The Hill has an interesting article about co-blogger Randy Barnett’s constitutional critique of GOP efforts to impose federally mandated tort reform on the states [HT: Instapundit]:
Opponents of a House medical malpractice bill are trumpeting an attack on the legislation from a prominent conservative lawyer.
Georgetown University law professor Randy Barnett accused the GOP of practicing “fair-weather federalism” on the malpractice bill, which would preempt state laws that conflict with its cap on some jury awards.
Barnett represents the National Federation of Independent Business in its lawsuit challenging the healthcare law’s requirement that most people buy insurance. Opponents of the malpractice bill say those conservative bona fides lend credibility to his criticism.
“I think that’s huge,” said Susan Parnas Frederick of the National Conference of State Legislatures.
NCSL says restrictions on malpractice suits should be left to the states. The House bill would set a limit of $250,000 on noneconomic damages and preempt state laws that have established higher caps. Some state constitutions also block the type of changes the bill would make. They would also be overridden.
“State court is an area for state law, not federal law,” Frederick said.
Although the article mistakenly labels Randy as a “conservative” (he is in fact an even more consistent libertarian than I am), I’m happy to see that his critique is having an impact. Hopefully, at least some Republican conservatives will begin to see that you can’t advocate strict limits on federal power with one hand while trying to impose sweeping federal control over state tort law with the other.
In this post, I explained why federally mandated tort reform is, in most cases, both constitutionally dubious and unnecessary. The better way to restrict abusive tort suits is through interstate competition combined with constraints on states’ ability to regulate conduct outside their borders.
UPDATE: Tort reform advocate Ted Frank responds to this post here. He seems to agree that “the real problem” is that states have sometimes used tort law to regulate conduct outside their borders, but claims that this problem is politically impossible to fix, therefore requiring the federal government to restrict the substance of state tort law. But if it is politically feasible for Congress to restructure state tort law as a whole, surely it can find the political will to take the much less intrusive step of restricting states’ abilities to impose abusive tort law standards on conduct that occurred outside their borders. Similarly, if the problem is bias against out of state defendants, Congress could craft a remedy narrowly targeted at that issue. Indeed, the ability of defendants to “remove” such suits to federal court already constrains in-state bias by state courts.
Finally, it should be reiterated that it is not true that state tort law abuses will run amok indefinitely unless Congress intervenes. As I explained in this post, over the last two decades, numerous states have enacted tort reform laws curbing abusive lawsuits in large part because of the pressure of interstate competition. The reformed states include even such previously notorious tort “hellholes” as Alabama.
reg says:
The constitution isnt a legal document anymore, so we should just make up arguments to justify our political preferences while making it as hard as possible for the other side to pass their preferences into law. Hasn’t anybody told barnett that’s what law professors are paid for?
May 24, 2011, 1:34 amKazinski says:
I consider myself a liberatarian too, but there is a contradiction here, if the Federal government is going to make itself a major payer via medicare, medicaid, and Obamacare, then they should takes steps to control costs to the taxpayer. In for a penny then in for a pound.
Of course I would be happier to leave health care completely to individuals and the states. Then there isn’t any inconsistency.
May 24, 2011, 1:45 amIlya Somin says:
I consider myself a liberatarian too, but there is a contradiction here, if the Federal government is going to make itself a major payer via medicare, medicaid, and Obamacare, then they should takes steps to control costs to the taxpayer. In for a penny then in for a pound.
Costs imposed by federal programs, sure. But this is no justification for the feds trying to control costs imposed by state tort law.
May 24, 2011, 2:12 amDavid Schwartz says:
I don’t see why. If a State tried to create a legal environment that imposed excessive costs on airlines or railroads, the Federal government would surely step in. If paying for health care is interstate commerce, why can’t the Federal government regulate costs imposed by States?
May 24, 2011, 2:20 amOrin Kerr says:
David Schwartz:
Two thoughts.
