, the coaches’ assistant instructed Morgan to push press and make other forbidden exercises hard for back. The student reminded coaches about medical excuse, but they insisted explaining that those activities will not affect back. Soon after Morgan visited his orthopedic surgeon again, the doctor wrote another diagnosis of “revealed a disc protrusion between the fourth and fifth vertebrae”. The student received doctor’s excuse forbidding sports activities, especially the ones with carrying weights. However, as Morgan underwent repeatable examination by another doctor, the coaches did not take into consideration his previous excuse. 

Predictably, Day injured his back again and since then was not able to play any sports games anymore. Morgan and his mother sued his coach convicting him in corporate irresponsibility that led to hard consequences. Among them Morgan’s mother mentioned withdrawal, loss of motivation, long-lasting treatment and psychological disorder. Including all warnings and responsibility roles, the trial court “found the defendants liable for Morgan’s back injury”. This case shows how tort law regulates measures of responsibility and corporate discipline that affect physical and mental health and financial well-being of victims.

Another case that depicts corporate responsibility for customer’s safety happened in 1994, and it is named Liebeck v. McDonald's Restaurants. A seventy-nine-year-old female Stella Liebeck ordered coffee in one of the McDonald's restaurant in New Mexico. When she sat in the car and tried to drink it, Liebeck accidentally spilled some hot coffee on her lap. Some hot fluid she dropped on her pelvic region, which led to third-degree burns and eight days of hospitalization. As a result, the civil jury awarded her with “$2.86 million” as the coffee she bought in McDonald's restaurant was too hot, which did not satisfy safety measures obligating restaurants while selling hot drinks. At first sight, this verdict may seem too generous for sloshing hot coffee, but there are some harder consequences beyond that. The temperature of coffee was so high that some parts of her skin melted into the seat of her car. As a result, the process of skin grafting and further rehabilitation and treatment took two years more. It means that coffee was so undrinkable that it could seriously burn customer's mouth, throat, and other organs in case Mrs. Liebeck would start drinking it. 

Continuing the issue of malpractice and trust, Californian tort legislature has one of the most proper models after reform was conducted in 1976. However, modern practice requires improvement of the tort system with regard to medical malpractice. The jury system fails to provide reliable compensation for injured persons and has omissions in adequate assessment of common needs of patients and health care providers. According to De Luke, “there must be an appropriate emphasis on aggressive risk management, quality improvement, patient safety, professional oversight, and responsible insurance underwriting”. The positive tendency is that single incremental reforms slowly occur on the state level, but society should be more active in its support. In case of more active position, the legal system will be restructured to the system of medical tribunals that will guarantee high rate of corporate responsibility and prevent thousands of cases when irresponsibility and careless attitude leads to catastrophic and unpunished consequences. 

Brief Explanation of Personal Injuries Compensations

Personal injuries litigation has become a common issue of contract the civil society has with the legal system. Simultaneously, it affects social preservation of the legal mechanism of labor organization, social security and prevention of accidents. In fact, legislatures and courts are supposed to choose which goals they wish to focus on because none of present approaches are able to fulfill serving requirements of all aims and trade-offs. For analysis, the paragraph will include such issues: 1) the method of payment of awards; 2) the calculation of future financial loss in relation to children; 3) the deductibility of additional costs from awards of damages; and 4) the impact of contributory negligence on awards.

Talking about the method of payment of awards, the law practice predicts paying the plaintiff of damages once with calculated general sum. It requires total assessment of losses, both past and future, that “must be carried out at the date of the trial”. The disadvantage of this method is the risk of unforeseen deteriorated condition of plaintiff, who has no alternative recourse during or after the trial. The annual lump sum is calculated “by the use of two figures – the multiplier and the multiplicand”. The calculated sum of annual plaintiff’s income (which automatically becomes loss after the incident) that is fixed for the day of trial is multiplied by the multiplier, which gives the sum of total award. The multiplier reflects the sum counted between years of treatment and the so-called unpredictable risk compensation. However, the Courts Act of 2003 gives the court power to decide the method of payment whether it will be laissez-faire approach for balancing annuity payments.

