Tort Reform Lies and Illusions
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Is it okay with you if I limit your right to voice your opinion about the government? Good with you if you can not own a gun? You probably would appreciate me censoring what gets published in newspapers or talked about on your nightly news, right? You are happy to allow government to control what church you can or cannot attend?
You, of course, will not allow these rights to be taken away, but you will allow the right to trial by jury to be taken away, with little more than a thought, when lobbyists tell you (through your legislators) that tort reform is a good thing. You are happy to give up this fundamental right when told by the insurance lobby that tort reform is the only way to “save” the medical profession.
What these lobbyists and their political cronies really mean is that tort reform translates to higher insurance profits, with no down side for the insurance industry. It means lower exposure to the business of insurance, which means more money in insurance company profit margins.
When tort reform hearings were held in Florida, insurance company executives actually testified that tort reform would not lower malpractice insurance premiums for doctors. The same executives testified that frivolous lawsuits in medical negligence cases were extremely rare and did little to add to costs for malpractice insurance. They said that the very tort reform proposed (ultimately passed) would have little or no affect on availability of malpractice coverage or the cost of malpractice coverage.
There are no objective studies that correlate tort reform with lowering of so called defensive medicine; demonstrating that a tort crisis even exists; or showing any benefit to tort reform except to insurance companies.
See what the insurance companies and tort reform advocates have said in the past. They claim to be experts and none of them have the temerity to claim that tort reform works:
Representative of the Ohio Health Insurance Company testifying before the Wyoming Legislature: Tort reform will not lower rates. (Casper Star Tribune, May 4, 2003)
Medical Assurance Co. of Mississippi: “[T]ort reform does not provide a magical ‘silver-bullet’ that will immediately affect medical malpractice insurance rates.” (Medical Assurance Co. of Mississippi)
Patricia Costante, chairman and CEO of the MIIX Group of Insurance Companies: When asked by New Jersey Assemblyman Paul D’Amato whether, if caps are enacted in New Jersey, her insurance company will not raise premiums and will, in fact, reduce them, she said, “No, we’re not telling you that.” (Meeting of the New Jersey Assembly Joint Committee of Banking)
American Insurance Association: “[T]he insurance industry never promised that tort reform would achieve specific premium savings.”
Sherman Joyce, President, American Tort Reform Association: “We wouldn’t tell you or anyone that the reason to pass tort reform would be to reduce insurance rates.”
Victor Schwartz, General Counsel, American Tort Reform Association: “[M]any tort reform advocates do not contend that restricting litigation will lower insurance rates, and ‘I’ve never said that in 30 years.’”
Dick Marquardt, Washington Insurance Commissioner: It was “impossible to attribute stable insurance rates to tort-law changes or the damages cap,” since rates also improved in states that did not pass tort reform.
Chairman of Great American West Insurance Company: “[T]ort reform ‘will not eliminate the market dynamics that lead to insurance cycles,’ and ‘we must not over-promise—or even imply—that insurance cycles will end when civil justice reform begins.’
Connecticut State Lawmaker: “[T]he insurance industry now says [tort reform] measures will have no effect on insurance rates. We have been disappointed by the response of the insurance industry. The reforms we passed should have led to rate reductions because we made it more difficult to recover, or set limits on recovery. But this hasn’t happened.”
State Farm Insurance Company (Kansas): “[W]e believe the effect of tort reform on our book of business would be small. … [T]he loss savings resulting from the non-economic cap will not exceed 1% of our total indemnity losses.… [I]n our sample of liability claims, no claim was found that would have been affected by the joint and several restriction.” And any savings due to alternative payment methods would be “negligible.” (Letter from Robert J. Nagel, Assistant Vice President, State Filings Division, to Ray Rather, Kansas Insurance Department)
Aetna Casualty and Surety Co. (Florida): After Florida enacted what Aetna Casualty and Surety Co. characterized as "full-fledged tort reform," including a $450,000 cap on non-economic damages, Aetna did a study of cases it had recently closed and concluded that Florida’s tort reforms would not effect Aetna’s rates. Aetna explained that “the review of the actual data submitted on these cases indicated no reduction of cost.”
St. Paul (Florida): St. Paul’s found “a total effect of about 1% savings” from Florida’s 1986 tort reforms, but that even this 1% might be inflated. St. Paul concluded that “the noneconomic cap of $450,000, joint and several liability on the noneconomic damages, and mandatory structured settlements on losses above $250,000 will produce little or no savings to the tort system as it pertains to medical malpractice.”
General Accident Insurance Company (Washington State): “Given that liability losses constitute such a low proportion of business owners’ losses, GA feels it is prudent to continue with its original proposal of a 10 percent increase in base rates.” (The Seattle Times, July 1, 1986. The Times wrote that “the highly touted tort-reform legislation enacted by the Legislature early this year is not lowering liability-insurance rates as promised, according to preliminary filings made with the state insurance commissioner.”)
Allstate Insurance Company (Washington State) In asking for a 22% rate increase following passage of tort reform in Washington State, including a cap on all damage awards, the company said, “our proposed rate would not be measurably affected by the tort reform legislation.” (The Seattle Times, July 1, 1986)