This week Republicans in Congress stood up for the right of incompetent Wall Street executives to be overpaid and undertaxed. You might GOP legislators were just making fools of themselves and can be ignored. But out of the AIG limelight the GOP was moving on other fronts with faux populist plans to protect the wealth of the wealthy.
Earlier this month the Senate Republican Conference held a discussion called “Protecting Main Street from Lawsuit Abuse.” Chaired by Sen. John Cornyn of Texas, the purpose of the discussion was to advance the idea that tort reform is essential to financial recovery. The idea is that frivolous lawsuits are hurting small business owners and driving up the cost of everything.
Tort reform is “a catchall phrase for legislative measures designed to make it harder for individuals to sue businesses,” wrote Daniel Fisher in Forbes. In the past several years state legislatures have passed “tort reform” measures that cap the awards juries can give plaintiffs and complicate procedures to make it more difficult for plaintiffs to file suits. These measures usually are sold to the public as being a benefit to the economy — tort reform will boost business, create jobs, and lower costs, including the costs of health care.
In practice, however, there is no clear-cut evidence that tort reform translates into lower health care costs or more jobs, and plenty of evidence suggests it doesn’t.
And the senators’ tender protectiveness of “main street” would be touching, except that in the real world small businesses often are wronged by, and file suit against, big corporations. Nor does “tort reform” do anything to make hospitals, products and workplaces safer.
Karl Rove’s Legacy
As documented by a PBS Frontline documentary, in the 1980s Karl Rove began to push tort reform as a winning issue for Republicans. It was a great wedge issue that brought together many disparate professional and moneyed interests, and it could be sold as being in the public interest. On the other side were ambulance-chasing trial lawyers and greedy litigants who wanted $5 million for spilling hot coffee on themselves at McDonald’s.
Tort reform was a major plank in George W. Bush’s gubernatorial campaign in 1994. In 1995, Gov. Bush signed a sweeping tort reform bill into law. Among other things, the bill limited the amount of damages a jury could award and raised the level of proof plaintiffs had to show to win damages.
When he ran for president in 2000, the Bush campaign claimed tort reform as one of the governor’s great successes. The benefits claimed for Texans included a stimulated economy and lower auto insurance premiums. Some tort reform lobbying groups to this day repeat the same claims and hold Texas up as a shining example of what is possible if only those greedy trial lawyers are kept in check.
However, all of the alleged public benefits of the 1995 reform act can be explained by other factors. There is no clear-cut evidence the act had any effect other than to make insurance companies more profitable. For details, see Richard A. Oppel Jr. and Jim Yardley, “Bush Calls Himself Reformer; the Record Shows the Label May Be a Stretch,” The New York Times, March 20, 2000.
Oppel and Yardley quoted Reggie James, director of the Austin office of Consumers Union. ”While it was portrayed as a fight between honest businesses and greedy trial lawyers, the fight was really about businesses not wanting to be held accountable when they harm consumers,” James said.
The Tort Reform Movement
The Commonweal Institute has a must-read report on the tort reform movement called “The Attack on Trial Lawyers and Tort Law” (PDF), and compiled by David Johnson. The movement appears to be made up of a number of independent “grass roots” organizations. In fact, these organizations are funded by a small number of conservative foundations that use the right-wing media infrastructure to implant the meme that the nation’s economy must be protected by an epidemic of greedy litigants who win millions of dollars in frivolous lawsuits.
This right-wing network also has sold the public on the idea that skyrocketing medical costs are mostly caused by out-of-control medical malpractice awards. In fact, the Congressional Budget Office has documented that all malpractice costs put together amount to less than 3 percent of the nation’s total health-care costs. If all malpractice-related costs were eliminated entirely, the effect on the nation’s health care cost would be negligible.
Again, let’s look at what happened in Texas. In 2003, the state placed tight restrictions on medical malpractice claims. This was supposed to make medical insurance more affordable for Texans. In fact, the cost of medical insurance not only continued to climb in Texas, but climbed at a faster rate than most of the rest of the country.
The Other Side
To be fair, Texas doctors are happy because their malpractice insurance has gone down. A Texas physician who flew to Washington to testify to Senator Cronyn’s “tort reform” discussion sang the praises of the 2003 Texas law. But, as I said, the savings to physicians have not translated into lower health insurance premiums, nor has it made medical care any safer in Texas. It simply makes it a great deal more difficult for someone to bring a successful medical malpractice suit to court.
It is also true that tort can be very lucrative for lawyers. In the PBS Frontline program cited above, Sam Gwynne, Executive Editor of Texas Monthly, explained,
In the Golden Triangle of Beaumont area of Texas, you have a lot of plants that made asbestos and other things or that used a lot of chemical and oil refinery. The border is perhaps the most notorious place. That’s where the famous McDonald’s verdict came from. Texas was a place where a smart trial lawyer could venue shop and get himself a good jury and get, you know, a $30 million verdict against a large company and win it and then take obviously half of it. This was the place where that sort of thing happened. So I think that Karl [Rove] … saw it as a coming issue, and a big one. And believe me, not everybody saw this.
But this does not negate the fact that real people were facing real workplace hazards that ruined their health and sometimes cut short their lives. That asbestos, for example, is the most common cause of mesothelioma, a particularly deadly cancer, as well as asbestosis and other extremely serious diseases. Litigants are not always people who want to be compensated for spilling coffee on themselves.
Lowering malpractice insurance rates and protecting honest businesses from frivolous lawsuits are fine goals. But surely there are remedies that don’t take away the rights of citizens to have their grievances heard in court.