What is Tort Reform?

Tort reform is a hot topic most every election cycle. Before we can say what tort reform is, we first need to understand what a tort is. According to Cornell Law School’s Legal Information institute, at tort is:

An injury to one person for which the person who caused the injury is legally responsible. A tort can be intentional — for example, an angry punch in the nose — but is far more likely to result from carelessness (called “negligence”), such as riding your bicycle on the sidewalk and colliding with a pedestrian. While the injury that forms the basis of a tort is usually physical, this is not a requirement — libel, slander, and the “intentional infliction of mental distress” are on a good-sized list of torts not based on a physical injury. A tort is a civil wrong, as opposed to a criminal wrong.

Negligent Torts are the type target by most tort reform. Most personal injury, like a car accident or surgical mistake, are not intentional. If it were, the new South Carolina Tort Reform Law would not affect the victim law suit. In layman terms, tort reform is designed to reduce the financial punishment to a party who has harm another with their negligent behavior. When we think of notorious example like the hot McDonald Coffee case, this sounds like a great thing. When you think of a person being crippled due to another person’s negligent action, does it sound as good?

South Carolina New Tort Reform Law

South Carolina finally passed a long lobbied tort reform act. called The South Carolina Fairness in Civil Justice Act of 2011, and the new law contains a punitive damages cap. Remember the definition of a tort includes “an injury in which the person who caused the injury is legal responsible. Assuming the tort was not intentional, the remaining punishment for a tort has been effectively reduced.

The Punitive Damages section of the Act says punitive damages will be capped at 3 times compensatory damages OR $500,000, whichever is greater unless the wrongful conduct was motivated by “unreasonable financial gain” and the person in charge knew of or approved the “unreasonably dangerous” nature of the conduct that was highly likely to result in injury or the wrongful conduct could subject the Defendant to a felony conviction. In those events, the punitive damage will be capped at 4 times compensatory damages OR $2 Million, whichever is greater.

Punitive Damages will not be capped if the Defendant intended to harm or the Defendant plead guilty to or was convicted of a felony arising out of the same act or the Defendant acted while under the influence of alcohol, drugs, glue, aerosol, or other toxic vapor.

Tort Reform Leading to More Litigation, Not Less

Are you clear on when the punitive damages are capped at three times compensatory damages or $500,000? What is “unreasonable” motive for financial gain? When it motivates a tortious act? The language of this long awaited law seems to create an environment for more trials when attorneys will clarify these issues in the court room.

It is important to realize that very few significant torts, like wrongful death, medical malpractice or traumatic injury make it to trial. The insurance companies negotiate settlement based on their expectation of negligence of the accused. They are making a business decision based on costs. Tort Reform make it financial advantageous to trial more cases. Trials take place in court rooms, with Judges, other court officers and jury members; all of which are paid for with tax dollars.

Will SC Tort Reform Save the Insurance Companies?

Allstate Insurance, the largest publicly traded insurance company, experienced net income down 43 percent in the fourth quarter as rising claims from auto insurance customers and catastrophes took their toll. Allstate’s fourth quarter 2010 net profit was $296 million compared to $518 million in the fourth quarter of 2009. Total operating income was $271 million in the fourth quarter of 2010 compared to $592 million in the same period of 2009. However, net profit for the 2010 year was $928 million compared to $854 million in 2009. Do you think Allstate is a struggling company with $928 million in profits last year?

Will Tort Reform Save Struggling Medical institutions?

Roper St. Francis Healthcare is fighting Trident Health System’s proposed $26 million expansion of Summerville Medical Center. Roper said Trident has not demonstrated the need to add 30 beds at the 94-bed medical center. The project would also convert 18 semi-private rooms to private rooms and expand labor and delivery rooms.

Shands HealthCare, a for-profit health care system and publisher of Physicians Practice Digest, cites South Carolina as one of the top five physician-friendly states. These physician-friendly states have low physician density, competitive insurance markets, and relatively high reimbursement rates. The South, in general, is considered the highest paying region in the U.S. for physicians. States that were listed by the American Medical Association as being in a malpractice crisis were disqualified for designation of physician-friendly.

Does it sound as if doctor and hospitals in the Charleston South Carolina area are struggling? Attorneys shoulder large expenses in accepting serious tort claims. While there are exceptions, the majority of claims are valid. There will plenty of trials, at the expense of tax payers, to determine the real implications of this law. I suppose the most prudent response to this law is to run out and buy stock in the insurance companies and hospitals. It seem the result of this law for them is clear.