First, Dormant Commerce Clause doctrine already does this: The “federal government” that steps in is the courts, not Congress.
Second, I don’t think Randy or Ilya are arguing that the federal government “can’t” do this: They are arguing that they shouldn’t do this if they have a genuine commitment to federalism.
May 24, 2011, 2:59 amDavid Schwartz says:
If the battle is lost over whether health care is interstate commerce, why not at least reap the benefits of that loss? Yes, in a perfect world federalism concerns would keep the federal government out of health care, but in this world, at least the federal government can do something about State torts run wild. Barnett’s criticism essentially argues that it’s betraying their principles if they try to make the best of their losses. IMO, it’s perfectly fair to say that what’s good for the goose is good for the gander so long as you make it clear that this is not the overall outcome you would prefer. “I wish the Federal government didn’t have this power, but since I lost that battle, let’s at least use it for good as well as evil.”
May 24, 2011, 4:48 amJustin says:
Correct me if I am wrong but isntt the purported point of the constitutional challenge to the IM that it infringes on states rights? Granted, haha and all that, but how would further infringing on states’ rights somehow make up for the first “infringement”? Two wrongs dont make a right to a party that gets “wronged” both times.
Also, the people who say that if the govt can regulate not prepaying for health care it can regulate anything say that about health care , but merely complain about consistency when the federal govt tries to create rules of decision in state courts. I laud Somin and Barnett for giving a nod to consistency, but if their concern really was federalism, their focus is misplaced.
May 24, 2011, 7:34 amDavid M. Nieporent says:
No. States don’t have “rights.” The point is that it exceeds the power of the federal government.
May 24, 2011, 8:18 amBen P says:
Although I think tort reform should be left to the states, I have a difficult time with this argument.
On the other hand. A hard cap on non-economic damages is simply the wrong way to go. I work almost exclusively work on the defense side, but I really doubt whether anyone who comes up with something like that has seen a bad med-mal case up close.
May 24, 2011, 8:38 amInstapundit » Blog Archive » THOUGHTS ON federalism and tort reform. “Although the article mistakenly labels Randy as a ‘conserv… says:
[...] ON federalism and tort reform. “Although the article mistakenly labels Randy as a ‘conservative’ (he is in fact [...]
May 24, 2011, 8:39 amKeith Jackson says:
This, a thousand times this. Tort reform should concentrate on figuring out how to keep non-meritorious claims from proceeding and imposing costs on would-be defendants. Damage caps do that inefficiently and have the far more pernicious effect of keeping meritorious non-death/permanent injury claims from being filed. (Full disclosure – I worked Plaintiff side).
Edited for spelling
May 24, 2011, 8:48 amruuffles says:
Hilarious that conservatives that preach the sanctity of a jury’s verdict and the wisdom of 12 ordinary citizens in criminal trials and death penalty phases would throw their judgment out the window in civil trials.
May 24, 2011, 8:56 amJustin says:
First,
David, if you don’t understand the relationship between the Commerce Clause and dual sovereignty, you probably don’t understand the last 200+ years of commerce clause (and related NP) jurisprudence starting with McCollouch and going right through Morrison and Lopez to Raich. Either that, or you do understand it, and are trying to “restore the lost commerce clause” that is some sort of liberterian paradise. When you are done, maybe the substantive limitations of the commerce clause, newly freed from federalist principles, can be incorporated into the 14th Amendment and the citizens of Massachussets can be finally free of Romneycare.
As far as a few other posters here (including Kozinski), I don’t think there’s any contradiction between opposing federalism and being a liberterian. Indeed, there’s some conflict between what we call “federalism,” which states broadly that power should be placed in the hands of state and local governments, and “liberterianism,” which states broadly that no government should have power other than that necessary to protect property and person. Liberterians have taken on federalism as a soulmate for tactical reasons – they believe that federalism would lead to less “government” generally, and so they have taken it on. That doesn’t mean that some people – Somin in particular – have gone on to believe that federalism is a good thing on its own when it does not conflict with liberterianism. But when Somin rails against state governments reserving for themselves the ability to recall property rights, that isn’t a “pro-federalist” position. It’s a liberterian one.
