May 19, 2023
Tort Reform Movement Gains Momentum in Florida
In April, Florida’s Governor DeSantis signed a tort reform bill that will have a significant impact on insurance litigation.
The bill modifies the bad faith framework, eliminates one-way attorneys’ fees, shortens the statute of limitations for negligence claims and changes the comparative negligence standard. In response, Florida attorneys moved to file more than 25,000 insurance claim cases before the law went into effect.
The Florida tort reform bill is the latest in a multi-decade effort to reduce litigation costs and quell the effects of social inflation.
History of the Tort Reform Movement
The origins of the tort reform movement can be traced back to concerns about the rising costs of liability insurance and its impact on businesses, particularly in the healthcare industry. In the early 1980s many physicians and hospitals were facing high insurance premiums and were forced to practice defensive medicine to protect themselves against lawsuits. Defensive medicine was driving up healthcare costs and even causing a shortage of doctors in certain areas.
In response to these concerns, various interest groups began advocating for changes to the civil justice system. They argued that the system was biased in favor of plaintiffs and allowed frivolous lawsuits to proceed, resulting in excessive damages awards that were often unrelated to the actual harm suffered by the plaintiff.
Since then, tort reform measures have been enacted in various states across the United States. Here are a few examples:
Texas: In 2003, Texas passed sweeping tort reform legislation that placed caps on non-economic damages in medical malpractice cases, limited the liability of businesses in certain situations, and made it more difficult to sue for product liability.
Missouri: In 2020, Missouri passed a law that places limits on punitive damages in personal injury and wrongful death cases. The law also requires plaintiffs to prove that a defendant was more than 50% at fault in order to recover damages.
Oklahoma: In 2019, Oklahoma passed a law that places a $350,000 cap on non-economic damages in personal injury cases, and a $300,000 cap on non-economic damages in wrongful death cases. The law also requires plaintiffs to provide more detailed information about their claims before filing a lawsuit.
Indiana: In 2018, Indiana passed a law that limits the amount of damages that can be awarded in medical malpractice cases. The law places a cap of $1.25 million on total damages, including both economic and non-economic damages.
Florida: In addition to the tort reform measures signed by Governor DeSantis this year, Florida has also passed other tort reform laws in recent years, such as a law that places limits on the amount of damages that can be awarded in auto accident cases.
Congressional Efforts at Tort Reform
Debates about tort reform in Congress have been divisive and little legislation has been passed, except for:
- CAFA – the Class Action Fairness Act (2005) established federal jurisdiction over certain large class-action lawsuits that previously could only be heard in state courts. The law was intended to prevent forum shopping and to provide defendants with greater protections against frivolous lawsuits.
- ACA – the Patient Protection and Affordable Care Act (Obamacare), passed in 2010, includes reducing healthcare costs by limiting medical malpractice lawsuits and encouraging the use of alternative dispute resolution methods.
Goals of Tort Reform
Overall, the goals of tort reform are:
- Lower insurance rates: By reducing the number of frivolous lawsuits and capping damages, insurance companies may be able to offer lower premiums to their customers.
As the Wall Street Journal pointed out in an editorial about this year’s Florida tort reforms, “Collusive agreements between physicians and lawyers to inflate charges will no longer be protected by attorney-client privilege. Lawyers could previously ensure that juries saw only the inflated amounts billed by their hand-picked doctors, and juries often based awards on those trumped-up bills.” - Faster resolution of cases: The new law requires plaintiffs to provide a detailed demand letter to defendants before filing a lawsuit. This could lead to faster settlement negotiations and a quicker resolution of cases, which would benefit both plaintiffs and defendants.
- Reduced healthcare costs: Medical malpractice claims can result in large settlements or verdicts, which can drive up healthcare costs. The new law limits the amount of damages that can be awarded in medical malpractice cases, which could help to reduce healthcare costs for patients.
- Protection for businesses: The new law provides protection for businesses from “frivolous” lawsuits, which could help to reduce the cost of doing business in Florida. This could potentially lead to more job creation and economic growth in the state.
It’s worth noting that tort reform is a contentious issue, as can be seen by the lack of legislation at the Congressional level. Supporters argue that tort reform can help to reduce the number of frivolous lawsuits and lower the cost of doing business, while opponents say that it can limit justice for individuals harmed by the actions of others.