Tort Reform

Tort reform has been a recent issue in the public sector. The basic principle of tort reform is simple. It strives to put limits on the compensation for non-economic damages awarded in law suits. Non-economic damages may best be described as compensation for pain and suffering as opposed to actual damages. Without limits, someone can be sued for millions of dollars or billions of dollars and only the whim of a jury decides that amount. In the issue of medical malpractice, this is important. Why? The insurance companies that determine how much liability the physician needs to be covered for have to determine their cost-risk ratio. If they are insuring me for 6 million dollars and yet I am likely to be sued for 6 billion dollars, then they lose and lose big. They will need to increase the amount of my malpractice insurance to cover that risk and those costs then become astronomical. Of course, those costs will be included in my fees and the price of receiving medical care becomes increasingly high as the cost of providing medical care rises proportionately. If a fixed, maximum compensation can be established through tort reform, the malpractice insurance companies can more effectually determine the limits of compensation for both economic and non-economic costs. My malpractice coverage is decreased and the cost of medicine is reduced. In Washington state, this has even led to only a couple of insurance companies willing to do business here where tort reform doesn’t exist. Where there are no insurance carriers, there are no physicians. Ask California a decade ago.