Liability-Insurance ‘Crisis’: Victims Need the Protection
In the current heated debate about the liability-insurance “crisis,” we seem to have forgotten why the law gives victims the right to claim tort damages from those who negligently caused their injuries.
Lawyers, judges and legal scholars generally agree that the purpose of tort law is to help victims and promote safety. Tort law compensates victims because few people have sufficient resources to meet the consequences of injury--most often catastrophic medical expenses and loss of income. It is better that many people bear small losses than that the victim shoulder all the burden. To help the victim once again become a functioning, productive member of the community is not only humane but also socially prudent. This, after all, is why state and federal governments provide relief to communities afflicted by natural disasters.
Safety first is even more important than binding up wounds. Chernobyl is a grim reminder, if any were needed. Tort damages should promote safety in much the same way that criminal penalties are supposed to discourage crime. The jury in a tort action weighs the cost of possible safety precautions against the cost of the accidents that they would have avoided. If a cost-effective safety precaution would have prevented the victim’s injury, the defendant must pay the plaintiff’s damages. This sends a message that it is cheaper to buy safety in advance than to pay for injuries afterward. Just as the criminal law deters crime only if penalties are certain, so tort law deters negligence only if all negligent defendants are held liable.
There are no comprehensive U.S. studies that map the incidence of injuries and examine the adequacy of tort damages. But a careful investigation by the Center for Socio-Legal Studies at Oxford University reached some depressing conclusions about the situation in Britain. Only 12% of British accident victims who suffer a serious injury (at least two weeks of disability) recover any tort damages. Given the extraordinarily low rate of recovery, it is not surprising that households headed by victims had incomes only two-thirds the national average. In other words, just as tort damages failed to compensate, they also failed to encourage safety. An entrepreneur who knows that only a fraction of victims will recover has that much less incentive to spend money to avoid accidents.
Although it is difficult to extrapolate such findings, American tort law probably is no more successful in compensating victims or promoting safety. In Britain, injury victims have access to legal aid; in the United States, they do not. Victims injured at work can sue for tort damages in Britain, whereas American employees generally are limited to workers’ compensation, which provides a much lower level of benefits. Other sources of assistance also are less generous in the United States. We are the only advanced industrialized nation without state-supported medical services. Our income-maintenance programs are fragmentary, and levels are low. The Reagan Administration savagely cut Social Security benefits for the disabled, which were restored only under court order. The abundance of mass disasters such as the exposure of thousands of workers to asbestos, the Pinto gasoline-tank explosions, toxic-shock syndrome, DES, Bhopal and the Dalkon shield provides ample evidence that tort liability is not ensuring acceptable levels of safety. Nevertheless, the Reagan Administration has championed an anti-regulatory revolution, dismantling or at least weakening the Occupational Safety and Health Administration, the Environmental Protection Agency and the Consumer Product Safety Administration, among others.
Virtually all observers agree that the current tort system is too slow and wasteful. But most of the changes currently being advocated, while possibly cutting administrative costs, also would reduce both the number of victims who are able to recover damages for their injuries and the adequacy of their recoveries. Eliminating joint and several liability and setting ceilings on damages would leave many victims uncompensated, in whole or in part. Limiting contingency fees without making legal aid available would prevent many victims from making claims at all. These changes simultaneously would lessen the incentive for entrepreneurs to be safe.
If we truly want to reform tort law, we should return to its fundamental goals: ensuring that all victims receive adequate medical care and assistance in becoming productive members of society once again, and encouraging all cost-effective safety precautions.
