[Millennium]

So, now that the election is over, let's get back on track with... I dunno... something else. Anything else, really. I submit that we start out on something that I don't think will be all that controversial: tort reform.

It's no secret that the US is an extremely litigous society. The term "frivolous lawsuit" was coined here, after all, in response to the infamous case of the spilled McDonald's coffee. Indeed, the massive punitive-damages rewards thrown about in this country provide quite the incentive to sue; one can make millions from a single misfortune.

Some say the solution is to limit punitive damages to a certain dollar amount, or even get rid of them completely. While this would solve that issue, I fear that it may create one that's even worse. Punitive damages do make an effective deterrent against many abuses, and to simply cap or scrap them would defang this deterrent. The largest corporations could easily absorb punitive damages capped at some relatively insignificant amount, while that amount might still be high enough to provide incentive to sue frivolously.

I propose an alternate solution. The plaintiff in a tort is entitled to compensatory damages and legal fees. Any punitive damages, however, go to whatever state has jurisdiction, if the defendant is not based in that state. If the defendant and plaintiff are based in the same state, or if no one state has jurisdiction, then the punitive damages go to the federal government. It is important that in any case the damages not go to the same state as the defendant; otherwise such lawsuits could be used as a kind of indirect bribe.

Wherever the damages go, they would be earmarked to be used only in a manner appropriate to the case; for example damages from a tort involving an automobile maker might be routed to the National Transportation Safety Board. If the McDonald's case had been tried under such a system, the money might have been routed to the Food and Drug Administration, or possibly even to OSHA.

The advantages to such a system:

• The plaintiff is still entitled to compensatory and legal fees, thus ensuring that greivances can be redressed.
• The punitive-damage concept is left intact, thus keeping intact its force as a deterrent.
• States get an alternative source of revenue, but the burden of that revenue source is not borne by the people.
• The purpose of punitive damages -to punish a wrongdoing corporation- is intact, but abuse by people out to make a quick buck or benefit from their own stupidity is severely curbed.

The possible disadvantages I see:

• If the plaintiff and defendant are in the same state, the money won't stay local to the defendant. While this is a shame, it is necessary to prevent abuse by corporations.
• Jurisdiction may sometimes be difficult to determine.

Thoughts? Alternatives?

[zigzag]

A good idea in and of itself, but the complaint of businesses is that the punitive damages themselves are too onerous. Awarding them to the state rather than the plaintiff doesn't seem to address that. Indeed, knowing that the punitive damages would benefit their state, jurors might be inclined to award even higher sums.

Also, the problem is generally overstated (and I say this as someone who represented businesses for many years). Only about 3% of verdicts result in punitive awards (and that's only 3% of the only 1-2% of cases that go to trial and verdict - a small fraction of a small fraction), and the median amount is only $50,000. It's the occasional huge award that raises the mean/average to over $700,000. And even then, the really big awards are subject to judicial review and are often reduced. It's more the fear of a runaway award than the actual awards that drives this debate.

So, while I agree with the idea of giving punitive award proceeds to the public, I don't think it would solve the problem of runaway awards. FWIW, a Model Punitive Damages Act has been drafted by some fairly responsible people that addresses at least some of the risk by raising the burden of proof. The key provision (this page also has a good discussion of judicial review):

the plaintiff [must establish] by clear and convincing evidence that the defendant maliciously intended to cause the injury or consciously and flagrantly disregarded the rights or interests of others in causing the injury

http://www.law.upenn.edu/bll/ulc/mpda/finaldft.htm

While punitive awards get a lot of press, I think the bigger issues lie in the tort system as a whole. I'm not in favor of artificial caps or outlawing contingency fees, but we could probably do a better job of dealing with frivolous claims. Unfortunately, it's far too complex a process to address on an internet forum. The legislatures and courts basically have to take baby steps - change a rule here and there - to deal with it. As you recognize, in our country one has to be very careful about impinging on a citizen's right to his/her day in court.

