Sunday, March 28, 2010

No Waste Tort Reform

On occasion I get a question or comment which requires far more than a single sentence or ‘witty’ explanation and gratuitous wink, to adequately answer. By in large, these posts are meant to entertain rather than deliver hard news, so rarely will I run back to back ‘sourced’ essays on the same, (particularly serious), topic. However this will be one of those rare exceptions so bear with me. I typically post twice per day, so if political/economic/legal theory and debate is not your cup of tea, then be sure to check back in twelve hours. I’ll brew you up a tall, cup of smooth chamomile to make up for my transgressions. Now THAT’S what I really call a ‘tea party’!

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I believe that TORT reform as popularly defined, is related to malpractice and Doctor liability. I concede that many sources will cap savings from such reform at about 2% of the current national healthcare expenditure. While that is low, it is a SAVINGS nonetheless, approaching $55 billion annually rather than an expenditure. I will never understand why the current legislation (now law) refused to address this AT ALL and pretend the healthcare bill was a COMPLETE legislative effort?

Further, as noted in the Beacon source linked here, in Missouri, the State saw insurers profits increase as much as a 20% when liability claim caps were imposed by law. These same firms were constantly losing money in malpractice payouts just before legislation was passed. So what is a REASONABLE expectation of savings if malpractice liability is controlled? I, nor anyone else can definitively say? However by NOT addressing the issue at all, Congress in all certainty has left significant money on the table.

I personally also feel that malpractice is but ONE factor in TRUE tort reform. Using Social Security disability claims as an example, current law allows UNLIMITED appeals to claim denials. Consider that for a moment. Regardless if your disability is legitimate or NOT, a cadre of highly trained Social Security researchers, medical specialists, U.S. attorneys, and civil service personnel will review your entire case history. Your alleged disability, expert testimony, you, and your counsel will receive a private hearing before a Federal judge, adjudication officer, and other Federal civil service support staff.

Once a legal opinion is rendered, if positive, you begin collecting your claim from the Social Security pool (rapidly closing in on bankruptcy). If your claim is DENIED, your attorney simply goes down the hall and files an appeal, and the case begins a NEW file and starts through the process again. Eventually If that appeal isn’t going well, your attorney obtains a new expert or some other evidence and YES, files yet AGAIN even while the current appeal is STILL pending? It is simply a numbers game in hopes of eventually finding ANY judge who might interpret the claimant's evidence in their favor to secure payment on their disability request.

Imagine the cost to the taxpayer for a SINGLE cycle in this process regardless of legitimacy of the claim. Also imagine the disheartening reality that no matter how hard those highly skilled civil servants work, they will NEVER get ahead, much less dream of ‘catching-up’. Just in this SINGLE U.S. BUREAU, the result has been a five-fold explosion or more in repeat legal claims over the past decade.

Now mind you, I am not arguing the particular NEED for this program or the validity of the government adjudication process itself. The system was designed with high ideals as a safety net for truly disabled workers with few options. However, in reality this department has become reflective of the problems encountered across the whole of big government. The out of control costs of processing endless legal claims, counter claims, appeals, and resultant payouts cannot be sustained forever. Despite good intentions and its effort to be a all things to all people, at some point, if continually burdened, even the most powerful economic engine, will eventually fail to move forward on track and stop working.

Tort reform in the TRUEST sense, is far more than taking the myopic view of simply addressing malpractice liability. Effective cost savings and system-wide service improvements, can be realized with a comprehensive plan to reign in ALL legal waste and claim redundancy. Only then can a complete legislative solution be crafted to protect the long term health of not only our citizenry, but our bloated and obese government as well.


  1. First of all, I want to thank you for your comment on my post on this topic. It lead me to read yours. Excellent points. Getting this mess right is not, by any stretch of the imagination; however, since I don't purport to be an economist or have the ability to change 'waste' in the medical system, I can only add my two cents from my perspective. Even so, agreed - so many issues.
    One issue that does not get any play in the press relates to the cost of malpractice litigation but not from the plaintiff side. For years (over 20), I did defense work. Now that I see the issue from 'the other side,' I get to see up close and personal just how many dollars are absolutely wasted in this entire litigation process - by the defense! If there were true early case analysis and honest assessment of a case, millions and millions of dollars a year would be saved. Many defense lawyers (hopefully I was not one) run up the costs on a case. It is their goal in life to make as much money as they can and then settle at the end of case. They have access to almost an endless supply of experts - so they name 10, 20 or more in a case - all leading to more expenditure of money needlessly. If a lawyer brings meritorious cases - they settle unless the demand is simply ridiculous and reason does not prevail. It usually does in my experience. I'd love to see what the cost figures are on cases in which settlements occur, when they occur (late versus early in a case) and what the defense costs (lawyers, experts, etc) are for those cases. I assure you, the number nationally is astronomical. Who is governing that type of irresponsible behavior? Why don't these insurers properly evaluate claims early and settle those early that should be settled and try those that should be tried - the entire system would be better served.
    As you have properly noted - the issues are many and complex. Thanks for the post and the comment to my post.

  2. Good points. I hate insurance companies that drag their feet on legitimate claims just to avoid precedent. I also hate the game where I can be sued for just about anything and of course my insurance company will choose to settle because it is far cheaper than to defend my protests of innocence in court. These points and countless others, along with the endless cycle of waste and redundant expert costs that you noted, really do add up to an incredible burden upon the whole system. These are difficult problems that will take time to solve and find fair solutions to all parties. I hope the Golden Goose can last at least a little bit longer while we all figure it out?! Take care, and thanks for your thoughtful remarks. -W.C.C.