“It is useless to attempt to reason a man out of a thing he was never reasoned into”

Jonathan Swift
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"The Democrats have moved to the right, and the right has moved into a mental hospital." - Bill Maher
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"The city is crowded my friends are away and I'm on my own
It's too hot to handle so I gotta get up and go

It's a cruel ... cruel summer"

Thursday, August 26, 2004

A little backstory on tort reform...

When my firm was asked by a statewide group (three guesses :) to help fight HB3/HB4/Prop. 12 last year, I had a chance to spend some time digging in the trenches of the med-mal/tort reform issue and found a few things that surprised me...and some that didn't.



Of note:

*Insurance companies make a very small portion of their profits off the premiums they sell you and I. The vast, vast majority of their profits come from investments (mostly stocks) they've bought with their profits for the last century. So, the industry is even more hyper-sensitive to market fluctuations than day traders. When tech crashed, insurance rates went up across the board--home, life, auto, health, med-mal, whatever. The point: they were trying to recoup their stock losses on our backs. It's happens every 15 years or so, and has gotten so predictable that the term "insurance cycle" has made it into economics textbooks.



*We're being gradually sold on this. For the last 15 years, there has been a concerted, coordinated advertising campaign aimed at convincing us that 1) our courts are clogged, 2) we can no longer trust trained jurists (now activist judges) or our peers (now runaway juries), 3) there is no rhyme or reason to damage awards (now jackpot justice), and possibly most dangerous 4) lawsuits drive up insurance rates. None of the above claims are supported by the data. This campaign started right here in Texas with the birth of CALA. Now we have TLR (top political $$ giver in Texas) and TAB (subsidiary of US Chamber of Commerce, under investigation for stealing elections in '02). These groups wield enough power with the almighty dollar to muddy the truth, whitewash the effects of their agenda and make it damn hard to get elected in this state without their go-ahead.



* This is very political. Medical malpractice is a real problem, and while doctors are next in line for sainthood, they're not above reproach. Last year's tort reform bill sat began as two separate bills: one purporting to relieve doctors and the other a Big Business wishlist that warped of any cogent theory of liability. As our polling showed (and certainly the other side's), Texans would do anything to save their doctor but were oh, say 60 pts less excited about handing over their rights to megalocorporations. The writing was on the wall--these bills were gonna pass together or not at all. It's indicative of the communications model Repubs have used to put us over a barrell--marrying hot-button emotive issues ("don't ya hate gays/PlannedParenthood/greedy trial lawyers, etc") with super Pro-business policy. The pro-business policy perpetuates the system, but it's the fear and hate that keep the votes rolling in that legitimize the whole agenda.



*Damage caps have never worked. Whether it's the much-touted MICRA in California (rates actually went up until they combined with insurance refrom), or the recent study by the Congressional Research Organization that found damage caps can have AT MOST a 1-3% effect on premiums. For what does affect insurance rates, see above. Damage caps do two things: 1) they punish the victims of the worst, most egregious, most intentionally-caused injuries, and 2) they suck money out of the Democratic Party. The folks pushing damage caps have a vested interest in both.



To me the bottom line has always been that there is no limit to the amount of damage a corporation can do to you and your family. The only thing that keeps them honest is the X-factor of what some silver-tongued trial lawyer can coax out of a slack-jawed jury in Mississippi. If we let them set a price on our lives, they'll just figure it in to the bottom line. The Ivey memo, exploding Pintos, we've seen it before.



Corporations were specifically designed to disperse liability, to take the human face off of whoever's pulling the levers. Great for business, but...