EDIT: I wasn't as clear as I should have been in addressing Millennium's post: his main point was not to reduce the size of the awards, but to reduce the incentive for frivolous claims by redirecting the proceeds. My reply focused on the size of the awards, but my reasoning is the same: punitive damage awards are relatively rare (especially in frivolous cases), so redirecting the proceeds would have little if any effect on the number of frivolous claims. I hope this is clearer, and I apologize to Millennium for my lack of clarity. I think his idea is a good one whether it would reduce frivolous claims or not.

[Millennium]

Originally posted by zigzag:
A good idea in and of itself, but the complaint of businesses is that the punitive damages themselves are too onerous.

They're supposed to be onerous; that's what makes it a deterrent. If they are made "non-onerous", they will be defanged.

[BlackGriffen]

Originally posted by zigzag:
A good idea in and of itself, but the complaint of businesses is that the punitive damages themselves are too onerous. Awarding them to the state rather than the plaintiff doesn't seem to address that. Indeed, knowing that the punitive damages would benefit their state, jurors might be inclined to award even higher sums.
[...]

Sure it does. If the punitive damages don't go to the plaintiff, there's less motive to file a lawsuit of dubious merit that may or may not win. Less lawsuits = less legal fees, fewer big awards, etc.

I agree with Millennium wholeheartedly: punitive damages are meant as a punishment to the wrongdoer and should not be a reward to the plaintiff. That said, I don't know if giving it to the state is the best idea. Problem is, it's probably the best idea of all of the places it could go to.

Some possibilities, and their problems, include:

• The state - those awarding damages (esp judges) may be tempted to make up for a budget shortfall, esp. if it effects education.
• The people (income tax rebate) - gives the jury personal monetary motivation and desire to be seen as tax heroes or something.
• A charity - see the state increased many fold.

I think that, perhaps, the state problem could be ameliorated by removing the states immediate financial concerns from consideration. For instance, if the government is constitutionally prohibited from touching the funds for 1 yr+. That and/or have the funds automatically pay for some kind of probationary oversight period - inspectors, investigators, lawyers, and what-have-you.

I really like that last idea - use the punitive damages not just as a deterrent, but to provide at least some short term insurance that the behavior will not be repeated. It's not like the corporation or person can complain about the oversight - they invited it by breaking the law in the first place. It would also provide extra incentive against breaking the law.

I like.

BlackGriffen

[BRussell]

It's not just punitive damages, it's all non-economic damages that they want to limit. I think it's a bad idea to give non-economic damages to someone other than the plaintiff, because there are very real situations where non-economic damages are important to the plaintiff.

If a physician chops off both my legs in the hospital for no good reason, it probably wouldn't be that expensive to sew me up and give me prosthetic legs. A few thousand dollars maybe. They could also pay for a wheel chair and maybe one of those special vans. So maybe $50,000.

But my life has been seriously ****ed up, in a way that is not compensated with $50,000.

I think capping non-economic damages is dumb. The problem I think is frivolous law suites. (Uh I mean suits, but suites is funny so I'm going to leave it.) I think, in the case of medical liability suits specifically, there ought to be a panel of neutral people, scientist-types, who make a judgment about whether there's any merit to a case. Frivolous suits are blocked before they cost anyone any money.

There are problems with that, because everyone should be allowed to sue without someone telling them they can't. But you could make health insurance or hospital use contingent on agreeing to that kind of arbitration. As long as the arbitration panel is truly neutral, it would cut back on the dumb cases while allowing real cases to go forward.

Just in general, I don't think we have such a problem as people say. I agree with Kerry/Edwards that this is basically a "don't we all hate lawyers" thing and they're being used as a scapegoat for increasing health costs that really have nothing to do with lawsuits.

[BlackGriffen]

BRussel: wouldn't what you're talking about be covered by "pain and suffering"? AFAIK, what Millennium proposes wouldn't touch those, and I agree that those damages should go to the plaintiff.

Hell, I don't see how "pain and suffering" wouldn't be considered economic damages - they help to cover adjustments in lifestyle and reduced productivity from ones emotional and sensory state. Last time I checked, economists do consider a reduction in earnings potential economic damage.

BlackGriffen

[zigzag]

.

