Is Tort Reform Necessary?

For over a decade, debate has raged in Washington and across the country over the issue of tort reform. Supporters of reform argue that damage awards are grossly excessive, providing incentive to lawyers and laymen for even more lawsuits. Excessive awards also adversely affect the economy. Manufacturers and corporations forced to pay for damage awards, not to mention attorney fees, must find the money somewhere. This translates into higher prices for consumers and employee layoffs. For others, especially doctors, this also translates into higher insurance premiums for the entire profession, not just those who commit malpractice. Taken together, the cost of tort lawsuits creates an enormous burden on the economy calculated in the billions of dollars. Opponents of tort reform argue that limiting awards for damages is inappropriate. Tort law is the means by which citizens are compensated for injuries from defective products and medical malpractice. Moreover, the threat of suit provides a healthy incentive for companies and professionals to act responsibly.

On February 18, President Bush signed the Class Action Fairness Act of 2005 into law. Under the legislation, class-action suits seeking $5 million or more would be heard in state court only if the primary defendant and more than one-third of the plaintiffs are from the same state. But if fewer than one-third of the plaintiffs are from the same state as the primary defendant, and more than $5 million is at stake, the case would go to federal court.

Though seemingly as victory, the new law has been widely criticized by tort reform advocates. “The national government is not empowered to dictate substantive rules of state tort law under the guise of the Commerce Clause. And Republicans, who are supposedly devoted to fighting federal bloat, should be on the front line in stopping the central government from worming its way into an area that has been left to the states for two-and-a-quarter centuries,” said Robert Levy , a senior fellow of constitutional studies at the Cato Institute. “To justify federal tort reform under the Commerce Clause, Congress must show that the reforms are both ‘necessary’ and ‘proper’ to ensure the free flow of interstate trade. When it comes to tort reform, neither criterion has been met. Substantive federal reforms are not necessary because the states are enacting their own reforms. Substantive federal reforms are not proper because they cannot be harmonized with traditional concepts of federalism,” Levy added. Instead, Congress should enact “procedural” rules while leaving substantive issues of tort law in state hands, Levy argues.

The debate rages on, but now with two key questions. First is whether tort reform is necessary. If so, what is the proper measure that can both bring needed changes to tort litigation but also not offend federalist principles? Michael Krauss, a professor at the George Mason School of Law, will help answer these questions and more in a lecture to be given on Thursday, October 20 at 12:35 pm in Room 135. A question and answer session will follow.