The Significance of Tort Law as The Way of Solving Insurance and Healthcare Issues

For over three decades, there has been debate over a reform that affects a variety of issues from insurance and health care premiums to the prices of goods and services. The Tort law gives civilians the right to put liability on a company and sue for a multitude of different things if something goes wrong. The main issue of the Tort reform is noneconomic damages. Noneconomic damages are awards granted for "pain and suffering." The solution to this ongoing problem is to set a cap, or ceiling, on the amount of compensation one can receive for his or her "pain and suffering." An issue with setting caps is that they are argued against as "unconstitutional" and "violates the right to trial by jury" (Hudson 1) stated in the Sixth Amendment of the Constitution.

Stella Liebeck is said to have sparked the idea of Tort reform when she sued McDonald's for medical bills she incurred after spilling boiling coffee on her lap and suffering major third degree burns on her inner thighs. After an extensive investigation into McDonald's records, Hilary Stout explains that Liebeck's attorney found many people complaining about the temperature of the coffee and the dangers that could arise from a hot drink. At that particular location, it was proven that the coffee was served 20 degrees higher than what is said in the instructional handbook that every McDonald's employee should be familiar with. The court soon came to a decision that the incident was 20 percent Liebeck's fault, and McDonald's was 80 percent to blame. As a result, the jury awarded Liebeck 2.9 million dollars in noneconomic damages (1). After this case hit the news, magazines, tabloids, and other forms of media, the case became known as a "frivolous lawsuit" and refer to it whenever someone files a lawsuit against a business.

Tort law has always been an issue that is in need of attention, but it is the Supreme Court cases in which the plaintiff is awarded millions of dollars for their "pain and suffering" that created the idea of needing a limit to certain awards and jurisdictions. According to Sherman Joyce, Victor Schwartz, and Darren McKinney of the American Tort Reform Association, over 30 states have implemented some noneconomic damages reform. For example, they report in 1986 the Alaskan government established a state cap of $500,000 on "noneconomic damages for cases that do not involve any physical impairment or disfigurement." They also found in 1997; Alaska adjusted the noneconomic damages reform once more. In this modification of the reform, the state went into deeper detail addressing different instances that could occur and the sufficient compensation for an individual's pain and suffering. For a single death or injury to a greater degree of $400,000, they are awarded as much as their life expectancy multiplied by $8,000. In another instance involving severe disfigurement or physical impairment exceeding $1,000,000, it is the individual's life expectancy (in years) multiplied by $25,000 (2). Many other states including Alabama, California, and Missouri have established their own cap or system for awarding damages for pain and suffering. These states have lower insurance and health care premiums, in addition to the prices of goods and services at a lower price. Not only does this benefit the state's economy but the nation's, as well.

Noneconomic damages reforms are not always viewed as positive. David Hudson Junior reported in February 2012, Tye Ward was riding his four-wheeler on a north-central Tennessee road with his cousin and her friend. Suddenly, he noticed Kaitlin Ward, his cousin, and Maykayla Gummo down in a creek, 80 feet below from where he was. Ward swiftly pulled both his cousin and her friend out of the water to safety. Hudson explains the consequences of the situation including Gummo losing part of her arm, breaking her femur, and also fracturing her back. Hudson shares that Andrea May Gummo, Maykayla's mother, referred to Ward "her hero" for saving the teens (1). Only five months later, Andrea May Gummo sued Robert and Shelaena Ward, the owners of the four-wheelers, over her daughter's injuries. Since Gummo lived in Texas, the Gummo v. Ward case was filed in Tennessee. Consequently, under the Justice Act of 2011 in Tennessee, "noneconomic damages are capped at $750,000 and punitive damages at either twice the amount of compensatory damages or at $500,000" (1). By having a cap on noneconomic damages, the highest amount that Gummo could collect in compensation for her daughter's injuries is one million dollars. Her attorney, however, did not stop there. They argued the Constitutionality of the cap, "claiming the cap violates the right to trial by jury enshrined in the Tennessee Constitution" (1). This question has been taken to the Tennessee Supreme Court, and the rest of the case remains in the federal court. No conclusions have yet been declared. Placing caps on noneconomic damages are not "unconstitutional," nor does it revoke an individual's right to trial by jury. That is simply an argument made in court that induces a sense that caps are unlawful in the juries mind when they are making their final decisions. Once the Constitutionality of a cap is challenged, the matter is taken the state Supreme Court and decided whether a cap should be withheld, placed, or altered. Hudson concludes that caps are upheld in order to "further the public interest in ensuring affordable and available health care and reduce the cost of malpractice insurance" (2). Whether a cap is ruled constitutional or not is solely based on the state's Constitution and the case evidence that triggered it into question in the first place.

Critics believe people injured by negligence or recklessness of others deserves to be awarded to the full extent of their injury. In addition, they hold to the idea that "the jury system exists to compensate people who have been wronged" (Hudson 2). Legal threats to the Tort reform involve conditions of state Constitutional law, separation of powers, and the right to trial by jury. Hudson explains "you have to look at the exact language of the individual state constitutions to identify the strongest arguments to be made under those particular state constitutions" (2). If the Constitutionality of a noneconomic damage cap is challenged in a state with its own Constitution, then the state's Constitution must be analyzed thoroughly with the Sixth Amendment, giving an individual the right to a trial by jury, in mind, as well.

