Tort Reform Has Been on the Lips

Tort reform has been on the lips of politicians and attorneys for many years. In the United States, it is a contentious political issue with strong feelings on both sides of the issue. U.S. tort reform advocates propose procedural and time limits on the right to file claims as well as capping the amounts of damage awards. The supporters of the existing tort system argue that the reformers have misrepresented the issues and criticize tort reform as favoring corporations. In this essay, the author will briefly look at both sides of the issue. Then, we will examine possible solutions in the form of a social security type of system that would issue payments to tort recipients from a government run accident insurance fund that corporations and citizens would both contribute to. Such an approach would however constitute a major change in the tort system of the U.S. which is fundamentally based upon British common law and its adversarial legal system.

The Issues

Tort reform refers to several proposed changes in the common law civil justice system that would reduce tort damages and/or litigation. Tort actions are civil common law claims that were first created under the English system of common law as a non-legislative method for compensating harm done by one person or organization to another's person, property or other protected issues (e.g., their reputation, under the applicable libel and slander laws). Tort reform advocates in particular focus on the personal injury common law rules.

In Texas, Georgia and California, a losing party pays the court costs of the opposing party.

The American Tort Reform Association (ATRA) states that "The cost of the U.S. tort system for 2003 was $246 billion, or $845 per citizen or $3,380 for a family of four" and "The Growth of U.S. tort costs have exceeded the Gross Domestic Product (GDP) by 2-3 percentage points in the past 50 years"(" facts," 2007).

The opponents of tort reform maintain that there has not been a "litigation explosion" or "liability crisis." Rather, they contend that the changes proposed in favor of tort reform advocates are not justified. According to records maintained by the National Center for State Courts, population-adjusted tort filings declined from the years 1992 to 2001. On average, the change in tort filings decreased by 15% decrease (" Examining," 2011).

A "poster child" case that has literally become textbook manna pointed to by tort reform critics point is the controversy surrounding the Ford Pinto. In this case, Ford Motor Company accountants coldly calculated that the expected payout in any series of wrongful death suits would be less than instituting a design change to prevent gas tanks from blowing up on minimum impact in a car crash. Simply put, Ford employed a financial metric that determined that Ford could avoid making life saving improvements to the automobile's design because doing so would be a net cost for the company. (Koenig & Rustad, 2001, 87-92, 276) Simply put, (even without tort reform caps) it was less expensive for Ford to litigate wrongful death lawsuits than to institute the safety improvements. Tort reform critics, would contend that the prospect of unpredictably large damage awards would act as an incentive to reduce the company's reckless behavior.

However, let us digress a bit. The facts of the Pinto case are clear. Even during the 1970s and 1980s when there were no practical limits on tort awards, Ford still went forward with the decision anyway. While it may seem to be an exercise in counterfactual history, one must confront this reality and ask a deeper question that shakes the tort system on all sides to its foundation. Would the accountants and Ford executives have thought twice had they known that an involuntary manslaughter charge with long prison sentences would be hanging over their heads? Such an approach which is generally not discussed may be one that would prevent such cases from happening in the first place.

Due to the impasse in the issue, let us take a look at an innovative solution that may provide a middle path out of the impasse. Some legal scholars have proposed replacing tort compensation with a social security type of framework that serves all victims without respect to who is the cause or the fault. New Zealand introduced the first ever universal no-fault insurance plan for all victims of accidents, a law which is currently on the books there. Benefits are provided from a government run Accident Compensation Corporation no matter who was the negligent party. Its goal is to achieve equality of compensation, while simultaneously reducing the costs of litigation (Dukes, Mildred & Swartz, 1998, 511).