[SimeyTheLimey]

Originally posted by BlackGriffen:
BRussel: wouldn't what you're talking about be covered by "pain and suffering"? AFAIK, what Millennium proposes wouldn't touch those, and I agree that those damages should go to the plaintiff.

Hell, I don't see how "pain and suffering" wouldn't be considered economic damages - they help to cover adjustments in lifestyle and reduced productivity from ones emotional and sensory state. Last time I checked, economists do consider a reduction in earnings potential economic damage.

BlackGriffen

Pain and suffering and related awards for things like emotional distress are considered compensatory damages - as opposed to punitive damages. Compensatory damages are designed to make the person whole. It's what one of my professors called: "what you did to me was awful, but money will help." They aren't economic damages because they can't be quantified in the same way as lost wages, property damage, medical expenses, etc. Nor even in the actuarial way that future lost wages and future medical expenses are calculated.

The dollar amount on pain and suffering or emotional distress is wholly subjective. It's therefore susceptable to being skewed and influenced by the sympathy of a jury. That's why many liability caps include non-economic compensatory damages.

[BlackGriffen]

Originally posted by SimeyTheLimey:
Pain and suffering and related awards for things like emotional distress are considered compensatory damages - as opposed to punitive damages. Compensatory damages are designed to make the person whole. It's what one of my professors called: "what you did to me was awful, but money will help." They aren't economic damages because they can't be quantified in the same way as lost wages, property damage, medical expenses, etc. Nor even in the actuarial way that future lost wages and future medical expenses are calculated.

The dollar amount on pain and suffering or emotional distress is wholly subjective. It's therefore susceptable to being skewed and influenced by the sympathy of a jury. That's why many liability caps include non-economic compensatory damages.

Sure it can. Just because we don't doesn't mean that it can't.

I understand, though, that such is the status quo, so I will cease referring to them as such. I may chose to call them "difficult to quantify economic damages" or some such.

That said, I am of the position that this reform should cover punitive damages only, and not touch compensatory damages - those are another debate.

BlackGriffen

[BRussell]

Originally posted by BlackGriffen:
BRussel: wouldn't what you're talking about be covered by "pain and suffering"? AFAIK, what Millennium proposes wouldn't touch those, and I agree that those damages should go to the plaintiff.

Hell, I don't see how "pain and suffering" wouldn't be considered economic damages - they help to cover adjustments in lifestyle and reduced productivity from ones emotional and sensory state. Last time I checked, economists do consider a reduction in earnings potential economic damage.

BlackGriffen

I'm not sure about what Millennium would include in the Millennium plan, but if you look at the Republican tort reform proposals, I believe they cap non-economic damages rather than specifically just punitive damages. In fact, I think the non-economic damages are really their focus, rather than punitive damages, which the reforms would still allow, though maybe with higher standards of proof or something.

[SimeyTheLimey]

Originally posted by BlackGriffen:
That said, I am of the position that this reform should cover punitive damages only, and not touch compensatory damages - those are another debate.

You can't do that because in situations where punitive damages are banned the tendency is to award huge pain and suffering damages to compensate. There is a tendency to want to give X dollars and then to put whatever label on it later.

And I still don't see how you quantify pain and suffering. Putting a figure on it is always a crap shoot because it is so subjective, and so susceptable to other sympathy factors.

[zigzag]

Originally posted by BlackGriffen:
Sure it does. If the punitive damages don't go to the plaintiff, there's less motive to file a lawsuit of dubious merit that may or may not win. Less lawsuits = less legal fees, fewer big awards, etc.

No it doesn't. Only 3% of cases bring punitive damage awards. Yet there's no shortage of litigation. Indeed, four states don't allow punitive damages at all, and there's no shortage of litigation in them. The incentive to sue remains.

Also, punitive damages are only likely to be awarded in cases that have merit in the first place. The dubious ones don't normally result in punitive awards. So changing punitive damage laws isn't likely to affect the number of frivolous lawsuits.

I agree with Millennium wholeheartedly: punitive damages are meant as a punishment to the wrongdoer and should not be a reward to the plaintiff. That said, I don't know if giving it to the state is the best idea. Problem is, it's probably the best idea of all of the places it could go to.

