Thursday, January 20, 2005

The Tortuous Logic of Tort Reform

If the first term of George W. Bush was all about smokin' out Al Qaeda and Saddam, then this second term is shaping up to be happy endings for the rich and really rich.

What a charitable guy that Dubya is. First he announces efforts to partially privatize Social Security, and now he promises a round of so-called tort reform on behalf of the nation's doctors and captains of business and industry.

If that sounds like a pretty wide spectrum of benefactors, that's 'cause, well, it is. The New York Times made the point recently that business-related tort reform and the rising costs of medical malpractice premiums have been linked partly to give a kindly Marcus Welby, M.D., face to the issue:

"The impending battles over malpractice costs have in some states been wrapped in the broader cloak of 'tort reform,' intended to restrict the civil liability of many types of businesses. They also come at a time when President Bush has pledged to push for federal restrictions on medical malpractice lawsuits.

"But in most of the states, soaring malpractice premiums have been the driving force for the campaigns -- in part because compelling stories about doctors and their patients have put human faces on the larger issue. In some regions, soaring premiums have led doctors to strike, stop delivering vital services and even quit."

Republicans are crafty on this public-relations tactic, especially since medical malpractice costs and larger questions surrounding business liability are, indeed, two separate issues. Having once upon a time worked in TV news, I can confirm that obstetricians closing up shop in small-town America make for a helluva lot more poignant television than a beleaguered toy manufacturer facing a class-action lawsuit over its new Barbie Nunchucks.

But even in the realm of skyrocketing medical malpractice costs -- and they are astronomical and rising, no doubt about it -- there is hardly a consensus that the fault rests with evil trial attorneys and a litany of lawsuits, as the GOP would have you believe (and has done a fair job getting the vast majority of docs to believe, too). Earlier this month, the Chicago Tribune provided an excellent encapsulation of the issues involved:

"The Congressional Budget Office attributes the problem of rising liability insurance costs to several factors. Premiums for physicians nationwide rose by 15 percent between 2000 and 2002, according to a January 2004 CBO report. Since 1993, premiums for all physicians have increased by about 25 percent. Growing claims are partly to blame, the CBO found, with the average payment for a medical malpractice claim rising "fairly steadily" since 1986, from $95,000 to $320,000 in 2002. But insurers also have been forced to raise premiums to offset reduced investment income.

"Insurers maintain that unreasonable costs of litigation have been a problem for years. It may be easier to absorb those costs when the stock market is flush, they say, but the problem resurfaces when profits are leaner.

"It's ultimately consumers who pay the price for increased litigation, said Sean McBride, spokesman for the U.S. Chamber of Commerce Institute for Legal Reform. 'It's not just an abstract cost to business,' said McBride, pegging the price at $809 a year for each American.
'It's costing consumers higher prices on just about everything they are purchasing.' The U.S. Chamber says the defense and payment of liability claims drains about $230 billion a year from the American economy. The system is 'bilking' small businesses of $88 billion a year, it maintains.

"'We have not promised price reductions with tort reform,' said Dennis Kelly, an American Insurance Association spokesman. 'We want tort reform to create a more balanced legal system that is more equitable for all parties.'

"Trial lawyers dispute the notion that huge jury awards are driving the high costs of health care. They argue that less than 2 percent of all health care spending is traced to the cost of litigation, a statistic supported by the CBO."

First off, we need to differentiate between medical malpractice reform and plain ol' tort reform. Lumping the two together plays into the Republican playbook and does a disservice to both problems. With regard to climbing medical malpractice premiums, we would suggest that -- while trial attorneys are easy whipping boys and insurance companies inexplicably escape culpability -- something clearly needs to be done. We can flap our jaws incessantly about why medical malpractice insurance premiums are so high, but the fact remains that they have jumped in recent years and are pricing many docs, especially OB-GYNs, out of the profession.

Still, we find the Republican Party's position on overarching tort reform more than a bit disingenuous. As we see it, either you have widespread deregulation of business and industry or you have serious tort reform -- but you shouldn't have both.

When the GOP embraces the mantra of an unencumbered business environment, then it seems only logical to allow the specter of, yes, litigation and high jury awards to ensure protection of the public. Call me crazy, but I just don't have enough boundless faith in the innate goodness of industry to guard against polluted air, dirty water, useless or potentially harmful products and a zillion other less-than-desirable effects without a hammer coming from somewhere -- government-enforced regulation or the wild west regulation of the courtroom.

There is little arguing that we live in a mighty litigious society burgeoning with insidious attorneys and greedy plaintiffs. But you also have plenty of the same mind-set in the business community. If mutually assured destruction had a twisted kind of logic in the Cold War, surely the tensions between business and attorney serve a purpose in ensuring public protection.

Don't be fooled. In the end, tort reform is all about who has the deeper pockets. Democrats circle their wagons around trial attorneys 'cause that's the ones who brung 'em. Republicans sidle up to big business and chambers of commerce 'cause them's the ones who brung them.

It is as simple as that.

According to the nonpartisan Center for Responsive Politics, attorneys and attorney-related PACs contributed nearly $118 million to Democratic candidates in last year's elections, meaning that roughly 70 percent of attorneys' campaign contributions went to Dems.

By contrast, Republicans captured 75 percent of all 2004 campaign contributions from the energy sector ($32 million); 59 percent from the finance, insurance and real estate industries ($159 million), 63 percent from healthcare professionals ($37.7 million) and 75 percent from the transportation industry ($31 million).

As The New York Times puts it:

"The battles pits two of the nation's most powerful and generous campaign contributors: trial lawyers and doctors.

"In the 2004 campaign, the American Trial Lawyers Association political action committee gave $2.1 million to federal candidates, almost all of them Democrats. The American Medical Association's political committee contributed nearly $2 million, with 81 percent going to Republicans."


At 6:54 AM, Blogger Thomas said...

Gosh, one would think that if they really wanted to get evil trial attorneys out of the pockets of business, then the law would limit the damages in suits between companies.

After all, they spend more money suing each other than defending themselves against citizens.

At 8:01 AM, Anonymous Anonymous said...

I agree completely that you can't have both deregulation and a limitation on the public's ability to sue. It seems that Republicans put a blanket adjective of "evil" on all regulations, yet anyone who has seriously looked into American history would be appalled at what businesses and industries have done prior to their being regulated.

At 11:23 PM, Anonymous Anonymous said...

Here's a few questions for everyone that might clear the air...

Which group creates jobs, hires people, innovates and keeps the economic engine of America humming?

Is it business owners or trial lawyers?

Which group pads personal bank accounts with horrific legal fees, and jets around the nation looking for the next target of its egregious class action lawsuits?

Is it businesses or trial lawyers?


No tortuous logic there.

Just Main Street versus K Street.

I'll take Main Street every time.


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