What Tort Reform Advocates Won't Tell You: Damage Caps Don't Work

Governor Bill Haslam and Republican legislators in Tennessee are amping up efforts to pass tort reform legislation in Tennessee. On February 17, Haslam presented his first package of proposed legislation as governor, which included protections against large payouts in lawsuits for businessmen and professionals. Specifically, Haslam is promoting the “Tennessee Civil Justice Improvement Act of 2011” (HB 2008/SB 1522), which is being co-sponsored by Senator Mark Norris (R-Collierville), Senator Brian Kelsey (R-Germantown), and Representative Gerald McCormick (R-Chattanooga) . Among the provisions that are included in the legislative proposal are limitations on both non-economic damages and punitive damages. Specifically, the proposal sets a $750,000 limit on non-economic damages and punitive damages would be limited to the higher of $500,000 or double the amount of compensatory damages awarded. The Act would also include a number of other procedural alterations. Haslam and the bill’s supporters are promoting tort reform as part of a strategy to create a better business environment within Tennessee. Unfortunately the reasons that they are promoting tort reform is not backed up by the data.

Tort reform is frequently promoted as a means to promote business development, as is happening in Tennessee. So-called frivolous lawsuits and damages that are spinning out of control are frequently blamed for lack of economic development, and tort reform is supported by many business groups, including in Tennessee. Tort reform has its opponents, however, and many of the reasons often given for its promotion are actually not based in real data; making tort reform simply a distraction from the real issues.

The American Association for Justice offers clear and concise data showing that the justifications for tort reform are not actually true. Specifically:

• The number of lawsuits filed is NOT rising; rather, between 1985 and 2003, the number of federal torts cases fell by 79%; at the state level torts trials decreased 31.8% between 1992 and 2001.
• Lawsuits do NOT hurt small businesses. Surveys indicate that lawsuit abuse is not a primary concern for business owners. Instead, it is overwhelmingly large corporations that push the tort reform agenda.
• Lawsuits are NOT trying to drive companies out of business; rather lawsuits promote a strong civil justice system that holds wrongdoers accountable.
• Trial attorneys are NOT “milking the system”; attorneys who represent plaintiffs only recover on successful cases and offer an important opportunity for individuals without financial resources to stand up for their rights.
• The rise in insurance rates is NOT linked to lawsuits. Insurance companies themselves have admitted that damages caps will not result in lower premiums.

As Tennessee begins to examine the proposed tort reform legislation and debate its merits, it is absolutely necessary that we not be distracted by what is being incorrectly touted as a quick fix to problems that businesses are facing. Lawsuits are not to blame and legislators should look to the concrete facts and data to understand the important role that torts litigation plays in our justice system.

As we go deeper into this debate, remember the FACTS instead of buying into the SPIN of corporate lobbyists and the lawmakers who do their bidding.