Consequently, one can oppose the individual mandate and support tort reform on policy grounds. You just cannot hold that the latter is constitutionally unproblematic while the former is unauthorized without risking the wrath of that hobgoblin of lesser minds.
May 24, 2011, 8:58 amHouston Lawyer says:
Cite please. Juries are good in criminal trials because they serve as a brake on state power. In civil trials they are a crap shoot and should not be allowed to make public policy.
May 24, 2011, 9:04 amPersonFromPorlock says:
Just an off-the-wall thought, but surely a 100% federal tax on punitive damages would go a long way towards discouraging profit-inspired lawsuits?
May 24, 2011, 9:22 amFat Man says:
It would be more a more interesting argument if the medical system were not 50% Federal dollars (Don’t forget the VA), and cost control in that system were not the most important issue facing Congress today. In the current configuration the cost of malpractice is established by the states, but paid by the Federal government. Arguing that the Constitution requires that configuration is simply perverse.
May 24, 2011, 9:32 amBill Robelen says:
I would argue that certain types of tort reform would certainly fall under even an extremely conservative understanding of the commerce clause. One example would be to limit suits on drugs that have passed FDA approval to a showing of fraud or bad faith.
David,
States do have rights. They are guaranteed under the 10th amendment.
Justin,
May 24, 2011, 9:35 amThe 14th amendment does not attach the commerce clause to the states. They are guaranteed more freedom to regulate matters than the federal government under the 10th amendment. The 14th amendment only applies the bill of rights to the states.
Justin says:
“It would be more a more interesting argument if the medical system were not 50% Federal dollars (Don’t forget the VA), and cost control in that system were not the most important issue facing Congress today.”
Uhhhhh…doesn’t that justify the individual mandate, too?
May 24, 2011, 9:36 amOrenWithAnE says:
Do you really think that the DCC saves an airline or railroad from State law as applied to the business they have within that State?
May 24, 2011, 9:36 amJustin says:
Bill,
I think you missed the dripping sarcasm.
May 24, 2011, 9:37 amDeeG says:
I would have a problem with this if the torts involved were purely within a state, were purely limited to doctor/nurse activity, and the state made agreeing to be sued part of its medical licensing authority. But medical malpractice-related torts involving, for example, drug manufacturers, product manufacturers, cannot be avoided under most current personal jurisdiction theories in most states. So I can see there being a commerce clause justification for capping liability there. Of course, if Congress were smart (and they aren’t), they would establish a “federal” license to practice medicine (via the weights and measures clause of the Constitution), then enact a statute that any doctor with a federal license who acts in accordance with accepted standards of care and/or who prescribes a drug in accordance with an FDA-approved label is immune from suit and/or cap liability that way. Then maybe we can return to a genuine negligence standard for malpractice, instead of what we currently have, which is, anything that goes wrong, sue the doctor.
May 24, 2011, 9:39 amSteve says:
What I’m curious to know is how many of the lawmakers who support federal tort reform have even thought about the federalism issue.
May 24, 2011, 9:46 amCornellian says:
But this is no justification for the feds trying to control costs imposed by state tort law.
I don’t see why. If a State tried to create a legal environment that imposed excessive costs on airlines or railroads, the Federal government would surely step in.
They surely would, but because airlines and railroads give politicians a lot of money, not because Congress has any genuine commitment to federalism.
May 24, 2011, 9:53 amCornellian says:
Juries are good in criminal trials because they serve as a brake on state power. In civil trials they are a crap shoot and should not be allowed to make public policy.
If a jury is a crap shoot in civil trials, why isn’t that same jury also a crap shoot in a criminal trial?
