Good riddance to Issue 1
A liberal law professor and a conservative public interest advocate agree that tort reform is bad for Arkansas
On Thursday, the Arkansas Supreme Court correctly struck Issue 1 from the November ballot. While the ruling was on procedural grounds, the decision also has critical substantive benefits.
Issue 1 was presented to the public as “tort reform.” But tort deform is a better label. Had Issue 1 remained on the ballot and passed, it would have fatally undermined the right to seek recovery in court for injuries, both physical and financial, and the separation of powers, which is a bedrock of American constitutional government.
Proponents of Issue 1 claim there is too much frivolous tort litigation in Arkansas, which allegedly reduces the quality of health care and hinders job growth. But these are myths of the first order. Frivolous lawsuits are exceedingly rare because the legal system has numerous mechanisms that weed out meritless claims. It is thus not possible for invalid cases to significantly impact the quality of health care or the economy.
Tragically, most people whose legal rights are violated never sue. For example, studies establish that around one percent of all hospital patients are victims of medical negligence. These errors kill or injure hundreds of thousands of individuals each year. But less than 2 percent of those hurt file a claim, in part because they cannot find an attorney willing to take their case.
Indeed, according to one study, most attorneys reject over 90 percent of the medical malpractice claims brought to them because the legal system makes it too hard for injured patients to win in court. This means the vast majority of medical negligence victims go uncompensated. And yet Issue 1’s advocates want to make it even harder for innocent patients and other injured Arkansans to seek justice in our courts.
Issue 1 has four primary pieces. The first is a $500,000 ceiling on non-economic damages, which are damages intended to compensate for pain, suffering, and loss of life, as opposed to damages that compensate for loss of income. Caps on non-economic damages put an arbitrary price tag on human life. Would you accept $500,000 for your life? For the life of your son, daughter, husband, or wife? How about for an arm or leg? Or for the ability to walk or have children? Rather than trusting juries comprised of sensible Arkansans to assess the appropriate level of compensation for such tragic injuries, Issue 1 would have substituted a one-size-fits-all limit.
Tort law and litigation are designed to deter careless behavior that results in injuries, and research shows that when tort law is weakened, injuries increase. One powerful study found that limits on non-economic damages consistently result in drops in patient safety, and another concluded that pregnant women suffer from increased medical negligence. Everyone in our state is aware of the crisis of poor care in nursing homes. Both the research and common sense establish this would only have gotten worse if Issue 1 passed because nursing homes would have lower incentives to comply with best practices.
The most carefully designed studies have found that caps on non-economic damages and other types of tort reform:
First, caps reduce medical malpractice premiums by at most 1 or 2 percent; 2. do not increase the number of doctors generally, in high-risk medical specialties, or in rural areas; 3. have only a tiny effect on overall health-care costs; and 4. do not reduce unemployment or increase economic growth.
Studies from prestigious universities like Harvard and Northwestern have repeatedly found that the entire medical malpractice liability system is a small fraction of overall health-care spending— somewhere between 1 and 3 percent. Given this, changing malpractice law could not possibly have a major impact on the health-care industry. That explains why the Congressional Budget Office concluded that comprehensive tort reform would reduce total American health-care costs by a mere 0.5 percent, and why there is a consensus in the academic community that malpractice reform is not an effective tool for containing health-care costs.
In sum, if Issue 1 had passed, the cap on non-economic damages would have traded, at best, tiny drops in health-care costs in exchange for significantly more injuries resulting from medical negligence, poorly constructed products, environmental pollution, and other reckless behavior. That is a bad trade for our state any way you slice it.
Second, Issue 1 places a cap on punitive damages. Juries may award such damages to punish wrong-doers for their careless or intentional misconduct. It is well established that damages designed to provide compensation for injuries do not adequately deter bad actors. That is why we allow for punitive damages. Not surprisingly, studies have found that when limits are placed on punitive damages, the result is more injuries, including from medical malpractice.
Defenders of Issue 1 point out that the proposed punitive damage cap does not apply to intentional misconduct. That exception is all but meaningless. No one seriously believes doctors and businesses are trying to injure their patients and customers. Instead, virtually all injuries are the result of negligence. Thus, Issue 1 effectively caps all punitive damages. This would have prevented juries from properly punishing corporations, hospitals, and nursing homes when they injure or kill people, meaning those organizations would have far less reason to be careful.
Third, Issue 1 limits contingency fees that injured plaintiffs may pay their attorneys. Contingency fees are paid only if an attorney wins the case for the client. If the lawyer loses, the client owes nothing. Most people who suffer an injury cannot afford to pay their attorney upfront or by the hour. Without contingency fees, the vast majority of citizens would not be able to hire a lawyer to take their case.
Limiting contingency fees is a corruption of the American justice system. In this country, both sides are supposed to vigorously present their arguments in court governed by the same rules. And a neutral jury decides the result. Contingency fee limitations tilt the playing field in favor of wealthy defendants by placing restrictions on only one side in the case. Imagine if, when the Razorbacks play LSU this season, only the Razorbacks are barred from throwing passes. Would you consider the game fair? Of course not. That is the impact of capping contingency fees: One side is handicapped by playing under less favorable rules.
Note that virtually all defendants in injury cases have liability insurance. So defense lawyers are paid for by insurance companies. This means that Issue 1 allows wealthy companies to spend unlimited amounts of money on their lawyers while the fees regular Arkansans may pay their attorneys are capped. That is grossly unfair and would have made it far more difficult for victims to find an affordable lawyer.
Finally, caps on contingency fees violate freedom of contract. They prohibit citizens from reaching an agreement of their choosing with the person whom they are hiring to protect their fundamental legal rights.
The fourth piece of Issue 1 is the most problematic. Under the state constitution, the Arkansas Supreme Court sets the rules that govern court proceedings. Issue 1 would have shifted that authority to the state Legislature. Rules about procedure or evidence that can be used in court would no longer be left to the people or the courts. State legislators, under the influence of wealthy special interests who fund their campaigns, could have adopted rules that effectively shut the courthouse doors to most Arkansans.
In 2003, to illustrate, the nursing home industry lobbied Arkansas lawmakers for rules providing them special privileges in court, like giving some of their staff members immunity from lawsuits or exempting state inspection reports from admissible evidence. Such lobbying would have skyrocketed under Issue 1. Shifting the power to make court rules to the Legislature is guaranteed to undermine our system of justice and eviscerate the separation of powers.
Virtually every organization that supported Issue 1 is a special interest lobby seeking to shield its members from the consequences of their own reckless conduct—conduct that often results in serious injury and even death. Instead of cleaning up their own bad practices, which are the real reason they get sued, these groups wanted to shirk their legal obligations and deny Arkansans their day in court.
Opposing Issue 1 was a broad coalition of institutions from across the political spectrum— churches, nonprofits, consumer organizations, and more. There is a reason why a liberal law professor and a conservative public interest advocate came together to write this piece: No matter your political ideology, you should oppose Issue 1. It was the wrong choice for Arkansas.