This week’s “Daily Journal” guest columnist is Daren Bakst, John Locke Foundation Director of Legal and Regulatory Studies.
RALEIGH — North Carolina’s legal system should provide a forum for the fair compensation of plaintiffs. This doesn’t mean, though, that defendants should be treated unfairly in the process. Unfortunately, that’s precisely the problem in North Carolina.
While there’s a need for many reforms to our civil justice system, two reforms stand out. First, there should be a cap on noneconomic damages. It’s important to understand what these damages cover.
To compensate plaintiffs for their losses, there are two types of damages that can be awarded to plaintiffs: economic and noneconomic damages. Plaintiffs should be able to receive whatever economic damages a jury awards. These damages represent the actual economic harm a plaintiff has or will sustain, such as lost wages and medical expenses.
Noneconomic damages are intangible in nature and therefore difficult to quantify. They represent damages due to pain and suffering, loss of consortium, and mental anguish. It is these subjective damages, often driven by emotional factors, which can lead to excessive awards.
A cap on these noneconomic damages would provide some reasonable protection for defendants without in any way failing to compensate plaintiffs for their tangible losses. Intangible losses, though, shouldn’t be taken lightly, so a cap must be carefully developed and revisited. Further, judges should be provided some leeway to grant exceptions to the cap in certain extreme situations, as defined by the legislature.
The level of a cap varies across the states, and in some states a cap is limited to medical liability cases alone. For example, South Carolina limits the cap to $350,000 per medical provider, with a total aggregate amount of $1.05 million for all providers.
California, not exactly a friendly environment for anyone engaging in commerce, caps noneconomic damages in medical liability cases to $250,000.
The North Carolina Senate has just introduced a bill (Senate Bill 33) that would be comparable to California by capping noneconomic damages in medical liability cases to $250,000.
This bill certainly is an important step when addressing noneconomic damages in the medical situation, but a cap should apply in all civil proceedings.
Certainly, though, it is understandable to be particularly concerned with medical liability. In a 2007 report, the American Medical Association identified North Carolina as one of 17 crisis states “where medical liability insurance rates force physicians to retire early, eliminate high-risk procedures, or leave the state.”
The AMA recently has provided additional studies (PDF link here) that illustrate the added costs associated with the litigious climate for medical professionals.
A startling finding from the AMA: “[A]mong physicians surveyed by the AMA, there was an average of 95 medical liability claims filed for every 100 physicians, almost one per physician.” Doctors are constantly getting sued, and without caps, this will only lead to costly defensive medicine.
Health care is properly a significant concern. There’s one way to address rising heath care costs without any mandates or completely turning the health care system upside down: Adopt tort reform for the medical providers.
There’s a second important tort reform that the North Carolina legislature should adopt. North Carolina should get rid of the rule called joint and several liability.
If a defendant is responsible for 1 percent of the damages to a plaintiff and the other defendant is 99 percent responsible, the defendant who is only 1 percent responsible would be required to pay 100 percent of the damages to the plaintiff if the other defendant is unable to pay.
This rule is extremely unfair and unjust to defendants. They are forced to pay far more than what is proportional to their level of fault. This rule should be changed, and defendants should only be liable based on their level of fault.
While it is true that such a rule protects plaintiffs, it only does so by creating an extreme hardship on defendants and forcing them to take on someone else’s responsibility.
Many states have done away with joint and several liability either completely or in part. The best option is simply to require defendants to pay their proportional amount of damages, as in Tennessee. Some states have created systems where a defendant isn’t liable for damages of another defendant(s) when the defendant is less than 50 percent at fault.
These two tort reforms, a cap on noneconomic damages and eliminating joint and several liability, barely scratch the surface of what’s needed to reform our tort system. However, these two changes are very important changes that need to be made and would help create a civil justice system that guarantees justice for both plaintiffs and defendants.