May 24, 2011, 9:54 amCornellian says:
If you’re the federal government and you want to enact tort reform while paying heed to federalism, all you have to do is allow removal to federal court on minimal diversity, adopt “loser pays attorney’s fees” in federal court, throw in some stricter pleading standards, increase the budget of the federal courts 10-fold to handle the volume of cases they’ll get, and let the wailing of the plaintiff’s bar begin.
May 24, 2011, 9:57 amMark Field says:
If this refers to DMN’s comment about states not having rights, I don’t believe he was being sarcastic. From previous comments, I’m pretty sure he thinks (as I do) that states do NOT have rights, only individuals do.
May 24, 2011, 10:09 amEzra says:
I think Randy’s wrong on the constitutional implications of tort reform. I see no reason why it’s any different from any other area of preemption. Federal law displacing state law isn’t some new thing or problem with federalism. Heck, the SCT even does it itself under the made up doctrine of the ‘negative impact of the commerce clause’ and in applying ‘due process’ limits to punitive damages in state cases. There is no doubt a broad power claimed in the ability to displace state substantive law, but it’s not a new power or a new application of an old power. It’s run of the mill federal legislating, as far as I can tell. And I’m about as libertarian as they come. It’s fine to dislike this legislation, but it doesn’t seem to me to cut any meaningful new ground.
May 24, 2011, 10:22 amNo Theory of Jurisprudence says:
I thought Randy was arguing that maybe Congress cannot do this constitutionally.
May 24, 2011, 10:30 amCJColucci says:
There are principled, consistent federalists out there. By my most recent count, there are 37 of them. Everyone else who talks federalism is just a posturing opportunist.
May 24, 2011, 10:40 amTexas Medicine says:
I’d expect that the majority haven’t given any thought to the issue beyond “plaintiffs bad, defendants good.”
May 24, 2011, 10:40 amJustin says:
Mark,
I was referring to his response to me, not to David.
As far as whether state governments have “rights,” I think this is a linguistic debate rather than a substantive one, so I’ll pass. Obviously, states don’t have “constitutional rights” in the sense that individuals do – see South Carolina v. Katzenbach (though I am in the process of editing an article questioning the holding of Katzenbach in certain unique situations not relevant to the discussion here).
May 24, 2011, 10:41 amrichard40 says:
Randy Barnett is partly right. I think whether lawsuits should be regulated at the state or fed level should depend on who the suit is against. If it is against somebody who lives and does business mostly in the state, then state rules should govern. If it is against a company with over 50% of its business outside the state, then fed rules should govern. This would be consistent with the constitutional provision that suits between citizens of 2 different states belong in federal court.
May 24, 2011, 10:44 amFor malpractice, since the doctor normally practices mainly in the state in question, Randy is right that state rules should govern. But for other types of lawsuits, my rule of where the target resides, should govern.
Justin says:
“I think whether lawsuits should be regulated at the state or fed level should depend on who the suit is against. If it is against somebody who lives and does business mostly in the state, then state rules should govern. If it is against a company with over 50% of its business outside the state, then fed rules should govern.”
This would be a shocking change in how we think of federalism, could raise equal protection concerns, and would be both practically unworkable and create unintended incentives.
May 24, 2011, 10:46 amSteve says:
Right. For example, you can look at the federal reforms relating to securities litigation over the last two decades, such as PSLRA (heightened pleading standards for securities fraud claims, to avoid boilerplate “strike suits” every time a company’s stock price drops), and SLUSA (preemption of state-law causes of action in connection with covered class actions, and a more robust right to remove such cases to federal court).
Securities cases are easy, of course, because the subject area is already governed by federal law. But if the federal government thinks it is advisable to take control of additional areas of litigation in order to avoid unfair procedures and outcomes in the federal courts, I believe it is far better to extend the right of removal to such cases and then use Congressional power to dictate the rules of procedure once the cases are in federal court. It is a poor idea for Congress to essentially commandeer the state court systems by dictating their rules of procedure in particular cases.