With regard to the calculation of future financial loss in relation to children, the courts of legislation make decision whether to award children with the financial compensation “either an amount based on the average industrial wage or basic subsistence support”. In the context of tort reform it would be fair if courts and legislatures decide to award injured children with a small amount, including expenses for additional contingencies “already taken into account in calculating the future financial loss of injured adults”. This model prevents inequitable delivery of medical care for different children. The deductibility of additional costs from awards of damages has two criteria, namely when the compensation is equal to loss and when it happens in case of accident and injury. The payments include sick pay, pension, insurance policy or social welfare, and charity donations. However, the state does not support the non-deductibility of separate benefits such as charitable donations or insurance. The reason for such measure is dictated by will to prevent cases when defendants meet a reduced number of responsibilities and awareness. The United States system practices non-deductibility law that “encompasses any benefit from a collateral source which is wholly independent of the wrongdoer”. However, some people protest against allowing victims to gain double benefit from compensation for injury they got. This tendency is a good signal for courts and legislatures to make decisions in relation to each type of collateral benefit it aims. It means that there must be differentiation between reducing the societal cost of accidents as the outcome of deductibility of the benefit provided and detection/punishment of future/present wrongdoers. In addition, it is important to consider the value of common comprehensive measures within the overall tort system and necessity of deductibility or non-deductibility in implementing tort law. 

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Legal Fees

In worldwide practice, a loser pays all fees for and instead of a winner, and the clearer regulations are represented in German, New Zealand and Australian models in particular. Formally, in the USA, each side is supposed to pay own fee, but in practice, defendants are obligated to pay fees by liability insurance. Liability insurance company covers not only legal defense expenses, but they also conduct control over defense (“including selecting the lawyer and determining whether to settle, and if so for how much”). When speaking about plaintiffs, they also have obligations to pay formal fees; however, the contingent fee system does not require any payments if the victim has no recovery. Hence, the plaintiff’s advocate provides insurance that covers their client’s not charging fee in case of loose. The disadvantage of American tort law system is high percentage of fee award they have to pay, which takes “between 20 and 50 per cent of the recovery depending on the nature of the case”. The percentage is defined by additional conditions such as victim’s age and stage of the litigation the case ends, among others. Nevertheless, the plaintiff appears in risk of under-compensation and financial losses if the law considers their case does not require fees discounts. 

With regard to a particular absurd of the American legal system, the injured victim is still required to make financial donations to pay for legal costs despite the fact that the right to recovery from pain and suffering is the subject for dispute in the court. Some other countries such as Germany or New Zealand are more progressive as they provide dual cooperation between a defendant and victim with liberal expenses for a plaintiff. Thus, the legal fees should be considered like other recoverable expenses that the defendant must incur for their corporate irresponsibility and carelessness. 

The financial measure of reasonable fee requires an objective approach to counting percentage of the recovery. Dr. Stephen Sugarman mentions that “the fee might be 50 per cent of the first US $50000 recovered, 25 per cent of the next US $100 000 and 10 to 15 per cent of the rest”. The work of plaintiff’s lawyer provokes various discussions around its payment, namely whether the fee proportion should be higher or lower in case victim’s recovery precipitates or slows. Accordingly, the lawyer’s fee charge must be grounded on counted hourly rate tied to counted hours they spent on case. As an alternative, if the case has unprecedented character, the charge can be counted as a lump sum tied to the type of case. 

Conclusion

In the United States, the tort reform covers more than thirty years of fight between the actual victims of professional backhandedness, and it still requires critical thinking. Since the American Tort Reform Association was founded, the supporters and opponents have started dispute over the measures and mechanisms of implementation of reform considering the tools the law already has. There are some methods of personal injury compensation and legal fees that a defendant and victim are obligated to pay. The values of the tort legal tool are in its potential to elevate consciousness and responsibility of corporate members towards their clients and charges. There is the need for a comprehensive approach to reforming American tort system in terms of deductibility or non-deductibility in implementing tort law and establishment of reasonable fees.