Some possibilities, and their problems, include:

• The state - those awarding damages (esp judges) may be tempted to make up for a budget shortfall, esp. if it effects education.
• The people (income tax rebate) - gives the jury personal monetary motivation and desire to be seen as tax heroes or something.
• A charity - see the state increased many fold.

I think that, perhaps, the state problem could be ameliorated by removing the states immediate financial concerns from consideration. For instance, if the government is constitutionally prohibited from touching the funds for 1 yr+. That and/or have the funds automatically pay for some kind of probationary oversight period - inspectors, investigators, lawyers, and what-have-you.

I really like that last idea - use the punitive damages not just as a deterrent, but to provide at least some short term insurance that the behavior will not be repeated. It's not like the corporation or person can complain about the oversight - they invited it by breaking the law in the first place. It would also provide extra incentive against breaking the law.

I like.

BlackGriffen

I agree that giving punitive award proceeds to the public is a useful idea, but as you've pointed out, it raises its own set of problems, and doesn't address the problem of frivolous lawsuits. That would have to be addressed by other means.

[thunderous_funker]

Good discussion.

One major point is being over-simplified, however. Too often people discuss this topic with the underlying assumption that large cash awards constitute some kind of lottery with the plaintiff getting a big fat check from the Prize Van.

Not true. As I understand it, overwhelmingly these awards go into Trusts in the plaintiffs name. Any time a plaintiff or guardian or family member wants to get money, they have to go through a formal process of requesting funds from those administering the Trust. They can't just buy a vacation home in Flordia. There is considerable beaurocracy and accountability in how those funds are dispersed and spent.

But the primary fact that is often overlooked in this debate over "frivolous" lawsuits is that an estimated 100,000 people die every year from preventable medical accidents. That doesn't include injury, disability, etc, just preventable deaths.

Until we do something significant about that number, I don't see how we can really use the word "frivolous" at all.

[zigzag]

Pain and suffering damages raise different (albeit related) issues than punitive damages, because you can't insure against punitive damages - they hit the defendant right in the pocket book. The reason you can't insure against them is because insurance would obviate their punitive effect.

Pain and suffering, on the other foot, is insurable, so it's more of a concern for the insurance industry, which is behind most of the general tort reform lobbying (of course, It also affects businesses and individuals in general in the form of higher premiums). I wouldn't mind pain and suffering limits so much if they weren't so low - $250,000 in most cases. That doesn't go very far to compensate a young person who hasn't started a career (and therefore gets a low economic damage award) but has been completely disabled.

There is, actually, a relatively new field that attempts to measure pain and suffering/loss of enjoyment - it's called anhedonic damages (anhedonic meaning the absence of hedonism, or pleasure), and there are a few self-described experts in it. Sort of a blend of psychology and actuary science. Not all courts have accepted it, but it can give a jury at least a ballpark valuation of non-economic damages.

Alternative dispute resolution (arbitration, mediation, etc.) with specialized panels has increasingly become a good way to address court congestion and frivolous suits. The problem is making sure the panels aren't stacked for or against one side (which is why you never want to agree to arbitration when you're admitted to a hospital). I've always encouraged people to use it.

[SimeyTheLimey]

Originally posted by thunderous_funker:
Not true. As I understand it, overwhelmingly these awards go into Trusts in the plaintiffs name. Any time a plaintiff or guardian or family member wants to get money, they have to go through a formal process of requesting funds from those administering the Trust. They can't just buy a vacation home in Flordia. There is considerable beaurocracy and accountability in how those funds are dispersed and spent.

zigzag can correct me if I am wrong, but AFAIK, plaintiffs always have the right to demand cash verdicts. The money is often put in a trust at the request of the plaintiff (or by mutual consent in a settlement) because it is better for the plaintiff. Most people can't handle a sudden windfall. And when the plaintiff requires future medical care, a trust is often the best way to ensure that the victim will be cared for in the future.

[zigzag]

Originally posted by thunderous_funker:
Good discussion.

One major point is being over-simplified, however. Too often people discuss this topic with the underlying assumption that large cash awards constitute some kind of lottery with the plaintiff getting a big fat check from the Prize Van.