May 24, 2011, 10:50 amArthur Kirkland says:
A similarly important element of any tort reform intended to promote justice: Elimination of artificial limits on liability. A true “wrongdoer pays” system. Accountability. No hiding behind corporate (or LLC) skirts.
May 24, 2011, 11:12 amfrankcross says:
Put me in the bunch who doesn’t see the necessary association between libertarianism and federalism.
This is libertarian in the sense that it limits federal power. But it is enormously unlibertarian if it unleashes a bunch of additional governments adopting regulation. Should the federal government preclude states from adopting licensing statutes for various occupations or eliminating rent control?
I would think a federalism devotee would say no, but a libertarian should embrace such action
May 24, 2011, 11:13 amwvufan says:
I have litigated large dollar tort cases for both plaintiffs and defendants and I agree that tort reform should not focus on caps but rather on making it harder to file non-meritorious cases.
The realities of modern economics and human behaviors mean that a serious injury provably caused by a tortfeasor results in a serious award against the tortfeasor. This is as it should be. Caps artificially disrupt this logical equilibrium
There are already many checks on frivolous cases (Rule 11, Rule 12, ethical rules, to name a few), but further steps like Twombly/Iqbal are a good idea. If a case is legitimate enough to survive SJ, it should survive a strengthened Rule 12. If it is not strong enough, it might as well be dismissed early before litigation costs get out of hand.
With respect to the constitutional issue, I haven’t looked at the case law on this in awhile, but given the interstate nature of lots of tortious conduct (not to mention the aggregate effect of tort suits within state borders) congress should have power under the commerce clause. I have seen due process challenges to caps, but I think they generally fail.
May 24, 2011, 11:20 amArthur Kirkland says:
What is the libertarian position on limited liability? Should the state interfere with a victim’s pursuit of justice, favoring the economic interests of a wrongdoer over those of a victim of negligence, malice, crime, etc.?
Is government-enforced artificial compartmentalization of liability through subsidiaries, corporate shells, flimsy limited parterships and the like consistent with libertarianism?
Illumination would be welcomed.
May 24, 2011, 11:26 amAndrew Cochran says:
EXACTLY. The Founders didn’t differentiate between the moral authority of a jury in civil vs. criminal cases. Article 39 of the Magna Carta protected jury trials in both types. The “crap shoot” argument is a slap in the face to the Founding Fathers,who trusted local juries to decide the claims of their neighbors.
May 24, 2011, 12:18 pmIspep Teid says:
Corporate officers are typically liable for the torts they commit or authorize. Are you thinking of something different?
May 24, 2011, 12:21 pmIspep Teid says:
You want plaintiffs, at the beginning of every case, to have evidence sufficient to defeat every hypothetical motion for summary judgment? And all this is to occur before discovery begins? Am I understanding you right?
May 24, 2011, 12:26 pmSteve says:
In my experience, federal courts don’t really know what to make of Twombly/Iqbal other than “I guess we’re supposed to dismiss more cases.” I think it would be more productive to change the requirements of Rule 12 explicitly, for example by saying that a motion to dismiss can rely upon undisputed documentary evidence from outside the pleadings. Many state court systems are ahead of the federal courts on this stuff.
I don’t think sanctions for frivolous litigation will be much of a fix no matter how much you change the rules, sadly. Courts are already desperate enough to clear their dockets. They aren’t interested in taking a claim they have already dismissed and giving it an additional examination to see if there was really a good-faith basis for filing it in the first place. It’s too bad, but in the big picture maybe you just end up multiplying the costs by fighting over sanctions. (And to flip the script, how about sanctions for frivolous defenses, a topic that generates little ink…)
May 24, 2011, 12:28 pmStephen Lathrop says:
What is the point of building a liability escape hatch into FDA approval? Is there something positive in corporate carelessness? Wouldn’t that standard incentivize drug developers to avoid areas of research in which bad news might turn up. Once you know the facts, if you are less than forthright, you could be on the hook for fraud or bad faith. But if you never discover the facts, and the FDA doesn’t think to make you go find them…
May 24, 2011, 12:37 pmOrenWithAnE says:
As I understand (CMIIW) the Constitution provides limits on a diversity jurisdiction. If I sue a doctor that is a resident of my State (and only him), I didn’t think Congress could remove that.
