The central question facing those studying tort reform and the insurance industry is how we move to redefine the public debate in 1987 and beyond.
My own thought is that those who care about the health of the insurance mechanism and how we handle risk would want to convert what has historically been a cyclical crisis issue, where the debate operated within fairly narrow intellectual parameters, into a much more fundamental discussion.This discussion would focus on the very purposes of the civil justice system, and where the objective is to institutionalize that discussion as part of the ongoing public agenda. That discussion would revolve around five fundamental questions:
How much risk do we want to tolerate in society - to what extent is it desirable or economically feasible in a competitive world economy to seek a zero risk environment?
How much to pay people with injuries?
Who should pay?
Who should be paid?
What mechanism should we use to deliver that money?
Those issues have two characteristics. The first is that they are primary issues that should be explicitly addressed, but they're so far-reaching that they tend to get avoided. So we end up proceeding as if there were a consensus on basic principles when few people have examined these principles. Then we're surprised when the failure to articulate the goals produces a stalemate on policy.
The second characteristic of these first-order issues is that they are issues on which there is no single, right answer, and they are issues on which nobody's going to get a resolution in 1987 or 1988. They are fundamental questions, the answers to which revolve around subjective judgments on the nature of justice and how much society elects to invest in liability protection.
Proponents of the status quo argue we should permit those answers to evolve through the courts. I would argue that case law is unsuited to take into account the systemic effects of legal principles, and the effects on insurance are a case in point.
Tort law is, quite properly, blind to the very existence of insurance; taking into account the economic status of the parties would repudiate the principle of equal protection. But that blindfold numbs the sensitivity of the judicial system to the health of the risk-spreading mechanism that ultimately determines whether a paper verdict produces a real recovery.
If the long-term dialogue centered around the basic issues outlined above, we could begin to ask the real questions:
What's the problem? Is it predictability, or predictability and cost, or the absence of deterrence?
Is it the arbitrariness of the system - and if so, is the problem that some get too much, or some get too little, or that it takes too long to get it?
How much risky conduct do we want to deter?
To what extent should the tort system, as opposed to government regulation, be our vehicle for deterring unreasonably risky conduct?
Do we really want to compensate most forms of injury absent a finding of fault? If we do want broad compensation, is no-fault an answer?
If we want to deter negligent conduct through the tort system, then we should predicate recovery on a finding of negligence. If society insists on compensating certain classes of injury irrespective of negligence, then there are cheaper, faster and fairer ways to do so than through the tort system.
You can make a philosophical case for either approach. You can achieve deterrence through a fault-based tort system. Or you can achieve broader compensation through no-fault and broader safety nets, and rely on government regulation and the criminal law for deterrence. But you can't achieve both objectives through the same tort system without putting intolerable strain on that system.
The reluctance to discuss those first-order issues is understandable
because they're so far-reaching, and because the implication is either (a) that you revert to a pure fault system and leave injured parties without compensation, or (b) that you move to a no-fault approach that involves broader government safety nets and perhaps a greater cost than this country would find acceptable. That's not an easy choice, but I'd submit that if you don't find vehicles to introduce these issues as part of the public dialogue we're inevitably left with what we have today:
A system that's eroding the international competitiveness of our economy.
A system with minimal deterrence.
A system with uneven levels of compensation.
A system that's high on cost.
A system that lacks the requisite predictability to make the risk- sharing insurance mechanism work.