Report Calls for Limiting Awards in Liability Cases

President Reagan was presented Monday with recommendations for dealing with the nation’s liability insurance crisis, including limits on attorneys’ fees and restrictions on punitive damages and damage awards for “pain and suffering,” White House officials said.

At a meeting of the Domestic Policy Council, Reagan was told the problem is “out of control,” with escalating premiums, insurance shortages and skyrocketing damage awards, the officials said.

Reagan was given the recommendations of an Administration working group on the problem headed by Assistant Atty. Gen. Richard K. Willard, who said in a speech here Monday that the crisis “is being felt in virtually every segment of American society.”

Legal Definition Expanded

While an intense debate is under way over the causes of the crisis, most observers believe it stems, in part, from an expanding legal definition of “liability” by judges, legislators and juries. As a result, individuals, businesses and public agencies are being required to compensate injured people more readily, and more generously, than in the past.

The higher awards have led to increased insurance premiums, and, in many cases, insurers have stopped selling lines of coverage altogether. The crisis has sharply curtailed the availability of many services, such as obstetrics, and dramatically increased the costs of others.

Controversial Proposals

Legislative proposals in this area affect the welfare of several major industries, including insurance, manufacturing and the legal profession, and have traditionally been extremely controversial.

Reagan made no decision on the recommendations Monday, officials said, but “was shaking his head” at accounts of abuses in the current tort system, under which claims of damage from a broad variety of injuries are settled in the courts.