May 24, 2011, 12:52 pmSteve says:
My concern would be that such a rule would give too much power to the rulings of an agency that seems particularly vulnerable to regulatory capture. I agree with the basic notion that drug companies have primary responsibility for ensuring that their drugs are reasonably safe, and they shouldn’t be encouraged to outsource their responsibilities to the FDA. Such a rule would mean that safety testing ceases to be primarily about ensuring a safe product and instead becomes primarily about obtaining FDA approval, period.
More to the point, since America remains the engine for drug company R&D notwithstanding our hardcore tort system, I’m hesitant to identify this as the first area in which we need to begin scaling back lawsuits in the name of promoting commerce.
May 24, 2011, 12:52 pmSteve says:
But if Congress passes a statute affecting that cause of action, it could create federal question jurisdiction thereby.
May 24, 2011, 12:56 pmDaily Dive 24 May 11 | adeliemanchot says:
[...] Federalism and Tort Reform [...]
May 24, 2011, 12:57 pmUrso says:
What if you pass a rule stating that malpractice insurers are necessary parties? There would be some situations where the insurer is a resident of the same state, but in the vast majority of cases you’d get some minimal diversity between the three.
Edit: Of course, this assumes that Congress would have the authority to pass a law making the malpractice insurers as necessary parties in the first place.
May 24, 2011, 1:18 pmKazinski says:
The costs are imposed by state tort laws on the federal healthcare programs. If taxpayers are funding the federal program, and the federal program is paying the doctors, and the doctors are paying the insurance companies, and the insurance companies are paying the plaintiffs, then it all boils down to the taxpayers paying the plaintiffs.
If Congress is putting the taxpayers on the hook, then Congress has a responsibility to control the costs. The other thing to consider is that it is also Congress that is setting medicare reimbursement rates, so there is not a free market in medical services, then you can’t leave an unfettered market in malpractice claims.
I’m all for the free market, but it just doesn’t work to have government intervention on the revenue side of the health industry, but an unfettered free market on the expense side.
That was the big problem in the California energy “deregulation” 10 years ago, they deregulated wholesale costs, but kept tight regulation on retail costs, including a mandate to provide service. Sound familiar?
May 24, 2011, 1:43 pmJohn Britely says:
States should only be allowed to have their own tort systems to the extent that medical providers can charge different prices that reflect those different rules.
The better rule would be jurisdiction specific prices.
As a libertarian I want freedom of association but too strong of a federal government limits my ability to vote with my feet and move to another state with different laws.
May 24, 2011, 1:53 pmwvufan says:
No, I just meant that surviving a motion to dismiss under even a heightened Rule 12 standard should not be a problem for a meritorious claims. At least in most tort contexts. There may be exceptions for some res ipsa cases, but I suspect that case law can and will develop (if it has not done so already) to permit the parties to such cases to develop the record even under Twombly etc.
Someone with more knowledge of insurance underwriting than I have should explain how, even with caps or other reforms, tort reform will help reduce medical costs. Reforms often make insurance available when insurers had previously stopped writing, but in my experience, rates are still high for covered physicians. Also, even under a cap system, the possibility for a non-cap verdict (for cases successfully plead outside the relevant statute) or a sizable verdict within the cap remains enough of a risk that insurance companies keep the rates high.
May 24, 2011, 2:03 pmDavid Schwartz says:
This is one of the issues on which Libertarians disagree. Some see this as one of the few things governments do right. Others see it as a shining example of how government has screwed up society.
May 24, 2011, 2:03 pmSteve says:
Not really. The federal program reimburses the doctors for performing medical procedures, not for paying their malpractice premiums. If a given doctor’s malpractice premium goes up, the government will not suddenly start paying him higher reimbursements. This argument also involves a form of bootstrapping that some federalism supporters may find distasteful.
