Beware The Siren Songs Of Congress On Tort, Regulatory System Reforms

Fans of Greek mythology will remember the Sirens from “Homers Odyssey.” The Sirens were beings who sang a song so compelling that all the sailors who heard it cast themselves into the sea, leading to their own destruction.

Odysseus, who wanted to hear the song of the Sirens while avoiding destruction, came up with an ingenious plan. First, he had his crewmembers fill their ears with wax. That way, they could not hear the song and would not destroy themselves or their ship.

Then he had himself tied to the mast so he could hear the song, but be unable to do himself any damage. We should all be as clever as Odysseus.

Why is it that whenever I think about the lure of the Sirens, I think about federal government relations?

It really is a perfect analogy. Dealing with Congress is so seductive. It so often seems that the solution to a problem is ever so close–just one little piece of federal legislation away.

But like the Sirens, those who are seduced by the song are too often cast into the sea of destruction. Sometimes, I think it would be better for the industry to fill its ears with wax every now and then.

What better example of the dangers of listening to the song of the federal Sirens than the asbestos “reform” bill now pending in the Senate? What was once touted as a bipartisan attempt to bring order and certainty to a chaotic and unfair litigation system, has evolved into a monster so heinous that the status quo is regarded as preferable.

Especially compelling was the idea of a trust fund. There would be a defined pool of money that would be earmarked to resolve asbestos claims. Every company would know the extent of its liability, litigation would cease, and one of the major problems facing the insurance industry would finally be put to rest.

I can think of no greater testimony to the power of the song of the Sirens than the fact that the industry fell into this trap even though it had every reason to believe that it would not work.

After the internecine war that erupted when a similar trust fund idea was proposed under Superfund, one would have thought that the industry was forewarned and thus would have followed the lesson of Odysseus and stuffed its ears with wax.

But the song was so compelling that even the experience of the past could not prevent some in the industry from following the same path to destruction.

And then there are the various legal reform bills that seemed so tantalizingly close in the early days of the 108th Congress.

Medical malpractice litigation had become a national crisis, and Congress was going to step in and do something about it by passing legislation. Indeed, the House did pass a bill that would cap punitive and non-economic damages.

Then the Senate entered the picture and the same old myth emerged. The Senate was going to craft a moderate alternative to the House bill, one that would have a higher damages cap but would draw bipartisan support.

Rumors began flying that a deal was in the works and before long, legislation to finally solve the malpractice crisis would be on the Presidents desk.

But, of course, it didnt happen. The Senates medical malpractice bill has apparently found its way into the sea of destruction–the victim of politics, parliamentary roadblocks and exaggerated expectations of what Congress can and cannot do.

Also lurking out there as a warning to the industry about the dangers of dealing with Congress is the federal insurance regulation bill sponsored by Sen. Ernest F. Hollings, D-S.C.

While some in the industry are looking to the federal government to champion a marketplace-oriented regulation system, Sen. Hollings is proposing a system far more restrictive than currently exists.

I personally do not believe this legislation has much of a chance of going anywhere. I think Sen. Hollings introduced it simply to annoy the industry because of its support for tort reform.

But it should serve as a warning that if industry proposals to create optional federal chartering ever get moving in Congress, it is highly unlikely that the industry will get the clean, market-based system it craves.

In particular, the parliamentary rules in the Senate will dictate that some compromise be achieved, and as with the asbestos bill, listening to the song of the Sirens may lead to something destructive.

I hope this does not sound overly na?ve. I understand that like it or not, there are some problems that only Congress can solve. With asbestos, for example, Congress is really the only place to go for answers, although I remain baffled about why the industry repeated a mistake by supporting a trust fund.

But for issues such as tort reform and insurance regulatory reform, there are other places the industry can go to solve their problems.

You can make a very strong, logical case for federal action in these areas. Yet the more I observe Congress, the more questions I have over whether it is structurally capable of enacting the types of reforms needed.

That is especially so in this Congress, where there are Republican majorities in both the Senate and the House as well as a Republican President in the White House. The environment probably is not going to get much better for the industry politically, and yet look at where things stand.

Like the Sirens, the song of Congress is seductive. But sometimes, I think the industry might be better off resisting the temptation. Maybe its time to stock up on wax.

Steven Brostoff is NU's longtime Washington editor. He may be reached at sbrostoff@nuco.com.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 4, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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Beware The Siren Songs Of Congress On Tort, Regulatory System Reforms

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