According to news articles and journals which are interpreting the progression of the Tort reform, noneconomic damages reforms are most common throughout the United States. As of 2014, over thirty states have implemented noneconomic damages reform. As a result, the states that have set caps on the awards that can be collected have reported lower insurance and health care premiums. Kip Viscusi and Patricia Born found that, in states that have caps on noneconomic damages, insurers have losses 17 percent lower, and earned premiums were also 6 percent lower (468). Viscusi and Born, in addition, have found that premiums earned (in millions) and losses incurred (in millions) have decreased with a cap in damages all the way to up to 1991, as shown in the table (475). Therefore, states that have placed caps on noneconomic damages have a lower rate of losses and earned premiums, which then makes insurance more affordable. Daniel Kessler and Mark McClellan also found that direct reforms in states have reduced premiums by 8.4 percent within the first three years of the reform; in addition, it reduces the probability that a physician will be sued by 2.1 percent (99). Invoking noneconomic damages reform is beneficial to the state but per capita, as well. States with reforms tend to have lower insurance rates and premiums and leads to more people being able to afford insurance, which, in turn leads to an influx in the economy. Additionally, the price of goods and services lowers with a set cap on noneconomic damages, so the economy will flourish because more people will be spending money and making money.

Rubin and Shepherd conclude when states put a cap on noneconomic damages, it can "lead to increased numbers of physicians in the state" (224). When there in an increased number of physicians in a state, it contributes to lower health care premiums. As a result of lower health care premiums and happier consumers, there is a reduced likelihood that a physician will be sued. They also explain that, after Tort reform, it causes lower and more predictable liability costs that make it, "cheaper and easier for potential injurers to obtain insurance for their own liability (224). Also, they interpret that if it is cheaper to obtain insurance for liability it will result in lower prices for, "both vaccines and prescription drugs" (224). Rubin and Shepherd confirm that, in a state that has adopted tort reform, emergency physicians find that, "direct reforms lead to increased growth in the supply of emergency medicine physicians of approximately 11.5%" (224). This benefits everything from state hospitals to individuals. If the prices of vaccines and prescription drugs decrease, then more people will be able to afford the appropriate medication to cure their injuries; which, in turn, will reduce the number of lawsuits filed against individual physicians or medical malpractices due to negligence or being held liable.

There are many feasible solutions to noneconomic damages in the Tort law. In fact, more than thirty states have implemented a noneconomic damages reform. For example, in Hawaii, the cap is $375,000 for physical pain and suffering. In Iowa, it is illegal for a motorist, passenger or pedestrian to obtain compensation from an automobile accident during the act of a felony. In Idaho, the last reported reform was in 2003, stating the cap of $250,000 for personal injury cases (Sherman, Schwartz, and McKinney 5-6). Many other states have noneconomic damage reforms, as well. Not all states have a cap either; just limitations on what can be collected for and who can and cannot obtain compensation from certain incidents. They are always a work in progress; no state can achieve success through their first reform. Many states have altered their reforms once and others as much as five times. States do not stop at noneconomic damages. There are also reforms capping or establishing limitations on Medical Liability and Punitive Damages. There are also states, such as Arizona, where it is illegal to put a cap on noneconomic damages. Michael J. Schoppmann believes in a limit of $250,000 dollars on awards for noneconomic damages. He explains that this is the most proposed solution, but could also be very effective. In Schoppmann's research, he concludes that, after the adoption of such measures, it could reduce malpractice premiums as much as 26 percent. When malpractice premiums are lower, more physicians will be able to provide liability insurance on medical practice. A more unique solution written by Stefan Toepler and Jon Gould deals with a different aspect of the Tort law. They suggest that the societal portion of punitive damages should be disbursed to eligible, nonprofit organizations. Toepler and Gould argue that the nonprofit organizations of a state promote community development. They identify that using third parties to execute public purposes and policies allow governments to expand service provision without the unpopular increase in government administration (155).

A solution that could be implemented is a national cap for noneconomic damages. A national cap would be a set amount on the awards and compensations allowed to be collected. For example, in the United States of America, the cap could be set at $1 million, or your life expectancy (in years) after your injury is assessed multiplied by $12,000, whichever is applicable. The higher the severity of the injury, the more compensation is given to the plaintiff. The less the severity of the injury, the less compensation is given to the plaintiff. In this situation, the jury still decides the amount of compensations that are awarded based on the evidence and case. Cases that are considered "frivolous" will not be tolerated. An extensive investigation will be required, and a set amount of data must be presented in order for a case to make it to the Supreme Court. It would not be "unconstitutional" and would not revoke the right to trial by jury embedded in the United States Constitution. If there is a national cap implemented, there will be less controversy over the Tort law and people will no longer question the Civil Justice System. Furthermore, the prices of goods and services would reduce nationwide. The cost of insurance and health care premiums would decrease, resulting in more affordable insurance and health care. Liability insurance would become more affordable, as well for medical practices. The prices of vaccines and prescription drugs would also decrease, resulting in a healthier country. With the price of insurance and health care low, an increased number of young adults will have insurance and will be able to afford the vaccines and prescription drugs that are a necessity. The economy will thrive, and the United States will be a stronger country overall. The economy would benefit greatly from a national cap on noneconomic damages.

By placing a cap on the amount of noneconomic damages that can be collected, it benefits not only the state itself, but possibly the country, as well. National problems with health care will no longer be an issue due to an increased number of people being able to afford it and also being to afford the necessary medications in order to cure their disease or injury. Another benefit of a cap is if the price of insurance is decreased, more people in the United States would be able to afford to have insurance and business would flourish because of it, which is beneficial to the economy. Additionally, when the cap is enacted, the prices of goods and services also decrease, which would cause an influx in the economy, as well as income per capita. Anyone who files a lawsuit after the national cap has been implemented will still receive financial compensation, however, not in excessive amounts. They will be awarded based on the severity of the injury. Therefore, no individual's rights that are granted in the Constitution of the United States of America are being infringed upon due to the issues involving noneconomic damages.