May 24, 2011, 2:14 pmNo Theory of Jurisprudence says:
On this issue the founders were wrong and deserve to be slapped in the face. They got personhood wrong, too.
May 24, 2011, 2:26 pmPointofLaw.com | PointOfLaw Forum: Somin on federalism and tort reform says:
[...] Ilya Somin @ Volokh:In this post, I explained why federally mandated tort reform is, in most cases, both constitutionally dubious and unnecessary. The better way to restrict abusive tort suits is through interstate competition combined with constraints on states' ability to regulate conduct outside their borders.Somin needs to be more specific: the Private Securities Litigation Reform Act was "tort reform," but it was reforming federal securities law, and there was nothing anti-federalist about that. [...]
May 24, 2011, 2:52 pmbpbatista says:
Question: Could Congress impose tort reform that applies only to Medicaid and Medicare recipients? E.g., a Medicare recipient can not be awarded more than $250,000 in non-economic damages.
May 24, 2011, 3:21 pmBen P says:
I think this is equally misguided. Piercing the corporate veil generally results in nothing but a judgments you’ll never collect on.
May 24, 2011, 4:25 pmBen P says:
the evidence bears out that there’s not a terribly strong correlation between insurance premiums and tort reform. The number of suits certainly went down. (You can’t hardly find a plaintiff’s lawyer willing to do med-mal cases in Texas now) But insurance premiums didn’t fall much oddly enough.
May 24, 2011, 4:28 pmgastorgrab says:
A simpler ‘federalist’ solution would be to allow insurance competition across state lines. Each state is currently a closed economy in this respect.
Let the customer see for themselves that their ‘state-adjusted insurance rate’ is the reason for the unusually high price they pay. Let them find out for themselves that the extra money they pay for insurance, over the rate paid by residents of the neighboring states, goes almost directly into the pocket of a state trial lawyer.
The high liability rate that doctors must pay is not at all there to protect the patients interests. It’s there to protect the trial lawyer’s bottom line.
May 24, 2011, 4:30 pm.
Bill Robelen says:
Steve,
May 24, 2011, 5:49 pmThe point I was raising was that many drug companies go through an extensively regulated approval process with the FDA in order to get a new drug on the market. Sometimes years after a drug has been on the market, a harmful side effect is discovered and the lawsuits begin flying. I would argue that since the FDA already regulates when a new drug may enter the market, than the drug companies ought be free from additional liability absent a finding of fraud or bad faith. If we want to claim that the FDA is inefficient at regulating drugs, than we ought to remove them from the process and let the drug companies be completely liable. The other alternative would be to reform the approval process for drugs. The current system, however, requires drug companies to spend years doing tests monitored by the FDA before getting a drug on the market. Ten years may pass by and suddenly a new defect is discovered and the drug company is put out of business by the lawsuits.
Floridan says:
What I find interesting about this argument about so-called frivolous litigation or excessive awards, is how little hard data there are available. Has any impartial/nonpartisan agency actually looked at the numbers?
May 24, 2011, 5:56 pmFloridan says:
If my memory is correct, some years ago the Florida Legislature had insurance executives testify under oath . . . not one would say that tort reform legislation would affect insurance premiums.
May 24, 2011, 6:00 pmPersonal Injury says:
I’m a plaintiffs’ personal injury lawyer. My 2 cents is that damages caps will not address the real concerns of the defense interests, and they know this. I think what they really want to do, is use this to start down a slippery legislative slope by which all tort litigation becomes more like worker’s comp- your case will fall into various categories, and depending on which category you fall into, you will receive an “award” that is based on a statutory or administrative schedule.
In other words, this is really the first step to transforming tort law into administrative law.
To do this effectively on a national scale, they really would need federal law to do it. It’s just not practical to focus their efforts on all 50 states.
