Real Tort Reform
It appears that the Missouri state Supreme Court may be poised to strike down the $350,000 cap on damages for pain and suffering in medical malpractice lawsuits. I’m fairly certain that some here will disagree with me, but I for one hope the cap is eliminated. From a legal perspective — keeping in mind that I am not a lawyer — the law seems inherently unequal, as it carves out a special exception in tort law for doctors. Furthermore, if doctors have this special exemption, they have less economic incentive to be careful in their work.
On the other hand, not having a cap can encourage too many lawsuits and add to medical cost inflation. However, it is important to keep the costs of excessive lawsuits in perspective. The Congressional Budget Office estimates that the savings for instituting a typical set of tort reforms (including but not limited to a cap on damages) saves 0.5 percent on total medical spending. This is not completely insignificant, but those savings would be totally swamped by a single year’s medical inflation.
There is a way to reform the tort system without giving anyone special privileges. Outside of the United States, most of the developed world uses what is usually referred to as the “loser pays” system, whereby whoever loses the lawsuit must pay both sides’ legal expenses. This system would have the salutary effect of eliminating frivolous lawsuits and lowering total lawsuit expenses. A 2008 Manhattan Institute study found that when compared to countries with the loser pays system (e.g. Britain, Australia, Germany), the United States spends at least twice as much on tort litigation as a percentage of GDP. If Missouri instituted loser pays, we could reap the benefits of lower litigation costs without creating a privileged legal class.
