America remains (and will continue to remain) a highly litigious society. Within our legal system, tort law addresses and provides remedies for civil wrongs that do not arise from contractual obligations. Examples include personal injury lawsuits, defective product liability and fraud. The good news is that our system allows victims to seek remedies from those responsible for their injuries. Unfortunately, many abuse the system and turn litigation into a weapon against guilty and innocent alike. Our current system too often rewards frivolous lawsuits.
Arizona families, businesses, doctors and even public agencies are spending millions of dollars each year on liability settlements rather than incurring the high costs to defend themselves against unsubstantiated lawsuits. In Arizona, the number and aggregate cost of tort suits have risen dramatically over the last three decades with a corresponding increase in the cost of insurance. In addition, the inherent uncertainty related to tort litigation can frustrate long-term business planning. Modest reforms of our tort system would: (1) significantly reduce business costs and enable more employers to expand their payrolls; (2) lower the cost of health care and thus allow more of our neighbors to afford better coverage; and (3) cut government expenditures relating to litigation.
Arizona voters need to know that most tort reform measures would require an amendment of the state constitution. Arizona is one of the few states where the constitution restricts tort reform. Articles II and XVIII have restrained the legislative and executive branches from enacting tort reform. Previous constitution amendment efforts in 1986, 1990, and 1994 failed because proponents’ plans were too broad and were not considered reasonable by a majority of voters. Moreover, any measure is likely to be fought by special interests and trial lawyers who benefit from the current system. Arizona voters must be convinced that meaningful, but sensible, tort reform is necessary. To convince a skeptical public, tort reform should be done in incremental steps to establish that such reforms are good for the people of Arizona.
First, we need to change Arizona’s comparative negligence standard. Comparative negligence is a partial legal defense that reduces the amount of damages a plaintiff can recover based on the degree to which the plaintiff’s own negligence contributed to the injury. There are three main standards: (1) a pure comparative negligence standard in 13 states, including Arizona; (2) a 50% or 51% comparative negligence standard in 33 states; and (3) pure contributory negligence in 4 states and the District of Columbia. In 1994, Arizona voters rejected moving to a 51% comparative negligence standard.
Under Arizona’s “pure comparative” standard, a plaintiff 90% at fault is allowed to sue another person who is only 10% at fault. Thus a reckless driver could sue someone driving just above the legal speed for a portion of the reckless driver’s hospital bill. I propose that we modify this rule to a new “75% modified comparative negligence” standard. Thus, if you were only 10% at fault, the person 90% at fault would not be able to win damages from you. Similar to the 51% modified standard, this reform would encourage those who are more responsible for their own injuries to settle or walk away rather than make everyone incur large legal fees. However, under a 75% standard, Arizonans would not have to fear that if they were truly only 49% at fault that our unpredictable legal system would determine that they were 51% at fault and thus unable to recover anything against the other party.
Second, no state does or should limit the amount of compensatory damages (e.g. lost wages, hospital costs, etc.) that a person can be awarded when they are injured. However, twelve states have placed caps or restrictions on the punitive damages and non-economic (e.g. pain and suffering) claims of plaintiffs – usually to $250,000 to $500,000. Likewise, 27 states have limited awards in medical malpractice cases. In 1986 and 1990, Arizona voters rejected similar damage caps as being too low. Again, we need modest but meaningful reform. Arizona should pass a limit on punitive and non-economic claims to a total of one million dollars across all industries unless the court finds justification by clear and convincing evidence for a higher amount. Thus, a judge would be provided limited discretion to increase the damage award in extraordinary situations. This sensible reform would reduce insurance costs while providing victims with a sizable judgment.
Finally, there is some good news for those who see the value in sensible tort reform. For years, Sen. Barbara Leff (R-District 11) has proposed a tort reform measure which would set a higher standard on expert witness testimony similar to the tougher standard in 30 other states. This year her reform passed the State Senate. Under the current standard, a court must admit expert testimony regarding novel scientific evidence based on whether it has “gained general acceptance in the particular field in which it belongs.” Under the proposed higher standard, the judge must consider several factors to determine whether the opinion or the assumptions underlying the opinion is valid and applied to the given situation. The factors include whether the methodology has been subjected to peer review and publication. Passage of this law will limit novel, untested, and unsubstantiated claims and thus reduce the number of frivolous lawsuits.