Consider the reasons why caps based on “runaway jury awards” won’t come close to solving the imagined “problem:”
o Juries are usually good for the defendants, not the plaintiffs, even in liberal jurisdictions. In fact if I file a lawsuit and don’t pray for a jury, the defense almost always demands a jury trial. Despite this, “runaway jury” awards are trumpeted because it sounds good to the uninformed.
o There are probably only a couple of dozen truly “liberal” counties in the entire United States, so far as damage awards are concerned.
o Damage caps will lower payouts for the most serious injuries. But those are the people most in need. Meanwhile, they will not solve the problem (from the defense perspective) of inflated relative values- a case worth $10,000 in County A is worth $25,000 in County B.
o Truly “frivolous” litigation (in the Rule 11 sense) does not result in big dollars for plaintiffs (it results in quick dismissals, at low defense costs, or at most nominal payouts)
o A handful of big jury awards are not the source of the financial woes, real or imagined, of insurers. Almost no cases ever go to trial. When they do, my experience is that it’s because one side or the other is making a mistake at valuing their case.
May 24, 2011, 6:19 pmSteve says:
That’s the exact opposite of a federalist solution. It would prohibit states from imposing conditions on the sale of insurance within their borders, creating a one-size-fits-all regime.
May 24, 2011, 6:39 pmgastorgrab says:
Why? The same sales could still occur, and a unique premium for every state would be factored into the price for all ‘out of state’ sellers.
Base cost of policy + state premium (to accommodate each state’s liability laws) = final cost.
The states can still impose their regulations (taxes) on each transaction as they see fit. The difference comes from the itemized statement which shows each customer how much their state is charging them for the privilege of being healthy. It makes it easy to compare notes.
Have I misunderstood the ‘Dormant Commerce Clause’? The state may regulate for the welfare (or safety) of it’s own citizens, but the federal government still has authority over interstate commerce, right?
May 24, 2011, 7:54 pm.
Stephen Lathrop says:
One advantage of combining a regulatory approach with undiminished liability is that it offers the prospect of compensation for injury if regulation, however efficient, fails to catch every contingency. It seems entirely just that the profiting party pay for the injury, instead of the injured party.
May 24, 2011, 9:51 pmSteve says:
This doesn’t make any sense. Regulation of insurance means that a state can say “you can’t sell any policy in this state unless it says X, Y, and Z.” Either insurance companies have to comply with that regulation in order to sell insurance in the state or they don’t.
May 24, 2011, 11:08 pmMike C says:
Much of what is called ‘conservatism’ has been fair-weather federalism for a long time.
Ask a conservative about medical-insurance reform, and s/he will demonstrate an instinctive understanding of separation of powers.
However, ask a conservative about the war on drugs and the law of unintended consequences, and s/he will make about as much sense as Barney Frank does when he talks about mortgage banking.
May 25, 2011, 3:38 amRicardo says:
I’m not sure I follow. The so-called prohibition on selling insurance across state lines really just means that insurance companies (which are, in fact, often headquartered in a different state like Indiana-based WellPoint which operates under the name “Blue Cross” or “Blue Shield” in many different states) must sell policies and settle claims in accordance with the laws of the state of residence of the insured.
The reason for this was to avoid a situation where all insurance companies decide to take up residence in a state like Delaware or North Dakota, lobby the state legislature to pass industry-friendly laws and then insist in its contracts that all disputes will be resolved according to Delaware or North Dakota law.
May 25, 2011, 10:37 amCilla Mitchell, Galveston Texas says:
Texas Tort Reform Act is a legal weapon used in Texas against Texans.
When there are laws on the books that prevent the common man from getting accountability, then there is no telling what will happen.
A link provided to a video showing just how Tort Reform is working out in Texas, or not.
http://www.youtube.com/watch?v=JT7rxa21_Xo
Or, just Google Cleveland Mark Mitchell, then click on youtube.
Thank you for your time.
May 25, 2011, 1:47 pm