"A total deterrent to small people bringing lawsuits" is what White House counsel Abner Mikva fantastically calls the "loser-pays" provision of the House GOP's proposed tort reform. Our view is that the loser-pays proposal is so narrow as to scarcely amount to much.
Loser-pays - also known as the English rule because it prevails in British law - requires a person who sues another and loses in court to pay the legal fees his suit has forced the exonerated defendant to incur. The purpose is to dampen litigiousness. If applied across the board, this rule would indeed discourage plaintiffs of limited means from taking any but open-and-shut cases to court.The House bill does not impose loser-pays across the board. All plaintiffs, even in cases involving residents of more than one state, would retain the right to sue in state court, unaffected by the change.
Moreover, plaintiffs who chose to sue in federal court would only fall under loser-pays if they rejected an offer to settle the suit and later were awarded less than the offered settlement by the jury. Even then, judges could limit the award of legal fees in certain circumstances.
Mikva's wild exaggeration is typical of critics' line that the House legislation is "extreme." They talk about the proposed cap on punitive damages, for example, as if it would leave an injured person destitute. In fact, compensatory damages - medical bills, rehabilitation, lost earnings, even compensation for pain and suffering - are unaltered by the House bill.
The punitive damages subject to the cap are awarded on top of compensatory damages. We favor leaving judges some latitude to waive the cap in the most egregious cases.
Yet even under the cap, courts could award punitive damages of up to three times the amount of compensatory damages or $250,000, whichever is greater. These are hardly trivial sums.
Nor do critics mention the modest victories for common sense contained in these reforms: Only "scientifically valid and reliable" expert opinions would be allowed in court; injured persons whose drug or alcohol abuse caused their accident could not recover from others; plaintiffs could not sue the maker of a product more than 15 years old unless the product caused a chronic illness; and so on.
Americans and the economy will benefit if the system can shed the dead weight of spurious litigation.