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Little Known Facts About Tort Reform

Consumer Protection, Crime, Healthcare, Injury

Tort reform: a phrase that’s been a favorite among GOP lawmakers and right-wing radio jocks at least since the early days of George W. Bush.

The idea behind tort reform—capping the amount of damages that can be paid to victims of medical malpractice and personal injury caused by negligent business practices—is that it will cut down on frivolous lawsuits and save gobs on healthcare. While that’s a good argument theoretically, it isn’t entirely based on fact.

Here are a few little-known facts about tort reform worth considering.

Tort reform won’t bring down medical costs.

Politicians are constantly squawking about how our out-of-control healthcare costs in America are the fault of malpractice suits. Even doctors believe that malpractice insurance and frivolous malpractice claims have driven up the cost of healthcare to their current mind-boggling proportions.

What academics and economists who study the system say, however, is that malpractice has little to do with the cost of healthcare in the U.S. University of Pennsylvania School of Law professor of law and health sciences, Tom Baker, points out that healthcare costs have doubled since the 1980s, but the number of malpractice claims has dropped since then. Not only that, but litigation and malpractice insurance costs make up only 1 to 1.5 percent of all medical costs.

Most malpractice victims don’t file a claim.

Major studies over three decades show that about one in every 100 hospitalized patients receives a serious injury from medical malpractice, yet only 4 to 7 percent of those ever file suit. The numbers of injured patients have gone up in the last decade, but the rate of claims hasn’t changed—which means even fewer malpractice victims sue nowadays than in the past.

Defensive medicine isn’t all bad, nor is it that expensive.

Despite the fact that so few injured patients actually file claims, tort reform supporters often point out that doctors are forced to practice “defensive medicine,” which means they feel forced to order all kinds of extra, expensive tests just to protect themselves from a malpractice suit.

But, defensive medicine is a good thing, to an extent. If a doctor has any suspicion of a major medical problem, you want to have that possibility explored. Sure, sometimes it’s unnecessary, but it’s part of responsible diagnosis and there’s no way to separate necessary tests from unnecessary ones until after the fact. Not only that, but defensive medicine actually costs far less than politicians lead us to believe. Harvard Professor of Law and Public Health, Michelle Mello, tell us that defensive medicine wouldn’t even be in the top 5 or 10 things that would bring down healthcare costs in America.

The caps on awards that exist in some states hurt real victims.

Mello also points out that, though putting caps on damage awards could limit how much liability insurance premiums go up in the future, “it tends to be oversold as a solution and it’s pretty unfair to patients.”

According to Bloomberg, at least 30 states already cap medical malpractice awards, and the caps generally do not go up with inflation, so caps put in place in the 1970s are now laughably inadequate. Also, a cap is a maximum—it’s not guaranteed. Even if it was, most caps mean that, even if the malpractice victim wins his case, he probably won’t get enough to even cover his medical expenses once legal fees are taken out. Most lawyers won’t take a malpractice case unless it is an epic case—it’s just not worth it. And that hurts the majority of victims who have no recourse even if they suffer physically and financially for months.

The McDonald’s hot coffee case actually wasn’t frivolous.

People love to use the hot coffee at McDonald’s case as an example of the kind of frivolous lawsuit that should be stopped through tort reform. Some woman spills her drive-through coffee in her lap, gets burned, and successfully sues McDonald’s for a small fortune. Appalling! Why should McDonald’s—and, down the line, those of us who like Big Macs—pay when obviously the woman was careless, right? Isn’t this just the kind of BS litigation that costs us all more money in the long run?

No, because it wasn’t frivolous at all. What news outlets failed to report was that the coffee in question was kept ridiculously hot and that, despite knowing it was hot enough to instantly cause 3rd degree burns (185 degrees), McDonald’s outright refused to lower the storage temperature of their coffee to a temperature that was still reasonably hot, but wouldn’t actually maim people (the average temperature of coffee served in the home is 135 to 140 degrees.)

Stella Liebeck, the woman injured by the coffee, suffered 3rd degree burns over 6 percent of her body, was hospitalized for 8 days and required skin grafts. If you’re still judging her because she was drinking coffee while driving, the fact is, she was the passenger and the car had been stopped so she could add cream and sugar. Even though the appalled jury felt her suffering was worth $2.7 million—the number invariably quoted by tort reform advocates—the judge actually lowered the award to only $480,000.

Tort reform isn’t really aimed at protecting people.

According to the Risk and Insurance Management Society itself, liability costs to American business have dropped significantly since the 1990s. What drives insurance premiums is not claims, but the health of the investments insurance companies own. So who is really protected through tort reform? Not your neighbor who is paying higher premiums, your doctor who has to pay malpractice insurance, or the person whose life is destroyed by negligence or malpractice. Tort reform protects corporations and their leadership—not to mention the politicians funded by those corporations.

Invariably, there will be frivolous lawsuits, because there will always be people who try to take advantage of the system. And yes, it costs money to get those cases to the point where a judge will dismiss them. But punishing people whose lives are devastated by corporate negligence or medical malpractice is not the way to solve the problem.