Tort reform refers to proposed changes in the civil justice system that would reduce tort litigation or damages. Tort is a system for compensating wrongs and harm done by one party to another's person, property or other protected interests (e.g. reputation, under libel and slander laws). Tort reform advocates focus on personal injury in particular.
In the United States tort reform is a contentious political issue. US tort reform advocates propose, among other things, procedural limits on the ability to file claims, and capping the awards of damages. According to Forbes reporter Daniel Fisher, tort reform is "A catchall phrase for legislative measures designed to make it harder for individuals to sue businesses."
In Commonwealth countries, those initiating liability lawsuits must pay court costs as well as the legal expenses of defendants should they lose, thus greatly reducing the number of such cases. On the other hand, there are proposals to replace tort compensation with a social security framework that serves victims without respect to cause. In 1972, New Zealand introduced the first universal no-fault insurance scheme for all accident victims, which provides benefit from the government run Accident Compensation Corporation without respect to negligence. Its goal is to achieve equality of compensation, while reducing costs of litigation. In the 1970s, Australia and the United Kingdom drew up proposals for similar no-fault schemes, that were later abandoned.
The tort system
Main article: TortTort requires those responsible (or "at fault") for harming others to compensate the victims, usually in money. The person injured can get a monetary payment to make up for their loss. This can include loss of income (while the person recovers), medical expenses and a payment for pain, suffering—even loss of a body part. Damages may also be awarded to compensate for the loss of future income. These components of the award can be adequately predicted in money terms, and (outside the United States) they most often constitute the largest element of the award.
The classical purpose of tort is to provide full compensation for proved harm. This is known under the Latin phrase restitutio in integrum (restoration to original state). In other words, the idea underpinning the law of tort is that if someone harms someone else, they should make up for it. Compensation should be, in the words of Lord Blackburn in Livingstone v Rawyards Coal Co ,
"that sum of money which will put the party who has been injured in the same position as he would have been if he had not sustained the wrong for which he is now getting his compensation or reparation."
Themes of the "tort reform" debates
A number of recurrent issues can be identified in the debates about tort reform.
Economic effects
See also: Insurance, Medical malpractice, and Product liabilityThe primary criticism of the tort systems is economic. Critics may decry the cost of compensation payments themselves, or that—granting that compensation is a worthy goal for the injured—litigation is an inefficient method of giving compensation. In Britain, for instance, it has been argued that 85p is spent on litigation for every £1 of compensation paid. In contrast, the social security system costs 8p or 12p for every £1 delivered. This figure is disputed, because there is no easy method for accounting for transaction costs particularly when pre-litigation settlements are considered.
Three particular charges are levelled at the tort system, for having distorting economic effects. First, the costs of litigation and compensation payouts raise the cost of insurance. Because most tort claims will be paid from the pockets of insurance, and because the public generally pays into insurance schemes of all kinds, tort reform proponents assert that reducing tort litigation and payouts will benefit everyone who pays for insurance.
Secondly, and related to insurance in countries which do not have "socialised medicine" (i.e., national health care), the costs of the tort system, and in particular medical malpractice suits, may raise the costs of health care. The difficulty in this area is to distinguish between public and private health care providers. The experience in the UK, where there is a fully public system run by the National Health Service, is that tort claims have been restricted, for instance in disallowing loss of chance cases. The Medical Defence Union actively combats, and attempts to settle all cases where potential negligence claims are at stake. While successful, the costs of litigation to the health system are steadily growing, and stand at around £446m a year. In the United States, it is easier for victims of medical malpractice to seek compensation through the tort system. The American medical negligence record is the poorest in the developed world, with around 195,000 deaths per year, which itself leads to a higher number of claims. It is open to debate as to whether a change in the law of tort either way would lead to significant reductions in cost or changes in practice. According to Business Week, "Study after study shows that costs associated with malpractice lawsuits make up 1% to 2% of the nation's $2.5 trillion annual health-care bill and that tort reform would barely make a dent in the total."
Thirdly, there is an argument that tort liability could stunt innovation. This argument usually comes in connection with product liability, which in every developed country is strict liability, subject to a "state of science" defence. If a product is faulty, and injures somebody who has come across it (whether they are the buyer or not) then the manufacturer will be responsible for compensating the victim regardless of whether it can be shown that the manufacturer was at fault. The standard is lower in other injury cases, so that a victim would have to prove that a tortfeasor had been negligent. It can be argued that strict liability deters innovation, because manufacturers could be reluctant to test out new products for fear that they could be subjecting themselves to massive tort claims. This argument is characteristic of the law and economics movement. It may be somewhat confused about the relevant law because it misses the state of science defence. This defence means that a manufacturer can always say "there was no warning or evidence in the scientific literature that this new product could be dangerous". Further, it can be counter-argued that strict liability does not deter innovation, because despite the existence of strict liability, innovation has increased.
There is however also a case to say that people should not receive such full compensation for income losses, because it could be said entrench an existing and inequitable distribution of wealth in society.
Equality in treatment
See also: Distributive justice and Equality of outcomeEquality of treatment is the central issue for reforms in New Zealand and in the Commonwealth more generally. If someone has an accident then they have a statistical 8% chance of finding a tortfeasor responsible for their injury. If they are lucky enough to have been injured by someone else's fault, then they can get full compensation (if the tortfeaser is not judgment proof). For others—for those injured by natural accidents, by themselves, by disease or by bolts from the blue—no compensation is available, and the most that can be gained for their losses will be meager state benefits for incapacity.
This was the basis for much of Professor Patrick Atiyah's scholarship as articulated in Accidents, Compensation and the Law (1970). Originally his proposal was the gradual abolition of tort actions, and its replacement with schemes like those for industrial injuries to cover for all illness, disability and disease, whether caused by people or nature. This has happened in New Zealand, except coverage of disease. Over the 1980s Atiyah's views shifted. He still argued that the tort system should be scrapped. But instead of relying on the state, he argued people should have to take out compulsory first party insurance, like that available for cars, and this model should be spread progressively.
Limits on noneconomic damages
Other tort reform proposals, some of which have been enacted in various states, include placing limits on noneconomic damages and collecting lawsuit claim data from malpractice insurance companies and courts in order to assess any connection between malpractice settlements and premium rates.
Reduction in the statute of limitations of action
A different reform is not to limit the amount of legitimate recovery, but to reduce the time to sue—the statute of limitations of actions. New York law now requires that:
An action for medical, dental or podiatric malpractice must be commenced within two years and six months of the act, omission or failure complained of or last treatment where there is continuous treatment for the same illness, injury or condition which gave rise to the said act, omission or failure; provided, however, that where the action is based upon the discovery of a foreign object in the body of the patient, the action may be commenced within one year of the date of such discovery or of the date of discovery of facts which would reasonably lead to such discovery, whichever is earlier....— N.Y
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