Glossary of “Tort Reforms”

"Tort reforms" (or tort "deforms") are cruel laws that reduce the protections and rights our country provides to those who are injured by defective products, toxic chemicals, medical malpractice, and other wrongdoing. "Tort reforms," which often change centuries-old common law, directly interfere with the independence of our nation's civil justice system, tying the hands of judges and juries who hear the evidence in a case, and undermining our country's uniquely individualized system of justice. They make it more difficult or impossible for injured consumers to hold wrongdoers accountable. Adding to the already existing barriers to court that exist for injured consumers, "tort reforms" present a peril to both family safety and democracy in our country.

Here is a glossary of the most common "tort reforms:"

Collateral Source Rule - The collateral source rule prevents a wrongdoer from reducing its financial responsibility for the injuries it causes by the amount an injured party receives (or could later receive) from outside sources. Payments from outside sources are those unrelated to the wrongdoer, like health or disability insurance, for which the injured party has already paid premiums or taxes. The rule also prevents juries from learning about such collateral payments, so as not to unfairly influence with verdict. States that have modified this rule have either completely repealed it, mandating that payments received from health insurance, social security or other sources be used to reduce the wrongdoer's liability. Or, they allow juries to hear during trial about collateral payments.

Caps (on Damages) - A damages cap is an arbitrary ceiling on the amount an injured party can receive in compensation by a judge or jury, irrespective of what the evidence presented at a trial proves compensation should be. A cap is usually defined in a statute by a dollar figure ($100,000, $500,000, etc.) or by tying the cap to another type of damages (e.g. two times compensatory damages). Caps usurp the authority of judges and juries, who listen to the evidence in a case, to decide compensation based on each specific fact situation. Several states have declared caps unconstitutional.

Caps on Non-economic Damages - Non-economic damages compensate injured consumers for intangible but real injuries, like infertility, permanent disability, disfigurement, pain and suffering, loss of a limb or other physical impairment. Caps or limits on non-economic damages have a disproportionate effect on plaintiffs who do not have high wages - like women who work inside the home, children, seniors or the poor, who are thus more likely to receive a greater percentage of their compensation in the form of non-economic damages if they are injured.

Caps on Punitive Damages - Punitive damages, also known as "exemplary damages," are assessed against defendants by judges or juries to punish particularly outrageous, deliberate or harmful misconduct, and to deter the defendant and others from engaging in similar misconduct in the future. It is well recognized that the prospect of having to pay punitive damages in a lawsuit by an injured consumer causes corporations to build safer products and operate more safely. Many dangerous and defective products -- including the Ford Pinto, asbestos, and the Dalkon Shield IUD -- were removed from the market because of punitive damages. Companies often weigh the potential costs of liability to determine whether a defective product should be redesigned or removed from the market, or an unsafe practice should be stopped. Capping or limiting punitive damages allows companies to treat liability as a cost of doing business, weakening their deterrent impact.

Contingency Fee Limits -- Under a contingency fee arrangement, a lawyer agrees to take a case on behalf of an injured client without obtaining any money up front from the client. This is a risk, because if the case is lost, the lawyer is paid nothing. In return, the lawyer is entitled to a percentage of the amount of money collected -- usually one-third -- if the case is successful. This system provides injured consumers who could not otherwise afford legal representation with access to the courts. Typically, states limit contingency fees by capping them sometimes way below one-third, sometimes along a sliding scale so fee percentages decrease, sometimes drastically, as judgments increases. The principal impact of contingency fee limits is to make it less likely attorneys can afford to risk bringing many cases, particularly the more costly and complex ones, providing practical immunity for many wrongdoers

