Tort Reform Caps Should Be Flexible It isn'toften that insurance issues enter the pop culture. On those fewoccasions when they do, insurers are rarely on the “right”side.

Thus, it was interesting to see a strong case made for tortreform in the newest best seller by John Grisham, “The King OfTorts.” The book served as a cartoon primer on how big-time triallawyers–and their targets–operate in the class-action arena.

The lead character, the so-called “King of Torts,” is a formerpublic defender seduced by the pot of gold at the end of theclass-action rainbow. He and his fellow sharks are portrayed asambulance chaserspiratesa gang of thieves. In one case, a cementcompany that practically employs an entire town is driven intobankruptcy after the “King” rejects a settlement offer because theattorney fees would be too low.

Throughout the book, class members are given the bum'srush–recruited by the thousands with scary TV ads, then left withthe short end of the stick while their lawyers get rich quick offthe sheer volume of claims.

To be fair, the defendants don't come off much better. None ofthem are innocent of wrongdoing. However, the tort lawyers areclearly the villains. Indeed, the book's premise seems to be thatplaintiffs in class-actions are victimized twice–first by thecompany or individual harming them; then again by their ownlawyers, who sell them out for far less than they deserve and takean obscene chunk off the top.

Ultimately, the “King of Torts” is unceremoniously dethroned byone of his own kind–a malpractice attorney. Former clients aregathered in a class to sue their quick-draw tort lawyer fornegligence. He is accused of accepting a relatively paltrysettlement of $62,000 per person ($43,000 after subtractingattorney fees, which top $100 million for the class) in a suit overa drug that turns out to be not merely harmful, but deadly. Thus,the hotshot trial attorney is sued into bankruptcy, receiving adose of his own medicine. Poetic justice, indeed!

To add injury to insult, the “King” is beaten up by thugs laidoff by the cement company he drove into bankruptcy.

The book is clich?d and superficial, but it does raise manyissues at the crux of the tort reform battle.

Is the tort system out of control?

Are greedy trial lawyers manipulating the courts for their owngain–often at the expense of their clients?

Are unfettered class-action suits undermining the economy andvarious high-risk professions, ultimately leaving society holdingthe bag?

Tort reform advocates say the solution is simple. All we have todo is limit non-economic damage awards to $250,000 and capplaintiff attorney fees. However, I fear this knee-jerk reaction isa simplistic response to a very complex problem.

If you want an alternative pop culture take on the tort system,rent “Erin Brockovich.” In that fact-based flick, a companypollutes the local drinking water, resulting in serious illnessesamong the surrounding residents. Damage control by the offendingfirm neglects to reveal the full extent of the medical threat. Whena trial lawyer's nosy, persistent aide digs into documents and soilsamples, the truth is revealed. A class is assembled, and justiceof a sort prevails.

The film, while dramatized and clich?d in its own right, raisedan entirely different set of questions about the relative merits oftort reform, such as:

Exactly who is being “protected” by such reforms–those harmed,or those causing the harm?
If awards for pain and suffering are limited, are we tradingdeterrence for predictability? Knowing the maximum probable loss upfront might help underwriters set stable rates, but is $250,000 abig enough hammer to keep wayward companies and individuals inline? Will corporate officers and individual practitioners feelless concerned about cutting corners on safety since the legaldownside would not be as catastrophic?
If contingency fees and damage awards are strictly limited, willinjured parties be able to find high-caliber attorneys to taketheir case against powerful corporate and professional defendants?In addition, is it fair to cap plaintiff attorney fees when thereare no caps on the amount of money defendants can spend to combatclass-action suits?
Is there any justice in setting an arbitrary damage standard? Areall maximum $250,000 damage claims alike? Shouldn't the worstoffenders–those guilty of gross negligence or outright criminalbehavior–be subjected to a far higher penalty?

Is there abuse of the system? Perhaps. In selected cases,litigation may be little more than a legal form of extortion, withpublicity-shy companies desperate to protect their brand reputationand stock price rushing to settle even frivolous suits just to makethe problem go away.

In addition, we can't ignore the fact that the tort system doesimpact the overall economy and society. It is remarkable to seedoctors making like union-types by walking off the job, demandingtort reforms to stop medical malpractice premiums from soaring.

However, the fact is that class actions are not allbaseless–there is plenty of bad corporate and individual behaviorout there–and that means there has to be some flexibility in anytort reform law to deter and punish the worst offenders.

If tort limits are approved, there should be an “escape clause”to give judges the option to toss the cap aside if asked to do soby a jury. The judge can then determine if the defendant's conductwas so outrageous that a larger award is in order, based onprecedents in similar cases. That way, the vast majority of suitsmight be subject to a reasonable limit, but the hammer woulddiscourage people from flaunting basic safety standards, andpunishing those who do.

A hard cap would be a one-dimensional, quick fix that could endup doing more harm than good. If the tort system must be tweaked,the worst offenders should not be let off the hook.

Sam Friedman is NU's publisher and editor-in-chief.Responses to this column should be sent to [email protected].

Reproduced from National Underwriter Edition, March 17, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved. Copyright in this article as anindependent work may be held by the author.