Franklin, Replacing the Negligence Lottery

Franklin, Replacing the Negligence Lottery

Stewart. Crisis in Tort Law? The Institutional Perspective.

Medical malpractice and products liability are the most criticized areas.

Welfarist Critiques

Critiques of the Incentive theory

Depends on information and knowledge, often lacking, particularly among ordinary folks.

Underdeterrence and overdeterrence.

Causation problems with environmental and health harms.

Liability insurance mitigates incentive effects.

Critiques of the Compensation (risk-spreading) theory

Very uneven coverage of victims.

Undercompensation and overcompensation.

Passing costs along is inequitable and regressive.

Compensation based on lost earnings disproportionately favors the rich.

Critiques based on Administrative costs

Third-party liability insurance far more costly than first-party or government insurance.

Litigation-cost system means undercompensation of badly injured and overcompensation of lightly injured, often due to settlement.

Attorney fees and litigation costs.

Justice-Based Perspectives

Notwithstanding the problems, it accomplishes corrective justice.

ALTERNATIVES TO TORT

Workers’ Compensation

Adopted widely by statute in early 20th century.

Abolished tort liability for on-the-job injuries.

Abolished fellow-servant rule.

Replaced costly litigation with more efficient administrative procedure.

Compensation

Guaranteed.

Usually less than 100% of economic costs.

No noneconomic costs.

Exclusive remedy

Causation

No-fault system.

Seems to induce better care on the part of employers.

Employee’s negligence is irrelevant.

Worker must only establish where injury occurred.

Problems with injuries that occur over time and cannot be pinpointed, like carpal tunnel syndrome.

Impact on wages

Wages go down as benefits go up, almost 1:1.

In effect, compulsory insurance.

No-Fault Automobile Insurance

Statutory

Some schemes have failed state constitutional challenges.

Upheld in MA in Pinnick v. Cleary (1971).

Mostly through first-party insurance.

Compensation

Virtually all accident victims are covered.

Unlike tort system, benefits not determined once and for all and paid in one lump sum.

Actual, not scheduled, damages.

Closer to full loss compensation than workers’ compensation.

Great reduction in administrative costs

Some evidence of increased accidents, perhaps because of reduced incentive to take care.

Exclusivity?

Some states preserve tort remedies for fault-based, particularly for grave injuries.

“Add-on” states do not limit tort recovery at all.

No-Fault Insurance for Medical and Product Injuries

Based on third-party insurance.

Some adoption for medical and hospital malpractice.

No adoption for products liability.

Problems

Defining compensable events.

Causation.

New Zealand Accident Compensation Act of 1972.

Comprehensive insurance scheme that replaced virtually all claims for personal injury or death due to accidents (but not illnesses).

Five guiding principles

Community responsibility

Comprehensive entitlement

Complete rehabilitation

Real compensation

Administrative efficiency

Table of Alternatives

I = Incentives

C = Compensation

Some reform options

Strict liability on workers’ compensation model for hospitals for iatrogenic injuries.

Compulsory first-party no-fault auto insurance.

Government regulation and compensation; abolition of tort.

MEDICAL MALPRACTICE—IATROGENIC INJURIES

Bases for recovery for iatrogenic injuries

Tort

Negligence

Individual provider

Enterprise

Strict liability

Administrative strict liability (WC model)

Compulsory first-party no-fault patient insurance

Contract