Not true. As I understand it, overwhelmingly these awards go into Trusts in the plaintiffs name. Any time a plaintiff or guardian or family member wants to get money, they have to go through a formal process of requesting funds from those administering the Trust. They can't just buy a vacation home in Flordia. There is considerable beaurocracy and accountability in how those funds are dispersed and spent.

As far as I know, that's only true in cases where the injured party is legally or mentally incompetent (e.g. a minor, or brain-damaged). In those cases, a guardian/trustee is appointed and has to report to the court. Other than that, judges and juries don't normally have the power to determine how money judgments are disbursed or spent. If you're a competent adult and win a verdict for $10 million, you normally get the $10 million free and clear (if you can collect it, that is ).

What often happens in big verdict cases is that the defendant appeals, and in lieu of appeal the case is settled for a lesser amount and/or periodic payments. Most large pretrial settlements also involve partial payments.

But the primary fact that is often overlooked in this debate over "frivolous" lawsuits is that an estimated 100,000 people die every year from preventable medical accidents. That doesn't include injury, disability, etc, just preventable deaths.

Until we do something significant about that number, I don't see how we can really use the word "frivolous" at all.

Yes - any attempt at tort reform should include preventing the torts in the first place. For all of their faults, lawyers are better at policing their own than doctors are.

[zigzag]

Originally posted by SimeyTheLimey:
zigzag can correct me if I am wrong, but AFAIK, plaintiffs always have the right to demand cash verdicts. The money is often put in a trust at the request of the plaintiff (or by mutual consent in a settlement) because it is better for the plaintiff. Most people can't handle a sudden windfall. And when the plaintiff requires future medical care, a trust is often the best way to ensure that the victim will be cared for in the future.

Right. I should add, though, that medical benefits are sometimes paid as they accrue, rather than in a lump sum, depending on the nature of the case.

[thunderous_funker]

Originally posted by zigzag:
As far as I know, that's only true in cases where the injured party is legally or mentally incompetent (e.g. a minor, or brain-damaged). In those cases, a guardian/trustee is appointed and has to report to the court. Other than that, judges and juries don't normally have the power to determine how money judgments are disbursed or spent. If you're a competent adult and win a verdict for $10 million, you normally get the $10 million free and clear (if you can collect it, that is ).

What often happens in big verdict cases is that the defendant appeals, and in lieu of appeal the case is settled for a lesser amount and/or periodic payments. Most large pretrial settlements also involve partial payments.

Ah. Thanks for the clarification.

Originally posted by zigzag:
Yes - any attempt at tort reform should include preventing the torts in the first place. For all of their faults, lawyers are better at policing their own than doctors are.

Very good point.

[SimeyTheLimey]

Originally posted by zigzag:
Right. I should add, though, that medical benefits are sometimes paid as they accrue, rather than in a lump sum, depending on the nature of the case.

I've also seen some reported cases where the defense tries to argue that they should only pay the amount needed to fund a trust in the payout amount of the verdict (or more likely, judicially supervised settlement). It's creative, but as I recall, the courts are not amused by that argument.

[zigzag]

Originally posted by SimeyTheLimey:
I've also seen some reported cases where the defense tries to argue that they should only pay the amount needed to fund a trust in the payout amount of the verdict (or more likely, judicially supervised settlement). It's creative, but as I recall, the courts are not amused by that argument.

There may be cases where the court has the power to do that. I could imagine it happening in class-action suits, which I've never been involved in. Or if an award is so large that it would bankrupt the defendant, a court might have the equitable power to structure it. I've never seen it myself, but that doesn't mean it doesn't happen.

[zigzag]

I wasn't as clear as I should have been in addressing Millennium's post: his main point was not to reduce the size of the awards, but to reduce the incentive for frivolous claims by redirecting the proceeds. My reply focused on the size of the awards, but my reasoning is the same: punitive damage awards are relatively rare (especially in frivolous cases), so redirecting the proceeds would have little if any effect on the number of frivolous claims. I hope this is clearer, and I apologize to Millennium for my lack of clarity. I think his idea is a good one whether it would reduce frivolous claims or not.