Arizona needs to pass meaningful tort reform to bring some needed sense to our legal system. Reforms would lower business costs, encourage job growth across our state, and lower our health care costs. Although passage of reforms requires a constitutional amendment, modest proposals as suggested above can gain the support of Arizona voters – particularly those struggling under the double burden of high unemployment rates and rising health care costs.
Recommended links:
Contributory Negligence vs. Comparative Negligence
Comparative Fault Systems in all 51 Jurisdictions
Eric West is a Republican candidate running for State Representative in District 11. He is a graduate of Stanford Law School and is a real estate attorney at Jennings Strouss and Salmon. Prior to real estate, Eric worked in corporate finance and as a financial planner. He has also earned engineering degrees from Stanford and the University of Arizona and is a graduate of Corona del Sol High School. Eric is married and has two children.
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Finally..some common sense! We all pay…one way or another.
Update: The Arizona House of Representatives just passed the expert witness tort reform measure.
http://www.azleg.gov/FormatDocument.asp?inDoc=/press/House/49leg/2R/3_17_10+NEWS+RELEASE+EXPERT+TESTIMONY+REP.+TOBIN.DOC.htm
“It’s critical for Arizona to have similar court standards to other states. This is particularly important for businesses that may not want to operate in Arizona due to the additional cost of defending lawsuits that would have no merit in neighboring states,” said Rep. Andy Tobin, R-Paulden, who sponsored the bill. “Adopting the Daubert standard will help improve our state’s business climate and allow companies to spend less on litigation and insurance, while investing more in growth and jobs.”
This argument looks appealiing on paper but shows its lack of merit upon a look at all of the facts. First, it should be noted that when this approach was put before the voters of Arizona it lost by a ovte of about 85% to 15%, quite a sound rejection.
Second, the claim that insurance rates have gone up due to runaway jury verdicts is wrong. Jury verdicts have goe up roughly in direct proportion to the rate of inflation, while insurance rates have gone up in a rough relationship opposite to that of the stock market. Unfortunately, when the market rises, the rates do not drop at the same rate as it rises in a down market. In a rising market, the insurance carriers will lower there rates a bit but in a falling market they will jack them up substantially. The fact of the matter is t hat the insurance industry does not make its profit from the premiums charged, but rather from investing the premiums in the market.
In addition, those who collect large verdicts in tort cases, do so mostly due to having suffered serious life changing injuries that will require major medical and psychological expenditures for the remainder of their lives. There are very few cases that result in large awards in cases which do not justify them. Most importantly, and always left out of the argument for “reform” is the plain fact that even when it is obvious that the defendant has caused very serious harm to a victim, the defense law yers will engage in all kinds of legal tactics to avoid any settlement until the day of trial, causing the expenditure in tens of thousands of extra dollars by each party to the lawsuit and by the courts. There is simply no excuse for such tactics.
If we want real reform, how about charging the defense attorneys and/or their clients who engage in such tactics, the full cost of unecessarily prolonging the litigation? That will bring about real reform!
First, Prop 103 in 1994 (to amend the constitution to move to a 51% comparative standard and allow for damage caps) failed 60.5% to 39.5%. I think after 16 years and a continued rise in legal costs, Arizonians would be favorable to more modest amendments.
Second, your comment on jury verdicts misses the larger point. Indeed the most expensive jury verdicts have sky rocketed, but more importantly, the number of lawsuits and the total amount of settlement costs and legal expenses are growing dramatically. Business costs (including insurance costs) are not based solely on the narrow issue of jury awards, but the total cost of defense.
Likewise, here is a 2000 article focusing on the rising costs for Arizona’s transportation department – see pages 7-11 whereby Arizona’s total liability costs in the 1990s were over $100 million versus about $24 million in the 1980s: http://www.azdot.gov/TPD/ATRC/publications/project_reports/PDF/AZ478.pdf
Third, I challenge your point that in obvious cases, defendants do not make settlement offers. They do, but the parties disagree as to the amount. Reasonable people can and do disagree, especially when it comes to an amount for pain and suffering.
Finally, you miss the point that medical expenditures (and lost wages) are economic damages which are not capped. The cap is for non-economic damages and even for those damages, in the case of extraordinary circumstances, my proposal allows limited judicial discretion. But in most circumstances, I think it is fair if a victim’s non-economic damages be limited to a million dollars.