Frivolous Lawsuits (ie Tort Reform)

The more I ponder President Obama’s words at yesterday’s Health Care Summit regarding frivolous lawsuit legislation being handed over to the states, the more it makes less sense to me.

Truth be told, zero sense.

Especially if one of the driving forces behind effective national healthcare reform is to lower costs to Main Street USA.

The insurance business is one of the riskiest businesses around.

Think about it. A company takes what is, in reality, a small amount of money from each of many people and ends up paying out money to cover whatever is insured.

In the health field, that particular cost is incredibly compounded by frivolous lawsuits and tort awards that are way out of line.

In order to protect themselves, and stay in business, insurance companies charge higher premiums.

There are major flaws with trying to pawn this area off to the states.

In the first place, consider the fact that not every state may enact any legislation at all. And, because it is being left up to the states, the laws themselves will vary (probably greatly) and provide different levels of protection.

Unless, of course, it is mandated that all states enact legislation. And, if that ends up being the case, why not do it at the national level?

Possibly the biggest factor, however, is that if a plaintiff does not like the award received in their judgment, even if it was at the uppermost limit a state allowed, it would be appealed. First to the Appellate Court, the the State Supreme Court and, ultimately, to the US Supreme Court, where a decision would be made.

And that decision would affect all states.

Thus, all that would be accomplished by pushing this particular area of responsibility and legislation to the states is clogging the courts with appeals that eventually end up in our highest court in the land for a decision.

As a note, that would, of course, be after each state spent countless hours, days, weeks – i.e., taxpayer dollars – in order to craft and pass legislation. Yet, another cost for Main Street USA to carry.

Therefore, all of this means, in the end, that there would be more burdensome costs for the good ole middle class. (And this is a hidden cost, not covered in either the House or Senate healthcare reform legislation.)

Another item to consider is that many elected (and appointed) representatives on Capitol Hill totally vilify the insurance companies as greedy, making too much money off of the middle class, etc., etc.

Think about this for a minute…how much money does an attorney make who wins a frivolous lawsuit or a suit that awards monetary damages in the hundreds of millions to someone?

A bundle, to be sure.

As an example, perhaps the attorney is working on a 30 or 40 percent retainer and the award comes in at $100 million. The plaintiff gets $60 or $70 million and the attorney walks away with a cool $30 or $40 million.

The lawyer will defend this and speak of all the time and costs involved that he/she must pay out of their portion of the settlement. But how many of those attorneys have to worry about health insurance, making their mortgage payment, putting food on the table? How many of them live in million-dollar-plus homes and drive cars that the vast majority of Main Street USA can only dream about?

It is still this Main Streeter’s opinion that this issue is being relegated to the states because attorneys and law firms are some of the biggest contributors to campaigns and spend millions of dollars lobbying.

Thus, by not tackling Tort Reform at the Federal level our elected public servants are being incredibly irresponsible in this area.

America does not need bigger, expanding government. America needs fair and equitable government representing the best interests of the People.

For Healthcare Reform, that starts with Tort Reform – putting an end to frivolous lawsuits and outlandish settlements – at the Federal, not State, level. And not attempting to rid the country of insurance companies so that we end up with socialized medicine.

If that happens, what is next? Uncle Sam’s Gas Stations?

Over For Now.

Main Street One