Joint and Several Liability Limits - The doctrine of joint and several liability is a fairness rule, developed over centuries to protect injured consumers. It applies when more than one defendant is found fully or substantially responsible for causing an injury (not 1% or 10% responsible, as is commonly misstated). If one wrongdoer is insolvent or cannot pay their share, the other fully-responsible wrongdoers must pick up the tab, to make sure the innocent victim is fully compensated. For example, suppose three toxic polluters recklessly contaminate drinking water, causing leukemia in neighborhood children. The actions of any one of them alone would be sufficient to cause leukemia. But because three companies are involved, each one's relative share becomes only one-third. This fortuitous circumstance allows them to split the total compensation each one owes the victims. But if one of those three companies becomes insolvent and cannot pay any compensation, who should cover it? Joint and several liability says that the other companies must cover the insolvent company's share. When joint and several liability is limited or abolished, however, these other wrongdoers are not required to cover the insolvent company's share. The wrongdoers are off the hook and the innocent victim receives far less compensation for injuries than the judge or jury determined they deserve.

Loser Pays - The English "loser pays" rule, which mandates that a losing party pay the winners' costs, is an unfair and dangerous rule. Its chief effect is discouraging important and legitimate cases. For example, imagine you are injured by a negligent or reckless corporation and believe you have a strong legal case. The economic devastation you might face upon losing your case, having to reimburse a large company for its inflated, hourly legal bills, would surely chill your right to file suit and attempt to hold that company accountable in court. That is why even in Britain, where loser pays exists, "legal expense" insurance is available, providing at least those who can afford it with the means to protect themselves against payment of an opponent's legal costs.

Prejudgment Interest - Prejudgment interest is the amount of interest that accrues on the value of an injured consumer's claim between the time he or she files a case and the final judgment. Some states penalize victims by prohibiting pre-judgment interest or by imposing very low limits on pre-judgment interest rates. Laws that limit prejudgment interest can delay timely settlements or judgments in civil cases by reducing the monetary incentive that defendants have to resolve cases expeditiously.

Product Liability Defenses - The doctrine of "strict liability" has long applied in suits involving defective products. Strict liability ensures that one who is responsible for bringing a dangerously defective product into the marketplace or workplace compensates those injured by the product. However, some states have enacted new defenses for those who manufacturer or sell defective products. For example, some laws establish a presumption that an injury-causing product, drug or medical device is not defective or unreasonably dangerous if the product complies with government standards. This benefits manufacturers that profit from weak and long out-of-date health and safety standards, like manufacturers of cars, trains, factory equipment and school buses. Other provisions require an injured consumer to prove the existence of an "alternative design" for a defective product, which would have prevented the harm but would not have hurt the product's marketability. This forces plaintiffs, who are at a distinct disadvantage when it comes to knowledge about technical design alternatives, to prove the existence of such alternatives when this defense is raised. Other laws immunize manufacturers that produce products with design defects if the products have "obvious risks," like tobacco, or are considered "unavoidably unsafe," like guns -- even if a defective gun accidentally discharges and kills someone.

Statute of Repose - A statute of repose for products completely cuts off liability of the manufacturer or seller of a defective product after an arbitrarily-established number of years, such as 10 years or 15 years. (A few states have adopted statutes of repose to cut off doctors' and hospitals' liability for medical malpractice, as well.) Statutes of repose apply no matter how serious the injuries, how many injuries have been caused over the years by these products or services, or how reckless the actions of the wrongdoer were. They cover products with expected lives much longer than typical cut-off dates in the statute of repose, products like nuclear power plant components, medical devices such as pacemakers, elevators, airplanes, home appliances, playground equipment, farm equipment, freight trains, trucks, and other industrial machinery.

Structured Settlements - Also called "periodic payments," structured settlement laws either mandate, allow defendants to request, or allow courts to require that some or all payments awarded by a judge or jury be made to the injured consumer over a long period of time. In other words, the injured consumer is prohibited from receiving payments in a lump sum. These provisions increase the hardships of the most seriously injured consumers who are hit soon after an injury with large medical costs and must make adjustments in transportation and housing. Often, the law allows insurance companies to pocket the money upon the plaintiff's death, instead of paying it to a dependent spouse or child.

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