Since the recent Gulf oil spill there has been some discussion among the public and members of the US government about the $75,000,000 liability cap placed on oil companies for damages they cause due to deepwater spills. Congress is now re-examining the cap on such damages and trying to retroactively remove them or raise the limit to a mere $10 billion. This arbitrary cap previously enacted into law is an example of one aspect of what is commonly referred to as "tort reform". The term "tort reform" is placed in quotation marks to indicate that while it is the common term for such measures, the term itself is intentionally misleading. It was invented as a strategy to engender public support for legal measures which by their very nature reduce the rights of the members of the public for the benefit of various business interests.
Indiana has capped all damages caused by medical malpractice since 1975. Initially it was $100,00 per occurrence for the doctor and $400,000 from the Indiana Patient's Compensation Fund. That was subsequently raised to $100,000 and $650,000 and finally increased to $250,000 for the doctor and $1,000,000 from the PCF. A simple consumer price index for inflation over that period shows that in order to obtain the same value as the $500,000 total set in 1975 at today's value in dollars would require and increase up to over 2 million of today's dollars instead of 1.25 million. Further, to the extent the damages are intended to pay for future medical care, the amount should be increased even more since medical inflation is generally well over twice the rate of general consumer price inflation.
May states have various types of "tort reform" as they apply to medical malpractice. Many states limit "non-economic" damages to an arbitrary cap such as $250,000. These are damages for pain and suffering, grief, loss of companionship and other such harms that are not easily calculable. However, these caps can vary widely from state to state. For instance, California and Ohio both share a $250,000 limit on non-economic damages, but Ohio's cap also stipulates that this amount can be assessed at a value no more than three times the plaintiff's economic damages at the court's discretion. Florida and Massachusetts limit non-economic damages to $500,000, though Massachusetts law allows for some exceptions to be released from those limitations. While some states' legislatures have never placed caps on damages, i.e. Vermont, Tennessee and Kentucky, in other states, the legislatively created caps have been declared unconstitutional such as in Pennsylvania, Arizona, Wyoming, Alabama and New Hampshire and struck down in court. The basis upon which the amount of non-economic damage caps has been determined is usually arbitrary and inconsistent from state to state.
While healthcare costs continue to climb in an ever-increasing upward spiral and many injured patients' lifelong medical care requirements will exceed the recoverable "fair" amount as determined by legislators, limiting patients' ability to recover damages has become a popular political subject in Washington for fixing the health care system under the guise of "tort reform". When medical malpractice insurers are reporting profitability in excess of 99% of Fortune 500 companies, perhaps reform efforts should be concentrated on reducing the number of preventable medical errors in the healthcare system which injure and kill thousands of patients every year. In addition, analyzing business practices of malpractice insurers who enjoy record profitability year over year despite claiming that there is a crisis in medical malpractice litigation requiring "tort reform" is an area ripe for further congressional scrutiny.
Not surprisingly, doctors' and patients' premiums continue to climb ever-higher, despite the placement of malpractice caps in many states that are purportedly designed to lower insurance premiums. As the government's actions in the recent BP Deepwater Horizon oil spill has brought the notion of "tort reform" back to the forefront, perhaps there can be some discussion of "tort reform" outside of the currently established paradigm in which medical malpractice litigation is characterized by politicians and insurance companies as a runaway problem that needs to be "reformed". If we truly want to reform healthcare, we should look at why so many preventable errors are made in healthcare institutions and how we can reduce them and, by extension, reduce the necessity for malpractice litigation in the first place.